
[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Notices]
[Pages 81562-81564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32820]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76760; File No. SR-NASDAQ-2015-154]


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

December 23, 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 [sic] amend the Exchange's transaction fees 
at Chapter XV, entitled ``Options Pricing,'' Section 10, entitled 
``Participant Fee--Options.''
    The Exchange purposes [sic] an increase to its Participant Fee to 
recoup costs incurred by the Exchange. The Exchange's Participant Fee 
is competitive with those of other options exchanges.\3\ While the 
amendment proposed herein is effective upon filing, the Exchange has 
designated the amendment [sic] become operative on January 4, 2016.
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    \3\ See note 14 below.
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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 increase the NOM Participant Fee, so the 
Exchange can allocate its costs to various options market participants. 
Today, the Exchange assesses all NOM Participants a $500 per month 
Participant Fee. This fee was initially assessed in 2012.\4\ The 
Exchange proposes to increase this Participant Fee from $500 to $1,000 
per month for all NOM Participants. The proposed Participant Fee is in 
addition to the trading rights fee of $1,000 per month to be an 
Exchange member.\5\
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    \4\ See Securities and Exchange Act Release No. 68502 (December 
20, 2012), 77 FR 76572 (December 28, 2012) (SR-NASDAQ-2012-139).
    \5\ See Exchange Rule 7001.
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    The Exchange believes this Participant Fee is competitive with fees 
at other options exchanges.\6\
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    \6\ See note 14 below.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act \8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

[[Page 81563]]

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.'' \9\ Likewise, 
in NetCoalition v. NYSE Arca, Inc.\10\ (``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.\11\ 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.'' \12\
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    \9\ Securities Exchange Act Release No. 51808 at 37499 (June 9, 
2005) (``Regulation NMS Adopting Release'').
    \10\ NetCoalition v. NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir. 
2010).
    \11\ See NetCoalition, at 534.
    \12\ 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'. . . .'' \13\ 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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    \13\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783).
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    The Exchange's proposal to increase the NOM Participant Fee from 
$500 to $1,000 per month is reasonable because the Exchange is seeking 
to recoup costs related to membership administration. The proposed fee 
is competitive with fees at other options exchanges.\14\
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    \14\ See The Chicago Board Options Exchange, Incorporated's Fees 
Schedule. Per month a Market Maker Trading Permit is $5,500, an SPX 
Tier Appointment is $3,000, a VIX Tier Appointment is $2,000, and an 
Electronic Access Permit is $1,600. See also the International 
Securities Exchange LLC's Schedule of Fees. Per month an Electronic 
Access Member is assessed $500.00 for membership and a market maker 
is assessed from $2,000 to $4,000 per membership depending on the 
type of market maker. See also C2 Options Exchange, Incorporated's 
Fees Schedule. Per month, a market-maker is assessed a $5,000 permit 
fee, an Electronic Access Permit is assessed a $1,000 permit fee. 
See also NYSE Arca, Inc.'s Fee Schedule. Per month, a Clearing Firm 
is assessed a $1,000 per month fee for the first Options Trading 
Permit (``OTP'') and $250 thereafter, and a market maker is assessed 
a permit based on the maximum number of OTPs held by an OTP Firm or 
OTP Holder during a calendar month ranging from $1,000 to $6,000 a 
month.
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    The Exchange's proposal to increase the NOM Participant Fee from 
$500 to $1,000 per month is equitable and not unfairly discriminatory 
because the Participant Fee will be assessed uniformly to each NOM 
Participant.

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 terms of intra-market competition, the Exchange's proposal to 
increase the NOM Participant Fee from $500 to $1,000 per month does not 
impose an undue burden on competition because the Exchange would 
uniformly assess the same Participant Fee to each NOM Participant. If 
the proposed amendment is unattractive to market participants, it is 
likely that the Exchange will lose Participants. Accordingly, the 
Exchange does not believe that the proposed changes will impair the 
ability of members 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.\15\
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    \15\ 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-2015-154 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-2015-154. 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.,

[[Page 81564]]

Washington, DC 20549 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 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-2015-154, and should 
be submitted on or before January 20, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-32820 Filed 12-29-15; 8:45 am]
BILLING CODE 8011-01-P


