Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees, 13910-13913 [2017-05089]
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13910
Federal Register / Vol. 82, No. 49 / Wednesday, March 15, 2017 / Notices
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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–ISE–
2017–20 and should be submitted on or
before April 5, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–05083 Filed 3–14–17; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–80188; File No. SR–ISE–
2017–16]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend the Schedule of
Fees
March 9, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
24, 2017, the International Securities
Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I and II, 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.
asabaliauskas on DSK3SPTVN1PROD with NOTICES2
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s Schedule of Fees, as
described in further detail below.
The text of the proposed rule change
is available on the Exchange’s Web site
at www.ise.com, at the principal office
of the Exchange, and at the
Commission’s Public Reference Room.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
1 15
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adding liquidity in those symbols.
These Market Maker Plus rebates are
provided on a per symbol basis in three
tiers based on the time the Market
Maker is quoting at the national best bid
or offer (‘‘NBBO’’).8 Currently, the
rebate is $0.10 per contract for Tier 1,
$0.18 per contract for Tier 2, and $0.22
per contract for Tier 3.9 The Exchange
now proposes to increase the rebate for
Tier 1 to $0.15 per contract. The rebates
for Tier 2 and Tier 3, including the
special rebates for Market Makers that
achieve Market Maker Plus in SPY or
QQQ, will remain at the same amounts
as described herein.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Priority Customer Taker Fees
The Exchange charges a taker fee for
regular orders in Select Symbols. This
fee is $0.44 per contract for Market
Maker orders, and $0.45 per contract for
Non-ISE Market Maker,10 Firm
Proprietary 11/Broker-Dealer,12 and
Professional Customer 13 orders. For
Priority Customer orders this fee is
$0.31 per contract, or $0.26 per contract
for members with a total affiliated
Priority Customer average daily volume
(‘‘ADV’’) that equals or exceeds 200,000
contracts.14 The Exchange now
1. Purpose
The purpose of the proposed rule
change is to amend the Exchange’s
Schedule of Fees to make changes to (1)
the Market Maker Plus 3 program, (2)
Priority Customer 4 regular order taker
fees in Select Symbols,5 (3) Priority
Customer complex order rebates in
Select Symbols and Non-Select
Symbols,6 and (4) the threshold of net
zero complex contracts. Each of these
changes is described below.
SECURITIES AND EXCHANGE
COMMISSION
11 17
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.
Market Maker Plus
In order to promote and encourage
liquidity in Select Symbols, the
Exchange offers Market Makers 7 that
meet the quoting requirements for
Market Maker Plus enhanced rebates for
3 A ‘‘Market Maker Plus’’ is a Market Maker who
is on the National Best Bid or National Best Offer
a specified percentage of the time for series trading
between $0.03 and $3.00 (for options whose
underlying stock’s previous trading day’s last sale
price was less than or equal to $100) and between
$0.10 and $3.00 (for options whose underlying
stock’s previous trading day’s last sale price was
greater than $100) in premium in each of the front
two expiration months. The specified percentage is
at least 80% but lower than 85% of the time for Tier
1, at least 85% but lower than 95% of the time for
Tier 2, and at least 95% of the time for Tier 3. A
Market Maker’s single best and single worst quoting
days each month based on the front two expiration
months, on a per symbol basis, will be excluded in
calculating whether a Market Maker qualifies for
this rebate, if doing so will qualify a Market Maker
for the rebate.
4 A ‘‘Priority Customer’’ is a person or entity that
is not a broker/dealer in securities, and does not
place more than 390 orders in listed options per day
on average during a calendar month for its own
beneficial account(s), as defined in ISE Rule
100(a)(37A).
5 ‘‘Select Symbols’’ are options overlying all
symbols listed on the ISE that are in the Penny Pilot
Program.
6 ‘‘Non-Select Symbols’’ are options overlying all
symbols, excluding Select Symbols.
7 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See ISE Rule 100(a)(25).
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8 For all Market Maker Plus tiers, a $0.30 per
contract fee applies when trading against Priority
Customer complex orders that leg into the regular
order book. No fee is charged or rebate provided
when trading against non-Priority Customer
complex orders that leg into the regular order book).
9 In addition, the Exchange also offers lower
rebates for Market Makers that achieve Market
Maker Plus in SPY or QQQ. Specifically, Market
Makers that achieve Tier 2 or Tier 3 of Market
Maker Plus in either SPY or QQQ will receive the
SPY or QQQ rebate based on the highest Market
Maker tier achieved in either product. For example,
a Market Maker that achieves Tier 1 Market Maker
Plus in QQQ but Tier 3 Market Maker Plus in SPY
will receive a Tier 3 rebate in both SPY and QQQ.
Instead of the Tier 2 and Tier 3 rebates described
above, however, Market Maker Plus orders in SPY
or QQQ are entitled to a rebate of $0.16 per contract
for Tier 2, and $0.20 per contract for Tier 3.
10 A ‘‘Non-ISE Market Maker’’ is a market maker
as defined in Section 3(a)(38) of the Securities
Exchange Act of 1934, as amended, registered in the
same options class on another options exchange.
11 A ‘‘Firm Proprietary’’ order is an order
submitted by a member for its own proprietary
account.
12 A ‘‘Broker-Dealer’’ order is an order submitted
by a member for a broker-dealer account that is not
its own proprietary account.
13 A ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer.
14 Priority Customer ADV includes all volume in
all symbols and order types. All eligible volume
from affiliated members will be aggregated in
determining total affiliated Priority Customer ADV,
provided there is at least 75% common ownership
between the members as reflected on each
member’s Form BD, Schedule A. For purposes of
determining Priority Customer ADV, any day that
the regular order book is not open for the entire
trading day or the Exchange instructs members in
writing to route their orders to other markets may
be excluded from such calculation; provided that
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asabaliauskas on DSK3SPTVN1PROD with NOTICES2
proposes to increase the taker fee for
Priority Customer orders in Select
Symbols to $0.40 per contract for all
such orders regardless of volume. As
such, the Exchange also proposes to
delete the volume-based incentive for
Priority Customer orders in Select
Symbols, specifically the taker fee of
$0.26 per contract for members that
achieve the higher Priority Customer
ADV tier.
Priority Customer Complex Order
Rebates
Currently, the Exchange provides
rebates to Priority Customer complex
orders that trade with non-Priority
Customer complex orders in the
complex order book or trade with quotes
and orders on the regular order book.
Rebates are tiered based on a member’s
ADV executed during a given month as
follows: 0 to 29,999 contracts (‘‘Tier 1’’),
30,000 to 59,999 contracts (‘‘Tier 2’’),
60,000 to 99,999 contracts (‘‘Tier 3’’),
100,000 to 149,999 (‘‘Tier 4’’), 150,000
to 199,999 contracts (‘‘Tier 5’’), and
200,000 or more contracts (‘‘Tier 6’’). In
Select Symbols the rebate is $0.30 per
contract for Tier 1, $0.35 per contract for
Tier 2, $0.41 per contract for Tier 3,
$0.44 per contract for Tier 4, $0.46 per
contract for Tier 5, and $0.47 per
contract for Tier 6. In Non-Select
Symbols the rebate is $0.63 per contract
for Tier 1, $0.71 per contract for Tier 2,
$0.79 per contract for Tier 3, $0.81 per
contract for Tier 4, $0.83 per contract for
Tier 5, and $0.84 per contract for Tier
6.15
The Exchange now proposes to (i)
introduce two additional volume-based
tiers of Priority Customer complex order
rebates and (ii) in the existing tiers,
amend the volume requirements
necessary for achieving higher Priority
Customer complex order rebates. As
proposed, the ADV thresholds will be as
follows: 0 to 14,999 contracts (‘‘Tier 1’’),
15,000 to 44,999 contracts (‘‘Tier 2’’),
45,000 to 59,999 contracts (‘‘Tier 3’’),
60,000 to 74,999 contracts (‘‘Tier 4’’),
75,000 to 99,999 contracts (‘‘Tier 5’’),
100,000 to 124,999 contracts (‘‘Tier 6’’),
125,000 to 224,999 contracts (‘‘Tier 7’’),
and 225,000 or more contracts (‘‘Tier
8’’).
Under the proposal, the rebate
amounts provided for Priority Customer
complex orders in both Select Symbols
the Exchange will only remove the day for members
that would have a lower ADV with the day
included.
15 For both Select Symbols and Non-Select
Symbols, these rebates are provided per contract
per leg if the order trades with non-Priority
Customer orders in the complex order book, or
trades with quotes and orders on the regular order
book.
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and Non-Select Symbols will be
amended to reflect the tier changes
described above. In Select Symbols, the
proposed rebate will be $0.26 per
contract for Tier 1, $0.30 per contract for
Tier 2, $0.36 per contract for Tier 3,
$0.41 per contract for Tier 4, $0.42 per
contract for Tier 5, $0.44 per contract for
Tier 6, $0.46 per contract for Tier 7, and
$0.49 per contract for Tier 8. In NonSelect Symbols, the proposed rebate
will be $0.40 per contract for Tier 1,
$0.60 per contract for Tier 2, $0.70 per
contract for Tier 3, $0.75 per contract for
Tier 4, $0.75 per contract for Tier 5,
$0.80 per contract for Tier 6, $0.81 per
contract for Tier 7, and $0.85 per
contract for Tier 8. Other rebate
amounts—specifically, the Price
Improvement Mechanism (‘‘PIM’’)
Break-up Rebates for both Select and
Non-Select Symbols and the Facilitation
and Solicitation Break-up Rebate for
Select Symbols—will remain unchanged
from their current levels, including the
rebate amounts for the two proposed
additional tiers.
Net Zero Complex Orders
Today, the Exchange does not provide
rebates for Priority Customer complex
orders that trade at a net price at or near
$0.00 (i.e., net zero complex orders) that
are entered on behalf of originating
market participants that execute an ADV
of at least 10,000 net zero complex
orders in a given month. For purposes
of determining which complex orders
qualify as ‘‘net zero,’’ the Exchange
counts all complex orders that leg in to
the regular order book and are executed
at a net price that is within a range of
$0.01 credit and $0.01 debit.16 While
these complex orders would generally
not find a counterparty in the complex
order book, they may leg in to the
regular market where they are executed
by Market Makers or other market
participants on the individual legs who
pay a fee to trade with this order flow.
The fee Market Makers pay when a
complex order legs into their quote is
substantially higher than their fee or
rebate for non-complex orders that trade
against their quotes. The 10,000 contract
threshold exists to differentiate market
participants that are entering legitimate
complex orders from those that are
entering net zero complex orders solely
to earn a rebate.
The Exchange now proposes to lower
the threshold of net zero complex
contracts from 10,000 to 2,000 contracts.
16 For example, a market participant could enter
a net zero complex order that buys 500 contracts of
the $193 March 6, 2016 SPY Put at a price of $0.03
and sells 500 contracts of the $193.50 March 6,
2016 SPY Put at a price of $0.03 for a net price of
$0.00.
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As such, net zero priced complex orders
that leg into the regular order book and
are entered by firms with an ADV in this
type of activity of 2,000 contracts or
more in a given month will not earn the
Priority Customer complex order rebate.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,17 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,18 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.
Market Maker Plus Program
The Exchange believes that it is
reasonable and equitable to increase the
Tier 1 Market Maker Plus rebate because
it will encourage Market Makers to post
tighter markets in Select Symbols and
thereby maintain liquidity and attract
additional order flow to the ISE, which
will ultimately benefit all market
participants that trade on the Exchange.
The Tier 1 Market Maker Plus rebate has
proven to be an effective incentive for
Market Makers to provide liquidity in
Select Symbols. The Exchange believes
that the proposed Tier 1 Market Maker
Plus rebate is reasonable and equitably
allocated to those members that direct
orders to the Exchange rather than to a
competing exchange. The Exchange also
believes that the proposed Tier 1 Market
Maker Plus rebate is not unfairly
discriminatory because all Market
Makers can achieve the higher rebate by
satisfying the applicable Market Maker
Plus requirements.
Priority Customer Taker Fees
The Exchange believes that the
proposed changes to increase the
Priority Customer taker fee and
eliminate the Priority Customer taker fee
discount program for members with a
total affiliated Priority Customer ADV of
more than 200,000 contracts are
reasonable and equitable because the
proposed fees remain lower than the
fees charged to other market
participants that remove liquidity on the
Exchange. In addition, the Exchange
believes that it is equitable and not
unfairly discriminatory to continue to
provide lower fees for Priority Customer
orders. A Priority Customer is by
definition not a broker or dealer in
securities, and does not place more than
17 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
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asabaliauskas on DSK3SPTVN1PROD with NOTICES2
390 orders in listed options per day on
average during a calendar month for its
own beneficial account(s). This
limitation does not apply to participants
whose behavior is substantially similar
to that of market professionals,
including Professional Customers, who
will generally submit a higher number
of orders than Priority Customers.
average during a calendar month for its
own beneficial account(s). This
limitation does not apply to participants
whose behavior is substantially similar
to that of market professionals,
including Professional Customers, who
will generally submit a higher number
of orders (many of which do not result
in executions) than Priority Customers.
Priority Customer Complex Order
Rebates
The Exchange believes that it is
reasonable and equitable to make the
proposed changes, both to the volume
requirements necessary to achieve the
Priority Customer complex order rebates
and to the rebate amounts, as the
proposals are designed to attract
additional Priority Customer complex
order volume to the Exchange. Although
the Exchange is lowering the rebates for
Priority Customer complex orders, it is
also generally lowering the associated
volume thresholds to make it easier for
members to achieve the higher tiers.
While the proposed rebate amounts are
lower in some categories, the Exchange
believes that the proposed changes are
reasonable and equitable when looking
at the overall program for both NonSelect Symbol and Select Symbol
rebates. For example, a member who
received a $0.71 Non-Select Symbol
rebate for executing an ADV of 45,000
Non-Select Symbol contracts in a given
month under the existing program
would receive a $0.70 Non-Select
Symbol rebate under the proposed
program. However, a member who
would have received a $0.35 Select
Symbol rebate under the existing
program for executing the same ADV for
Select Symbol contracts in a given
month would receive a $0.36 Select
Symbol rebate under the proposed
program. Therefore, the Exchange
believes that the overall amendments to
its rebate program for Priority Customer
complex orders is reasonable and
equitable as proposed. In addition, the
Exchange believes that introducing an
additional volume-based tier with
higher rebate amounts will incentivize
members to send additional order flow
to the Exchange in order to achieve
these rebates for their Priority Customer
complex order volume, creating
additional liquidity to the benefit of all
members that trade complex orders on
the Exchange.
The Exchange further believes that it
is equitable and not unfairly
discriminatory to continue to provide a
rebate only for Priority Customer
complex orders. A Priority Customer is
by definition not a broker or dealer in
securities, and does not place more than
390 orders in listed options per day on
Net Zero Complex Orders
The Exchange believes that the
proposed change to lower the threshold
of net zero complex contracts is
reasonable, equitable, and not unfairly
discriminatory as it is designed to
remove financial incentives for market
participants to engage in rebate arbitrage
by entering valueless complex orders on
the Exchange that do not have any
economic purpose. The Exchange has
determined that the current threshold is
still too high to effectively discourage
market participants from engaging in
rebate arbitrage, and believes that the
lower threshold proposed in this filing
more accurately reflects the Exchange’s
original intent. No market participants
meet the current ADV threshold, as
firms have modified their activity to
ensure that their complex ADV in the
net zero range is lower than the 10,000
ADV threshold set in the original net
zero filing. In January 2017, for
example, the market participant with
the largest ADV in net zero contracts
executed an ADV of 1,250 net zero
contracts. By comparison the average
net zero ADV of market participants that
traded complex orders in January 2017
was only 12 contracts, with the vast
majority of these market participants
executing no net zero contracts. The
continued submission of a high volume
of net zero complex orders that leg into
the regular order book by these firms
has generated complaints from the
Market Makers that trade against these
orders in the regular order book, as
firms recognize these net zero complex
orders as essentially non-economic.
The Exchange believes that lowering
the threshold will make it more difficult
for firms to continue to enter net zero
complex orders purely to earn a rebate.
In particular, the Exchange notes that
any firm that engages in this activity
will be prevented from doing so with an
ADV of more than 2,000 net zero
complex orders. This will reduce the
cost of these trades to the Exchange and
its members as firms are limited in the
amount of this net zero complex order
activity that they can conduct on the
Exchange. While the proposed threshold
is still higher than current activity seen
in January 2017, the Exchange believes
that it is important to lower the ADV
threshold to ensure that market
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participants do not further increase this
activity. The Exchange believes that
market participants will stop entering
net zero complex orders when they
reach the proposed ADV threshold as
these firms are entering these orders
solely for the purpose of earning a
rebate. Indeed, this is consistent with
the Exchange’s experience with this rule
to date, as firms that were previously
entering a high volume of net zero
complex orders have reduced their
volume in activity covered by this rule.
To the extent that market participants
enter legitimate complex orders,
however, they will continue to receive
the same rebates that they do today. In
addition, market participants that enter
an insubstantial volume of net zero
complex orders will also continue to
receive rebates. The Exchange believes
that it is reasonable, equitable, and not
unfairly discriminatory to continue to
provide rebates where appropriate based
on the market participant executing
only a low ADV of net zero complex
orders. While the Exchange could
prohibit rebates for any net zero
complex orders without an ADV
threshold, doing so would disadvantage
innocent market participants that are
not engaged in rebate arbitrage. The
Exchange believes that the decision to
allow rebates for firms with a limited
ADV in net zero complex orders
properly balances the need to encourage
market participants to send order flow
to the Exchange, and the need to
prevent activity that is harmful to the
market. Moreover, all market
participants will be treated the same
based on their net zero ADV.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,19 the Exchange does not believe
that the proposed rule change will
impose any burden on intermarket or
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
fees and rebates remain competitive
with those on other options markets,
and will continue to attract order flow
to the Exchange. The Exchange operates
in a highly competitive market in which
market participants can readily direct
their order flow to competing venues. In
such an environment, the Exchange
must continually review, and consider
adjusting, its fees and rebates to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that the proposed fee
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U.S.C. 78f(b)(8).
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changes reflect this competitive
environment.
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,20 and Rule
19b–4(f)(2) 21 thereunder. 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:
asabaliauskas on DSK3SPTVN1PROD with NOTICES2
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
ISE–2017–16 on the subject line.
Paper Comments
• 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–ISE–2017–16. 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 Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
20 15
21 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
18:19 Mar 14, 2017
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 Web site 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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–ISE–
2017–16 and should be submitted on or
before April 5, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–05089 Filed 3–14–17; 8:45 am]
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
[Docket No. SSA–2017–0012]
Agency Information Collection
Activities: Proposed Request
The Social Security Administration
(SSA) publishes a list of information
collection packages requiring clearance
by the Office of Management and
Budget (OMB) in compliance with
Public Law 104–13, the Paperwork
Reduction Act of 1995, effective October
1, 1995. This notice includes a new
information collection.
SSA is soliciting comments on the
accuracy of the agency’s burden
estimate; the need for the information;
its practical utility; ways to enhance its
quality, utility, and clarity; and ways to
minimize burden on respondents,
including the use of automated
collection techniques or other forms of
information technology. Mail, email, or
fax your comments and
recommendations on the information
collection(s) to the OMB Desk Officer
and SSA Reports Clearance Officer at
the following addresses or fax numbers.
22 17
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13913
(OMB)
Office of Management and Budget, Attn:
Desk Officer for SSA, Fax: 202–395–
6974, Email address: OIRA_
Submission@omb.eop.gov
(SSA)
Social Security Administration, OLCA,
Attn: Reports Clearance Director, 3100
West High Rise, 6401 Security Blvd.,
Baltimore, MD 21235, Fax: 410–966–
2830, Email address:
OR.Reports.Clearance@ssa.gov
Or you may submit your comments
online through www.regulations.gov,
referencing Docket ID Number [SSA–
2017–0012].
The information collections below are
pending at SSA. SSA will submit them
to OMB within 60 days from the date of
this notice. To be sure we consider your
comments, we must receive them no
later than May 15, 2017. Individuals can
obtain copies of the collection
instruments by writing to the above
email address.
Authorization for the Social Security
Administration To Obtain Wage and
Employment Information From Payroll
Data Providers—0960–NEW. Section
824 of the Bipartisan Budget Act (BBA)
of 2015, Public Law 114–74, authorizes
the Social Security Administration
(SSA) to enter into information
exchanges with payroll data providers
for the purposes of improving program
administration and preventing improper
payments in the Social Security
Disability Insurance (SSDI) and
Supplemental Security Income (SSI)
programs. SSA will use Form SSA–
8240, ‘‘Authorization for the Social
Security Administration to Obtain Wage
and Employment Information from
Payroll Data Providers,’’ to secure the
authorization needed from the relevant
members of the public to obtain their
wage and employment information from
payroll data providers. Ultimately, SSA
will use this wage and employment
information to help determine program
eligibility and payment amounts.
The public will be able to complete
form SSA–8240 using the following
modalities: a paper form; the Internet;
and an in-office or telephone interview,
during which an SSA employee will
document the wage and employment
information authorization information
on one of SSA’s internal systems ((the
Modernized Claims System (MCS); the
Modernized Supplemental Security
Income Claims System (MSSICS);
eWork; or iMain)). The individual’s
authorization will remain effective until
one of the following four events occurs:
• SSA makes a final adverse decision
on the application for benefits, and the
E:\FR\FM\15MRN1.SGM
15MRN1
Agencies
[Federal Register Volume 82, Number 49 (Wednesday, March 15, 2017)]
[Notices]
[Pages 13910-13913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05089]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80188; File No. SR-ISE-2017-16]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Amend the Schedule of Fees
March 9, 2017.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 24, 2017, the International Securities Exchange, LLC
(``ISE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I and II, 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\ 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 Exchange's Schedule of Fees, as
described in further detail below.
The text of the proposed rule change is available on the Exchange's
Web site at www.ise.com, 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
The purpose of the proposed rule change is to amend the Exchange's
Schedule of Fees to make changes to (1) the Market Maker Plus \3\
program, (2) Priority Customer \4\ regular order taker fees in Select
Symbols,\5\ (3) Priority Customer complex order rebates in Select
Symbols and Non-Select Symbols,\6\ and (4) the threshold of net zero
complex contracts. Each of these changes is described below.
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\3\ A ``Market Maker Plus'' is a Market Maker who is on the
National Best Bid or National Best Offer a specified percentage of
the time for series trading between $0.03 and $3.00 (for options
whose underlying stock's previous trading day's last sale price was
less than or equal to $100) and between $0.10 and $3.00 (for options
whose underlying stock's previous trading day's last sale price was
greater than $100) in premium in each of the front two expiration
months. The specified percentage is at least 80% but lower than 85%
of the time for Tier 1, at least 85% but lower than 95% of the time
for Tier 2, and at least 95% of the time for Tier 3. A Market
Maker's single best and single worst quoting days each month based
on the front two expiration months, on a per symbol basis, will be
excluded in calculating whether a Market Maker qualifies for this
rebate, if doing so will qualify a Market Maker for the rebate.
\4\ A ``Priority Customer'' is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s), as defined in ISE Rule 100(a)(37A).
\5\ ``Select Symbols'' are options overlying all symbols listed
on the ISE that are in the Penny Pilot Program.
\6\ ``Non-Select Symbols'' are options overlying all symbols,
excluding Select Symbols.
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Market Maker Plus
In order to promote and encourage liquidity in Select Symbols, the
Exchange offers Market Makers \7\ that meet the quoting requirements
for Market Maker Plus enhanced rebates for adding liquidity in those
symbols. These Market Maker Plus rebates are provided on a per symbol
basis in three tiers based on the time the Market Maker is quoting at
the national best bid or offer (``NBBO'').\8\ Currently, the rebate is
$0.10 per contract for Tier 1, $0.18 per contract for Tier 2, and $0.22
per contract for Tier 3.\9\ The Exchange now proposes to increase the
rebate for Tier 1 to $0.15 per contract. The rebates for Tier 2 and
Tier 3, including the special rebates for Market Makers that achieve
Market Maker Plus in SPY or QQQ, will remain at the same amounts as
described herein.
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\7\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule
100(a)(25).
\8\ For all Market Maker Plus tiers, a $0.30 per contract fee
applies when trading against Priority Customer complex orders that
leg into the regular order book. No fee is charged or rebate
provided when trading against non[hyphen]Priority Customer complex
orders that leg into the regular order book).
\9\ In addition, the Exchange also offers lower rebates for
Market Makers that achieve Market Maker Plus in SPY or QQQ.
Specifically, Market Makers that achieve Tier 2 or Tier 3 of Market
Maker Plus in either SPY or QQQ will receive the SPY or QQQ rebate
based on the highest Market Maker tier achieved in either product.
For example, a Market Maker that achieves Tier 1 Market Maker Plus
in QQQ but Tier 3 Market Maker Plus in SPY will receive a Tier 3
rebate in both SPY and QQQ. Instead of the Tier 2 and Tier 3 rebates
described above, however, Market Maker Plus orders in SPY or QQQ are
entitled to a rebate of $0.16 per contract for Tier 2, and $0.20 per
contract for Tier 3.
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Priority Customer Taker Fees
The Exchange charges a taker fee for regular orders in Select
Symbols. This fee is $0.44 per contract for Market Maker orders, and
$0.45 per contract for Non-ISE Market Maker,\10\ Firm Proprietary \11\/
Broker-Dealer,\12\ and Professional Customer \13\ orders. For Priority
Customer orders this fee is $0.31 per contract, or $0.26 per contract
for members with a total affiliated Priority Customer average daily
volume (``ADV'') that equals or exceeds 200,000 contracts.\14\ The
Exchange now
[[Page 13911]]
proposes to increase the taker fee for Priority Customer orders in
Select Symbols to $0.40 per contract for all such orders regardless of
volume. As such, the Exchange also proposes to delete the volume-based
incentive for Priority Customer orders in Select Symbols, specifically
the taker fee of $0.26 per contract for members that achieve the higher
Priority Customer ADV tier.
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\10\ A ``Non[hyphen]ISE Market Maker'' is a market maker as
defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended, registered in the same options class on another options
exchange.
\11\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account.
\12\ A ``Broker[hyphen]Dealer'' order is an order submitted by a
member for a broker[hyphen]dealer account that is not its own
proprietary account.
\13\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
\14\ Priority Customer ADV includes all volume in all symbols
and order types. All eligible volume from affiliated members will be
aggregated in determining total affiliated Priority Customer ADV,
provided there is at least 75% common ownership between the members
as reflected on each member's Form BD, Schedule A. For purposes of
determining Priority Customer ADV, any day that the regular order
book is not open for the entire trading day or the Exchange
instructs members in writing to route their orders to other markets
may be excluded from such calculation; provided that the Exchange
will only remove the day for members that would have a lower ADV
with the day included.
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Priority Customer Complex Order Rebates
Currently, the Exchange provides rebates to Priority Customer
complex orders that trade with non-Priority Customer complex orders in
the complex order book or trade with quotes and orders on the regular
order book. Rebates are tiered based on a member's ADV executed during
a given month as follows: 0 to 29,999 contracts (``Tier 1''), 30,000 to
59,999 contracts (``Tier 2''), 60,000 to 99,999 contracts (``Tier 3''),
100,000 to 149,999 (``Tier 4''), 150,000 to 199,999 contracts (``Tier
5''), and 200,000 or more contracts (``Tier 6''). In Select Symbols the
rebate is $0.30 per contract for Tier 1, $0.35 per contract for Tier 2,
$0.41 per contract for Tier 3, $0.44 per contract for Tier 4, $0.46 per
contract for Tier 5, and $0.47 per contract for Tier 6. In Non-Select
Symbols the rebate is $0.63 per contract for Tier 1, $0.71 per contract
for Tier 2, $0.79 per contract for Tier 3, $0.81 per contract for Tier
4, $0.83 per contract for Tier 5, and $0.84 per contract for Tier
6.\15\
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\15\ For both Select Symbols and Non-Select Symbols, these
rebates are provided per contract per leg if the order trades with
non-Priority Customer orders in the complex order book, or trades
with quotes and orders on the regular order book.
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The Exchange now proposes to (i) introduce two additional volume-
based tiers of Priority Customer complex order rebates and (ii) in the
existing tiers, amend the volume requirements necessary for achieving
higher Priority Customer complex order rebates. As proposed, the ADV
thresholds will be as follows: 0 to 14,999 contracts (``Tier 1''),
15,000 to 44,999 contracts (``Tier 2''), 45,000 to 59,999 contracts
(``Tier 3''), 60,000 to 74,999 contracts (``Tier 4''), 75,000 to 99,999
contracts (``Tier 5''), 100,000 to 124,999 contracts (``Tier 6''),
125,000 to 224,999 contracts (``Tier 7''), and 225,000 or more
contracts (``Tier 8'').
Under the proposal, the rebate amounts provided for Priority
Customer complex orders in both Select Symbols and Non-Select Symbols
will be amended to reflect the tier changes described above. In Select
Symbols, the proposed rebate will be $0.26 per contract for Tier 1,
$0.30 per contract for Tier 2, $0.36 per contract for Tier 3, $0.41 per
contract for Tier 4, $0.42 per contract for Tier 5, $0.44 per contract
for Tier 6, $0.46 per contract for Tier 7, and $0.49 per contract for
Tier 8. In Non-Select Symbols, the proposed rebate will be $0.40 per
contract for Tier 1, $0.60 per contract for Tier 2, $0.70 per contract
for Tier 3, $0.75 per contract for Tier 4, $0.75 per contract for Tier
5, $0.80 per contract for Tier 6, $0.81 per contract for Tier 7, and
$0.85 per contract for Tier 8. Other rebate amounts--specifically, the
Price Improvement Mechanism (``PIM'') Break-up Rebates for both Select
and Non-Select Symbols and the Facilitation and Solicitation Break-up
Rebate for Select Symbols--will remain unchanged from their current
levels, including the rebate amounts for the two proposed additional
tiers.
Net Zero Complex Orders
Today, the Exchange does not provide rebates for Priority Customer
complex orders that trade at a net price at or near $0.00 (i.e., net
zero complex orders) that are entered on behalf of originating market
participants that execute an ADV of at least 10,000 net zero complex
orders in a given month. For purposes of determining which complex
orders qualify as ``net zero,'' the Exchange counts all complex orders
that leg in to the regular order book and are executed at a net price
that is within a range of $0.01 credit and $0.01 debit.\16\ While these
complex orders would generally not find a counterparty in the complex
order book, they may leg in to the regular market where they are
executed by Market Makers or other market participants on the
individual legs who pay a fee to trade with this order flow. The fee
Market Makers pay when a complex order legs into their quote is
substantially higher than their fee or rebate for non-complex orders
that trade against their quotes. The 10,000 contract threshold exists
to differentiate market participants that are entering legitimate
complex orders from those that are entering net zero complex orders
solely to earn a rebate.
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\16\ For example, a market participant could enter a net zero
complex order that buys 500 contracts of the $193 March 6, 2016 SPY
Put at a price of $0.03 and sells 500 contracts of the $193.50 March
6, 2016 SPY Put at a price of $0.03 for a net price of $0.00.
---------------------------------------------------------------------------
The Exchange now proposes to lower the threshold of net zero
complex contracts from 10,000 to 2,000 contracts. As such, net zero
priced complex orders that leg into the regular order book and are
entered by firms with an ADV in this type of activity of 2,000
contracts or more in a given month will not earn the Priority Customer
complex order rebate.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\17\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\18\ 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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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(4) and (5).
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Market Maker Plus Program
The Exchange believes that it is reasonable and equitable to
increase the Tier 1 Market Maker Plus rebate because it will encourage
Market Makers to post tighter markets in Select Symbols and thereby
maintain liquidity and attract additional order flow to the ISE, which
will ultimately benefit all market participants that trade on the
Exchange. The Tier 1 Market Maker Plus rebate has proven to be an
effective incentive for Market Makers to provide liquidity in Select
Symbols. The Exchange believes that the proposed Tier 1 Market Maker
Plus rebate is reasonable and equitably allocated to those members that
direct orders to the Exchange rather than to a competing exchange. The
Exchange also believes that the proposed Tier 1 Market Maker Plus
rebate is not unfairly discriminatory because all Market Makers can
achieve the higher rebate by satisfying the applicable Market Maker
Plus requirements.
Priority Customer Taker Fees
The Exchange believes that the proposed changes to increase the
Priority Customer taker fee and eliminate the Priority Customer taker
fee discount program for members with a total affiliated Priority
Customer ADV of more than 200,000 contracts are reasonable and
equitable because the proposed fees remain lower than the fees charged
to other market participants that remove liquidity on the Exchange. In
addition, the Exchange believes that it is equitable and not unfairly
discriminatory to continue to provide lower fees for Priority Customer
orders. A Priority Customer is by definition not a broker or dealer in
securities, and does not place more than
[[Page 13912]]
390 orders in listed options per day on average during a calendar month
for its own beneficial account(s). This limitation does not apply to
participants whose behavior is substantially similar to that of market
professionals, including Professional Customers, who will generally
submit a higher number of orders than Priority Customers.
Priority Customer Complex Order Rebates
The Exchange believes that it is reasonable and equitable to make
the proposed changes, both to the volume requirements necessary to
achieve the Priority Customer complex order rebates and to the rebate
amounts, as the proposals are designed to attract additional Priority
Customer complex order volume to the Exchange. Although the Exchange is
lowering the rebates for Priority Customer complex orders, it is also
generally lowering the associated volume thresholds to make it easier
for members to achieve the higher tiers. While the proposed rebate
amounts are lower in some categories, the Exchange believes that the
proposed changes are reasonable and equitable when looking at the
overall program for both Non-Select Symbol and Select Symbol rebates.
For example, a member who received a $0.71 Non-Select Symbol rebate for
executing an ADV of 45,000 Non-Select Symbol contracts in a given month
under the existing program would receive a $0.70 Non-Select Symbol
rebate under the proposed program. However, a member who would have
received a $0.35 Select Symbol rebate under the existing program for
executing the same ADV for Select Symbol contracts in a given month
would receive a $0.36 Select Symbol rebate under the proposed program.
Therefore, the Exchange believes that the overall amendments to its
rebate program for Priority Customer complex orders is reasonable and
equitable as proposed. In addition, the Exchange believes that
introducing an additional volume-based tier with higher rebate amounts
will incentivize members to send additional order flow to the Exchange
in order to achieve these rebates for their Priority Customer complex
order volume, creating additional liquidity to the benefit of all
members that trade complex orders on the Exchange.
The Exchange further believes that it is equitable and not unfairly
discriminatory to continue to provide a rebate only for Priority
Customer complex orders. A Priority Customer is by definition not a
broker or dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s). This limitation does not apply to
participants whose behavior is substantially similar to that of market
professionals, including Professional Customers, who will generally
submit a higher number of orders (many of which do not result in
executions) than Priority Customers.
Net Zero Complex Orders
The Exchange believes that the proposed change to lower the
threshold of net zero complex contracts is reasonable, equitable, and
not unfairly discriminatory as it is designed to remove financial
incentives for market participants to engage in rebate arbitrage by
entering valueless complex orders on the Exchange that do not have any
economic purpose. The Exchange has determined that the current
threshold is still too high to effectively discourage market
participants from engaging in rebate arbitrage, and believes that the
lower threshold proposed in this filing more accurately reflects the
Exchange's original intent. No market participants meet the current ADV
threshold, as firms have modified their activity to ensure that their
complex ADV in the net zero range is lower than the 10,000 ADV
threshold set in the original net zero filing. In January 2017, for
example, the market participant with the largest ADV in net zero
contracts executed an ADV of 1,250 net zero contracts. By comparison
the average net zero ADV of market participants that traded complex
orders in January 2017 was only 12 contracts, with the vast majority of
these market participants executing no net zero contracts. The
continued submission of a high volume of net zero complex orders that
leg into the regular order book by these firms has generated complaints
from the Market Makers that trade against these orders in the regular
order book, as firms recognize these net zero complex orders as
essentially non-economic.
The Exchange believes that lowering the threshold will make it more
difficult for firms to continue to enter net zero complex orders purely
to earn a rebate. In particular, the Exchange notes that any firm that
engages in this activity will be prevented from doing so with an ADV of
more than 2,000 net zero complex orders. This will reduce the cost of
these trades to the Exchange and its members as firms are limited in
the amount of this net zero complex order activity that they can
conduct on the Exchange. While the proposed threshold is still higher
than current activity seen in January 2017, the Exchange believes that
it is important to lower the ADV threshold to ensure that market
participants do not further increase this activity. The Exchange
believes that market participants will stop entering net zero complex
orders when they reach the proposed ADV threshold as these firms are
entering these orders solely for the purpose of earning a rebate.
Indeed, this is consistent with the Exchange's experience with this
rule to date, as firms that were previously entering a high volume of
net zero complex orders have reduced their volume in activity covered
by this rule.
To the extent that market participants enter legitimate complex
orders, however, they will continue to receive the same rebates that
they do today. In addition, market participants that enter an
insubstantial volume of net zero complex orders will also continue to
receive rebates. The Exchange believes that it is reasonable,
equitable, and not unfairly discriminatory to continue to provide
rebates where appropriate based on the market participant executing
only a low ADV of net zero complex orders. While the Exchange could
prohibit rebates for any net zero complex orders without an ADV
threshold, doing so would disadvantage innocent market participants
that are not engaged in rebate arbitrage. The Exchange believes that
the decision to allow rebates for firms with a limited ADV in net zero
complex orders properly balances the need to encourage market
participants to send order flow to the Exchange, and the need to
prevent activity that is harmful to the market. Moreover, all market
participants will be treated the same based on their net zero ADV.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\19\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
believes that the proposed fees and rebates remain competitive with
those on other options markets, and will continue to attract order flow
to the Exchange. The Exchange operates in a highly competitive market
in which market participants can readily direct their order flow to
competing venues. In such an environment, the Exchange must continually
review, and consider adjusting, its fees and rebates to remain
competitive with other exchanges. For the reasons described above, the
Exchange believes that the proposed fee
[[Page 13913]]
changes reflect this competitive environment.
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\19\ 15 U.S.C. 78f(b)(8).
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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.
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,\20\ and Rule 19b-4(f)(2) \21\ thereunder.
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.
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\20\ 15 U.S.C. 78s(b)(3)(A)(ii).
\21\ 17 CFR 240.19b-4(f)(2).
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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
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-ISE-2017-16 on the subject line.
Paper Comments
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-ISE-2017-16. 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 Web site (https://www.sec.gov/rules/sro.shtml). 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 Web site 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; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2017-16 and should be
submitted on or before April 5, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05089 Filed 3-14-17; 8:45 am]
BILLING CODE 8011-01-P