Document ID: SEC-2022-1680-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2022-12-29T05:00Z

[Federal Register Volume 87, Number 249 (Thursday, December 29, 2022)]
[Notices]
[Pages 80225-80228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28297]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96567; File No. SR-NASDAQ-2022-078]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Options 7, Section 2 Concerning the NOM Pricing Schedule

December 22, 2022.
    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 December 14, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II, 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 The Nasdaq Options Market LLC 
(``NOM'') Pricing Schedule at Options 7, Section 2.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend NOM's Pricing Schedule at Options 7, 
Section 2(1), ``Nasdaq Options Market--Fees and Rebates.'' Today, NOM 
Options 7, Section 2(1) provides for various fees and rebates 
applicable to NOM Participants.
    Customer \3\ and Professional \4\ Rebates to Add Liquidity in Penny 
Symbols are paid per the highest tier achieved among the 6 available 
tiers. To determine the applicable percentage of total industry 
customer equity and ETF option average daily volume, unless otherwise 
stated, the Exchange considers the Participant's Penny and Non-Penny 
Symbol Customer and/or Professional volume that adds liquidity. Below 
is the criteria for each Rebate to Add Liquidity in Penny Symbol tier.
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    \3\ The term ``Customer'' or (``C'') 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 Options 1, Section 
1(a)(47)). See Options 7, Section 1(a).
    \4\ The term ``Professional'' or (``P'') 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 Options 1, Section 1(a)(47). All Professional orders shall be 
appropriately marked by Participants. See Options 7, Section 1(a).

                             Monthly Volume
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Tier 1.....................  Participant adds Customer, Professional,
                              Firm, Non-NOM Market Maker and/or Broker-
                              Dealer liquidity in Penny Symbols and/or
                              Non-Penny Symbols of up to 0.10% of total
                              industry customer equity and ETF option
                              average daily volume (``ADV'') contracts
                              per day in a month.
Tier 2.....................  Participant adds Customer, Professional,
                              Firm, Non-NOM Market Maker and/or Broker-
                              Dealer liquidity in Penny Symbols and/or
                              Non-Penny Symbols above 0.10% to 0.20% of
                              total industry customer equity and ETF
                              option ADV contracts per day in a month.
Tier 3.....................  Participant: (a) adds Customer,
                              Professional, Firm, Non-NOM Market Maker
                              and/or Broker-Dealer liquidity in Penny
                              Symbols and/or Non-Penny Symbols above
                              0.20% to 0.30% of total industry customer
                              equity and ETF option ADV contracts per
                              day in a month; or (b) adds Customer and/
                              or Professional liquidity in Penny Symbols
                              and/or Non-Penny Symbols of 0.05% to less
                              than 0.10% of total industry customer
                              equity and ETF option ADV contracts per
                              day in a month and qualifies for MARS.
Tier 4.....................  Participant adds Customer, Professional,
                              Firm, Non-NOM Market Maker and/or Broker-
                              Dealer liquidity in Penny Symbols and/or
                              Non-Penny Symbols above 0.30% to 0.40% of
                              total industry customer equity and ETF
                              option ADV contracts per day in a month.
Tier 5.....................  Participant adds Customer, Professional,
                              Firm, Non-NOM Market Maker and/or Broker-
                              Dealer liquidity in Penny Symbols and/or
                              Non-Penny Symbols above 0.40% to 0.80% of
                              total industry customer equity and ETF
                              option ADV contracts per day in a month.

[[Page 80226]]

 
Tier 6.....................  Participant adds Customer, Professional,
                              Firm, Non-NOM Market Maker and/or Broker-
                              Dealer liquidity in Penny Symbols and/or
                              Non-Penny Symbols above 0.70% or more of
                              total industry customer equity and ETF
                              option ADV contracts per day in a month,
                              or Participant: (1) adds Customer and/or
                              Professional liquidity in Penny Symbols
                              and/or Non-Penny Symbols of 0.10% or more
                              of total industry customer equity and ETF
                              option ADV contracts per day in a month,
                              and (2) has added liquidity in all
                              securities through one or more of its
                              Nasdaq Market Center MPIDs that represent
                              1.00% or more of Consolidated Volume in a
                              month or qualifies for MARS (defined
                              below).
------------------------------------------------------------------------

    The Exchange proposes to amend the current Customer and 
Professional Rebates to Add Liquidity in Penny Symbols to amend Tiers 
2-5 to remove the range of total industry customer equity and ETF 
option ADV contracts that must be met and, instead, simply note what 
percentage of total industry customer equity and ETF option ADV 
contracts a Participant needs to exceed. The Exchange is not amending 
the qualifications for any of the Customer and Professional Rebates to 
Add Liquidity in Penny Symbols tiers, rather the Exchange proposes to 
streamline the qualifications as the Customer and Professional Rebate 
to Add Liquidity in Penny Symbols are paid per the highest tier 
achieved.
    For example, Customer and Professional Rebate to Add Liquidity in 
Penny Symbols Tier 2 provides that a ``Participant adds Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity 
in Penny Symbols and/or Non-Penny Symbols above 0.10% to 0.20% of total 
industry customer equity and ETF option ADV contracts per day in a 
month.'' The Exchange would amend Customer and Professional Rebate to 
Add Liquidity in Penny Symbols Tier 2 to instead provide, ``Participant 
adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.10% 
of total industry customer equity and ETF option ADV contracts per day 
in a month.'' This amendment does not change the criteria, rather it 
simply provides a floor that must be exceeded.\5\ The Exchange believes 
that this change will make the tier qualifications easier to understand 
and review. Similar changes would be made to Customer and Professional 
Rebate to Add Liquidity in Penny Symbols Tiers 3-5.
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    \5\ Currently, Participants that add Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Symbols and/or Non-Penny Symbols above 0.20% to 0.30% of total 
industry customer equity and ETF option ADV contracts per day in a 
month qualify for a Tier 3 Customer and Professional Rebate to Add 
Liquidity in Penny Symbols rebate and would be paid the higher 
rebate.
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    Customer and Professional Rebate to Add Liquidity in Penny Symbols 
Tier 3 currently states, ``Participant: (a) adds Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity 
in Penny Symbols and/or Non-Penny Symbols above 0.20% to 0.30% of total 
industry customer equity and ETF option ADV contracts per day in a 
month; or (b) adds Customer and/or Professional liquidity in Penny 
Symbols and/or Non-Penny Symbols of 0.05% to less than 0.10% of total 
industry customer equity and ETF option ADV contracts per day in a 
month and qualifies for MARS.'' With the proposed change, Customer and 
Professional Rebate to Add Liquidity in Penny Symbols Tier 3 instead 
would provide, ``Participant: (a) adds Customer, Professional, Firm, 
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols 
and/or Non-Penny Symbols above 0.20% of total industry customer equity 
and ETF option ADV contracts per day in a month; or (b) adds Customer 
and/or Professional liquidity in Penny Symbols and/or Non-Penny Symbols 
above 0.05% of total industry customer equity and ETF option ADV 
contracts per day in a month and qualifies for MARS.'' \6\
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    \6\ Currently, Participants that add Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Symbols and/or Non-Penny Symbols above 0.30% to 0.40% of total 
industry customer equity and ETF option ADV contracts per day in a 
month qualify for a Tier 4 Customer and Professional Rebate to Add 
Liquidity in Penny Symbols rebate and would be paid the higher 
rebate. Also, currently, Participants that add Customer and/or 
Professional liquidity in Penny Symbols and/or Non-Penny Symbols of 
0.10% or more of total industry customer equity and ETF option ADV 
contracts per day in a month qualify for a Tier 6 Customer and 
Professional Rebate to Add Liquidity in Penny Symbols rebate and 
would be paid the higher rebate provided in this case the 
Participant also added liquidity in all securities through one or 
more of its Nasdaq Market Center MPIDs that represent 1.00% or more 
of Consolidated Volume in a month or qualifies for MARS.
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    Customer and Professional Rebate to Add Liquidity in Penny Symbols 
Tier 4 currently states, ``Participant adds Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Symbols and/or Non-Penny Symbols above 0.30% to 0.40% of total industry 
customer equity and ETF option ADV contracts per day in a month.'' With 
the proposed change, Customer and Professional Rebate to Add Liquidity 
in Penny Symbols Tier 4 instead would provide, ``Participant adds 
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer 
liquidity in Penny Symbols and/or Non-Penny Symbols above 0.30% of 
total industry customer equity and ETF option ADV contracts per day in 
a month.'' \7\
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    \7\ Currently, Participants that add Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Symbols and/or Non-Penny Symbols above 0.40% to 0.80% of total 
industry customer equity and ETF option ADV contracts per day in a 
month qualify for a Tier 5 Customer and Professional Rebate to Add 
Liquidity in Penny Symbols rebate and would be paid the higher 
rebate.
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    Customer and Professional Rebate to Add Liquidity in Penny Symbols 
Tier 5 currently states, ``Participant adds Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Symbols and/or Non-Penny Symbols above 0.40% to 0.80% of total industry 
customer equity and ETF option ADV contracts per day in a month.'' With 
the proposed change, Customer and Professional Rebate to Add Liquidity 
in Penny Symbols Tier 5 instead would provide, ``Participant adds 
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer 
liquidity in Penny Symbols and/or Non-Penny Symbols above 0.40% of 
total industry customer equity and ETF option ADV contracts per day in 
a month.'' \8\
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    \8\ Currently, Participants that add Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Symbols and/or Non-Penny Symbols above 0.70% or more of total 
industry customer equity and ETF option ADV contracts per day in a 
month qualify for a Tier 6 Customer and Professional Rebate to Add 
Liquidity in Penny Symbols rebate and would be paid the higher 
rebate.
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    The Exchange proposes similar changes to the NOM Market Maker \9\ 
Rebate to Add Liquidity in Penny Symbol tiers. There are currently 6 
NOM Market Maker Rebate to Add Liquidity in Penny Symbol tiers. The NOM 
Market Maker Rebates to Add Liquidity in Penny Symbols are paid per

[[Page 80227]]

the highest tier achieved.\10\ The Exchange proposes to amend Tiers 2 
and 3 in a similar fashion to reflect only the floor where a range is 
provided.
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    \9\ The term ``NOM Market Maker'' or (``M'') is a Participant 
that has registered as a Market Maker on NOM pursuant to Options 2, 
Section 1, and must also remain in good standing pursuant to Options 
2, Section 9. In order to receive NOM Market Maker pricing in all 
securities, the Participant must be registered as a NOM Market Maker 
in at least one security. See Options 7, Section 1(a).
    \10\ The Exchange also proposes to make plural the word 
``Rebates'' within note 3 of Options 7, Section 2(1).
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    NOM Market Maker Rebate to Add Liquidity in Penny Symbols Tier 2 
currently states, ``Participant adds NOM Market Maker liquidity in 
Penny Symbols and/or Non-Penny Symbols above 0.10% to 0.20% of total 
industry customer equity and ETF option ADV contracts per day in a 
month.'' With the proposed change, Market Maker Rebate to Add Liquidity 
in Penny Symbols Tier 2 instead would provide, ``Participant adds NOM 
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 
0.10% of total industry customer equity and ETF option ADV contracts 
per day in a month.'' \11\
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    \11\ Currently, Participants that add NOM Market Maker liquidity 
in Penny Symbols and/or Non-Penny Symbols above 0.20% to 0.60% of 
total industry customer equity and ETF option ADV contracts per day 
in a month qualify for a Tier 3 NOM Market Maker rebate and would be 
paid the higher rebate.

    NOM Market Maker Rebate to Add Liquidity in Penny Symbols Tier 3 
currently states,
    Participant: (a) adds NOM Market Maker liquidity in Penny 
Symbols and/or Non-Penny Symbols above 0.20% to 0.60% of total 
industry customer equity and ETF option ADV contracts per day in a 
month; or (b)(1) adds NOM Market Maker liquidity in Penny Symbols 
and/or Non-Penny Symbols above 0.07% to 0.20% of total industry 
customer equity and ETF option ADV contracts per day in a month, (2) 
transacts in all securities through one or more of its Nasdaq Market 
Center MPIDs that represent (i) 0.70% or more of Consolidated Volume 
(``CV'') which adds liquidity in the same month on The Nasdaq Stock 
Market or (ii) 70 million shares or more ADV which adds liquidity in 
the same month on The Nasdaq Stock Market, (3) transacts in Tape B 
securities through one or more of its Nasdaq Market Center MPIDs 
that represent 0.10% or more of CV which adds liquidity in the same 
month on The Nasdaq Stock Market, and (4) executes greater than 
0.01% of CV via Market-on- Close/Limit-on-Close (``MOC/LOC'') volume 
within The Nasdaq Stock Market Closing Cross in the same month

    With the proposed change, the introductory part of NOM Market Maker 
Rebate to Add Liquidity in Penny Symbols Tier 3 instead would provide, 
``Participant: (a) adds NOM Market Maker liquidity in Penny Symbols 
and/or Non-Penny Symbols above 0.20% of total industry customer equity 
and ETF option ADV contracts per day in a month; or (b)(1) adds NOM 
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 
0.07% of total industry customer equity and ETF option ADV contracts 
per day in a month . . .''.\12\
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    \12\ Currently, Participants that Participants that add NOM 
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of 
above 0.60% of total industry customer equity and ETF option ADV 
contracts per day in a month qualify for a Tier 4 NOM Market Maker 
rebate and would be paid the higher rebate. Participants would 
qualify for a Tier 3 NOM Market Maker rebate if they added NOM 
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols 
above 0.20% to 0.60% of total industry customer equity and ETF 
option ADV contracts per day in a month.
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    The Exchange believes that the proposed amendments will further 
clarify the qualifications for the NOM Market Maker Rebate to Add 
Liquidity in Penny Symbols.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\13\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\14\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest. The proposed changes to NOM Options 7, Section 2(1) are not 
substantive amendments to the current pricing structure for NOM, rather 
these changes streamline the qualifications for the Customer and 
Professional Rebate to Add Liquidity in Penny Symbols as well as the 
NOM Market Maker Rebate to Add Liquidity in Penny Symbols which are 
paid per the highest tier achieved. These amendments do not change the 
criteria, rather they simply provide a floor that must be exceeded to 
obtain the rebates. The Exchange believes that these amendments will 
make the tier qualifications easier to understand.
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    \13\ 15 U.S.C. 78f(b)
    \14\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.
    The proposed changes to NOM Options 7, Section 2(1) are not 
substantive amendments to the current pricing structure for NOM, rather 
these changes streamline the qualifications for the Customer and 
Professional Rebate to Add Liquidity in Penny Symbols as well as the 
NOM Market Maker Rebate to Add Liquidity in Penny Symbols which are 
paid per the highest tier achieved. These amendments do not change the 
criteria, rather they simply provide a floor that must be exceeded to 
obtain the rebates. The Exchange believes that these amendments will 
make the tier qualifications easier to understand.

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and 
subparagraph (f)(6) of Rule 19b-4 \16\ thereunder.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. Rule 19b-4(f)(6)(iii), however, permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the operative delay so that the 
proposed rule change may become operative immediately upon filing. The 
Exchange states that this proposed rule change could immediately 
benefit market participants by making more clear the qualifications for 
achieving rebates on NOM by removing superfluous rule text. The 
Commission thus believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposal operative upon filing.\18\
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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

[[Page 80228]]

it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
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 [email protected]. Please include 
File Number SR-NASDAQ-2022-078 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-2022-078. 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly.
    All submissions should refer to File Number SR-NASDAQ-2022-078 and 
should be submitted on or before January 19, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-28297 Filed 12-28-22; 8:45 am]
BILLING CODE 8011-01-P