82 FR 48867 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees To Increase the Crossing Fee Cap

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 202 (October 20, 2017)

[Federal Register Volume 82, Number 202 (Friday, October 20, 2017)]
[Notices]
[Pages 48867-48869]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-22753]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81878; File No. SR-ISE-2017-88]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Schedule of Fees To Increase the Crossing Fee Cap

October 16, 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 October 2, 2017, 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 Schedule of Fees to increase the 
Crossing Fee Cap for members that do not commit in advance to paying 
the full Crossing Fee Cap at the end of each month.
    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 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.

[[Page 48868]]

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 increase the Crossing Fee Cap for members that do not commit in 
advance to paying the full Crossing Fee Cap at the end of each month. 
Currently, the Exchange has a Crossing Fee Cap of $75,000 per month per 
member on all Firm Proprietary \3\ and Non-Nasdaq ISE Market Maker \4\ 
transactions that are part of the originating or contra side of a 
Crossing Order.\5\ Members that elect prior to the start of the month 
to pay $65,000 per month have these crossing fees capped at that level 
instead, regardless of actual trading volume. All eligible volume from 
affiliated Members is aggregated for purposes of the Crossing Fee Cap, 
provided there is at least 75% common ownership between the Members as 
reflected on each Member's Form BD, Schedule A. The Exchange now 
proposes to increase the Crossing Fee Cap to $90,000 per month; 
provided, however, that members that commit in advance to paying the 
full Crossing Fee Cap at the end of each month will continue to have 
these fees capped at $65,000 per month.
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    \3\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \4\ 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.
    \5\ Crossing Orders are contracts that are submitted as part of 
a Facilitation, Solicitation, PIM, Block or QCC order. Fees charged 
by the Exchange for Responses to Crossing Orders are not included in 
the calculation of the monthly fee cap. Surcharge fees charged by 
the Exchange for licensed products and the fees for index options 
are not included in the calculation of the monthly fee cap.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that it is reasonable and equitable to 
increase the Crossing Fee Cap as the proposed Crossing Fee Cap is set 
at a level that the Exchange believes appropriately rewards members for 
executing a high volume of Crossing Orders on the Exchange. The 
proposed Crossing Fee Cap remains lower than similar fee caps available 
on other options exchanges, including NYSE American Options and NYSE 
Arca Options, which both have fee caps set at $100,000 per month, 
subject to the potential for reduced caps based on a member's tier 
achieved.\8\ As proposed, members that do not elect to pay the 
discounted rate in full each month will be eligible to have their fees 
capped at the new rate of $90,000 per month. At the same time, members 
that commit to their Crossing Order fees in advance will continue to 
receive a discounted rate of $65,000 per month, which will encourage 
members to bring their Crossing Order flow to the Exchange. In 
particular, the Exchange believes that the proposed fee change may 
further incentivize members to commit to the discounted Crossing Fee 
Cap, and will bring more Crossing Order flow to the Exchange as a 
result. The Exchange believes that this will benefit all members and 
investors that trade on the Exchange as it will provide additional 
opportunities for market participants to interact with this Crossing 
Order Flow, contributing to a robust and competitive market. 
Furthermore, the Exchange believes that the proposed fee change is not 
unfairly discriminatory because all members will have the option to 
make the required commitment in order to qualify for the discounted 
Crossing Fee Cap, or will be subject to the Crossing Fee Cap proposed 
here. The Crossing Fee Cap will be uniformly applied to members based 
on their election.
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    \8\ See NYSE American Options Fee Schedule, Section I. Options 
Transaction Fees and Credits, I. Firm Monthly Fee Cap; NYSE Arca 
Options Fees and Charges, NYSE Arca Options: Trade-Related Charges 
for Standard Options, Firm and Broker Dealer Monthly Fee Cap.
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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. Although the Exchange is 
increasing the Crossing Fee Cap, the Exchange believes that the 
proposed cap is set at an appropriate level. Moreover, any member that 
wishes to lower their fees can continue to prepay the Crossing Fee Cap, 
and thereby qualify for a discounted fee. 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.

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 \9\ and Rule 19b-4(f)(2) \10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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-2017-88 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-2017-88. 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

[[Page 48869]]

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-2017-88 and should be 
submitted on or before November 13, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22753 Filed 10-19-17; 8:45 am]
 BILLING CODE 8011-01-P