Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Market Maker Plus Program, 11844-11847 [2019-05922]
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11844
Federal Register / Vol. 84, No. 60 / Thursday, March 28, 2019 / Notices
appropriate to promote fairness in
funding the operation and
administration of the Board and would
achieve a more equitable balance among
regulated entities and a more balanced
allocation of the expenses of the
regulatory activities, systems
development, and operational activities
undertaken by the MSRB. Because the
three fees that are the subject of the
proposed rule change (underwriting,
transaction and technology fees) are the
primary drivers for the MSRB’s reserves,
the Board believes that it is appropriate
to temporarily reduce these fees for the
designated period.
The MSRB does not believe that the
proposed rule change would result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as it would
temporarily decrease the underwriting,
transaction and technology fees by the
same percentage for all dealers subject
to these fees.
The MSRB believes that the proposed
rule change would not impose an
unnecessary or inappropriate regulatory
burden on small regulated entities, as
smaller dealers would benefit from the
temporary fee reduction in the same
proportion as larger dealers in relation
to the assessible activity during the
relevant period.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Board did not solicit comment on
the proposed rule change. Therefore,
there are no comments on the proposed
rule change received from members,
participants or others.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
has become effective pursuant to
Section 19(b)(3)(A)(ii) of the Act 21 and
Rule 19b–4(f)(2) 22 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
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
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–
MSRB–2019–06 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–MSRB–2019–06. 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 MSRB. 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–MSRB–2019–06 and should
be submitted on or before April 18,
2019.
For the Commission, pursuant to delegated
authority.23
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–05924 Filed 3–27–19; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85396; File No. SR–ISE–
2019–07]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Market
Maker Plus Program
March 22, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 11,
2019, 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
Market Maker Plus program under
Options 7, Section 3.
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
Market Maker Plus program, as
described in detail below.
BILLING CODE 8011–01–P
21 15
U.S.C. 78s(b)(3)(A)(ii).
22 17 CFR 240.19b–4(f)(2).
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Federal Register / Vol. 84, No. 60 / Thursday, March 28, 2019 / Notices
As set forth in Section 3 of the Pricing
Schedule, the Exchange operates a
Market Maker Plus program for regular
orders in Select Symbols 3 where Market
Makers 4 that contribute to market
quality by maintaining tight markets are
eligible for enhanced rebates. Market
Makers are evaluated each trading day
for the percentage of time spent on the
National Best Bid or National Best Offer
(‘‘NBBO’’) for qualifying series that
expire in two successive thirty calendar
day periods beginning on that trading
day. A Market Maker Plus is a Market
Maker who is on the NBBO a specified
percentage of the time on average for the
month based on daily performance in
the qualifying series for each of the two
successive periods described above.
Qualifying series are series trading
between $0.03 and $3.00 (for options
whose underlying stock’s previous
trading day’s last sale price was less
than or equal to $100) and between
$0.10 and $3.00 (for options whose
underlying stock’s previous trading
day’s last sale price was greater than
$100) in premium. If a Market Maker
would qualify for a different Market
Maker Plus tier in each of the two
successive periods described above,
then the lower of the two Market Maker
Plus tier rebates shall apply to all
contracts.5 These general qualification
requirements will remain unchanged
with the amendments to the applicable
Market Maker Plus rebates described in
this proposed rule change.
Market Maker orders in Select
Symbols are charged a maker fee of
$0.11 per contract; 6 provided that
Market Makers that qualify for Market
Maker Plus will not pay this fee if they
meet the applicable tier thresholds set
forth in the table below, and will
instead receive the below maker rebates
based on the applicable tier for which
they qualify.7
SELECT SYMBOLS OTHER THAN SPY,
QQQ, AND IWM
Market Maker Plus tier
(specified percentage)
Tier 1 (80% to less than
85%) ..................................
Tier 2 (85% to less than
95%) ..................................
Tier 3 (95% or greater) .........
Maker rebate
($0.15)
(0.18)
(0.22)
SPY, QQQ, AND IWM
Market Maker Plus tier
(specified percentage)
Tier
Tier
Tier
Tier
1
2
3
4
(70%
(80%
(85%
(90%
to less than 80%) ................................................................................................................................
to less than 85%) ................................................................................................................................
to less than 90%) ................................................................................................................................
or greater) ............................................................................................................................................
The Exchange now proposes to
introduce a separate rebate program for
Market Makers that achieve Market
Maker Plus in options overlying
symbols AMZN, FB, or NVDA in order
to promote and encourage liquidity in
those particular Select Symbols.9
Specifically, Market Makers that achieve
Market Maker Plus Tiers 1–3 as
proposed below for executions in
AMZN, FB, or NVDA will receive the
following maker rebates:
Market Maker Plus tier
(specified percentage)
Tier 1 (70% to less than
85%) ..................................
Tier 2 (85% to less than
95%) ..................................
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Regular Maker
rebate
18:57 Mar 27, 2019
Maker rebate
Tier 3 (95% or greater) .........
(0.22)
The proposed rebates for AMZN, FB,
and NVDA are the same as the rebates
currently provided for Select Symbols
(other than SPY, QQQ, and IWM),
except that the proposal lowers the
minimum qualification in Tier 1 from
80% to 70% for AMZN, FB, and NVDA.
In addition, the Exchange proposes to
‘‘link’’ the benefits associated with the
Maker rebate
Market Maker’s performance in AMZN,
FB, and NVDA such that the proposed
Tiers 1–3 maker rebates will apply to
($0.15) executions in AMZN, FB, or NVDA if
the Market Maker does not achieve the
(0.18) applicable tier in that symbol, but
3 ‘‘Select Symbols’’ are options overlying all
symbols listed on the Nasdaq ISE that are in the
Penny Pilot Program.
4 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See ISE Rule 100(a)(32).
5 Market Makers may enter quotes in a symbol
using one or more unique, exchange assigned
identifiers—i.e., badge/suffix combinations. Market
Maker Plus status is calculated independently
based on quotes entered in a symbol for each of the
Market Maker’s badge/suffix combinations, and the
highest tier achieved for any badge/suffix
combination quoting that symbol applies to
executions across all badge/suffix combinations that
the member uses to trade in that symbol. A Market
Maker’s worst quoting day each month for each of
the two successive periods described above, on a
per symbol basis, will be excluded in calculating
whether a Market Maker qualifies for this rebate.
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Market Maker Plus tier
(specified percentage)
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6 This fee also applies to Market Maker orders
sent to the Exchange by Electronic Access Members.
7 A $0.15 per contract fee applies instead of the
applicable fee or rebate when trading against
Priority Customer complex orders that leg into the
regular order book. There will be no fee charged or
rebate provided when trading against non-Priority
Customer complex orders that leg into the regular
order book.
8 To encourage Market Makers to maintain quality
markets in SPY, QQQ, and IWM in particular,
members that maintain tight markets in those
symbols are eligible for higher regular maker rebates
and may also be eligible for linked maker rebates,
as shown in the table above. Specifically, the
following symbols are linked for purposes of the
linked maker rebate: (1) SPY and QQQ, and (2) SPY
and IWM. Market Makers that qualify for Market
Maker Plus Tiers 2–4 above for executions in SPY,
QQQ, and IWM may be eligible for a linked maker
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($0.00)
(0.18)
(0.22)
(0.26)
Linked Maker
rebate 8
N/A
(0.15)
(0.19)
(0.23)
achieves the tier (i.e., proposed Tiers 1–
3) for any badge/suffix combination in
the other two symbols. Once the
applicable tier—any of proposed Tiers
1, 2 or 3—is achieved for two out of the
three symbols AMZN, FB, or NVDA, the
Market Maker will be eligible for a
maker rebate in the third symbol, which
will be provided in addition to the
maker rebate for the applicable tier
achieved in the other two symbols. If a
Market Maker would qualify for
different Market Maker Plus Tiers 1–3 in
the two symbols, then the lower of the
two maker rebates will be applied to the
third symbol. Thus, for example, if a
Market Maker achieves Tier 1 in AMZN
and Tier 2 in FB, the Market Maker
would receive the Tier 1 maker rebate
in NVDA ($0.15 per contract), Tier 1
rebate in a linked symbol in addition to the regular
maker rebate for the applicable tier. The linked
maker rebate applies to executions in SPY, QQQ,
and IWM if the Market Maker does not achieve the
applicable tier in that symbol but achieves the tier
(i.e., any of the Market Maker Plus Tiers 2–4) for
any badge/suffix combination in the other linked
symbol, in which case the higher tier achieved
applies to both symbols. If a Market Maker would
qualify for a linked maker rebate in SPY based on
the tier achieved in QQQ and the tier achieved in
IWM, then the higher of the two linked maker
rebates will be applied to SPY. The regular maker
rebate will be provided in the symbol that qualifies
the Market Maker for the higher tier based on
percentage of time at the NBBO.
9 Qualifying Market Makers will continue to
receive the maker rebates described above in
products other than AMZN, FB, and NVDA.
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Federal Register / Vol. 84, No. 60 / Thursday, March 28, 2019 / Notices
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maker rebate in AMZN ($0.15 per
contract), and Tier 2 maker rebate in FB
($0.18 per contract). The Exchange notes
that this rebate will be provided in the
third symbol regardless of time at the
NBBO (i.e., there is no minimum tier
threshold to be met in the third symbol
for the ‘‘linked’’ maker rebate). As such,
if all three symbols separately achieve
any of Market Maker Plus Tiers 1–3, the
symbol that achieves the tier with the
lowest maker rebate will instead receive
the same maker rebate as the symbol
that achieved the next lowest tier. For
example, if a Market Maker achieves
Tier 1 in AMZN, Tier 2 in FB, and Tier
3 in NVDA, the Market Maker would
receive the $0.18 per contract ‘‘linked’’
Tier 2 maker rebate in AMZN based on
their FB performance, the $0.18 per
contract Tier 2 maker rebate in FB, and
the $0.22 per contract Tier 3 maker
rebate in NVDA.
Because the Exchange is introducing
a separate rebate program for AMZN,
FB, and NVDA, the associated rebate
table heading for Select Symbols other
than SPY, QQQ, and IWM will be
expanded to include AMZN, FB, and
NVDA under this proposal.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,11 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees, and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that it is
reasonable and equitable to offer special
rebates for Market Makers that achieve
Market Maker Plus in AMZN, FB or
NVDA. As proposed, Market Makers
would receive the same tiered rebates in
those three symbols as the tiered rebates
provided in Select Symbols other than
SPY, QQQ, and IWM (i.e., $0.15, $0.18,
and $0.22 per contract). Furthermore,
the proposal lowers the minimum
qualification in Tier 1 for percentage of
time spent quoting at the NBBO to 70%
less than 85% for AMZN, FB, and
NVDA (as opposed to 80% to less than
85% for Select Symbols other than SPY,
QQQ, and IWM). The proposed rule
change will therefore allow Market
Makers that would not qualify for
Market Maker Plus in AMZN, FB, or
NVDA today to qualify for the $0.15 per
contract maker rebate based on a time at
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
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the NBBO of at least 70% of the time
pursuant to proposed Tier 1.
In addition, the proposal links the
benefits associated with the Market
Maker’s performance in AMZN, FB, and
NVDA so that the Market Maker would
be able to receive a maker rebate in any
of those symbols by meeting the
requirements of Market Maker Plus
Tiers 1–3 in the other two, as further
described above. Accordingly, the
Exchange believes that Market Makers
would be incentivized by the ability to
earn this linked rebate, in addition to
the applicable tiered rebates provided in
the other two symbols, to maintain
quality markets in those three symbols
on ISE.
The Market Maker Plus program is
designed to attract liquidity from Market
Makers and provide incentives for those
Market Makers to maintain tight
markets, measured by time spent
quoting at the NBBO. For the reasons
discussed above, the Exchange believes
that the proposed rule change has the
potential to further benefit market
quality by encouraging Market Makers
to maintain tight markets in AMZN, FB,
and NVDA, which are highly active
symbols within the industry, thereby
creating a more active and liquid market
for options traded on the Exchange.
Furthermore, the Exchange believes that
these three symbols have significant
interest amongst retail options investors,
as the underlying stocks themselves are
high-priced with each currently priced
above $150 per share. The proposed
pricing incentive for Market Makers is
therefore meant to encourage more
trading activity on the Exchange
amongst all market participant types by
encouraging Market Makers to maintain
tight markets in these symbols.
The Exchange also believes that the
proposed changes are not unfairly
discriminatory as all Market Makers can
qualify for the same rebates based on
achieving the appropriate tier of Market
Maker Plus in AMZN, FB, and NVDA.
Furthermore, the Exchange continues to
believe that it is not unfairly
discriminatory to offer these rebates
only to Market Makers because Market
Makers, and in particular, those Market
Makers that achieve Market Maker Plus
status, are subject to additional
requirements and obligations (such as
quoting requirements) that other market
participants are not.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
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proposed changes to Market Maker Plus
to introduce a separate rebate program
for AMZN, FB, and NVDA are designed
to increase competition by encouraging
Market Makers to provide liquidity and
maintain tight markets in these high
volume symbols on ISE. The Exchange
operates in a highly competitive market
in which market participants can
readily direct their order flow to
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. For the
reasons described above, the Exchange
believes that the proposed fee changes
reflect this competitive environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,12 and Rule
19b–4(f)(2) 13 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–2019–07 on the subject line.
12 15
13 17
E:\FR\FM\28MRN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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Federal Register / Vol. 84, No. 60 / Thursday, March 28, 2019 / Notices
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–2019–07. 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–2019–07 and should be
submitted on or before April 18, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–05922 Filed 3–27–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85397; File No. SR–
PEARL–2019–04]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Exchange
Rule 507, Must Give Up Clearing
Member, and Rule 513, Submission of
Orders and Clearance of Transactions
March 22, 2019.
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 March 11, 2019, MIAX PEARL, LLC
(‘‘MIAX PEARL’’ or the ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
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 is filing a proposal to
amend Rule 507, Must Give Up Clearing
Member, and Rule 513, Submission of
Orders and Clearance of Transactions,
in order to codify the requirement that
for each transaction in which a
Member 3 participates, the Member may
indicate the name of any Clearing
Member 4 through which the transaction
will be cleared (‘‘Give Up’’), and to
establish a new ‘‘Opt In’’ process by
which a Clearing Member can restrict
one or more of its OCC numbers and
thereafter designate certain Members as
authorized to Give Up a restricted
clearing number.
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
office, and at the Commission’s Public
Reference Room.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
4 The term ‘‘Clearing Member’’ means a Member
that has been admitted to membership in the
Clearing Corporation pursuant to the provisions of
the rules of the Clearing Corporation. See Exchange
Rule 100.
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2 17
14 17
CFR 200.30–3(a)(12).
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11847
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 proposes to amend its
requirements in MIAX PEARL Rule 507
and Rule 513, related to the give up of
a Clearing Member by a Member on
Exchange transactions. By way of
background, to enter transactions on the
Exchange, a Member must either be a
Clearing Member or must have a
Clearing Member agree to accept
financial responsibility for all of its
transactions. Additionally, Rule 507
currently provides that when a Member
executes a transaction on the Exchange,
it must give up the name of a Clearing
Member (the ‘‘Give Up’’) through which
the transaction will be cleared (i.e.,
‘‘give up’’). The Exchange believes that
this proposal would result in the fair
and reasonable use of resources by both
the Exchange and the Member. In
addition, the proposed change would
align the Exchange with competing
options exchanges that have proposed
rules consistent with this proposal.5
Recently, certain Clearing Members,
in conjunction with the Securities
Industry and Financial Markets
Association (‘‘SIFMA’’), expressed
concerns related to the process by
which executing brokers on U.S. options
5 See Securities Exchange Act Release No. 84624
(November 19, 2018), 83 FR 60547 (November 26,
2018) (SR–Phlx–2018–72) (Notice of Filing of
Proposed Rule Change to Establish Rules Governing
the Give Up of a Clearing Member by a Member
Organization on Exchange Transactions). See also
Securities Exchange Act Release No. 84981 (January
9, 2019), 84 FR 837 (January 31, 2019) (SR–Phlx–
2018–72) (Notice of Designation of a Longer Period
for Commission Action on a Proposed Rule Change
To Establish Rules Governing the Give Up of a
Clearing Member by a Member Organization on
Exchange Transactions). See also Securities
Exchange Act Release No. 85136 (February 14,
2019) (SR–Phlx–2018–72)(Order Approving a
Proposed Rule Change to Establish Rules Governing
the Give Up of a Clearing Member by a Member
Organization on Exchange Transactions).
E:\FR\FM\28MRN1.SGM
28MRN1
]]>Agencies
[Federal Register Volume 84, Number 60 (Thursday, March 28, 2019)]
[Notices]
[Pages 11844-11847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05922]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85396; File No. SR-ISE-2019-07]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the Market
Maker Plus Program
March 22, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 11, 2019, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Market Maker Plus program under
Options 7, Section 3.
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
Market Maker Plus program, as described in detail below.
[[Page 11845]]
As set forth in Section 3 of the Pricing Schedule, the Exchange
operates a Market Maker Plus program for regular orders in Select
Symbols \3\ where Market Makers \4\ that contribute to market quality
by maintaining tight markets are eligible for enhanced rebates. Market
Makers are evaluated each trading day for the percentage of time spent
on the National Best Bid or National Best Offer (``NBBO'') for
qualifying series that expire in two successive thirty calendar day
periods beginning on that trading day. A Market Maker Plus is a Market
Maker who is on the NBBO a specified percentage of the time on average
for the month based on daily performance in the qualifying series for
each of the two successive periods described above. Qualifying series
are series trading between $0.03 and $3.00 (for options whose
underlying stock's previous trading day's last sale price was less than
or equal to $100) and between $0.10 and $3.00 (for options whose
underlying stock's previous trading day's last sale price was greater
than $100) in premium. If a Market Maker would qualify for a different
Market Maker Plus tier in each of the two successive periods described
above, then the lower of the two Market Maker Plus tier rebates shall
apply to all contracts.\5\ These general qualification requirements
will remain unchanged with the amendments to the applicable Market
Maker Plus rebates described in this proposed rule change.
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\3\ ``Select Symbols'' are options overlying all symbols listed
on the Nasdaq ISE that are in the Penny Pilot Program.
\4\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule
100(a)(32).
\5\ Market Makers may enter quotes in a symbol using one or more
unique, exchange assigned identifiers--i.e., badge/suffix
combinations. Market Maker Plus status is calculated independently
based on quotes entered in a symbol for each of the Market Maker's
badge/suffix combinations, and the highest tier achieved for any
badge/suffix combination quoting that symbol applies to executions
across all badge/suffix combinations that the member uses to trade
in that symbol. A Market Maker's worst quoting day each month for
each of the two successive periods described above, on a per symbol
basis, will be excluded in calculating whether a Market Maker
qualifies for this rebate.
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Market Maker orders in Select Symbols are charged a maker fee of
$0.11 per contract; \6\ provided that Market Makers that qualify for
Market Maker Plus will not pay this fee if they meet the applicable
tier thresholds set forth in the table below, and will instead receive
the below maker rebates based on the applicable tier for which they
qualify.\7\
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\6\ This fee also applies to Market Maker orders sent to the
Exchange by Electronic Access Members.
\7\ A $0.15 per contract fee applies instead of the applicable
fee or rebate when trading against Priority Customer complex orders
that leg into the regular order book. There will be no fee charged
or rebate provided when trading against non-Priority Customer
complex orders that leg into the regular order book.
Select Symbols Other Than SPY, QQQ, and IWM
------------------------------------------------------------------------
Market Maker Plus tier (specified percentage) Maker rebate
------------------------------------------------------------------------
Tier 1 (80% to less than 85%)........................... ($0.15)
Tier 2 (85% to less than 95%)........................... (0.18)
Tier 3 (95% or greater)................................. (0.22)
------------------------------------------------------------------------
SPY, QQQ, and IWM
------------------------------------------------------------------------
Market Maker Plus tier (specified Regular Maker Linked Maker
percentage) rebate rebate \8\
------------------------------------------------------------------------
Tier 1 (70% to less than 80%)........... ($0.00) N/A
Tier 2 (80% to less than 85%)........... (0.18) (0.15)
Tier 3 (85% to less than 90%)........... (0.22) (0.19)
Tier 4 (90% or greater)................. (0.26) (0.23)
------------------------------------------------------------------------
The Exchange now proposes to introduce a separate rebate program
for Market Makers that achieve Market Maker Plus in options overlying
symbols AMZN, FB, or NVDA in order to promote and encourage liquidity
in those particular Select Symbols.\9\ Specifically, Market Makers that
achieve Market Maker Plus Tiers 1-3 as proposed below for executions in
AMZN, FB, or NVDA will receive the following maker rebates:
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\8\ To encourage Market Makers to maintain quality markets in
SPY, QQQ, and IWM in particular, members that maintain tight markets
in those symbols are eligible for higher regular maker rebates and
may also be eligible for linked maker rebates, as shown in the table
above. Specifically, the following symbols are linked for purposes
of the linked maker rebate: (1) SPY and QQQ, and (2) SPY and IWM.
Market Makers that qualify for Market Maker Plus Tiers 2-4 above for
executions in SPY, QQQ, and IWM may be eligible for a linked maker
rebate in a linked symbol in addition to the regular maker rebate
for the applicable tier. The linked maker rebate applies to
executions in SPY, QQQ, and IWM if the Market Maker does not achieve
the applicable tier in that symbol but achieves the tier (i.e., any
of the Market Maker Plus Tiers 2-4) for any badge/suffix combination
in the other linked symbol, in which case the higher tier achieved
applies to both symbols. If a Market Maker would qualify for a
linked maker rebate in SPY based on the tier achieved in QQQ and the
tier achieved in IWM, then the higher of the two linked maker
rebates will be applied to SPY. The regular maker rebate will be
provided in the symbol that qualifies the Market Maker for the
higher tier based on percentage of time at the NBBO.
\9\ Qualifying Market Makers will continue to receive the maker
rebates described above in products other than AMZN, FB, and NVDA.
------------------------------------------------------------------------
Market Maker Plus tier (specified percentage) Maker rebate
------------------------------------------------------------------------
Tier 1 (70% to less than 85%)........................... ($0.15)
Tier 2 (85% to less than 95%)........................... (0.18)
Tier 3 (95% or greater)................................. (0.22)
------------------------------------------------------------------------
The proposed rebates for AMZN, FB, and NVDA are the same as the
rebates currently provided for Select Symbols (other than SPY, QQQ, and
IWM), except that the proposal lowers the minimum qualification in Tier
1 from 80% to 70% for AMZN, FB, and NVDA.
In addition, the Exchange proposes to ``link'' the benefits
associated with the Market Maker's performance in AMZN, FB, and NVDA
such that the proposed Tiers 1-3 maker rebates will apply to executions
in AMZN, FB, or NVDA if the Market Maker does not achieve the
applicable tier in that symbol, but achieves the tier (i.e., proposed
Tiers 1-3) for any badge/suffix combination in the other two symbols.
Once the applicable tier--any of proposed Tiers 1, 2 or 3--is achieved
for two out of the three symbols AMZN, FB, or NVDA, the Market Maker
will be eligible for a maker rebate in the third symbol, which will be
provided in addition to the maker rebate for the applicable tier
achieved in the other two symbols. If a Market Maker would qualify for
different Market Maker Plus Tiers 1-3 in the two symbols, then the
lower of the two maker rebates will be applied to the third symbol.
Thus, for example, if a Market Maker achieves Tier 1 in AMZN and Tier 2
in FB, the Market Maker would receive the Tier 1 maker rebate in NVDA
($0.15 per contract), Tier 1
[[Page 11846]]
maker rebate in AMZN ($0.15 per contract), and Tier 2 maker rebate in
FB ($0.18 per contract). The Exchange notes that this rebate will be
provided in the third symbol regardless of time at the NBBO (i.e.,
there is no minimum tier threshold to be met in the third symbol for
the ``linked'' maker rebate). As such, if all three symbols separately
achieve any of Market Maker Plus Tiers 1-3, the symbol that achieves
the tier with the lowest maker rebate will instead receive the same
maker rebate as the symbol that achieved the next lowest tier. For
example, if a Market Maker achieves Tier 1 in AMZN, Tier 2 in FB, and
Tier 3 in NVDA, the Market Maker would receive the $0.18 per contract
``linked'' Tier 2 maker rebate in AMZN based on their FB performance,
the $0.18 per contract Tier 2 maker rebate in FB, and the $0.22 per
contract Tier 3 maker rebate in NVDA.
Because the Exchange is introducing a separate rebate program for
AMZN, FB, and NVDA, the associated rebate table heading for Select
Symbols other than SPY, QQQ, and IWM will be expanded to include AMZN,
FB, and NVDA under this proposal.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees, and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that it is reasonable and equitable to offer
special rebates for Market Makers that achieve Market Maker Plus in
AMZN, FB or NVDA. As proposed, Market Makers would receive the same
tiered rebates in those three symbols as the tiered rebates provided in
Select Symbols other than SPY, QQQ, and IWM (i.e., $0.15, $0.18, and
$0.22 per contract). Furthermore, the proposal lowers the minimum
qualification in Tier 1 for percentage of time spent quoting at the
NBBO to 70% less than 85% for AMZN, FB, and NVDA (as opposed to 80% to
less than 85% for Select Symbols other than SPY, QQQ, and IWM). The
proposed rule change will therefore allow Market Makers that would not
qualify for Market Maker Plus in AMZN, FB, or NVDA today to qualify for
the $0.15 per contract maker rebate based on a time at the NBBO of at
least 70% of the time pursuant to proposed Tier 1.
In addition, the proposal links the benefits associated with the
Market Maker's performance in AMZN, FB, and NVDA so that the Market
Maker would be able to receive a maker rebate in any of those symbols
by meeting the requirements of Market Maker Plus Tiers 1-3 in the other
two, as further described above. Accordingly, the Exchange believes
that Market Makers would be incentivized by the ability to earn this
linked rebate, in addition to the applicable tiered rebates provided in
the other two symbols, to maintain quality markets in those three
symbols on ISE.
The Market Maker Plus program is designed to attract liquidity from
Market Makers and provide incentives for those Market Makers to
maintain tight markets, measured by time spent quoting at the NBBO. For
the reasons discussed above, the Exchange believes that the proposed
rule change has the potential to further benefit market quality by
encouraging Market Makers to maintain tight markets in AMZN, FB, and
NVDA, which are highly active symbols within the industry, thereby
creating a more active and liquid market for options traded on the
Exchange. Furthermore, the Exchange believes that these three symbols
have significant interest amongst retail options investors, as the
underlying stocks themselves are high-priced with each currently priced
above $150 per share. The proposed pricing incentive for Market Makers
is therefore meant to encourage more trading activity on the Exchange
amongst all market participant types by encouraging Market Makers to
maintain tight markets in these symbols.
The Exchange also believes that the proposed changes are not
unfairly discriminatory as all Market Makers can qualify for the same
rebates based on achieving the appropriate tier of Market Maker Plus in
AMZN, FB, and NVDA. Furthermore, the Exchange continues to believe that
it is not unfairly discriminatory to offer these rebates only to Market
Makers because Market Makers, and in particular, those Market Makers
that achieve Market Maker Plus status, are subject to additional
requirements and obligations (such as quoting requirements) that other
market participants are not.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed changes to Market
Maker Plus to introduce a separate rebate program for AMZN, FB, and
NVDA are designed to increase competition by encouraging Market Makers
to provide liquidity and maintain tight markets in these high volume
symbols on ISE. The Exchange operates in a highly competitive market in
which market participants can readily direct their order flow to
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. For the reasons described above, the
Exchange believes that the proposed fee changes reflect this
competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\12\ and Rule 19b-4(f)(2) \13\ 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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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 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-2019-07 on the subject line.
[[Page 11847]]
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-2019-07. 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-2019-07 and should be submitted on
or before April 18, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-05922 Filed 3-27-19; 8:45 am]
BILLING CODE 8011-01-P
