```

[Federal Register Volume 83, Number 140 (Friday, July 20, 2018)]
[Notices]
[Pages 34625-34630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15503]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83639; File No. SR-ISE-2018-61]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Schedule of Fees To Add Establish Fees and Rebates for NQX 
Options and Make Several Clarifying Changes

July 16, 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 July 2, 2018, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Schedule of Fees.
    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

[[Page 34626]]

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 recently received approval to list index options on 
the Nasdaq 100 Reduced Value Index (``NQX'') on a pilot basis.\3\ The 
Exchange began to list NQX on June 26, 2018, and filed on the same day 
a proposed rule change that waived fees and rebates for executions in 
NQX options from June 26-29, 2018.\4\ The Exchange now proposes to 
amend its Schedule of Fees to adopt pricing for NQX.
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    \3\ See Securities Exchange Act Release No. 82911 (March 20, 
2018), 83 FR 12966 (March 26, 2018) (SR-ISE-2017-106). The NQX 
options contract is the same in all respects as the current Nasdaq-
100 Index options contract (``NDX'') listed on the Exchange, except 
that NQX is P.M. settled and based on \1/5\ of the value of the 
Nasdaq 100 Index. The Exchange notes that similar features are 
available with other index options contracts listed on the Exchange, 
including P.M. settled options on the full value of the Nasdaq 100 
Index (``NDXP'').
    \4\ See SR-ISE-2018-58 (not yet published).
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    By way of background, certain proprietary products such as NDX and 
NDXP are commonly included in or excluded from a variety of fee and 
rebate programs. The Exchange notes that the reason these products are 
often included in or excluded from certain programs is because the 
Exchange has expended considerable resources developing and maintaining 
its proprietary products. Similar to NDX and NDXP, NQX is a proprietary 
product. As such, the Exchange proposes to establish transaction fees 
for NQX options that are similarly structured to the transaction fees 
for NDX and NDXP options with some differences as noted below. The 
Exchange also proposes to similarly include or exclude NQX options from 
several programs from which NDX and NDXP options are currently included 
or excluded. Lastly, the Exchange proposes a number of clarifying 
changes to the Schedule of Fees. Each change is discussed below.
Transaction Fees for NQX Options
    The Exchange proposes to establish transaction fees and rebates for 
adding or removing liquidity from ISE (i.e., maker/taker fees and 
rebates) in NQX options. The proposed maker/taker fees and rebates for 
NQX will apply to executions in both the regular and complex order 
book, according to the following schedule:

------------------------------------------------------------------------
       Market participant          Maker fee/rebate    Taker fee/rebate
------------------------------------------------------------------------
Market Maker....................             ($0.25)               $0.00
Market Maker (for orders sent by              (0.25)                0.00
 Electronic Access Members).....
Non-Nasdaq ISE Market Maker                     0.25                0.25
 (FarMM)........................
Firm Proprietary/Broker-Dealer..                0.25                0.25
Professional Customer...........                0.25                0.25
Priority Customer...............                0.00                0.00
------------------------------------------------------------------------

    The proposed pricing for NQX is similarly structured to how the 
Exchange currently prices its other proprietary products, NDX and NDXP, 
in that Non-Priority Customers,\5\ except for Market Makers (i.e., 
Primary Market Makers and Competitive Market Makers) in this case, will 
be charged uniform transaction fees and Priority Customers \6\ will not 
be charged any fees.\7\ Furthermore, the proposed pricing for NQX will 
similarly apply to all executions in NQX, including Non-Priority 
Customer Crossing Orders \8\ in NQX. Unlike NDX and NDXP, which are 
currently charged the applicable complex order fees for Non-Select 
Symbols (i.e., options overlying all symbols that are not in the Penny 
Program) in Section II, the proposed pricing for NQX applies to both 
regular and complex executions in NQX orders. The Exchange believes 
that this will promote trading activity in the new product since 
complex executions in Non-Priority Customer NQX orders will mainly be 
charged at a lower rate.\9\
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    \5\ ``Non-Priority Customers'' include Market Makers, Non-Nasdaq 
ISE Market Makers, Firm Proprietary/Broker-Dealers, and Professional 
Customers.
    \6\ A ``Priority Customer'' is a person or entity that is not a 
broker/dealer in securities, and does not place more than 390 orders 
in listed options per day on average during a calendar month for its 
own beneficial account(s), as defined in Nasdaq ISE Rule 
100(a)(37A).
    \7\ See Securities Exchange Act Releases No. 80637 (May 10, 
2017), 82 FR 22576 (May 16, 2017) (SR-ISE-2017-35) (among other 
changes, establishing flat transaction fees for executions of 
regular NDX orders) and No. 83144 (May 1, 2018), 83 FR 20107 (May 7, 
2018) (SR-ISE-2018-38) (among other changes, establishing flat 
transaction fees for executions of regular NDXP orders).
    \8\ A ``Crossing Order'' is an order executed in the Exchange's 
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement 
Mechanism (PIM) or submitted as a Qualified Contingent Cross order. 
For purposes of the fee schedule, orders executed in the Block Order 
Mechanism are also considered Crossing Orders.
    \9\ For instance, a Non-Priority Customer complex order in a 
Non-Select Symbol (when trading against a Priority Customer) would 
normally be charged maker/taker fees ranging from $0.86 to $0.88 per 
contract. See Maker and Taker fee schedule in Section II. NQX is a 
Non-Select Symbol.
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    The proposed pricing for Market Maker orders, including those 
orders sent by Electronic Access Members (``EAMs''), is intended to 
encourage Market Maker activity in NQX, and the Exchange believes that 
the $0.25 per contract maker rebate and taker fee waiver for Market 
Maker orders will provide such incentive. In addition, the proposed 
$0.25 per contract maker rebate is intended to offset the proposed NQX 
license surcharge, as further discussed below, and will further 
incentivize Market Makers to provide liquidity in the new product 
during the initial months of trading.
    In connection the foregoing changes, the Exchange proposes to 
remove language related to the NQX fee holiday from June 26-30, 2018 
from its Schedule of Fees. The Exchange also proposes to relocate the 
pricing for NDX and NDXP presently set forth in the separate table 
entitled ``Index Options'' within Section I, and the Non-Priority 
Customer license surcharge for index options presently within Section 
IV.C, to group them with the proposed fees and rebates for NQX. The 
Exchange proposes to set forth the foregoing index options fees in 
Section III, which currently contains pricing for FX options, and 
retitle that section as ``Index Options Fees and Rebates.'' FX options 
ceased trading on the Exchange upon the January 2018 expiry, after 
which the Exchange determined not to list additional expiry contracts 
for FX options. No market participant has traded FX options on the 
Exchange as of the January 2018 expiry. As such, the Exchange proposes 
to remove all references to specific pricing for FX options from its 
Schedule of Fees.

[[Page 34627]]

    The Exchange proposes in the new Section III to restructure the 
index options fees described above into three separate subsections. 
First, the Exchange proposes to add a new subsection A, and list the 
transaction fees for NDX and NDXP in this subsection. As noted above, 
the fees are not being amended; rather, the existing fees in Section I 
are being relocated into Section III.A. The rule text in corresponding 
note 7 in Section I will be deleted since the substance is being 
relocated to Section III.A. Section III.A will be titled, ``NDX Index 
Options Fees for Regular Orders'' to clarify that these fees apply to 
executions in regular NDX and NDXP orders only, and the Exchange will 
separately note in Section III.A that for all executions in complex NDX 
and NDXP orders, the applicable complex order fees for Non-Select 
Symbols in Section II will apply.\10\
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    \10\ For purposes of the Schedule of Fees, ``NDX'' is defined 
therein as A.M. or P.M. settled options on the full value of the 
Nasdaq 100 Index, and therefore includes both NDX and NDXP options.
---------------------------------------------------------------------------

    Second, the Exchange proposes to add a new subsection B, and list 
the proposed maker/taker fees and rebates for NQX, as discussed above, 
in this subsection. Section III.B will be titled, ``NQX Index Options 
Fees and Rebates for Regular and Complex Orders'' to clarify that these 
fees and rebates apply to executions in both regular and complex NQX 
orders.
    Third, the Exchange proposes to add a new subsection C, and list 
the various Non-Priority Customer license surcharge fee amounts for the 
specified index options. Other than to include the proposed NQX license 
surcharge as further discussed below, the current fees are not being 
amended; rather, the existing fees in Section IV.C are being relocated 
into Section III.C. Section III.C will be titled, ``Non-Priority 
Customer License Surcharge for Index Options.''
    The Exchange considers it appropriate to group the index options 
fees as described above so that ISE's pricing for index options may be 
easily located within its fee schedule. For the sake of clarity, the 
Exchange also proposes to note within Section I that for all executions 
in regular NDX, NDXP and NQX orders, the applicable index options fees 
in Section III will apply. The Exchange similarly proposes to note 
within Section II that for all executions in complex NQX orders, the 
NQX index options fees in Section III will apply. The Exchange believes 
that the proposed cross references will clarify how its pricing for 
NDX, NDXP and NQX will apply.
Priority Customer Complex Rebates
    Today, the tiered Priority Customer Complex Rebates in Section II 
of the Schedule of Fees are not paid for NDX or NDXP. Under the 
Exchange's proposal, the Priority Customer Complex Rebates will 
likewise not be paid for NQX.
Non-Priority Customer License Surcharge
    Today as set forth in Section IV.C, the Exchange assesses a license 
surcharge of $0.25 per contract for all Non-Priority Customer orders in 
NDX and NDXP, which applies to all executions in those symbols, 
including executions of NDX and NDXP orders that are routed to away 
markets in connection with the Options Order Protection and Locked/
Crossed Market Plan (the ``Plan'').\11\ The Exchange now proposes to 
apply the $0.25 per contract Non-Priority Customer license surcharge to 
NQX in order to recoup the costs associated with listing this 
proprietary product. Unlike NDX and NDXP, the Exchange is not proposing 
to apply this surcharge to NQX orders that are routed away at this time 
because NQX is currently listed exclusively on ISE. If NQX begins 
listing on any of the other Nasdaq, Inc.-owned exchanges, the Exchange 
will file any necessary rule change proposals with the Commission to 
apply the $0.25 per contract surcharge in addition to the $0.95 per 
contract route-out fee for those NQX orders that are routed away.\12\
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    \11\ The Exchange applies a route-out fee to executions of 
orders in all symbols that are routed to away markets in connection 
with the Plan. Specifically, Non-Priority Customer orders in Non-
Select Symbols pay a route-out fee of $0.95 per contract. NDX and 
NDXP are Non-Select Symbols. See Schedule of Fees, Section IV.F.
    \12\ NQX is a Non-Select Symbol.
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Marketing Fee
    By way of background, the Exchange administers a marketing fee 
program that helps Market Makers establish marketing fee arrangements 
with EAMs in exchange for those EAMs routing some or all of their order 
flow to the Market Maker. This program is funded through a fee of $0.70 
per contract, which is paid by Market Makers for each regular Priority 
Customer contract executed in Non-Select Symbols.\13\ This fee is 
currently waived for NDX and NDXP orders. The Exchange proposes to 
similarly waive the marketing fee for NQX orders.
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    \13\ See Schedule of Fees, Section IV.E.
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Crossing Fee Cap
    As set forth in Section IV.H of the Schedule of Fees, the Exchange 
currently caps Crossing Order fees at $90,000 per month per member on 
all Firm Proprietary \14\ and Non-Nasdaq ISE Market Maker \15\ 
transactions that are part of the originating or contra side of a 
Crossing Order. Surcharge fees charged by the Exchange for licensed 
products (e.g., the $0.25 per contract license surcharge for NDX and 
NDXP) and the fees for index options as set forth in Section I (e.g., 
the $0.75 per contract fees for NDX and NDXP) are currently excluded 
from the calculation of this monthly fee cap. The Exchange now proposes 
to similarly exclude the license surcharge and fees for NQX from the 
calculation of the monthly Crossing Fee Cap. The Exchange also proposes 
to amend language in Section IV.H that currently states, ``Surcharge 
fees charged by the Exchange for licensed products and the fees for 
index options as set forth in Section I . . .'' by replacing the 
reference to Section I with Section III to reflect the proposed 
relocation of various index options fees, as further described above.
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    \14\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \15\ A ``Non-Nasdaq ISE Market Maker'' is a market maker as 
defined in Section 3(a)(38) of the Securities Exchange Act of 1934, 
as amended, registered in the same options class on another options 
exchange.
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Clean-Up Changes
    Lastly, the Exchange proposes a number of clarifying changes to its 
Schedule of Fees. In Section I, the Exchange proposes to amend note 6, 
which currently reads: ``Market Maker fees are subject to tier 
discounts, as provided in Section IV.C.'' The Exchange seeks to update 
the reference to Section IV.C, which presently sets forth the Non-
Priority Customer license surcharge for index options, to Section IV.D, 
which sets forth the Market Maker discount tiers.\16\ In Section II, 
the Exchange proposes to delete the stray references to note 5, which 
is currently reserved, from the maker and taker fee schedule.\17\
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    \16\ The Exchange recently filed a rule change that renumbered 
the subsection containing the market maker tier discounts from 
Section IV.C to Section IV.D, but did not update the specific 
references within the fee schedule. See Securities Exchange Act 
Release No. 83002 (April 5, 2018), 83 FR 15655 (April 11, 2018) (SR-
ISE-2018-27).
    \17\ The Exchange recently filed a proposed rule change to 
delete the rule text within note 5, but did not delete the 
references to the note from maker and taker fee schedule in Section 
II. See Securities Exchange Act Release No. 83431 (June 14, 2018), 
83 FR 28681 (June 20, 2018) (SR-ISE-2018-51).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b)

[[Page 34628]]

of the Act,\18\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\19\ 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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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
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Transaction Fees for NQX Options
    The Exchange believes that it is reasonable to assess the proposed 
maker/taker fees and rebates as discussed above for NQX because NQX 
will be an exclusively listed product on ISE only. Similar to NDX and 
NDXP, the Exchange seeks to recoup the operational costs for listing 
proprietary products.\20\ Also, pricing by symbol is a common practice 
on many U.S. options exchanges as a means to incentivize order flow to 
be sent to an exchange for execution in particular products. Other 
options exchanges price by symbol.\21\ Further, the Exchange notes that 
with its products, market participants are offered an opportunity to 
either transact NQX or separately execute PowerShares QQQ Trust 
(``QQQ'') options.\22\ Offering products such as QQQ provides market 
participants with a variety of choices in selecting the product they 
desire to utilize to transact the Nasdaq 100 Index.\23\ When exchanges 
are able to recoup costs associated with offering proprietary products, 
it incentivizes growth and competition for the innovation of additional 
products. The Exchange also believes that it is reasonable to assess 
the proposed fees and rebates for both regular and complex executions 
in NQX options, unlike NDX and NDXP which are assessed the normal 
complex rates in Section II, because the Exchange believes that this 
will promote trading activity in NQX as further discussed above.
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    \20\ For example, in analyzing an obvious error, the Exchange 
would have additional data points available in establishing a 
theoretical price for a multiply listed option as compared to a 
proprietary product, which requires additional analysis and 
administrative time to comply with Exchange rules to resolve an 
obvious error.
    \21\ See pricing for Russell 2000 Index (``RUT'') on Chicago 
Board Options Exchange, Incorporated's (``CBOE'') Fees Schedule and 
on CBOE C2 Exchange, Inc.'s (``C2'') Fees Schedule.
    \22\ QQQ is an exchange-traded fund based on the Nasdaq 100 
Index.
    \23\ QQQ options overlie the same index as NDX, namely the 
Nasdaq 100 Index. This relationship between QQQ options and NDX 
options is similar to the relationship between RUT and the iShares 
Russell 2000 Index (``IWM''), which is the ETF on RUT.
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable, equitable and not 
unfairly discriminatory to provide a maker rebate of $0.25 per contract 
and assess no taker fee to Maker Makers as compared to other market 
participants because Market Makers, unlike other market participants, 
take on a number of obligations, including quoting obligations, that 
other market participants do not have. Further, the proposed pricing 
for Market Maker orders in NQX are intended to incentivize Market 
Makers to quote and trade more on the Exchange, thereby providing more 
trading opportunities for all market participants. As noted above, the 
$0.25 per contract maker rebate is intended to offset the $0.25 per 
contract NQX license surcharge, and the Exchange believes this will 
further incentivize Market Makers to provide liquidity in the new 
product during the initial months of trading. Additionally, the 
proposed NQX pricing for Market Makers will be applied equally to all 
Market Maker orders (including those orders sent by an EAM), as further 
discussed above.
    The Exchange also believes that it is reasonable, equitable and not 
unfairly discriminatory to assess no transaction fees to Priority 
Customer orders in NQX because Priority Customer order flow enhances 
liquidity on the Exchange for the benefit of all market participants. 
Priority Customer liquidity provides more trading opportunities, which 
attracts Market Makers. An increase in the activity of these market 
participants in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow from other market 
participants. The proposed pricing for Priority Customer orders in NQX 
is intended to attract more Priority Customer trading volume to the 
Exchange. In addition, the proposed NQX pricing for Priority Customers 
will apply equally to all Priority Customer orders, as further 
discussed above.
    The Exchange further believes that the proposed fee of $0.25 per 
contract for Non-Nasdaq ISE Market Maker, Firm Proprietary/Broker-
Dealer,\24\ and Professional Customer \25\ orders in NQX is reasonable, 
equitable and not unfairly discriminatory because they are well within 
the range of amounts assessed for the Exchange's other proprietary 
products, including the $0.75 per contract fee charged to those market 
participant orders in NDX and NDXP.\26\ The lower fee amount of $0.25 
per contract for NQX options as compared to $0.75 per contract for NDX 
and NDXP options is reasonable because NQX options is based on \1/5\ of 
the value of the Nasdaq 100 Index whereas both NDX and NDXP are based 
on the full value of the Nasdaq 100, and the Exchange therefore seeks 
to assess corresponding reduced fees for this product. In addition, the 
proposed pricing for Non-Nasdaq ISE Market Maker, Firm Proprietary/
Broker-Dealer, and Professional Customer orders in NQX will be applied 
equally to those market participants, as further discussed above.
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    \24\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account.
    \25\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
    \26\ See Index Options pricing table in the Schedule of Fees, 
Section I.
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    The Exchange believes that the proposed changes to eliminate 
language related to the NQX fee holiday, relocate and group the various 
index options fees within the Schedule of Fees, and make all of the 
clarifying changes related to the relocation, each as discussed above, 
are reasonable, equitable and not unfairly discriminatory. The proposed 
changes are all intended to bring greater clarity to the Schedule of 
Fees and will ensure that ISE's pricing for index options may be easily 
located within its fee schedule. Finally, the Exchange believes that 
its proposal to remove obsolete references to specific pricing for FX 
options from its Schedule of Fees is reasonable, equitable and not 
unfairly discriminatory because FX options ceased trading on the 
Exchange upon the January 2018 expiry, as discussed above, and the 
specific pricing for FX options is therefore no longer applicable. No 
market participant can trade any FX options on ISE since the Exchange 
has determined not to list additional expiry contracts.
Priority Customer Complex Rebates
    The Exchange believes that its proposal to eliminate the Priority 
Customer Complex Rebates for NQX is reasonable because even after the 
elimination of the rebate, Priority Customer complex orders in NQX will 
not be assessed any complex order transaction fees. As noted above, the 
Priority Customer Complex Rebates are likewise currently eliminated for 
NDX and NDXP. By contrast, public customer executions on C2 in RUT are 
subject to a $0.15 per contract transaction fee.\27\
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    \27\ See C2's Fees Schedule, Section 1.C.
---------------------------------------------------------------------------

    The Exchange's proposal to eliminate the Priority Customer Complex 
Rebates for NQX is equitable and not unfairly

[[Page 34629]]

discriminatory because the Exchange will eliminate the rebate for all 
similarly situated members.
Non-Priority Customer License Surcharge
    The Exchange believes that its proposal to charge a $0.25 per 
contract Non-Priority Customer license surcharge for NQX is reasonable 
because the fee amount is the same as the amount for NDX and NDXP, and 
lower when compared to the $0.45 per contract surcharge C2 applies to 
non-public customer transactions in RUT.\28\ The proposed license 
surcharge for NQX will also help recoup costs associated with listing 
proprietary products. The Exchange also believes that its proposal to 
not apply the Non-Priority Customer license surcharge to NQX orders 
that are routed to away markets in connection with the Plan is 
reasonable because NQX is currently an exclusively listed product, as 
discussed above.
---------------------------------------------------------------------------

    \28\ See C2's Fees Schedule, Section 1.D.
---------------------------------------------------------------------------

    Further, the Exchange believes that its proposal to assess a Non-
Priority Customer license surcharge of $0.25 per contract to NQX 
options is equitable and not unfairly discriminatory because the 
Exchange will apply the same surcharge for all similarly situated 
members in a similar manner. The Exchange also believes that it is 
equitable and not unfairly discriminatory to not assess the surcharge 
to Priority Customer orders in NQX because Priority Customer orders 
bring valuable liquidity to the market, which in turn benefits other 
market participants.
Marketing Fee
    The Exchange believes that its proposal to exclude NQX from the 
$0.70 per contract marketing fee is reasonable because the purpose of 
the marketing fee is to attract order flow to the Exchange. Because NQX 
will be an exclusively listed product, a marketing fee whose purpose is 
to attract order flow to the Exchange is no longer necessary for NQX.
    The Exchange's proposal to exclude NQX from the marketing fee is 
equitable and not unfairly discriminatory because the Exchange will 
apply this exclusion to all similarly situated members.
Crossing Fee Cap
    The Exchange believes that its proposal to exclude the Non-Priority 
Customer license surcharge and transaction fees for NQX from the 
calculation of the monthly Crossing Fee Cap is reasonable because NQX 
will be an exclusively listed product. Similar to NDX and NDXP, which 
are also excluded from the Crossing Fee Cap, the Exchange seeks to 
recoup the operational costs for listing proprietary products. The 
Exchange further believes that the proposed exclusion of NQX from the 
Crossing Fee Cap is equitable and not unfairly discriminatory because 
the Exchange will apply the exclusion all similarly situated members. 
The Exchange also believes that it is reasonable, equitable and not 
unfairly discriminatory to amend Section IV.H to include the reference 
to the various index options fees in Section III, as discussed above, 
because it will conform Section IV.H to the changes proposed herein and 
clarify how this provision will be applied.
Clean-Up Changes
    The Exchange believes that the clean-up changes to Sections I and 
II as described above are reasonable, equitable and not unfairly 
discriminatory because they are merely intended to bring greater 
clarity to the Schedule of Fees, to the benefit of all market 
participants.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
its proposal to assess different maker/taker fees and rebates to 
different market participants for NQX options will impose an undue 
burden on competition because different market participants have 
different obligations and circumstances, as further discussed above. 
For example, Market Makers have quoting obligations that other market 
participants do not have. In addition, the Exchange notes that with its 
products, market participants are offered an opportunity to either 
transact NDXP or separately execute QQQ options. Offering products such 
as QQQ provides market participants with a variety of choices in 
selecting the product they desire to utilize to transact the Nasdaq 100 
Index.\29\ Furthermore, the proposed pricing changes will apply 
uniformly to all similarly situated market participants, as discussed 
above. For the foregoing reasons, the Exchange does not believe that 
the proposed changes to adopt pricing for NQX options as described 
above will impose an undue burden on competition.
---------------------------------------------------------------------------

    \29\ See note 23 above.
---------------------------------------------------------------------------

    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.

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,\30\ and Rule 19b-4(f)(2) \31\ 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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    \30\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \31\ 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-2018-61 on the subject line.

[[Page 34630]]

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-2018-61. 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-2018-61 and should be submitted on 
or before August 10, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15503 Filed 7-19-18; 8:45 am]
 BILLING CODE 8011-01-P
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