Document ID: SEC-2010-1176-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-08-04T04:00Z

[Federal Register: August 4, 2010 (Volume 75, Number 149)]
[Notices]               
[Page 47057-47059]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04au10-108]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62590; File No. SR-NASDAQ-2010-090]

 
Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change and 
Amendment Nos. 1 and 2 Thereto Relating to Fees for Routing to Away 
Markets

July 29, 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 July 20, 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 Exchange submitted Amendment Nos. 1 and 2 to the proposed 
rule change on July 28, 2010.\3\ The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment Nos. 1 and 2 make technical corrections to the 
rule text.
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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.
    The text of the proposed rule change is set forth below. Proposed 
new text is underlined 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)-(3) No Change.
    (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 website.

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

[[Page 47058]]

PHLX (for all options other than          0.06         0.55         0.55
 PHLX Select Symbols)............
PHLX Select Symbols **...........         0.30         0.55         0.55
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* 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.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 but routed to and executed on away 
markets (``routing fees''). The Exchange proposes to assess the 
following fees for orders routed to the International Securities 
Exchange LLC (``ISE'') in Select Symbols for orders of 100 or more 
contracts: $.26 per contract for customers and $0.55 per contract for 
Firms \4\ and Market Makers.\5\ All other orders that are routed to 
ISE, including orders that are less than 100 contracts, will be 
assessed the rates labeled ``ISE''.\6\
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    \4\ Firm is an order that clears as ``Firm'' with the Options 
Clearing Corporation (``OCC''). This fee of $0.55 is a fixed routing 
fee for routing orders for the account(s) of Firms.
    \5\ This fee of $0.55 is a fixed routing fee for routing orders 
for the account(s) of Market Makers. The Exchange notes that some 
other options exchanges include Market Maker transaction and 
clearing fees as ``broker-dealer'' fees.
    \6\ The current rates to route an order to ISE are $.06 for 
customers and $0.55 for Firms and Market Makers. This would not 
include ISE Select Symbols, which have different fees and are the 
subject of this filing.
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    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 is proposing to amend 
Rule 7050 to title these fees ``ISE Select Symbols of 100 or more 
contracts.''
    The Exchange is proposing this amendment in order to recoup 
clearing and transaction charges incurred by the Exchange when orders 
are routed to ISE in the ISE Select Symbols and the order is for 100 or 
more contracts. Each destination market's transaction charge varies and 
there is a standard clearing charge for each transaction incurred by 
the Exchange. The Exchange proposes this fee change to account for an 
increase in cost for routing to ISE relative to the fees in the ISE 
Select Symbols.\7\
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    \7\ ISE assesses a taker fee of $0.20 for priority customers for 
orders for 100 or more contracts in its rebates and fees for adding 
and removing liquidity in select symbols. See Securities Exchange 
Act Release No. 61869 (April 7, 2010), 75 FR 19449 (April 14, 2010) 
(SR-ISE-2010-25).
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2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\8\ in general, and with Section 
6(b)(4) of the Act,\9\ 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 that this fee 
is reasonable because it seeks to recoup costs that are incurred by the 
Exchange when routing customer orders to ISE in the select symbols of 
100 or more contracts on behalf of its members. The Exchange also 
believes that the proposed fee change for customer orders routed to ISE 
in the select symbols is equitable because it will be uniformly applied 
to all customers with orders of 100 or more contracts.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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    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 \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 may summarily abrogate 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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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, as amended, 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

[[Page 47059]]

Number SR-NASDAQ-2010-090 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-2010-090. 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-2010-090 and should be submitted on or before 
August 25, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19111 Filed 8-3-10; 8:45 am]
BILLING CODE 8010-01-P