Document ID: SEC-2015-1868-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market, LLC
Posted Date: 2015-11-10T05:00Z

[Federal Register Volume 80, Number 217 (Tuesday, November 10, 2015)]
[Notices]
[Pages 69755-69760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28508]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76344; File No. SR-NASDAQ-2015-115]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Chapter XV, Entitled ``Options Pricing,'' at Section 2 Governing 
Pricing for NASDAQ Members

November 4, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 22, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange

[[Page 69756]]

Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III, below, which Items have been 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Chapter XV, entitled ``Options 
Pricing,'' at Section 2, which governs pricing for NASDAQ members using 
the NASDAQ Options Market (``NOM''), NASDAQ's facility for executing 
and routing standardized equity and index options, to amend the 
Customer \3\ and Professional \4\ Penny Pilot \5\ Options Rebates to 
Add Liquidity. The proposed amendments apply to volume from October 22, 
2015 through October 30, 2015.
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    \3\ The term ``Customer'' applies to any transaction that is 
identified by a Participant for clearing in the Customer range at 
The Options Clearing Corporation (``OCC'') which is not for the 
account of broker or dealer or for the account of a ``Professional'' 
(as that term is defined in Chapter I, Section 1(a)(48)).
    \4\ The term ``Professional'' means any person or entity that 
(i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s) pursuant to Chapter 
I, Section 1(a)(48). All Professional orders shall be appropriately 
marked by Participants.
    \5\ See Securities Exchange Act Release Nos. 57579 (March 28, 
2008), 73 FR 18587 (April 4, 2008) (SR-NASDAQ-2008-026) (notice of 
filing and immediate effectiveness establishing Penny Pilot); 60874 
(October 23, 2009), 74 FR 56682 (November 2, 2009)(SR-NASDAQ-2009-
091) (notice of filing and immediate effectiveness expanding and 
extending Penny Pilot); 60965 (November 9, 2009), 74 FR 59292 
(November 17, 2009)(SR-NASDAQ-2009-097) (notice of filing and 
immediate effectiveness adding seventy-five classes to Penny Pilot); 
61455 (February 1, 2010), 75 FR 6239 (February 8, 2010) (SR-NASDAQ-
2010-013) (notice of filing and immediate effectiveness adding 
seventy-five classes to Penny Pilot); 62029 (May 4, 2010), 75 FR 
25895 (May 10, 2010) (SR-NASDAQ-2010-053) (notice of filing and 
immediate effectiveness adding seventy-five classes to Penny Pilot); 
65969 (December 15, 2011), 76 FR 79268 (December 21, 2011) (SR-
NASDAQ-2011-169) (notice of filing and immediate effectiveness 
extension and replacement of Penny Pilot); 67325 (June 29, 2012), 77 
FR 40127 (July 6, 2012) (SR-NASDAQ-2012-075) (notice of filing and 
immediate effectiveness and extension and replacement of Penny Pilot 
through December 31, 2012); 68519 (December 21, 2012), 78 FR 136 
(January 2, 2013) (SR-NASDAQ-2012-143) (notice of filing and 
immediate effectiveness and extension and replacement of Penny Pilot 
through June 30, 2013); 69787 (June 18, 2013), 78 FR 37858 (June 24, 
2013) (SR-NASDAQ-2013-082) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
December 31, 2013); 71105 (December 17, 2013), 78 FR 77530 (December 
23, 2013) (SR-NASDAQ-2013-154) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
June 30, 2014); 79 FR 31151 (May 23, 2014), 79 FR 31151 (May 30, 
2014) (SR-NASDAQ-2014-056) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
December 31, 2014); 73686 (December 2, 2014), 79 FR 71477 (November 
25, 2014) (SR-NASDAQ-2014-115) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
June 30, 2015) and 75283 (June 24, 2015), 80 FR 37347 (June 30, 
2015) (SR-NASDAQ-2015-063) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change Relating to Extension of the 
Exchange's Penny Pilot Program and Replacement of Penny Pilot Issues 
That Have Been Delisted.) See also NOM Rules, Chapter VI, Section 5.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Chapter XV, Section 2, entitled 
``NASDAQ Options Market--Fees and Rebates'' to amend the Customer and 
Professional Penny Pilot Options Rebates to Add Liquidity. Each of the 
proposed rule changes will be detailed below.

Customer and Professional Penny Pilot Options Rebates To Add Liquidity

    Today, the Exchange offers tiered Penny Pilot Options Rebates to 
Add Liquidity to Customers and Professionals based on various criteria 
with rebates ranging from $0.20 to $0.48 per contract. Participants may 
qualify for Customer and Professional Penny Pilot Options Rebates to 
Add Liquidity by adding a certain amount of liquidity as specified by 
each tier.\6\
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    \6\ Tiers 6 and 7 are calculated based on Total Volume. Total 
Volume is defined as Customer, Professional, Firm, Broker-Dealer, 
Non-NOM Market Maker and NOM Market Maker volume in Penny Pilot 
Options and/or Non-Penny Pilot Options which either adds or removes 
liquidity on NOM. See note ``b'' in Section 2(1) of Chapter XV. The 
Exchange utilizes data from OCC to determine the total industry 
customer equity and ETF options ADV figure. OCC classifies equity 
and ETF options volume under the equity options category. Also, both 
customer and professional orders that are transacted on options 
exchanges clear in the customer range at OCC and therefore both 
customer and professional volume would be included in the total 
industry figure to calculate rebate tiers.
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Note ``e'' of Chapter XV, Section 2(1)

    The Exchange proposes to amend current note ``e'' to permit 
Participants that qualify for the Tier 8 Customer and Professional 
Penny Pilot Options Rebate to Add Liquidity \7\ to achieve a higher 
rebate. Currently, note ``e'' states: ``[P]articipants that add 
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer 
liquidity in Penny Pilot Options and/or Non- Penny Pilot Options of 
1.15% or more of total industry customer equity and ETF option ADV 
contracts per day in a month will receive an additional $0.02 per 
contract Penny Pilot Options Customer Rebate to Add Liquidity for each 
transaction which adds liquidity in Penny Pilot Options in that month. 
Participants that add Customer, Professional, Firm, Non-NOM Market 
Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of 1.40% or more of total industry customer equity 
and ETF option ADV contracts per day in a month will receive an 
additional $0.05 per contract Penny Pilot Options Customer Rebate to 
Add Liquidity for each transaction which adds liquidity in Penny Pilot 
Options in that month.'' The Exchange is amending note ``e'' to clearly 
denote that there will now be three ways to earn an additional rebate 
for Participants that qualify for the Tier 8 Customer and Professional 
Penny Pilot Options Rebate to Add Liquidity. The first two additional 
rebates currently apply today, and will be demarcated as ``1'' and 
``2.'' The Exchange proposes to pay a new additional $0.05 per contract 
rebate to Participants that qualify for the Tier 8 rebate of $0.48 per 
contract, from October 22, 2015 through October 30, 2015, for a total 
of $0.53 per contract,

[[Page 69757]]

provide the Participant meets the requisite criteria. The new incentive 
would require the Participant to: (a) Add Customer, Professional, Firm, 
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot 
Options and/or Non-Penny Pilot Options above 0.85% of total industry 
customer equity and ETF option ADV contracts per day from October 22, 
2015 through October 30, 2015 in a month and (b) add liquidity in all 
securities through one or more of its Nasdaq Market Center MPIDs \8\ 
that represent 1.00% or more of Consolidated Volume from October 22, 
2015 through October 30, 2015. Consolidated Volume shall mean the total 
consolidated volume reported to all consolidated transaction reporting 
plans by all exchanges and trade reporting facilities during a month 
\9\ in equity securities, excluding executed orders with a size of less 
than one round lot. For purposes of calculating Consolidated Volume and 
the extent of an equity member's trading activity, expressed as a 
percentage of or ratio to Consolidated Volume, the date of the annual 
reconstitution of the Russell Investments Indexes shall be excluded 
from both total Consolidated Volume and the member's trading activity.
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    \7\ Tier 8 of the Customer and Professional Rebate to Add 
Liquidity Tiers pays a $0.48 per contract rebate to Participants 
that add Customer, Professional, Firm, Non-NOM Market Maker and/or 
Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny 
Pilot Options above 0.75% or more of total industry customer equity 
and ETF option ADV contracts per day in a month or Participant adds 
(1) Customer and/or Professional liquidity in Penny Pilot Options 
and/or Non-Penny Pilot Options of 30,000 or more contracts per day 
in a month, (2) the Participant has certified for the Investor 
Support Program set forth in Rule 7014, and/or (3) the Participant 
qualifies for rebates under the Qualified Market Maker Program set 
forth in Rule 7014.
    \8\ MPIDS are four character alpha code market participant 
identifiers used to report trades.
    \9\ For purposes of this filing, the Consolidated Volume shall 
only apply to volume from October 22, 2015 through October 30, 2015.
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    The Exchange believes that this new added incentive will encourage 
Participants to add even more liquidity on NOM to earn a higher rebate. 
Also, the Exchange is not only providing Participants another manner in 
which to earn a higher options rebate by participating in the options 
market, but is also permitting equities volume to qualify for the 
options rebate, thereby benefitting the Nasdaq Market Center as well as 
the NOM market, by incentivizing order flow to these markets.

Note ``d'' of Chapter XV, Section 2(1)

    Currently, note ``d'' of Chapter XV, Section 2(1) states that 
Participants that qualify for Customer or Professional Rebate to Add 
Liquidity Tiers 7 \10\ or 8 in a given month will be assessed a 
Professional, Firm, Non-NOM Market Maker, NOM Market Maker or Broker-
Dealer Fee for Removing Liquidity in Penny Pilot Options of $0.50 per 
contract. Currently, the Professional, Firm, Non-NOM Market Maker, NOM 
Market Maker or Broker-Dealer Fee for Removing Liquidity in Penny Pilot 
Options is $0.54 per contract for these Participants.\11\
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    \10\ Customer and Professional Rebate to Add Liquidity Tier 7 
pays a $0.47 per contract rebate to Participants that have Total 
Volume of 150,000 or more contracts per day in a month, of which 
50,000 or more contracts per day in a month must be Customer and/or 
Professional liquidity in Penny Pilot Options. ``Total Volume'' is 
defined as Customer, Professional, Firm, Broker-Dealer, Non-NOM 
Market Maker and NOM Market Maker volume in Penny Pilot Options and/
or Non-Penny Pilot Options which either adds or removes liquidity on 
NOM.
    \11\ SPY transactions are assessed a $0.50 per contract Fee for 
Removing Liquidity in Penny Pilot Options for all Participants 
except Customer.
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    The Exchange proposes to remove the incentive to obtain a lower 
Professional, Firm, Non-NOM Market Maker, NOM Market Maker or Broker-
Dealer Fee for Removing Liquidity in Penny Pilot Options for 
Participants that qualify for Tier 7 of the Customer and Professional 
Penny Pilot Options Rebate to Add Liquidity as of October 22, 2015. 
This incentive will remain for Participants that qualify for Tier 8, as 
is the case today. The Exchange desires to incentivize market 
participants to add liquidity in the highest tier in order to obtain 
the lower Professional, Firm, Non-NOM Market Maker, NOM Market Maker or 
Broker-Dealer Fee for Removing Liquidity in Penny Pilot Options. Note 
``d'' will be amended to remove Tier 7. Additionally, from October 1, 
2015 through the date of this filing, no member has qualified for the 
lower Professional, Firm, Non-NOM Market Maker, NOM Market Maker or 
Broker-Dealer Fee for Removing Liquidity in Penny Pilot Options of 
$0.50 per contract with Tier 7.

Typographical Correction

    The Exchange proposes to remove the period at the end of Customer 
and Professional Penny Pilot Options Rebate to Add Liquidity Tier 8 to 
conform the rule text.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\12\ in general, and with 
Section 6(b)(4) and 6(b)(5) of the Act,\13\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which NASDAQ operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. Customer volume is important because it continues 
to attract liquidity to the Exchange, which benefits all market 
participants. Further, with respect to Professional liquidity, the 
Exchange initially established Professional pricing in order to ``. . . 
bring additional revenue to the Exchange.'' \14\ The Exchange noted in 
the Professional Filing that it believes ``. . . that the increased 
revenue from the proposal would assist the Exchange to recoup fixed 
costs.'' \15\ Further, the Exchange noted in that filing that it 
believes that establishing separate pricing for a Professional, which 
ranges between that of a Customer and market maker, accomplishes this 
objective.\16\
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4) and (5).
    \14\ See Securities Exchange Act Release No. 64494 (May 13, 
2011), 76 FR 29014 (May 19, 2011) (SR-NASDAQ-2011-066) 
(``Professional Filing''). In this filing, the Exchange addressed 
the perceived favorable pricing of Professionals who were assessed 
fees and paid rebates like a Customer prior to the filing. The 
Exchange noted in that filing that a Professional, unlike a retail 
Customer, has access to sophisticated trading systems that contain 
functionality not available to retail Customers.
    \15\ See Professional Filing.
    \16\ See Professional Filing. The Exchange also in the 
Professional Filing that it believes the role of the retail Customer 
in the marketplace is distinct from that of the Professional and the 
Exchange's fee proposal at that time accounted for this distinction 
by pricing each market participant according to their roles and 
obligations.
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Customer and Professional Penny Pilot Options Rebates to Add Liquidity

Note ``e'' of Chapter XV, Section 2(1)

    The Exchange's proposal to amend note ``e'' to provide for an 
additional means to earn a higher rebate for Participants that qualify 
for the Tier 8 Customer and Professional Penny Pilot Options Rebate to 
Add Liquidity is reasonable because the opportunity to earn a higher 
rebate of $0.53 \17\ per contract, provided the qualifications are met, 
will incentivize Participants to transact an even greater number of 
qualifying Customer and/or Professional volume, which liquidity will 
benefit other market participants by providing them the opportunity to 
interact with that liquidity. The Exchange's proposal to permit 
Participants to obtain a higher rebate of $0.53 per contract, provided 
they qualify for the Tier 8 rebate and the new criteria \18\ by adding 
volume from October 22, 2015 through October 30,

[[Page 69758]]

2015,\19\ which criteria includes the addition of options and equity 
volume, is reasonable because the Exchange is encouraging market 
participants to send order flow to both the options and equity markets 
to receive the rebate. Incentivizing Participants to add options 
liquidity through the payment of an additional rebate is not novel and 
exists today.\20\ Today, the Customer and Professional Penny Pilot 
Options Rebate to Add Liquidity Tier 8 includes, as part of the 
qualifying criteria, a certification for the Investor Support Program 
\21\ as set forth in Rule 7014 and qualification in the QMM 
Program.\22\ These two programs are equity programs which require 
participation in the form of adding liquidity. The concept of 
participating in the equities market as a means to qualify for an 
options rebate exists today. The Exchange's proposal would require 
Participants to add liquidity in all securities through one or more of 
its Nasdaq Market Center MPIDS that represent 1.00% or more of 
Consolidated Volume during the month.\23\ Consolidated Volume shall 
mean the total consolidated volume reported to all consolidated 
transaction reporting plans by all exchanges and trade reporting 
facilities during a month \24\ in equity securities, excluding executed 
orders with a size of less than one round lot. For purposes of 
calculating Consolidated Volume and the extent of an equity member's 
trading activity, expressed as a percentage of or ratio to Consolidated 
Volume, the date of the annual reconstitution of the Russell 
Investments Indexes shall be excluded from both total Consolidated 
Volume and the member's trading activity.
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    \17\ Tier 8 pays a rebate of $0.48 per contract and the 
additional rebate proposed for note ``e'' would be a $0.05 per 
contract rebate for a total of $0.53 per contract.
    \18\ New note ``e'' requires Participants to (a) add Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer 
liquidity in Penny Pilot Options and/or Non-Penny Pilot Options 
above 0.85% of total industry customer equity and ETF option ADV 
contracts per day from October 22, 2015 through October 30, 2015 and 
(b) add liquidity in all securities through one or more of its 
Nasdaq Market Center MPIDs that represent 1.00% or more of 
Consolidated Volume from October 22, 2015 through October 30, 2015 
in order to receive an additional $0.05 per contract Penny Pilot 
Options Customer Rebate to Add Liquidity.
    \19\ Monthly volume prior to October 22, 2015 will not count 
toward the calculation of this rebate incentive.
    \20\ Today, note ``e'' provides two opportunities to earn a 
higher rebate. Participants that add Customer, Professional, Firm, 
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot 
Options and/or Non- Penny Pilot Options of 1.15% or more of total 
industry customer equity and ETF option ADV contracts per day in a 
month receive an additional $0.02 per contract Penny Pilot Options 
Customer Rebate to Add Liquidity for each transaction which adds 
liquidity in Penny Pilot Options in that month; or Participants may 
add Customer, Professional, Firm, Non-NOM Market Maker and/or 
Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny 
Pilot Options of 1.40% or more of total industry customer equity and 
ETF option ADV contracts per day in a month to receive an additional 
$0.05 per contract Penny Pilot Options Customer Rebate to Add 
Liquidity for each transaction which adds liquidity in Penny Pilot 
Options in that month.
    \21\ For a detailed description of the Investor Support Program 
or ISP, see Securities Exchange Act Release No. 63270 (November 8, 
2010), 75 FR 69489 (November 12, 2010) (NASDAQ-2010-141) (notice of 
filing and immediate effectiveness) (the ``ISP Filing''). See also 
Securities Exchange Act Release Nos. 63414 (December 2, 2010), 75 FR 
76505 (December 8, 2010) (NASDAQ-2010-153) (notice of filing and 
immediate effectiveness); and 63628 (January 3, 2011), 76 FR 1201 
(January 7, 2011) (NASDAQ-2010-154) (notice of filing and immediate 
effectiveness).
    \22\ A QMM is a NASDAQ member that makes a significant 
contribution to market quality by providing liquidity at the 
national best bid and offer (``NBBO'') in a large number of stocks 
for a significant portion of the day. In addition, the NASDAQ equity 
member must avoid imposing the burdens on NASDAQ and its market 
participants that may be associated with excessive rates of entry of 
orders away from the inside and/or order cancellation. The 
designation ``QMM'' reflects the QMM's commitment to provide 
meaningful and consistent support to market quality and price 
discovery by extensive quoting at the NBBO in a large number of 
securities. In return for its contributions, certain financial 
benefits are provided to a QMM with respect to a particular MPID (a 
``QMM MPID''), as described under Rule 7014(e).
    \23\ For purposes of this filing, the Consolidated Volume shall 
only apply to volume from October 22, 2015 through October 30, 2015.
    \24\ Id.
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    The Exchange is not only providing Participants with a manner in 
which to earn an additional options rebate, but also expanding the 
qualifications to permit participation in the equities market to 
qualify for the additional rebate. This participation benefits the 
Nasdaq Market Center as well as the NOM market by incentivizing order 
flow to these markets. As with existing tiers that require 
participation in both the Nasdaq Market Center and NOM, this additional 
rebate recognizes the prevalence of trading in which members 
simultaneously trade different asset classes within the same strategy. 
Because cash equities and options markets are linked, with liquidity 
and trading patterns on one market affecting those on the other, the 
Exchange believes that pricing incentives that encourage market 
participant activity in NOM also support price discovery and liquidity 
provision in the Nasdaq Market Center. Further, because the proposed 
incentive which is being added in note ``e'' require significant levels 
of liquidity provision, which benefits all market participants, and 
because activity in NOM also supports price discovery and liquidity 
provision in the Nasdaq Market Center due to the increasing propensity 
of market participants to be active in both markets and the influence 
of each market on the pricing of securities in the other, this proposal 
is reasonable. Moreover, the incentive has the potential to make the 
applicable higher rebate available to a wider range of market 
participants by introducing an additional means of qualification. 
Finally, other options exchanges today pay rebates to participants that 
add order both options and equity order flow.\25\
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    \25\ BATS Exchange Inc. (``BATS'') and NYSE Arca, Inc. (NYSE 
Arca'') offer Cross-Asset Step-Up Tiers on its equity market. See 
BATS BZX Exchange Fee Schedule. See also NYSE Arca Equities Schedule 
of Fees and Charges for Exchange Services and NYSE Arca Options Fees 
and Charges.
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    The Exchange's proposal to amend note ``e'' to provide for an 
additional means to earn a higher rebate for Participants that qualify 
for the Tier 8 Customer and Professional Penny Pilot Options Rebate to 
Add Liquidity is equitable and not unfairly discriminatory because all 
Participants may qualify for Tier 8 and the additional incentive. 
Qualifying Participants will be uniformly paid the rebate provided the 
requirements are met for the time period from October 22, 2015 through 
October 30, 2015. The Exchange's proposal to permit Participants to 
receive an additional $0.05 per contract rebate in addition to the Tier 
8 rebate of $0.48 per contract, provided they qualify for Tier 8 and 
add options and equity volume as specified in the new note ``e'' 
criteria,\26\ is equitable and not unfairly discriminatory because 
market participants today may qualify for a comparable or a higher 
rebate through alternative means that does not require participation in 
NOM.
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    \26\ See note 20.
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Note ``d'' of Chapter XV, Section 2(1)

    The Exchange's proposal to remove the incentive in note ``d'' for 
Participants that qualify for Tier 7 and continue to apply the 
incentive for Participants that qualify for Tier 8 is reasonable 
because the Exchange desires to incentivize market participants to add 
liquidity in the highest tier in order to obtain the lower 
Professional, Firm, Non-NOM Market Maker, NOM Market Maker or Broker-
Dealer Fee for Removing Liquidity in Penny Pilot Options.\27\ This 
proposal will shift the applicability of note ``d'' to the highest 
rebate tier only.
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    \27\ Currently, the Professional, Firm, Non-NOM Market Maker, 
NOM Market Maker or Broker-Dealer Fee for Removing Liquidity in 
Penny Pilot Options is $0.54 per contract for these Participants, 
except in SPY where it is $0.50 per contract for these Participants.
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    The Exchange's proposal to remove the incentive in note ``d'' for 
Participants that qualify for Tier 7 and continue to apply the 
incentive for Participants that qualify for Tier 8 is equitable and not 
unfairly discriminatory because the Exchange will uniformly apply the 
incentive to all Participants that qualify for Tier 8.\28\ No

[[Page 69759]]

Participant will receive the incentive in note ``d'' for qualification 
in Tier 7 as of October 22, 2015 and all Participants that have met the 
Customer and Professional Penny Pilot Options Rebate to Add Liquidity 
in Tier 8 would continue to receive the note ``d'' incentive.
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    \28\ To date for the month of October 2015, no member has 
qualified for the lower Professional, Firm, Non-NOM Market Maker, 
NOM Market Maker or Broker-Dealer Fee for Removing Liquidity in 
Penny Pilot Options of $0.50 per contract with Tier 7.
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Typographical Correction

    The Exchange's proposal to remove the period at the end of Customer 
and Professional Penny Pilot Options Rebate to Add Liquidity Tier 8 for 
consistency is reasonable, equitable and not unfairly discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ does not believe that the proposed rule change will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act.

Customer and Professional Penny Pilot Options Rebates to Add Liquidity

New Note ``e'' of Chapter XV, Section 2(1)

    The Exchange's proposal to adopt a new note ``e'' incentive does 
not impose an undue burden on intra-market competition because all 
Participants are eligible to qualify for the Tier 8 Customer or 
Professional Rebate to Add Liquidity Tier, provided they meet the 
qualifications for that tier, and additionally all Participants may 
qualify for the additional requirements in new note ``e''.\29\ Further, 
this new additional note ``e'' rebate will be uniformly paid to those 
Participants that are eligible for the rebate.
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    \29\ See note 20.
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    Furthermore, incentivizing Participants to add not only options, 
but equities volume does not impose an undue burden on intra-market 
competition because cash equities and options markets are linked, with 
liquidity and trading patterns on one market affecting those on the 
other, the Exchange believes that pricing incentives that encourage 
market participant activity in NOM also support price discovery and 
liquidity provision in the Nasdaq Market Center. Further, the pricing 
incentives require significant levels of liquidity provision, which 
benefits all market participants on NOM and the Nasdaq Market Center. 
Moreover, the changes have the potential to make the applicable 
incentives available to a wider range of market participants by 
introducing an additional means of qualification.

Note ``d'' of Chapter XV, Section 2(1)

    The Exchange's proposal to remove the incentive in note ``d'' from 
Participants that qualify for Customer and Professional Penny Pilot 
Options Rebate to Add Liquidity Tier 7 and continue to apply the 
incentive to Participants that qualify for Customer and Professional 
Penny Pilot Options Rebate to Add Liquidity Tier 8 does not impose an 
undue burden on intra-market competition because the Exchange will 
uniformly apply the incentive to all Participants. No Participant will 
receive the incentive in note ``d'' for Tier 7 qualification as of 
October 22, 2015 and all Participants that have met the criteria for 
Customer and Professional rebate Tier 8 would continue to receive the 
note ``d'' incentive. Further, there are no Participants that qualified 
for the Tier 7 incentive from October 1, 2015 through the date of this 
filing.
    The Exchange's proposal addressed herein does not impose an inter-
market burden on competition because the Exchange operates in a highly 
competitive market in which many sophisticated and knowledgeable market 
participants can readily and do send order flow to competing exchanges 
if they deem fee levels or rebate incentives at a particular exchange 
to be excessive or inadequate. These market forces support the Exchange 
belief that the proposed rebate structure and tiers proposed herein are 
competitive with rebates and tiers in place on other exchanges. The 
Exchange believes that this competitive marketplace continues to impact 
the rebates present on the Exchange today and substantially influences 
the proposals set forth above. Other options markets offer similar 
rebates to incentive market participants to direct order flow to their 
markets. The Exchange believes that continuing to offer rebates and 
increasing those rebates and providing opportunities to earn higher 
rebates will benefit the marketplace by continuing to reward liquidity 
providers and thereby offering other market participants an opportunity 
to interact with this order flow.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\30\
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    \30\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2015-115 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2015-115. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE.,

[[Page 69760]]

Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASDAQ-2015-115, and should 
be submitted on or before December 1, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
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    \31\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-28508 Filed 11-9-15; 8:45 am]
 BILLING CODE 8011-01-P