Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposes to amend the fee schedule applicable to Members
The text of the proposed rule change is available at the Exchange's Web site at
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 parts of such statements.
The Exchange proposes to modify the "Options Pricing" section of its fee schedule effective September 10, 2012, in order to modify pricing related to executions that occur on the NASDAQ Options Market ("NOM"). NOM implemented certain pricing changes effective September 4, 2012,
The Exchange currently charges certain flat rates for routing to other options exchanges that have been placed into three groups based on the approximate cost of routing to such venues. The grouping of away options exchanges is based on the cost of transaction fees assessed by each venue as well as costs to the Exchange for routing (i.e., clearing fees, connectivity and other infrastructure costs, membership fees, etc.) (collectively, "Routing Costs"). For routing to options exchanges in the Exchange's highest price grouping, the Exchange currently assesses fees of $0.50 per contract for Customer orders and $0.55 per contract for orders on behalf of all other participants. With the recent change by NOM to charge non-Customer executions a rate of $0.47 per contract for penny pilot options, the Exchange believes NOM no longer fits in this category. This is due, in part, to the fact that NOM charges $0.50 per contract for non-Customer orders in non-penny pilot options, and the Exchange incurs various Routing Costs in addition to this fee. Accordingly, the Exchange proposes to adopt a new category for NOM under which it will charge a fee of $0.57 per contract for Professional, Firm, or Market Maker orders routed to and executed at NOM in options other than Specified Symbols, which are described in further detail below. This fee will help the Exchange to recoup clearing and transaction charges incurred by the Exchange, as well as other Routing Costs, in connection with routing to NOM.
NOM also recently implemented specific fees for options on specified securities that the Exchange proposes to identify as "NOM Specified Symbols."
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.
The Exchange believes that the proposed modifications to routing fees applicable for orders routed to and executed at NOM is fair, equitable and reasonable because the fees are an approximation of the cost to the Exchange for routing orders to NOM. The Exchange believes that its flat fee structure for orders routed to various venues is a fair and equitable approach to pricing, as it provides certainty with respect to execution fees at groups of away options exchanges. Each destination market's transaction charge varies and there is a standard clearing charge for each transaction incurred by the Exchange along with other administrative and technical costs that are incurred by the Exchange. Under its flat fee structure, taking all costs to the Exchange into account, the Exchange may operate at a slight gain or a slight loss for orders routed to and executed at NOM. As a general matter, the Exchange believes that the proposed fees will allow it to recoup and cover its costs of providing routing services to NOM. Specifically, the Exchange believes that the proposed routing fees will enable the Exchange to recover the remove fees assessed for the Exchange's routing to NOM, plus other Routing Costs associated with the execution of orders that have been routed to NOM. The Exchange also believes that its increase to fees for Directed ISO's to NOM in Specified Symbols to $0.95 per contract (from the current charge of $0.60 per contract for all other Directed ISO's) is fair, equitable and reasonable because the fees are also an approximation of the cost to the Exchange for routing orders to NOM in Specified Symbols. The Exchange also believes that the proposed fee structure for orders routed to and executed at NOM, including Directed ISOs in Specified Symbols, is not unreasonably discriminatory, again, because it is based on and intended to approximate the cost of routing to NOM.
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. To the contrary, the change to routing fees will assist the Exchange in recouping costs for routing orders to NOM on behalf of its participants, and absent such change, the Exchange would be subsidizing routing to NOM by Exchange participants. The Exchange also notes that Users may choose to mark their orders as ineligible for routing to avoid incurring routing fees.
No written comments were solicited or received.
Pursuant to Section 19(b)(3)(A)(ii) of the Act
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
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:
* Use the Commission's Internet comment form (
* Send an email to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.