82 FR 37966 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 155 (August 14, 2017)

Page Range		37966-37969
FR Document		2017-17065
Federal Register, Volume 82 Issue 155 (Monday, August 14, 2017)
[Federal Register Volume 82, Number 155 (Monday, August 14, 2017)]
[Notices]
[Pages 37966-37969]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-17065]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81350; File No. SR-ISE-2017-77]


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

August 8, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 1, 2017, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``SEC'' or ``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 its Schedule of Fees to (1) 
eliminate Priority Customer complex order rebates for all net zero 
complex orders without any associated average daily volume requirement, 
and (2) reduce the maker fee charged to Market Makers and Non-Nasdaq 
ISE Market Makers for Regular Orders in Select Symbols when trading 
against Priority Customer complex orders that leg into the regular 
order book.
    The text of the proposed rule change is available on the Exchange's 
Web site at www.ise.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

[[Page 37967]]

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 Schedule of 
Fees to (1) eliminate Priority Customer \3\ complex order rebates for 
all net zero complex orders without any associated average daily volume 
(``ADV'') requirement, and (2) reduce the maker fee charged to Market 
Makers \4\ and Non-Nasdaq ISE Market Makers \5\ for Regular Orders in 
Select Symbols \6\ when trading against Priority Customer complex 
orders that leg into the regular order book. These changes are designed 
to eliminate rebate arbitrage where market participants enter valueless 
complex orders solely for the purpose of earning a rebate, and to 
reduce disincentives for Market Makers to provide liquidity on the 
Exchange.
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    \3\ A ``Priority Customer'' is a person or entity that is not a 
broker/dealer in securities, and does not place more than 390 orders 
in listed options per day on average during a calendar month for its 
own beneficial account(s), as defined in Nasdaq ISE Rule 
100(a)(37A).
    \4\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule 
100(a)(25).
    \5\ A ``Non-Nasdaq ISE Market Maker'' is a market maker as 
defined in Section 3(a)(38) of the Securities Exchange Act of 1934, 
as amended, registered in the same options class on another options 
exchange.
    \6\ ``Select Symbols'' are options overlying all symbols listed 
on the Nasdaq ISE that are in the Penny Pilot Program.
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    Currently, the Exchange does not provide Priority Customer rebates 
for complex orders that that leg in to the regular order book and trade 
at a net price per contract that is at or near $0.00 (i.e., net zero 
complex orders), provided those orders are entered on behalf of 
originating market participants that execute an ADV of at least 1,000 
contracts in net zero complex orders in a given month. For purposes of 
determining which complex orders qualify as net zero the Exchange 
counts all complex orders that leg in to the regular order book and are 
executed at a net price per contract that is within a range of $0.01 
credit and $0.01 debit. The Exchange now proposes to eliminate Priority 
Customer complex order rebates for all net zero complex orders, 
regardless of whether the order is entered on behalf of originating 
market participants that execute a specified ADV of net zero complex 
orders.
    Priority Customer complex orders are typically eligible for tiered 
rebates that range from $0.26 per contract (i.e., for Tier 1) to $0.49 
per contract (i.e., for Tier 8) depending on the member's Priority 
Customer Complex ADV. Pursuant to the provision described above, 
however, the Exchange does not provide these rebates for net zero 
complex orders entered on behalf of originating market participants 
that execute a significant ADV of these orders in a given month. This 
provision is designed to prevent members from engaging in rebate 
arbitrage by entering essentially valueless complex orders solely to 
recover rebates. While net zero complex orders would generally not find 
a counterparty in the complex order book, they may leg in to the 
regular order book where they are typically executed by Market Makers 
or other market participants on the individual legs who pay a fee to 
trade with this order flow. Market Makers have continued to express 
concerns about trading against net zero complex orders that leg into 
the regular market, as offending firms modify their behavior to stay 
within the ADV requirements set by the Exchange. These Market Makers 
have indicated that continued interaction with these economically 
valueless orders impedes their ability to provide liquidity on the 
Exchange as they are charged to trade against these net zero complex 
orders when they leg into the regular market and execute against their 
quotes.
    The Exchange believes that it is in the interest of a fair and 
orderly market to provide appropriate incentives for Market Makers to 
maintain quality markets. As a result, the Exchange has instituted 
several programs that are aimed at incentivizing Market Makers to 
provide liquidity, including, for example, the Market Maker Plus 
program, which rewards Market Makers for routinely quoting at the 
national best bid or offer.\7\ Despite the Exchange's efforts to date, 
market participants have continued to enter valueless net zero complex 
orders and may earn rebates for those orders if they stay within the 
ADV threshold described in the rule. In particular, today, market 
participants can reduce their ADV in net zero complex orders and/or 
split their net zero order flow across multiple originating market 
participants to stay within the ADV thresholds set by the Exchange, and 
thereby qualify for Priority Customer complex order rebates. The 
Exchange believes that it is appropriate at this time to completely 
remove incentives for trading net zero complex orders by eliminating 
the current ADV threshold. With this proposed change, all net zero 
complex orders will be ineligible for Priority Customer complex order 
rebates. Eliminating the ADV requirement will discourage market 
participants from engaging in this economically valueless conduct, 
which impedes Market Makers' ability to maintain quality markets, as no 
net zero complex orders will be rebate eligible. Priority Customer 
complex orders that do not meet the definition of a net zero complex 
order will continue to receive rebates based on the tier achieved.
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    \7\ See ISE Schedule of Fees, Section I., Regular Order Fees and 
Rebates.
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    In addition, the Exchange proposes to reduce the fee charged to 
Market Makers and Non-Nasdaq ISE Market Makers for Regular Orders in 
Select Symbols when trading against Priority Customer complex orders 
that leg into the regular book. Currently, Market Makers (including 
Market Makers that qualify for Market Maker Plus) \8\ and Non-Nasdaq 
ISE Market Makers are charged a maker fee of $0.30 per contract for 
Regular Orders in Select Symbols when trading against Priority Customer 
complex orders that leg into the regular order book.\9\ This higher 
maker fee was originally adopted because the Exchange pays a rebate to 
Priority Customer complex orders that leg into the regular order book. 
With the changes described above, the Exchange believes that it is 
appropriate to revisit this fee, and now proposes to reduce the fee to 
$0.10 per contract. This change will reduce disincentives for Market 
Makers

[[Page 37968]]

to provide liquidity to the benefit of all market participants that 
trade on the Exchange.\10\
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    \8\ A Market Maker Plus is a Market Maker who is on the National 
Best Bid or National Best Offer a specified percentage of the time 
for 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 in each of the front two expiration 
months. The specified percentage is at least 80% but lower than 85% 
of the time for Tier 1, at least 85% but lower than 95% of the time 
for Tier 2, and at least 95% of the time for Tier 3. A Market 
Maker's single best and single worst quoting days each month based 
on the front two expiration months, on a per symbol basis, will be 
excluded in calculating whether a Market Maker qualifies for this 
rebate, if doing so will qualify a Market Maker for the rebate.
    \9\ Market Makers that qualify for Market Maker Plus are not 
charged a fee or provided a rebate when trading against non-Priority 
Customer complex orders that leg into the regular order book. Other 
Market Makers and Non-Nasdaq ISE Market Makers are charged the 
regular $0.10 per contract fee when trading against non-Priority 
Customer complex orders that leg into the regular order book.
    \10\ With the proposed fee reduction, Market Makers (other than 
those that qualify for Market Maker Plus) and Non-Nasdaq ISE Market 
Makers will be charged a maker fee of $0.10 per contract for Regular 
Orders in Select Symbols regardless of the order on the other side 
of the trade. The Exchange therefore proposes to effectuate this 
change by deleting footnote 11.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\11\ in general, and 
Section 6(b)(4) of the Act,\12\ in particular, in that it is designed 
to provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and other persons using its facilities.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable and equitable to remove 
the ADV threshold from the net zero provision in the Schedule of Fees 
as this change is designed to remove financial incentives for market 
participants to engage in rebate arbitrage by entering net zero complex 
orders on the Exchange that do not have any economic substance. With 
the current provision, offending firms have repeatedly found ways to 
continue to submit these economically valueless orders to the detriment 
of the Exchange and market participants that trade on the Exchange. The 
continued submission of these net zero complex orders by a handful of 
market participants has generated complaints from the Market Makers 
that trade against these orders in the regular order book, as firms 
recognize these net zero complex orders as essentially non-economic. 
The Exchange believes that eliminating the ADV threshold will take away 
the incentives for firms to continue to enter net zero complex orders 
purely to earn a rebate, thereby reducing the cost of these trades to 
the Exchange and its members.
    Market Makers may be impeded in providing liquidity when doing so 
may result in trading against these net zero complex orders that leg 
into the regular market. The Exchange believes that it is important 
that Market Makers be properly incentivized to maintain quality 
markets, and is therefore proposing to take steps to eliminate the 
incentives for market participants to enter net zero complex orders. 
Priority Customer complex orders, including net zero complex orders 
that leg in to the regular order book, are currently paid significant 
rebates by the Exchange, which are funded in part by charging higher 
fees to the market participants that trade against these orders. The 
Exchange believes that eliminating the ADV requirement in this 
provision will discourage market participants from entering valueless 
net zero complex orders, which are entered for the sole purpose of 
earning a rebate. As a result, the Exchange believes that Market Makers 
will be aided in their role of providing liquidity and maintaining 
quality markets to the benefit of all market participants that trade on 
the Exchange.
    Furthermore, the Exchange believes that the proposed change is not 
unfairly discriminatory as it is designed to stop market participants 
from taking advantage of Exchange rebates by entering orders that lack 
economic substance. The Exchange is proposing to eliminate Priority 
Customer complex order rebates for all market participants, regardless 
of their ADV in this activity. Thus, all market participants that enter 
net zero complex orders will be uniformly denied rebates for those 
orders. To the extent that those market participants execute non-net 
zero complex orders, however, they will continue to receive Priority 
Customer complex order rebates based on their ADV in that activity. The 
Exchange does not believe that it is unfairly discriminatory to 
eliminate the ADV threshold for net zero complex orders since the 
elimination of this threshold means that no market participants will 
receive rebates for these orders.
    The Exchange also believes that it is reasonable and equitable 
reduce the maker fee charged to Market Makers and Non-Nasdaq ISE Market 
Makers for Regular Orders in Select Symbols when trading against 
Priority Customer complex orders that leg into the regular order book. 
With the changes described above related to net zero complex orders, 
which will eliminate rebates for certain Priority Customer complex 
orders that leg in to the regular order book, the Exchange believes 
that it is appropriate to also reduce the amount charged to Market 
Makers when trading against such Priority Customer complex orders in 
the regular order book. Furthermore, the Exchange believes that 
reducing the fee charged to Market Makers and Non-Nasdaq ISE Makers 
when trading against Priority Customer complex order that leg into the 
regular order book will increase incentives for those firms to provide 
liquidity to the benefit of all market participants that trade on the 
Exchange. The Exchange does not believe that this change is unfairly 
discriminatory as the same $0.10 per contract maker fee applies to 
Market Makers (other than those that qualify for Market Maker Plus) and 
Non-Nasdaq ISE Market Makers when trading against other orders in these 
symbols, and is also the same as the maker fees charged to Firm 
Proprietary,\13\ Broker-Dealer,\14\ and Professional Customer 
orders.\15\
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    \13\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \14\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account.
    \15\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\16\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. By eliminating 
the ADV requirement applicable to the Exchange's net zero complex order 
provision in the Schedule of Fees, the proposed rule change is designed 
to eliminate the ability for certain market participants to engage in 
rebate arbitrage to the detriment of the Exchange and its members. 
Rather than impede competition, the Exchange believes that this change 
will enhance competition by enabling Market Makers to step up and 
maintain quality markets to the benefit of all market participants that 
trade on the Exchange. In addition, the reduction of Market Maker and 
Non-Nasdaq ISE Market Maker fees for trading against Priority Customer 
complex orders that leg into the regular order book will also further 
competition as the fees are consistent with those charged to other 
market participants. The Exchange operates in a highly competitive 
market in which market participants can readily direct their order flow 
to competing venues. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees and rebates to 
remain competitive with other exchanges. For the reasons described 
above, the Exchange believes that the proposed fee changes reflect this 
competitive environment.
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    \16\ 15 U.S.C. 78f(b)(8).
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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.

[[Page 37969]]

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,\17\ and Rule 19b-4(f)(2) \18\ 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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    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \18\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-ISE-2017-77 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-2017-77. 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 Web site (http://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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ISE-2017-77 and should be 
submitted on or before September 5, 2017.
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    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-17065 Filed 8-11-17; 8:45 am]
 BILLING CODE 8011-01-P
37966 Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices

technical resources than regulating non- If the Commission takes such action, the For the Commission, by the Division of
Customer trading activity, which tends Commission shall institute proceedings Trading and Markets, pursuant to delegated
to be more automated and less labor to determine whether the proposed rule authority.14
intensive. As a result, the costs should be approved or disapproved. Eduardo A. Aleman,
associated with administering the Assistant Secretary.
IV. Solicitation of Comments
Customer component of the Exchange’s [FR Doc. 2017–17048 Filed 8–11–17; 8:45 am]
overall regulatory program are Interested persons are invited to BILLING CODE 8011–01–P
anticipated to be typically higher than submit written data, views, and
the costs associated with administering arguments concerning the foregoing,
the non-Customer component of its including whether the proposed rule SECURITIES AND EXCHANGE
regulatory program. The Exchange change is consistent with the Act. COMMISSION
proposes assessing higher fees to those Comments may be submitted by any of [Release No. 34–81350; File No. SR–ISE–
members that will require more the following methods: 2017–77]
Exchange regulatory services based on
the amount of Customer options Electronic Comments
Self-Regulatory Organizations; Nasdaq
business they conduct. Additionally, the • Use the Commission’s Internet ISE, LLC; Notice of Filing and
dues and fees paid by members go into comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed
the general funds of the Exchange, a rules/sro.shtml); or Rule Change To Amend Its Schedule of
portion of which is used to help pay the • Send an email to rule-comments@ Fees
costs of regulation. The Exchange has in sec.gov. Please include File No. SR–
place a regulatory structure to surveil, August 8, 2017.
Phlx–2017–54 on the subject line. Pursuant to Section 19(b)(1) of the
conduct examinations and monitor the
marketplace for violations of Exchange Paper Comments Securities Exchange Act of 1934
Rules. The ORF assists the Exchange to (‘‘Act’’),1 and Rule 19b–4 thereunder,2
• Send paper comments in triplicate notice is hereby given that on August 1,
fund the cost of this regulation of the
to Secretary, Securities and Exchange 2017, Nasdaq ISE, LLC (‘‘ISE’’ or
marketplace.
Commission, 100 F Street NE., ‘‘Exchange’’) filed with the Securities
B. Self-Regulatory Organization’s Washington, DC 20549–1090. and Exchange Commission (‘‘SEC’’ or
Statement on Burden on Competition All submissions should refer to File No. ‘‘Commission’’) the proposed rule
The Exchange does not believe that SR–Phlx–2017–54. This file number change as described in Items I and II,
the proposed rule change will impose should be included on the subject line below, which Items have been prepared
any burden on competition not if email is used. To help the by the Exchange. The Commission is
necessary or appropriate in furtherance Commission process and review your publishing this notice to solicit
of the purposes of the Act. The ORF is comments more efficiently, please use comments on the proposed rule change
not intended to have any impact on only one method. The Commission will from interested persons.
competition. Rather, it is designed to post all comments on the Commission’s I. Self-Regulatory Organization’s
enable the Exchange to recover a Internet Web site (http://www.sec.gov/ Statement of the Terms of Substance of
material portion of the Exchange’s cost rules/sro.shtml). Copies of the the Proposed Rule Change
related to its regulatory activities. The submission, all subsequent
Exchange is obligated to ensure that the amendments, all written statements The Exchange proposes to amend its
amount of regulatory revenue collected with respect to the proposed rule Schedule of Fees to (1) eliminate
from the ORF, in combination with its change that are filed with the Priority Customer complex order rebates
other regulatory fees and fines, does not Commission, and all written for all net zero complex orders without
exceed regulatory costs. communications relating to the any associated average daily volume
proposed rule change between the requirement, and (2) reduce the maker
C. Self-Regulatory Organization’s fee charged to Market Makers and Non-
Statement on Comments on the Commission and any person, other than
those that may be withheld from the Nasdaq ISE Market Makers for Regular
Proposed Rule Change Received From Orders in Select Symbols when trading
Members, Participants, or Others public in accordance with the
provisions of 5 U.S.C. 552, will be against Priority Customer complex
No written comments were either available for Web site viewing and orders that leg into the regular order
solicited or received. printing in the Commission’s Public book.
III. Date of Effectiveness of the Reference Room, 100 F Street NE., The text of the proposed rule change
Proposed Rule Change and Timing for Washington, DC 20549, on official is available on the Exchange’s Web site
Commission Action business days between the hours of at www.ise.com, at the principal office
10:00 a.m. and 3:00 p.m. Copies of the of the Exchange, and at the
The foregoing rule change has become Commission’s Public Reference Room.
filing also will be available for
effective pursuant to Section
inspection and copying at the principal II. Self-Regulatory Organization’s
19(b)(3)(A)(ii) of the Act.13
At any time within 60 days of the office of the Exchange. All comments Statement of the Purpose of, and
filing of the proposed rule change, the received will be posted without change; Statutory Basis for, the Proposed Rule
Commission summarily may the Commission does not edit personal Change
identifying information from
sradovich on DSK3GMQ082PROD with NOTICES

temporarily suspend such rule change if In its filing with the Commission, the
it appears to the Commission that such submissions. You should submit only
information that you wish to make Exchange included statements
action is: (i) Necessary or appropriate in concerning the purpose of and basis for
the public interest; (ii) for the protection available publicly.
the proposed rule change and discussed
of investors; or (iii) otherwise in All submissions should refer to File No.
furtherance of the purposes of the Act. SR–Phlx–2017–54, and should be 14 17 CFR 200.30–3(a)(12).
submitted on or before September 5, 1 15 U.S.C. 78s(b)(1).
13 15 U.S.C. 78s(b)(3)(A)(ii). 2017. 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 16:45 Aug 11, 2017 Jkt 241001 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 E:\FR\FM\14AUN1.SGM 14AUN1
37968 Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices

to provide liquidity to the benefit of all which are funded in part by charging Market Makers (other than those that
market participants that trade on the higher fees to the market participants qualify for Market Maker Plus) and Non-
Exchange.10 that trade against these orders. The Nasdaq ISE Market Makers when
Exchange believes that eliminating the trading against other orders in these
2. Statutory Basis
ADV requirement in this provision will symbols, and is also the same as the
The Exchange believes that the discourage market participants from maker fees charged to Firm
proposed rule change is consistent with entering valueless net zero complex Proprietary,13 Broker-Dealer,14 and
the provisions of Section 6 of the Act,11 orders, which are entered for the sole Professional Customer orders.15
in general, and Section 6(b)(4) of the purpose of earning a rebate. As a result,
Act,12 in particular, in that it is designed the Exchange believes that Market B. Self-Regulatory Organization’s
to provide for the equitable allocation of Makers will be aided in their role of Statement on Burden on Competition
reasonable dues, fees, and other charges providing liquidity and maintaining In accordance with Section 6(b)(8) of
among its members and other persons quality markets to the benefit of all the Act,16 the Exchange does not believe
using its facilities. market participants that trade on the that the proposed rule change will
The Exchange believes that it is Exchange. impose any burden on intermarket or
reasonable and equitable to remove the Furthermore, the Exchange believes intramarket competition that is not
ADV threshold from the net zero that the proposed change is not unfairly necessary or appropriate in furtherance
provision in the Schedule of Fees as this discriminatory as it is designed to stop of the purposes of the Act. By
change is designed to remove financial market participants from taking eliminating the ADV requirement
incentives for market participants to advantage of Exchange rebates by applicable to the Exchange’s net zero
engage in rebate arbitrage by entering entering orders that lack economic complex order provision in the
net zero complex orders on the substance. The Exchange is proposing to Schedule of Fees, the proposed rule
Exchange that do not have any eliminate Priority Customer complex change is designed to eliminate the
economic substance. With the current order rebates for all market participants, ability for certain market participants to
provision, offending firms have regardless of their ADV in this activity. engage in rebate arbitrage to the
repeatedly found ways to continue to Thus, all market participants that enter detriment of the Exchange and its
submit these economically valueless net zero complex orders will be members. Rather than impede
orders to the detriment of the Exchange uniformly denied rebates for those competition, the Exchange believes that
and market participants that trade on orders. To the extent that those market this change will enhance competition by
the Exchange. The continued participants execute non-net zero enabling Market Makers to step up and
submission of these net zero complex complex orders, however, they will maintain quality markets to the benefit
orders by a handful of market continue to receive Priority Customer of all market participants that trade on
participants has generated complaints complex order rebates based on their the Exchange. In addition, the reduction
from the Market Makers that trade ADV in that activity. The Exchange does of Market Maker and Non-Nasdaq ISE
against these orders in the regular order not believe that it is unfairly Market Maker fees for trading against
book, as firms recognize these net zero discriminatory to eliminate the ADV Priority Customer complex orders that
complex orders as essentially non- threshold for net zero complex orders leg into the regular order book will also
economic. The Exchange believes that since the elimination of this threshold further competition as the fees are
eliminating the ADV threshold will take means that no market participants will consistent with those charged to other
away the incentives for firms to receive rebates for these orders. market participants. The Exchange
continue to enter net zero complex The Exchange also believes that it is operates in a highly competitive market
reasonable and equitable reduce the
orders purely to earn a rebate, thereby in which market participants can
maker fee charged to Market Makers and
reducing the cost of these trades to the readily direct their order flow to
Non-Nasdaq ISE Market Makers for
Exchange and its members. competing venues. In such an
Regular Orders in Select Symbols when
Market Makers may be impeded in environment, the Exchange must
trading against Priority Customer
providing liquidity when doing so may continually review, and consider
complex orders that leg into the regular
result in trading against these net zero adjusting, its fees and rebates to remain
order book. With the changes described
complex orders that leg into the regular competitive with other exchanges. For
above related to net zero complex
market. The Exchange believes that it is the reasons described above, the
orders, which will eliminate rebates for
important that Market Makers be Exchange believes that the proposed fee
certain Priority Customer complex
properly incentivized to maintain orders that leg in to the regular order changes reflect this competitive
quality markets, and is therefore book, the Exchange believes that it is environment.
proposing to take steps to eliminate the appropriate to also reduce the amount C. Self-Regulatory Organization’s
incentives for market participants to charged to Market Makers when trading Statement on Comments on the
enter net zero complex orders. Priority against such Priority Customer complex Proposed Rule Change Received From
Customer complex orders, including net orders in the regular order book. Members, Participants, or Others
zero complex orders that leg in to the Furthermore, the Exchange believes that
regular order book, are currently paid No written comments were either
reducing the fee charged to Market
significant rebates by the Exchange, solicited or received.
Makers and Non-Nasdaq ISE Makers
10 With the proposed fee reduction, Market
when trading against Priority Customer 13 A ‘‘Firm Proprietary’’ order is an order
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Makers (other than those that qualify for Market complex order that leg into the regular submitted by a member for its own proprietary
Maker Plus) and Non-Nasdaq ISE Market Makers order book will increase incentives for account.
will be charged a maker fee of $0.10 per contract those firms to provide liquidity to the 14 A ‘‘Broker-Dealer’’ order is an order submitted

for Regular Orders in Select Symbols regardless of benefit of all market participants that by a member for a broker-dealer account that is not
the order on the other side of the trade. The its own proprietary account.
Exchange therefore proposes to effectuate this
trade on the Exchange. The Exchange 15 A ‘‘Professional Customer’’ is a person or entity
change by deleting footnote 11. does not believe that this change is that is not a broker/dealer and is not a Priority
11 15 U.S.C. 78f. unfairly discriminatory as the same Customer.
12 15 U.S.C. 78f(b)(4). $0.10 per contract maker fee applies to 16 15 U.S.C. 78f(b)(8).

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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices 37969

III. Date of Effectiveness of the Reference Room, 100 F Street NE., Options, to make technical and
Proposed Rule Change and Timing for Washington, DC 20549, on official conforming changes to the rules of the
Commission Action business days between the hours of Exchange (‘‘Rules’’) and the NYSE
The foregoing rule change has become 10:00 a.m. and 3:00 p.m. Copies of the American Options Fee Schedule (‘‘Fee
effective pursuant to Section filing also will be available for Schedule’’). The proposed change is
19(b)(3)(A)(ii) of the Act,17 and Rule inspection and copying at the principal available on the Exchange’s Web site at
19b–4(f)(2) 18 thereunder. At any time office of the Exchange. All comments www.nyse.com, at the principal office of
within 60 days of the filing of the received will be posted without change; the Exchange, and at the Commission’s
proposed rule change, the Commission the Commission does not edit personal Public Reference Room.
summarily may temporarily suspend identifying information from
submissions. You should submit only II. Self-Regulatory Organization’s
such rule change if it appears to the Statement of the Purpose of, and
Commission that such action is: (i) information that you wish to make
available publicly. All submissions Statutory Basis for, the Proposed Rule
Necessary or appropriate in the public Change
interest; (ii) for the protection of should refer to File Number SR–ISE–
investors; or (iii) otherwise in 2017–77 and should be submitted on or
In its filing with the Commission, the
furtherance of the purposes of the Act. before September 5, 2017.
self-regulatory organization included
If the Commission takes such action, the For the Commission, by the Division of statements concerning the purpose of,
Commission shall institute proceedings Trading and Markets, pursuant to delegated and basis for, the proposed rule change
to determine whether the proposed rule authority.19
and discussed any comments it received
should be approved or disapproved. Eduardo A. Aleman, on the proposed rule change. The text
Assistant Secretary. of those statements may be examined at
IV. Solicitation of Comments
[FR Doc. 2017–17065 Filed 8–11–17; 8:45 am] the places specified in Item IV below.
Interested persons are invited to BILLING CODE 8011–01–P The Exchange has prepared summaries,
submit written data, views, and set forth in sections A, B, and C below,
arguments concerning the foregoing, of the most significant parts of such
including whether the proposed rule SECURITIES AND EXCHANGE statements.
change is consistent with the Act. COMMISSION
Comments may be submitted by any of A. Self-Regulatory Organization’s
[Release No. 34–81337; File No. SR–
the following methods: Statement of the Purpose of, and the
NYSEAMER–2017–02]
Statutory Basis for, the Proposed Rule
Electronic Comments
Self-Regulatory Organizations; NYSE Change
• Use the Commission’s Internet American LLC; Notice of Filing and
comment form (http://www.sec.gov/ 1. Purpose
Immediate Effectiveness of Proposed
rules/sro.shtml); or
Change in Connection With Its Recent The Exchange proposes, in
• Send an email to rule-comments@
Name Change From NYSE MKT LLC to connection with its name change from
sec.gov. Please include File Number SR–
ISE–2017–77 on the subject line. NYSE American LLC and the Related NYSE MKT to NYSE American and the
Rebranding of NYSE Amex Options to related rebranding of NYSE Amex
Paper Comments NYSE American Options Options to NYSE American Options, to
• Send paper comments in triplicate make technical and conforming changes
DATES: August 8, 2017. the Rules and Fee Schedule.4
to Secretary, Securities and Exchange Pursuant to Section 19(b)(1) 1 of the
Commission, 100 F Street NE., Securities Exchange Act of 1934 (the Background
Washington, DC 20549–1090. ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
All submissions should refer to File notice is hereby given that, on July 27, On March 16, 2017, the Exchange
Number SR–ISE–2017–77. This file 2017, NYSE American LLC (the filed rule changes with the Commission
number should be included on the ‘‘Exchange’’ or ‘‘NYSE American’’) filed in connection with its name change to
subject line if email is used. To help the with the Securities and Exchange NYSE American.5 In addition, on May
Commission process and review your Commission (the ‘‘Commission’’) the 19, 2017, the Exchange filed rule
comments more efficiently, please use proposed rule change as described in changes with the Commission
only one method. The Commission will Items I and II below, which Items have associated with the rebranding of NYSE
post all comments on the Commission’s been prepared by the self-regulatory Amex Options, the Exchange’s facility
Internet Web site (http://www.sec.gov/ organization. The Commission is for trading options, to NYSE American
rules/sro.shtml). Copies of the publishing this notice to solicit Options.6 In those filings, the Exchange
submission, all subsequent comments on the proposed rule change committed to submitting subsequent
amendments, all written statements from interested persons. rule filings as necessary to make any
with respect to the proposed rule technical and conforming changes to
change that are filed with the I. Self-Regulatory Organization’s proposed rule changes that were
Commission, and all written Statement of the Terms of Substance of pending as of the time of those filings
communications relating to the the Proposed Rule Change or that occurred after such filings but
proposed rule change between the The Exchange proposes in connection before the operative date of the name
Commission and any person, other than with its recent name change from NYSE
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those that may be withheld from the MKT LLC (‘‘NYSE MKT’’) to NYSE 4 The Exchange originally filed the proposed

public in accordance with the American and the related rebranding of changes on July 21, 2017 (SR–NYSEMKT–2017–47)
provisions of 5 U.S.C. 552, will be and withdrew such filing on July 27, 2017.
NYSE Amex Options to NYSE American 5 See Securities Exchange Act Release No.80283
available for Web site viewing and
(March 21, 2017), 82 FR 15244 (March 27, 2017)
printing in the Commission’s Public 19 17 CFR 200.30–3(a)(12). (SR–NYSEMKT–2017–14).
1 15 U.S.C.78s(b)(1). 6 See Securities Exchange Act Release No. 80748
17 15 U.S.C. 78s(b)(3)(A)(ii). 2 15 U.S.C. 78a.
(May 23, 2017), 82 FR 24764 (May 30, 2017) (SR–
18 17 CFR 240.19b–4(f)(2). 3 17 CFR 240.19b–4. NYSEMKT 2017–20).

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Document Created: 2018-10-24 11:50:53
Document Modified: 2018-10-24 11:50:53
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 37966