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

In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for 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 Port Fees for the following ports from $600.00 to $650.00 per port, per month, per mnemonic: Order Entry Port,
[3]

CTI Port,
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ITTO Port,
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BONO Port,
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Order Entry DROP Port Fees
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and OTTO Drop Ports.
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The OTTO Port
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will be increased from $600.00 to $750.00 per port, per month, per mnemonic, and the SQF Port
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will be increased from $600.00 to $750.00 per port, per month. ITTO and BONO Port fees will continue to be assessed to non-NOM Participants and NOM Participants.

Each NOM Participant is assigned a market participant identifier or “mnemonic”
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and in some cases, certain NOM Participants request multiple mnemonics for purposes of accounting for trading activity. These mnemonics identify users at a particular NOM Participant. The Exchange bills its port fees based on the number of mnemonics configured for each port. By

way of example, if a NOM Participant, ABC, requested 2 ports from the Exchange and further requested that each port be configured to be accessed by 4 mnemonics or in some cases account numbers,
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the NOM Participant, today, would be billed for 8 ports at the rate of $600 per port for that month. All billing is captured at the Participant level. NOM Participants may choose to have multiple mnemonics or in some case multiple account numbers for the convenience of conducting their business, however only one mnemonic and one account number is required to conduct business on NOM. The aforementioned will not apply to SQF ports, which are not billed by mnemonic.

The Exchange is proposing to increase OTTO and SQF Ports from $600.00 to $750.00, per port, per month, per mnemonic for the OTTO Port and per port, per month for the SQF port. All other port fees (Order Entry Port, CTI Port, ITTO Port, BONO Port, Order Entry DROP Port and OTTO Drop Ports) will increase from $600.00 to $650.00 per port, per month, per mnemonic. NOM Market Makers utilize OTTO and SQF ports for their market making business, which ports require a greater throughput as compared to the other ports mentioned herein. The Exchange expends greater resources to provide the OTTO and SQF ports, which is the reason for the increased fee for these ports as compared to other ports.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
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in general, and with Section 6(b)(4) and 6(b)(5) of the Act,
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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 NASDAQ operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.

The Exchange believes that increasing the Order Entry Port, CTI Port, ITTO Port, BONO Port, Order Entry DROP Port and OTTO DROP Port fees from $600 to $650 per port, per month, per mnemonic is reasonable because it would allow the Exchange to keep pace with increasing technology costs. The increased Port Fees reflect the increased costs that the Exchange bears with respect to maintaining ports. The Port Fees are reasonable because they enable the Exchange to offset, in part, its connectivity costs associated with making such ports available, including costs based on gateway software and hardware enhancements and resources dedicated to gateway development, quality assurance, and support. The Exchange’s Port Fees are in line with costs for ports at other options exchanges.
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The Exchange believes that increasing the Order Entry Ports, CTI Ports, ITTO Ports, BONO Ports, Order Entry DROP Port and OTTO DROP Port fees from $600 to $650 per port, per month, per mnemonic is equitable and not unfairly discriminatory because the Exchange assesses the same fees for all ports to all NOM participants.
The Exchange believes that increasing the OTTO Port and SQF Port Fees from $600 to $750 is reasonable because it would allow the Exchange to keep pace with increasing technology costs. NOM Market Makers utilize the OTTO and SQF ports, which ports require a greater throughput as compared to the other ports mentioned herein. The Exchange expends greater resources to provide the OTTO and SQF ports, which is the reason for the increased fee as compared to other ports. The increased Port Fees reflect the increased costs that the Exchange bears with respect to maintaining ports. The Port Fees are reasonable because they enable the Exchange to offset, in part, its connectivity costs associated with making such NOM Market Maker ports available, including costs based on gateway software and hardware enhancements and resources dedicated to gateway development, quality assurance, and support. The Exchange’s Port Fees are in line with costs for ports at other options exchanges.
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The Exchange believes that increasing the OTTO Port and SQF Port Fees from $600 to $750 is equitable and not unfairly discriminatory because the Exchange assesses the same fees for these ports which are utilized by NOM Market Makers for any NOM market participant desiring these ports.
B. Self-Regulatory Organization’s Statement on Burden on Competition

NASDAQ 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. The Exchange believes the proposed fee change is reasonably designed to be fair and equitable, and therefore, will not unduly burden any particular group of market participants trading on the Exchange. The Exchange’s proposal to increase all port fees for all NOM Participants with respect to the Order Entry Port, CTI Port, ITTO Port, BONO Port, Order Entry DROP Port and OTTO DROP Port fees from $600 to $650 does not create an undue burden on competition. The proposed fees are designed to ensure a fair and reasonable use of Exchange resources by allowing the Exchange to recoup for certain of its connectivity costs, while continuing to offer competitive rates to NOM Participants.
With respect to the OTTO Port and SQF Port Fees, the increase in the port fees from $600 to $750 is greater. These ports are utilized by NOM Market Makers in connection with marking markets. NOM Market Makers utilize the OTTO and SQF ports, which ports require a greater throughput as compared to the other ports mentioned herein. The Exchange expends greater resources to provide the OTTO and SQF ports, which is the reason for the increased fee as compared to other ports. The increased Port Fees reflect the increased costs that the Exchange bears with respect to maintaining ports. The Exchange does not believe these fee increases create an undue burden on competition. Moreover, the Exchange believes that its fee increases are competitive with similar fees at other options exchanges.
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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.


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