Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule at Options 7, 44114-44117 [2020-15688]
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Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices
explicitly recognizes NCUA’s authority
to examine and take any enforcement
actions, including conservatorship and
liquidation actions.
This information is necessary to
evaluate the safety and soundness of the
decision to open the branch and to
protect the interests of the National
Credit Union Share Insurance Fund.
Type of Review: Extension of a
currently approved collection.
Affected Public: Private Sector: Notfor-profit institutions.
Estimated Total Annual Burden
Hours: 33.
By Gerard Poliquin, Secretary of the
Board, the National Credit Union
Administration, on July 15, 2020.
Dated: July 16, 2020.
Dawn D. Wolfgang,
NCUA PRA Clearance Officer.
[FR Doc. 2020–15739 Filed 7–20–20; 8:45 am]
BILLING CODE 7535–01–P
POSTAL REGULATORY COMMISSION
[Docket Nos. CP2020–227; CP2020–228]
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: July 23,
2020.
SUMMARY:
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.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
jbell on DSKJLSW7X2PROD 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
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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.
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
3011.301.1
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 3030, and 39
CFR part 3040, 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 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: CP2020–227; Filing
Title: Notice of United States Postal
Service of Filing a Functionally
Equivalent Global Reseller Expedited
Package 2 Negotiated Service Agreement
and Application for Non-Public
Treatment of Materials Filed Under
Seal; Filing Acceptance Date: July 15,
2020; Filing Authority: 39 CFR
3035.105; Public Representative:
Gregory Stanton; Comments Due: July
23, 2020.
2. Docket No(s).: CP2020–228; Filing
Title: Notice of United States Postal
Service of Filing a Functionally
Equivalent Global Reseller Expedited
Package 2 Negotiated Service Agreement
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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and Application for Non-Public
Treatment of Materials Filed Under
Seal; Filing Acceptance Date: July 15,
2020; Filing Authority: 39 CFR
3035.105; Public Representative:
Gregory Stanton; Comments Due: July
23, 2020.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2020–15711 Filed 7–20–20; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89321; File No. SR–ISE–
2020–26]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Pricing Schedule at
Options 7
July 15, 2020.
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 1,
2020, 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 Pricing Schedule at Options
7, as described further below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/ise/rules, 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
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices
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
Pricing Schedule at Options 7. Each
change is described below.
Response Fees
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Today, for regular orders in NonSelect Symbols,3 the Exchange charges
all market participants a fee for
Responses to Crossing Orders 4 (except
PIM orders) that is $0.50 per contract.
For complex orders in Non-Select
Symbols, this Response fee is $0.91 per
contract for Market Makers 5 and $0.96
per contract for all other market
participants. In addition, for regular
orders in Select Symbols 6 and NonSelect Symbols, the Exchange currently
charges all market participants a fee for
Responses to PIM orders that is $0.35
per contract. For complex orders in both
Select and Non-Select Symbols, the PIM
Response fee is likewise $0.35 per
contract for all market participants.
The Exchange now proposes to
increase the Response fees described
above. Specifically, the fees for
Responses to Crossing Orders (except
PIM orders) in Non-Select Symbols for
both regular and complex orders will
increase to $1.10 per contract for all
market participants. In addition, the fees
for Responses to PIM orders in Select
Symbols for regular and complex orders
will increase to $0.50 per contract for all
market participants. Lastly, the fees for
Responses to PIM orders in Non-Select
Symbols for regular and complex orders
will increase to $1.10 per contract for all
market participants.
3 ‘‘Non-Select Symbols’’ are options overlying all
symbols excluding Select Symbols.
4 ‘‘Responses to Crossing Orders’’ is any contraside interest submitted after the commencement of
an auction in the Exchange’s Facilitation
Mechanism, Solicited Order Mechanism, Block
Order Mechanism or Price Improvement
Mechanism (‘‘PIM’’).
5 ‘‘Market Makers’’ are ‘‘Competitive Market
Makers’’ and ‘‘Primary Market Makers’’ collectively.
See Options 1, Section 1(a)(21).
6 ‘‘Select Symbols’’ are options overlying all
symbols listed on the Nasdaq ISE that are in the
Penny Interval Program.
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Facilitation and Solicitation Break-up
Rebate
Currently, the Exchange provides a
Facilitation and Solicitation break-up
rebate of $0.15 per contract for regular
and complex orders in Select Symbols.
This rebate applies to all Non-Nasdaq
ISE Market Maker,7 Firm Proprietary 8/
Broker-Dealer,9 Professional
Customer,10 and Priority Customer 11
orders submitted in the Facilitation and
Solicited Order Mechanisms that do not
trade with their contra order, except
when those contracts trade against preexisting orders and quotes on the
Exchange’s order books. The Exchange
now proposes to adopt the same breakup rebate for regular and complex
orders in Non-Select Symbols, and
apply the rebate in the same manner to
Non-Nasdaq ISE Market Maker, Firm
Proprietary/Broker-Dealer, Professional
Customer, and Priority Customer orders.
The Exchange also proposes technical
changes in note 4 of Options 7, Section
3 to revise ‘‘orderbooks’’ to ‘‘order
books,’’ and in the Crossing Order Fees
and Rebates table in Options 7, Section
4 to revise ‘‘Breakup Rebate’’ to ‘‘Breakup Rebate’’ for greater consistency with
the Pricing Schedule.
Taker Fees
The Exchange currently charges all
Non-Priority Customers 12 a taker fee of
$0.72 per contract for regular orders in
Non-Select Symbols (except NDX and
NQX).13 The Exchange now proposes to
increase this fee to $0.90 per contract for
all Non-Priority Customers.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,14 in general, and furthers the
7 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.
8 A ‘‘Firm Proprietary’’ order is an order
submitted by a member for its own proprietary
account.
9 A ‘‘Broker-Dealer’’ order is an order submitted
by a member for a broker-dealer account that is not
its own proprietary account.
10 A ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer.
11 A ‘‘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
Options 1, Section 1(a)(37).
12 Non-Priority Customers include Market
Makers, Non-Nasdaq ISE Market Makers (FarMMs),
Firm Proprietary/Broker-Dealers, and Professional
Customers.
13 NDX and NQX, which are Non-Select Symbols,
are presently subject to separate pricing for index
options in Section 5 of the Pricing Schedule.
14 15 U.S.C. 78f(b).
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44115
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,15 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’s proposed changes to
its Pricing Schedule are reasonable in
several respects. As a threshold matter,
the Exchange is subject to significant
competitive forces in the market for
options securities transaction services
that constrain its pricing determinations
in that market. The fact that this market
is competitive has long been recognized
by the courts. In NetCoalition v.
Securities and Exchange Commission,
the D.C. Circuit stated as follows: ‘‘[n]o
one disputes that competition for order
flow is ‘fierce.’ . . . As the SEC
explained, ‘[i]n the U.S. national market
system, buyers and sellers of securities,
and the broker-dealers that act as their
order-routing agents, have a wide range
of choices of where to route orders for
execution’; [and] ‘no exchange can
afford to take its market share
percentages for granted’ because ‘no
exchange possesses a monopoly,
regulatory or otherwise, in the execution
of order flow from broker
dealers’. . . .’’ 16
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 17
Numerous indicia demonstrate the
competitive nature of this market. For
example, clear substitutes to the
Exchange exist in the market for options
security transaction services. The
Exchange is only one of sixteen options
exchanges to which market participants
may direct their order flow. Within this
environment, market participants can
freely and often do shift their order flow
15 15
U.S.C. 78f(b)(4) and (5).
v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
17 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
16 NetCoalition
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Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices
among the Exchange and competing
venues in response to changes in their
respective pricing schedules. As such,
the proposal represents a reasonable
attempt by the Exchange to increase its
liquidity and market share relative to its
competitors.
Response Fees
The Exchange believes that the
proposed increase to the fees for
responses to Crossing Orders is
reasonable, equitable and not unfairly
discriminatory. With the proposed
changes, the response fees will now be
uniform at $0.50 per contract for regular
and complex orders in Select Symbols,
and at $1.10 per contract for regular and
complex orders in Non-Select Symbols,
in both cases across all Crossing Orders
and all market participant types. While
the response fees are increasing under
this proposal, the proposed fees are still
within the range of rates charged for
similar auction mechanisms at other
options exchanges.18
Facilitation and Solicitation Break-up
Rebate
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The Exchange believes that the
proposed Facilitation and Solicitation
break-up rebates for Non-Select Symbols
are reasonable because these incentives
will encourage use of the Facilitation
and Solicited Order Mechanisms.
Specifically, the Exchange believes that
the proposed rebates will encourage
increased originating regular and
complex Non-Nasdaq ISE Market Maker,
Firm Proprietary/Broker-Dealer,
Professional Customer, and Priority
Customer order flow to the Facilitation
and Solicited Order Mechanisms,
thereby potentially increasing the
initiation of and volume executed
through such auctions. Additional
auction order flow provides market
participants with additional trading
opportunities at potentially improved
prices. The Exchange further believes
that the proposed Facilitation and
Solicitation break-up rebates for NonSelect Symbols are set at reasonable
rates because they are aligned with the
break-up rebates currently provided for
Select Symbols, as discussed above.
18 See Nasdaq MRX (‘‘MRX’’) Pricing Schedule,
Options 7, Section 3, Table 2, and Section 5.E,
which set forth comparable rates for responses to
Crossing Orders on MRX. For example, MRX
charges all market participants a $0.50 per contract
fee for responses to Crossing Orders in Penny
Symbols and a $1.10 per contract fee for responses
to Crossing Orders in Non-Penny Symbols. See also
Cboe EDGX Options (‘‘EDGX’’) Fee Schedule,
‘‘Automated Improvement Mechanism (‘‘AIM’’) and
Solicitation Auction Mechanism (‘‘SAM’’) Pricing,’’
which charges all market participants a fee of $0.50
(Penny Pilot Securities) and $1.05 (Non-Penny Pilot
Securities) for AIM and SAM responses.
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The Exchange believes that the
proposed Facilitation and Solicitation
break-up rebates for Non-Select Symbols
are equitable and not unfairly
discriminatory because the proposed
rebates will apply equally to all nonMarket Maker originating orders
submitted to the Facilitation and
Solicited Order Mechanisms that do not
trade with their contra orders (except
when those originating contracts trade
against pre-existing orders and quotes
on the Exchange’s order books). While
Market Makers will not receive the
Facilitation and Solicitation break-up
rebates for Non-Select Symbols, the
Exchange believes that the application
of the rebate is equitable and not
unfairly discriminatory because Market
Makers are not eligible for Facilitation
and Solicitation break-up rebates in
Select Symbols today. In addition, the
Exchange currently offers Market
Makers other rebate programs that do
not apply to non-Market Makers, such
as the Market Maker Plus Program.
Taker Fees
The Exchange believes that the
proposed increase to the Non-Select
Symbol taker fees is reasonable,
equitable and not unfairly
discriminatory. With the proposed
changes, the taker fees will uniformly
increase to $0.90 per contract for all
Non-Priority Customers. The Exchange
notes that Priority Customers will
continue to be assessed no taker fee for
Non-Select Symbols under this
proposal. While the taker fees are
increasing for Non-Priority Customers,
the proposed fees are within the range
of taker fees at another options
exchange.19
The Exchange believes that it is
equitable and not unfairly
discriminatory to continue charging
Priority Customers no taker fees in NonSelect Symbols as the Exchange has
historically offered lower execution fees
or rebates to those market participants.
Furthermore, Priority Customer order
flow enhances liquidity on the
Exchange for the benefit of all market
participants by providing more trading
opportunities, which in turn attracts
Market Makers and other market
participants that may trade with this
order flow.
19 See Cboe C2 Options (‘‘C2’’) Fees Schedule,
‘‘Transaction Fees,’’ which charges the following
fees in Non-Penny Classes for orders that remove
liquidity: $0.85 for Public Customer orders, $0.90
for C2 Market Maker orders, and $0.93 for NonCustomer, Non-Market Maker orders (Professional
Customer, Firm, Broker/Dealer, non-C2 Market
Maker, JBO, etc.).
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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. In terms of
intra-market competition, the Exchange
does not believe that its proposal will
place any category of market participant
at a competitive disadvantage. The
proposed response fees for Crossing
Orders will be consistent across all
market participants, as discussed above.
In addition, the Facilitation and
Solicitation break-up rebates proposed
for Non-Select Symbols will be applied
to market participants in the same
manner as the Facilitation and
Solicitation break-up rebates are applied
today for Select Symbols. Lastly, the
Non-Select Symbol taker fees will be
increased uniformly across all NonPriority Customers while Priority
Customers will continue to be charged
no taker fee.
In terms of inter-market competition,
the Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges. Because competitors are free
to modify their own fees in response,
and because market participants may
readily adjust their order routing
practices, the Exchange believes that the
degree to which fee changes in this
market may impose any burden on
competition is extremely limited. In this
instance, while the Exchange is
increasing the response fees and taker
fees in the manner discussed above, the
Exchange does not believe this will
cause an undue burden on competition
as the increased fees are still within the
range of similar fees charged by other
options exchanges.
In sum, if the changes proposed
herein are unattractive to market
participants, it is likely that the
Exchange will lose market share as a
result. Accordingly, the Exchange does
not believe that the proposed changes
will impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
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Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices
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 20 and Rule
19b–4(f)(2) 21 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:
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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–2020–26 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–2020–26. 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
20 15
21 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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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–2020–26 and should be
submitted on or before August 11, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–15688 Filed 7–20–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33927; File No. 812–14987]
FS Global Credit Opportunities Fund,
et al.
July 15, 2020.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of application for an order
under sections 17(d) and 57(i) of the
Investment Company Act of 1940 (the
‘‘Act’’) and rule 17d–1 under the Act to
permit certain joint transactions
otherwise prohibited by sections 17(d)
and 57(a)(4) of the Act and rule 17d–1
under the Act.
Summary of Application: Applicants
request an order to permit certain
business development companies
(‘‘BDCs’’) 1 and closed-end management
investment companies to co-invest in
portfolio companies with each other and
CFR 200.30–3(a)(12).
2(a)(48) defines a BDC to be any closedend investment company that operates for the
purpose of making investments in securities
described in section 55(a)(1) through 55(a)(3) and
makes available significant managerial assistance
with respect to the issuers of such securities.
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1 Section
Frm 00079
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44117
with affiliated investment funds and
accounts.
Applicants: FS Global Credit
Opportunities Fund (the ‘‘Fund’’); FS
Global Advisor, LLC (‘‘FS’’); FS Tactical
Opportunities Fund, L.P. (‘‘Existing
Affiliated Fund’’); and FS Tactical
Advisor, LLC (‘‘Affiliated Fund
Advisor’’, and together with the Fund,
FS and the Existing Affiliated Fund, the
‘‘Applicants’’).
Filing Dates: The application was
filed on December 17, 2018, and
amended on May 20, 2019, October 1,
2019, January 24, 2020, April 23, 2020
and June 30, 2020.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by emailing the
Commission’s Secretary at SecretarysOffice@sec.gov and serving Applicants
with a copy of the request by email.
Hearing requests should be received by
the Commission by 5:30 p.m. on August
10, 2020 and should be accompanied by
proof of service on the Applicants, in
the form of an affidavit or, for lawyers,
a certificate of service. Pursuant to rule
0–5 under the Act, hearing requests
should state the nature of the writer’s
interest, any facts bearing upon the
desirability of a hearing on the matter,
the reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by emailing the
Commission’s Secretary at SecretarysOffice@sec.gov.
ADDRESSES: Secretary, U.S. Securities &
Exchange Commission: SecretarysOffice@sec.gov. Applicants:
legalnotices@fsinvestment.com.
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Counsel, at
(202) 551–6990, or Trace W. Rakestraw,
Branch Chief, at (202) 551–6825
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or for an applicant using the
Company name box at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Introduction
1. The Applicants request an order of
the Commission under sections 17(d)
and 57(i) of the Act and rule 17d–1
thereunder (the ‘‘Order’’) to permit,
subject to the terms and conditions set
forth in the application (the
E:\FR\FM\21JYN1.SGM
21JYN1
]]>Agencies
[Federal Register Volume 85, Number 140 (Tuesday, July 21, 2020)]
[Notices]
[Pages 44114-44117]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15688]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89321; File No. SR-ISE-2020-26]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Pricing Schedule at Options 7
July 15, 2020.
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 1, 2020, 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 Exchange's Pricing Schedule at
Options 7, as described further below.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/ise/rules, 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
[[Page 44115]]
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
Pricing Schedule at Options 7. Each change is described below.
Response Fees
Today, for regular orders in Non-Select Symbols,\3\ the Exchange
charges all market participants a fee for Responses to Crossing Orders
\4\ (except PIM orders) that is $0.50 per contract. For complex orders
in Non-Select Symbols, this Response fee is $0.91 per contract for
Market Makers \5\ and $0.96 per contract for all other market
participants. In addition, for regular orders in Select Symbols \6\ and
Non-Select Symbols, the Exchange currently charges all market
participants a fee for Responses to PIM orders that is $0.35 per
contract. For complex orders in both Select and Non-Select Symbols, the
PIM Response fee is likewise $0.35 per contract for all market
participants.
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\3\ ``Non-Select Symbols'' are options overlying all symbols
excluding Select Symbols.
\4\ ``Responses to Crossing Orders'' 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 Price Improvement Mechanism (``PIM'').
\5\ ``Market Makers'' are ``Competitive Market Makers'' and
``Primary Market Makers'' collectively. See Options 1, Section
1(a)(21).
\6\ ``Select Symbols'' are options overlying all symbols listed
on the Nasdaq ISE that are in the Penny Interval Program.
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The Exchange now proposes to increase the Response fees described
above. Specifically, the fees for Responses to Crossing Orders (except
PIM orders) in Non-Select Symbols for both regular and complex orders
will increase to $1.10 per contract for all market participants. In
addition, the fees for Responses to PIM orders in Select Symbols for
regular and complex orders will increase to $0.50 per contract for all
market participants. Lastly, the fees for Responses to PIM orders in
Non-Select Symbols for regular and complex orders will increase to
$1.10 per contract for all market participants.
Facilitation and Solicitation Break-up Rebate
Currently, the Exchange provides a Facilitation and Solicitation
break-up rebate of $0.15 per contract for regular and complex orders in
Select Symbols. This rebate applies to all Non-Nasdaq ISE Market
Maker,\7\ Firm Proprietary \8\/Broker-Dealer,\9\ Professional
Customer,\10\ and Priority Customer \11\ orders submitted in the
Facilitation and Solicited Order Mechanisms that do not trade with
their contra order, except when those contracts trade against pre-
existing orders and quotes on the Exchange's order books. The Exchange
now proposes to adopt the same break-up rebate for regular and complex
orders in Non-Select Symbols, and apply the rebate in the same manner
to Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-Dealer,
Professional Customer, and Priority Customer orders. The Exchange also
proposes technical changes in note 4 of Options 7, Section 3 to revise
``orderbooks'' to ``order books,'' and in the Crossing Order Fees and
Rebates table in Options 7, Section 4 to revise ``Breakup Rebate'' to
``Break-up Rebate'' for greater consistency with the Pricing Schedule.
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\7\ 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.
\8\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account.
\9\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
\10\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
\11\ A ``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 Options 1,
Section 1(a)(37).
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Taker Fees
The Exchange currently charges all Non-Priority Customers \12\ a
taker fee of $0.72 per contract for regular orders in Non-Select
Symbols (except NDX and NQX).\13\ The Exchange now proposes to increase
this fee to $0.90 per contract for all Non-Priority Customers.
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\12\ Non-Priority Customers include Market Makers, Non-Nasdaq
ISE Market Makers (FarMMs), Firm Proprietary/Broker-Dealers, and
Professional Customers.
\13\ NDX and NQX, which are Non-Select Symbols, are presently
subject to separate pricing for index options in Section 5 of the
Pricing Schedule.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\14\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\15\ 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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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed changes to its Pricing Schedule are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for options
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .'' \16\
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\16\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \17\
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\17\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options security transaction services. The Exchange is only one of
sixteen options exchanges to which market participants may direct their
order flow. Within this environment, market participants can freely and
often do shift their order flow
[[Page 44116]]
among the Exchange and competing venues in response to changes in their
respective pricing schedules. As such, the proposal represents a
reasonable attempt by the Exchange to increase its liquidity and market
share relative to its competitors.
Response Fees
The Exchange believes that the proposed increase to the fees for
responses to Crossing Orders is reasonable, equitable and not unfairly
discriminatory. With the proposed changes, the response fees will now
be uniform at $0.50 per contract for regular and complex orders in
Select Symbols, and at $1.10 per contract for regular and complex
orders in Non-Select Symbols, in both cases across all Crossing Orders
and all market participant types. While the response fees are
increasing under this proposal, the proposed fees are still within the
range of rates charged for similar auction mechanisms at other options
exchanges.\18\
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\18\ See Nasdaq MRX (``MRX'') Pricing Schedule, Options 7,
Section 3, Table 2, and Section 5.E, which set forth comparable
rates for responses to Crossing Orders on MRX. For example, MRX
charges all market participants a $0.50 per contract fee for
responses to Crossing Orders in Penny Symbols and a $1.10 per
contract fee for responses to Crossing Orders in Non-Penny Symbols.
See also Cboe EDGX Options (``EDGX'') Fee Schedule, ``Automated
Improvement Mechanism (``AIM'') and Solicitation Auction Mechanism
(``SAM'') Pricing,'' which charges all market participants a fee of
$0.50 (Penny Pilot Securities) and $1.05 (Non-Penny Pilot
Securities) for AIM and SAM responses.
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Facilitation and Solicitation Break-up Rebate
The Exchange believes that the proposed Facilitation and
Solicitation break-up rebates for Non-Select Symbols are reasonable
because these incentives will encourage use of the Facilitation and
Solicited Order Mechanisms. Specifically, the Exchange believes that
the proposed rebates will encourage increased originating regular and
complex Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-Dealer,
Professional Customer, and Priority Customer order flow to the
Facilitation and Solicited Order Mechanisms, thereby potentially
increasing the initiation of and volume executed through such auctions.
Additional auction order flow provides market participants with
additional trading opportunities at potentially improved prices. The
Exchange further believes that the proposed Facilitation and
Solicitation break-up rebates for Non-Select Symbols are set at
reasonable rates because they are aligned with the break-up rebates
currently provided for Select Symbols, as discussed above.
The Exchange believes that the proposed Facilitation and
Solicitation break-up rebates for Non-Select Symbols are equitable and
not unfairly discriminatory because the proposed rebates will apply
equally to all non-Market Maker originating orders submitted to the
Facilitation and Solicited Order Mechanisms that do not trade with
their contra orders (except when those originating contracts trade
against pre-existing orders and quotes on the Exchange's order books).
While Market Makers will not receive the Facilitation and Solicitation
break-up rebates for Non-Select Symbols, the Exchange believes that the
application of the rebate is equitable and not unfairly discriminatory
because Market Makers are not eligible for Facilitation and
Solicitation break-up rebates in Select Symbols today. In addition, the
Exchange currently offers Market Makers other rebate programs that do
not apply to non-Market Makers, such as the Market Maker Plus Program.
Taker Fees
The Exchange believes that the proposed increase to the Non-Select
Symbol taker fees is reasonable, equitable and not unfairly
discriminatory. With the proposed changes, the taker fees will
uniformly increase to $0.90 per contract for all Non-Priority
Customers. The Exchange notes that Priority Customers will continue to
be assessed no taker fee for Non-Select Symbols under this proposal.
While the taker fees are increasing for Non-Priority Customers, the
proposed fees are within the range of taker fees at another options
exchange.\19\
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\19\ See Cboe C2 Options (``C2'') Fees Schedule, ``Transaction
Fees,'' which charges the following fees in Non-Penny Classes for
orders that remove liquidity: $0.85 for Public Customer orders,
$0.90 for C2 Market Maker orders, and $0.93 for Non-Customer, Non-
Market Maker orders (Professional Customer, Firm, Broker/Dealer,
non-C2 Market Maker, JBO, etc.).
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The Exchange believes that it is equitable and not unfairly
discriminatory to continue charging Priority Customers no taker fees in
Non-Select Symbols as the Exchange has historically offered lower
execution fees or rebates to those market participants. Furthermore,
Priority Customer order flow enhances liquidity on the Exchange for the
benefit of all market participants by providing more trading
opportunities, which in turn attracts Market Makers and other market
participants that may trade with this order flow.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In terms of intra-market
competition, the Exchange does not believe that its proposal will place
any category of market participant at a competitive disadvantage. The
proposed response fees for Crossing Orders will be consistent across
all market participants, as discussed above. In addition, the
Facilitation and Solicitation break-up rebates proposed for Non-Select
Symbols will be applied to market participants in the same manner as
the Facilitation and Solicitation break-up rebates are applied today
for Select Symbols. Lastly, the Non-Select Symbol taker fees will be
increased uniformly across all Non-Priority Customers while Priority
Customers will continue to be charged no taker fee.
In terms of inter-market competition, the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges. Because competitors are free to modify their own fees in
response, and because market participants may readily adjust their
order routing practices, the Exchange believes that the degree to which
fee changes in this market may impose any burden on competition is
extremely limited. In this instance, while the Exchange is increasing
the response fees and taker fees in the manner discussed above, the
Exchange does not believe this will cause an undue burden on
competition as the increased fees are still within the range of similar
fees charged by other options exchanges.
In sum, if the changes proposed herein are unattractive to market
participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.
[[Page 44117]]
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 \20\ and Rule 19b-4(f)(2) \21\ 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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\20\ 15 U.S.C. 78s(b)(3)(A)(ii).
\21\ 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-2020-26 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-2020-26. 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-2020-26 and should be submitted on
or before August 11, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-15688 Filed 7-20-20; 8:45 am]
BILLING CODE 8011-01-P
