Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchanges Schedule of Fees, 23752-23755 [2018-10830]

Download as PDF 23752 Federal Register / Vol. 83, No. 99 / Tuesday, May 22, 2018 / Notices A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days after the date of its filing. However, Rule 19b– 4(f)(6)(iii) 14 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposed rule change will become operative on filing. Waiver of the operative delay would allow the Exchange to implement the proposed rule change on May 14, 2018, which is same day as the anticipated date for the migration of C2 to the Bats technology platform. The Exchange stated that the proposed rule change promotes the protection of investors and the public interest because it would minimize the amount of disruption as C2 (and eventually Cboe Options) migrates to the Bats technology platform. Therefore, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.15 At any time within 60 days of the filing of such 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 change 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 DSK3GDR082PROD with NOTICES1 Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 14 17 CFR 240.19b–4(f)(6)(iii). 15 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). VerDate Sep<11>2014 16:47 May 21, 2018 Jkt 241001 • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeEDGA–2018–008 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–CboeEDGA–2018–008. 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–CboeEDGA–2018–008, and should be submitted on or before June 12, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–10828 Filed 5–21–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83257; File No. SR–ISE– 2018–42] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchanges Schedule of Fees May 16, 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 May 1, 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 Exchanges Schedule of Fees. 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, as described further below. 1 15 16 17 PO 00000 CFR 200.30–3(a)(12). Frm 00128 Fmt 4703 Sfmt 4703 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\22MYN1.SGM 22MYN1 23753 Federal Register / Vol. 83, No. 99 / Tuesday, May 22, 2018 / Notices Fee for Responses to PIM Orders Currently, for regular orders in NonSelect Symbols,3 the Exchange charges all market participants a fee for Responses to Price Improvement Mechanism (‘‘PIM’’) orders that is $0.20 per contract. For complex orders in both Select Symbols 4 and Non-Select Symbols, the fee for Responses to PIM orders is likewise $0.20 per contract for all market participants. The Exchange now proposes to increase the aforementioned fees to $0.25 per contract for all market participants. Fee for Responses to Crossing Orders Except PIM Orders Today, the Exchange charges all market participants a fee for Responses to Crossing Orders 5 except PIM orders that is $0.48 per contract for complex orders in Select Symbols. The Exchange now proposes to increase this fee to $0.50 per contract for all market participants. QCC and Solicitation Rebate Currently, members using QCC and/or other solicited crossing orders, including solicited orders executed in the Solicitation, Facilitation or Price Improvement Mechanisms, receive rebates for each originating contract side in all symbols traded on the Exchange. Once a member reaches a certain volume threshold in QCC orders and/or solicited crossing orders during a month, the Exchange provides rebates to that member for all of its QCC and solicited crossing order traded contracts for that month.6 The applicable rebates are applied on QCC and solicited crossing order traded contracts once the volume threshold is met. Members receive the Non-‘‘Customer to Customer’’ rebate for all QCC and/or other solicited crossing orders except for QCC and solicited orders between two Priority Customers.7 QCC and solicited orders between two Priority Customers receive the ‘‘Customer to Customer’’ rebate. Non-‘‘Customer to Customer’’ and ‘‘Customer to Customer’’ volume is aggregated in determining the applicable volume tier. The current volume threshold and corresponding rebates are as follows: Non-‘‘Customer to Customer’’ rebate Originating contract sides 0 to 99,999 ................................................................................................................................................... 100,000 to 199,999 ...................................................................................................................................... 200,000 to 499,999 ...................................................................................................................................... 500,000 to 999,999 ...................................................................................................................................... 1,000,000+ ................................................................................................................................................... To incentive greater QCC and/or other solicited crossing order flow to ISE, the Exchange now proposes to amend the tier schedule by adjusting current tier 4 (i.e., 500,000 to 999,999) so that it becomes 500,000 to 749,999 originating contract sides, and adopting a new tier 5 for 750,000 to 999,999 originating contract sides. With this proposed change, members that execute between 500,000 to 749,999 originating contract sides of eligible volume will earn the current tier 4 rebates (i.e., a Non‘‘Customer to Customer’’ rebate of $0.09 per originating contract side and a ‘‘Customer to Customer’’ rebate of $0.03 per originating contract side). For members that meet the volume $0.00 (0.05) (0.07) (0.09) (0.11) Non-‘‘Customer to Customer’’ rebate 0 to 99,999 ................................................................................................................................................... 100,000 to 199,999 ...................................................................................................................................... 200,000 to 499,999 ...................................................................................................................................... 500,000 to 749,999 ...................................................................................................................................... 750,000 to 999,999 ...................................................................................................................................... 1,000,000+ ................................................................................................................................................... amozie on DSK3GDR082PROD with NOTICES1 The Exchange proposes to make a non-substantive change to remove an obsolete reference to its old website in its Schedule of Fees. In particular, the definition of Select Symbols in the Exchange’s Schedule of Fees presently states that: ‘‘ ‘Select Symbols’ are 3 ‘‘Non-Select Symbols’’ are options overlying all symbols excluding Select Symbols. 4 ‘‘Select Symbols’’ are options overlying all symbols listed on the Nasdaq ISE that are in the Penny Pilot Program. 5 A ‘‘Crossing Order’’ is an order executed in the Exchange’s Facilitation Mechanism, Solicited Order Mechanism, PIM or submitted as a Qualified VerDate Sep<11>2014 16:47 May 21, 2018 Jkt 241001 $0.00 (0.01) (0.01) (0.03) (0.03) threshold in the new tier 5, the Exchange proposes to pay a Non‘‘Customer to Customer’’ rebate of $0.10 per originating contract side and a ‘‘Customer to Customer’’ rebate of $0.03 per originating contract side. The new tier schedule and corresponding rebates will be as follows: Originating contract sides Clean-up Change ‘‘Customer to Customer’’ rebate $0.00 (0.05) (0.07) (0.09) (0.10) (0.11) ‘‘Customer to Customer’’ rebate $0.00 (0.01) (0.01) (0.03) (0.03) (0.03) options overlying all symbols listed on the Nasdaq ISE that are in the Penny Pilot Program. The current list of Nasdaq ISE-listed Penny Pilot Program symbols is available at https:// www.ise.com/assets/files/products/ pennies/penny_stocks.xls.’’ The Exchange proposes to delete the second sentence in the definition of Select Symbols now that the legacy website is no longer available. Contingent Cross (‘‘QCC’’) order. For purposes of the Fee Schedule, orders executed in the Block Order Mechanism are also considered Crossing Orders. 6 All eligible volume from affiliated members will be aggregated in determining QCC and Solicitation volume totals, provided there is at least 75% common ownership between the members as reflected on each member’s Form BD, Schedule A. 7 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). 8 15 U.S.C. 78f(b). PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,8 in general, and furthers the E:\FR\FM\22MYN1.SGM 22MYN1 23754 Federal Register / Vol. 83, No. 99 / Tuesday, May 22, 2018 / Notices objectives of Sections 6(b)(4) and 6(b)(5) of the Act,9 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. Fee for Responses to PIM Orders The Exchange believes that its proposal to increase the regular and complex order fees for Responses to PIM orders from $0.20 to $0.25 per contract for all market participants is reasonable, equitable and not unfairly discriminatory. With the proposed changes, market participants that respond to PIM auctions will pay response fees that remain significantly lower than those charged for Responses to other Crossing Orders. Accordingly, the Exchange believes that the PIM response fees proposed herein will remain attractive to market participants and will continue to encourage them to respond to PIM auctions, thereby increasing price improvement opportunities for PIM orders. Furthermore, the Exchange believes that the proposed PIM response fees are equitable and not unfairly discriminatory they will apply uniformly to all market participants. Fee for Responses to Crossing Orders Except PIM Orders The Exchange believes that its proposal to increase the complex order fees for Responses to Crossing Orders except PIM orders in Select Symbols to $0.50 per contract for all market participants is reasonable because the proposed fee remains within the range of similar fees charged by other options exchanges, including, for example, BOX Options Exchange (‘‘BOX’’), which charges up to $0.50 per contract for responses in its solicitation or facilitation auction mechanisms for penny pilot classes.10 Accordingly, the Exchange believes that the response fees proposed herein for Crossing Orders except PIM orders are set at levels that the Exchange believes will remain 9 15 U.S.C. 78f(b)(4) and (5). charges a fee for responses in the solicitation or facilitation auction mechanisms for all account types that is $0.25 per contract for penny pilot classes. See BOX Fee Schedule, Section I.C. As set forth in the BOX Fee Schedule, ‘‘[r]esponses to Facilitation and Solicitation Orders executed in these mechanisms shall be charged the ‘‘add’’ fee.’’ Id. at Section III.B, second bullet. For all account types, this fee (i.e., the Fee for Adding Liquidity) is $0.25 for penny pilot classes. Id. Thus, BOX may charge a fee for responses in its solicitation or facilitation auction mechanisms of up to $0.50 per contract. amozie on DSK3GDR082PROD with NOTICES1 10 BOX VerDate Sep<11>2014 16:47 May 21, 2018 Jkt 241001 attractive to market participants that trade on ISE. Additionally, the Exchange believes that the proposed fees for Responses to Crossing Orders except PIM orders are equitable and not unfairly discriminatory because they will apply uniformly to all market participants. QCC and Solicitation Rebate The Exchange believes that the proposed changes to the QCC and Solicitation rebate tier schedule are reasonable because the proposed changes are designed to encourage members to bring additional QCC and/ or other solicited crossing order volume to the Exchange in order to benefit from the enhanced rebates. As explained above, the Exchange is (i) adjusting the volume threshold in the current tier 4 from 500,000 to 999,999 to 500,000 to 749,999 originating contract sides and offering the current tier 4 Non‘‘Customer to Customer’’ rebate of $0.09 per originating contract side and ‘‘Customer to Customer’’ rebate of $0.03 per originating contract side, and (ii) adopting a new tier 5 for 750,000 to 999,999 originating contract sides with a corresponding Non-‘‘Customer to Customer’’ rebate of $0.10 per originating contract side and ‘‘Customer to Customer’’ rebate of $0.03 per originating contract side. With the proposed changes, members will be provided more opportunities to meet the volume thresholds and qualify for enhanced rebates by bringing greater QCC and/or other solicited crossing order flow to the Exchange. The Exchange also believes that the proposed changes to the tier schedule are equitable and not unfairly discriminatory because all members will be able to attain the enhanced rebates by executing the required volume of QCC and/or other solicited crossing orders on the Exchange. Clean-up Change The Exchange believes that its proposal to remove the obsolete reference to its old website from its Schedule of Fees is reasonable, equitable and not unfairly discriminatory because it is a nonsubstantive change designed to 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. In this instance, the Exchange is proposing PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 various changes to its fees and rebates program for Crossing Orders, specifically to increase the response fees for Crossing Orders, including PIM orders, and to enhance its QCC and Solicitation rebate program by modifying the current tier schedule, each as described in detail above. The Exchange does not believe that the proposed changes impose an undue burden on competition because the proposed fees and rebates will apply uniformly to all market participants, as discussed above. Furthermore, the Exchange believes that its fees and rebates program for Crossing Orders will remain attractive with the changes proposed herein, and will continue to attract additional order flow to ISE, thereby enhancing the competitiveness of ISE relative to other options exchanges. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,11 and Rule 11 15 E:\FR\FM\22MYN1.SGM U.S.C. 78s(b)(3)(A)(ii). 22MYN1 23755 Federal Register / Vol. 83, No. 99 / Tuesday, May 22, 2018 / Notices 19b–4(f)(2) 12 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 DSK3GDR082PROD with NOTICES1 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–2018–42 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–2018–42. 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 12 17 CFR 240.19b–4(f)(2). VerDate Sep<11>2014 16:47 May 21, 2018 Jkt 241001 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–2018–42 and should be submitted on or before June 12, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–10830 Filed 5–21–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83256; File No. SR– CboeEDGX–2018–015] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.12 To Add References to Cboe Options and C2 May 16, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 14, 2018, Cboe EDGX Exchange, Inc. (‘‘EDGX’’ or the ‘‘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 Exchange has designated this proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6)(iii) thereunder,4 which renders it effective upon filing with the Commission. 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 filed a proposal to amend Rule 2.12 to add references to Cboe Exchange, Inc. (‘‘Cboe Options’’) and Cboe C2 Exchange, Inc. (‘‘C2’’). The Exchange does not propose to amend the requirements of this rule. 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6)(iii). 1 15 PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 (additions are italicized; deletions are [bracketed]) * * * * * Cboe EDGX Exchange, Inc. Rules * * * * * Rule 2.12. Cboe Trading, Inc. as Inbound Router (a) For so long as the Exchange is affiliated with Cboe Exchange, Inc., Cboe C2 Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe BYX Exchange, Inc., or Cboe BZX Exchange, Inc. (each, a ‘‘Cboe Exchange’’), and Cboe Trading, Inc. (‘‘Cboe Trading’) in its capacity as a facility of each Cboe Exchange is utilized for the routing of orders from a Cboe Exchange to the Exchange, the Exchange undertakes as follows: (1)–(4) No change. (b) No change. * * * * * The text of the proposed rule change is available at the Exchange’s website at www.markets.cboe.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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In December 2016, the Exchange and its affiliates 5 received approval to effect a merger (the ‘‘Merger’’) of the Exchange’s parent company, Bats Global Markets, Inc. with CBOE Holdings, Inc. (now known as Cboe Global Markets, Inc.), the parent company of Cboe Options and C2.6 Hereinafter, the 5 As of December 2016, the Exchange’s affiliates included Cboe BZX Exchange, Inc. (formerly Bats BZX Exchange, Inc.) (‘‘BZX’’), Cboe BYX Exchange, Inc. (formerly Bats BYX Exchange. Inc.) (‘‘BYX’’), and Cboe EDGA Exchange, Inc. (formerly Bats EDGA Exchange, Inc.) (‘‘EDGA’’). 6 See Securities Exchange Act Release No. 79585 (December 16, 2016), 81 FR 93988 (December 22, Continued E:\FR\FM\22MYN1.SGM 22MYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 83, Number 99 (Tuesday, May 22, 2018)]
[Notices]
[Pages 23752-23755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10830]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83257; File No. SR-ISE-2018-42]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchanges Schedule of Fees

May 16, 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 May 1, 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 Exchanges Schedule of Fees.
    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, as described further below.

[[Page 23753]]

Fee for Responses to PIM Orders
    Currently, for regular orders in Non-Select Symbols,\3\ the 
Exchange charges all market participants a fee for Responses to Price 
Improvement Mechanism (``PIM'') orders that is $0.20 per contract. For 
complex orders in both Select Symbols \4\ and Non-Select Symbols, the 
fee for Responses to PIM orders is likewise $0.20 per contract for all 
market participants. The Exchange now proposes to increase the 
aforementioned fees to $0.25 per contract for all market participants.
---------------------------------------------------------------------------

    \3\ ``Non-Select Symbols'' are options overlying all symbols 
excluding Select Symbols.
    \4\ ``Select Symbols'' are options overlying all symbols listed 
on the Nasdaq ISE that are in the Penny Pilot Program.
---------------------------------------------------------------------------

Fee for Responses to Crossing Orders Except PIM Orders
    Today, the Exchange charges all market participants a fee for 
Responses to Crossing Orders \5\ except PIM orders that is $0.48 per 
contract for complex orders in Select Symbols. The Exchange now 
proposes to increase this fee to $0.50 per contract for all market 
participants.
---------------------------------------------------------------------------

    \5\ A ``Crossing Order'' is an order executed in the Exchange's 
Facilitation Mechanism, Solicited Order 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.
---------------------------------------------------------------------------

QCC and Solicitation Rebate
    Currently, members using QCC and/or other solicited crossing 
orders, including solicited orders executed in the Solicitation, 
Facilitation or Price Improvement Mechanisms, receive rebates for each 
originating contract side in all symbols traded on the Exchange. Once a 
member reaches a certain volume threshold in QCC orders and/or 
solicited crossing orders during a month, the Exchange provides rebates 
to that member for all of its QCC and solicited crossing order traded 
contracts for that month.\6\ The applicable rebates are applied on QCC 
and solicited crossing order traded contracts once the volume threshold 
is met. Members receive the Non-``Customer to Customer'' rebate for all 
QCC and/or other solicited crossing orders except for QCC and solicited 
orders between two Priority Customers.\7\ QCC and solicited orders 
between two Priority Customers receive the ``Customer to Customer'' 
rebate. Non-``Customer to Customer'' and ``Customer to Customer'' 
volume is aggregated in determining the applicable volume tier. The 
current volume threshold and corresponding rebates are as follows:
---------------------------------------------------------------------------

    \6\ All eligible volume from affiliated members will be 
aggregated in determining QCC and Solicitation volume totals, 
provided there is at least 75% common ownership between the members 
as reflected on each member's Form BD, Schedule A.
    \7\ 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).

------------------------------------------------------------------------
                                    Non-``Customer to    ``Customer to
    Originating contract sides      Customer'' rebate  Customer'' rebate
------------------------------------------------------------------------
0 to 99,999.......................              $0.00              $0.00
100,000 to 199,999................             (0.05)             (0.01)
200,000 to 499,999................             (0.07)             (0.01)
500,000 to 999,999................             (0.09)             (0.03)
1,000,000+........................             (0.11)             (0.03)
------------------------------------------------------------------------

    To incentive greater QCC and/or other solicited crossing order flow 
to ISE, the Exchange now proposes to amend the tier schedule by 
adjusting current tier 4 (i.e., 500,000 to 999,999) so that it becomes 
500,000 to 749,999 originating contract sides, and adopting a new tier 
5 for 750,000 to 999,999 originating contract sides. With this proposed 
change, members that execute between 500,000 to 749,999 originating 
contract sides of eligible volume will earn the current tier 4 rebates 
(i.e., a Non-``Customer to Customer'' rebate of $0.09 per originating 
contract side and a ``Customer to Customer'' rebate of $0.03 per 
originating contract side). For members that meet the volume threshold 
in the new tier 5, the Exchange proposes to pay a Non-``Customer to 
Customer'' rebate of $0.10 per originating contract side and a 
``Customer to Customer'' rebate of $0.03 per originating contract side. 
The new tier schedule and corresponding rebates will be as follows:

------------------------------------------------------------------------
                                    Non-``Customer to    ``Customer to
    Originating contract sides      Customer'' rebate  Customer'' rebate
------------------------------------------------------------------------
0 to 99,999.......................              $0.00              $0.00
100,000 to 199,999................             (0.05)             (0.01)
200,000 to 499,999................             (0.07)             (0.01)
500,000 to 749,999................             (0.09)             (0.03)
750,000 to 999,999................             (0.10)             (0.03)
1,000,000+........................             (0.11)             (0.03)
------------------------------------------------------------------------

Clean-up Change
    The Exchange proposes to make a non-substantive change to remove an 
obsolete reference to its old website in its Schedule of Fees. In 
particular, the definition of Select Symbols in the Exchange's Schedule 
of Fees presently states that: `` `Select Symbols' are options 
overlying all symbols listed on the Nasdaq ISE that are in the Penny 
Pilot Program. The current list of Nasdaq ISE-listed Penny Pilot 
Program symbols is available at https://www.ise.com/assets/files/products/pennies/penny_stocks.xls.'' The Exchange proposes to delete 
the second sentence in the definition of Select Symbols now that the 
legacy website is no longer available.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the

[[Page 23754]]

objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\9\ 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

Fee for Responses to PIM Orders
    The Exchange believes that its proposal to increase the regular and 
complex order fees for Responses to PIM orders from $0.20 to $0.25 per 
contract for all market participants is reasonable, equitable and not 
unfairly discriminatory. With the proposed changes, market participants 
that respond to PIM auctions will pay response fees that remain 
significantly lower than those charged for Responses to other Crossing 
Orders. Accordingly, the Exchange believes that the PIM response fees 
proposed herein will remain attractive to market participants and will 
continue to encourage them to respond to PIM auctions, thereby 
increasing price improvement opportunities for PIM orders. Furthermore, 
the Exchange believes that the proposed PIM response fees are equitable 
and not unfairly discriminatory they will apply uniformly to all market 
participants.
Fee for Responses to Crossing Orders Except PIM Orders
    The Exchange believes that its proposal to increase the complex 
order fees for Responses to Crossing Orders except PIM orders in Select 
Symbols to $0.50 per contract for all market participants is reasonable 
because the proposed fee remains within the range of similar fees 
charged by other options exchanges, including, for example, BOX Options 
Exchange (``BOX''), which charges up to $0.50 per contract for 
responses in its solicitation or facilitation auction mechanisms for 
penny pilot classes.\10\ Accordingly, the Exchange believes that the 
response fees proposed herein for Crossing Orders except PIM orders are 
set at levels that the Exchange believes will remain attractive to 
market participants that trade on ISE. Additionally, the Exchange 
believes that the proposed fees for Responses to Crossing Orders except 
PIM orders are equitable and not unfairly discriminatory because they 
will apply uniformly to all market participants.
---------------------------------------------------------------------------

    \10\ BOX charges a fee for responses in the solicitation or 
facilitation auction mechanisms for all account types that is $0.25 
per contract for penny pilot classes. See BOX Fee Schedule, Section 
I.C. As set forth in the BOX Fee Schedule, ``[r]esponses to 
Facilitation and Solicitation Orders executed in these mechanisms 
shall be charged the ``add'' fee.'' Id. at Section III.B, second 
bullet. For all account types, this fee (i.e., the Fee for Adding 
Liquidity) is $0.25 for penny pilot classes. Id. Thus, BOX may 
charge a fee for responses in its solicitation or facilitation 
auction mechanisms of up to $0.50 per contract.
---------------------------------------------------------------------------

QCC and Solicitation Rebate
    The Exchange believes that the proposed changes to the QCC and 
Solicitation rebate tier schedule are reasonable because the proposed 
changes are designed to encourage members to bring additional QCC and/
or other solicited crossing order volume to the Exchange in order to 
benefit from the enhanced rebates. As explained above, the Exchange is 
(i) adjusting the volume threshold in the current tier 4 from 500,000 
to 999,999 to 500,000 to 749,999 originating contract sides and 
offering the current tier 4 Non-``Customer to Customer'' rebate of 
$0.09 per originating contract side and ``Customer to Customer'' rebate 
of $0.03 per originating contract side, and (ii) adopting a new tier 5 
for 750,000 to 999,999 originating contract sides with a corresponding 
Non-``Customer to Customer'' rebate of $0.10 per originating contract 
side and ``Customer to Customer'' rebate of $0.03 per originating 
contract side. With the proposed changes, members will be provided more 
opportunities to meet the volume thresholds and qualify for enhanced 
rebates by bringing greater QCC and/or other solicited crossing order 
flow to the Exchange. The Exchange also believes that the proposed 
changes to the tier schedule are equitable and not unfairly 
discriminatory because all members will be able to attain the enhanced 
rebates by executing the required volume of QCC and/or other solicited 
crossing orders on the Exchange.
Clean-up Change
    The Exchange believes that its proposal to remove the obsolete 
reference to its old website from its Schedule of Fees is reasonable, 
equitable and not unfairly discriminatory because it is a non-
substantive change designed to 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. In this instance, the Exchange 
is proposing various changes to its fees and rebates program for 
Crossing Orders, specifically to increase the response fees for 
Crossing Orders, including PIM orders, and to enhance its QCC and 
Solicitation rebate program by modifying the current tier schedule, 
each as described in detail above. The Exchange does not believe that 
the proposed changes impose an undue burden on competition because the 
proposed fees and rebates will apply uniformly to all market 
participants, as discussed above. Furthermore, the Exchange believes 
that its fees and rebates program for Crossing Orders will remain 
attractive with the changes proposed herein, and will continue to 
attract additional order flow to ISE, thereby enhancing the 
competitiveness of ISE relative to other options exchanges.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive, or rebate 
opportunities available at other venues to be more favorable. In such 
an environment, the Exchange must continually adjust its fees to remain 
competitive with other exchanges and with alternative trading systems 
that have been exempted from compliance with the statutory standards 
applicable to exchanges. Because competitors are free to modify their 
own fees in response, and because market participants may readily 
adjust their order routing practices, the Exchange believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited. In sum, if the changes proposed 
herein are unattractive to market participants, it is likely that the 
Exchange will lose market share as a result. Accordingly, the Exchange 
does not believe that the proposed changes will impair the ability of 
members or competing order execution venues to maintain their 
competitive standing in the financial markets.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\11\ and Rule

[[Page 23755]]

19b-4(f)(2) \12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 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-2018-42 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-2018-42. 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-2018-42 and should be submitted on 
or before June 12, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10830 Filed 5-21-18; 8:45 am]
 BILLING CODE 8011-01-P

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