Document ID: SEC-2014-0281-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market LLC
Posted Date: 2014-02-14T05:00Z

[Federal Register Volume 79, Number 31 (Friday, February 14, 2014)]
[Notices]
[Pages 9024-9028]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-03250]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71516; File No. SR-NASDAQ-2014-013]

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

February 10, 2014.
    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 January 29, 2014, 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 NASDAQ. 
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

    NASDAQ proposes to modify Chapter XV, entitled ``Options Pricing,'' 
at Section 2 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: 
(i) Amend the Customer Non-Penny Pilot Options \3\ Rebate to Add 
Liquidity; (ii) amend the Customer and Professional Rebates to Add 
Liquidity in Penny Pilot Options; \4\ and (iii) amend the Penny Pilot 
Options Customer Fee for Removing Liquidity.
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    \3\ The Non-Penny Pilot Options pricing includes options 
overlying the Nasdaq 100 Index traded under the symbol NDX.
    \4\ The Penny Pilot was established in March 2008 and in October 
2009 was expanded and extended through June 30, 2014. 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); 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); 65969 (December 15, 
2011), 76 FR 79268 (December 21, 2011) (SR-NASDAQ-2011-169) (notice 
of filing and immediate effectiveness extension and replacement of 
Penny Pilot); 67325 (June 29, 2012), 77 FR 40127 (July 6, 2012) (SR-
NASDAQ-2012-075) (notice of filing and immediate effectiveness and 
extension and replacement of Penny Pilot through December 31, 2012); 
68519 (December 21, 2012), 78 FR 136 (January 2, 2013) (SR-NASDAQ-
2012-143) (notice of filing and immediate effectiveness and 
extension and replacement of Penny Pilot through June 30, 2013); 
69787 (June 18, 2013), 78 FR 37858 (June 24, 2013) (SR-NASDAQ-2013-
082) and 71105 (December 17, 2013), 78 FR 77530 (December 23, 2013) 
(SR-NASDAQ-2013-154). See also NOM Rules, Chapter VI, Section 5.
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    While the changes proposed herein are effective upon filing, the 
Exchange has designated that the amendments be operative on February 3, 
2014.
    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. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ proposes to amend certain fees in Chapter XV, Section 2. The 
Exchange proposes to amend the Non-Penny Pilot Options Customer Rebate 
to Add Liquidity to encourage Participants to add liquidity by earning 
a higher Non-Penny Pilot Customer Rebate to Add Liquidity. The Exchange 
also proposes to amend the Tier 8 Rebate to Add Liquidity to lower the 
Professional rebate paid for that tier. While the Exchange is lowering 
the Professional Rebate to Add Liquidity in Penny Pilot Options, the 
Exchange believes that the rebate will continue to encourage 
Participants to add volume to earn the rebate. The Exchange proposes to 
increase the Customer Penny Pilot Options Fee for Removing Liquidity 
from $0.45 to $0.47 per contract. Despite the increase, the Exchange 
believes this fee remains competitive.
Non-Penny Pilot Customer Rebate To Add Liquidity
    The Exchange currently pays a Customer Non-Penny Pilot Rebate to 
Add Liquidity of $0.84 per contract. Non-Customer Participants do not 
receive a Non-Penny Pilot Rebate to Add Liquidity. The Exchange 
proposes to pay an additional $0.01 per contract Non-Penny Pilot 
Options Customer Rebate to Add Liquidity (for a total rebate of $0.85 
per contract) to a Participant that qualifies for a Tier 7 or 8 
Customer or Professional Penny Pilot Options Rebate to Add Liquidity in 
a given month. Participants would receive the additional $0.01 per 
contract rebate for each transaction which adds liquidity in Non-Penny 
Pilot Options in that month.
Penny Pilot Options Customer and Professional Rebate To Add Liquidity
    The Exchange currently pays Customer and Professional Rebates to 
Add Liquidity based on an eight tier rebate structure as follows:

------------------------------------------------------------------------
                                                              Rebate to
                       Monthly volume                            add
                                                              liquidity
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Tier 1 Participant adds Customer and/or Professional               $0.25
 liquidity in Penny Pilot Options and/or Non-Penny Pilot
 Options of up to 0.20% of total industry customer equity
 and ETF option average daily volume (``ADV'') contracts
 per day in a month........................................
Tier 2 Participant adds Customer and/or Professional                0.42
 liquidity in Penny Pilot Options and/or Non-Penny Pilot
 Options above 0.20% to 0.30% of total industry customer
 equity and ETF option ADV contracts per day in a month....
Tier 3 Participant adds Customer and/or Professional                0.43
 liquidity in Penny Pilot Options and/or Non-Penny Pilot
 Options above 0.30% to 0.40% of total industry customer
 equity and ETF option ADV contracts per day in a month....

[[Page 9025]]

 
Tier 4 Participant adds Customer and/or Professional                0.45
 liquidity in Penny Pilot Options and/or Non-Penny Pilot
 Options above 0.40% or more of total industry customer
 equity and ETF option ADV contracts per day in a month....
Tier 5 Participant adds (1) Customer and/or Professional            0.45
 liquidity in Penny Pilot Options and/or Non-Penny Pilot
 Options of 25,000 or more contracts per day in a month,
 (2) the Participant has certified for the Investor Support
 Program set forth in Rule 7014, and (3) the Participant
 executed at least one order on NASDAQ's equity market.....
Tier 6 Participant has Total Volume of 100,000 or more              0.45
 contracts per day in a month, of which 25,000 or more
 contracts per day in a month must be Customer and/or
 Professional liquidity in Penny Pilot Options.............
Tier 7 Participant has Total Volume of 150,000 or more              0.47
 contracts per day in a month, of which 50,000 or more
 contracts per day in a month must be Customer and/or
 Professional liquidity in Penny Pilot Options.............
Tier 8 Participant adds Customer and/or Professional                0.48
 liquidity in Penny Pilot Options and/or Non-Penny Pilot
 Options of 0.75% or more of national customer volume in
 multiply-listed equity and ETF options classes in a month.
------------------------------------------------------------------------

    For purposes of qualifying for a Customer and Professional Rebate 
to Add Liquidity tier, the Exchange determines the applicable 
percentage of total industry customer equity and ETF option average 
daily volume by including the Participant's Penny Pilot and Non-Penny 
Pilot Customer and/or Professional volume that adds liquidity. The 
Exchange is proposing to make certain amendments to the tiers as noted 
below.
    The Exchange proposes to amend the Tier 8 Professional Penny Pilot 
Options Rebate to Add Liquidity to reduce the rebate paid from $0.48 to 
$0.47 per contract. Today, the Exchange pays a $0.48 per contract 
Customer and Professional Penny Pilot Options Tier 8 Rebate to Add 
Liquidity to Participants that add Customer and/or Professional 
liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 
0.75% or more of national customer volume in multiply-listed equity and 
ETF options classes in a month. The Exchange would continue to pay a 
Penny Pilot Options Rebate to Add Liquidity of $0.48 per contract to 
Participants that add Customer liquidity and qualify for Tier 8.
Customer Penny Pilot Options Fee for Removing Liquidity
    The Exchange proposes to increase the Penny Pilot Options Customer 
Fee for Removing Liquidity from $0.45 to $0.47 per contract. The 
Exchange will continue to assess a NOM Market Maker a $0.48 per 
contract Penny Pilot Options Fee for Removing Liquidity. A 
Professional, Firm, Non-NOM Market Maker and Broker-Dealer will 
continue to be assessed $0.49 per contract.
2. Statutory Basis
    NASDAQ believes that its proposal to amend its Pricing Schedule is 
consistent with Section 6(b) of the Act \5\ in general, and furthers 
the objectives of Section 6(b)(4) and (b)(5) of the Act \6\ 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, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4), (5).
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Non-Penny Pilot Customer Rebate To Add Liquidity
    The Exchange's proposal to pay an additional $0.01 per contract 
Non-Penny Pilot Options Customer Rebate to Add Liquidity to a 
Participant that qualifies for a Tier 7 or 8 Customer or Professional 
Penny Pilot Options Rebate to Add Liquidity in a given month is 
reasonable because the rebate encourages Participants to qualify for 
higher Customer or Professional Penny Pilot Options rebate tiers in 
order to also qualify for an additional Non-Penny Pilot Options 
Customer rebate. To qualify for a Tier 7 rebate, Participants require 
Total Volume of 150,000 or more contracts per day in a month, of which 
50,000 or more contracts per day in a month must be Customer and/or 
Professional liquidity in Penny Pilot Options. Total Volume is defined 
as Customer, Professional, Firm, Broker-Dealer, Non-NOM Market Maker 
and NOM Market Maker volume in Penny Pilot Options and/or Non-Penny 
Pilot Options which either adds or removes liquidity on NOM. To qualify 
for a Tier 8 rebate, Participants must add Customer and/or Professional 
liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 
0.75% or more of national customer volume in multiply-listed equity and 
ETF options classes in a month. The Exchange believes that by 
encouraging Participants to qualify for Tier 7 or 8 there will be an 
incentive to add a certain amount of Penny and/or Non-Penny Pilot 
Options volume and/or Customer and/or Professional liquidity, thereby 
attracting additional order flow to the benefit of all market 
participants. Today, the Exchange also incentivizes NOM Market Makers 
to post liquidity, by offering NOM Market Makers rebates, which also 
benefit market participants through increased order interaction. Firms, 
Non-NOM Market Makers and Broker-Dealers are also offered rebates under 
the current pricing structure.
    The Exchange's proposal to pay an additional $0.01 per contract 
Non-Penny Pilot Options Customer Rebate to Add Liquidity to a 
Participant that qualifies for a Tier 7 or 8 Customer or Professional 
Penny Pilot Options Rebate to Add Liquidity in a given month is 
equitable and not unfairly discriminatory because the Exchange will pay 
the additional $0.01 per contract rebate in addition to the Non-Penny 
Pilot Options Rebate to Add Liquidity to all Participants that qualify 
for a Tier 7 or 8 Customer or Professional Penny Pilot Options Rebate 
to Add Liquidity in a uniform manner. Today, no other market 
participant is entitled to a Non-Penny Pilot Options Rebate to Add 
Liquidity other than a Customer. The Exchange believes that it is 
reasonable, equitable and not unfairly discriminatory to only pay 
Customers a rebate in Non-Penny Pilot Options because Customer order 
flow is unique and benefits all market participants through the 
increased liquidity that such order flow brings to the market. The 
opportunity to increase the Non-Penny Pilot Options rebate will further 
encourage the addition of Penny Pilot and Non-Penny Pilot Options 
liquidity as well as Customer and Professional liquidity.
Customer and Professional Penny Pilot Option Rebate To Add Liquidity
    The Exchange's proposal to lower the Tier 8 Professional Penny 
Pilot Options Rebate to Add Liquidity from $0.48 to $0.47 per contract 
is reasonable because the Exchange believes that the $0.47 per contract 
rebate should continue to incentivize Participants to qualify for a 
Tier 8 Penny Pilot Options Rebate to Add Liquidity to earn the rebate.
    The Exchange's proposal to lower the Tier 8 Professional Penny 
Pilot Options

[[Page 9026]]

Rebate to Add Liquidity from $0.48 to $0.47 per contract is equitable 
and not unfairly discriminatory for the reasons which follow. The 
Exchange believes that Customers are entitled to higher rebates because 
Customer order flow brings unique benefits to the market through 
increased liquidity which benefits all market participants. The 
Exchange believes that offering Professionals the opportunity to earn 
the same rebates as Customers, as is the case today, or slightly lower 
rebates, as proposed for Tier 8, and higher rebates as compared to 
Firms, Broker-Dealers and Non-NOM Market Makers, and in some cases NOM 
Market Makers, is equitable and not unfairly discriminatory because the 
Exchange does not believe that the amount of the rebate offered by the 
Exchange has a material impact on a Participant's ability to execute 
orders in Penny Pilot Options. By offering Professionals, as well as 
Customers, higher rebates as compared to other market participants, the 
Exchange hopes to simply remain competitive with other venues so that 
it remains a choice for market participants when posting orders and the 
result may be additional Professional order flow for the Exchange, in 
addition to increased Customer order flow. A Participant may not be 
able to gauge the exact rebate tier it would qualify for until the end 
of the month because Professional volume would be commingled with 
Customer volume in calculating tier volume.\7\ A Professional could 
only otherwise presume the Tier 1 rebate would be achieved in a month 
when determining price.\8\ Further, the Exchange initially established 
Professional pricing in order to ``. . . bring additional revenue to 
the Exchange.'' \9\ The Exchange noted in the Professional Filing that 
it believes ``. . . that the increased revenue from the proposal would 
assist the Exchange to recoup fixed costs.'' \10\ The Exchange also 
noted in that filing that it believes that establishing separate 
pricing for a Professional, which ranges between that of a customer and 
market maker, accomplishes this objective.\11\ The Exchange does not 
believe that providing Professionals with the opportunity to obtain 
higher rebates, which may be equivalent to that of a Customer, creates 
a competitive environment where Professionals would be necessarily 
advantaged on NOM as compared to NOM Market Makers, Firms, Broker-
Dealers or Non-NOM Market Makers. Also, a Professional is assessed the 
same fees as other market participants, except Customers.\12\ For these 
reasons, the Exchange believes that continuing to offer Professionals 
the same rebates or slightly lower rebates as Customers is equitable 
and not unfairly discriminatory. NOM Market Makers also receive higher 
rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers 
because NOM Market Makers are valuable market participants that provide 
liquidity in the marketplace and incur costs unlike other market 
participants. The Exchange believes that NOM Market Makers should be 
offered the opportunity to earn higher rebates as compared to Non-NOM 
Market Makers, Firms and Broker Dealers because NOM Market Makers add 
value through continuous quoting \13\ and the commitment of capital. 
The Exchange believes that encouraging NOM Market Makers to be more 
aggressive when posting liquidity, by offering such higher rebates, 
benefits all market participants through increased liquidity. NOM 
Market Makers will continue to earn the same or lower rebates as 
compared to Customers and Professionals.\14\
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    \7\ Customer and Professional volume is aggregated for purposes 
of determining which rebate tier a Participant qualifies for with 
respect to the Professional Rebate to Add Liquidity in Penny Pilot 
Options.
    \8\ A Professional would be unable to determine the exact rebate 
that would be paid on a transaction by transaction basis with 
certainty until the end of a given month when all Customer and 
Professional volume is aggregated for purposes of determining which 
tier the Participant qualified for in a given month.
    \9\ See Securities Exchange Act Release No. 64494 (May 13, 
2011), 76 FR 29014 (May 19, 2011) (SR-NASDAQ-2011-066) 
(``Professional Filing''). In this filing, the Exchange addressed 
the perceived favorable pricing of Professionals who were assessed 
fees and paid rebates like a Customer prior to the filing. The 
Exchange noted in that filing that a Professional, unlike a retail 
Customer, has access to sophisticated trading systems that contain 
functionality not available to retail Customers.
    \10\ See Securities Exchange Act Release No. 64494 (May 13, 
2011), 76 FR 29014 (May 19, 2011) (SR-NASDAQ-2011-066).
    \11\ See Securities Exchange Act Release No. 64494 (May 13, 
2011), 76 FR 29014 (May 19, 2011) (SR-NASDAQ-2011-066). The Exchange 
noted in this filing that it believes the role of the retail 
customer in the marketplace is distinct from that of the 
professional and the Exchange's fee proposal at that time accounted 
for this distinction by pricing each market participant according to 
their roles and obligations.
    \12\ The Fee for Removing Liquidity in Penny Pilot Options is 
$0.49 per contract for all market participants, except Customers who 
are assessed $0.45 per contract and NOM Market Makers who are 
assessed $0.48 per contract.
    \13\ Pursuant to Chapter VII (Market Participants), Section 5 
(Obligations of Market Makers), in registering as a market maker, an 
Options Participant commits himself to various obligations. 
Transactions of a Market Maker in its market making capacity must 
constitute a course of dealings reasonably calculated to contribute 
to the maintenance of a fair and orderly market, and Market Makers 
should not make bids or offers or enter into transactions that are 
inconsistent with such course of dealings. Further, all Market 
Makers are designated as specialists on NOM for all purposes under 
the Act or rules thereunder. See Chapter VII, Section 5.
    \14\ The Tier 1 NOM Market Maker Rebate to Add Liquidity in 
Penny Pilot Options is the same rebate as the Tier 1 Customer and 
Professional rebate in Penny Pilot Options. The Exchange pays the 
highest Tier 1 Rebates to Add Liquidity in Penny Pilot Options of 
$0.25 per contract to Customers, Professionals and NOM Market Makers 
for transacting one qualifying contract as compared to other market 
participants. Firms, Non-NOM Market Makers and Broker-Dealers 
receive a $0.10 per contract Penny Pilot Option Rebate to Add 
Liquidity. In addition, Participants that adds Firm, Non-NOM Market 
Maker or Broker-Dealer liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of 15,000 contracts per day or more in a given 
month will receive a Rebate to Add Liquidity in Penny Pilot Options 
of $0.20 per contract.
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Customer Penny Pilot Options Fee for Removing Liquidity
    The Exchange's proposal to increase the Penny Pilot Options 
Customer Fee for Removing Liquidity from $0.45 per contract to $0.47 
per contract is reasonable because the Exchange will continue to assess 
Customers the lowest Fee for Removing Liquidity as compared to other 
market participants. In addition, Participants may qualify for certain 
rebates by transacting Customer orders. The rebates for Customers are 
the highest rebates offered by the Exchange.
    The Exchange's proposal to increase the Penny Pilot Options 
Customer Fee for Removing Liquidity from $0.45 per contract to $0.47 
per contract is equitable and not unfairly discriminatory. The Exchange 
will assess the lowest Penny Pilot Options Fee for Removing Liquidity 
to Customers as is the case today. NOM Market Makers will also continue 
to receive a lower fee as compared to a Professional, Firm, Non-NOM 
Market Maker and Broker-Dealer because of the obligations borne by NOM 
Market Makers.\15\
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    \15\ See note 13.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ 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. The Exchange believes that offering to pay 
an additional $0.01 per contract Customer Non-Penny Pilot Options 
Rebate to Add Liquidity to Participants that qualify for a Tier 7 or 8 
Customer or Professional Rebate to Add Liquidity does not impose an 
undue burden on competition, rather it encourages Participants to add 
liquidity to NOM to obtain the Customer rebate and in turn

[[Page 9027]]

promotes competition. The Exchange does not believe that offering 
Participants that qualify for Tier 7 or 8 of the Customer and 
Professional Penny Pilot Options Rebate to Add Liquidity an additional 
Non-Penny Pilot Options Customer rebate would result in any burden on 
competition as between market participants because the remaining market 
participants, NOM Market Makers, Firms, Non-NOM Market Makers and 
Broker-Dealers, would continue to have an opportunity to earn Penny 
Pilot Options rebates. Today, the Exchange only pays Customers Non-
Penny Pilot Options Rebates to Add Liquidity.\16\ Customer order flow 
brings unique benefits to the market through increased liquidity which 
benefits all market participants.
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    \16\ NASDAQ OMX BX, Inc. Options pays a Rebate to Remove 
Liquidity in All Other Penny Pilot Options of $0.32 per contract to 
Customers only.
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    The Exchange's proposal to pay an additional Non-Penny Pilot 
Options Customer Rebate to Add Liquidity, presuming the Participant 
qualifies for Tier 7 or 8 of the Customer and Professional Penny Pilot 
Options Rebate to Add Liquidity, will incentivize Participants to 
direct Penny and Non-Penny Pilot Options order flow, as well as 
Customer and Professional order flow, to NOM to the benefit of all 
other market participants. The Exchange believes the proposed pricing 
incentives contribute to the overall health of the market and benefit 
all Participants willing to choose to transact options on NOM. For the 
reasons specified herein, the Exchange does not believe this proposal 
creates an undue burden on competition.
    The Exchange believes that lowering the Tier 8 Professional Penny 
Pilot Options Rebate to Add Liquidity does not burden competition 
because Professionals will continue to earn higher rebates as compared 
to other non-Customer market participants, except NOM Market Makers, as 
is the case today. The Tier 1 NOM Market Maker Rebate to Add Liquidity 
in Penny Pilot Options is the same rebate as the Tier 1 Customer and 
Professional rebate in Penny Pilot Options. The Exchange pays the 
highest Tier 1 Rebates to Add Liquidity in Penny Pilot Options of $0.25 
per contract to Customers, Professionals and NOM Market Makers for 
transacting one qualifying contract as compared to other market 
participants. This will also remain the same. The Customer will earn a 
higher Tier 8 rebate as compared to a Professional. Customer liquidity 
offers unique benefits to the market which benefits all market 
participants. Customer liquidity benefits all market participants by 
providing more trading opportunities, which attract Specialists and 
Market Makers. An increase in the activity of these market participants 
in turn facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
The Exchange believes that continuing to encourage Participants to add 
Professional liquidity, by offering rebates, creates competition among 
options exchanges because the Exchange believes that the rebates may 
cause market participants to select NOM as a venue to send Professional 
order flow. For these reasons, the Exchange does not believe this 
proposal creates an undue burden on competition.
    The Exchange does not believe that increasing the Customer Penny 
Pilot Options Fee for Removing Liquidity will create an undue burden on 
competition because the Exchange continues to assess the lowest fee to 
Customers. As noted above, Customer liquidity offers unique benefits to 
the market which benefits all market participants.
    The Exchange operates in a highly competitive market comprised of 
twelve U.S. options exchanges in which many sophisticated and 
knowledgeable market participants can readily and do send order flow to 
competing exchanges if they deem fee levels or rebate incentives at a 
particular exchange to be excessive or inadequate. These market forces 
support the Exchange's belief that the proposed rebate structure and 
tiers proposed herein are competitive with rebates and tiers in place 
on other exchanges. The Exchange believes that this competitive 
marketplace continues to impact the rebates present on the Exchange 
today and substantially influences the proposals set forth above.

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.\17\ 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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    \17\ 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 email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2014-013 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-2014-013. 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 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 
10:00 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; 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-

[[Page 9028]]

NASDAQ-2014-013, and should be submitted on or before March 7, 2014.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03250 Filed 2-13-14; 8:45 am]
BILLING CODE 8011-01-P