Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Regular Order Take Fee and the QCC and Solicitation Order Rebate, 40096-40099 [2018-17255]
Download as PDF
<![CDATA[
40096
Federal Register / Vol. 83, No. 156 / Monday, August 13, 2018 / Notices
Dated: August 9, 2018.
Catherine F.I. Andrade,
OPIC Corporate Secretary.
[FR Doc. 2018–17422 Filed 8–9–18; 4:15 pm]
BILLING CODE 3210–01–P
POSTAL REGULATORY COMMISSION
[Docket Nos. CP2017–219; CP2018–217]
New Postal Products
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
negotiated service agreements. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: August 15,
2018.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Table of Contents
sradovich on DSK3GMQ082PROD with NOTICES
I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
VerDate Sep<11>2014
20:42 Aug 10, 2018
Jkt 244001
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.40.
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: CP2017–219; Filing
Title: USPS Notice of Amendment to
Parcel Select Contract 22, Filed Under
Seal; Filing Acceptance Date: August 3,
2018; Filing Authority: 39 CFR 3015.5;
Public Representative: Lyudmila Y.
Bzhilyanskaya; Comments Due: August
15, 2018.
2. Docket No(s).: CP2018–217; Filing
Title: USPS Notice of Amendment to
Priority Mail Express & Priority Mail
Contract 65, Filed Under Seal; Filing
Acceptance Date: August 7, 2018; Filing
Authority: 39 CFR 3015.5; Public
Representative: Christopher C. Mohr;
Comments Due: August 15, 2018.
This notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
[FR Doc. 2018–17332 Filed 8–10–18; 8:45 am]
BILLING CODE 7710–FW–P
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 25,
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
ISE Schedule of Fees to: (i) Increase the
Regular Order Take Fee in SPY, QQQ,
IWM, and VXX for Priority Customers; 3
and; (2) not pay the ‘‘Customer to
Customer’’ Orders rebate for QCC and
solicited orders between two Priority
Customers.
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
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83790; File No. SR–ISE–
2018–69]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to the Regular
Order Take Fee and the QCC and
Solicitation Order Rebate
August 7, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
The purpose of the proposed rule
change is to amend the ISE Schedule of
Fees at Section I, entitled ‘‘Regular
Order Fees and Rebates’’ as well as the
Section IV, entitled ‘‘Other Options Fees
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 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). Unless otherwise noted, when used in
the Schedule of Fees the term ‘‘Priority Customer’’
includes ‘‘Retail’’ as defined in the Schedule of
Fees. See Preface to ISE Schedule of Fees.
2 17
E:\FR\FM\13AUN1.SGM
13AUN1
Federal Register / Vol. 83, No. 156 / Monday, August 13, 2018 / Notices
and Rebates’’ within Section A, ‘‘QCC
and Solicitation Rebate.’’ Each proposed
change is described in more detail
below. The Exchange believes that each
of the proposed rule changes will permit
the Exchange to remain competitive in
options trading.
Taker Fees
Currently, the Exchange charges a
Regular Order Taker Fee for Select
Symbols, other than Priority Customer
orders in SPY, QQQ, IWM, and VXX, of:
$0.45 per contract for Market Maker
orders,4 $0.44 per contract for Priority
Customer orders and $0.46 per contract
for Non-Nasdaq ISE Market Makers 5
(FarMM), Firm Proprietary 6/Broker
Dealer,7 and Professional Customers 8
orders. The Regular Order Taker Fee for
Priority Customer orders in SPY, QQQ,
IWM, and VXX is $0.37 per contract.
The Exchange proposes to increase this
Regular Order Taker Fee in SPY, QQQ,
IWM, and VXX to $0.40 per contract for
Priority Customer orders. While the
Exchange is increasing this fee, the
Exchange believes that the fee remains
competitive. Also, this fee continues to
be lower than other Regular Order Taker
Fees for SPY, QQQ, IWM, and VXX
assessed to non-Priority Customers.
QCC and Solicitation Rebate
Currently, ISE Members using
Qualified Contingent Cross (‘‘QCC’’)
orders 9 and/or other solicited crossing
orders, including solicited orders
executed in the Solicitation,10
Facilitation 11 or Price Improvement
Mechanism (‘‘PIM’’) 12, 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.13 The applicable rebates
are applied on QCC and solicited
crossing order traded contracts once the
volume threshold is met. Today,
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. QCC and solicited
orders between two Priority Customers
receive the ‘‘Customer to Customer’’
Orders 14 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 749,999 ......................................................................................................................................
750,000 to 999,999 ......................................................................................................................................
1,000,000+ ...................................................................................................................................................
sradovich on DSK3GMQ082PROD with NOTICES
At this time, the Exchange proposes to
not pay the ‘‘Customer to Customer’’
Orders rebate for QCC and solicited
orders between two Priority Customers.
The Exchange proposes to amend its
Schedule of Fees to make clear that such
a rebate will not be paid. ‘‘Customer-toCustomer’’ Rebates are being removed
from the table within the Schedule of
Fees. The Exchange notes that this
rebate did not attract volume as
anticipated when the rebate was
implemented. The Exchange is also
amending the sentence that provides,
‘‘Non-‘‘Customer to Customer’’ and
‘‘Customer to Customer’’ volume will be
aggregated in determining the
applicable volume tier’’ with language
which removes the term ‘‘Customer to
Customer’’ and instead descriptively
defines that volume. The proposed
sentence states, ‘‘Volume resulting from
all QCC and solicited orders will be
aggregated in determining the
applicable volume tier.’’ In addition the
Exchange is removing references to
‘‘Non-‘‘Customer to Customer’’ rebate’’
and simply noting the term ‘‘rebate.’’
The Exchange believes that the term
Non-‘‘Customer to Customer’’ is no
longer necessary. The language makes
clear that Members will receive the
rebate for all QCC and/or other solicited
crossing orders except for QCC and
4 ‘‘Market makers’’ refers to ‘‘Competitive Market
Makers’’ and ‘‘Primary Market Makers’’ collectively.
See ISE Rule 100(a)(28).
5 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. See Preface to ISE Schedule of
Fees.
6 A ‘‘Firm Proprietary’’ order is an order
submitted by a Member for its own proprietary
account. See Preface to ISE Schedule of Fees.
7 ‘‘Broker-Dealer’’ order is an order submitted by
a Member for a broker-dealer account that is not its
own proprietary account. See Preface to ISE
Schedule of Fees.
8 A ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer. See Preface to ISE Schedule of Fees.
9 A QCC Order is comprised of an originating
order to buy or sell at least 1000 contracts that is
identified as being part of a qualified contingent
trade, as that term is defined in Supplementary
Material .01 below, coupled with a contra-side
order or orders totaling an equal number of
contracts. See ISE Rule 715(j).
10 The Solicited Order Mechanism is a process by
which an EAM can attempt to execute orders of 500
or more contracts it represents as agent against
contra orders that it solicited. Each order entered
into the Solicited Order Mechanism shall be
designated as all-or-none. See ISE Rule 716(e).
11 The Facilitation Mechanism is a process by
which an EAM can execute a transaction wherein
the EAM seeks to facilitate a block-size order it
represents as agent, and/or a transaction wherein
the EAM solicited interest to execute against a
block-size order it represents as agent. See Rule
716(d).
VerDate Sep<11>2014
20:42 Aug 10, 2018
Jkt 244001
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
40097
$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)
solicited orders between two Priority
Customers. No other changes are being
made to the manner in which rebates
are calculated or paid.
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
12 PIM is a process by which an Electronic Access
Member can provide price improvement
opportunities for a transaction wherein the
Electronic Access Member seeks to facilitate an
order it represents as agent, and/or a transaction
wherein the Electronic Access Member solicited
interest to execute against an order it represents as
agent (a ‘‘Crossing Transaction’’).
13 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.
14 A ‘‘Customer to Customer’’ order is a QCC or
other solicited order between two Priority
Customers.
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(4) and (5).
E:\FR\FM\13AUN1.SGM
13AUN1
40098
Federal Register / Vol. 83, No. 156 / Monday, August 13, 2018 / Notices
discrimination between customers,
issuers, brokers, or dealers.
Taker Fees
The Exchange believes that the
proposed change to increase Regular
Order Priority Customer Taker Fees in
SPY, QQQ, IWM, and VXX from $0.37
to $0.40 per contract is reasonable
because the increased Taker Fee
remains competitive and will continue
to be attractive to market participants.
Priority Customers will continue to
receive reduced Regular Order Taker
Fees in SPY, QQQ, IWM, and VXX,
which represent some of the most
heavily traded symbols on ISE. In
particular, the proposed Taker Fees are
lower than Taker Fees assessed to
Priority Customer orders in other Select
Symbols 17 as well as Taker Fees
assessed to other market participants.18
As such, the Exchange believes that the
proposed Regular Order Taker Fees will
continue to attract order flow to the
benefit of all market participants that
trade on the Exchange.
The Exchange believes that the
proposed change to increase Regular
Order Priority Customer Taker Fees in
SPY, QQQ, IWM, and VXX from $0.37
to $0.40 per contract is equitable and
not unfairly discriminatory because
despite the increase to the fee, Priority
Customer interest will continue to be
assessed the lowest Regular Order Taker
Fees in these symbols. Priority
Customer interest brings valuable
liquidity to the market, which liquidity
benefits other market participants.
Priority Customer liquidity benefits all
market participants by providing more
trading opportunities, which attracts
Market Makers. An increase in the
activity of these market participants in
turn facilitates tighter spreads, which
may cause an additional corresponding
increase in order flow from other market
participants.
QCC and Solicitation Rebate
sradovich on DSK3GMQ082PROD with NOTICES
The Exchange believes that the
proposed change to not pay the
‘‘Customer to Customer’’ Rebate for QCC
and solicited orders between two
Priority Customers is reasonable.
Despite the removal of the rebate, the
Exchange believes that the proposal will
continue to encourage Members to
transact QCC and/or other solicited
17 Currently, ISE charges a Regular Order Taker
Fee for Select Symbols, other than SPY, QQQ, IWM,
and VXX, of $0.44 per contract for Priority
Customer orders.
18 Currently, the Exchange charges a Regular
Order Taker Fee for Select Symbols of $0.45 per
contract for Market Maker orders and $0.46 per
contract for FarMM, Firm Proprietary/Broker
Dealer, and Professional Customers orders.
VerDate Sep<11>2014
20:42 Aug 10, 2018
Jkt 244001
crossing orders on ISE. The Exchange
notes that Customer-to-Customer Orders
will continue to be aggregated with all
other volume to determine the
applicable volume tier for rebates.
The Exchange believes that the
proposed change to not pay the
‘‘Customer to Customer’’ Orders rebate
for QCC and solicited orders between
two Priority Customers is equitable and
not unfairly discriminatory because the
Exchange would uniformly not pay any
Member a rebate for Customer-toCustomer Orders. The Customer-toCustomer Orders will continue to be
counted toward the rebates for all
market participants that qualify for such
rebates.
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. With respect
to the increase to the Regular Order
Taker Fees for Priority Customers in
SPY, QQQ, IWM, and VXX, the
Exchange does not believe this proposal
imposes an undue burden on
competition because despite the
increase to the fee, Priority Customer
interest will continue to be assessed the
lowest Regular Order Taker Fees in
these symbols. Priority Customer
interest brings valuable liquidity to the
market, which liquidity benefits other
market participants. Priority Customer
liquidity benefits all market participants
by providing more trading
opportunities, which attracts Market
Makers. An increase in the activity of
these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants.
With respect to the proposed change
to not pay the ‘‘Customer to Customer’’
Orders rebate for QCC and solicited
orders between two Priority Customers,
the Exchange does not believe this
proposal imposes an undue burden on
competition because the Exchange
would uniformly not pay any Member a
rebate for Customer-to-Customer Orders.
The Customer-to-Customer Orders will
continue to be counted toward the
rebates for all market participants that
qualify for such rebates.
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.
PO 00000
Frm 00118
Fmt 4703
Sfmt 4703
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,19 and Rule
19b–4(f)(2) 20 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:
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–2018–69 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–2018–69. 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
19 15
20 17
E:\FR\FM\13AUN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
13AUN1
Federal Register / Vol. 83, No. 156 / Monday, August 13, 2018 / Notices
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–2018–69 and should be
submitted on or before September 4,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–17255 Filed 8–10–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings
FEDERAL REGISTER CITATION OF PREVIOUS
ANNOUNCEMENT: 83 FR 25496, June 1,
2018.
PREVIOUSLY ANNOUNCED TIME AND DATE OF
THE MEETING: Tuesday, June 5, 2018 at
10:00 a.m.
The Open
Meeting scheduled for Tuesday, June 5,
2018 at 10:00 a.m. has been changed to
Tuesday, June 5, 2018 at 11:30 a.m. The
following items will not be considered
during the Commission’s Open Meeting:
• Whether to adopt a new rule as well
as amendments to rules and forms to
provide certain registered investment
companies (‘‘funds’’) with an optional
method to transmit shareholder reports.
• whether to issue a release
requesting comment about processing
fees for delivering shareholder reports
and other materials to fund investors.
• whether to issue a release
requesting comment from individual
investors and other interested parties on
how to enhance the delivery, design,
and content of fund disclosures,
including shareholder reports and
prospectuses.
CONTACT PERSON FOR MORE INFORMATION:
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed, please contact the
Office of the Secretary at (202) 551–
5400.
sradovich on DSK3GMQ082PROD with NOTICES
CHANGES IN THE MEETING:
Dated: June 4, 2018.
Brent J. Fields,
Secretary.
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
[FR Doc. 2018–17390 Filed 8–9–18; 11:15 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83794; File No. SR–
NASDAQ–2018–062]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Nasdaq Options Regulatory Fee
August 7, 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 July 27,
2018, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘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 revise The
Nasdaq Options Market LLC’s Rules
(‘‘NOM’’) at Chapter XV, Section 5 to
amend the Nasdaq Options Regulatory
Fee or ‘‘ORF.’’
While the changes proposed herein
are effective upon filing, the Exchange
has designated the amendments become
operative on August 1, 2018.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.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
1 15
21 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
20:42 Aug 10, 2018
2 17
Jkt 244001
40099
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00119
Fmt 4703
Sfmt 4703
1. Purpose
Currently, Nasdaq assesses an ORF of
$0.0027 per contract side. The Exchange
proposes to decrease this ORF to
$0.0008 per contract side. In light of
recent market volumes on NOM, the
Exchange is proposing to change the
amount of ORF that will be collected by
the Exchange. The Exchange’s proposed
change to the ORF should balance the
Exchange’s regulatory revenue against
the anticipated costs.
Collection of ORF
Currently, NOM assesses its ORF for
each customer option transaction that is
either: (1) executed by a Participant on
NOM; or (2) cleared by a NOM
Participant at The Options Clearing
Corporation (‘‘OCC’’) in the customer
range,3 even if the transaction was
executed by a non-member of NOM,
regardless of the exchange on which the
transaction occurs.4 If the OCC clearing
member is a NOM Participant, ORF is
assessed and collected on all cleared
customer contracts (after adjustment for
CMTA5); and (2) if the OCC clearing
member is not a NOM Participant, ORF
is collected only on the cleared
customer contracts executed at NOM,
taking into account any CMTA
instructions which may result in
collecting the ORF from a non-member.
By way of example, if Broker A, a
NOM Participant, routes a customer
order to CBOE and the transaction
executes on CBOE and clears in Broker
A’s OCC Clearing account, ORF will be
collected by NOM from Broker A’s
clearing account at OCC via direct debit.
While this transaction was executed on
a market other than NOM, it was cleared
by a NOM Participant in the member’s
OCC clearing account in the customer
range, therefore there is a regulatory
nexus between NOM and the
transaction. If Broker A was not a NOM
Participant, then no ORF should be
assessed and collected because there is
no nexus; the transaction did not
3 Participants must record the appropriate
account origin code on all orders at the time of
entry in order. The Exchange represents that it has
surveillances in place to verify that members mark
orders with the correct account origin code.
4 The Exchange uses reports from OCC when
assessing and collecting the ORF.
5 CMTA or Clearing Member Trade Assignment is
a form of ‘‘give-up’’ whereby the position will be
assigned to a specific clearing firm at OCC.
E:\FR\FM\13AUN1.SGM
13AUN1
]]>Agencies
[Federal Register Volume 83, Number 156 (Monday, August 13, 2018)]
[Notices]
[Pages 40096-40099]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17255]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83790; File No. SR-ISE-2018-69]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to the
Regular Order Take Fee and the QCC and Solicitation Order Rebate
August 7, 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 July 25, 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 ISE Schedule of Fees to: (i)
Increase the Regular Order Take Fee in SPY, QQQ, IWM, and VXX for
Priority Customers; \3\ and; (2) not pay the ``Customer to Customer''
Orders rebate for QCC and solicited orders between two Priority
Customers.
---------------------------------------------------------------------------
\3\ 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). Unless otherwise noted, when used in the Schedule of
Fees the term ``Priority Customer'' includes ``Retail'' as defined
in the Schedule of Fees. See Preface to ISE 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 ISE
Schedule of Fees at Section I, entitled ``Regular Order Fees and
Rebates'' as well as the Section IV, entitled ``Other Options Fees
[[Page 40097]]
and Rebates'' within Section A, ``QCC and Solicitation Rebate.'' Each
proposed change is described in more detail below. The Exchange
believes that each of the proposed rule changes will permit the
Exchange to remain competitive in options trading.
Taker Fees
Currently, the Exchange charges a Regular Order Taker Fee for
Select Symbols, other than Priority Customer orders in SPY, QQQ, IWM,
and VXX, of: $0.45 per contract for Market Maker orders,\4\ $0.44 per
contract for Priority Customer orders and $0.46 per contract for Non-
Nasdaq ISE Market Makers \5\ (FarMM), Firm Proprietary \6\/Broker
Dealer,\7\ and Professional Customers \8\ orders. The Regular Order
Taker Fee for Priority Customer orders in SPY, QQQ, IWM, and VXX is
$0.37 per contract. The Exchange proposes to increase this Regular
Order Taker Fee in SPY, QQQ, IWM, and VXX to $0.40 per contract for
Priority Customer orders. While the Exchange is increasing this fee,
the Exchange believes that the fee remains competitive. Also, this fee
continues to be lower than other Regular Order Taker Fees for SPY, QQQ,
IWM, and VXX assessed to non-Priority Customers.
---------------------------------------------------------------------------
\4\ ``Market makers'' refers to ``Competitive Market Makers''
and ``Primary Market Makers'' collectively. See ISE Rule 100(a)(28).
\5\ 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. See Preface to ISE Schedule of Fees.
\6\ A ``Firm Proprietary'' order is an order submitted by a
Member for its own proprietary account. See Preface to ISE Schedule
of Fees.
\7\ ``Broker-Dealer'' order is an order submitted by a Member
for a broker-dealer account that is not its own proprietary account.
See Preface to ISE Schedule of Fees.
\8\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer. See Preface to
ISE Schedule of Fees.
---------------------------------------------------------------------------
QCC and Solicitation Rebate
Currently, ISE Members using Qualified Contingent Cross (``QCC'')
orders \9\ and/or other solicited crossing orders, including solicited
orders executed in the Solicitation,\10\ Facilitation \11\ or Price
Improvement Mechanism (``PIM'') \12\, 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.\13\ The applicable rebates are applied on QCC
and solicited crossing order traded contracts once the volume threshold
is met. Today, 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. QCC and solicited
orders between two Priority Customers receive the ``Customer to
Customer'' Orders \14\ 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:
---------------------------------------------------------------------------
\9\ A QCC Order is comprised of an originating order to buy or
sell at least 1000 contracts that is identified as being part of a
qualified contingent trade, as that term is defined in Supplementary
Material .01 below, coupled with a contra-side order or orders
totaling an equal number of contracts. See ISE Rule 715(j).
\10\ The Solicited Order Mechanism is a process by which an EAM
can attempt to execute orders of 500 or more contracts it represents
as agent against contra orders that it solicited. Each order entered
into the Solicited Order Mechanism shall be designated as all-or-
none. See ISE Rule 716(e).
\11\ The Facilitation Mechanism is a process by which an EAM can
execute a transaction wherein the EAM seeks to facilitate a block-
size order it represents as agent, and/or a transaction wherein the
EAM solicited interest to execute against a block-size order it
represents as agent. See Rule 716(d).
\12\ PIM is a process by which an Electronic Access Member can
provide price improvement opportunities for a transaction wherein
the Electronic Access Member seeks to facilitate an order it
represents as agent, and/or a transaction wherein the Electronic
Access Member solicited interest to execute against an order it
represents as agent (a ``Crossing Transaction'').
\13\ 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.
\14\ A ``Customer to Customer'' order is a QCC or other
solicited order between two Priority Customers.
------------------------------------------------------------------------
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)
------------------------------------------------------------------------
At this time, the Exchange proposes to not pay the ``Customer to
Customer'' Orders rebate for QCC and solicited orders between two
Priority Customers. The Exchange proposes to amend its Schedule of Fees
to make clear that such a rebate will not be paid. ``Customer-to-
Customer'' Rebates are being removed from the table within the Schedule
of Fees. The Exchange notes that this rebate did not attract volume as
anticipated when the rebate was implemented. The Exchange is also
amending the sentence that provides, ``Non-``Customer to Customer'' and
``Customer to Customer'' volume will be aggregated in determining the
applicable volume tier'' with language which removes the term
``Customer to Customer'' and instead descriptively defines that volume.
The proposed sentence states, ``Volume resulting from all QCC and
solicited orders will be aggregated in determining the applicable
volume tier.'' In addition the Exchange is removing references to
``Non-``Customer to Customer'' rebate'' and simply noting the term
``rebate.'' The Exchange believes that the term Non-``Customer to
Customer'' is no longer necessary. The language makes clear that
Members will receive the rebate for all QCC and/or other solicited
crossing orders except for QCC and solicited orders between two
Priority Customers. No other changes are being made to the manner in
which rebates are calculated or paid.
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
[[Page 40098]]
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
Taker Fees
The Exchange believes that the proposed change to increase Regular
Order Priority Customer Taker Fees in SPY, QQQ, IWM, and VXX from $0.37
to $0.40 per contract is reasonable because the increased Taker Fee
remains competitive and will continue to be attractive to market
participants. Priority Customers will continue to receive reduced
Regular Order Taker Fees in SPY, QQQ, IWM, and VXX, which represent
some of the most heavily traded symbols on ISE. In particular, the
proposed Taker Fees are lower than Taker Fees assessed to Priority
Customer orders in other Select Symbols \17\ as well as Taker Fees
assessed to other market participants.\18\ As such, the Exchange
believes that the proposed Regular Order Taker Fees will continue to
attract order flow to the benefit of all market participants that trade
on the Exchange.
---------------------------------------------------------------------------
\17\ Currently, ISE charges a Regular Order Taker Fee for Select
Symbols, other than SPY, QQQ, IWM, and VXX, of $0.44 per contract
for Priority Customer orders.
\18\ Currently, the Exchange charges a Regular Order Taker Fee
for Select Symbols of $0.45 per contract for Market Maker orders and
$0.46 per contract for FarMM, Firm Proprietary/Broker Dealer, and
Professional Customers orders.
---------------------------------------------------------------------------
The Exchange believes that the proposed change to increase Regular
Order Priority Customer Taker Fees in SPY, QQQ, IWM, and VXX from $0.37
to $0.40 per contract is equitable and not unfairly discriminatory
because despite the increase to the fee, Priority Customer interest
will continue to be assessed the lowest Regular Order Taker Fees in
these symbols. Priority Customer interest brings valuable liquidity to
the market, which liquidity benefits other market participants.
Priority Customer liquidity benefits all market participants by
providing more trading opportunities, which attracts Market Makers. An
increase in the activity of these market participants in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
QCC and Solicitation Rebate
The Exchange believes that the proposed change to not pay the
``Customer to Customer'' Rebate for QCC and solicited orders between
two Priority Customers is reasonable. Despite the removal of the
rebate, the Exchange believes that the proposal will continue to
encourage Members to transact QCC and/or other solicited crossing
orders on ISE. The Exchange notes that Customer-to-Customer Orders will
continue to be aggregated with all other volume to determine the
applicable volume tier for rebates.
The Exchange believes that the proposed change to not pay the
``Customer to Customer'' Orders rebate for QCC and solicited orders
between two Priority Customers is equitable and not unfairly
discriminatory because the Exchange would uniformly not pay any Member
a rebate for Customer-to-Customer Orders. The Customer-to-Customer
Orders will continue to be counted toward the rebates for all market
participants that qualify for such rebates.
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. With respect to the increase to
the Regular Order Taker Fees for Priority Customers in SPY, QQQ, IWM,
and VXX, the Exchange does not believe this proposal imposes an undue
burden on competition because despite the increase to the fee, Priority
Customer interest will continue to be assessed the lowest Regular Order
Taker Fees in these symbols. Priority Customer interest brings valuable
liquidity to the market, which liquidity benefits other market
participants. Priority Customer liquidity benefits all market
participants by providing more trading opportunities, which attracts
Market Makers. An increase in the activity of these market participants
in turn facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
With respect to the proposed change to not pay the ``Customer to
Customer'' Orders rebate for QCC and solicited orders between two
Priority Customers, the Exchange does not believe this proposal imposes
an undue burden on competition because the Exchange would uniformly not
pay any Member a rebate for Customer-to-Customer Orders. The Customer-
to-Customer Orders will continue to be counted toward the rebates for
all market participants that qualify for such rebates.
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,\19\ and Rule 19b-4(f)(2) \20\ 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(3)(A)(ii).
\20\ 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-2018-69 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-2018-69. 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
[[Page 40099]]
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-
2018-69 and should be submitted on or before September 4, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------
\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-17255 Filed 8-10-18; 8:45 am]
BILLING CODE 8011-01-P
