Document ID: SEC-2010-1198-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-08-06T04:00Z

[Federal Register: August 6, 2010 (Volume 75, Number 151)]
[Notices]               
[Page 47662-47664]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au10-144]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62618; File No. SR-NASDAQ-2010-088]

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

July 30, 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 22, 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 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 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 changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on August 2, 2010.
    The text of the proposed rule change is set forth below. Proposed 
new text is in italics and deleted text is in brackets.\3\
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    \3\ The proposed text reflects recent amendments to Rule 7050, 
specifically proposed rule change SR-NASDAQ-2010-090.
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* * * * *

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.

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                  Exchange                         Customer Firm MM
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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 more               $0.26       $0.55 $0.55
 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 PHLX            $0.06       $0.55 $0.55
 Select Symbols [the below listed options])

[[Page 47663]]

PHLX Select Symbols** [(for the following        $0.30       $0.55 $0.55
 options only): AA, AAPL, ABK, ABX, AIG,
 ALL, AMD, AMR, AMZN, ARIA, AXP, BAC, BRCD,
 C, CAT, CIEN, CIGX, CSCO, DELL, DIA, DNDN,
 DRYS, EBAY, EK, F, FAS, FAZ, GDX, GE, GLD,
 GLW, GS, HAL, IBM, INTC, IWM, IYR, JPM,
 LVS, MGM, MOT, MSFT, MU, NEM, NOK, NVDA,
 ONNN, ORCL, PALM, PFE, POT, QCOM, QID,
 QQQQ, RIG, RIMM, RMBS, SBUX, SDS, SIRI,
 SKF, SLV, SMH, SNDK, SPY, T, TBT, TZA,
 UAUA, UNG, USO, UYG, V, VALE, VZ, WYNN, X,
 XHB, XLF, XRX and YHOO]...................
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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''). 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. 
NOM currently assesses customers a fee of $0.30 and Firms and Market 
Makers a fee of $0.55 for routing options orders to NASDAQ OMX PHLX, 
Inc. (``PHLX'') in certain select symbols that are subject to PHLX's 
Rebates and Fees for Adding and Removing Liquidity in Select 
Symbols.\4\ The Exchange proposes to modify Rule 7050 by titling those 
fees ``PHLX Select Symbols'' and adding clarifying language to indicate 
those fees would be subject to PHLX's Rebates and Fees for Adding and 
Removing Liquidity in Select Symbols, rather than listing all of the 
option symbols that are subject to those fees. The Exchange is 
proposing to amend the title in Rule 7050 so that the PHLX select 
symbols fees would apply to all of the symbols in PHLX's list of 
symbols which are subject to the Rebates and Fees for Adding and 
Removing Liquidity in Select Symbols.\5\
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    \4\ NOM currently assesses the aforementioned rates in the 
following symbols: AA, AAPL, ABK, ABX, AIG, ALL, AMD, AMR, AMZN, 
ARIA, AXP, BAC, BRCD, C, CAT, CIEN, CIGX, CSCO, DELL, DIA, DNDN, 
DRYS, EBAY, EK, F, FAS, FAZ, GDX, GE, GLD, GLW, GS, HAL, IBM, INTC, 
IWM, IYR, JPM, LVS, MGM, MOT, MSFT, MU, NEM, NOK, NVDA, ONNN, ORCL, 
PALM, PFE, POT, QCOM, QID, QQQQ, RIG, RIMM, RMBS, SBUX, SDS, SIRI, 
SKF, SLV, SMH, SNDK, SPY, T, TBT, TZA, UAUA, UNG, USO, UYG, V, VALE, 
VZ, WYNN, X, XHB, XLF, XRX and YHOO.
    \5\ PHLX recently filed a proposed rule change to add the 
following four options to the Phlx's list of symbols subject to the 
Rebates and Fees for Adding and Removing Liquidity in Select 
Symbols: BP p.l.c. Common Stock (``BP''), Baidu, Inc. (``BIDU''), 
IShares FTSE/Xinhua China 25 Index (``FXI'') and Exxon Mobil Corp. 
(``XOM'') and also remove the following three options: ARIAD 
Pharmaceuticals, Inc. (``ARIA''), Star Scientific, Inc. (``CIGX'') 
and Palm, Inc. (``PALM'') from its list of Select Symbols. See SR-
Phlx-2010-98. All symbols subject to PHLX's Rebates and Fees for 
Adding and Removing Liquidity in Select Symbols will be referred to 
as ``PHLX Select Symbols.''
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    The Exchange also proposes to amend text in Rule 7050 to clarify 
that orders which are currently subject to ``PHLX (for all options 
other than the below listed options)'' routing fees would be renamed to 
state ``PHLX (for all options other than PHLX Select Symbols)'' to 
clarify that these fees would continue to apply to all orders routed to 
PHLX and not subject to PHLX's Rebates and Fees for Adding and Removing 
Liquidity in Select Symbols.\6\
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    \6\ Currently NOM assesses $0.06 for Customers and $0.55 for 
Firms and Market Makers for routing orders to PHLX which are not 
subject to PHLX's Rebates and Fees for Adding and Removing Liquidity 
in Select Symbols.
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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 
collects fees for routing to away markets in order to recoup clearing 
and transaction charges incurred by the Exchange when such orders are 
routed to various destination markets. Each destination market's 
transaction charge varies and there is a standard clearing charge for 
each transaction incurred by the Exchange.
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on August 2, 2010.
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 that the 
proposed fee changes are reasonable because the Exchange is seeking to 
recoup the costs incurred for options orders entered into NOM but 
routed to and executed on PHLX in any symbol subject to PHLX's Rebates 
and Fees for Adding and Removing Liquidity in Select Symbols. This 
proposal would continue to apply to all of the PHLX Select Symbols, as 
defined on PHLX's Fee Schedule, going forward rather than listing each 
symbol in Rule 7050. The Exchange believes this amendment to Rule 7050 
is reasonable because it continues to assess the same fees for routing 
orders to PHLX which are subject to PHLX's Rebates and Fees for Adding 
and Removing Liquidity in Select Symbols. This proposal is simply 
renaming those routing fees without changing the fees. Also, the 
proposal is equitable because the fees assessed to Customers, Firms and 
Market Makers will continue to apply to those market participants and 
the modifications to the title of the PHLX Select Symbols routing fees 
will

[[Page 47664]]

be uniformly applied to each of these participants.
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    \7\ 15 U.S.C. 78f.
    \8\ 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 \9\ and paragraph (f)(2) of Rule 19b-4 \10\ 
thereunder. At any time within 60 days of the filing of such 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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 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-2010-088 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-2010-088. 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-
2010-088 and should be submitted on or before August 27, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19370 Filed 8-5-10; 8:45 am]
BILLING CODE 8010-01-P