Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Schedule of Fees Relating to Crossing Orders and Responses to Crossing Orders in Index Options on the Nasdaq 100 Reduced Value Index, 41124-41126 [2018-17738]
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41124
Federal Register / Vol. 83, No. 160 / Friday, August 17, 2018 / Notices
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–BX–2018–037 and should
be submitted on or before September 7,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018–17742 Filed 8–16–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83830; File No. SR–ISE–
2018–66]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Schedule of Fees Relating
to Crossing Orders and Responses to
Crossing Orders in Index Options on
the Nasdaq 100 Reduced Value Index
August 13, 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 August 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
Exchange’s Schedule of Fees to provide
further explanation on how the
Exchange charges Crossing Orders and
Responses to Crossing Orders in index
options on the Nasdaq 100 Reduced
Value Index (‘‘NQX’’).
The text of the proposed rule change
is available on the Exchange’s website at
https://ise.cchwallstreet.com/, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange recently adopted
transaction fees and rebates for adding
or removing liquidity from ISE (i.e.,
maker/taker fees and rebates) in NQX
options, which apply to executions in
both the regular and complex order
book, according to the following
schedule: 3
Maker
fee/rebate
Market participant
Market Maker ...........................................................................................................................................................
Market Maker (for orders sent by Electronic Access Members) .............................................................................
Non-Nasdaq ISE Market Maker (FarMM) ...............................................................................................................
Firm Proprietary/Broker-Dealer ................................................................................................................................
Professional Customer ............................................................................................................................................
Priority Customer .....................................................................................................................................................
amozie on DSK3GDR082PROD with NOTICES1
In SR–ISE–2018–61, the Exchange
stated that the above pricing would
apply to all executions in NQX,
including Non-Priority Customer 4
Crossing Orders 5 in NQX. The
Exchange now proposes to clarify that
13 17
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17:17 Aug 16, 2018
Jkt 244001
$0.00
0.00
0.25
0.25
0.25
0.00
the taker fee applies to Crossing Orders
(i.e., both the originating and contra side
of the order) in NQX as well as
responses to such orders by noting the
following in Section III.B: ‘‘Fee will also
apply to the originating and contra side
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 83639
(July 16, 2018) (SR–ISE–2018–61).
4 ‘‘Non-Priority Customers’’ include Market
Makers, Non-Nasdaq ISE Market Makers, Firm
1 15
($0.25)
(0.25)
0.25
0.25
0.25
0.00
Taker
fee/rebate
of Crossing Orders, and to Responses to
Crossing Orders.’’ 6
The Exchange does not seek to amend
the manner in which Crossing Orders in
NQX and responses thereto are
currently charged, rather the Exchange
Proprietary/Broker-Dealers, and Professional
Customers.
5 A ‘‘Crossing Order’’ is an order executed in the
Exchange’s Facilitation Mechanism, Solicited Order
Mechanism, Price Improvement Mechanism (PIM)
or submitted as a Qualified Contingent Cross order.
For purposes of the fee schedule, orders executed
in the Block Order Mechanism are also considered
Crossing Orders.
6 ‘‘Responses to Crossing Order’’ is any contraside interest submitted after the commencement of
an auction in the Exchange’s Facilitation
Mechanism, Solicited Order Mechanism, Block
Order Mechanism or PIM.
PO 00000
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E:\FR\FM\17AUN1.SGM
17AUN1
Federal Register / Vol. 83, No. 160 / Friday, August 17, 2018 / Notices
amozie on DSK3GDR082PROD with NOTICES1
seeks to more clearly state in its
Schedule of Fees that taker pricing
applies for such orders. While the
Exchange is not aware of any member
confusion with respect to this fee, the
Exchange believes this specificity will
help preclude any potential confusion
in how its fees will apply.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,7 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,8 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees, and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that the
proposed language relating to the
application of taker fees to Crossing
Orders and Responses to Crossing
Orders in NQX is reasonable because
the proposed rule text will bring greater
transparency to the manner in which
the Exchange charges NQX orders
submitted in ISE’s various crossing
mechanisms. As discussed above, the
Exchange charges members the
applicable taker fee to both the
originating and contra side of Crossing
Orders in NQX as well charging the
NQX taker pricing for Responses to
Crossing Orders. The Exchange believes
it is reasonable and appropriate to
charge taker and not maker pricing for
these orders because the Exchange seeks
to encourage market making activity in
NQX by providing the $0.25 per
contract maker rebate to Market Maker
orders that post liquidity in the
Exchange’s new proprietary product
during the initial months of trading.
Furthermore, the manner in which the
Exchange applies the NQX taker fees in
Section III.B is not changing with this
proposal, and the proposed changes are
intended to bring greater clarity to ISE’s
Schedule of Fees, to the benefit of all
market participants.
The Exchange’s proposal to add the
clarifying language is also equitable and
not unfairly discriminatory because the
Exchange will continue to apply the
taker fees for Crossing Orders and
Responses to Crossing Orders in NQX in
a uniform manner for all similarly
situated participants. The Exchange also
believes that it is equitable and not
unfairly discriminatory to assess no
taker fees to Market Maker Crossing
Orders and Responses to Crossing
7 15
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
VerDate Sep<11>2014
17:17 Aug 16, 2018
Jkt 244001
Orders in NQX as compared to other
Non-Priority Customers, who are
currently assessed the $0.25 per contract
taker fee for such orders. Market
Makers, unlike other market
participants, take on a number of
obligations, including quoting
obligations, that other market
participants do not have. Further, the
Exchange believes that it is equitable
and not unfairly discriminatory to
assess no transaction fees to Priority
Customer 9 Crossing Orders and
Responses to Crossing Orders in NQX
because Priority Customer order flow
enhances liquidity on the Exchange for
the benefit of all market participants.
Priority Customer liquidity provides
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.
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. As discussed
above, the proposal is intended to
eliminate ambiguity from the Schedule
of Fees by further explaining how ISE
charges the originating and contra side
of Crossing Orders in NQX as well as
Responses to Crossing Orders in NQX.
The proposal does not amend the
current manner in which the Exchange
assesses fees for Crossing Orders and
Responses to Crossing Orders in NQX,
and the Exchange will continue to
assess the applicable taker fees in
Section III.B for such NQX orders in a
uniform manner to all market
participants. For the foregoing reasons,
the Exchange believes that the proposed
changes do not impose an undue burden
on competition.
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.
9 A ‘‘Priority Customer’’ is a person or entity that
is not a broker/dealer in securities, and does not
place more than 390 orders in listed options per day
on average during a calendar month for its own
beneficial account(s), as defined in Nasdaq ISE Rule
100(a)(37A).
PO 00000
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41125
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 10 and Rule
19b–4(f)(2) 11 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–2018–66 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–2018–66. 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
10 15
11 17
E:\FR\FM\17AUN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
17AUN1
41126
Federal Register / Vol. 83, No. 160 / Friday, August 17, 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–2018–66 and should be
submitted on or before September 7,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018–17738 Filed 8–16–18; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83835; File No. SR–
PEARL–2018–15]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change to the Exchange Rule 514
Priority on the Exchange
August 13, 2018.
amozie on DSK3GDR082PROD with NOTICES1
Pursuant to the provisions of 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 August 1, 2018, MIAX PEARL, LLC
(‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
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 is filing a proposal to
amend Exchange Rule 514, Priority on
the Exchange.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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17:17 Aug 16, 2018
Jkt 244001
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
BILLING CODE 8011–01–P
12 17
office, and at the Commission’s Public
Reference Room.
The Exchange proposes to amend
Exchange Rule 514, Priority on the
Exchange. Specifically, the Exchange
proposes to amend subsection (c), SelfTrade Protection, to broaden the
protection afforded under the current
rule by giving Members 3 the option to
have this protection apply at the market
participant identifier (‘‘MPID’’) 4 level
(i.e., currently existing functionality), or
at the firm level. The Exchange believes
that this enhancement will provide
helpful flexibility for market making
firms that wish to prevent trading
against all orders entered by their firm
under any MPID, instead of just those
entered under the same MPID.
Currently, the rule prevents orders
entered by a Market Maker 5 via the
MEO Interface 6 or the FIX Interface 7
using the same MPID from executing
against orders entered on the opposite
side of the market by the same Market
3 The term ‘‘Member’’ means an individual or
organization that is registered with the Exchange
pursuant to Chapter II of MIAX PEARL Rules for
purposes of trading on the Exchange as an
‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’
Members are deemed ‘‘members’’ under the
Exchange Act. See Exchange Rule 100.
4 The term ‘‘MPID’’ means unique market
participant identifier. See Exchange Rule 100.
5 The term ‘‘Market Maker’’ or ‘‘MM’’ means a
Member registered with the Exchange for the
purpose of making markets in options contracts
traded on the Exchange and that is vested with the
rights and responsibilities specified in Chapter VI
of the MIAX PEARL Rules. See Exchange Rule 100.
6 The term ‘‘MEO Interface’’ means a binary order
interface used for submitting certain order types (as
set forth in Rule 516) to the MIAX PEARL System.
See Exchange Rule 100.
7 The term ‘‘FIX Interface’’ means the Financial
Information Exchange interface used for submitting
certain order types (as set forth in Rule 516) to the
MIAX PEARL System. See Exchange Rule 100.
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Frm 00085
Fmt 4703
Sfmt 4703
Maker using the same MPID via the
MEO Interface or the FIX Interface.8 In
such a case, the System 9 will cancel the
oldest of the orders back to the entering
party prior to execution.
Members of the Exchange may either
be Market Makers or Electronic
Exchange Members.10 Each Market
Maker and Electronic Exchange Member
is assigned an MPID by the Exchange for
identification purposes. A Member may
have multiple Market Maker MPIDs on
the Exchange, therefore the possibility
exists that a Member may cross its own
Market Maker’s orders.11
The Exchange now proposes to allow
members to choose to have this
protection applied at either the MPID
level, as currently implemented, or at
the member firm level. If members
choose to have this protection applied at
the member firm level, the System will
prohibit orders entered from different
MPIDs within the Member’s firm from
trading against one another. The
Exchange believes that the proposed
enhancement will provide Members
with more tailored self-trade
functionality that will allow Members to
manage their trading as appropriate
based on the Member’s business needs.
While the Exchange believes that some
firms will want to restrict trading
interest from the same MPID, (as
currently implemented), the Exchange
believes that other firms will find it
helpful to apply self-trade protection
across all MPIDs of the same firm.
The Exchange note that similar
functionality also exists on the Nasdaq
Stock Market (‘‘NASDAQ’’) which
prevents self-trades by MPID, or
alternatively, if selected by the member,
self-trade protection for all MPIDs of the
firm.12 Cboe BZX Exchange
(‘‘CboeBZX’’) also has a similar rule in
place which provides members the
ability to apply Match Trade Prevention
(‘‘MTP’’) modifiers (CboeBZX’s version
8 See
Exchange Rule 514(c)(1).
term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
10 The term ‘‘Electronic Exchange Member’’ or
‘‘EEM’’ means the holder of a Trading Permit who
is a Member representing as agent Public Customer
Orders or Non-Customer Orders on the Exchange
and those non-Market Maker Members conducting
proprietary trading. Electronic Exchange Members
are deemed ‘‘members’’ under the Exchange Act.
See Exchange Rule 100.
11 The Exchange notes that if requested by an
EEM, orders entered by an EEM via the MEO
Interface using the same MPID will not be executed
against orders entered on the opposite side of the
market by the same EEM using the same MPID via
the MEO Interface. In such a case, the System will
cancel the oldest of the orders back to the entering
party prior to execution. See Exchange Rule
514(c)(2).
12 See Nasdaq Stock Market Rule, Chapter VI, Sec.
18(c)(1).
9 The
E:\FR\FM\17AUN1.SGM
17AUN1
]]>Agencies
[Federal Register Volume 83, Number 160 (Friday, August 17, 2018)]
[Notices]
[Pages 41124-41126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17738]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83830; File No. SR-ISE-2018-66]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Schedule of Fees Relating to Crossing Orders and Responses
to Crossing Orders in Index Options on the Nasdaq 100 Reduced Value
Index
August 13, 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 August 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 Exchange's Schedule of Fees to
provide further explanation on how the Exchange charges Crossing Orders
and Responses to Crossing Orders in index options on the Nasdaq 100
Reduced Value Index (``NQX'').
The text of the proposed rule change is available on the Exchange's
website at https://ise.cchwallstreet.com/, at the principal office of
the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange recently adopted transaction fees and rebates for
adding or removing liquidity from ISE (i.e., maker/taker fees and
rebates) in NQX options, which apply to executions in both the regular
and complex order book, according to the following schedule: \3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 83639 (July 16,
2018) (SR-ISE-2018-61).
------------------------------------------------------------------------
Maker fee/ Taker fee/
Market participant rebate rebate
------------------------------------------------------------------------
Market Maker............................ ($0.25) $0.00
Market Maker (for orders sent by (0.25) 0.00
Electronic Access Members).............
Non-Nasdaq ISE Market Maker (FarMM)..... 0.25 0.25
Firm Proprietary/Broker-Dealer.......... 0.25 0.25
Professional Customer................... 0.25 0.25
Priority Customer....................... 0.00 0.00
------------------------------------------------------------------------
In SR-ISE-2018-61, the Exchange stated that the above pricing would
apply to all executions in NQX, including Non-Priority Customer \4\
Crossing Orders \5\ in NQX. The Exchange now proposes to clarify that
the taker fee applies to Crossing Orders (i.e., both the originating
and contra side of the order) in NQX as well as responses to such
orders by noting the following in Section III.B: ``Fee will also apply
to the originating and contra side of Crossing Orders, and to Responses
to Crossing Orders.'' \6\
---------------------------------------------------------------------------
\4\ ``Non-Priority Customers'' include Market Makers, Non-Nasdaq
ISE Market Makers, Firm Proprietary/Broker-Dealers, and Professional
Customers.
\5\ A ``Crossing Order'' is an order executed in the Exchange's
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement
Mechanism (PIM) or submitted as a Qualified Contingent Cross order.
For purposes of the fee schedule, orders executed in the Block Order
Mechanism are also considered Crossing Orders.
\6\ ``Responses to Crossing Order'' is any contra-side interest
submitted after the commencement of an auction in the Exchange's
Facilitation Mechanism, Solicited Order Mechanism, Block Order
Mechanism or PIM.
---------------------------------------------------------------------------
The Exchange does not seek to amend the manner in which Crossing
Orders in NQX and responses thereto are currently charged, rather the
Exchange
[[Page 41125]]
seeks to more clearly state in its Schedule of Fees that taker pricing
applies for such orders. While the Exchange is not aware of any member
confusion with respect to this fee, the Exchange believes this
specificity will help preclude any potential confusion in how its fees
will apply.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\8\ 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes that the proposed language relating to the
application of taker fees to Crossing Orders and Responses to Crossing
Orders in NQX is reasonable because the proposed rule text will bring
greater transparency to the manner in which the Exchange charges NQX
orders submitted in ISE's various crossing mechanisms. As discussed
above, the Exchange charges members the applicable taker fee to both
the originating and contra side of Crossing Orders in NQX as well
charging the NQX taker pricing for Responses to Crossing Orders. The
Exchange believes it is reasonable and appropriate to charge taker and
not maker pricing for these orders because the Exchange seeks to
encourage market making activity in NQX by providing the $0.25 per
contract maker rebate to Market Maker orders that post liquidity in the
Exchange's new proprietary product during the initial months of
trading. Furthermore, the manner in which the Exchange applies the NQX
taker fees in Section III.B is not changing with this proposal, and the
proposed changes are intended to bring greater clarity to ISE's
Schedule of Fees, to the benefit of all market participants.
The Exchange's proposal to add the clarifying language is also
equitable and not unfairly discriminatory because the Exchange will
continue to apply the taker fees for Crossing Orders and Responses to
Crossing Orders in NQX in a uniform manner for all similarly situated
participants. The Exchange also believes that it is equitable and not
unfairly discriminatory to assess no taker fees to Market Maker
Crossing Orders and Responses to Crossing Orders in NQX as compared to
other Non-Priority Customers, who are currently assessed the $0.25 per
contract taker fee for such orders. Market Makers, unlike other market
participants, take on a number of obligations, including quoting
obligations, that other market participants do not have. Further, the
Exchange believes that it is equitable and not unfairly discriminatory
to assess no transaction fees to Priority Customer \9\ Crossing Orders
and Responses to Crossing Orders in NQX because Priority Customer order
flow enhances liquidity on the Exchange for the benefit of all market
participants. Priority Customer liquidity provides 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.
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\9\ A ``Priority Customer'' is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s), as defined in Nasdaq ISE Rule
100(a)(37A).
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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. As discussed above, the
proposal is intended to eliminate ambiguity from the Schedule of Fees
by further explaining how ISE charges the originating and contra side
of Crossing Orders in NQX as well as Responses to Crossing Orders in
NQX. The proposal does not amend the current manner in which the
Exchange assesses fees for Crossing Orders and Responses to Crossing
Orders in NQX, and the Exchange will continue to assess the applicable
taker fees in Section III.B for such NQX orders in a uniform manner to
all market participants. For the foregoing reasons, the Exchange
believes that the proposed changes do not impose an undue burden on
competition.
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 \10\ and Rule 19b-4(f)(2) \11\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is: (i) Necessary or
appropriate in the public interest; (ii) for the protection of
investors; or (iii) otherwise in furtherance of the purposes of the
Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-ISE-2018-66 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-2018-66. 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 41126]]
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-
2018-66 and should be submitted on or before September 7, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-17738 Filed 8-16-18; 8:45 am]
BILLING CODE 8011-01-P
