Document ID: SEC-2016-0100-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market, LLC
Posted Date: 2016-01-20T05:00Z

[Federal Register Volume 81, Number 12 (Wednesday, January 20, 2016)]
[Notices]
[Pages 3220-3224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00897]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76886; File No. SR-NASDAQ-2015-166]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Chapter XV, Entitled ``Options Pricing''

January 13, 2016.
    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 December 30, 2015, 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 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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[[Page 3221]]

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

    The Exchange proposes to amend Chapter XV, entitled ``Options 
Pricing,'' at Section 2, which governs pricing for Exchange members 
using the NASDAQ Options Market (``NOM''), the Exchange's facility for 
executing and routing standardized equity and index options.
    The Exchange purposes [sic] to amend it [sic] Customer,\3\ 
Professional \4\ and NOM Market Maker \5\ Penny Pilot Options \6\ 
Rebate to Add Liquidity tiers. While the changes proposed herein are 
effective upon filing, the Exchange has designated the amendments [sic] 
become operative on January 4, 2016.
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    \3\ The term ``Customer'' applies to any transaction that is 
identified by a Participant for clearing in the Customer range at 
The Options Clearing Corporation that 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)).
    \4\ The term ``Professional'' 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). See NOM Rules at 
Chapter I, Section 1(a)(48). All Professional orders shall be 
appropriately marked by Participants.
    \5\ A ``Non-NOM Market Maker'' 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.
    \6\ 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 [sic] 
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) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
December 31, 2013); 71105 (December 17, 2013), 78 FR 77530 (December 
23, 2013) (SR-NASDAQ-2013-154) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
June 30, 2014); 79 FR 31151 [sic] (May 23, 2014), 79 FR 31151 (May 
30, 2014) (SR-NASDAQ-2014-056) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
December 31, 2014); 73686 (December 2, 2014) [sic], 79 FR 71477 
(November 25, 2014) [sic] (SR-NASDAQ-2014-115) (notice of filing and 
immediate effectiveness and extension and replacement of Penny Pilot 
through June 30, 2015) and 75283 (June 24, 2015), 80 FR 37347 (June 
30, 2015) (SR-NASDAQ-2015-063) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot) See also 
NOM Rules, Chapter VI, Section 5.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://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 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 proposes certain amendments to the NOM transaction 
fees set forth at Chapter XV, Section 2 for executing and routing 
standardized equity and index options under the Penny Pilot Options 
program. The proposed changes are as follows:
Note ``c'' of Chapter XV, Section 2(1)
     Proposal to amend note ``c'' criteria, at part (2), to 
decrease the percentage of total industry customer equity and ETF 
option ADV contract per day in a month from 1.40% to 1.30%.
     The Exchange is bolding the numbers and letters in this 
paragraph for ease of reference.
NOM Market Maker Penny Pilot Options Rebate To Add Liquidity Tiers
     Proposal to amend Tier 6 of the NOM Market Maker Penny 
Pilot Options Rebate to Add Liquidity to remove an existing 
qualification from Tier 6.
    These rule changes are described in greater detail below.
Note ``c'' of Chapter XV, Section 2(1)
    The Exchange currently pays Customer and Professional Rebates to 
Add Liquidity based on an eight tier rebate structure. 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 volume that 
adds liquidity.\7\
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    \7\ Tiers 6 and 7 are exceptions because these tiers are 
calculated based on Total Volume. 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. See 
note ``b'' in Section 2(1) of Chapter XV. The Exchange utilizes data 
from The Options Clearing Corporation (``OCC'') to determine the 
total industry customer equity and ETF options ADV figure. OCC 
classifies equity and ETF options volume under the equity options 
category. Also, both customer and professional orders that are 
transacted on options exchanges clear in the customer range at OCC 
and therefore both customer and professional volume would be 
included in the total industry figure to calculate rebate tiers.
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    The Exchange proposes, beginning January 4, 2016, to amend note 
``c,'' which permits Participants that qualify for the Tier 8 Customer 
and Professional Penny Pilot Options Rebate to Add Liquidity \8\ to 
achieve a higher rebate. Currently, note ``c'' states: ``[P]articipants 
that (1) add Customer, Professional, Firm, Non-NOM Market Maker and/or 
Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot 
Options of 1.15% or more of total industry customer equity and ETF 
option ADV contracts per day in a month will receive an additional 
$0.02 per contract Penny Pilot Options Customer Rebate to Add Liquidity 
for each transaction which adds liquidity in Penny Pilot Options in 
that month; or (2) add Customer, Professional, Firm, Non-NOM Market 
Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of 1.40% or more of total industry customer equity 
and ETF option ADV contracts per day in a month will receive an 
additional $0.05 per contract Penny Pilot Options Customer Rebate to 
Add Liquidity for each transaction

[[Page 3222]]

which adds liquidity in Penny Pilot Options in that month; or (3)(a) 
add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options 
above 0.75% of total industry customer equity and ETF option ADV 
contracts per day in a month and (b) has added liquidity in all 
securities through one or more of its Nasdaq Market Center MPIDs that 
represent 1.10% or more of Consolidated Volume in a month will receive 
an additional $0.03 per contract Penny Pilot Options Customer Rebate to 
Add Liquidity for each transaction which adds liquidity in Penny Pilot 
Options in a month.'' \9\
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    \8\ Tier 8 of the Customer and Professional Rebate to Add 
Liquidity Tiers currently pays a $0.48 per contract rebate to 
Participants that add Customer, Professional, Firm, Non-NOM Market 
Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or 
Non-Penny Pilot Options above 0.75% or more of total industry 
customer equity and ETF option ADV contracts per day in a month or 
Participant adds (1) Customer and/or Professional liquidity in Penny 
Pilot Options and/or Non-Penny Pilot Options of 30,000 or more 
contracts per day in a month and (2) the Participant has certified 
for the Investor Support Program set forth in Rule 7014.
    \9\ Consolidated Volume means the total consolidated volume 
reported to all consolidated transaction reporting plans by all 
exchanges and trade reporting facilities during a month in equity 
securities, excluding executed orders with a size of less than one 
round lot. For purposes of calculating Consolidated Volume and the 
extent of an equity member's trading activity, expressed as a 
percentage of or ratio to Consolidated Volume, the date of the 
annual reconstitution of the Russell Investments Indexes shall be 
excluded from both total Consolidated Volume and the member's 
trading activity.
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    The Exchange proposes to amend the criteria in note ``c'' at part 
(2) to decrease the percentage of total industry customer equity and 
ETF option ADV contract per day in a month from 1.40% to 1.30%. The 
Exchange believes that this decrease will offer Participants an 
opportunity to qualify for the part (2) incentive and receive a $0.05 
per contract \10\ additional rebate, in addition to the Tier 8 rebate, 
by amending the qualification to require less volume.\11\ The Exchange 
believes that this incentive will continue to encourage Participants to 
add even more liquidity on NOM to earn a higher Tier 8 rebate. The 
Exchange is not amending the other criteria, (1) and (3), in note ``c'' 
to qualify for an additional rebate.
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    \10\ Note ``c'' offers three distinct incentives for 
Participants that qualify for the Tier 8 Customer and Professional 
Penny Pilot Options Rebate to Add Liquidity. The part (2) rebate, as 
amended, would be paid to Participants that added Customer, 
Professional, Firm, NOM Market Maker [sic], Non-NOM Market Maker 
and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of 1.30% or more of total industry customer 
equity and ETF option ADV contracts per day in a month.
    \11\ Only Participants that qualify for the Tier 8 Customer and 
Professional Penny Pilot Options Rebate to Add Liquidity are 
eligible for the note ``c'' incentives. The incentives are in 
addition to the Tier 8 rebate.
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    The Exchange also proposes to bold the numbers and letters that 
define the various parts of note `c'' for ease of reference.
NOM Market Maker Penny Pilot Options Rebate To Add Liquidity Tiers
    The Exchange proposes, beginning January 4, 2016, to amend Tier 6 
of the NOM Market Maker Penny Pilot Option Rebate to Add Liquidity to 
eliminate one of the criteria for qualifying for the $0.42 per contract 
Tier 6 rebate. Currently, Participants that add NOM Market Maker 
liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 
0.80% of total industry customer equity and ETF option ADV contracts 
per day in a month and qualify for the Tier 7 or Tier 8 Customer and/or 
Professional Rebate to Add Liquidity in Penny Pilot Options or 
Participants that add NOM Market Maker liquidity in Penny Pilot Options 
and/or Non-Penny Pilot Options above 0.90% of total industry customer 
equity and ETF option ADV contracts per day in a month or Participants 
that add Customer, Professional, Firm, Non-NOM Market Maker, and/or 
Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot 
Options of 1.40% or more of total industry customer equity and ETF 
option ADV contracts per day in a month receive a $0.42 per contract 
NOM Market Maker Penny Pilot Options Rebate to Add Liquidity.
    The Exchange proposes to remove the option to qualify for the Tier 
6 NOM Market Maker Penny Pilot Options rebate by adding Customer, 
Professional, Firm, Non-NOM Market Maker, and/or Broker-Dealer 
liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 
1.40% or more of total industry customer equity and ETF option ADV 
contracts per day in a month. With this proposal, Participants will be 
able to qualify for the Tier 6 NOM Market Maker Rebate by either (1) 
adding NOM Market Maker liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options above 0.80% of total industry customer equity and 
ETF option ADV contracts per day in a month and qualifies [sic] for the 
Tier 7 or Tier 8 Customer and/or Professional Rebate to Add Liquidity 
in Penny Pilot Options or (2) adding NOM Market Maker liquidity in 
Penny Pilot Options and/or Non-Penny Pilot Options above 0.90% of total 
industry customer equity and ETF option ADV contracts per day in a 
month. While the Exchange is eliminating one of the methods to qualify 
for the Tier 6 NOM Market Maker Penny Pilot Options rebate, the 
Exchange believes that the rebate tier will continue to incentivize NOM 
Participants to continue to add liquidity to NOM.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act,\12\ in general, and with Section 6(b)(4) and 
6(b)(5) of the Act,\13\ 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 the Exchange operates or controls, and is not designed to permit 
unfair discrimination between customers, issuers, brokers, or dealers. 
Customer volume is important because it continues to attract liquidity 
to the Exchange, which benefits all market participants. Further, with 
respect to Professional liquidity, the Exchange initially established 
Professional pricing in order to ``. . . bring additional revenue to 
the Exchange.'' \14\ 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.'' \15\ The Exchange 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.\16\ NOM Market Makers have obligations to 
the market and regulatory requirements,\17\ which normally do not apply 
to other market participants. A NOM Market Maker has the obligation to 
make continuous markets, engage in a course of dealings reasonably 
calculated to

[[Page 3223]]

contribute to the maintenance of a fair and orderly market, and not 
make bids or offers or enter into transactions that are inconsistent 
with a [sic] course of dealings.\18\
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4) and (5).
    \14\ 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.1
    \15\ See Professional Filing.
    \16\ See Professional Filing. The Exchange also [sic] in the 
Professional 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.
    \17\ 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.
    \18\ Id.
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    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, for example, the Commission indicated that market forces should 
generally determine the price of non-core market data because national 
market system regulation ``has been remarkably successful in promoting 
market competition in its broader forms that are most important to 
investors and listed companies.'' \19\ Likewise, in NetCoalition v. 
NYSE Arca, Inc. \20\ (``NetCoalition'') the D.C. Circuit upheld the 
Commission's use of a market-based approach in evaluating the fairness 
of market data fees against a challenge claiming that Congress mandated 
a cost-based approach.\21\ As the court emphasized, the Commission 
``intended in Regulation NMS that `market forces, rather than 
regulatory requirements' play a role in determining the market data . . 
. to be made available to investors and at what cost.'' \22\
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    \19\ Securities Exchange Act Release No. 51808 at 37499 (June 9, 
2005) (``Regulation NMS Adopting Release'').
    \20\ NetCoalition v. NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir. 
2010).
    \21\ See NetCoalition, at 534.
    \22\ Id. at 537.
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    Further, ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their order-routing agents, have a wide range of choices of 
where to route orders for execution'; [and] `no exchange can afford to 
take its market share percentages for granted' because `no exchange 
possesses a monopoly, regulatory or otherwise, in the execution of 
order flow from broker dealers' . . . .'' \23\ Although the court and 
the SEC were discussing the cash equities markets, the Exchange 
believes that these views apply with equal force to the options 
markets.
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    \23\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783).
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Note ``c'' of Chapter XV, Section 2(1)
    The Exchange's proposal to amend note ``c,'' at part (2) to 
decrease the percentage of total industry customer equity and ETF 
option ADV contract per day in a month from 1.40% to 1.30% in part (2) 
to qualify for the additional Tier 8 NOM Market Maker [sic] Penny Pilot 
Option rebate is reasonable because additional Participants may qualify 
for this incentive because of the lower volume requirement. The 
Exchange believes that this incentive will continue to encourage 
Participants to add even more liquidity on NOM to earn a higher rebate. 
Participants that qualify for this incentive would be paid the Tier 8 
Customer and Professional Penny Pilot Options Rebate to Add Liquidity 
of $0.48 per contract plus the additional part (2) note ``c'' rebate of 
$0.05 per contract for a total rebate of $0.53 per contract.
    The Exchange's proposal to amend note ``c,'' at part (2) to 
decrease the percentage of total industry customer equity and ETF 
option ADV contract per day in a month from 1.40% to 1.30% in part (2) 
to qualify for the additional Tier 8 NOM Market Maker [sic] Penny Pilot 
Option rebate is equitable and not unfairly discriminatory because, 
today, all Participants may qualify for the Tier 8 Customer and 
Professional Rebate to Add Liquidity in Penny Pilot Options and 
therefore are qualified to earn the additional note ``c'' rebates.\24\ 
The Exchange will uniformly pay the Tier 8 and additional note ``c'' 
rebates to all Participants that transact the qualifying volume, 
respectively.
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    \24\ Note ``c'' offers three distinct incentives for 
Participants that qualify for the Tier 8 Customer and Professional 
Penny Pilot Options Rebate to Add Liquidity.
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    The Exchange's proposal to bold the numbers and letters in note 
``c'' is reasonable, equitable and not unfairly discriminatory because 
it will provide an easier point of reference for each criteria and 
rebate. Also, this proposed amendment is non-substantive.
NOM Market Maker Penny Pilot Options Rebate To Add Liquidity Tiers
    The Exchange's proposal to amend Tier 6 of the NOM Market Maker 
Penny Pilot Options Rebate to Add Liquidity to eliminate one of the 
criteria to qualify for the $0.42 per contract Tier 6 rebate is 
reasonable because, despite the elimination of one of the methods to 
qualify for the Tier 6 NOM Market Maker Penny Pilot Options rebate, the 
Exchange believes that the Tier 6 rebate will continue to incentivize 
Participants to add liquidity to NOM in order to receive the rebate.
    The Exchange's proposal to amend Tier 6 of the NOM Market Maker 
Penny Pilot Options Rebate to Add Liquidity to eliminate one of the 
criteria to qualify for the $0.42 per contract Tier 6 rebate is 
equitable and not unfairly discriminatory because the elimination of 
the qualifying language in Tier 6 of the NOM Market Maker Penny Pilot 
Options Rebate to Add Liquidity will uniformly apply to all 
Participants. No Participant will be entitled to the Tier 6 NOM Market 
Maker Penny Pilot Options Rebate to Add Liquidity by adding Customer, 
Professional, Firm, Non-NOM Market Maker, and/or Broker-Dealer 
liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 
1.40% or more of total industry customer equity and ETF option ADV 
contracts per day in a month. Also, it is important to note that NOM 
Market Makers have obligations to the market and regulatory 
requirements,\25\ which normally do not apply to other market 
participants. The Exchange believes that offering rebates to these 
market participants is equitable and not unfairly discriminatory in 
light of their obligations.
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    \25\ See note 17 above.
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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. In terms of inter-market 
competition, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive, or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees to remain competitive with other exchanges and with 
alternative trading systems that have been exempted from compliance 
with the statutory standards applicable to exchanges. Because 
competitors are free to modify their own fees in response and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited.
    In this instance, the proposed amendments to the Customer, 
Professional and NOM Market Maker Penny Pilot Options Rebate to Add 
Liquidity tiers do not impose an undue burden on inter-market 
competition because the Exchange's execution services are completely 
voluntary and subject to extensive competition.
Note ``c'' of Chapter XV, Section 2(1)
    The Exchange's proposal to amend note ``c,'' at part (2) to 
decrease the

[[Page 3224]]

percentage of total industry customer equity and ETF option ADV 
contract per day in a month from 1.40% to 1.30% to qualify for the 
additional Tier 8 rebate does not impose an undue burden on intra-
market competition because, today, all Participants may qualify for the 
Tier 8 Customer and Professional Penny Pilot Options Rebates to Add 
Liquidity and qualify to earn the note ``c'' additional rebates. The 
Exchange will uniformly pay the Tier 8 and additional note ``c'' 
rebates to all Participants that transact the qualifying volume, 
respectively.
    Customer liquidity is critically important to the market and 
benefits all market participants. Greater customer liquidity benefits 
all market participants by providing more trading opportunities and 
attracting greater participation by specialists and market makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads. All Participants are eligible for these 
rebates if they transact the requisite volume. All Participants are 
eligible for the note ``c'' incentives if they transact the requisite 
volume. Also, the Exchange believes that encouraging Participants to 
add Professional liquidity 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.
    The Exchange's proposal to bold the numbers and letters in note 
``c'' do not impose an undue burden on intra-market competition because 
the amendment is non-substantive.
NOM Market Maker Penny Pilot Options Rebate To Add Liquidity Tiers
    The Exchange's proposal to amend Tier 6 of the NOM Market Maker 
Penny Pilot Options Rebate to Add Liquidity to eliminate one of the 
criteria to qualify for the $0.42 per contract Tier 6 rebate does not 
impose an undue burden on intra-market competition because the 
elimination of the qualifying language in Tier 6 of the NOM Market 
Maker Penny Pilot Options Rebate to Add Liquidity will uniformly apply 
to all Participants. No Participant will be entitled to the Tier 6 NOM 
Market Maker Penny Pilot Options Rebate to Add Liquidity by adding 
Customer, Professional, Firm, Non-NOM Market Maker, and/or Broker-
Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options 
of 1.40% or more of total industry customer equity and ETF option ADV 
contracts per day in a month. The Exchange believes that offering 
rebates to these market participants is equitable and not unfairly 
discriminatory in light of their obligations.\26\
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    \26\ See note 17 above.
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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.\27\
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    \27\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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.

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-2015-166 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-2015-166. 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-2015-166, and should 
be submitted on or before February 10, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00897 Filed 1-19-16; 8:45 am]
BILLING CODE 8011-01-P