
[Federal Register Volume 77, Number 242 (Monday, December 17, 2012)]
[Notices]
[Pages 74703-74705]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30269]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68400; File No. SR-NASDAQ-2012-136]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Fees for SOX, OSX and HGX

December 11, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on November 30, 2012. 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 
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 
increase fees for options overlying the PHLX Semiconductor Sector\SM\ 
(SOX\SM\), PHLX Housing Sector\TM\ (HGX\SM\) and PHLX Oil Service 
Sector\SM\ (OSX\SM\).
    While changes to the Pricing Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated the proposed 
amendment to be operative on December 3, 2012.
    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. 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 proposes to amend certain fees in Chapter XV, Section 2. 
Specifically, the Exchange proposes to increase the Fees for Adding and 
Removing Liquidity in SOX, HGX and OSX. These products are only listed 
on NOM and NASDAQ OMX PHLX LLC (``Phlx'').\3\ Phlx recently filed an 
immediately effective rule change to amend its fees for Singly Listed 
Options, which include SOX, HGX and OSX, effective December 3, 2012.\4\ 
NASDAQ proposes to make corresponding changes to fees for SOX, HGX and 
OSX effective as of December 3, 2012.
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    \3\ See Phlx's Pricing Schedule at Section III.
    \4\ See SR-Phlx-2012-135 (not yet published).
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    The Exchange currently assesses Customers a Fee for Adding 
Liquidity and a Fee for Removing Liquidity in SOX, HGX and OSX of $0.35 
per contract. This fee will remain unchanged. The Exchange assesses 
Professionals, Firms and Non-NOM Market Makers a Fee for Adding 
Liquidity and a Fee for Removing Liquidity in SOX, HGX and OSX of $0.45 
per contract. The Exchange is proposing to increase these fees to $0.60 
per contract. Finally, the Exchange currently assesses NOM Market 
Makers a $0.35 per contract Fee for Adding Liquidity and a Fee for 
Removing Liquidity in SOX, HGX and OSX. The Exchange proposes to 
increase this fee to $0.40 per contract. The Exchange is not proposing 
to amend other pricing in Chapter XV, Section 2.
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) of the Act \6\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members and other persons using its facilities.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that increasing the Fees for Adding and 
Removing Liquidity in SOX, HGX and OSX is reasonable because the 
Exchange proposes to assess the same fees which were recently increased 
by Phlx for SOX, HGX and OSX.\7\ Also, the proposed fees are within the 
range of similar fees assessed at other exchanges.\8\ The Exchange has 
previously distinguished other index products from the Non-Penny Pilot 
Options fees and rebates.\9\ The Exchange

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would continue to assess lower Fees for Removing Liquidity in SOX, HGX 
and OSX as compared to the Fees for Removing Liquidity in Non-Penny 
Pilot Options, which should continue to encourage NOM Participants to 
transact these newly listed index options. The Fees for Adding 
Liquidity for transactions in SOX, HGX and OSX are higher than the Fees 
for Adding Liquidity in Non-Penny Pilot Options, but as previously 
noted, the fees correspond to fees assessed by Phlx. The Exchange 
believes that these fees are reasonable because these fees correspond 
to comparable fees in place at Phlx for executions in SOX, HGX, and 
OSX.\10\
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    \7\ Despite the fact that SOX, HGX and OSX are Multiply Listed 
(listed on Phlx and NOM), Phlx assesses its market participants the 
fees for Singly Listed Options to transact index options in SOX, HGX 
and OSX. See Securities Exchange Act Release No. 66668 (March 28, 
2012), 77 FR 20090 (April 3, 2012) (SR-Phlx-2012-35). See also 
Section III of Phlx's Pricing Schedule. Accordingly, Phlx recently 
filed an immediately effective rule change to amend its fees as of 
December 3, 2012 to assess the following fees to transact index 
options in SOX, HGX and OSX: Customers $0.35 per contract, 
Professionals $0.60 per contract, Firms $0.60 per contract, Market 
Makers $0.40 per contract, and Broker-Dealers $0.60 per contract. 
Non-NOM Market Makers are registered market makers on another 
options market that append the market maker designation to orders 
routed to NOM. This is the equivalent of a Broker-Dealer on Phlx. 
While Phlx does not assess both a Fee for Adding Liquidity and Fee 
for Removing Liquidity, it assesses each side of the transaction the 
options transaction charge.
    \8\ Chicago Board Options Exchange, Incorporated (``CBOE'') 
assesses an $0.80 per contract fee to Customers, Broker-Dealers, 
Non-Trading Permit Holder Market Makers and Professional and 
Voluntary Professional market participants for SPX Range Options 
(SRO) transactions, a proprietary index, in addition to a surcharge 
fee. SPX refers to options on the Standard & Poor's 500 Index. See 
CBOE's Fees Schedule. In addition, NOM assesses Non-Penny Pilot Fees 
for Removing Liquidity ranging from $0.82 to $0.89 per contract 
depending on the market participant. See Chapter XV, Section 2 of 
NOM's Rules. Phlx also assesses a Broker-Dealer an electronic 
options transaction charge (non-Penny Pilot) of $0.60 per contract 
for transactions in Multiply Listed Options. See Section II of the 
Exchange's Pricing Schedule. While Phlx does not assess both a Fee 
for Adding Liquidity and Fee for Removing Liquidity, it assesses 
each side of the transaction the options transaction charge.
    \9\ See Securities Exchange Act Release No. 67837 (September 12, 
2012), 77 FR 57614, 77 FR 57614 (September 18, 2012) (SR-NASDAQ-
2012-102) (an immediately effective rule change which adopted 
rebates and fees relating to options on Facebook, Inc. (``FB''), 
Google, Inc. (``GOOG'') and Groupon, Inc. (``GRPN'') separate from 
other Non-Penny Pilot fees).
    \10\ See Phlx's Pricing Schedule at Section III.
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    The Exchange believes that increasing the Fees for Adding and 
Removing Liquidity in SOX, HGX and OSX is equitable and not unfairly 
discriminatory because the pricing will be comparable among similar 
categories of market participants, namely Professionals, Firms and Non-
NOM Market Makers would continue to be assessed the same fee of $0.60 
per contract. Customers and NOM Market Makers would be assessed lower 
fees as compared to other market participants, as is the case today. 
Customer order flow is assessed the lowest fee because incentivizing 
members to continue to offer Customer trading opportunities in options 
overlying SOX, HGX and OSX benefits all market participants through 
increased liquidity. The Exchange notes that NOM Market Makers are 
assessed lower fees as compared to other market participants, except 
Customers, because they have burdensome quoting obligations \11\ to the 
market which do not apply to Customers, Professionals, Firms and Non-
NOM Market Makers. The proposed differentiation as between Customers 
and NOM Market Makers as compared to Professionals, Firms and Non-NOM 
Market Makers recognizes the differing contributions made to the 
liquidity and trading environment on the Exchange by these market 
participants.
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    \11\ See Exchange Rules Section VII, Market Participants, 
Sections 5, Obligations of Market Makers, and Section 6, Market 
Maker Quotations.
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    The Exchange also believes that it is equitable and not unfairly 
discriminatory to increase the NOM Market Maker Fees for Adding and 
Removing Liquidity in options overlying SOX, HGX and OSX by $0.05 per 
contract as compared to the $0.15 per contract increase to 
Professionals, Firms and Non-NOM Market Makers because as explained 
above NOM Market Makers have certain obligations to the market that do 
not apply to other market participants. The Exchange desires to 
continue to assess NOM Market Makers and Customers lower fees as 
compared to other market participants because these participants 
contribute to the marketplace as described above. The Customer Fees for 
Adding and Removing Liquidity in options overlying SOX, HGX and OSX 
would remain unchanged at $0.35 per contract. The Exchange believes 
that it is reasonable to assess Customers and NOM Market Makers lower 
fees as compared to other market participants because these market 
participants contribute to the market in terms of liquidity and trading 
environment as compared to other market participants. Also, the 
proposed lower fees are comparable to pricing on NOM and other options 
exchanges.\12\
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    \12\ The Exchange assesses a lower Penny Pilot Options Fee for 
Removing Liquidity for Customers ($0.45 per contract versus $0.47 
per contract for other market participants) and assesses no Non-
Penny Pilot Options Fee for Adding Liquidity for Customers as 
compared to other market participants. The Exchange assesses a lower 
Non-Penny Pilot Options Fee for Adding Liquidity for NOM Market 
Makers as compared to other market participants ($0.25 per contract 
versus $0.45 per contract for other market participants). Finally, 
the Exchange assesses lower Non-Penny Pilot Options Fees for 
Removing Liquidity for Customers and NOM Market Makers as compared 
to other market participants ($0.82 per contract versus $0.87 per 
contract for other market participants). See Chapter XV, Section 2 
pricing. Phlx does not assess Customers options transaction charges 
for Penny or Non-Penny Pilot options transactions. Also, Specialists 
and Market Makers are assessed lower electronic options transaction 
charges in Penny and Non-Penny Pilot Options as compared to 
Professionals, Broker-Dealers and Firms. See Section II of the 
Exchange's Pricing Schedule.
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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 its fees for SOX, HGX 
and OSX remain competitive with fees at other options exchanges.

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.\13\ 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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    \13\ 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-2012-136 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-2012-136. 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

[[Page 74705]]

printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549-1090, on official business days between the hours 
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be 
available for inspection and copying at the NASDAQ's principal office. 
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-2012-
136, and should be submitted on or before January 7, 2013.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-30269 Filed 12-14-12; 8:45 am]
BILLING CODE 8011-01-P


