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 immediately, in order to modify pricing related to executions that occur on the NASDAQ Options Market ("NOM"). NOM implemented certain pricing changes effective October 1, 2012,
The Exchange currently charges certain flat rates for routing to other options exchanges that have been placed into 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"). Based on recent changes to NOM pricing, the Exchange adopted two categories for NOM under which it charges: (i) A fee of $0.50 per contract for Customer
As noted above, NOM currently imposes specific fees for options on specified securities that the Exchange identifies on its fee schedule as "NOM Specified Symbols." Such NOM Specified Symbols currently include options on Facebook ("FB"), Google ("GOOG") and Groupon ("GRPN"). The fee charged by NOM to remove liquidity in NOM Specified Symbols is $0.79 per contract for NOM customer and NOM market maker orders and $0.85 per contract for all other participant capacities. NOM recently announced adoption of identical pricing for non-Penny Pilot Securities.
In addition, the Exchange currently charges a flat fee of $0.95 per contract for Directed ISOs to NOM in NOM Specified Symbols and $0.60 per contract for any other Directed ISO. In order to cover the cost of removing liquidity in non-Penny Pilot Securities at NOM, including Routing Costs, the Exchange proposes to charge the same fee as it does for Directed ISOs to NOM in NOM Specified Symbols, $0.95 per contract, for Directed ISOs to NOM in non-Penny Pilot Securities.
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 of orders in non-Penny Pilot Securities to NOM, plus other Routing Costs associated with the execution of such orders that have been routed to NOM. The Exchange also believes that its increase to fees for Directed ISO's to NOM in non-Penny Pilot Securities to $0.95 per contract (from the current charge of $0.60 per contract for all Directed ISO's other than in NOM Specified Symbols) is fair, equitable and reasonable because the fees are also an approximation of the cost to the Exchange for routing orders to NOM in non-Penny Pilot Securities. The Exchange also believes that the proposed fee structure for orders routed to and executed at NOM, including Directed ISOs in non-Penny Pilot Securities, 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 public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
Interested persons are invited to submit written data, views, and
* 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.