Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Assess Fees for Specialized Quote Feed and SQF Purge Ports, 48865-48867 [2017-22757]

Download as PDF Federal Register / Vol. 82, No. 202 / Friday, October 20, 2017 / Notices srobinson on DSKBC5CHB2PROD with NOTICES assets in illiquid assets (calculated at the time of investment). (7) A minimum of 100,000 Shares for the Fund will be outstanding at the commencement of trading on the Exchange. (8) All futures contracts (and options on futures), listed options, and ETPs held by the Fund will be traded on U.S. exchanges, all of which are members of ISG or are exchanges with which the Exchange has in place a comprehensive surveillance sharing agreement. (9) The Fund will not invest in any non-U.S. equity securities. (10) The Fund’s investments will be consistent with the Fund’s investment objective and will not be used to enhance leverage.31 The Fund will not invest in leveraged (e.g., 2X, –2X, 3X, or –3X) ETPs. (11) The Fund’s investments in total return swap agreements will be backed by investments in U.S. government securities in an amount equal to the exposure of those contracts. (12) The Fund may invest up to 10% of its assets in over-the-counter Russell 2000 put options. (13) All money market instruments acquired by the Fund will be rated investment grade, except that a Fund may invest in unrated money market instruments that are deemed by the Adviser or Sub-Adviser to be of comparable quality to money market securities rated investment grade. (14) The Russell 2000 Index options traded on CBOE are highly liquid, with average daily trading volume in 2016 of 71,365 contracts and a notional size per contract of $117,169. CBOE is a member of the Option Price Regulatory Surveillance Authority, which was established to provide efficiencies in looking for insider trading and serves as a central organization to facilitate collaboration in insider trading and investigations for the U.S. options exchanges. The Exchange further represents that all statements and representations made in the filing regarding the index composition, the description of the portfolio or reference assets, limitations on portfolio holdings or reference assets, dissemination and availability of index, reference asset, and intraday indicative values, and the applicability of Exchange rules specified in the filing 31 The Exchange represents that the Fund will include appropriate risk disclosure in its offering documents, including leveraging risk. Leveraging risk is the risk that certain transactions of a fund, including a fund’s use of derivatives, may give rise to leverage, causing a fund to be more volatile than if it had not been leveraged. To mitigate leveraging risk, the Adviser will segregate or earmark liquid assets or otherwise cover the transactions that give rise to such risk. VerDate Sep<11>2014 16:22 Oct 19, 2017 Jkt 244001 constitute continued listing requirements for the Fund. The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. The Exchange further represents that FINRA conducts certain cross-market surveillances on behalf of the Exchange pursuant to a regulatory services agreement, and the Exchange is responsible for FINRA’s performance under this regulatory services agreement. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Rule 14.12. This approval order is based on all of the Exchange’s representations, including those set forth above and in the Notice. For the foregoing reasons, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act 32 and the rules and regulations thereunder applicable to a national securities exchange. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,33 that the proposed rule change (SR–BatsBZX– 2017–53) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.34 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–22752 Filed 10–19–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81882; File No. SR–ISE– 2017–87] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Assess Fees for Specialized Quote Feed and SQF Purge Ports October 16, 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 October 32 15 U.S.C. 78f(b)(5). U.S.C. 78s(b)(2). 34 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 33 15 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 48865 2, 2017, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to proposal to amend its Schedule of Fees, as described further 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 Exchange is proposing to amend its Schedule of Fees to assess fees for Specialized Quote Feed (‘‘SQF’’) 3 and SQF Purge 4 Ports that Market Makers 5 utilize to connect to the Exchange. The Exchange recently completed the migration of the Exchange’s T7 trading 3 SQF is an interface that allows market makers to connect and send quotes, sweeps and auction responses into the Exchange. Data includes the following: (1) Options Auction Notifications (e.g., opening imbalance, Flash, PIM, Solicitation and Facilitation or other information); (2) Options Symbol Directory Messages; (3) System Event Messages (e.g., start of messages, start of system hours, start of quoting, start of opening); (4) Option Trading Action Messages (e.g., halts, resumes); (5) Execution Messages; (6) Quote Messages (quote/ sweep messages, risk protection triggers or purge notifications). 4 SQF Purge is a specific port for the SQF interface that only receives and notifies of purge requests from the market maker. 5 The term ‘‘Market Makers’’ refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. See ISE Rule 100(a)(25). E:\FR\FM\20OCN1.SGM 20OCN1 48866 Federal Register / Vol. 82, No. 202 / Friday, October 20, 2017 / Notices srobinson on DSKBC5CHB2PROD with NOTICES system to the Nasdaq INET architecture.6 This technology replatform included the adoption of new connectivity options, including SQF and SQF Purge Ports,7 which are the same as the connectivity options currently used to connect to the Exchange’s affiliates, including Nasdaq GEMX (‘‘GEMX’’), Nasdaq Options Market (‘‘NOM’’), Nasdaq BX (‘‘BX’’), and Nasdaq Phlx (‘‘Phlx’’).8 During the migration period, Market Makers had to use both old application programming interface (‘‘API’’) sessions (‘‘old API Ports’’) and new SQF Ports to connect to the Exchange.9 To help its members transition through the migration period, the Exchange filed a fee proposal regarding the old API Ports and the new SQF Ports.10 As part of that filing, the Exchange added the following language in Section V of the Schedule of Fees in order to avoid double charging Market Makers who were using both the old and new connectivity options to access the Exchange while also allowing the Exchange to recoup the costs of supporting its architecture (‘‘migration accommodation language’’): (1) In Section V.D of the Schedule of Fees, it is currently noted for the monthly $1,000 SQF Port Fee that: ‘‘A Market Maker who was not subject to the API Session Fee in Section V.C.1 prior to July 3, 2017 will be assessed the above SQF Port Fee from July 3, 2017 through September 29, 2017. This SQF Port Fee will not apply to Market Makers that are subject to the Fixed Fee in Section V.E.’’ (2) Section V.E of the Schedule of Fees presently reads: ‘‘Market Makers that are subject to the API Session Fee in Section V.C.1 as of July 3, 2017 will be subject a monthly fixed fee that reflects the average of API Session Fees assessed to that Market Maker for the months of March, April, and May 2017 6 See Securities Exchange Act Release No. 80432 (April 11, 2017), 82 FR 18191 (April 17, 2017) (SR– ISE–2017–03). 7 When the Exchange adopted these new ports, it initially did not assess any fees so that members would not be double charged for connectivity to the old Exchange architecture and the new Nasdaq INET architecture. See Securities Exchange Act Release No. 81095 (July 7, 2017), 82 FR 32409 (July 13, 2017) (SR–ISE–2017–62). 8 See GEMX Schedule of Fees, IV. Access Services, Port Fees, 3. Ports; NOM Rules, Chapter XV Options Pricing, Sec. 3 NOM—Ports and other Services; BX Rules, Chapter XV Options Pricing, Sec. 3 BX—Ports and other Services; and Phlx Pricing Schedule, VII. Other Member Fees, B. Port Fees. 9 The Exchange migrated on a symbol by symbol basis thereby requiring the use of both the old API Ports on T7 and the new SQF Ports on INET for a period of time. 10 See Securities Exchange Act Release No. 81213 (July 26, 2017), 82 FR 35855 (August 1, 2017) (SR– ISE–2017–73) (hereinafter ‘‘Prior SQF Filing’’). VerDate Sep<11>2014 16:22 Oct 19, 2017 Jkt 244001 (‘‘Fixed Fee’’) in lieu of the API Session Fee. This Fixed Fee will be assessed to these Market Makers from July 3, 2017 through September 29, 2017, and applies both to API sessions and SQF ports used to connect to Nasdaq ISE. The Fixed Fee will be charged for all of the API sessions and SQF ports used in a given month during this time period, not per port.’’ As discussed above, the Exchange completed its migration to INET, and the old API Ports have accordingly been eliminated and only the new SQF Ports are being utilized. As such, these instances of the migration accommodation language are no longer needed and are therefore being deleted. The Exchange also seeks to amend Section V.D of the Schedule of Fees to increase the monthly $1,000 SQF Port Fee to $1,100 per SQF Port and to begin assessing a monthly $1,100 SQF Purge Port Fee per SQF Purge Port. The proposed SQF and SQF Purge Port Fees will apply to all Market Makers. The Exchange believes that its pricing remains competitive. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,11 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,12 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. As discussed above, the Exchange added the migration accommodation language and the associated Fixed Fee and $1,000 SQF Port Fee in Section V of the Schedule of Fees in order to avoid double charging members while also allowing the Exchange to recoup the costs of supporting its architecture. At the time these fees were put into place, the Exchange recognized that there may not be a one-to-one relationship between the number of the old API Ports and the new SQF Ports needed to connect to the Exchange due to the different infrastructure of the two trading systems.13 The Exchange expected, however, that the quoting needs and other trading activity of Market Makers would remain relatively constant throughout the migration and across the two platforms.14 As such, the Exchange stated that it would use the 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(4) and (5). 13 See Prior SQF Filing at 35856. 14 Id. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 time period between July 3, 2017 and September 29, 2017 to monitor the manner in which all Market Makers connect to the new INET trading system, and would reassess whether the related fees assessed to Market Makers were adequate and reasonable.15 During this three-month time frame, the Exchange has looked at the manner in which all Market Makers connect to INET to determine the proposed $1,100 SQF and SQF Purge Port Fees, and believes that these fees are adequate and reasonable in light of how all Market Makers use these ports to access the Exchange. Furthermore, the Exchange believes that assessing all Market Makers the proposed fees is reasonable because members no longer have connectivity to the old Exchange architecture (and therefore no longer need to maintain two sets of ports), and are using only the new SQF Ports to connect to the Exchange. In addition, the Exchange believes that the proposed SQF and SQF Purge Port Fees of $1,100 per port, per month are reasonable because they are in line with the fees assessed by other exchanges. For example, GEMX assesses a fee of $1,250 per port, per month for SQF and SQF Purge Ports today.16 The Exchange also notes that Bats BZX Exchange, Inc. (‘‘Bats BZX’’) assesses a $1,500 fee to its market makers for Ports with Bulk Quoting Capabilities.17 The Exchange also believes that the proposed fees are an equitable allocation and not unfairly discriminatory because the Exchange will apply these fees uniformly to all similarly situated members. The Exchange believes that deleting the migration accommodation language from Section V of the Schedule of Fees is reasonable, equitable and not unfairly discriminatory because the migration is now completed and the migration accommodation language is therefore no longer needed. Deleting outdated rule text will bring greater clarity to the Exchange’s Schedule of Fees. 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. As explained above, the proposed SQF and SQF Purge Port Fees are assessed uniformly to all Market Makers at a rate that is 15 Id. at 35858. GEMX Schedule of Fees, IV. Access Services, Port Fees, 3. Ports. 17 See Bats BZX Fee Schedule at: https:// www.bats.com/us/options/membership/fee_ schedule/bzx/. 16 See E:\FR\FM\20OCN1.SGM 20OCN1 Federal Register / Vol. 82, No. 202 / Friday, October 20, 2017 / Notices representative of their typical usage of the new ports. Moreover, the proposed fees are in line with the fees assessed by other exchanges for the same or similar connectivity. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed fee changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. srobinson on DSKBC5CHB2PROD with NOTICES 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.18 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 • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– ISE–2017–87 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81878; File No. SR–ISE– 2017–88] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees To Increase the Crossing Fee Cap October 16, 2017. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–ISE–2017–87. 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 (http://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– 2017–87 and should be submitted on or before November 13, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Eduardo A. Aleman, Assistant Secretary. 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 October 2, 2017, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Schedule of Fees to increase the Crossing Fee Cap for members that do not commit in advance to paying the full Crossing Fee Cap at the end of each month. 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. [FR Doc. 2017–22757 Filed 10–19–17; 8:45 am] BILLING CODE 8011–01–P 1 15 18 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 16:22 Oct 19, 2017 19 17 Jkt 244001 PO 00000 CFR 200.30–3(a)(12). Frm 00082 Fmt 4703 48867 Sfmt 4703 2 17 E:\FR\FM\20OCN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 20OCN1

Agencies

[Federal Register Volume 82, Number 202 (Friday, October 20, 2017)]
[Notices]
[Pages 48865-48867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22757]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81882; File No. SR-ISE-2017-87]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Assess Fees for 
Specialized Quote Feed and SQF Purge Ports

October 16, 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 October 2, 2017, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to proposal to amend its Schedule of Fees, as 
described further 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 Exchange is proposing to amend its Schedule of Fees to assess 
fees for Specialized Quote Feed (``SQF'') \3\ and SQF Purge \4\ Ports 
that Market Makers \5\ utilize to connect to the Exchange. The Exchange 
recently completed the migration of the Exchange's T7 trading

[[Page 48866]]

system to the Nasdaq INET architecture.\6\ This technology re-platform 
included the adoption of new connectivity options, including SQF and 
SQF Purge Ports,\7\ which are the same as the connectivity options 
currently used to connect to the Exchange's affiliates, including 
Nasdaq GEMX (``GEMX''), Nasdaq Options Market (``NOM''), Nasdaq BX 
(``BX''), and Nasdaq Phlx (``Phlx'').\8\ During the migration period, 
Market Makers had to use both old application programming interface 
(``API'') sessions (``old API Ports'') and new SQF Ports to connect to 
the Exchange.\9\ To help its members transition through the migration 
period, the Exchange filed a fee proposal regarding the old API Ports 
and the new SQF Ports.\10\ As part of that filing, the Exchange added 
the following language in Section V of the Schedule of Fees in order to 
avoid double charging Market Makers who were using both the old and new 
connectivity options to access the Exchange while also allowing the 
Exchange to recoup the costs of supporting its architecture 
(``migration accommodation language''):
---------------------------------------------------------------------------

    \3\ SQF is an interface that allows market makers to connect and 
send quotes, sweeps and auction responses into the Exchange. Data 
includes the following: (1) Options Auction Notifications (e.g., 
opening imbalance, Flash, PIM, Solicitation and Facilitation or 
other information); (2) Options Symbol Directory Messages; (3) 
System Event Messages (e.g., start of messages, start of system 
hours, start of quoting, start of opening); (4) Option Trading 
Action Messages (e.g., halts, resumes); (5) Execution Messages; (6) 
Quote Messages (quote/sweep messages, risk protection triggers or 
purge notifications).
    \4\ SQF Purge is a specific port for the SQF interface that only 
receives and notifies of purge requests from the market maker.
    \5\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule 
100(a)(25).
    \6\ See Securities Exchange Act Release No. 80432 (April 11, 
2017), 82 FR 18191 (April 17, 2017) (SR-ISE-2017-03).
    \7\ When the Exchange adopted these new ports, it initially did 
not assess any fees so that members would not be double charged for 
connectivity to the old Exchange architecture and the new Nasdaq 
INET architecture. See Securities Exchange Act Release No. 81095 
(July 7, 2017), 82 FR 32409 (July 13, 2017) (SR-ISE-2017-62).
    \8\ See GEMX Schedule of Fees, IV. Access Services, Port Fees, 
3. Ports; NOM Rules, Chapter XV Options Pricing, Sec. 3 NOM--Ports 
and other Services; BX Rules, Chapter XV Options Pricing, Sec. 3 
BX--Ports and other Services; and Phlx Pricing Schedule, VII. Other 
Member Fees, B. Port Fees.
    \9\ The Exchange migrated on a symbol by symbol basis thereby 
requiring the use of both the old API Ports on T7 and the new SQF 
Ports on INET for a period of time.
    \10\ See Securities Exchange Act Release No. 81213 (July 26, 
2017), 82 FR 35855 (August 1, 2017) (SR-ISE-2017-73) (hereinafter 
``Prior SQF Filing'').
---------------------------------------------------------------------------

    (1) In Section V.D of the Schedule of Fees, it is currently noted 
for the monthly $1,000 SQF Port Fee that: ``A Market Maker who was not 
subject to the API Session Fee in Section V.C.1 prior to July 3, 2017 
will be assessed the above SQF Port Fee from July 3, 2017 through 
September 29, 2017. This SQF Port Fee will not apply to Market Makers 
that are subject to the Fixed Fee in Section V.E.''
    (2) Section V.E of the Schedule of Fees presently reads: ``Market 
Makers that are subject to the API Session Fee in Section V.C.1 as of 
July 3, 2017 will be subject a monthly fixed fee that reflects the 
average of API Session Fees assessed to that Market Maker for the 
months of March, April, and May 2017 (``Fixed Fee'') in lieu of the API 
Session Fee. This Fixed Fee will be assessed to these Market Makers 
from July 3, 2017 through September 29, 2017, and applies both to API 
sessions and SQF ports used to connect to Nasdaq ISE. The Fixed Fee 
will be charged for all of the API sessions and SQF ports used in a 
given month during this time period, not per port.''
    As discussed above, the Exchange completed its migration to INET, 
and the old API Ports have accordingly been eliminated and only the new 
SQF Ports are being utilized. As such, these instances of the migration 
accommodation language are no longer needed and are therefore being 
deleted.
    The Exchange also seeks to amend Section V.D of the Schedule of 
Fees to increase the monthly $1,000 SQF Port Fee to $1,100 per SQF Port 
and to begin assessing a monthly $1,100 SQF Purge Port Fee per SQF 
Purge Port. The proposed SQF and SQF Purge Port Fees will apply to all 
Market Makers. The Exchange believes that its pricing remains 
competitive.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    As discussed above, the Exchange added the migration accommodation 
language and the associated Fixed Fee and $1,000 SQF Port Fee in 
Section V of the Schedule of Fees in order to avoid double charging 
members while also allowing the Exchange to recoup the costs of 
supporting its architecture. At the time these fees were put into 
place, the Exchange recognized that there may not be a one-to-one 
relationship between the number of the old API Ports and the new SQF 
Ports needed to connect to the Exchange due to the different 
infrastructure of the two trading systems.\13\ The Exchange expected, 
however, that the quoting needs and other trading activity of Market 
Makers would remain relatively constant throughout the migration and 
across the two platforms.\14\ As such, the Exchange stated that it 
would use the time period between July 3, 2017 and September 29, 2017 
to monitor the manner in which all Market Makers connect to the new 
INET trading system, and would reassess whether the related fees 
assessed to Market Makers were adequate and reasonable.\15\ During this 
three-month time frame, the Exchange has looked at the manner in which 
all Market Makers connect to INET to determine the proposed $1,100 SQF 
and SQF Purge Port Fees, and believes that these fees are adequate and 
reasonable in light of how all Market Makers use these ports to access 
the Exchange. Furthermore, the Exchange believes that assessing all 
Market Makers the proposed fees is reasonable because members no longer 
have connectivity to the old Exchange architecture (and therefore no 
longer need to maintain two sets of ports), and are using only the new 
SQF Ports to connect to the Exchange.
---------------------------------------------------------------------------

    \13\ See Prior SQF Filing at 35856.
    \14\ Id.
    \15\ Id. at 35858.
---------------------------------------------------------------------------

    In addition, the Exchange believes that the proposed SQF and SQF 
Purge Port Fees of $1,100 per port, per month are reasonable because 
they are in line with the fees assessed by other exchanges. For 
example, GEMX assesses a fee of $1,250 per port, per month for SQF and 
SQF Purge Ports today.\16\ The Exchange also notes that Bats BZX 
Exchange, Inc. (``Bats BZX'') assesses a $1,500 fee to its market 
makers for Ports with Bulk Quoting Capabilities.\17\
---------------------------------------------------------------------------

    \16\ See GEMX Schedule of Fees, IV. Access Services, Port Fees, 
3. Ports.
    \17\ See Bats BZX Fee Schedule at: https://www.bats.com/us/options/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed fees are an equitable 
allocation and not unfairly discriminatory because the Exchange will 
apply these fees uniformly to all similarly situated members.
    The Exchange believes that deleting the migration accommodation 
language from Section V of the Schedule of Fees is reasonable, 
equitable and not unfairly discriminatory because the migration is now 
completed and the migration accommodation language is therefore no 
longer needed. Deleting outdated rule text will bring greater clarity 
to the Exchange's Schedule of Fees.

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. As explained above, the 
proposed SQF and SQF Purge Port Fees are assessed uniformly to all 
Market Makers at a rate that is

[[Page 48867]]

representative of their typical usage of the new ports. Moreover, the 
proposed fees are in line with the fees assessed by other exchanges for 
the same or similar connectivity.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive, or rebate 
opportunities available at other venues to be more favorable. In such 
an environment, the Exchange must continually adjust its fees to remain 
competitive with other exchanges and with alternative trading systems 
that have been exempted from compliance with the statutory standards 
applicable to exchanges. Because competitors are free to modify their 
own fees in response, and because market participants may readily 
adjust their order routing practices, the Exchange believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited. In sum, if the changes proposed 
herein are unattractive to market participants, it is likely that the 
Exchange will lose market share as a result. Accordingly, the Exchange 
does not believe that the proposed fee changes will impair the ability 
of members or competing order execution venues to maintain their 
competitive standing in the financial markets.

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.\18\ 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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    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-ISE-2017-87 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2017-87. 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 (http://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-2017-87 and should be 
submitted on or before November 13, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22757 Filed 10-19-17; 8:45 am]
BILLING CODE 8011-01-P