Document ID: SEC-2010-1685-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-11-03T04:00Z

[Federal Register Volume 75, Number 212 (Wednesday, November 3, 2010)]
[Notices]
[Pages 67801-67803]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-27690]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63199; File No. SR-NASDAQ-2010-139]

Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Routing Fees

October 27, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 67802]]

(``Act''), \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 25, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange 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 modify Rule 7050 governing pricing for 
NASDAQ members using the NASDAQ Options Market (``NOM''), NASDAQ's 
facility for executing and routing standardized equity and index 
options.
    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative upon 
the effectiveness of SR-C2-2010-006.
    The text of the proposed rule change is set forth below. Proposed 
new text is in italics and deleted text is in [brackets].
* * * * *

7050. NASDAQ Options Market

    The following charges shall apply to the use of the order execution 
and routing services of the NASDAQ Options Market for all securities.
* * * * *
    (4) Fees for routing contracts to markets other than the NASDAQ 
Options Market shall be assessed as provided below. The current fees 
and a historical record of applicable fees shall be posted on the 
NasdaqTrader.com Web site.

------------------------------------------------------------------------
             Exchange                Customer       Firm          MM
------------------------------------------------------------------------
BATS.............................        $0.36        $0.55        $0.55
BOX..............................        $0.06        $0.55        $0.55
CBOE.............................        $0.06        $0.55        $0.55
ISE..............................        $0.06        $0.55        $0.55
ISE Select Symbols * of 100 or           $0.26        $0.55        $0.55
 more contracts..................
NYSE Arca Penny Pilot............        $0.50        $0.55        $0.55
NYSE Arca Non Penny Pilot........        $0.06        $0.55        $0.55
NYSE AMEX........................        $0.06        $0.55        $0.55
PHLX (for all options other than         $0.06        $0.55        $0.55
 PHLX Select Symbols)............
PHLX Select Symbols **...........        $0.30        $0.55        $0.55
C2...............................        $0.21        $0.55        $0.55
------------------------------------------------------------------------
* These fees are applicable to orders routed to ISE that are subject to
  Rebates and Fees for Adding and Removing Liquidity in Select Symbols.
  See ISE's Schedule of Fees for the complete list of symbols that are
  subject to these fees.
** These fees are applicable to orders routed to PHLX that are subject
  to Rebates and Fees for Adding and Removing Liquidity in Select
  Symbols. See PHLX's Fee Schedule for the complete list of symbols that
  are subject to these fees.

* * * * *
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ is proposing to modify Rule 7050 governing the fees assessed 
for options orders entered into NOM but routed to and executed on away 
markets (``routing fees'').
    NASDAQ Options Services LLC (``NOS''), a member of the Exchange, is 
the Exchange's exclusive order router. Each time NOS routes to away 
markets NOS is charged a $0.06 clearing fee and, in the case of certain 
exchanges, a transaction fee is also charged in certain symbols, which 
are passed through to the Exchange.
    The Exchange proposes to assess new fees for routing contracts to 
markets other than the NASDAQ Options Market to Rule 7050. The Exchange 
is proposing to assess a $.21 per contract fee for Customer option 
orders, a $.55 per contract fee for Firm and Market Maker option orders 
that are routed to C2 Options Exchange, Inc. (``C2''). The Exchange is 
proposing to caption these proposed fees ``C2.''
    The Exchange is proposing these fees in order to recoup clearing 
and transaction charges incurred by the Exchange when orders are routed 
to C2.\3\ Each destination market's transaction charge varies and there 
is a standard clearing charge for each transaction incurred by the 
Exchange. The Exchange believes that the routing fees proposed will 
enable the Exchange to recover the transaction fees assessed by away 
markets, where applicable, plus clearing fees for the execution of 
Customer, Firm and Market Maker orders. As with all fees, the Exchange 
may adjust these Routing Fees in response to competitive conditions by 
filing a new proposed rule change.
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    \3\ See C2 Fees Schedule.
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    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative upon 
the effectiveness of SR-C2-2010-006.
2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\4\ in

[[Page 67803]]

general, and with Section 6(b)(4) of the Act,\5\ 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.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that this fee is reasonable because it seeks 
to recoup costs that are incurred by the Exchange when routing customer 
orders to C2 on behalf of its members. The Exchange also believes that 
the proposed fees are equitable because they will be uniformly applied 
to all customers.
    NASDAQ is one of eight options market in the national market system 
for standardized options. Joining NASDAQ and electing to trade options 
is entirely voluntary. Under these circumstances, NASDAQ's fees must be 
competitive and low in order for NASDAQ to attract order flow, execute 
orders, and grow as a market. NASDAQ thus believes that its fees are 
fair and reasonable and consistent with the Exchange Act.

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

    The Exchange 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.

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.\6\ 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 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.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2010-139 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2010-139. This 
file number should be included on the subject line if e-mail 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. 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-2010-139 and should be submitted on or before 
November 24, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-27690 Filed 11-2-10; 8:45 am]
BILLING CODE 8011-01-P