Document ID: SEC-2010-1313-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-08-27T04:00Z

[Federal Register: August 27, 2010 (Volume 75, Number 166)]
[Notices]               
[Page 52790-52792]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27au10-97]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62754; File No. SR-NASDAQ-2010-105]

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

August 20, 2010.
    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 August 18, 2010, NASDAQ Stock Market LLC (``NASDAQ'' or the 
``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

---------------------------------------------------------------------------

[[Page 52791]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify Exchange 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. Specifically, NOM proposes to: modify pricing for both 
Penny Pilot \3\ Options and All Other Options with respect to the fees 
for removing liquidity.\4\
---------------------------------------------------------------------------

    \3\ The Penny Pilot was established in March 2008 and in October 
2009 was expanded and extended through December 31, 2010. 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); and 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). 
See also Exchange Rule Chapter VI, Section 5.
    \4\ An order that removes liquidity is one that is entered into 
NOM and that executes against an order resting on the NOM book.
---------------------------------------------------------------------------

    While changes pursuant to this proposal are effective upon filing, 
the Exchange has designated these changes to be operative for 
transactions on September 1, 2010.
    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.
(1) Fees for Execution of Contracts on the NASDAQ Options Market

                                                Fees and Rebates
                                             [Per executed contract]
----------------------------------------------------------------------------------------------------------------
                                                                                  Non-NOM market    NOM market
                                                     Customer          Firm            maker           maker
----------------------------------------------------------------------------------------------------------------
Penny Pilot Options:
    Rebate to Add Liquidity.....................           $0.32           $0.10           $0.25           $0.30
    Fee for Removing Liquidity..................         0.4[0]3            0.45            0.45            0.45
NDX and MNX:
    Rebate to Add Liquidity.....................            0.10            0.10            0.10            0.20
    Fee for Removing Liquidity..................            0.50            0.50            0.50            0.40
All Other Options:
    Fee for Adding Liquidity....................            0.00            0.45            0.45            0.30
    Fee for Removing Liquidity..................         0.4[0]3            0.45            0.45            0.45
    Rebate to Add Liquidity.....................            0.20            0.00            0.00            0.00
----------------------------------------------------------------------------------------------------------------

* * * * *
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqomx.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. Specifically, NASDAQ is proposing 
to modify pricing for both Penny Pilot Options and All Other Options 
with respect to the fees for removing liquidity. Currently, NASDAQ 
distinguishes between options that are included in the Penny Pilot and 
those that are not.

Penny Options--Removing Liquidity

    The Exchange assesses a fee to members removing liquidity through 
NOM in options included in the Penny Pilot and charges a fee of $0.40 
per executed contract to Customers for removing such liquidity and a 
fee of $0.45 per executed contract to members in the capacity of firm, 
NOM Market Maker and Non-NOM Market Maker for removing liquidity. The 
Exchange proposes to amend these fees for removing liquidity and assess 
a Customer $.43 per contract instead of $0.40 per contract.\5\
---------------------------------------------------------------------------

    \5\ A Firm, NOM Market Maker and Non-NOM Market Maker would 
continue to be assessed $0.45 per contract for removing liquidity.
---------------------------------------------------------------------------

Non-Penny Options--Removing Liquidity

    The Exchange assesses fees to members removing liquidity through 
NOM in non-Penny Options (All Other Options) and charges a fee of $0.40 
per executed contract to members removing liquidity in the capacity of 
Customer and a fee of $0.45 per executed contract to members removing 
liquidity in the capacity of Firm, NOM Market Maker and Non-NOM Market 
Maker. The Exchange proposes to amend these fees for removing liquidity 
and assess a Customer $.43 per contract instead of $0.40.\6\
---------------------------------------------------------------------------

    \6\ A Firm NOM Market Makers and Non-NOM Market Makers would 
continue to be assessed $.045 per contract for removing liquidity.
---------------------------------------------------------------------------

    While changes pursuant to this proposal are effective upon filing, 
the Exchange has designated these changes to be operative for 
transactions on September 1, 2010.

[[Page 52792]]

2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\7\ in general, and with Section 
6(b)(4) of the Act,\8\ 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. The Exchange believes the proposed 
amendments to the fees for removing liquidity are equitable and 
reasonable because they are within the range of fees assessed by other 
exchanges employing similar pricing schemes. Specifically, NYSE Arca, 
Inc. (``NYSE Arca'') assesses a customer electronic fee for taking 
liquidity of $0.45 for electronic executions in penny pilot issues and 
foreign currency options.\9\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ See NYSE Arca's Fee Schedule.
---------------------------------------------------------------------------

    NASDAQ is one of eight options market [sic] in the national market 
system for standardized options. It is a mature, robust market that is 
highly competitive with highly sophisticated and knowledge [sic] 
participants. Joining NASDAQ and electing to trade options is entirely 
voluntary. Under these circumstances, NASDAQ's fees must be 
competitive, fair and just in order for NASDAQ to attract order flow, 
execute orders, and grow as a market. NASDAQ thus believes that its 
fees are equitable, 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 \10\ and paragraph (f)(2) of Rule 19b-4 \11\ 
thereunder. 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2010-105 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-2010-105. 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, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such 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 No. SR-NASDAQ-
2010-105 and should be submitted on or before September 17, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-21307 Filed 8-26-10; 8:45 am]
BILLING CODE 8010-01-P