```

[Federal Register Volume 85, Number 231 (Tuesday, December 1, 2020)]
[Notices]
[Pages 77328-77333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26400]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90501; File No. SR-ISE-2020-39]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change to an Amendment to 
Options 7, Section 4, Related to Complex Orders Fees and Rebates, and 
Options 7, Section 9

November 24, 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 November 13, 2020, 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 Options 7, Section 4, ``Complex 
Order Fees and Rebates,'' and Options 7, Section 9, ``Legal & 
Regulatory.''
    The Exchange originally filed the proposed pricing change on 
November 2, 2020 (SR-ISE-2020-37). On November 12, 2020, the Exchange 
withdrew that filing and is submitting this replacement filing on 
November 13, 2020.
    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 proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to amend Options 7, Section 4, ``Complex 
Order Fees and Rebates,'' and Options 7, Section 9, ``Legal & 
Regulatory.'' Each change will be described below.
Options 7, Section 4
Priority Customer Rebates for Complex Orders
    The Exchange's proposal to amend Options 7, Section 4, ``Complex 
Order Fees and Rebates'' is intended to offer Members an ability to 
earn higher Priority Customer Complex Order rebates. Specifically, the 
Exchange proposes to amend Priority Customer Complex Order Tiers 8 and 
9 and add a new Tier 10. Today, the Exchange pays rebates to Priority 
Customers pursuant to the below tier schedule.

                                            Priority Customer Rebates
----------------------------------------------------------------------------------------------------------------
                                                   Total affiliated member or
                                                 affiliated entity complex order
                                                   volume (excluding crossing       Rebate for    Rebate for non-
 Priority customer complex tier (7) (13) (16)   orders and responses to crossing  select symbols  select symbols
                                                     orders) calculated as a            (1)           (1) (4)
                                                  percentage of customer total
                                                       consolidated volume
----------------------------------------------------------------------------------------------------------------
Tier 1........................................  0.000%-0.200%...................         ($0.25)         ($0.40)
Tier 2........................................  Above 0.200%-0.400%.............          (0.30)          (0.55)
Tier 3........................................  Above 0.400%-0.450%.............          (0.35)          (0.70)
Tier 4........................................  Above 0.450%-0.750%.............          (0.40)          (0.75)
Tier 5........................................  Above 0.750%-1.000%.............          (0.45)          (0.80)
Tier 6........................................  Above 1.000%-1.350%.............          (0.47)          (0.80)
Tier 7........................................  Above 1.350%-2.000%.............          (0.48)          (0.80)
Tier 8........................................  Above 2.000%-2.600%.............          (0.50)          (0.85)
Tier 9........................................  Above 2.600%....................          (0.52)          (0.85)
----------------------------------------------------------------------------------------------------------------

[[Page 77329]]

    First, the Exchange proposes to amend the criteria to qualify for 
Tiers 8 and 9 and certain rebates as discussed below.
    Today, Tier 8 of the Complex Order Priority Customer Rebates 
requires Members to submit above 2.000%-2.60% of 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 in order to receive a $0.50 per 
contract rebate for Select Symbols \3\ and an $0.85 per contract rebate 
for Non-Select Symbols.\4\ The Exchange proposes to amend the 
qualifications of Tier 8 to require Members to submit above 2.000%-
2.750% of 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 to 
receive an increased $0.52 per contract rebate for Select Symbols and 
continue to receive an $0.85 per contract rebate for Non-Select 
Symbols. The Exchange is both amending the qualifications for Tier 8 
and increasing the rebate for Select Symbols with this proposal. A 
Member who qualified for Tier 8 in a prior month, with above 2.000% to 
2.60% of 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 
(``Current Tier 8 Volume''), would continue to qualify for Tier 8 
rebates with this proposal if that same amount of volume was submitted. 
The Member would qualify for an increased Tier 8 Rebate for Select 
Symbols of $0.52 per contract when submitting Current Tier 8 Volume and 
the same $0.85 per contract Tier 8 Rebate for Non-Select Symbols.
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    \3\ ``Select Symbols'' are options overlying all symbols listed 
on the Nasdaq ISE that are in the Penny Interval Program. See 
Options 7, Section 1(b).
    \4\ ``Non-Select Symbols'' are options overlying all symbols 
excluding Select Symbols. See Options 7, Section 1(b).
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    Today, Tier 9 of the Complex Order Priority Customer Rebates 
requires Members to submit above 2.600% of 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 in order to receive a $0.52 per contract 
rebate for Select Symbols and an $0.85 per contract rebate for Non-
Select Symbols. The Exchange proposes to amend the qualifications of 
Tier 9 to require Members to submit above 2.750%-4.500% of 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 to continue to receive 
a $0.52 per contract rebate for Select Symbols and an increased $0.86 
per contract rebate for Non-Select Symbols. The Exchange is both 
amending the qualifications for Tier 9 and increasing the rebate for 
Non-Select Symbols with this proposal. A Member who qualified for Tier 
9 in a prior month, with above 2.600% of 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 (``Current Tier 9 Volume''), may continue to 
qualify for Tier 9 rebates with this proposal if the Member submitted 
greater than 2.750% volume Calculated as a Percentage of Customer Total 
Consolidated Volume. A Member who submitted the same amount of volume 
as in the prior month would receive either: (1) An increased Tier 8 
Rebate for Select Symbols of $0.52 per contract and the same $0.85 per 
contract Rebate for Non-Select Symbols; or (2) the same Tier 9 Rebate 
for Select Symbols of $0.52 per contract and an increased $0.86 per 
contract Rebate for Non-Select Symbols, depending on the Member's 
volume Calculated as a Percentage of Customer Total Volume. Also, with 
this proposal, a Member would have the opportunity to qualify for 
increased Tier 10 rebates of $0.53 per contract for Select Symbols and 
$0.88 per contract for Non-Select Symbols by submitting above 4.500% of 
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.
    Second, the Exchange proposes to add a new Priority Customer 
Complex Order Tier 10 which requires Members to submit above 4.500% of 
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 to receive a 
$0.53 per contract rebate for Select Symbols and an $0.88 per contract 
rebate for Non-Select Symbols. This new Tier 10 would offer Members an 
opportunity to earn higher Priority Customer Complex Order rebates on 
ISE.
    The Exchange believes that amending Priority Customer Complex Order 
Rebate Tiers 8 and 9 and adding a new Tier 10 will attract a greater 
amount of Priority Customer Complex Order volume to ISE.
Maker and Taker Fees for Complex Orders
    Today, the Exchange assesses certain Maker and Taker Fees for 
Complex Orders transacted on ISE as follows:

                                                                  Maker and Taker Fees
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Maker fee for
                                                                                           Maker fee for    non-select
                                                                           Maker fee for  select symbols   symbols when                    Taker fee for
                   Market participant                      Maker fee for    non-select     when trading       trading      Taker fee for    non-select
                                                          select symbols      symbols         against         against     select symbols      symbols
                                                                                             priority        priority
                                                                                             customer        customer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker............................................           $0.10           $0.20       (3) $0.47           $0.86       (3) $0.50       (8) $0.86
Non-Nasdaq ISE Market Maker (FarMM).....................            0.20            0.20            0.48            0.88            0.50        (8) 0.88
Firm Proprietary/Broker-Dealer..........................            0.10            0.20            0.48            0.88            0.50        (8) 0.88
Professional Customer...................................            0.10            0.20            0.48            0.88            0.50        (8) 0.88
Priority Customer.......................................            0.00            0.00            0.00            0.00            0.00            0.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 77330]]

    Current note 3 of Options 7, Section 4, which applies to orders for 
Market Makers who qualify for the Complex Order Maker Fee for Select 
Symbols when trading against Priority Customer Complex Orders and the 
Complex Order Taker Fee for Select Symbols, states, ``This fee is $0.47 
per contract for Market Makers that achieve Priority Customer Complex 
Tier 8 and $0.44 per contract for Market Makers that achieve Priority 
Customer Complex Tier 9.'' Current note 8 of Options 7, Section 4 which 
applies to Complex Orders of Market Makers, Non-Nasdaq ISE Market 
Makers (FarMM), Firm Proprietary/Broker-Dealers, and Professional 
Customers who qualify for the Complex Order Taker Fee for Non-Select 
Symbols, states, ``A $0.05 per contract surcharge will be assessed to 
non-Priority Customer Complex Orders that take liquidity from the 
Complex Order Book, excluding Complex Orders executed in the 
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement 
Mechanism and ``exposure'' auctions pursuant to Options 3, Section 
14(c)(3).''
    The Exchange proposes to increase the Complex Order Maker Fees for 
Select Symbols when trading against Priority Customer for Market Makers 
from $0.47 to $0.50 per contract. The Exchange also proposes to 
increase the Complex Order Maker Fees for Select Symbols when trading 
against Priority Customer for Non-Nasdaq ISE Market Makers (FarMM), 
Firm Proprietary/Broker-Dealers, and Professional Customers from $0.48 
to $0.50 per contract. Priority Customers would continue to pay no 
Complex Order Maker Fees for Select Symbols when trading against 
Priority Customer.
    In addition, the Exchange proposes to amend note 3 which is 
applicable to the aforementioned Complex Order Maker and Taker Fees by 
instead providing, ``This fee is $0.49 per contract for Market Makers 
that achieve Priority Customer Complex Tier 8, $0.47 per contract for 
Market Makers that achieve Priority Customer Complex Tier 9, and $0.44 
per contract for Market Makers that achieve Priority Customer Complex 
Tier 10.''
    While the Exchange is increasing the Complex Order Maker Fees for 
Select Symbols when trading against Priority Customers, Market Makers, 
Non-Nasdaq ISE Market Makers (FarMM), Firm Proprietary/Broker-Dealers, 
and Professional Customers who qualify for Priority Customer Complex 
Order Tiers 8 and 9 or new Tier 10, would continue to receive lower 
Complex Order Maker Fees, which is intended to incentive these Members 
to transact a greater amount of Priority Customer Complex Orders on 
ISE.
Technical Amendments
    The Exchange proposes to remove reserved note 17 within Options 7, 
Section 4 because this note is not necessary. The Exchange also 
proposes to remove obsolete date references and an obsolete rate within 
Options 7, Section 9.C. related to the Options Regulatory Fee. The 
dates refer to past dates.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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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.'' \7\
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    \7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    Likewise, in NetCoalition v. Securities and Exchange Commission \8\ 
(``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.\9\ 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.'' \10\
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    \8\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \9\ See NetCoalition, at 534-535.
    \10\ Id. at 537.
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    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'. . . .'' \11\ 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.
---------------------------------------------------------------------------

    \11\ Id. at 539 (quoting Securities Exchange Act Release No. 
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) 
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------

Options 7, Section 4
Priority Customer Rebates for Complex Orders
    The Exchange's proposal to amend the qualifications of Tier 8, to 
require Members to submit above 2.000%-2.750% of 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 in order to receive an increase 
$0.52 per contract rebate for Select Symbols and continue to receive an 
$0.85 per contract rebate for Non-Select Symbols, and its proposal to 
amend the qualifications of Tier 9, to require Members to submit above 
2.750%-4.500% of 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 to continue to receive a $0.52 per contract rebate for Select 
Symbols and an increased $0.86 per contract rebate for Non-Select 
Symbols, are reasonable. The Exchange believes amending Priority 
Customer Complex Order Tiers 8 and 9 will attract a greater amount of 
Priority Customer Complex Order volume to ISE. Specifically, Members 
who desire to qualify for the increased $0.52 per contract rebate for 
Select Symbols in Tier 8 or continue to qualify for an $0.85 per 
contract rebate for Non-Select Symbols in Tier 8 or Members who desire 
to continue to qualify for the $0.52 per contract rebate in Select 
Symbols for Tier 9 or an increased $0.86 per contract rebate for Non-
Select Symbols in Tier 9 will be encouraged to submit the requisite 
order flow to obtain the same or higher rebates. With respect to 
Priority Customer Complex Order Tier 8, the Exchange notes that the

[[Page 77331]]

proposed amendment should not result in lower rebates for any Member 
submitting the same Complex Order volume as the Member submitted in the 
prior month. With respect to Priority Customer Complex Order Tier 9, 
Members who qualified for Tier 8 in a prior month with Current Tier 8 
Volume \12\ would continue to qualify for Tier 8 rebates with this 
proposal if that same amount of volume was submitted and would receive 
an increased Tier 8 Rebate for Select Symbols of $0.52 per contract and 
the same $0.85 per contract Rebate for Non-Select Symbols. In addition, 
the Member may earn increased Tier 9 \13\ or Tier 10 rebates if the 
Member submitted additional qualifying volume. Therefore, the Member 
would receive the same or higher Tier 8 rebates.
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    \12\ Today, Tier 8 of the Complex Order Priority Customer 
Rebates pays rebates to Members who submit above 2.000%-2.60% of 
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. 
With this proposal, Members who submit above 2.000%-2.750% of 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 are 
entitled to rebates.
    \13\ The Exchange notes that the propose Tier 8 Rebate for 
Select Symbols and the Tier 9 Rebate for Select Symbols, which 
remains unchanged, are both $0.52 per contract.
---------------------------------------------------------------------------

    Members who qualified for Tier 9 in a prior month with Current Tier 
9 Volume may continue to qualify for Tier 9 rebates with this proposal 
if the Member submitted greater than 2.750% volume and would receive 
either: (1) An increased Tier 8 Rebate for Select Symbols of $0.52 per 
contract and the same $0.85 per contract Rebate for Non-Select Symbols; 
or (2) the same Tier 9 Rebate for Select Symbols of $0.52 per contract 
and an increased $0.86 per contract Rebate for Non-Select Symbols, 
depending on the Member's volume Calculated as a Percentage of Customer 
Total Consolidated Volume. Despite the increase required in Complex 
Order volume for Priority Customer Complex Order Tier 9, the Exchange's 
proposal offers Members an opportunity to earn the same or higher Tier 
9 rebates. Also, with this proposal, a Member would have the 
opportunity to qualify for increased Tier 10 rebates of $0.53 per 
contract for Select Symbols and $0.88 per contract for Non-Select 
Symbols by submitting above 4.500% of 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. The Priority Customer Complex Order rebate 
program is optional and available to all Members that choose to 
transact Complex Order flow on ISE in order to earn a rebate on their 
Priority Customer Complex Order volume. To the extent the program, as 
modified, continues to attract Complex Order volume to the Exchange, 
the Exchange believes that the proposed changes would improve the 
Exchange's overall competitiveness and strengthen its market quality 
for all market participants.
    The Exchange's proposal to add a new Priority Customer Complex 
Order Tier 10, which requires Members to submit above 4.500% of 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 in order to receive a 
$0.53 per contract rebate for Select Symbols and an $0.88 per contract 
rebate for Non-Select Symbols is reasonable. The Exchange believes 
proposed new Tier 10 will attract a greater amount of Priority Customer 
Complex Order volume to ISE as the Exchange proposes to pay $0.53 per 
contract rebate for Select Symbols and $0.88 per contract rebate for 
Non-Select Symbols, the highest Priority Customer Complex Order rebates 
for that order flow.
    The Exchange's proposals to amend the tier qualifications for 
Priority Customer Complex Order Tiers 8 and 9, increase the Select 
Symbol rebate in Tier 8, increase the Non-Select Symbol rebate in Tier 
9, and add a new Priority Customer Complex Order Tier 10 with rebates 
of $0.53 per contract for Select Symbols and $0.88 per contract for 
Non-Select Symbols are equitable and not unfairly discriminatory. Any 
ISE Member may qualify for a Priority Customer Complex Order rebate 
tier, provided the qualifications are met. By encouraging all Members 
to transact significant amounts of Priority Customer Complex Order flow 
(i.e., to qualify for the higher tiers) in order to earn a higher 
rebate on their Priority Customer Complex Orders, the Exchange seeks to 
provide more trading opportunities for all market participants, thereby 
promoting price discovery, and improving the overall market quality of 
the Exchange. ISE would uniformly pay rebates to Members that qualified 
for Priority Customer Complex Order rebates. The Exchange anticipates 
all Members that currently qualify for the Tier 8 or 9 Priority 
Customer Complex Order rebates will receive the same or higher rebates 
with this proposal. Also, any Member may qualify for the new Tier 10 
Priority Customer Complex Order rebate to earn even higher rebates. To 
the extent the proposed changes encourage additional Members to strive 
for the modified tiers and thus attract more Priority Customer Complex 
Order volume to the Exchange, this increased order flow would improve 
the overall quality and attractiveness of the Exchange.
Maker and Taker Fees for Complex Orders
    The Exchange's proposal to increase the Complex Order Maker Fees 
for Select Symbols when trading against Priority Customer for Market 
Makers from $0.47 to $0.50 per contract and to increase the Complex 
Order Maker Fees for Select Symbols when trading against Priority 
Customer for Non-Nasdaq ISE Market Makers (FarMM), Firm Proprietary/
Broker-Dealers, and Professional Customers from $0.48 to $0.50 per 
contract is reasonable because while the Exchange is proposing to 
increase these fees, the Exchange believes that market participants 
will continue to be incentivized to send Priority Customer order flow 
to ISE to obtain rebates offered by the Exchange. Additionally, Market 
Makers would continue to be offered the opportunity to reduce their 
Complex Order Maker Fees. If a Market Maker qualifies for Priority 
Customer Complex Order Tiers 8 and 9, the Complex Order Maker Fee would 
be reduced to $0.49 and $0.47 per contract, respectively. In addition, 
a Market Maker that qualifies for Priority Customer Complex Order Tier 
10 would reduce the Complex Order Maker Fees to $0.44 per contract. 
Finally, Priority Customers will continue to pay no Maker Fees for 
Select Symbols when trading against Priority Customer.
    The Exchange's proposal to increase the Complex Order Maker Fees 
for Select Symbols when trading against Priority Customer for Market 
Makers from $0.47 to $0.50 per contract and to increase the Complex 
Order Maker Fees for Select Symbols when trading against Priority 
Customer for Non-Nasdaq ISE Market Makers (FarMM), Firm Proprietary/
Broker-Dealers, and Professional Customers from $0.48 to $0.50 per 
contract is equitable and not unfairly discriminatory as all Non-
Priority Customers would be assessed the same Complex Order Maker Fees 
for Select Symbols when trading against Priority Customer. Priority 
Customer orders bring valuable liquidity to the market which liquidity 
benefits other market participants. Priority Customers are not assessed 
Complex Order Maker Fees for Select Symbols when trading against 
Priority Customer.

[[Page 77332]]

    The Exchange's proposal to amend note 3 of Options 7, Section 4 
with respect to Complex Order Maker Fees for Select Symbols when 
trading against Priority Customer for Market Makers as well as Complex 
Order Taker Fees for Select Symbols for Market Makers is reasonable 
because while the Exchange is reducing the fee discount for Members who 
qualify for Priority Customer Complex Order Tiers 8 and 9,\14\ Market 
Makers will continue to have the opportunity to reduce their costs when 
they qualify for Priority Customer Complex Order Tiers 8 and 9. The 
Exchange will continue to offer Market Makers the opportunity to reduce 
Complex Order Maker Fees for Select Symbols when trading against 
Priority Customers, as well as Complex Order Taker Fees for Select 
Symbols. The Exchange's proposal also offers Market Makers a fee 
discount when trading against Priority Customer Complex Orders if the 
qualifications for new Tier 10 are met.\15\
---------------------------------------------------------------------------

    \14\ Today, the Exchange offers Market Makers the opportunity to 
reduce the Complex Order Maker Fee for Select Symbols when trading 
against Priority Customer and the Complex Order Taker Fee for Select 
Symbols to $0.47 per contract for Tier 8 and $0.44 per contract for 
Tier 9. With this proposal, the fee discount within note 3 would 
decrease. The Exchange would offer Market Makers that qualify for 
Priority Customer Complex Order Tier 8 a rate of $0.49 per contract, 
and the Exchange would offer Market Makers that qualify for Priority 
Customer Complex Order Tier 9 a rate of $0.47 per contract.
    \15\ The Exchange would offer Market Makers that qualify for 
Priority Customer Complex Order Tier 10 a rate of $0.44 per 
contract.
---------------------------------------------------------------------------

    The Exchange's proposal to amend note 3 of Options 7, Section 4 
with respect to Complex Order Maker Fees for Select Symbols when 
trading against Priority Customer for Market Makers as well as Complex 
Order Taker Fees for Select Symbols for Market Makers is equitable and 
not unfairly discriminatory. Market Makers would continue to be 
permitted to lower their Maker Fees for Select Symbols when trading 
against Priority Customers, as well as Taker Fees for Select Symbols, 
provided the Market Maker qualified for Priority Customer Complex Order 
Tiers 8, 9 or 10. Today, Market Makers are able to lower their Maker 
Fees for Select Symbols when trading against Priority Customers, as 
well as Taker Fees for Select Symbols, provided they qualify for 
Priority Customer Complex Order Tiers 8 or 9. With this proposal Market 
Makers would also be able to lower their Maker Fees for Select Symbols 
when trading against Priority Customers, as well as Taker Fees for 
Select Symbols, if they qualify for new Priority Customer Complex Order 
Tier 10. Unlike other market participants, Market Makers have an 
obligation to maintain quotes \16\ and provide liquidity in the regular 
market. The Exchange is providing Market Makers the opportunity to 
reduce their Maker Fees for Select Symbols when trading against 
Priority Customers, as well as Taker Fees for Select Symbols, provided 
the Market Maker qualified for Priority Customer Complex Order Tiers 8, 
9 or 10, to incentivize these market participants to continue to 
provide liquidity on ISE.
---------------------------------------------------------------------------

    \16\ See ISE, Options 2, Section 5.
---------------------------------------------------------------------------

Technical Amendments
    The Exchange's proposal to remove reserved note 17 within Options 
7, Section 4 is reasonable, equitable and not unfairly discriminatory 
as this note is not necessary and the amendment is non-substantive. The 
Exchange's proposal to remove obsolete date references and an obsolete 
rate within Options 7, Section 9.C. related to the Options Regulatory 
Fee is reasonable, equitable and not unfairly discriminatory as the 
dates have passed and the rate is obsolete.

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. 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 that have been exempted from compliance with the statutory 
standards applicable to 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.
Intra-Market Competition
    The proposed amendments do not impose an undue burden on intra-
market competition.
Options 7, Section 4
Priority Customer Rebates for Complex Orders
    The Exchange's proposals to amend the tier qualifications for 
Priority Customer Complex Order Tiers 8 and 9, increase the Select 
Symbol rebate in Tier 8, increase the Non-Select Symbol rebate in Tier 
9, and add a new Priority Customer Complex Order Tier 10 with rebates 
of $0.53 per contract for Select Symbols and $0.88 per contract for 
Non-Select Symbols does not impose an undue burden on competition. Any 
ISE Member may qualify for a Priority Customer Complex Order rebate 
tier, provided the qualifications are met. By encouraging all Members 
to transact significant amounts of Priority Customer Complex Order flow 
(i.e., to qualify for the higher tiers) in order to earn a higher 
rebate on their Priority Customer Complex Orders, the Exchange seeks to 
provide more trading opportunities for all market participants, thereby 
promoting price discovery, and improving the overall market quality of 
the Exchange. ISE would uniformly pay rebates to Members that qualified 
for Priority Customer Complex Order rebates. The Exchange anticipates 
all Members that currently qualify for the Tier 8 Priority Customer 
Complex Order rebates will receive the same or higher Tier 8 rebates 
with this proposal. Members that currently qualify for Tier 9 Priority 
Customer Complex Order rebates may need to submit additional Priority 
Customer Complex Order flow to continue to qualify for the same or 
higher Tier 9 rebates. Also, any Member may qualify for the new Tier 10 
Priority Customer Complex Order rebate to earn even higher rebates. To 
the extent the proposed changes encourage additional Members to strive 
for the modified tiers and thus attract more Priority Customer Complex 
Order volume to the Exchange, this increased order flow would improve 
the overall quality and attractiveness of the Exchange.
Maker and Taker Fees for Complex Orders
    The Exchange's proposal to increase the Complex Order Maker Fees 
for Select Symbols when trading against Priority Customer for Market 
Makers from $0.47 to $0.50 per contract and to increase the Complex 
Order Maker Fees for Select Symbols when trading against Priority 
Customer for Non-Nasdaq ISE Market Makers (FarMM), Firm

[[Page 77333]]

Proprietary/Broker-Dealers, and Professional Customers from $0.48 to 
$0.50 per contract does not impose an undue burden on competition as 
all Non-Priority Customers would be assessed the same Complex Order 
Maker Fees for Select Symbols when trading against Priority Customer. 
Priority Customer orders bring valuable liquidity to the market which 
liquidity benefits other market participants. Priority Customers are 
not assessed Complex Order Maker Fees for Select Symbols when trading 
against Priority Customer.
    The Exchange's proposal to amend note 3 of Options 7, Section 4 
with respect to Complex Order Maker Fees for Select Symbols when 
trading against Priority Customer for Market Makers as well as Complex 
Order Taker Fees for Select Symbols for Market Makers does not impose 
an undue burden on competition. Market Makers would continue to be 
permitted to lower their Maker Fees for Select Symbols when trading 
against Priority Customers, as well as Taker Fees for Select Symbols, 
provided the Market Maker qualified for Priority Customer Complex Order 
Tiers 8, 9 or 10. Today, Market Makers are able to lower their Maker 
Fees for Select Symbols when trading against Priority Customers, as 
well as Taker Fees for Select Symbols, provided they qualify for 
Priority Customer Complex Order Tiers 8 or 9. With this proposal Market 
Makers would also be able to lower their Maker Fees for Select Symbols 
when trading against Priority Customers, as well as Taker Fees for 
Select Symbols, if they qualify for new Priority Customer Complex Order 
Tier 10. Unlike other market participants, Market Makers have an 
obligation to maintain quotes \17\ and provide liquidity in the regular 
market. The Exchange is providing Market Makers the opportunity to 
reduce their Maker Fees for Select Symbols when trading against 
Priority Customers, as well as Taker Fees for Select Symbols, provided 
the Market Maker qualified for Priority Customer Complex Order Tiers 8, 
9 or 10, to incentivize these market participants to continue to 
provide liquidity on ISE.
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    \17\ See ISE, Options 2, Section 5.
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Technical Amendments
    The Exchange's proposal to remove reserved note 17 within Options 
7, Section 4 does not impose an undue burden on competition as this 
note is not necessary and the amendment is non-substantive. The 
Exchange's proposal to remove obsolete date references and an obsolete 
rate within Options 7, Section 9.C. related to the Options Regulatory 
Fee does not impose an undue burden on competition.

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 \18\ and Rule 19b-4(f)(2) \19\ 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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    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \19\ 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-2020-39 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-2020-39. 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 (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 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-2020-39 and should be submitted on 
or before December 22, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-26400 Filed 11-30-20; 8:45 am]
BILLING CODE 8011-01-P
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