Notice2021-26858
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Pricing Schedule at Options 7, Section 1, General Provisions
Primary source
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Published
December 13, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 236 (Monday, December 13, 2021)</title>
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[Federal Register Volume 86, Number 236 (Monday, December 13, 2021)]
[Notices]
[Pages 70872-70874]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-26858]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93728; File No. SR-NASDAQ-2021-095]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Pricing Schedule at Options 7, Section 1, General Provisions
December 7, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\
[[Page 70873]]
notice is hereby given that on December 1, 2021, The Nasdaq Stock
Market LLC (``Nasdaq'' or ``Exchange'') filed with the Securities and
Exchange Commission (``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\ 15 U.S.C. 78a.
\3\ 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 The Nasdaq Options Market LLC's
(``NOM'') Pricing Schedule at Options 7, Section 1, General Provisions.
While the changes proposed herein are effective upon filing, the
Exchange has designated the amendments become operative on December 1,
2021.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules</a>, 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
NOM proposes to amend its Pricing Schedule at Options 7, Section 1,
General Provisions. Specifically, NOM proposes to amend the way an
Exchange Participant indicates its participation in the Affiliated
Entity Program. Specifically, the Exchange proposes to amend the
description of ``Affiliated Entity'' within Options 7, Section 1,
General Provisions. Currently, the term ``Affiliated Entity'' is
described as,
a relationship between an Appointed MM and an Appointed OFP for
purposes of aggregating eligible volume for pricing in Options 7,
Sections 2(1) and 2(6) for which a volume threshold or volume
percentage is required to qualify for higher rebates or lower fees.
NOM Market Makers and OFPs are required to send an email to the
Exchange to appoint their counterpart at least 3 business days prior
to the last day of the month to qualify for the next month. The
Exchange will acknowledge receipt of the emails and specify the date
the Affiliated Entity is eligible for applicable pricing in Options
7, Sections 2(1) and 2(6). Each Affiliated Entity relationship will
commence on the 1st of a month and may not be terminated prior to
the end of any month. An Affiliated Entity Relationship will
terminate after a one (1) year period, unless either party
terminates earlier in writing by sending an email to the Exchange at
least 3 business days prior to the last day of the month to
terminate for the next month. Affiliated Entity relationships must
be renewed annually. Participants under Common Ownership may not
qualify as a counterparty comprising an Affiliated Entity. Each
Participant may qualify for only one (1) Affiliated Entity
relationship at any given time.
Today, Participants are required to annually renew their Affiliate
Entity relationship at the end of one year if they desire to continue
the relationship. The parties must both send an email to the Exchange
to avoid termination of the relationship, provided the relationship was
not terminated earlier in the year. The Exchange believes that this
process is burdensome for Participants that desire to remain in the
program. The consequence of not renewing is termination. The Exchange
desires to remove the administrative burden associated with the
requirement to annually renew and instead provide that the Affiliated
Entity relationship will automatically renew each month, unless
otherwise terminated. The proposed new rule text would provide,
The term ``Affiliated Entity'' is a relationship between an
Appointed MM and an Appointed OFP for purposes of aggregating
eligible volume for pricing in Options 7, Sections 2(1) and 2(6) for
which a volume threshold or volume percentage is required to qualify
for higher rebates or lower fees. NOM Market Makers and OFPs are
required to send an email to the Exchange to appoint their
counterpart at least 3 business days prior to the last day of the
month to qualify for the next month. The Exchange will acknowledge
receipt of the emails and specify the date the Affiliated Entity is
eligible for applicable pricing in Options 7, Sections 2(1) and
2(6). Each Affiliated Entity relationship will commence on the 1st
of a month and may not be terminated prior to the end of any month.
An Affiliated Entity Relationship will automatically renew each
month until or unless either party terminates earlier in writing by
sending an email to the Exchange at least 3 business days prior to
the last day of the month to terminate for the next month.
Participants under Common Ownership may not qualify as a
counterparty comprising an Affiliated Entity. Each Participant may
qualify for only one (1) Affiliated Entity relationship at any given
time.
As is the case today, parties to the Affiliated Entity relationship
may decide to terminate the relationship during any month by sending an
email to the Exchange at least 3 business days prior to the last day of
the month to terminate for the next month. Cboe Exchange, Inc.
(``Cboe'') has a similar automatic renewal process for its Appointed
OFP and Appointed Market-Maker Program.\4\ The Exchange believes that
this amendment will streamline the workflow for Participants by not
requiring Participants to renew each year to continue the affiliated
relationship.
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\4\ See Cboe's Fees Schedule at footnote 23 ``A Market-Maker may
designate an Order Flow Provider (``OFP'') as its ``Appointed OFP''
and an OFP may designate a Market-Maker to be its ``Appointed
Market-Maker'' for purposes of qualifying for credits under AVP. In
order to effectuate the appointment, the parties would need to
submit the Appointed Affiliate Form to the Exchange by 3:00 p.m. CST
on the first business day of the month in order to be eligible to
qualify for credits under AVP for that month. The Exchange will
recognize only one such designation for each party once every
calendar month, which designation will automatically renew each
month until or unless the Exchange receives an email from either
party indicating that the appointment has been terminated. A Market-
Maker that has both an Affiliate OFP and Appointed OFP will only
qualify based upon the volume of its Appointed OFP. The volume of an
OFP that has both an Affiliate Market-Maker and Appointed Market-
Maker will only count towards qualifying the Appointed Market-Maker.
Volume executed in open outcry is not eligible to receive a credit
under AVP.''
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\5\ in general, and furthers the objectives of Sections
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,
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposal to amend the way Exchange Participants
indicate their participation in the Affiliated Entity Program is
reasonable. Today, Participants are required to annually renew their
Affiliated Entity relationship at the end of one year if they desire to
continue the relationship. The parties must both send an email to the
Exchange to avoid termination of the relationship, provided the
relationship was not terminated earlier in the year. The Exchange
believes that this process is burdensome for Participants that desire
to remain in the program. The consequence of not renewing is
termination of their participation in the
[[Page 70874]]
program. The Exchange desires to remove the administrative burden
associated with the requirement to annually renew and instead provide
that the Affiliated Entity relationship will automatically renew each
month, unless otherwise terminated. As is the case today, parties to
the Affiliated Entity relationship may decide to terminate the
relationship during any month by sending an email to the Exchange at
least 3 business days prior to the last day of the month to terminate
for the next month. Also, Cboe has a similar automatic renewal process
for its Appointed OFP and Appointed Market-Maker Program.\7\ The
Exchange believes that this amendment will streamline the workflow for
Participants by not requiring Participants to renew each year to
continue the affiliated relationship.
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\7\ See Cboe's Fees Schedule at footnote 23 ``A Market-Maker may
designate an Order Flow Provider (``OFP'') as its ``Appointed OFP''
and an OFP may designate a Market-Maker to be its ``Appointed
Market-Maker'' for purposes of qualifying for credits under AVP. In
order to effectuate the appointment, the parties would need to
submit the Appointed Affiliate Form to the Exchange by 3:00 p.m. CST
on the first business day of the month in order to be eligible to
qualify for credits under AVP for that month. The Exchange will
recognize only one such designation for each party once every
calendar month, which designation will automatically renew each
month until or unless the Exchange receives an email from either
party indicating that the appointment has been terminated. A Market-
Maker that has both an Affiliate OFP and Appointed OFP will only
qualify based upon the volume of its Appointed OFP. The volume of an
OFP that has both an Affiliate Market-Maker and Appointed Market-
Maker will only count towards qualifying the Appointed Market-Maker.
Volume executed in open outcry is not eligible to receive a credit
under AVP.''
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The Exchange's proposal to amend the way Exchange Participants
indicate their participation in the Affiliated Entity Program is
equitable and not unfairly discriminatory. Today, any Participant may
participate in the Affiliated Entity Program. The proposed changes
would impact all Participants that voluntarily elect to participate in
the Affiliated Entity Program in a uniform manner.
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.
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition. Cboe has a similar automatic renewal process for its
Appointed OFP and Appointed Market-Maker Program \8\ as proposed herein
for the Affiliated Entity Program.
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\8\ Id.
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Intra-Market Competition
The Exchange's proposal to amend the way Exchange Participants
indicate their participation in the Affiliated Entity Program does not
impose an undue burden on competition. Today, any Participant may
participate in an Affiliated Entity relationship. The proposed changes
would impact all Participants that voluntarily elect to participate in
the Affiliated Entity Program in a uniform manner.
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.\9\
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\9\ 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#7604031a135b15191b1b131802053605131558111900"><span class="__cf_email__" data-cfemail="5123243d347c323e3c3c343f2522112234327f363e27">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2021-095 on the subject line.
Paper Comments
<bullet> 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-2021-095. 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 website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2021-095, and should be submitted
on or before January 3, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26858 Filed 12-10-21; 8:45 am]
BILLING CODE 8011-01-P
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