Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees for Regular Orders in Select Symbols, 56297-56300 [2017-25686]
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Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Notices
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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–MIAX–2017–46 and should
be submitted on or before December 19,
2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–25605 Filed 11–27–17; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–82141; File No. SR–ISE–
2017–98]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Schedule
of Fees for Regular Orders in Select
Symbols
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November 22, 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 November
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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
Schedule of Fees for regular orders in
Select Symbols to: (1) Adjust rebates
and tier thresholds for the Market Maker
Plus program, and (2) increase taker fees
for certain Firm-Proprietary, BrokerDealer, and Priority Customer orders.
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
SECURITIES AND EXCHANGE
COMMISSION
16 17
13, 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.
The purpose of the proposed rule
change is to amend the Schedule of Fees
for regular orders in Select Symbols to:
(1) Adjust rebates and tier thresholds for
the Market Maker Plus program, and (2)
increase taker fees for certain FirmProprietary,3 Broker-Dealer,4 and
Priority Customer 5 orders.
3 A ‘‘Firm Proprietary’’ order is an order
submitted by a member for its own proprietary
account.
4 A ‘‘Broker-Dealer’’ order is an order submitted
by a member for a broker-dealer account that is not
its own proprietary account.
5 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 Nasdaq ISE Rule
100(a)(37A).
PO 00000
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56297
The Exchange initially filed the
proposed pricing changes on November
1, 2017 (SR–ISE–2017–97). On
November 13, 2017, the Exchange
withdrew that filing and submitted this
filing.
Market Maker Plus
The Exchange proposes to increase
Market Maker Plus rebates in SPY and
QQQ, and modify the associated tier
thresholds to make it easier for Market
Makers 6 to qualify for higher Market
Maker Plus tiers in these symbols. The
Market Maker Plus program is designed
to attract additional liquidity from
Market Makers and encourage Market
Makers to maintain tight markets on
ISE. The Exchange believes that the
proposed fee changes will further these
objectives.
A Market Maker Plus is a Market
Maker who is on the National Best Bid
or National Best Offer (‘‘NBBO’’) 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. Currently,
the specified percentage for time at the
NBBO for all symbols 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 3.7 The Exchange proposes
to modify the tier thresholds for SPY
and QQQ only by adding a new Tier 1
and adjusting the other Market Maker
Plus tiers such that: (1) Tier 1 rebates
are provided to Market Makers that are
on the NBBO at least 70% but lower
than 80% of the time; (2) Tier 2 rebates
are provided to market Makers that are
on the NBBO at least 80% but lower
than 85% of the time; (3) Tier 3 rebates
are provided to Market Makers that are
on the NBBO at least 85% but lower
than 90% of the time; and (4) Tier 4 and
6 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See Rule 100(a)(25).
7 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. Other than days where
the Exchange closes early for holiday observance,
any day that the market 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 the Market Maker Plus tier
calculation; provided that the Exchange will only
remove the day for members that would have a
lower time at the NBBO for the specified series with
the day included.
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rebates are provided to Market Makers
that are on the NBBO at least 90% of the
time.
The Exchange is not proposing any
changes to the tier thresholds for Select
Symbols other than SPY and QQQ.
However, in connection with the
changes described above for SPY and
QQQ, the Exchange proposes to
reformat the Schedule of Fees so that all
Market Maker Plus tier thresholds and
rebate amounts, including those for SPY
and QQQ, and those for other Select
Symbols, are clearly described in
footnote 5 under Regular Order Fees and
Rebates. With the proposed changes,
this footnote will state that Market
Makers that qualify for Market Maker
Plus will receive rebates based on a
table contained therein that separately
identifies tier thresholds and rebate
amounts for SPY and QQQ, and for
Select Symbols other than SPY and
QQQ. While tier thresholds and rebate
amounts for Select Symbols other than
SPY and QQQ are being moved to this
section of the Schedule of Fees, the
Exchange is not proposing any changes
to those values. Therefore, the Market
Maker Plus program will continue to
operate in the same way that it does
today for all symbols other than SPY
and QQQ.
Currently, Market Makers that qualify
for Market Maker Plus are provided a
rebate for regular orders in Select
Symbols of $0.15 per contract for Tier
1, $0.18 per contract for Tier 2, and
$0.22 per contract for Tier 3.8 For SPY
and QQQ only, this rebate is $0.16 per
contract for Tier 2 and $0.20 per
contract for Tier 3.9 A Market Maker
that achieves a higher tier of Market
Maker Plus in either SPY or QQQ
receives the higher rebate in both SPY
and QQQ. Market Makers that do not
qualify for Market Maker Plus are not
eligible for rebates and are instead
charged a fee of $0.10 per contract. With
the introduction of a new Tier 1 and
adjustment of other tier thresholds for
SPY and QQQ, the Exchange proposes
to provide an increased Market Maker
Plus rebate in SPY and QQQ that is: (1)
$0.00 Per contract (i.e., no fee or rebate)
for new Tier 1; (2) $0.18 per contract for
new Tier 2, (3) $0.22 per contract for
new Tier 3, and (3) $0.26 per contract
for new Tier 4. Each of these regular
8 For all tiers, a $0.10 per contract fee applies
when trading against Priority Customer complex
orders that leg into the regular order book. There
will be no fee charged or rebate provided when
trading against non-Priority Customer complex
orders that leg into the regular order book.
9 As with other rebates provided under the
Market Maker Plus program, this rebate does not
apply when trading against complex orders that leg
into the regular book.
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maker rebates is increased from current
Market Maker Plus rebates provided to
Market Makers that are at the NBBO for
the same percentage of time today—or
in the case of Tier 1, represents the
elimination of a fee that would have
been charged to Market Makers that are
on the NBBO for the same percentage of
the time. In addition, the Exchange
proposes to adopt a ‘‘linked maker
rebate’’ for proposed Tiers 2–4 that
applies to executions in SPY or QQQ if
the Market Maker does not achieve the
applicable tier in that symbol but
achieves the tier (i.e., proposed Tiers 2–
4) in the other symbol. Once the
applicable tier—any of proposed Tiers
2, 3 or 4—is achieved for one symbol,
the Market Maker will be eligible for the
linked maker rebate in the other symbol,
regardless of time at the NBBO in that
symbol (i.e., there is no minimum tier
threshold to be met in that symbol for
the proposed linked maker rebate). This
linked maker rebate would be $0.16 per
contract for Tier 2, $0.20 per contract for
Tier 3, and $0.24 per contract for Tier
4. The regular maker rebate will be
provided in the symbol that qualifies
the Market Maker for the tier based on
percentage of time at the NBBO. Thus,
for example, if a Market Maker achieves
Tier 3 in SPY and Tier 1 in QQQ, the
Market Maker would receive the Tier 3
regular maker rebate in SPY (i.e., $0.22
per contract) and the Tier 3 linked
maker rebate in QQQ (i.e., $0.20 per
contract). This linked maker rebate is
similar to how Market Maker Plus
rebates are currently provided in SPY
and QQQ—i.e., a Market Maker that
qualifies for a tier in one qualifies for
both—but is more beneficial to the
Market Maker because the Market Maker
may earn the higher regular maker
rebate in the symbol for which they
qualify for that tier normally.
Taker Fees
Currently, the Exchange charges a
taker fee for regular orders in Select
Symbols that is $0.44 per contract for
Market Maker and Priority Customer
orders (other than Priority Customer
orders in SPY, QQQ, IWM, and VXX)
and $0.45 per contract for Non-Nasdaq
ISE Market Maker,10 Firm Proprietary,
Broker-Dealer, and Professional
Customer 11 orders. The taker fee for
Priority Customer orders is $0.34 per
contract in SPY, and $0.35 per contract
10 A ‘‘Non-Nasdaq 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 ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer.
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in QQQ, IWM, and VXX. The Exchange
proposes to: (1) Increase the taker fee for
Firm Proprietary and Broker-Dealer
orders in Select Symbols to $0.46 per
contract; and (2) increase the taker fee
for Priority Customer orders in SPY,
QQQ, IWM, and VXX to $0.37 per
contract.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,12 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,13 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
The Exchange believes that the
proposed changes to the Market Maker
Plus program in SPY and QQQ are
reasonable and equitable as these
changes would increase rebates for
Market Makers that qualify for Market
Maker Plus in these symbols, including
linked maker rebates that will now be
provided in a manner more beneficial to
members—i.e., by providing the higher
maker rebate in the symbol where a
member qualifies normally.
Furthermore, the proposed rule change
would also introduce a new tier that
eliminates maker fees for Market Makers
that do not meet the current
requirements for time at the NBBO in
SPY and QQQ, and ease the
requirements needed to qualify for
higher tiers of Market Maker Plus in
these symbols. The Market Maker Plus
program is designed to attract liquidity
from Market Makers on ISE and provide
incentives for those Market Makers to
maintain tight markets, measured by
time spent quoting at the NBBO. The
Exchange believes the proposed rule
change will further encourage Market
Makers to maintain quality markets in
SPY and QQQ, which are two of the
most actively traded symbols on ISE, to
the benefit of all market participants
that trade on the Exchange.14
The Exchange also believes that these
changes are not unfairly discriminatory
as all Market Makers can qualify for
Market Maker Plus in these symbols by
meeting program requirements that are
designed to incentivize Market Markets
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
14 The proposed rule change also reformats the
way that Market Maker Plus rebates and tier
thresholds are displayed, which will make the
program easier to understand.
13 15
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Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Notices
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to maintain quality markets. As noted
above, SPY and QQQ have been targeted
by the Exchange as these are highly
active symbols on the Exchange. The
proposed rule change will allow Market
Makers that would not qualify for
Market Maker Plus in SPY or QQQ
today to qualify for free maker
executions based on a time at the NBBO
of at least 70% of the time pursuant to
proposed Tier 1. And, as is the case
today, Market Makers that show
commitment to market quality by
maintaining quotes that qualify them for
a higher tier in these symbols will earn
higher rebates, including more favorably
applied linked rebates. Furthermore, the
Exchange continues to believe that it is
not unfairly discriminatory to offer
these rebates only to Market Makers as
Market Makers, and, in particular, those
Market Makers that achieve Market
Maker Plus status, are subject to
additional requirements and obligations
(such as quoting requirements) that
other market participants are not.
Taker Fees
The Exchange believes that the
proposed changes to taker fees are
reasonable and equitable as the
proposed increases are modest and
reflect reasonable charges to access
liquidity on the Exchange. The
Exchange believes that the increased
taker fee for Firm Proprietary and
Broker-Dealer orders in Select Symbols
and the taker fee for Priority Customer
orders in SPY, QQQ, IWM, and VXX
will continue to be attractive to market
participants. Furthermore, Priority
Customers will continue to receive
reduced taker fees in SPY, QQQ, IWM,
and VXX, which represent some of the
most heavily traded symbols on the
Exchange. In particular, the proposed
taker fees are lower than taker fees
charged to Priority Customer orders in
other Select Symbols as well as taker
fees charged to other market
participants. As such, the Exchange
believes that the proposed taker fees
will continue to attract order flow to the
benefit of all market participants that
trade on the Exchange. In addition, the
Exchange believes that it is equitable
and not unfairly discriminatory to
increase the taker fees described above,
as well as to only offer reduced taker
fees in SPY, QQQ, IWM, and VXX to
Priority Customer orders. The proposed
taker fee increases apply equally to
members based on a market
participants’ type. Furthermore, 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
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account(s). This limitation does not
apply to participants on the Exchange
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.
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. The
proposed changes to the Market Maker
Plus program in SPY and QQQ are
designed to increase competition by
encouraging Market Makers to provide
liquidity and maintain tight markets in
these symbols. Furthermore, the
proposed increases to taker fees are
modest and the Exchange does not
expect that such minor increases will
have any significant impact on
competition. The Exchange 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. 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.
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,15 and Rule
19b–4(f)(2) 16 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
15 15
16 17
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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56299
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–2017–98 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–2017–98. 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–ISE–2017–98 and should be
submitted on or before December 19,
2017.
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Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–25686 Filed 11–27–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82153; File No. SR–FINRA–
2017–035]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Extend the Tier Size
Pilot of Rule 6433 (Minimum Quotation
Size Requirements for OTC Equity
Securities)
November 22, 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 November
20, 2017, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) 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 FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend FINRA
Rule 6433 (Minimum Quotation Size
Requirements for OTC Equity
Securities) to extend the Tier Size Pilot,
which currently is scheduled to expire
on December 8, 2017, until June 7, 2018.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
1 15
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA 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. FINRA 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
FINRA proposes to amend FINRA
Rule 6433 (Minimum Quotation Size
Requirements for OTC Equity
Securities) (the ‘‘Rule’’) to extend, until
June 7, 2018, the amendments set forth
in File No. SR–FINRA–2011–058 (‘‘Tier
Size Pilot’’ or ‘‘Pilot’’), which currently
are scheduled to expire on December 8,
2017.4
The Tier Size Pilot was filed with the
SEC on October 6, 2011,5 to amend the
minimum quotation sizes (or ‘‘tier
sizes’’) for OTC Equity Securities.6 The
goals of the Pilot were to simplify the
tier structure, facilitate the display of
customer limit orders, and expand the
scope of the Rule to apply to additional
quoting participants. During the course
of the Pilot, FINRA collected and
provided to the SEC specified data with
which to assess the impact of the Pilot
tiers on market quality and limit order
display.7 On September 13, 2013,
FINRA provided to the Commission an
assessment on the operation of the Tier
Size Pilot utilizing data covering the
period from November 12, 2012 through
June 30, 2013.8 As noted in the 2013
Assessment, FINRA believed that the
4 See Securities Exchange Act Release No. 80727
(May 18, 2017), 82 FR 23953 (May 24, 2017) (Notice
of Filing and Immediate Effectiveness of File No.
SR–FINRA–2017–014).
5 See Securities Exchange Act Release No. 65568
(October 14, 2011), 76 FR 65307 (October 20, 2011)
(Notice of Filing of File No. SR–FINRA–2011–058).
6 ‘‘OTC Equity Security’’ means any equity
security that is not an ‘‘NMS stock’’ as that term is
defined in Rule 600(b)(47) of SEC Regulation NMS;
provided, however, that the term OTC Equity
Security shall not include any Restricted Equity
Security. See FINRA Rule 6420.
7 FINRA ceased collecting Pilot data for
submission to the Commission on February 13,
2015.
8 The assessment is part of the SEC’s comment file
for SR–FINRA–2011–058 and also is available on
FINRA’s Web site at: https://www.finra.org/Industry/
Regulation/RuleFilings/2011/P124615 (‘‘Pilot
Assessment’’).
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analysis of the data generally showed
that the Tier Size Pilot had a neutral to
positive impact on OTC market quality
for the majority of OTC Equity
Securities and tiers; and that there was
an overall increase of 13% in the
number of customer limit orders that
met the minimum quotation sizes to be
eligible for display under the Pilot tiers.
In the 2013 Assessment, FINRA
recommended adopting the tiers as
permanent, but extended the Pilot
period to allow more time to gather and
analyze data after the November 12,
2012 through June 30, 2013 assessment
period.9 The purpose of this filing is to
further extend the operation of the Tier
Size Pilot until June 7, 2018, to provide
additional time to finalize a permanent
proposal with regard to the Tier Size
Pilot.10
FINRA has filed the proposed rule
change for immediate effectiveness. The
operative date of the proposed rule
change will be December 8, 2017.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,11 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. FINRA also believes that
the proposed rule change is consistent
with the provisions of Section
15A(b)(11) of the Act.12 Section
15A(b)(11) requires that FINRA rules
include provisions governing the form
and content of quotations relating to
securities sold otherwise than on a
national securities exchange which may
be distributed or published by any
member or person associated with a
member, and the persons to whom such
quotations may be supplied.
FINRA believes that the extension of
the Tier Size Pilot until June 7, 2018, is
consistent with the Act in that it would
provide the Commission and FINRA
with additional time to finalize a
proposal with regard to the Tier Size
Pilot.
9 See Securities Exchange Act Release No. 70839
(November 8, 2013), 78 FR 68893 (November 15,
2013) (Notice of Filing and Immediate Effectiveness
of File No. SR–FINRA–2013–049).
10 FINRA reviewed the post-June 30, 2013 data,
and stated that the impact described in the 2013
Assessment continued to hold (and improved in
certain areas). See June 2016 Extension.
11 15 U.S.C. 78o–3(b)(6).
12 15 U.S.C. 78o–3(b)(11).
E:\FR\FM\28NON1.SGM
28NON1
]]>Agencies
[Federal Register Volume 82, Number 227 (Tuesday, November 28, 2017)]
[Notices]
[Pages 56297-56300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25686]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82141; File No. SR-ISE-2017-98]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Schedule of Fees for Regular Orders in Select Symbols
November 22, 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 November 13, 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.
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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 Schedule of Fees for regular
orders in Select Symbols to: (1) Adjust rebates and tier thresholds for
the Market Maker Plus program, and (2) increase taker fees for certain
Firm-Proprietary, Broker-Dealer, and Priority Customer orders.
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 Schedule of
Fees for regular orders in Select Symbols to: (1) Adjust rebates and
tier thresholds for the Market Maker Plus program, and (2) increase
taker fees for certain Firm-Proprietary,\3\ Broker-Dealer,\4\ and
Priority Customer \5\ orders.
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\3\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account.
\4\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
\5\ 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 Nasdaq ISE Rule
100(a)(37A).
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The Exchange initially filed the proposed pricing changes on
November 1, 2017 (SR-ISE-2017-97). On November 13, 2017, the Exchange
withdrew that filing and submitted this filing.
Market Maker Plus
The Exchange proposes to increase Market Maker Plus rebates in SPY
and QQQ, and modify the associated tier thresholds to make it easier
for Market Makers \6\ to qualify for higher Market Maker Plus tiers in
these symbols. The Market Maker Plus program is designed to attract
additional liquidity from Market Makers and encourage Market Makers to
maintain tight markets on ISE. The Exchange believes that the proposed
fee changes will further these objectives.
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\6\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Rule
100(a)(25).
---------------------------------------------------------------------------
A Market Maker Plus is a Market Maker who is on the National Best
Bid or National Best Offer (``NBBO'') 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.
Currently, the specified percentage for time at the NBBO for all
symbols 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.\7\ The Exchange proposes to modify the tier
thresholds for SPY and QQQ only by adding a new Tier 1 and adjusting
the other Market Maker Plus tiers such that: (1) Tier 1 rebates are
provided to Market Makers that are on the NBBO at least 70% but lower
than 80% of the time; (2) Tier 2 rebates are provided to market Makers
that are on the NBBO at least 80% but lower than 85% of the time; (3)
Tier 3 rebates are provided to Market Makers that are on the NBBO at
least 85% but lower than 90% of the time; and (4) Tier 4 and
[[Page 56298]]
rebates are provided to Market Makers that are on the NBBO at least 90%
of the time.
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\7\ 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. Other than days where the Exchange closes early for
holiday observance, any day that the market 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 the Market
Maker Plus tier calculation; provided that the Exchange will only
remove the day for members that would have a lower time at the NBBO
for the specified series with the day included.
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The Exchange is not proposing any changes to the tier thresholds
for Select Symbols other than SPY and QQQ. However, in connection with
the changes described above for SPY and QQQ, the Exchange proposes to
reformat the Schedule of Fees so that all Market Maker Plus tier
thresholds and rebate amounts, including those for SPY and QQQ, and
those for other Select Symbols, are clearly described in footnote 5
under Regular Order Fees and Rebates. With the proposed changes, this
footnote will state that Market Makers that qualify for Market Maker
Plus will receive rebates based on a table contained therein that
separately identifies tier thresholds and rebate amounts for SPY and
QQQ, and for Select Symbols other than SPY and QQQ. While tier
thresholds and rebate amounts for Select Symbols other than SPY and QQQ
are being moved to this section of the Schedule of Fees, the Exchange
is not proposing any changes to those values. Therefore, the Market
Maker Plus program will continue to operate in the same way that it
does today for all symbols other than SPY and QQQ.
Currently, Market Makers that qualify for Market Maker Plus are
provided a rebate for regular orders in Select Symbols of $0.15 per
contract for Tier 1, $0.18 per contract for Tier 2, and $0.22 per
contract for Tier 3.\8\ For SPY and QQQ only, this rebate is $0.16 per
contract for Tier 2 and $0.20 per contract for Tier 3.\9\ A Market
Maker that achieves a higher tier of Market Maker Plus in either SPY or
QQQ receives the higher rebate in both SPY and QQQ. Market Makers that
do not qualify for Market Maker Plus are not eligible for rebates and
are instead charged a fee of $0.10 per contract. With the introduction
of a new Tier 1 and adjustment of other tier thresholds for SPY and
QQQ, the Exchange proposes to provide an increased Market Maker Plus
rebate in SPY and QQQ that is: (1) $0.00 Per contract (i.e., no fee or
rebate) for new Tier 1; (2) $0.18 per contract for new Tier 2, (3)
$0.22 per contract for new Tier 3, and (3) $0.26 per contract for new
Tier 4. Each of these regular maker rebates is increased from current
Market Maker Plus rebates provided to Market Makers that are at the
NBBO for the same percentage of time today--or in the case of Tier 1,
represents the elimination of a fee that would have been charged to
Market Makers that are on the NBBO for the same percentage of the time.
In addition, the Exchange proposes to adopt a ``linked maker rebate''
for proposed Tiers 2-4 that applies to executions in SPY or QQQ if the
Market Maker does not achieve the applicable tier in that symbol but
achieves the tier (i.e., proposed Tiers 2-4) in the other symbol. Once
the applicable tier--any of proposed Tiers 2, 3 or 4--is achieved for
one symbol, the Market Maker will be eligible for the linked maker
rebate in the other symbol, regardless of time at the NBBO in that
symbol (i.e., there is no minimum tier threshold to be met in that
symbol for the proposed linked maker rebate). This linked maker rebate
would be $0.16 per contract for Tier 2, $0.20 per contract for Tier 3,
and $0.24 per contract for Tier 4. The regular maker rebate will be
provided in the symbol that qualifies the Market Maker for the tier
based on percentage of time at the NBBO. Thus, for example, if a Market
Maker achieves Tier 3 in SPY and Tier 1 in QQQ, the Market Maker would
receive the Tier 3 regular maker rebate in SPY (i.e., $0.22 per
contract) and the Tier 3 linked maker rebate in QQQ (i.e., $0.20 per
contract). This linked maker rebate is similar to how Market Maker Plus
rebates are currently provided in SPY and QQQ--i.e., a Market Maker
that qualifies for a tier in one qualifies for both--but is more
beneficial to the Market Maker because the Market Maker may earn the
higher regular maker rebate in the symbol for which they qualify for
that tier normally.
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\8\ For all tiers, a $0.10 per contract fee applies when trading
against Priority Customer complex orders that leg into the regular
order book. There will be no fee charged or rebate provided when
trading against non-Priority Customer complex orders that leg into
the regular order book.
\9\ As with other rebates provided under the Market Maker Plus
program, this rebate does not apply when trading against complex
orders that leg into the regular book.
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Taker Fees
Currently, the Exchange charges a taker fee for regular orders in
Select Symbols that is $0.44 per contract for Market Maker and Priority
Customer orders (other than Priority Customer orders in SPY, QQQ, IWM,
and VXX) and $0.45 per contract for Non-Nasdaq ISE Market Maker,\10\
Firm Proprietary, Broker-Dealer, and Professional Customer \11\ orders.
The taker fee for Priority Customer orders is $0.34 per contract in
SPY, and $0.35 per contract in QQQ, IWM, and VXX. The Exchange proposes
to: (1) Increase the taker fee for Firm Proprietary and Broker-Dealer
orders in Select Symbols to $0.46 per contract; and (2) increase the
taker fee for Priority Customer orders in SPY, QQQ, IWM, and VXX to
$0.37 per contract.
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\10\ A ``Non-Nasdaq 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 ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\12\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\13\ 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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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4) and (5).
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Market Maker Plus
The Exchange believes that the proposed changes to the Market Maker
Plus program in SPY and QQQ are reasonable and equitable as these
changes would increase rebates for Market Makers that qualify for
Market Maker Plus in these symbols, including linked maker rebates that
will now be provided in a manner more beneficial to members--i.e., by
providing the higher maker rebate in the symbol where a member
qualifies normally. Furthermore, the proposed rule change would also
introduce a new tier that eliminates maker fees for Market Makers that
do not meet the current requirements for time at the NBBO in SPY and
QQQ, and ease the requirements needed to qualify for higher tiers of
Market Maker Plus in these symbols. The Market Maker Plus program is
designed to attract liquidity from Market Makers on ISE and provide
incentives for those Market Makers to maintain tight markets, measured
by time spent quoting at the NBBO. The Exchange believes the proposed
rule change will further encourage Market Makers to maintain quality
markets in SPY and QQQ, which are two of the most actively traded
symbols on ISE, to the benefit of all market participants that trade on
the Exchange.\14\
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\14\ The proposed rule change also reformats the way that Market
Maker Plus rebates and tier thresholds are displayed, which will
make the program easier to understand.
---------------------------------------------------------------------------
The Exchange also believes that these changes are not unfairly
discriminatory as all Market Makers can qualify for Market Maker Plus
in these symbols by meeting program requirements that are designed to
incentivize Market Markets
[[Page 56299]]
to maintain quality markets. As noted above, SPY and QQQ have been
targeted by the Exchange as these are highly active symbols on the
Exchange. The proposed rule change will allow Market Makers that would
not qualify for Market Maker Plus in SPY or QQQ today to qualify for
free maker executions based on a time at the NBBO of at least 70% of
the time pursuant to proposed Tier 1. And, as is the case today, Market
Makers that show commitment to market quality by maintaining quotes
that qualify them for a higher tier in these symbols will earn higher
rebates, including more favorably applied linked rebates. Furthermore,
the Exchange continues to believe that it is not unfairly
discriminatory to offer these rebates only to Market Makers as Market
Makers, and, in particular, those Market Makers that achieve Market
Maker Plus status, are subject to additional requirements and
obligations (such as quoting requirements) that other market
participants are not.
Taker Fees
The Exchange believes that the proposed changes to taker fees are
reasonable and equitable as the proposed increases are modest and
reflect reasonable charges to access liquidity on the Exchange. The
Exchange believes that the increased taker fee for Firm Proprietary and
Broker-Dealer orders in Select Symbols and the taker fee for Priority
Customer orders in SPY, QQQ, IWM, and VXX will continue to be
attractive to market participants. Furthermore, Priority Customers will
continue to receive reduced taker fees in SPY, QQQ, IWM, and VXX, which
represent some of the most heavily traded symbols on the Exchange. In
particular, the proposed taker fees are lower than taker fees charged
to Priority Customer orders in other Select Symbols as well as taker
fees charged to other market participants. As such, the Exchange
believes that the proposed taker fees will continue to attract order
flow to the benefit of all market participants that trade on the
Exchange. In addition, the Exchange believes that it is equitable and
not unfairly discriminatory to increase the taker fees described above,
as well as to only offer reduced taker fees in SPY, QQQ, IWM, and VXX
to Priority Customer orders. The proposed taker fee increases apply
equally to members based on a market participants' type. Furthermore, 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 on the
Exchange 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.
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. The proposed changes to the
Market Maker Plus program in SPY and QQQ are designed to increase
competition by encouraging Market Makers to provide liquidity and
maintain tight markets in these symbols. Furthermore, the proposed
increases to taker fees are modest and the Exchange does not expect
that such minor increases will have any significant impact on
competition. The Exchange 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. 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.
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,\15\ and Rule 19b-4(f)(2) \16\ 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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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 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-2017-98 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-2017-98. 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. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2017-98 and should be
submitted on or before December 19, 2017.
[[Page 56300]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25686 Filed 11-27-17; 8:45 am]
BILLING CODE 8011-01-P
