Document ID: SEC-2014-1501-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market LLC
Posted Date: 2014-09-09T04:00Z

[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53471-53473]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21361]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72967; File No. SR-NASDAQ-2014-082]

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

September 3, 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 August 20, 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,'' 
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 harmonize the 
process by which it collects information from its equity members and 
Options Participants for aggregating the activity of affiliated 
entities for the purposes of assessing charges or credits.
    The Exchange requests that this filing become operative on December 
1, 2014.
    The text of the proposed rule change is set forth below. Proposed 
new language is in italics; deleted text is in brackets.
* * * * *

Chapter XV Options Pricing

    NASDAQ Options Market Participants may be subject to the Charges 
for Membership, Services and Equipment in the Rule 7000 Series as well 
as the fees in this Chapter XV. For purposes of assessing fees and 
paying rebates, the following references should serve as guidance.
    The term ``Customer'' or (``C'') applies to any transaction that is 
identified by a Participant for clearing in the Customer range at The 
Options Clearing Corporation (``OCC'') which is not for the account of 
broker or dealer or for the account of a ``Professional'' (as that term 
is defined in Chapter I, Section 1(a)(48)).
    The term ``NOM Market Maker'' or (``M'') is a Participant that has 
registered as a Market Maker on NOM pursuant to Chapter VII, Section 2, 
and must also remain in good standing pursuant to Chapter VII, Section 
4. In order to receive NOM Market Maker pricing in all securities, the 
Participant must be registered as a NOM Market Maker in at least one 
security.
    The term ``Non-NOM Market Maker'' or (``O'') is a registered market 
maker on another options exchange that is not a NOM Market Maker. A 
Non-NOM Market Maker must append the proper Non-NOM Market Maker 
designation to orders routed to NOM.
    The term ``Firm'' or (``F'') applies to any transaction that is 
identified by a Participant for clearing in the Firm range at OCC.
    The term ``Professional'' or (``P'') means any person or entity 
that (i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a calendar 
month for its own beneficial account(s) pursuant to Chapter I, Section 
1(a)(48). All Professional orders shall be appropriately marked by 
Participants.
    The term ``Broker-Dealer'' or (``B'') applies to any transaction 
which is not subject to any of the other transaction fees applicable 
within a particular category.
    The term ``Common Ownership'' shall mean Participants under 75% 
common ownership or control.
    (a) For purposes of applying any options transaction fee or rebate 
where the fee assessed, or rebate provided by NOM depends upon the 
volume of an Options Participant's activity, an Options Participant may 
request that NOM aggregate its activity with the activity of its 
affiliates.
    (1) An Options Participant requesting aggregation of affiliate 
activity shall be required to certify to NOM the affiliate status of 
entities whose activity it seeks to aggregate prior to receiving 
approval for aggregation, and shall be required to inform NOM 
immediately of any event that causes an entity to cease to be an 
affiliate. NOM shall review available information regarding the 
entities, and reserves the right to request additional information to 
verify the affiliate status of an entity. NOM shall approve a request 
unless it determines that the certification is not accurate.
    (2) If two or more Options Participants become affiliated on or 
prior to the sixteenth day of a month, and submit the required request 
for aggregation on or prior to the twenty-

[[Page 53472]]

second day of the month, an approval of the request by NOM shall be 
deemed to be effective as of the first day of that month. If two or 
more Options Participants become affiliated after the sixteenth day of 
a month, or submit a request for aggregation after the twenty-second 
day of the month, an approval of the request by NOM shall be deemed to 
be effective as of the first day of the next calendar month.
    (b) For purposes of applying any options transaction fee or rebate 
where the fee assessed, or rebate provided, by NOM depends upon the 
volume of an Options Participant's activity, references to an entity 
(including references to a ``Options Participant'') shall be deemed to 
include the entity and its affiliates that have been approved for 
aggregation.
    (c) For purposes of options pricing, the term ``affiliate'' of an 
Options Participant shall mean any Options Participant under 75% common 
ownership or control of that Options Participant.
    With respect to Chapter XV, Sections 2(1) and (2) the order that is 
received by the trading system first in time shall be considered an 
order adding liquidity and an order that trades against that order 
shall be considered an order removing liquidity.
* * * * *

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
    The Exchange is proposing to amend NOM Rules at Chapter XV, 
entitled ``Options Pricing,'' to harmonize the process by which the 
Exchange will collect information from Options Participants that desire 
their activity to be aggregated for the purposes of assessing charges 
or credits with the process currently required for equity members on 
Nasdaq. The Exchange proposes to adopt the process that is used by 
equity members today without changing that process. The Exchange 
believes that this filing is non-controversial because the process, as 
proposed, will not change. Today, equity and Options Participants may 
aggregate affiliate activity based on volume of activity for purposes 
of pricing.\3\ The Exchange believes that having the same process for 
equity members and Options Participants will provide consistency to its 
processes when aggregating pricing.
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    \3\ See NASDAQ Rule 7027(a) and NOM Chapter XV.
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    Today, a Nasdaq member requesting aggregation of affiliate activity 
is be required to certify to Nasdaq the affiliate status of entities 
whose activity it seeks to aggregate prior to receiving approval for 
aggregation, and also is required to inform Nasdaq immediately of any 
event that causes an entity to cease to be an affiliate. Nasdaq reviews 
available information regarding the entities, and reserves the right to 
request additional information to verify the affiliate status of an 
entity. Nasdaq approves a request unless it determines that the 
certification is not accurate. Further, if two or more members become 
affiliated on or prior to the sixteenth day of a month, and submit the 
required request for aggregation on or prior to the twenty-second day 
of the month, an approval of the request by Nasdaq is deemed to be 
effective as of the first day of that month. If two or more members 
become affiliated after the sixteenth day of a month, or submit a 
request for aggregation after the twenty-second day of the month, an 
approval of the request by Nasdaq is deemed to be effective as of the 
first day of the next calendar month.
    The Exchange proposes to amend NOM Rules at Chapter XV to make this 
language consistent with the requirements that would be applied to NOM 
Options Participants.
    The Exchange believes that harmonizing the process for collecting 
this information will avoid confusion and simplify information 
requested of equity members and Options Participants by requesting 
consistent information.
    The Exchange proposes to apply this pricing as of December 1, 2014 
and issue an Options Trader Alert to its members.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \4\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \5\ in particular, that it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general to protect investors and the public interest, 
in that the proposal will harmonize the process by which the Exchange 
collects information from equity members and Options Participants 
regarding the aggregation of activity of affiliated entities for the 
purposes of assessing charges or credits.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that harmonizing this process by which the 
Exchange collects information related to aggregation for equity members 
and Options Participants will provide consistency to market 
participants with respect to meeting the requirements to aggregate on 
Nasdaq and NOM. Also, the Exchange believes that adopting this method 
for collecting such information on aggregated pricing, with respect to 
Options Participants, will ensure proper validation for firms entitled 
to the aggregation.

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 is merely seeking to harmonize 
the manner in which it collects information related to the aggregation 
of activity of affiliated entities for the purposes of assessing 
charges or credits for equity members and Options Participants. The 
Exchange intends to apply a uniform process to request such aggregation 
for all NASDAQ members NOM Options Participants.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section

[[Page 53473]]

19(b)(3)(A)(ii) of the Act \6\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \7\ 17 CFR 240.19b-4(f)(6).
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    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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. The Exchange has 
provided the Commission written notice of its intent to file the 
proposed rule change, along with a brief description and text of the 
proposed rule change, at least five business days prior to the date of 
filing of the proposed rule change.

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-2014-082 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2014-082. 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-NASDAQ-2014-082 and should 
be submitted on or before September 30, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21361 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P