28272 Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Market Makers’’ refers to 

‘‘Competitive Market Makers’’ and ‘‘Primary Market 

Makers’’ collectively. See ISE Rule 100(a)(28). 

4 ‘‘Non-Select Symbols’’ are options overlying all 

symbols excluding Select Symbols. ‘‘Select 

Symbols’’ are options overlying all symbols listed 

on ISE that are in the Penny Pilot Program. 

5A ‘‘Flash Order’’ is an order that is exposed at 

the National Best Bid and Offer by the Exchange to 

all Members for execution prior to routing the order 

to another exchange or cancelling it, as provided 

under Supplementary Material .02 to ISE Rule 1901. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(4) and (5). 

8Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(‘‘Regulation NMS Adopting Release’’). 

9NetCoalition v. SEC, 615 F.3d 525 (DC Cir. 

2010). 

10See NetCoalition, at 534–535. 

11 Id. at 537. 

12 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)). 

SUPPLEMENTARY INFORMATION: The 

United States Postal Service® hereby 

gives notice that, pursuant to 39 U.S.C. 

3642 and 3632(b)(3), on June 12, 2018, 

it filed with the Postal Regulatory 

Commission a USPS Request to Add 

Priority Mail Contract 443 to 

Competitive Product List. Documents 

are available at www.prc.gov, Docket 

Nos. MC2018–168, CP2018–240. 

Elizabeth Reed, 

Attorney, Corporate and Postal Business Law. 

[FR Doc. 2018–12956 Filed 6–15–18; 8:45 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83411; File No. SR–ISE– 

2018–50] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Section IV.D of 

the Exchange’s Schedule of Fees 

June 12, 2018. 

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 May 30, 

2018, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to Section 

IV.D. of the Exchange’s Schedule of 

Fees, as described further below. The 

text of the proposed rule change is 

available on the Exchange’s website at 

http://ise.cchwallstreet.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this proposed rule 

change is to amend certain Market 

Maker 3 fees for Regular Orders in NonSelect Symbols 4 and FX Options. 

Presently, the Exchange charges a 

base execution fee of $0.25 per contract 

to Members who trade 250,000 contracts 

or less in a calendar month in NonSelect Symbols and FX Options, and a 

fee of $0.20 per contract if a Member 

trades more than 250,000 contracts in 

Non-Select Symbols and FX Options in 

a calendar month. In addition, once a 

Member reaches the highest tier, the fee 

applicable to that tier will apply 

retroactively to all Market Maker 

contracts for Regular Orders in NonSelect Symbols and FX Options. 

Presently, the Exchange waives this fee 

entirely for Market Makers that execute 

Flash Orders.5

The Exchange proposes to eliminate 

this fee waiver for Flash Orders, such 

that Market Makers that execute Flash 

Orders will be subject to one of the two 

foregoing fee tiers. However, the 

Exchange notes that Flash Orders will 

remain exempt from the $0.70 per 

contract Marketing Fee that it otherwise 

charges to Market Makers pursuant to 

Section IV.E of the Exchange’s Schedule 

of Fees. The Exchange will also 

continue to provide credits to Market 

Makers that respond to Customer Flash 

Orders, pursuant to Section IV.G. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,6 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,7 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees, and other charges 

among members and issuers and other 

persons using any facility, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

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.’’ 8

Likewise, in NetCoalition v. Securities 

and Exchange Commission 9

(‘‘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 costbased approach.10 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.’’ 11

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 brokerdealers 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’ . . . .’’ 12 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 it is reasonable 

and equitable to eliminate the fee 

waiver for Flash orders because the fee 

that the Exchange proposes to charge for 


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Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 28273 

13See Miax Options Options Fee Schedule, 

Section 1(b) (Mar. 1, 2018); CBOE Exchange Inc. 

Fees Schedule (May 1, 2018). 

14See Miax Options Options Fee Schedule, 

Section 1(b) (Mar. 1, 2018); CBOE Exchange Inc. 

Fees Schedule (May 1, 2018). 

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

16 17 CFR 240.19b–4(f)(2). 17 17 CFR 200.30–3(a)(12). 

such orders are within the range of fees 

assessed by other exchanges employing 

similar pricing schemes. As noted 

above, pursuant to Section IV.E of the 

Exchange’s Schedule of Fees, the 

Exchange does not charge a $.70 per 

contract marketing fee for Flash Orders, 

whereas MIAX and CBOE do so.13 The 

Exchange also provides a credit to 

Market Makers that respond to Flash 

Orders, pursuant to Section IV.G. As 

such, even with the proposed rule 

change, the Exchange’s fee structure for 

Flash Orders will remain materially less 

expensive than the fee structures of 

other exchanges. Moreover, the 

Exchange operates in a highly 

competitive market in which market 

participants can readily direct order 

flow to another exchange if they deem 

fee levels at a particular exchange to be 

excessive. 

The Exchange also believes its 

proposal is not unfairly discriminatory 

because the proposed fees for Flash 

Orders would apply uniformly to all 

similarly situated Market Makers. 

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. In terms of 

inter-market competition, 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 and 

with alternative trading systems 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. 

In this instance, the Exchange’s 

proposal does not impose a burden on 

competition because the Exchange’s 

execution services are completely 

voluntary and subject to extensive 

competition both from other exchanges 

and from off-exchange venues. 

Moreover, even with the proposed rule 

change, the range of fees that Exchange 

proposes to charge its Market Makers for 

Flash orders will remain competitive 

with the fees that other exchange 

charge. As noted above, pursuant to 

Section IV.E of the Exchange’s Schedule 

of Fees, the Exchange does not charge a 

$.70 per contract marketing fee for Flash 

Orders, whereas MIAX and CBOE do 

so.14 The Exchange also provides a 

credit to Market Makers that respond to 

Flash Orders, pursuant to Section IV.G. 

Thus, even with the proposed rule 

change, the Exchange’s fee structure for 

Flash Orders will remain materially less 

expensive than the fee structures of 

other exchanges. 

In sum, if the changes proposed 

herein are unattractive to market 

participants, it is likely that the 

Exchange will lose market share as a 

result. Accordingly, the Exchange does 

not believe that the proposed changes 

will impair the ability of members or 

competing order execution venues to 

maintain their competitive standing in 

the financial markets. 

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,15 and Rule 

19b–4(f)(2) 16 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. 

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 rule-comments@

sec.gov. Please include File Number SR– 

ISE–2018–50 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–2018–50. 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–2018–50 and should be 

submitted on or before July 9, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12927 Filed 6–15–18; 8:45 am] 

BILLING CODE 8011–01–P 


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