
[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Notices]
[Pages 81612-81614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32895]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76768; File No. SR-NASDAQ-2015-155]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NOM Rules at Chapter XV, Section 2

December 24, 2015.
    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 17, 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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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 to lower the Non-NOM Market Maker \3\ Penny 
Pilot Options \4\ Fee for Removing Liquidity

[[Page 81613]]

for options overlying iShares MSCI Emerging Markets (``EEM''), SPDR 
Gold Shares (``GLD''), iShares Russell 2000 ETF (``IWM''), PowerShares 
QQQ (``QQQ''), and SPDR S&P 500 (``SPY'') from $0.55 to $0.50 per 
contract. 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\ 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.
    \4\ 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 to lower the Non-NOM Market Maker Penny Pilot 
Options Fee for Removing Liquidity for options overlying EEM, GLD, IWM, 
QQQ, and SPY from $0.55 to $0.50 per contract. The details of this 
proposal are below.
Non-NOM Market Maker Penny Pilot Options Fee for Removing Liquidity
    The Exchange proposes, beginning January 4, 2016, to decrease the 
Non-NOM Market Maker Fee for Removing Liquidity in Penny Pilot Options 
from $0.55 to $0.50 per contract for options overlying EEM, GLD, IWM, 
QQQ, and SPY. The Exchange notes that the Fees for Removing Liquidity 
for other Participants in Penny Pilot Options will remain the same, at 
$0.050 [sic] per contract. The Exchange believes that lowering this fee 
may encourage additional order flow to be directed to NOM for options 
overlying EEM, GLD, IWM, QQQ, and SPY.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act,\5\ in general, and with Section 6(b)(4) and 
6(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 the Exchange 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.
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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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.'' \7\ Likewise, in NetCoalition v. NYSE 
Arca, Inc.\8\ (``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.\9\ 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.'' \10\
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    \7\ Securities Exchange Act Release No. 51808 at 37499 (June 9, 
2005) (``Regulation NMS Adopting Release'').
    \8\ NetCoalition v. NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir. 
2010).
    \9\ See NetCoalition, at 534.
    \10\ 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'. . . .'' \11\ 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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    \11\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783).
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Non-NOM Market Maker Penny Pilot Options Fee for Removing Liquidity
    The Exchange's proposal to decrease the Non-NOM Market Maker Fee 
for Removing Liquidity in Penny Pilot Options from $0.55 to $0.50 per 
contract for options overlying EEM, GLD, IWM, QQQ, and SPY is 
reasonable because the Exchange seeks to assess all Participants the 
same rate of $0.50 per contract to remove Penny Pilot Options on NOM. 
Also, the Exchange believes that lowering this fee may encourage 
additional order flow to be directed to NOM for options overlying EEM, 
GLD, IWM, QQQ, and SPY.
    The Exchange's proposal to decrease the Non-NOM Market Maker Fee 
for Removing Liquidity in Penny Pilot Options from $0.55 to $0.50 per 
contract for options overlying EEM, GLD, IWM, QQQ, and SPY is equitable 
and not unfairly discriminatory because all Participants will be 
assessed a $0.50 per contract Fee for Removing Liquidity in Penny Pilot 
Options for all options transacted on NOM.

[[Page 81614]]

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 change to fees assessed to 
Participants for execution of securities does not impose a burden on 
competition because the Exchange's execution services are completely 
voluntary and subject to extensive competition both from other 
exchanges and from off-exchange venues.
Non-NOM Market Maker Penny Pilot Options Fee for Removing Liquidity
    The Exchange's proposal to decrease the Non-NOM Market Maker Fee 
for Removing Liquidity in Penny Pilot Options from $0.55 to $0.50 per 
contract for options overlying EEM, GLD, IWM, QQQ, and SPY does not 
impose an undue burden on intra-market competition because the Exchange 
will assess all Participants the same Fee for Removing Liquidity in 
Penny Pilot Options.
    In sum, if the changes proposed herein are unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. Accordingly, the Exchange does not believe that the proposed 
change will impair the ability of Participants or competing order 
execution venues to maintain their competitive standing in the 
financial markets.

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.\12\
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    \12\ 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-2015-155 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2015-155. 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-2015-155 and should 
be submitted on or before January 20, 2016.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Brent J. Fields,
Secretary.
[FR Doc. 2015-32895 Filed 12-29-15; 8:45 am]
BILLING CODE 8011-01-P


