71046 Federal Register / Vol. 88, No. 197 / Friday, October 13, 2023 / Notices 

13Based on a compilation of OCC data for 

monthly volume of equity-based options and 

monthly volume of equity-based ETF options, see 

id., the Exchange’s market share in equity-based 

options increased slightly from 11.36% for the 

month of August 2022 to 11.37% for the month of 

August 2023. 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(2). 

16 15 U.S.C. 78s(b)(2)(B). 17 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

Exchange had less than 12% market 

share of executed volume of multiplylisted equity and ETF options trades.13

The Exchange believes that the 

proposed rule change reflects this 

competitive environment because it 

modifies the Exchange’s fees in a 

manner designed to continue to incent 

OTP Holders to direct Customer and 

Market Maker posted interest to the 

Exchange, to provide liquidity and to 

attract order flow. To the extent that this 

purpose is achieved, all the Exchange’s 

market participants should benefit from 

the improved market quality and 

increased opportunities for price 

improvement. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to section 

19(b)(3)(A) 14 of the Act and 

subparagraph (f)(2) of Rule 19b–4 15

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under section 19(b)(2)(B) 16 of the Act to 

determine whether the proposed rule 

change 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NYSEARCA–2023–69 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–NYSEARCA–2023–69. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

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–NYSEARCA–2023–69 and should be 

submitted on or before November 3, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22507 Filed 10–12–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98702; File No. SR–ISE– 

2023–22] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Its Complex 

Order Rules 

October 6, 2023 

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 

3, 2023, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Options 3, Section 11, Auction 

Mechanisms, and Options 3, Section 13, 

Price Improvement Mechanisms for 

Crossing Transactions. 

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 

In connection with a technology 

migration to an enhanced Nasdaq, Inc. 


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3See Securities Exchange Act Release No. 98066 

(August 7, 2023), 88 FR 54672 (SR–ISE–2023–13) 

(Notice of Filing and Immediate Effectiveness of 

Proposed Rule Change to Amend ISE Rules Related 

to Complex Orders with Respect to a System 

Migration) (‘‘SR–ISE–2023–13’’). 

4See Securities Exchange Act Release No. 98599 

(September 28, 2023) (SR–MRX–2023–18) (Notice 

of Filing and Immediate Effectiveness of Proposed 

Rule Change to Amend its Complex Order Rules) 

(not yet published). 

5The term ‘‘Stock-Option Order’’ refers to an 

order for a Stock-Option Strategy as defined in 

Options 3, Section 14(a)(2). A Stock-Option Strategy 

is the purchase or sale of a stated number of units 

of an underlying stock or a security convertible into 

the underlying stock (‘‘convertible security’’) 

coupled with the purchase or sale of options 

contract(s) on the opposite side of the market 

representing either (A) the same number of units of 

the underlying stock or convertible security, or (B) 

the number of units of the underlying stock 

necessary to create a delta neutral position, but in 

no case in a ratio greater than eight-to-one (8.00), 

where the ratio represents the total number of units 

of the underlying stock or convertible security in 

the option leg to the total number of units of the 

underlying stock or convertible security in the stock 

leg. See ISE Options 3, Section 14(a)(2). 

6The term ‘‘Stock-Complex Order’’ refers to an 

order for a Stock-Complex Strategy as defined in 

Options 3, Section 14(a)(3). A Stock-Complex 

Strategy is the purchase or sale of a stated number 

of units of an underlying stock or a security 

convertible into the underlying stock (‘‘convertible 

security’’) coupled with the purchase or sale of a 

Complex Options Strategy on the opposite side of 

the market representing either (A) the same number 

of units of the underlying stock or convertible 

security, or (B) the number of units of the 

underlying stock necessary to create a delta neutral 

position, but in no case in a ratio greater than eightto-one (8.00), where the ratio represents the total 

number of units of the underlying stock or 

convertible security in the option legs to the total 

number of units of the underlying stock or 

convertible security in the stock leg. Only those 

Stock-Complex Strategies with no more than the 

applicable number of legs, as determined by the 

Exchange on a class-by-class basis, are eligible for 

processing. See ISE Options 3, Section 14(a)(3). 

7See SR–ISE–2023–13. 

8 Id. 

9A Complex PIM Order is an order entered into 

the Complex Price Improvement Mechanism as 

described in Options 3, Section 13(e). See ISE 

Options 3, Section 14(b)(18). 

10A Complex Facilitation Order is an order 

entered into the Complex Facilitation Mechanism 

as described in Options 3, Section 11(c). See ISE 

Options 3, Section 14(b)(16). 

11A Complex SOM Order is an order entered into 

the Complex Solicited Order Mechanism as 

described in Options 3, Section 11(e). See ISE 

Options 3, Section 14(b)(17). 

12NES is a broker-dealer owned and operated by 

Nasdaq, Inc. NES, an affiliate of the Exchange, has 

been approved by the Commission to become a 

Member of the Exchange and perform inbound 

routing on behalf of the Exchange. 

13See ISE Supplementary Material .08(c) to 

Options 3, Section 11 and ISE Supplementary 

Material .09(c) to Options 3, Section 13. The term 

‘‘covered security’’ has the same meaning as in Rule 

201(a)(1) of Regulation SHO. 

14See ISE Supplementary Material .08(c) to 

Options 3, Section 11 and ISE Supplementary 

Material .09(c) to Options 3, Section 13. 

(‘‘Nasdaq’’) functionality, the Exchange 

proposes to amend certain auction 

rules 3 which describe the short sale 

price test in Rule 201 of Regulation 

SHO. Specifically, the Exchange 

proposes to adopt a new sentence 

within Options 3, Section 11, Auction 

Mechanisms, and Options 3, Section 13, 

Price Improvement Mechanisms for 

Crossing Transactions, to add further 

detail to the recently adopted stock-tied 

rule text. This rule change is identical 

to a rule change filed by Nasdaq MRX, 

LLC (‘‘MRX’’).4

Background 

Today, ISE Members may trade 

certain Stock-Option Orders as 

described in ISE Options 3, Section 

14(a)(2) 5 and Stock-Complex Orders as 

described in ISE Options 3, Section 

14(a)(3),6 among other things. ISE 

recently filed a rule change to amend its 

stock-tied functionality in connection 

with a technology migration.7 Among 

other things, the proposal added 

Supplementary Material .08(c) to 

Options 3, Section 11 and 

Supplementary Material .09(c) to 

Options 3, Section 13 8 to address the 

short sale price test in Rule 201 of 

Regulation SHO with respect to 

Complex PIM Orders,9 Complex 

Facilitation Orders 10 and Complex 

SOM Orders.11 The rule states that 

when the short sale price test in Rule 

201 of Regulation SHO is triggered for 

a covered security, Nasdaq Execution 

Services, LLC (‘‘NES’’),12 will not 

execute a short sale order in the 

underlying covered security component 

of a Complex Facilitation Order, 

Complex SOM Order and/or Response, 

or in the underlying security component 

of a Complex PIM Order and/or 

Improvement Order, if the price is equal 

to or below the current national best 

bid.13 However, NES will execute a 

short sale order in the underlying 

covered security component of a 

Complex Facilitation Order, Complex 

SOM Order and/or Response, or in the 

underlying security component of a 

Complex PIM Order and/or 

Improvement Order, if such order is 

marked ‘‘short exempt,’’ regardless of 

whether it is at a price that is equal to 

or below the current national best bid.14

Further, if NES cannot execute the 

underlying covered security component 

of a Complex Facilitation Order, 

Complex SOM Order and/or Response, 

or Complex PIM Order and/or 

Improvement Order, in accordance with 

Rule 201 of Regulation SHO, the 

Exchange will cancel back the Complex 

Facilitation Order, Complex SOM Order 

and/or Response or Complex PIM Order 

and/or Improvement Order to the 

entering Member. 

Proposal 

At this time, the Exchange proposes to 

amend its Complex SOM, Complex 

Facilitation, and Complex PIM rules to 

add a new sentence within 

Supplementary Material .08(c) to 

Options 3, Section 11 and 

Supplementary Material .09(c) to 

Options 3, Section 13 that describes the 

manner in which NES would execute a 

short sale order in the underlying 

covered security component of 

Response, Improvement Complex Order, 

or unrelated Limit Complex Order on 

the Complex Order Book (1) when the 

facilitating Electronic Access Member’s 

contra-order, the solicited contra-side 

Complex Order, or the Counter-Side 

Order does not include a short sale 

order in the underlying covered security 

component; or (2) when the facilitating 

Electronic Access Member’s contraorder, the solicited contra-side Complex 

Order, or the Counter-Side Order 

includes a short sale order in the 

underlying security component. As 

described more fully below, in the first 

case NES would execute the underlying 

covered security component of the 

Response, Improvement Complex Order, 

or unrelated Limit Complex Order on 

the Complex Order Book at its stated 

limit price. In the second case, NES 

would execute the underlying security 

component of the Response, 

Improvement Complex Order, or 

unrelated Limit Complex Order on the 

Complex Order Book at its stated limit 

price or better. 

The proposed rules will make clear to 

Members who submit auction responses 

or Improvement Orders that include a 

short sale order, or Members that place 

orders on the Complex Order Book that 

include a short sale order, the manner 

in which NES will execute the short sale 

component of their order when their 

Response, Improvement Complex Order, 

or unrelated Limit Complex Order on 

the Complex Order Book executes in the 

Complex SOM, Complex Facilitation, 

and Complex PIM auction, (i.e., their 

short sale order will execute at its stated 

limit price, but not at a better price) if 

the facilitating Electronic Access 

Member’s contra-order, the solicited 

contra-side Complex Order, or the 

Counter-Side Order does not include a 

short sale order. However their short 

sale order will execute at its stated limit 

price or better if the facilitating 

Electronic Access Member’s contraorder, the solicited contra-side Complex 

Order, or the Counter-Side Order 

includes a short sale order. Thus, 

whether a short sale order included in 

an auction receives its stated limit price, 

or potentially receives a better price 


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15While the examples utilize the Complex PIM 

auction, the same examples apply to a Complex 

SOM or Complex Facilitation auction. 

16The Exchange notes that different combinations 

of stock and options prices could determine the 

strategy prices in this Example 1 as well as 

Examples 2 and 3. The Exchange is assuming the 

noted prices for the examples, however the 

Exchange notes that multiple price points could 

achieve the net prices in these examples. In this 

particular case in Example 1, the agency order 

could buy stock @1.07 and buy options @0.06 in 

lieu of the prices noted. 

than its limit price, depends on whether 

the contra-side order submitted to the 

auction with an agency order also 

included a short sale order. Although 

the availability of the potential for price 

improvement for the responder’s short 

sale order will vary, depending on 

whether the contra-order also included 

a short sale order, ISE notes that for the 

reasons described below the alternative 

would be to exclude auction orders that 

include a short sale order from the 

Complex SOM, Complex Facilitation, 

and Complex PIM altogether, which 

would decrease competition in the 

auction and potentially reduce 

opportunities for the agency order to 

receive price improvement in the 

auctions. Below are some examples of 

Complex PIM Auction responses 

(‘‘Improvement Orders’’) executing 

within a Complex PIM Auction.15

Example No. 1—Complex PIM Auction 

Utilizing Stated Limit Price 

ISE BBO for option leg is 0.05 × 0.10. 

Underlying equity NBBO is 1.05 × 

1.10. 

Reg SHO short sale price test is 

triggered in the underlying. 

Stock-Option Strategy is created to 

buy 1 put, buy 100 shares (cBBO for this 

strategy is 1.10 × 1.20). 

Complex PIM to buy strategy, 100 @

1.13 (buy stock @1.08 and options @

0.05); 16 Counter-Side Order does not 

include a short sale order. 

Improvement Complex Order1 is a 

Priority Customer Order to sell, sell 

short stock leg, 100 @1.11 (sell stock @

1.06 and options @0.05). 

Improvement Complex Order2 to sell, 

sell short stock leg, 100 @1.12 (sell stock 

@1.07 and options @0.05). 

Complex PIM auction timer 

concludes: 

Improvement Complex Order1 trades 

with Complex PIM Agency Order, 

option @0.05 and stock @1.06 for net 

price of 1.11. The Improvement 

Complex Order may not trade the 

underlying equity at 1.05 because it 

cannot execute a short sale order at a 

price that is equal to the NBB of the 

underlying equity. 

Example No. 2—Complex PIM Auction 

Utilizing Stated Limit Price 

ISE BBO for option leg is 0.05 × 0.10. 

Underlying equity NBBO is 1.05 × 

1.10. 

Reg SHO short sale price test is 

triggered in the underlying. 

Stock-Option Strategy is created to 

buy 1 put, buy 100 shares (cBBO for this 

strategy is 1.10 × 1.20). 

Complex PIM to buy strategy, 100 @

1.13 (buy stock @1.08 and options @

0.05); Counter-Side Order does not 

include a short sale order. 

Improvement Complex Order1 is a 

Priority Customer Order to sell, sell 

short stock leg, 100 @1.10 (sell stock @

1.05 and options @0.05). 

Improvement Complex Order2 to sell, 

sell short stock leg, 100 @1.12 (sell stock 

@1.06 and options @0.06). 

Complex PIM auction timer 

concludes: 

Improvement Complex Order2 trades 

with Complex PIM Agency Order, 

option @0.06 and stock @1.06 for net 

price of 1.12. Since the Counter-Side 

Order does not include a short sale 

order, Improvement Complex Order1 is 

considered for execution at its stated 

limit price of 1.10; since it cannot trade 

at 1.10 due to Reg SHO, it does not trade 

with the Complex PIM Agency Order. 

Example No. 3—Complex PIM Auction 

Where Counter-Side Is Also Short 

Selling 

ISE BBO for option leg is 0.05 × 0.10. 

Underlying equity NBBO is 1.05 × 

1.20. 

Counter-Side Order includes a short 

sale order. 

Reg SHO short sale price test is 

triggered in the underlying. 

Stock-Option Strategy is created to 

buy 1 put, buy 100 shares (cBBO for this 

strategy is 1.10 × 1.30). 

Complex PIM to Buy strategy, 100 @

1.13, Counter-Side Order is a Market 

Order that is willing to auto-match at 

any price point within Reg SHO price 

restriction bound and has ‘sell short’ 

stock leg instructions and therefore 

cannot trade the stock component at any 

price less than or equal to the 

underlying best bid of $1.05. In this 

example, if the Counter-Side Order did 

not have a ‘‘sell short’’ instruction it 

would not be required to trade at a price 

that is better than the NBB for security 

($1.05) and could execute at a price 

equal to or less than the underlying best 

bid of $1.05. The price of 1.10 is the cBB 

(net of option and underlying NBB). 

Improvement Complex Order1 is to 

sell, sell short stock leg, 100 @1.10 

(selling stock at 1.05 and options at 

0.05; note it cannot trade at 1.10 due to 

Reg SHO). 

Improvement Complex Order2 to sell, 

sell short stock leg, 100 @1.12 (selling 

stock at 1.06 and options at 0.06). 

Complex PIM auction timer 

concludes: 

The Complex PIM Agency Order first 

executes 40 contracts with the CounterSide Market Order, the option leg at 

0.05 and stock leg at 1.06 for a net price 

of 1.11. The remaining 60 contracts from 

the Complex Agency Order then execute 

with Improvement Complex Order1 at 

the same price. In this example, both the 

Complex Counter-Side Order and the 

Improvement Complex Order are 

marked short sale, which permits the 

Improvement Complex Order to trade at 

a price that is better than its stated limit 

price. 

In this example, the Improvement 

Complex Order traded at its next 

available price in lieu of its stated limit 

price because both the Counter-Side 

Order and the Improvement Complex 

Order included a short sale order in the 

underlying component security. In 

contrast, if the Counter-Side Order did 

not include a short sale order than [sic] 

the Counter-Side Order and 

Improvement Complex Order2 trade 

with the Complex PIM Agency Order for 

[sic] net price of 1.12 (option @0.06 and 

stock @1.06). 

The Exchange proposes to amend the 

rule text in Supplementary Material .08 

to Options 3, Section 11 with respect to 

a SOM and Facilitation auction to 

provide: 

When a response or an unrelated limit 

complex order on the complex order book 

includes a short sale order in the underlying 

covered security, NES will execute such 

order at (1) its stated limit price if the 

facilitating Electronic Access Member’s 

contra order or contra-side solicited Complex 

Order does not include a short sale order in 

the underlying security; or (2) its stated limit 

price or better if the facilitating Electronic 

Access Member’ contra order or the solicited 

contra-side Complex Order includes a short 

sale order in the underlying covered security. 

With respect to a Complex PIM 

auction, the Exchange proposes to 

amend the rule text within 

Supplementary Material .09 to Options 

3, Section 13 to provide: 

When an improvement order or an 

unrelated limit complex order on the 

complex order book includes a short sale 

order in the underlying covered security, 

NES will execute such order at (1) its stated 

limit price if the Counter-Side Order does not 

include a short sale order in the underlying 

security; or (2) its stated limit price or better 

if the counter-side order includes a short sale 

order in the underlying covered security. 

In such case where a response or an 

unrelated limit complex order on the 

complex order book includes a short 


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17For example, utilizing a Complex PIM auction 

with a BBO of 0.05 × 0.10 and an NBBO for the 

underlying security component of 1.05 × 1.10, if the 

Initiating Order submitted an agency order to buy 

@1.13 and a contra-order to sell @1.13, with automatch at any price point, and Responder1 was long 

@1.10, and Responder2 was short @1.10 (in this 

scenario 1.10 would not comply with the short sale 

price test), pursuant to the proposed amendment, 

the agency order would receive a price 

improvement allocation @1.10. In this scenario the 

improved price of 1.11 would not be allocated to 

the responder with a short sale rather the price 

improvement would be applied to the agency order. 

The Exchange believes it is important to offer price 

improvement to the agency order over the 

responder to the auction. Of note, the responder 

that was short @1.10 would be cancelled. 

18 15 U.S.C. 78f(b). 

19 15 U.S.C. 78f(b)(5). 

20 17 CFR 242.200 et seq. 

sale order in the underlying covered 

security, NES will execute the order at 

its stated limit price if the facilitating 

Electronic Access Member’s contra 

order, contra-side solicited Complex 

Order, or Counter-Side Order does not 

include a short sale order in the 

underlying covered security because the 

Exchange desires to foster competition 

by including responses that have a short 

sale order in the underlying covered 

security. In this scenario, the Exchange 

would consider all prices submitted by 

responders at which the auction may 

execute because the Electronic Access 

Member’s contra order, contra-side 

solicited Complex Order, or CounterSide Order does not need to comply 

with the short sale price test in Rule 201 

of Regulation SHO because the order is 

not short. By using the order’s stated 

limit price in this case, the Exchange 

would allow the responder with a short 

sale order to participate in the auction 

and allocate the best price possible to 

the agency order while complying with 

the short sale price test.17 The Exchange 

believes that including responses with a 

short sale order in the underlying 

covered security may create additional 

competition in the Complex SOM, 

Complex Facilitation and Complex PIM 

auction while also providing additional 

opportunity for potential price 

improvement for the agency order. 

When a response, Improvement 

Order, or an unrelated limit complex 

order on the complex order book 

includes a short sale order in the 

underlying covered security, NES will 

execute the order at its stated limit price 

or better if the facilitating Electronic 

Access Member contra order, solicited 

contra-side Complex Order, or CounterSide Order includes a short sale order 

in the underlying security component. 

In this case, each short sale compliant 

price would be considered in 

determining the price at which the 

auction may execute, which would be at 

its stated limit price or better. In this 

scenario, because the Electronic Access 

Member contra order, solicited contraside Complex Order, or Counter-Side 

Order are short, the Exchange will only 

consider prices that comply with the 

short sale price test in Rule 201 of 

Regulation SHO. In this case, all prices 

that are compliant with the short sale 

price test are considered when 

allocating the auction, and both the 

agency order and responders may 

receive a better price. The auction 

would allocate at the agency order’s 

stated limited price or better depending 

on the prices of the responses. The 

auction responses may execute at their 

stated limited price or better depending 

on the final auction price. 

This is in contrast to the prior 

scenario where the Electronic Access 

Member’s contra order, contra-side 

solicited Complex Order, or CounterSide Order does not need to comply 

with the short sale price test. Utilizing 

the proposed stated limit price or better 

where a Member’s contra order, contraside solicited Complex Order, or 

Counter-Side Order includes a short sale 

order allows the Exchange to potentially 

provide price improvement opportunity 

to the agency order. 

Implementation 

The Exchange intends to begin 

implementation of the proposed rule 

change prior to December 20, 2024. The 

implementation would commence with 

a limited symbol migration and 

continue to migrate symbols over 

several weeks. The Exchange will issue 

an Options Trader Alert to Members to 

provide notification of the symbols that 

will migrate and the relevant dates. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,18 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,19

in particular, in that it is designed to 

promote just and equitable principles of 

trade and to protect investors and the 

public interest for the reasons discussed 

below. 

With respect to short sale regulation, 

the proposed handling of the stock/ETF 

component of a Complex Order under 

this proposal does not raise any issues 

of compliance with the currently 

operative provisions of Regulation 

SHO 20 and, therefore, the proposal 

promotes just and equitable principles 

of trade. When a Complex Order has a 

stock/ETF component, Members must 

indicate, pursuant to Regulation SHO, 

whether that order involves a long or 

short sale. NES, as a trading center 

under Rule 201, will be compliant with 

the requirements of Regulation SHO. Of 

course, broker-dealers, including both 

NES and the Members submitting orders 

to ISE with a stock/ETF component, 

must comply with Regulation SHO. 

NES’ compliance team updates, reviews 

and monitors NES’ policies and 

procedures including those pertaining 

to Regulation SHO on an annual basis. 

In the case where a response, 

Improvement Order, or an unrelated 

limit complex order includes a short 

sale order in the underlying covered 

security, executing such order at its 

stated limit price when the facilitating 

Electronic Access Member’s contra 

order, contra-side Complex Order, or 

Counter-Side Order does not include a 

short sale order in the underlying 

security would protect investors and the 

public interest by considering all prices 

at which the auction could execute. 

Under these circumstance, the 

Response, Improvement Complex Order, 

or unrelated Limit Complex Order 

would be considered for execution at its 

stated limit price (provided the limit 

price is compliant with the short sale 

price test in Rule 201 of Regulation 

SHO) while the Electronic Access 

Member’s contra order, contra-side 

solicited Complex Order, or CounterSide Order does not need to comply 

with the short sale price test in Rule 201 

of Regulation SHO because the order is 

not short. Utilizing the order’s stated 

limit price in this case allows the 

responder with a short sale order to 

participate in the auction while the 

agency order is allocated the best price 

possible while complying with the short 

sale price test. The Exchange believes 

that this behavior is consistent with the 

protection of investors and the public 

interest because it attempts to afford 

price improvement to the agency order 

over the responder to the auction. 

Finally, the Exchange believes that 

including responses with a short sale 

order in the underlying covered security 

may create additional competition in 

the Complex SOM, Complex Facilitation 

and Complex PIM auction and provides 

the agency order with additional 

opportunities for potential price 

improvement. 

In contrast, when the facilitating 

Electronic Access Member’s contra 

order, contra-side Complex Order, or 

Counter-Side Order includes a short 

sale order in the underlying covered 

security, the auction must be allocated 

at a price that is short sell compliant. In 

this case, each short sale compliant 

price would be considered in 

determining the price at which the 

Complex SOM, Complex Facilitation 

and Complex PIM auction may execute 


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71050 Federal Register / Vol. 88, No. 197 / Friday, October 13, 2023 / Notices 

21 15 U.S.C. 78s(b)(3)(A)(iii). 

22 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires the Exchange to give the 

Commission written notice of its intent to file the 

proposed rule change, along with a brief description 

and text of the proposed rule change, at least five 

business days prior to the date of filing of the 

proposed rule change, or such shorter time as 

designated by the Commission. The Exchange has 

satisfied this requirement. 

and, because the Electronic Access 

Member contra order, solicited contraside Complex Order, or Counter-Side 

Order are short, the Exchange will only 

consider prices that comply with the 

short sale price test in Rule 201 of 

Regulation SHO. As a result, the auction 

may allocate at the agency order’s stated 

limited price or better depending on the 

prices of the responses. Also, the 

auction responses may execute at their 

stated limited price or better depending 

on the final auction price. The Exchange 

believes its proposal is consistent with 

the Act and the protection of investors 

because both the agency order and 

responders may receive a better price in 

this case. This is in contrast to the prior 

scenario where the Electronic Access 

Member’s contra order, contra-side 

solicited Complex Order, or CounterSide Order does not need to comply 

with the short sale price test. Utilizing 

the proposed stated limit price or better 

where a Member’s contra order, contraside solicited Complex Order, or 

Counter-Side Order includes a short sale 

order allows the Exchange to potentially 

provide a price improvement 

opportunity to the agency order and to 

the auction response. With the proposed 

amendments, Complex SOM, Complex 

Facilitation, and Complex PIM auction 

responders who submit a response 

would be aware of the auction price that 

would comply with the short sale price 

test in Rule 201 of Regulation SHO. The 

proposed amendment allows Members 

to participate in auctions with a short 

sale response and such participation 

facilitates competition in these auctions. 

This proposed approach is in lieu of 

prohibiting Members whose auction 

Responses or resting Limit Complex 

Orders include a short sale order from 

responding to these auctions, which 

would limit competition in the auction. 

By allowing additional responses to 

participate in the auction, the Exchange 

believes that the proposal would benefit 

investors and the public interest 

because the additional interest may 

increase competition in these auctions, 

which may lead to better prices. 

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. 

Where a response, Improvement 

Order, or an unrelated limit complex 

order includes a short sale order in the 

underlying covered security, executing 

such order at its stated limit price when 

the facilitating Electronic Access 

Member’s contra order, contra-side 

Complex Order, or Counter-Side Order 

does not include a short sale order in 

the underlying covered security does 

not impose an undue burden on intramarket competition because the 

Exchange would uniformly consider all 

prices submitted by responders in 

determining the allocation price because 

the Electronic Access Member’s contra 

order, contra-side solicited Complex 

Order, or Counter-Side Order does not 

need to comply with the short sale price 

test in Rule 201 of Regulation SHO 

because the order is not short. Where a 

response, Improvement Order, or an 

unrelated limit complex order includes 

a short sale order in the underlying 

covered security, executing such order 

at its stated limit price or better when 

the facilitating Electronic Access 

Member’s contra order, contra-side 

Complex Order, or Counter-Side Order 

is also a short sale order in the 

underlying covered security component 

does not impose an undue burden on 

intra-market competition because the 

Exchange would uniformly consider all 

prices that are compliant with the short 

sale price test when allocating the 

auction. 

Where a response, Improvement 

Order, or an unrelated limit complex 

order includes a short sale order in the 

underlying covered security, executing 

such order at its stated limit price when 

the facilitating Electronic Access 

Member’s contra order, contra-side 

Complex Order, or Counter-Side Order 

does not include a short sale order in 

the underlying covered security and 

executing such order its stated limit 

price or better when the facilitating 

Electronic Access Member contra-order, 

solicited contra-side Complex Order, or 

Counter-Side Order is also a short sale 

order in the underlying covered security 

component does not impose an undue 

burden on inter-market competition 

because other options exchanges today 

may offer a similar process for handling 

stock-tied transactions that have a short 

sale order. 

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 

Because the foregoing proposed rule 

change does not: (i) significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 21 and Rule 

19b–4(f)(6) thereunder.22

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 necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

ISE–2023–22 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–2023–22. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 197 / Friday, October 13, 2023 / Notices 71051 

23 17 CFR 200.30–3(a)(12), (59). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). 

4See Securities Exchange Act Release No. 98176 

(August 21, 2023), 88 FR 58342. 

5 15 U.S.C. 78s(b)(3)(C). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 98656, 

88 FR 68680 (October 4, 2023). 

8 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 3See FINRA Rules 12208, 13208 and 14106. 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

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–2023–22 and should be 

submitted on or before November 3, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

J. Lynn Taylor, 

Assistant Secretary. 

[FR Doc. 2023–22611 Filed 10–12–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98691; File No. SR– 

EMERALD–2023–19] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Notice of Withdrawal of 

Proposed Rule Change To Amend the 

Fee Schedule To Modify Certain 

Connectivity Fees and Ports Fees 

October 5, 2023. 

On August 8, 2023, MIAX Emerald, 

LLC (‘‘MIAX Emerald’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’),1 and 

Rule 19b–4 thereunder,2 a proposed rule 

change to amend certain connectivity 

and port fees. 

The proposed rule change was 

immediately effective upon filing with 

the Commission pursuant to section 

19(b)(3)(A) of the Act.3 The proposed 

rule change was published for comment 

in the Federal Register on August 25, 

2023.4 On September 29, 2023, pursuant 

to section 19(b)(3)(C) of the Act,5 the 

Commission: (1) temporarily suspended 

the proposed rule change; and (2) 

instituted proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change.7 On October 2, 

2023, the Exchange withdrew the 

proposed rule change (SR–EMERALD– 

2023–19). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22505 Filed 10–12–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98703; File No. SR–FINRA– 

2023–013] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of a 

Proposed Rule Change To Amend the 

FINRA Codes of Arbitration Procedure 

and Code of Mediation Procedure To 

Revise and Restate the Qualifications 

for Representatives in Arbitrations and 

Mediations 

October 6, 2023. 

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 

5, 2023, the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

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 FINRA. 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 

FINRA is proposing to amend FINRA 

Rule 12208(b) through (d) of the Code of 

Arbitration Procedure for Customer 

Disputes (‘‘Customer Code’’), FINRA 

Rule 13208(b) through (d) of the Code of 

Arbitration Procedure for Industry 

Disputes (‘‘Industry Code’’) and FINRA 

Rule 14106(b) through (d) of the Code of 

Mediation Procedure (‘‘Mediation 

Code’’ and collectively, ‘‘Codes’’), to 

revise and restate the qualifications for 

representatives in arbitrations and 

mediations in the forum administered 

by FINRA Dispute Resolution Services 

(‘‘DRS’’); to disallow compensated 

representatives who are not attorneys 

from representing parties in the DRS 

forum; to codify that a student enrolled 

in a law school participating in a law 

school clinical program or its equivalent 

and practicing under the supervision of 

an attorney may represent investors in 

the DRS forum; and to clarify the 

circumstances in which any person, 

including attorneys, would be 

prohibited from representing parties in 

the DRS forum. 

The text of the proposed rule change 

is available on FINRA’s website at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 

Background 

The Codes currently permit parties to 

arbitrations and mediations in the DRS 

forum to represent themselves, to be 

represented by an attorney at law in 

good standing or to be represented by a 

non-attorney representative (‘‘NAR’’).3

Some NARs receive compensation in 

connection with their representation of 

parties (‘‘compensated NARs’’). 

Compensated NARs receive monetary or 

non-monetary compensation in 

connection with the representation of 

parties—including, for example, 

advance fees, consulting fees, payments 

in kind, referral fees or fees pursuant to 

a contingent fee arrangement. Other 

NARs, often friends or relatives of a 

party, may assist parties with their cases 

without compensation 

(‘‘uncompensated NARs’’). In addition, 

although not specifically provided for in 


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