Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),^[1] and Rule 19b-4 thereunder ,² ( printed page 54416) notice is hereby given that on August 6, 2026, 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, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange proposes to amend the Exchange's Rules at Options 7, Section 4 (Complex Order Fees and Rebates) and Section 6 (Other Options Fees and Rebates).^[3]

The text of the proposed rule change is available on the Exchange's website at listingcenter.nasdaq.com/​rulebook/​ise/​rulefilings, and at the principal office of the Exchange.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

The purpose of the proposed rule change is to amend the complex order ^[4] rebates in the Exchange's Pricing Schedule (Options 7). Specifically, the Exchange proposes to amend its Pricing Schedule at Section 4 (Complex Order Fees and Rebates) and Section 6 (Other Options Fees and Rebates).

Options 7, Section 4 (Complex Order Fees and Rebates)

Currently, the Exchange offers tiered complex order rebates for Select Symbols ^[5] and Non-Select Symbols ^[6] based on the Priority Customer ^[7] Complex Tier achieved.^[8] The schedule of tiered complex order Priority Customer rebates for Select Symbols and Non-Select Symbols is currently as follows:

The above rebates are provided per contract, per leg, if the order trades with Non-Priority Customer ^[9] orders in the complex order book. This rebate will be reduced by $0.20 per contract in Select Symbols where the largest leg of the Complex Order is under fifty (50) contracts and trades with quotes and orders on the regular order book. No Priority Customer Complex Order rebates are provided in Select Symbols if any leg of the order that trades with interest on the regular order book is fifty (50) contracts or more. No Priority Customer Complex Order rebates are provided in Non-Select Symbols if any leg of the order trades with interest on the regular order book, irrespective of order size.

The Exchange also offers additional tiered rebates, in addition to the existing Priority Customer Complex Tier rebates, for Select Symbols and for Non-Select Symbols, provided the Member has also transacted an average daily volume of greater than 10,000 contracts of FLEX ( printed page 54417) Orders ^[10] in a given month. As is the case with the Priority Customer Complex Tier rebates, these additional tiered rebates are provided per contract, per leg, if the order trades with Non-Priority Customer orders in the complex order book. For purposes of calculating this threshold, eligible volume from Affiliated Members and Affiliated Entities is aggregated.

The additional tiered rebate, in addition to the Priority Customer Complex Tier rebates, for Select Symbols is currently as follows:

The additional tiered rebate, in addition to the Priority Customer Complex Tier rebates, for Non-Select Symbols is currently as follows:

The Exchange proposes to add a note 18 to Section 4 that would read as follows: “Members whose Total Affiliated Member or Affiliated Entity Complex Order Volume (excluding Crossing Orders and Responses to Crossing Orders) calculated as a percentage of Customer Total Consolidated Volume would otherwise qualify them for Priority Customer Complex rebates below Tier 4 will receive the Tier 4 Priority Customer Complex rebates if such Members have Total Affiliated Member or Affiliated Entity Volume of 1.2% or more as a percentage of Customer Total Consolidated Volume. Those Members would also be eligible to receive the Tier 4 additional rebates in notes ** and ## of this Section.” In other words, Members whose complex order volume might only qualify them for Tiers 1, 2, or 3 of the Priority Customer Complex rebates, would now qualify for Tier 4 of the Priority Customer Complex rebates if they have Total Affiliated Member^[11] or Affiliated Entity Volume ¹² of 1.2% or more as a percentage of Customer Total Consolidated Volume.¹³ Furthermore, those Members would now also be eligible to receive the additional rebates available to Members that have also transacted an average daily volume of greater than 10,000 contracts of FLEX Orders in a given month.

The composition of national options order flow can vary significantly from month to month. Therefore, on a given month a Member may not execute sufficient Priority Customer Complex order flow on the Exchange to qualify for Tier 4 or higher of the Priority Customer Complex rebates, even if the Member has Total Affiliated Member or Affiliated Entity Volume of 1.2% or more as a percentage of Customer Total Consolidated Volume. This new provision would incentivize Members that transact a large overall amount of order flow on the Exchange to transact more of their Priority Customer Complex order flow to the Exchange, by providing them with the more attractive Priority Customer Complex pricing provided by Tier 4 of the Priority Customer Complex rebates, even if their Priority Customer Complex order flow might otherwise only qualify them for Tiers 1, 2, or 3.

Section 6 (Other Options Fees and Rebates)

Currently, the Exchange offers a PIM ^[14] rebate of $0.11 per contract to Electronic Access Members ^[15] that utilize PIM to execute more than 0.75% of Priority Customer volume in Regular Orders,^[16] calculated as a percentage of Customer Total Consolidated Volume per day in a given month.^[17] The rebate is paid for Priority Customer Regular Orders under 250 contracts that are submitted to PIM.^[18]

The Exchange proposes to modify the amount of this rebate, from $0.11 per contract, to $0.105 per contract.

2. Statutory Basis

The Exchange believes that its proposal is consistent with Section 6(b) of the Act,^[19] in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,^[20] 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 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.” ^[21]

Likewise, in NetCoalition v. Securities and Exchange Commission  ^[22] (“NetCoalition”) the D.C. Circuit upheld the Commission's use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a cost-based approach.^[23] As the court emphasized, the Commission “intended in Regulation NMS that `market forces, rather than regulatory requirements' play a role in determining the market data . . . to be made available to investors and at what cost.” ^[24]

Further, “[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'. . . .” ^[25] Although the court and the SEC were discussing the cash equities markets, the Exchange believes that these views apply with equal force to the options markets.

The Exchange believes that its proposal to add new note 18 to Options 7, Section 4 is reasonable because it is designed to incentivize Members who have Total Affiliated Member or Affiliated Entity Volume of 1.2% or more as a percentage of Customer Total Consolidated Volume to transact more of their Priority Customer complex order flow on the Exchange in order to qualify for the more attractive Tier 4 Priority Customer Complex rebates. As explained above, the composition of national options order flow can vary significantly from month to month, so a Member may not always execute sufficient Priority Customer complex order flow on the Exchange in a given month to qualify for Tier 4 or higher of the Priority Customer Complex rebates, even if the Member has Total Affiliated Member or Affiliated Entity Volume of 1.2% or more as a percentage of Customer Total Consolidated Volume. The proposed 1.2% Total Affiliated Member or Affiliated Entity Volume qualification is set at a level that requires a meaningful commitment of overall order flow to the Exchange, and the Exchange believes that offering the Tier 4 rebates on this basis will help attract additional Priority Customer complex order flow to the Exchange, which will benefit all market participants.

The Exchange's proposal to add new note 18 to Section 4 is equitable and not unfairly discriminatory because the new incentive will be uniformly applied to all Members that meet or exceed the objective, transparent 1.2% Total Affiliated Member or Affiliated Entity Volume threshold, and any Member may qualify by transacting sufficient volume on the Exchange. All Members qualifying under note 18 will receive the same Tier 4 Priority Customer Complex rebates (and, where applicable, the same Tier 4 additional rebates in notes ** and ## of Section 4). Offering the note 18 incentive only to Priority Customer orders is equitable and not unfairly discriminatory because Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Market Makers. An increase in the activity of these market participants, particularly in response to pricing, facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants.

The Exchange's proposal to reduce the PIM rebate in Options 7, Section 6.C from $0.11 per contract to $0.105 per contract is reasonable. The Exchange has limited resources to allocate to its incentive programs and periodically assesses its fee structure to ensure that its rebates continue to attract order flow while remaining sustainable. The proposed rebate of $0.105 per contract represents only a modest reduction from the current $0.11 per contract level; the Exchange believes that this rebate remains attractive and will continue to incentivize qualifying Electronic Access Members to submit smaller-sized Priority Customer Regular Orders to PIM for price improvement, which benefits all market participants.

The Exchange's proposal to reduce the PIM rebate is equitable and not unfairly discriminatory because the modified rebate will apply uniformly to all Electronic Access Members that satisfy the objective volume qualification (utilizing PIM to execute more than 0.75% of Priority Customer volume in Regular Orders, calculated as a percentage of Customer Total Consolidated Volume per day in a given month) with respect to all Priority Customer Regular Orders under 250 contracts submitted to PIM. Any Electronic Access Member is able to qualify for the rebate by meeting the applicable volume threshold, and all qualifying Members will receive the same $0.105 per contract rebate on such orders. Paying this rebate only for Priority Customer Regular Orders is equitable and not unfairly discriminatory because Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Market Makers, and increased Market Maker activity facilitates tighter spreads that may cause an additional corresponding increase in order flow from other market participants.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.

Inter-Market Competition

The proposal does not impose an undue burden on inter-market competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes its proposal remains competitive with other options markets and will offer market participants with another choice of where to transact options. 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 ( printed page 54419) market may impose any burden on competition is extremely limited.

Intra-Market Competition

The Exchange's proposal to add new note 18 to Options 7, Section 4 will not impose an undue burden on intra-market competition. The new incentive will be applied uniformly to all Members that meet or exceed the objective, transparent 1.2% Total Affiliated Member or Affiliated Entity Volume threshold as a percentage of Customer Total Consolidated Volume, and any Member may qualify by transacting sufficient volume on the Exchange. All Members qualifying under note 18 will receive the same Tier 4 Priority Customer Complex rebates (and, where applicable, the same Tier 4 additional rebates in notes ** and ## of Section 4). Moreover, offering the note 18 incentive only to Priority Customer orders does not impose an undue burden on intra-market competition because Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Market Makers. An increase in the activity of these market participants, particularly in response to pricing, facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants.

The Exchange's proposal to reduce the PIM rebate in Options 7, Section 6.C from $0.11 per contract to $0.105 per contract likewise will not impose an undue burden on intra-market competition. The modified rebate will apply uniformly to all Electronic Access Members that satisfy the same objective volume qualification, with respect to all Priority Customer Regular Orders under 250 contracts submitted to PIM. Any Electronic Access Member is able to qualify for the rebate by meeting the applicable volume threshold. While the rebate is targeted at Priority Customer Regular Orders, this does not impose an undue burden on intra-market competition because Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Market Makers, and increased Market Maker activity facilitates tighter spreads that may cause an additional corresponding increase in order flow from other market participants.

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.^[26] At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:

Electronic Comments

• Use the Commission's internet comment form (www.sec.gov/​rules/​sro.shtml); or
• Send an email torule-comments@sec.gov. Please include file number SR-ISE-2026-46 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-2026-46. 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 ( www.sec.gov/​rules/​sro.shtml). Copies of the filing will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR-ISE-2026-46 and should be submitted on or before September 11, 2026.