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Friday, July 31, 2020

Options Trader Alert #2020 - 21
Nasdaq NOM Updated Pricing Effective August 3, 2020

Category:

  • Pricing

Markets Impacted:

Contact Information:

Resources:

Effective Monday, August 3, 2020, pending filing with the SEC, the following changes will apply to the Nasdaq Options Market (NOM):

  • “Penny Pilot Options” and “Non-Penny Pilot Options” where referenced throughout the Pricing Schedule will be replaced with “Penny Symbols” and “Non-Penny Symbols”.

  • Transaction rebates and fees will be restructured into tables and notes will be relocated as described below.

  • NOM Market Maker symbol-specific Tier 3 and 4 Rebates to Add Liquidity in Penny Symbols are detailed, without change, in new note "4".

  • Participants that add NOM Market Maker liquidity in Non-Penny Symbols of 10,000 to 14,999 contracts per day in a month will be assessed $0.00 per contract Non-Penny Symbol Fee to Add Liquidity in that month.

  • Participants that add NOM Market Maker liquidity in Non-Penny Symbols of 15,000 or more ADV contracts per day in a month will receive a $0.30 per contract Non-Penny Symbol Rebate to Add Liquidity for that month instead of paying the Non-Penny Symbol Fee for Adding Liquidity. Previous qualifications were 7,500 contracts and 10,000 contracts, respectively.

  • A Participant that qualifies for Customer or Professional Penny Symbol Tier 6 Rebate to Add Liquidity in a month will continue to receive an additional $0.20 per contract Non-Penny Symbol Rebate to Add Liquidity as Customer and will now receive an additional $0.10 per contract Non-Penny Symbol Rebate to Add Liquidity as Professional for such transactions which adds liquidity in Non-Penny Symbols in that month.

  • Relocated existing note “c” to new note “7”. Professionals will no longer receive rebates associated with this note incentive.

  • Relocated existing note “d” to new note “8”. Professionals will no longer receive rebates associated with this note incentive.

  • Relocated existing note “e and note “f” to new notes “9” and “10” and amending Rebates to Add Liquidity in Penny and Non-Penny Symbols applicable to Professional. Specifically, the Professional Rebate to Add Liquidity in Penny Symbols will be $0.48 per contract and the Professional Rebate to Add Liquidity in Non-Penny Symbols will be $0.90 per contract.

  • MARS Payment (Penny) Tier 1 and Tier 2 rebates will be increased to $0.11 per contract from $0.07 and $0.09, respectively.

  • MARS Payment (Non-Penny) Tier 1 will be increased to $0.24 per contract from $0.15 per contract.

  • MARS Payment (Non-Penny) Tier 2 will be increased to $0.29 per contract from $0.20 per contract.

  • MARS Payment (Non-Penny) Tier 3 will be increased to $0.39 per contract from $0.30 per contract.

  • MARS Payment schedule changes to add Tier 6 through Tier 9 pricing are detailed below.

  • MARS Payment note “*” has been amended. NOM Participants that qualify for Customer and Professional Penny Symbols Rebate to Add Liquidity Tier 6 will no longer receive a $0.09 per contract additional rebate in Penny Symbols, but will now receive a $0.20 per contract rebate in lieu of Penny MARS Payment Tiers 1 – 5 on MARS Eligible Contracts the NOM Participant qualifies for in a given month.

  • MARS Payment notes “@” and “&” have been removed.

    • Rebates to Add Liquidity in Penny Symbols

    Market ParticipantTier 1Tier 2Tier 3Tier 4Tier 5Tier 6
    Customer (1)(8)(9)(10)($0.20)($0.25)($0.42)($0.43)($0.45)($0.48)(7)
    Professional (1)(9)(10)($0.20)($0.25)($0.42)($0.43)($0.45)($0.48)
    Broker-Dealer($0.10)N/AN/AN/AN/AN/A
    Firm($0.10)N/AN/AN/AN/AN/A
    Non-NOM Market Maker($0.10)N/AN/AN/AN/AN/A
    NOM Market Maker (3)($0.20)($0.25)($0.30)(4)($0.32)(4)($0.44)(11)($0.48)

    Fees and Rebates to Add Liquidity in Non-Penny Symbols

    Customer (9)(10)(12)($0.80)
    Professional (9)(10)(12)($0.80)
    Broker-Dealer$0.45
    Firm$0.45
    Non-NOM Market Maker$0.45
    NOM Market Maker (5)(6)$0.35 / ($0.30)

    Fees to Remove Liquidity in Penny and Non-Penny Symbols

    Market ParticipantPenny SymbolsNon-Penny Symbols
    Customer$0.48$0.85
    Professional$0.48$0.85
    Broker-Dealer$0.50$1.10
    Firm$0.50$1.10
    Non-NOM Market Maker (2)$0.50$1.10
    NOM Market Maker (2)$0.50$1.10
    (1) The Customer and Professional Rebate to Add Liquidity in Penny Symbols will be paid per the highest tier achieved below. To determine the applicable percentage of total industry customer equity and ETF option average daily volume, unless otherwise stated, the Participant's Penny Symbol and Non-Penny Symbol Customer and/or Professional volume that adds liquidity will be included.

    Monthly Volume:
    Tier 1Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols of up to 0.10% of total industry customer equity and ETF option average daily volume (“ADV”) contracts per day in a month
    Tier 2Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.10% to 0.20% of total industry customer equity and ETF option ADV contracts per day in a month
    Tier 3Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.20% to 0.30% of total industry customer equity and ETF option ADV contracts per day in a month
    Tier 4Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.30% to 0.40% of total industry customer equity and ETF option ADV contracts per day in a month
    Tier 5Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.40% to 0.80% of total industry customer equity and ETF option ADV contracts per day in a month
    Tier 6Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.80% or more of total industry customer equity and ETF option ADV contracts per day in a month, or Participant adds: (1) Customer and/or Professional liquidity in Penny Symbols and/or Non-Penny Symbols of 0.20% or more of total industry customer equity and ETF option ADV contracts per day in a month, and (2) has added liquidity in all securities through one or more of its Nasdaq Market Center MPIDs that represent 1.00% or more of Consolidated Volume in a month or qualifies for MARS (defined below)
    (2) Participants that add 1.30% of Customer, Professional, Firm, Broker-Dealer or Non-NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of total industry customer equity and ETF option ADV contracts per day in a month will be subject to the following pricing applicable to executions: a $0.48 per contract Penny Symbols Fee for Removing Liquidity when the Participant is (i) both the buyer and the seller or (ii) the Participant removes liquidity from another Participant under Common Ownership.

    Participants that add 1.50% of Customer, Professional, Firm, Broker-Dealer or Non-NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of total industry customer equity and ETF option ADV contracts per day in a month and meet or exceed the cap for The Nasdaq Stock Market Opening Cross during the month will be subject to the following pricing applicable to executions less than 10,000 contracts: a $0.32 per contract Penny Symbols Fee for Removing Liquidity when the Participant is (i) both the buyer and seller or (ii) the Participant removes liquidity from another Participant under Common Ownership.

    Participants that add 1.75% of Customer, Professional, Firm, Broker-Dealer or Non-NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of total industry customer equity and ETF option ADV contracts per day in a month will be subject to the following pricing applicable to executions less than 10,000 contracts: a $0.32 per contract Penny Symbols Fee for Removing Liquidity when the Participant is (i) both the buyer and seller or (ii) the Participant removes liquidity from another Participant under Common Ownership.

    (3) The NOM Market Maker Rebate to Add Liquidity in Penny Symbols will be paid per the highest tier achieved below.

    Monthly Volume:
    Tier 1Participant adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of up to 0.10% of total industry customer equity and ETF option average daily volume (“ADV”) contracts per day in a month
    Tier 2Participant adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 0.10% to 0.20% of total industry customer equity and ETF option ADV contracts per day in a month
    Tier 3Participant: (a) adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 0.20% to 0.60% of total industry customer equity and ETF option ADV contracts per day in a month: or (b)(1) transacts in all securities through one or more of its Nasdaq Market Center MPIDs that represent 0.70% or more of Consolidated Volume (“CV”) which adds liquidity in the same month on The Nasdaq Stock Market, (2) transacts in Tape B securities through one or more of its Nasdaq Market Center MPIDs that represent 0.18% or more of CV which adds liquidity in the same month on The Nasdaq Stock Market, and (3) executes greater than 0.01% of CV via Market-on- Close/Limit-on-Close (“MOC/LOC”) volume within The Nasdaq Stock Market Closing Cross in the same month
    Tier 4Participant adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of above 0.60% to 0.90% of total industry customer equity and ETF option ADV contracts per day in a month
    Tier 5Participant adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of above 0.40% of total industry customer equity and ETF option ADV contracts per day in a month and transacts in all securities through one or more of its Nasdaq Market Center MPIDs that represent 0.40% or more of Consolidated Volume (“CV”) which adds liquidity in the same month on The Nasdaq Stock Market
    Tier 6Participant: (a)(1) adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 0.95% of total industry customer equity and ETF option ADV contracts per day in a month, (2) executes Total Volume of 250,000 or more contracts per day in a month, of which 30,000 or more contracts per day in a month must be removing liquidity, and (3) adds Firm, Broker-Dealer and Non-NOM Market Maker liquidity in Non-Penny Symbols of 10,000 or more contracts per day in a month; or (b)(1) adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 1.50% of total industry customer equity and ETF option ADV contracts per day in a month, and (2) executes Total Volume of 250,000 or more contracts per day in a month, of which 15,000 or more contracts per day in a month must be removing liquidity
    * “Total Volume” shall be defined as Customer, Professional, Firm, Broker-Dealer, Non-NOM Market Maker and NOM Market Maker volume in Penny Symbols and/or Non-Penny Symbols which either adds or removes liquidity on NOM.

    (4) Participants who achieve the NOM Market Maker Tier 3 or Tier 4 Rebate to Add Liquidity will receive $0.40 per contract to add liquidity in in the following symbols: AAPL, SPY, QQQ, IWM, and VXX.

    (5) The NOM Market Maker Fee for Adding Liquidity in Non-Penny Symbols will apply unless Participants meet the volume thresholds set forth in this note. Participants that add NOM Market Maker liquidity in Non-Penny Symbols of 10,000 to 14,999 ADV contracts per day in a month will be assessed a $0.00 per contract Non-Penny Options Fee for Adding Liquidity in that month. Participants that add NOM Market Maker liquidity in Non-Penny Symbols of 15,000 or more ADV contracts per day in a month will receive the Non-Penny Rebate to Add Liquidity for that month instead of paying the Non-Penny Fee for Adding Liquidity.

    (6) Participants that qualify for the Tier 6 NOM Market Maker Rebate to Add Liquidity in Penny Symbols will receive a $0.86 per contract NOM Market Maker Rebate to Add Liquidity in Non-Penny Symbols. Participants that qualify for Tier 7 or higher in the MARS Payment Schedule in Section (6) will receive an additional $0.02 per contract NOM Market Maker Rebate to Add Liquidity in Non-Penny Symbols, in addition to receiving a $0.86 per contract NOM Market Maker Rebate to Add Liquidity in Non-Penny Symbols. Participants that qualify for note “5” and note “6” incentives will receive the greater of the note “5” or note “6” incentive, but not both incentives.

    (7) Participants that: (1) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non- Penny Symbols of 1.15% or more of total industry customer equity and ETF option ADV contracts per day in a month will receive an additional $0.02 per contract Penny Symbol Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Symbol in that month; or (2) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols of 1.30% or more of total industry customer equity and ETF option ADV contracts per day in a month will receive an additional $0.05 per contract Penny Symbol Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Symbols in that month; or (3) (a) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker- Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.80% of total industry customer equity and ETF option ADV contracts per day in a month, (b) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Non-Penny Symbols above 0.12% of total industry customer equity and ETF option ADV contracts per day in a month, and (c) execute greater than 0.04% of Consolidated Volume (“CV”) via Market-on-Close/Limit-on- Close (“MOC/LOC”) volume within The Nasdaq Stock Market Closing Cross within a month will receive an additional $0.05 per contract Penny Symbol Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Symbols in a month. Consolidated Volume shall mean the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot. For purposes of calculating Consolidated Volume and the extent of an equity member's trading activity, expressed as a percentage of or ratio to Consolidated Volume, the date of the annual reconstitution of the Russell Investments Indexes shall be excluded from both total Consolidated Volume and the member’s trading activity.

    (8) NOM Participants that qualify for any MARS Payment Tier in Section (6) will receive: (1) an additional $0.05 per contract Penny Symbol Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Symbols in that month, in addition to qualifying Customer Rebate to Add Liquidity Tier 1, or (2) an additional $0.04 per contract Penny Symbol Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Symbols in that month, in addition to qualifying Penny Symbol Customer Rebate to Add Liquidity Tiers 2-6. NOM Participants that qualify for note “7” and note “8” incentives will receive the greater of the note “7” or note “8” incentive, but not both.

    (9) NOM Participants that transact in all securities through one or more of its Nasdaq Market Center MPIDs that represent 3.00% or more of Consolidated Volume in the same month on The Nasdaq Stock Market will receive a $0.50 per contract rebate to add liquidity in Penny Symbols as Customer, a $0.48 per contract rebate as Professional, a $1.00 per contract rebate to add liquidity in Non-Penny Symbols as Customer, and a $0.90 per contract rebate to add liquidity in Non-Penny Symbols as Professional. Participants that qualify for this rebate would not be eligible for any other rebates in Tiers 1-6 or other rebate incentives on NOM for Customer and Professional order flow in Options 7, Section 2(1).

    (10) NOM Participants that (a) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 1.20% of total industry customer equity and ETF option ADV contracts per day in a month, (b) execute greater than 0.04% of Consolidated Volume (“CV”) via Market-on-Close/Limit-on-Close (“MOC/LOC”) volume within The Nasdaq Stock Market Closing Cross within a month, and (c) add greater than 1.5 million shares per day of non-displayed volume within The Nasdaq Stock Market within a month will receive a $0.55 per contract Rebate to Add Liquidity in Penny Symbols as Customer, a $0.48 per contract Rebate to Add Liquidity in Penny Symbols as Professional, and a $1.05 per contract Rebate to Add Liquidity in Non-Penny Symbols as Customer, and a $0.90 per contract Rebate to Add Liquidity in Non-Penny Symbols as Professional. Participants that qualify for this rebate would not be eligible for any other rebates in Tiers 1-6 or other rebate incentives on NOM for Customer and Professional order flow in Options 7, Section 2(1).

    (11) NOM Participants that qualify for the Tier 5 NOM Market Maker Rebate to Add Liquidity in Penny Symbols and add NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of above 0.50% of total industry customer equity and ETF option ADV contracts per day in a month, will receive a $0.46 per contract rebate to add liquidity in Penny Symbols as Market Maker in lieu of the Tier 5 rebate.

    (12) A Participant that qualifies for Customer or Professional Penny Symbol Rebate to Add Liquidity Tiers 2, 3, 4, or 5 in a month will receive an additional $0.10 per contract Non-Penny Symbol Rebate to Add Liquidity for each transaction which adds liquidity in Non-Penny Symbols in that month. A Participant that qualifies for Customer or Professional Penny Symbol Rebate to Add Liquidity Tier 6 in a month will receive an additional $0.20 per contract Non-Penny Symbol Rebate to Add Liquidity as Customer and an additional $0.10 per contract Non-Penny Symbol Rebate to Add Liquidity as Professional for such transactions which add liquidity in Non-Penny Symbols in that month.

    MARS Payment

    NOM Participants that have System Eligibility and have executed the requisite number of Eligible Contracts in a month will be paid the following rebates:

    TiersAverage Daily Volume ("ADV")MARS Payment (Penny)MARS Payment (Non-Penny)
    12,000$0.07 $0.11*^$0.15 $0.24^
    25,000$0.09 $0.11*^$0.20 $0.29^
    310,000 $0.11*^$0.30 $0.39^
    420,000$0.15*^$0.50^
    445,000$0.17*^$0.60^
    475,000$0.20^$0.75^
    4100,000$0.20^$0.78^
    4125,000$0.20^$0.81^
    4150,000$0.21^$0.84^
    The specified MARS Payment will be paid on all executed Eligible Contracts that add liquidity, which are routed to NOM through a participating NOM Participant's System and meet the requisite Eligible Contracts ADV. No payment will be made with respect to orders that are routed to NOM, but not executed.

    A Participant will not be entitled to receive any other revenue from the Exchange for the use of its System specifically with respect to orders routed to NOM.

    * NOM Participants that qualify for Customer and Professional Penny Symbols Rebate to Add Liquidity Tier 6 will receive a $0.20 per contract rebate in Penny Symbols in lieu of the Penny MARS Payment Tiers 1 – 5 on MARS Eligible Contracts the NOM Participant qualifies for in a given month.

    ^ NOM Participants that have total Affiliated Entity or Common Ownership average daily add volume ("ADAV") of 3.00% or more of total industry customer equity and ETF option ADV contracts per day in a month will receive an additional $0.01 per contract in Penny Symbols and an additional $0.03 per contract in Non-Penny Symbols, in addition to any MARS Payment Tier on MARS Eligible Contracts the NOM Participant qualifies for in a given month.

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