Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Schedule of Fees To Clarify the Fees and Rebates for the Complex Order Exposure Auction Pursuant to Rule 722(b)(3)(iii), 15662-15664 [2018-07405]

Download as PDF 15662 Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices Commission, 100 F Street NE, Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION All submissions should refer to File Number SR–NYSEArca–2018–17. 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, 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–NYSEArca–2018–17 and should be submitted on or before May 2, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–07406 Filed 4–10–18; 8:45 am] [Release No. 34–82999; File No. SR–ISE– 2018–28] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange’s Schedule of Fees To Clarify the Fees and Rebates for the Complex Order Exposure Auction Pursuant to Rule 722(b)(3)(iii) April 5, 2018. 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 March 23, 2018, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s Schedule of Fees to provide greater clarity as to how the Exchange currently charges complex orders executed during an exposure auction pursuant to Rule 722(b)(3)(iii) (‘‘Exposure Auction’’). 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 amozie on DSK30RV082PROD with NOTICES BILLING CODE 8011–01–P 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. 1 15 20 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:17 Apr 10, 2018 2 17 Jkt 244001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00113 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend the Exchange’s Schedule of Fees to provide greater clarity as to how the Exchange currently charges complex orders executed during an Exposure Auction pursuant to Rule 722(b)(3)(iii). An Exposure Auction is automatically initiated when a member submits an eligible complex order that is marked for price improvement.3 Because Exposure Auctions are initiated by complex orders entered on the complex order book, they are charged based on the same maker/taker scheme as is applicable to other complex orders that are executed on the complex order book rather than the separate pricing defined for Crossing Orders.4 Specifically, the Exchange treats the originating side of Exposure Auction orders as adding liquidity, and the contra side as taking liquidity, for the purpose of determining applicable fees and rebates. Since the Schedule of Fees does not currently indicate the manner in which the Exchange treats the originating or contra side of Exposure Auction orders, the Exchange proposes to add the following language in Section II: ‘‘During an ‘‘exposure’’ auction pursuant to Rule 722(b)(3)(iii), the originating side of the auction order will be assessed the applicable maker fee or rebate, and the contra side will be assessed the applicable taker fee or rebate.’’ Thus, based on current rates, the Exchange charges the originating side of Non-Priority Customer 5 Exposure Auction orders that trade against other Non-Priority Customer orders a maker fee of $0.10 per contract in Select 3 Pursuant to Rule 722(b)(3)(iii), the marked complex order is exposed for a period of up to onesecond. When the Exchange first adopted Rule 722(b)(3)(iii), it indicated that this exposure period, which provided members an opportunity for price improvement, was not considered an ‘‘auction.’’ See Securities Exchange Act Release No. 57706 (April 24, 2008), 73 FR 23517 (April 30, 2008) (SR–ISE– 2007–77) (‘‘2007 Filing’’). Notwithstanding the 2007 Filing, this feature would be considered an auction today. 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 order. For purposes of the Fee Schedule, orders executed in the Block Order Mechanism are also considered Crossing Orders. 5 Non-Priority Customer includes Market Maker, Non-Nasdaq ISE Market Maker, Firm Proprietary, Broker-Dealer, and Professional Customer. E:\FR\FM\11APN1.SGM 11APN1 Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices amozie on DSK30RV082PROD with NOTICES Symbols 6 for Market Maker,7 Firm Proprietary 8/Broker-Dealer,9 and Professional Customer 10 orders, and $0.20 per contract in Select Symbols for Non-Nasdaq ISE Market Maker 11 orders. In Non-Select Symbols,12 the originating side is charged a $0.20 per contract maker fee for all Non-Priority Customer orders. The contra side Non-Priority Customer order is charged a taker fee of $0.50 per contract in Select Symbols for Market Maker (or $0.44 per contract for Market Makers with total affiliated Priority Customer Complex ADV of 150,000 or more contracts),13 NonNasdaq ISE Market Maker, Firm Proprietary/Broker-Dealer, and Professional Customer orders. In NonSelect Symbols, the contra side NonPriority Customer order is charged a $0.86 per contract taker fee for Market Maker orders,14 and a $0.88 per contract taker fee for Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-Dealer, and Professional Customer orders.15 When Non-Priority Customer orders trade against Priority Customer 16 orders 6 ‘‘Select Symbols’’ are options overlying all symbols listed on ISE that are in the Penny Pilot Program. 7 The term ‘‘Market Makers’’ refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. 8 A ‘‘Firm Proprietary’’ order is an order submitted by a member for its own proprietary account. 9 A ‘‘Broker-Dealer’’ order is an order submitted by a member for a broker-dealer account that is not its own proprietary account. 10 A ‘‘Professional Customer’’ is a person or entity that is not a broker/dealer and is not a Priority Customer. 11 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. 12 ‘‘Non-Select Symbols’’ are options overlying all symbols excluding Select Symbols. 13 Further, Nasdaq ISE Market Makers making or taking liquidity receive a discount of $0.02 when trading against Priority Customer orders preferenced to them in the Complex Order Book in equity options that are able to be listed and traded on more than one options exchange. This discount does not apply to FX Options Symbols or to option classes designated by the Exchange to receive a guaranteed allocation pursuant to Nasdaq ISE Rule 722(b)(3)(i)(B). 14 Id. 15 The Exchange also currently charges a $0.03 per contract complex surcharge for Non-Priority Customer complex orders in Non-Select Symbols that take liquidity from the complex order book, excluding complex orders executed in the Facilitation Mechanism, Solicited Order Mechanism, Price Improvement Mechanism and Exposure Auctions. See Securities Exchange Act Release No. 82644 (February 6, 2018), 83 FR 6069 (February 12, 2018) (SR–ISE–2018–10). 16 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). VerDate Sep<11>2014 17:17 Apr 10, 2018 Jkt 244001 in Exposure Auctions and the originating side is a Non-Priority Customer order, the originating side is charged a maker fee of $0.47 per contract in Select Symbols for Market Maker orders (or $0.44 per contract for Market Makers with total affiliated Priority Customer Complex ADV of 150,000 or more contracts),17 and $0.48 per contract for Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-Dealer, and Professional Customer orders. In Non-Select Symbols, the originating side is charged a $0.86 per contract maker fee for Market Maker orders,18 and a $0.88 per contract maker fee for Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-Dealer, and Professional Customer orders. The contra side Priority Customer order is paid a volume-based tiered rebate,19 which currently ranges from $0.26 per contract in Select Symbols (if the member executes Priority Customer Complex ADV of 0 to 14,999 contracts in a given month) to $0.50 per contract in Select Symbols (if the member executes Priority Customer Complex ADV of 225,000 or more contracts in a given month). In Non-Select Symbols, the tiered rebate paid to the contra side Priority Customer order currently ranges from $0.40 per contract (if the member executes Priority Customer Complex ADV of 0 to 14,999 contracts in a given month) to $0.85 per contract (if the member executes Priority Customer Complex ADV of 225,000 or more contracts in a given month). When Non-Priority Customer orders trade against Priority Customer orders in Exposure Auctions and the originating side is a Priority Customer order, the originating side receives the tiered rebate in Select and Non-Select Symbols, as discussed above. The contra side Non-Priority Customer is charged the taker fee in Select and Non-Select Symbols, as discussed above.20 Lastly, when Priority Customer orders trade against Priority Customer orders in Exposure Auctions, neither the originating side nor the contra side is charged a fee or given a rebate because the Exchange currently does not charge a maker or taker fee for Priority Customer complex orders, and provides a rebate only if the Priority Customer complex order trades against a Non17 See note 13 above. 18 Id. 19 The Exchange provides rebates to members for adding and taking liquidity based on tiers that reflect their Priority Customer Complex average daily volume (‘‘ADV’’) executed during a given month. 20 See note 15 above. PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 15663 Priority Customer complex order, as described above. While the proposed change discussed above is consistent with current practice, the Exchange believes that the clarifications will eliminate any potential confusion around how Exposure Auction orders are charged today. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,21 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,22 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 believes that it is reasonable, equitable and not unfairly discriminatory to clarify in Section II of the Schedule of Fees as to how the Exchange currently charges Exposure Auction orders, as further discussed above. The Exchange believes that the proposed change will eliminate any potential confusion around how Exposure Auction orders are charged today, and will make the Schedule of Fees more transparent to members and investors. 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 change is not intended to address any competitive issues but rather to provide more clarity and transparency regarding how Exposure Auction orders are charged today. 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 with other exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may 21 15 22 15 E:\FR\FM\11APN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 11APN1 15664 Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices 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,23 and Rule 19b–4(f)(2) 24 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: amozie on DSK30RV082PROD 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–2018–28 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–2018–28. 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 23 15 24 17 17:17 Apr 10, 2018 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–07405 Filed 4–10–18; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice: 10386] U.S. Department of State Advisory Committee on Private International Law (ACPIL): Public Meeting on Security Interest The Office of the Assistant Legal Adviser for Private International Law, Department of State, hereby gives notice that the Advisory Committee on Private International Law (ACPIL) will hold a public meeting via teleconference to discuss the next session of the UNCITRAL WG VI (Security Interests). The next meeting of UNCITRAL Working Group VI is scheduled for April 30–May 4, 2018. This public meeting is not a meeting of the full Advisory Committee. This public meeting will discuss the Draft Practice Guide to the UNCITRAL Model Law on Secured Transactions. The Draft Practice Guide provides guidance to users of the Model Law on Secured Transactions on (1) the types of financing transactions that are possible under the law, (2) how to do a number of common and commercially important types of secured transactions, and (3) how to coordinate between the Law and the State’s prudential regulatory framework. Additionally, the Working Group will discuss possible future work. Documents for the session are available at https://www.uncitral.org/uncitral/en/ commission/working_groups/6Security_ Interests.htl Time and Place: The public meeting will take place on April 26 from 10 a.m. to 12:30 p.m. EDT, via conference call. Public Participation: Those planning to participate should email pil@state.gov to obtain the call-in number. The number will not be given out until the afternoon before the public meeting. Michael J. Dennis, Attorney-Adviser, Office of Private International Law, Office of the Legal Adviser, Department of State. [FR Doc. 2018–07457 Filed 4–10–18; 8:45 am] BILLING CODE 4710–08–P STATE JUSTICE INSTITUTE SJI Board of Directors Meeting, Notice State Justice Institute. Notice of meeting. AGENCY: ACTION: The SJI Board of Directors will be meeting on Monday, April 23, 2018 at 1:00 p.m. The meeting will be held at the St. Louis County Courthouse, 105 S. Central Avenue, Clayton, Missouri. The purpose of this meeting is to consider grant applications for the 2nd quarter of FY 2018, and other business. All portions of this meeting are open to the public. ADDRESSES: St. Louis County Courthouse, 105 S. Central Avenue, Clayton, Missouri 63105. FOR FURTHER INFORMATION CONTACT: Jonathan Mattiello, Executive Director, State Justice Institute, 11951 Freedom Drive, Suite 1020, Reston, VA 20190, 571–313–8843, contact@sji.gov. SUMMARY: Jonathan D. Mattiello, Executive Director. [FR Doc. 2018–07461 Filed 4–10–18; 8:45 am] BILLING CODE P SUSQUEHANNA RIVER BASIN COMMISSION Projects Rescinded for Consumptive Uses of Water Susquehanna River Basin Commission. ACTION: Notice. AGENCY: This notice lists the approved by rule projects rescinded by the SUMMARY: U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). VerDate Sep<11>2014 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, 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–2018–28 and should be submitted on or before May 2, 2018. 25 17 Jkt 244001 PO 00000 CFR 200.30–3(a)(12). Frm 00115 Fmt 4703 Sfmt 4703 E:\FR\FM\11APN1.SGM 11APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 83, Number 70 (Wednesday, April 11, 2018)]
[Notices]
[Pages 15662-15664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07405]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82999; File No. SR-ISE-2018-28]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Schedule of Fees To Clarify the Fees and Rebates for the 
Complex Order Exposure Auction Pursuant to Rule 722(b)(3)(iii)

April 5, 2018.
    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 March 23, 2018, 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.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend the Exchange's Schedule of Fees to 
provide greater clarity as to how the Exchange currently charges 
complex orders executed during an exposure auction pursuant to Rule 
722(b)(3)(iii) (``Exposure Auction'').
    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 purpose of the proposed rule change is to amend the Exchange's 
Schedule of Fees to provide greater clarity as to how the Exchange 
currently charges complex orders executed during an Exposure Auction 
pursuant to Rule 722(b)(3)(iii). An Exposure Auction is automatically 
initiated when a member submits an eligible complex order that is 
marked for price improvement.\3\ Because Exposure Auctions are 
initiated by complex orders entered on the complex order book, they are 
charged based on the same maker/taker scheme as is applicable to other 
complex orders that are executed on the complex order book rather than 
the separate pricing defined for Crossing Orders.\4\ Specifically, the 
Exchange treats the originating side of Exposure Auction orders as 
adding liquidity, and the contra side as taking liquidity, for the 
purpose of determining applicable fees and rebates. Since the Schedule 
of Fees does not currently indicate the manner in which the Exchange 
treats the originating or contra side of Exposure Auction orders, the 
Exchange proposes to add the following language in Section II: ``During 
an ``exposure'' auction pursuant to Rule 722(b)(3)(iii), the 
originating side of the auction order will be assessed the applicable 
maker fee or rebate, and the contra side will be assessed the 
applicable taker fee or rebate.''
---------------------------------------------------------------------------

    \3\ Pursuant to Rule 722(b)(3)(iii), the marked complex order is 
exposed for a period of up to one-second. When the Exchange first 
adopted Rule 722(b)(3)(iii), it indicated that this exposure period, 
which provided members an opportunity for price improvement, was not 
considered an ``auction.'' See Securities Exchange Act Release No. 
57706 (April 24, 2008), 73 FR 23517 (April 30, 2008) (SR-ISE-2007-
77) (``2007 Filing''). Notwithstanding the 2007 Filing, this feature 
would be considered an auction today.
    \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 order. 
For purposes of the Fee Schedule, orders executed in the Block Order 
Mechanism are also considered Crossing Orders.
---------------------------------------------------------------------------

    Thus, based on current rates, the Exchange charges the originating 
side of Non-Priority Customer \5\ Exposure Auction orders that trade 
against other Non-Priority Customer orders a maker fee of $0.10 per 
contract in Select

[[Page 15663]]

Symbols \6\ for Market Maker,\7\ Firm Proprietary \8\/Broker-Dealer,\9\ 
and Professional Customer \10\ orders, and $0.20 per contract in Select 
Symbols for Non-Nasdaq ISE Market Maker \11\ orders. In Non-Select 
Symbols,\12\ the originating side is charged a $0.20 per contract maker 
fee for all Non-Priority Customer orders. The contra side Non-Priority 
Customer order is charged a taker fee of $0.50 per contract in Select 
Symbols for Market Maker (or $0.44 per contract for Market Makers with 
total affiliated Priority Customer Complex ADV of 150,000 or more 
contracts),\13\ Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-
Dealer, and Professional Customer orders. In Non-Select Symbols, the 
contra side Non-Priority Customer order is charged a $0.86 per contract 
taker fee for Market Maker orders,\14\ and a $0.88 per contract taker 
fee for Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-Dealer, 
and Professional Customer orders.\15\
---------------------------------------------------------------------------

    \5\ Non-Priority Customer includes Market Maker, Non-Nasdaq ISE 
Market Maker, Firm Proprietary, Broker-Dealer, and Professional 
Customer.
    \6\ ``Select Symbols'' are options overlying all symbols listed 
on ISE that are in the Penny Pilot Program.
    \7\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively.
    \8\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \9\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account.
    \10\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
    \11\ 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.
    \12\ ``Non-Select Symbols'' are options overlying all symbols 
excluding Select Symbols.
    \13\ Further, Nasdaq ISE Market Makers making or taking 
liquidity receive a discount of $0.02 when trading against Priority 
Customer orders preferenced to them in the Complex Order Book in 
equity options that are able to be listed and traded on more than 
one options exchange. This discount does not apply to FX Options 
Symbols or to option classes designated by the Exchange to receive a 
guaranteed allocation pursuant to Nasdaq ISE Rule 722(b)(3)(i)(B).
    \14\ Id.
    \15\ The Exchange also currently charges a $0.03 per contract 
complex surcharge for Non-Priority Customer complex orders in Non-
Select Symbols that take liquidity from the complex order book, 
excluding complex orders executed in the Facilitation Mechanism, 
Solicited Order Mechanism, Price Improvement Mechanism and Exposure 
Auctions. See Securities Exchange Act Release No. 82644 (February 6, 
2018), 83 FR 6069 (February 12, 2018) (SR-ISE-2018-10).
---------------------------------------------------------------------------

    When Non-Priority Customer orders trade against Priority Customer 
\16\ orders in Exposure Auctions and the originating side is a Non-
Priority Customer order, the originating side is charged a maker fee of 
$0.47 per contract in Select Symbols for Market Maker orders (or $0.44 
per contract for Market Makers with total affiliated Priority Customer 
Complex ADV of 150,000 or more contracts),\17\ and $0.48 per contract 
for Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-Dealer, and 
Professional Customer orders. In Non-Select Symbols, the originating 
side is charged a $0.86 per contract maker fee for Market Maker 
orders,\18\ and a $0.88 per contract maker fee for Non-Nasdaq ISE 
Market Maker, Firm Proprietary/Broker-Dealer, and Professional Customer 
orders. The contra side Priority Customer order is paid a volume-based 
tiered rebate,\19\ which currently ranges from $0.26 per contract in 
Select Symbols (if the member executes Priority Customer Complex ADV of 
0 to 14,999 contracts in a given month) to $0.50 per contract in Select 
Symbols (if the member executes Priority Customer Complex ADV of 
225,000 or more contracts in a given month). In Non-Select Symbols, the 
tiered rebate paid to the contra side Priority Customer order currently 
ranges from $0.40 per contract (if the member executes Priority 
Customer Complex ADV of 0 to 14,999 contracts in a given month) to 
$0.85 per contract (if the member executes Priority Customer Complex 
ADV of 225,000 or more contracts in a given month).
---------------------------------------------------------------------------

    \16\ 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).
    \17\ See note 13 above.
    \18\ Id.
    \19\ The Exchange provides rebates to members for adding and 
taking liquidity based on tiers that reflect their Priority Customer 
Complex average daily volume (``ADV'') executed during a given 
month.
---------------------------------------------------------------------------

    When Non-Priority Customer orders trade against Priority Customer 
orders in Exposure Auctions and the originating side is a Priority 
Customer order, the originating side receives the tiered rebate in 
Select and Non-Select Symbols, as discussed above. The contra side Non-
Priority Customer is charged the taker fee in Select and Non-Select 
Symbols, as discussed above.\20\ Lastly, when Priority Customer orders 
trade against Priority Customer orders in Exposure Auctions, neither 
the originating side nor the contra side is charged a fee or given a 
rebate because the Exchange currently does not charge a maker or taker 
fee for Priority Customer complex orders, and provides a rebate only if 
the Priority Customer complex order trades against a Non-Priority 
Customer complex order, as described above.
---------------------------------------------------------------------------

    \20\ See note 15 above.
---------------------------------------------------------------------------

    While the proposed change discussed above is consistent with 
current practice, the Exchange believes that the clarifications will 
eliminate any potential confusion around how Exposure Auction orders 
are charged today.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\21\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\22\ 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 believes that it 
is reasonable, equitable and not unfairly discriminatory to clarify in 
Section II of the Schedule of Fees as to how the Exchange currently 
charges Exposure Auction orders, as further discussed above. The 
Exchange believes that the proposed change will eliminate any potential 
confusion around how Exposure Auction orders are charged today, and 
will make the Schedule of Fees more transparent to members and 
investors.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

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 change is not 
intended to address any competitive issues but rather to provide more 
clarity and transparency regarding how Exposure Auction orders are 
charged today. 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 with other exchanges. Because competitors are free to 
modify their own fees in response, and because market participants may 
readily adjust their order routing practices, the Exchange believes 
that the degree to which fee changes in this market may

[[Page 15664]]

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,\23\ and Rule 19b-4(f)(2) \24\ 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.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \24\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2018-28 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-2018-28. 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, 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-2018-28 and should be submitted on 
or before May 2, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-07405 Filed 4-10-18; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.