Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Calculation of the Member Order Routing Program, 60455-60458 [2017-27340]
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Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices
with the protection of investors and the
public interest. Therefore, the
Commission designates the proposed
rule change to be operative upon
filing.11
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 necessary or appropriate in the
public interest, for the protection of
investors, or 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.
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–2017–104 and should
be submitted on or before January 10,
2018.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Eduardo A. Aleman,
Assistant Secretary.
sradovich on DSK3GMQ082PROD with NOTICES
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–2017–104 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–2017–104. 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 website (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 website viewing and
printing in the Commission’s Public
11 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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[FR Doc. 2017–27338 Filed 12–19–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82323; File No. SR–
NYSEArca–2017–99]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on Proposed Rule Change, as Modified
by Amendment No. 1, To List and
Trade Shares of the Hartford
Schroders Tax-Aware Bond ETF Under
NYSE Arca Rule 8.600–E
60455
has received no comment letters on the
proposed rule change.
Section 19(b)(2) of the Act 5 provides
that, within 45 days of the publication
of notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is December 15,
2017. The Commission is extending this
45-day time period.
The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule change so that it has
sufficient time to consider the proposed
rule change. Accordingly, the
Commission, pursuant to Section
19(b)(2) of the Act,6 designates January
29, 2018, as the date by which the
Commission shall either approve or
disapprove or institute proceedings to
determine whether to disapprove the
proposed rule change (File Number SR–
NYSEArca–2017–99).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–27344 Filed 12–19–17; 8:45 am]
BILLING CODE 8011–01–P
December 14, 2017.
On October 11, 2017, NYSE Arca, Inc.
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares of the Hartford
Schroders Tax-Aware Bond ETF under
NYSE Arca Rule 8.600–E. The proposed
rule change was published for comment
in the Federal Register on October 31,
2017.3 On November 21, 2017, the
Exchange filed Amendment No. 1 to the
proposed rule change.4 The Commission
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 81944
(October 25, 2017), 82 FR 50461.
4 Amendment No. 1, which amended and
replaced the proposed rule change in its entirety,
is available on the Commission’s website at: https://
www.sec.gov/comments/sr-nysearca-2017-99/
nysearca201799-2711017-161518.pdf.
1 15
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82320; File No. SR–ISE–
2017–103]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Calculation of the Member Order
Routing Program
December 14, 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
29, 2017, Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘Exchange’’) filed with the Securities
5 15
U.S.C. 78s(b)(2).
6 Id.
7 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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60456
Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices
and Exchange Commission
(‘‘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 amend its
Schedule of Fees to amend the
calculation of the Member Order
Routing Program.
While these amendments are effective
upon filing, the Exchange has
designated the proposed amendments to
be operative on December 1, 2017.
The text of the proposed rule change
is available on the Exchange’s website at
https://ise.cchwallstreet.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 operates the Member
Order Routing Program (‘‘MORP’’),3
which is a program that provides
enhanced rebates to order routing firms
that select the Exchange as the default
routing destination for unsolicited
Regular orders
in select
symbols
Market participant
Market Maker ...........................................
Non-Nasdaq ISE Market Maker (FarMM)
Firm Proprietary/Broker-Dealer ................
Professional Customer .............................
Priority Customer .....................................
N/A
($0.35)
(0.35)
(0.35)
(0.35)
Complex
orders in
select
symbols
Regular orders
in non-select
symbols
N/A
($0.35)
(0.35)
(0.35)
(0.35)
N/A
($0.15)
(0.15)
(0.15)
(0.15)
Crossing Orders.4 This proposal seeks to
exclude options overlying NDX 5 from
the calculation of MORP for purposes of
rebates.
Eligible MORP Electronic Access
Members (EAMS) that execute a
monthly average daily volume (ADV) in
unsolicited Crossing Orders of 30,000
originating contract sides or more on
their MORP designated sessions are
eligible for increased Facilitation and
Solicitation break-up rebates in addition
to enhanced rebates for Unsolicited
Crossing Orders. Break-up rebates,
which are shown in the table below,
apply instead of rebates described in
Sections I, II, and III of the Schedule of
Fees, and will be provided for contracts
that are submitted to the Facilitation
and Solicited Order Mechanisms that do
not trade with their contra order except
when those contracts trade against preexisting orders and quotes on the
Exchange’s order books. The applicable
fee for Crossing Orders is applied to any
contracts for which a rebate is provided.
Facilitation and Solicitation Break-Up
Rebates are as follows:
Complex
orders in
non-select
symbols
N/A
($0.80)
(0.80)
(0.80)
(0.80)
Regular orders
in FX
options
N/A
($0.15)
(0.15)
(0.15)
(0.15)
Complex
orders in FX
options
N/A
($0.15)
(0.15)
(0.15)
(0.15)
sradovich on DSK3GMQ082PROD with NOTICES
Currently, an EAM that is MORP
eligible receives a rebate for all
unsolicited Crossing Orders of $0.05 per
originating contract side, provided that
the member executes a minimum ADV
in unsolicited Crossing Orders of 30,000
to 99,999 originating contract sides
though their MORP designated sessions.
If the member executed greater than
100,000 originating contract sides, the
rebate for all unsolicited Crossing
Orders is $0.07 per originating contract
side.6 No rebate is paid for volume
below 30,000 originating contract sides.
With respect to the Facilitation and
Solicitation Break-Up Rebate, any EAM
that qualifies for the MORP rebate by
executing an ADV of 30,000 originating
contract sides or more on their MORP
designated sessions is also eligible for
increased Facilitation and Solicitation
break-up rebates 7 for their Non-ISE
Market Maker,8 Firm Proprietary,9
Broker-Dealer,10 Professional
Customer,11 and Priority Customer
orders.12 Currently, MORP eligible
members that execute a qualifying ADV
in unsolicited Crossing Orders of at least
30,000 originating contract sides,
receive a Facilitation and Solicitation
break-up rebate that is $0.35 per
contract for regular and complex orders
3 See Securities Exchange Act Release No. 74706
(April 10, 2016), 80 FR 20522 (April 16, 2016) (SR–
ISE–2015–11). A Member may designate one or
more sessions to be eligible for MORP. A session
is connection to the exchange over which a member
submits orders. See Section V.C. of the Schedule of
Fees. If a session is designated as eligible for MORP
all requirements for the program must be met for
that session.
4 A ‘‘Crossing Order’’ is an order executed in the
Exchange’s Facilitation Mechanism, Solicited Order
Mechanism, Price Improvement Mechanism
(‘‘PIM’’) or submitted as a Qualified Contingent
Cross (‘‘QCC’’) order. For purposes of the fee
schedule, orders executed in the Block Order
Mechanism are also considered Crossing Orders.
5 NDX represents options on the Nasdaq 100
Index traded under the symbol NDX (‘‘NDX’’).
6 The rebate for the highest tier achieved is
applied retroactively to all eligible contracts traded
in a given month. For purposes of determining
whether the member meets the above ADV
thresholds, any day that the Exchange is not open
for the entire trading day or the Exchange instructs
members in writing to route their orders to other
markets may be excluded from such calculation;
provided that the Exchange will only remove the
day for members that would have a lower ADV with
the day included.
7 Break-up rebates are provided for contracts that
are submitted to the Facilitation and Solicited
Order Mechanisms that do not trade with their
contra order except when those contracts trade
against pre-existing orders and quotes on the
Exchange’s orderbooks. The applicable fee for
Crossing Orders is applied to any contracts for
which a rebate is provided.
8 A ‘‘Non-ISE Market Maker’’ is a market maker
as defined in Section 3(a)(38) of the Securities
Exchange Act of 1934, as amended, registered in the
same options class on another options exchange.
9 A ‘‘Firm Proprietary’’ order is an order
submitted by a member for its own proprietary
account.
10 A ‘‘Broker-Dealer’’ order is an order submitted
by a member for a broker-dealer account that is not
its own proprietary account.
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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Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices
in Select Symbols,13 $0.15 per contract
for regular orders in Non-Select
Symbols,14 $0.80 per contract for
complex orders in Non-Select Symbols,
and $0.15 per contract for regular and
complex orders in foreign exchange
option classes (‘‘FX Options’’).
Proposal
This proposal would exclude options
overlying NDX from the monthly ADV
when calculating the originating
contract side for unsolicited Crossing
Orders executed by an eligible EAM on
their MORP designated sessions. NDX
would not be subject to unsolicited
Crossing Orders rebates and Facilitation
and Solicitation break-up rebates. NDX
will continue to be subject to Section I
Index Options pricing for simple orders
and Non-Select pricing for complex
orders.
sradovich on DSK3GMQ082PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,15 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,16 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.
The Exchange’s proposal to exclude
options overlying NDX from the
monthly ADV when calculating
unsolicited Crossing Orders rebates and
also from Facilitation and Solicitation
break-up rebates is reasonable because
the MORP will continue to be attractive
to members that participate in the
program.17 Under MORP, which is a
voluntary rebate program, the Exchange
currently provides enhanced rebates to
EAMs that connect directly to the
Exchange and provide their clients with
order routing functionality that includes
all U.S. options exchanges, including
ISE. Even with the exclusion of NDX
from the MORP monthly ADV and
rebates, the Exchange still believes that
Members will continue to be
incentivized to participate in the
program. The Exchange today prices
12 A ‘‘Priority Customer’’ is a person or entity that
is not a broker/dealer in securities, and does not
place more than 390 orders in listed options per day
on average during a calendar month for its own
beneficial account(s), as defined in ISE Rule
100(a)(37A).
13 ‘‘Select Symbols’’ are options overlying all
symbols listed on the ISE that are in the Penny Pilot
Program.
14 ‘‘Non-Select Symbols’’ are options overlying all
symbols excluding Select Symbols.
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(4) and (5).
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Index Options separately from other
multiply-listed options.18 This practice
of pricing certain products separately is
not novel.19
The Exchange’s proposal to exclude
options overlying NDX from the
monthly ADV when calculating
unsolicited Crossing Orders rebates and
also from Facilitation and Solicitation
break-up rebates is equitable and not
unfairly discriminatory because no
Member would be eligible to include
NDX in monthly ADV and receive
MORP rebates. The Exchange would
uniformly calculate tiers and pay
rebates associated with MORP.
Any EAM that participates in the
program will be provided the rebates on
an equal and non-discriminatory basis
based on the order flow executed on the
Exchange.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,20 the Exchange does not believe
that the proposed rule change will
impose any burden on intermarket or
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Order routing
firms that participate in MORP and
select the Exchange as the default
routing destination for unsolicited
Crossing Orders will continue to receive
enhanced rebates. The exclusion from
NDX from the monthly ADV when
calculating unsolicited Crossing Orders
rebates and also from Facilitation and
Solicitation break-up rebates will apply
uniformly to all ISE Members. Other
exchanges price certain symbols
differently.21
The Exchange operates in a highly
competitive market in which market
participants can readily direct their
order flow to competing venues. In such
an environment, the Exchange must
continually review, and consider
adjusting, its fees and rebates to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that the proposed fee
changes reflect this competitive
environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
17 See
note 3 above.
Section I of the ISE Schedule of Fees.
19 See Nasdaq Phlx’s Pricing Schedule at Section
I which offers separate pricing for options overlying
SPY.
20 15 U.S.C. 78f(b)(8).
18 See
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60457
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.22 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–2017–103 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–2017–103. 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 website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
21 See
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20DEN1
60458
Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices
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–2017–103 and should
be submitted on or before January 10,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–27340 Filed 12–19–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82322; File No. SR–Phlx–
2017–101]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to Specialist
Obligations
December 14, 2017.
sradovich on DSK3GMQ082PROD with NOTICES
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
29, 2017, Nasdaq PHLX LLC (‘‘Phlx’’ 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
Rule 1017, entitled ‘‘Openings in
Options,’’ to specify the obligations of a
Specialist when entering Valid Width
Quotes 3 during the Opening Process.
The text of the proposed rule change
is available on the Exchange’s website at
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 A Valid Width Quote is a two-sided electronic
quotation submitted by a Phlx Electronic Market
https://nasdaqphlx.cchwallstreet.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
Rule 1017, Openings in Options, to
amend the obligations of a Specialist
when entering Valid Width Quotes
during the Opening Process. In addition,
the Exchange proposes to make clear the
obligations of a Specialist and a Phlx
Electronic Market Maker once an
options series has opened.
Currently, Rule 1017(d)(i) provides,
the Opening Process for an option series
will be conducted pursuant to
paragraphs (f)–(k) of Phlx Rule 1017
below on or after 9:30 a.m. if: The
ABBO, if any, is not crossed; and the
system has received, within two
minutes (or such shorter time as
determined by the Exchange and
disseminated to membership on the
Exchange’s website) of the opening
trade or quote on the market for the
underlying security in the case of equity
options or, in the case of index options,
within two minutes of the receipt of the
opening price in the underlying index
(or such shorter time as determined by
the Exchange and disseminated to
membership on the Exchange’s website),
or within two minutes of market
opening for the underlying currency in
the case of U.S. dollar-settled FCO (or
such shorter time as determined by the
Exchange and disseminated to
membership on the Exchange’s website)
any of the following: (A) The
Specialist’s Valid Width Quote; (B) the
Valid Width Quotes of at least two Phlx
Electronic Market Makers other than the
1 15
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Maker that consists of a bid/ask differential that is
compliant with Rule 1014(c)(i)(A)(1)(a). See Rule
1017(a)(ix).
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Specialist; or (C) if neither the
Specialist’s Valid Width Quote nor the
Valid Width Quotes of two Phlx
Electronic Market Makers have been
submitted within such timeframe, one
Phlx Electronic Market Maker has
submitted a Valid Width Quote.
Thereafter, Rule 1017(d)(iii) specifies
that the Specialist assigned in a
particular equity or index option must
enter a Valid Width Quote, in 90% of
their assigned series, not later than one
minute following the dissemination of a
quote or trade by the market for the
underlying security or, in the case of
index options, following the receipt of
the opening price in the underlying
index. The Specialist assigned in a
particular U.S. dollar-settled FCO must
enter a Valid Width Quote, in 90% of
their assigned series, not later than 30
seconds after the announced market
opening. The Specialist must promptly
enter a Valid Width Quote in the
remainder of their assigned series,
which did not open within one minute
following the dissemination of a quote
or trade by the market for the
underlying security or, in the case of
index options, following the receipt of
the opening price in the underlying
index or, with respect to a U.S. dollarsettled FCO, following the announced
market opening.
The Exchange proposes to make clear
that a Specialist has the obligations
specified in Phlx Rule 1017(d)(iii) to
promptly enter a Valid Width Quote in
the remainder of their assigned series in
cases where the Specialist’s assigned
series was not already opened by a Phlx
Electronic Market Maker as permitted
by Rule 1017(d)(i) as noted herein. The
Specialist would continue to have the
ultimate obligation to open each
assigned series, however this rule
change would not require the Specialist
to enter a Valid Width Quote for the
10% of their assigned series, not later
than one minute following the
dissemination of a quote or trade by the
market for the underlying security or, in
the case of index options, following the
receipt of the opening price in the
underlying index during the Opening
Process if a Phlx Electronic Market
Maker entered an order pursuant to Rule
1017(d)(i)(B) and (C) within the
timeframe specified for the Specialist to
enter a Valid Width Quote as noted in
Rule 1017(d)(iii). Also, the Specialist
assigned in a particular U.S. dollarsettled FCO must enter a Valid Width
Quote for 10% of their assigned series,
not later than 3 [sic] seconds after the
announced market opening during the
Opening Process if a Phlx Electronic
Market Makers entered [sic] an order
pursuant to Rule 1017(d)(i)(B) and (C)
E:\FR\FM\20DEN1.SGM
20DEN1
]]>Agencies
[Federal Register Volume 82, Number 243 (Wednesday, December 20, 2017)]
[Notices]
[Pages 60455-60458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27340]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82320; File No. SR-ISE-2017-103]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Calculation of the Member Order Routing Program
December 14, 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 29, 2017, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed
with the Securities
[[Page 60456]]
and Exchange Commission (``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.
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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 its Schedule of Fees to amend the
calculation of the Member Order Routing Program.
While these amendments are effective upon filing, the Exchange has
designated the proposed amendments to be operative on December 1, 2017.
The text of the proposed rule change is available on the Exchange's
website at https://ise.cchwallstreet.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 operates the Member Order Routing Program
(``MORP''),\3\ which is a program that provides enhanced rebates to
order routing firms that select the Exchange as the default routing
destination for unsolicited Crossing Orders.\4\ This proposal seeks to
exclude options overlying NDX \5\ from the calculation of MORP for
purposes of rebates.
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\3\ See Securities Exchange Act Release No. 74706 (April 10,
2016), 80 FR 20522 (April 16, 2016) (SR-ISE-2015-11). A Member may
designate one or more sessions to be eligible for MORP. A session is
connection to the exchange over which a member submits orders. See
Section V.C. of the Schedule of Fees. If a session is designated as
eligible for MORP all requirements for the program must be met for
that session.
\4\ A ``Crossing Order'' is an order executed in the Exchange's
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement
Mechanism (``PIM'') or submitted as a Qualified Contingent Cross
(``QCC'') order. For purposes of the fee schedule, orders executed
in the Block Order Mechanism are also considered Crossing Orders.
\5\ NDX represents options on the Nasdaq 100 Index traded under
the symbol NDX (``NDX'').
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Eligible MORP Electronic Access Members (EAMS) that execute a
monthly average daily volume (ADV) in unsolicited Crossing Orders of
30,000 originating contract sides or more on their MORP designated
sessions are eligible for increased Facilitation and Solicitation
break-up rebates in addition to enhanced rebates for Unsolicited
Crossing Orders. Break-up rebates, which are shown in the table below,
apply instead of rebates described in Sections I, II, and III of the
Schedule of Fees, and will be provided for contracts that are submitted
to the Facilitation and Solicited Order Mechanisms that do not trade
with their contra order except when those contracts trade against pre-
existing orders and quotes on the Exchange's order books. The
applicable fee for Crossing Orders is applied to any contracts for
which a rebate is provided.
Facilitation and Solicitation Break-Up Rebates are as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Regular orders Complex Regular orders Complex Complex
Market participant in select orders in in non-select orders in non- Regular orders orders in FX
symbols select symbols symbols select symbols in FX options options
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker............................................ N/A N/A N/A N/A N/A N/A
Non-Nasdaq ISE Market Maker (FarMM)..................... ($0.35) ($0.35) ($0.15) ($0.80) ($0.15) ($0.15)
Firm Proprietary/Broker-Dealer.......................... (0.35) (0.35) (0.15) (0.80) (0.15) (0.15)
Professional Customer................................... (0.35) (0.35) (0.15) (0.80) (0.15) (0.15)
Priority Customer....................................... (0.35) (0.35) (0.15) (0.80) (0.15) (0.15)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Currently, an EAM that is MORP eligible receives a rebate for all
unsolicited Crossing Orders of $0.05 per originating contract side,
provided that the member executes a minimum ADV in unsolicited Crossing
Orders of 30,000 to 99,999 originating contract sides though their MORP
designated sessions. If the member executed greater than 100,000
originating contract sides, the rebate for all unsolicited Crossing
Orders is $0.07 per originating contract side.\6\ No rebate is paid for
volume below 30,000 originating contract sides.
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\6\ The rebate for the highest tier achieved is applied
retroactively to all eligible contracts traded in a given month. For
purposes of determining whether the member meets the above ADV
thresholds, any day that the Exchange is not open for the entire
trading day or the Exchange instructs members in writing to route
their orders to other markets may be excluded from such calculation;
provided that the Exchange will only remove the day for members that
would have a lower ADV with the day included.
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With respect to the Facilitation and Solicitation Break-Up Rebate,
any EAM that qualifies for the MORP rebate by executing an ADV of
30,000 originating contract sides or more on their MORP designated
sessions is also eligible for increased Facilitation and Solicitation
break-up rebates \7\ for their Non-ISE Market Maker,\8\ Firm
Proprietary,\9\ Broker-Dealer,\10\ Professional Customer,\11\ and
Priority Customer orders.\12\ Currently, MORP eligible members that
execute a qualifying ADV in unsolicited Crossing Orders of at least
30,000 originating contract sides, receive a Facilitation and
Solicitation break-up rebate that is $0.35 per contract for regular and
complex orders
[[Page 60457]]
in Select Symbols,\13\ $0.15 per contract for regular orders in Non-
Select Symbols,\14\ $0.80 per contract for complex orders in Non-Select
Symbols, and $0.15 per contract for regular and complex orders in
foreign exchange option classes (``FX Options'').
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\7\ Break-up rebates are provided for contracts that are
submitted to the Facilitation and Solicited Order Mechanisms that do
not trade with their contra order except when those contracts trade
against pre-existing orders and quotes on the Exchange's orderbooks.
The applicable fee for Crossing Orders is applied to any contracts
for which a rebate is provided.
\8\ A ``Non-ISE Market Maker'' is a market maker as defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended,
registered in the same options class on another options exchange.
\9\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account.
\10\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
\11\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
\12\ A ``Priority Customer'' is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s), as defined in ISE Rule 100(a)(37A).
\13\ ``Select Symbols'' are options overlying all symbols listed
on the ISE that are in the Penny Pilot Program.
\14\ ``Non-Select Symbols'' are options overlying all symbols
excluding Select Symbols.
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Proposal
This proposal would exclude options overlying NDX from the monthly
ADV when calculating the originating contract side for unsolicited
Crossing Orders executed by an eligible EAM on their MORP designated
sessions. NDX would not be subject to unsolicited Crossing Orders
rebates and Facilitation and Solicitation break-up rebates. NDX will
continue to be subject to Section I Index Options pricing for simple
orders and Non-Select pricing for complex orders.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\15\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\16\ 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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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposal to exclude options overlying NDX from the
monthly ADV when calculating unsolicited Crossing Orders rebates and
also from Facilitation and Solicitation break-up rebates is reasonable
because the MORP will continue to be attractive to members that
participate in the program.\17\ Under MORP, which is a voluntary rebate
program, the Exchange currently provides enhanced rebates to EAMs that
connect directly to the Exchange and provide their clients with order
routing functionality that includes all U.S. options exchanges,
including ISE. Even with the exclusion of NDX from the MORP monthly ADV
and rebates, the Exchange still believes that Members will continue to
be incentivized to participate in the program. The Exchange today
prices Index Options separately from other multiply-listed options.\18\
This practice of pricing certain products separately is not novel.\19\
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\17\ See note 3 above.
\18\ See Section I of the ISE Schedule of Fees.
\19\ See Nasdaq Phlx's Pricing Schedule at Section I which
offers separate pricing for options overlying SPY.
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The Exchange's proposal to exclude options overlying NDX from the
monthly ADV when calculating unsolicited Crossing Orders rebates and
also from Facilitation and Solicitation break-up rebates is equitable
and not unfairly discriminatory because no Member would be eligible to
include NDX in monthly ADV and receive MORP rebates. The Exchange would
uniformly calculate tiers and pay rebates associated with MORP.
Any EAM that participates in the program will be provided the
rebates on an equal and non-discriminatory basis based on the order
flow executed on the Exchange.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\20\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Order routing
firms that participate in MORP and select the Exchange as the default
routing destination for unsolicited Crossing Orders will continue to
receive enhanced rebates. The exclusion from NDX from the monthly ADV
when calculating unsolicited Crossing Orders rebates and also from
Facilitation and Solicitation break-up rebates will apply uniformly to
all ISE Members. Other exchanges price certain symbols differently.\21\
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\20\ 15 U.S.C. 78f(b)(8).
\21\ See note 19 above.
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The Exchange operates in a highly competitive market in which
market participants can readily direct their order flow to competing
venues. In such an environment, the Exchange must continually review,
and consider adjusting, its fees and rebates to remain competitive with
other exchanges. For the reasons described above, the Exchange believes
that the proposed fee changes reflect this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\22\ 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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\22\ 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 [email protected]. Please include
File Number SR-ISE-2017-103 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-2017-103. 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 website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE,
[[Page 60458]]
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-2017-103 and should be
submitted on or before January 10, 2018.
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\23\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-27340 Filed 12-19-17; 8:45 am]
BILLING CODE 8011-01-P
