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]
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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.
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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
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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).
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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’’).
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(‘‘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.
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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
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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 (https://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 (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–
2017–87 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
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18 15
U.S.C. 78s(b)(3)(A)(ii).
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2 17
E:\FR\FM\20OCN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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'').
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(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.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4) and (5).
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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.
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\13\ See Prior SQF Filing at 35856.
\14\ Id.
\15\ Id. at 35858.
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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\
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\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/.
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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 (https://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 (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-2017-87 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