Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 34625 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the 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. 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6)(iii). 

22For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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 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) of the Act 18 and Rule 19b– 

4(f)(6) thereunder.19

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 20 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 21

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay so that it may allow all 

Members to submit Improvement Orders 

directly into PIM to provide an even 

greater number of GEMX Members an 

opportunity to more directly participate 

in PIM and provide price improvement. 

The Exchange states that it will issue an 

Options Trader Alert to notify Members 

of the date within which this 

functionality will be implemented. The 

Commission believes the waiver of the 

operative delay is consistent with the 

protection of investors and the public 

interest. Accordingly, the Commission 

hereby waives the operative delay and 

designates the proposed rule change 

operative upon filing.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. 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– 

GEMX–2018–25 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–GEMX–2018–25. 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 such 

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–GEMX–2018–25, and 

should be submitted on or before 

August 10, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–15501 Filed 7–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

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. 

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 


daltland on DSKBBV9HB2PROD with NOTICES
34626 Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 

3See 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’’). 

4See SR–ISE–2018–58 (not yet published). 

5 ‘‘Non-Priority Customers’’ include Market 

Makers, Non-Nasdaq ISE Market Makers, Firm 

Proprietary/Broker-Dealers, and Professional 

Customers. 

6A ‘‘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). 

7See 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). 

8A ‘‘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. 

9For 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. 

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. 

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 Electronic Access Members) ............................................................. (0.25) 0.00 

Non-Nasdaq ISE Market Maker (FarMM) ............................................................................................... 0.25 0.25 

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 NonPriority 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

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. 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 34627 

10For 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. 

11The 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 NonSelect 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. 

12NQX is a Non-Select Symbol. 

13See Schedule of Fees, Section IV.E. 

14A ‘‘Firm Proprietary’’ order is an order 

submitted by a member for its own proprietary 

account. 

15A ‘‘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. 

16The 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). 

17The 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). 

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

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

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. 

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. 

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

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 


daltland on DSKBBV9HB2PROD with NOTICES
34628 Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 

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

19 15 U.S.C. 78f(b)(4) and (5). 

20For 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. 

21See 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. 

22QQQ is an exchange-traded fund based on the 

Nasdaq 100 Index. 

23QQQ 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. 

24A ‘‘Broker-Dealer’’ order is an order submitted 

by a member for a broker-dealer account that is not 

its own proprietary account. 

25A ‘‘Professional Customer’’ is a person or entity 

that is not a broker/dealer and is not a Priority 

Customer. 

26See Index Options pricing table in the Schedule 

of Fees, Section I. 

27See C2’s Fees Schedule, Section 1.C. 

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. 

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. 

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. 

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

The Exchange’s proposal to eliminate 

the Priority Customer Complex Rebates 

for NQX is equitable and not unfairly 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 34629 

28See C2’s Fees Schedule, Section 1.D. 29See note 23 above. 

30 15 U.S.C. 78s(b)(3)(A)(ii). 

31 17 CFR 240.19b–4(f)(2). 

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. 

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 cleanup 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. 

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. 

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–2018–61 on the subject line. 


daltland on DSKBBV9HB2PROD with NOTICES
34630 Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 

32 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer that has been admitted 

to membership in the Exchange.’’ See Exchange 

Rule 1.5(n). 

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

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–15503 Filed 7–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83643; File No. SRCboeEDGA–2018–012] 

Self-Regulatory Organizations; Cboe 

EDGA Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Related to Fees 

for Use on Cboe EDGA Exchange, Inc. 

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, Cboe EDGA Exchange, Inc. 

(‘‘Exchange’’ or ‘‘EDGA’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposed rule change as 

one establishing or changing a member 

due, fee, or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change effective upon 

filing with the Commission. 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 filed a proposal to 

amend the fee schedule applicable to 

Members 5 and non-Members of the 

Exchange pursuant to EDGA Rules 

15.1(a) and (c). 

The text of the proposed rule change 

is available at the Exchange’s website at 

www.markets.cboe.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 parts of such 

statements. 

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

fee schedule to (i) amend its pricing 

model, (ii) eliminate Add Volume Tier 

1 and (iii) amend certain routing fees, 

effective July 2, 2018. 

Currently, the Exchange utilizes a low 

pricing model under which it charges a 

low fee or provides the execution free of 

charge. The Exchange proposes to 

amend its fee schedule to replace its 

current low pricing model to an 

inverted pricing model under which the 

Exchange will charge a fee to add 

liquidity and provide a rebate to remove 

liquidity. 

Displayed Order Fee Change 

In securities priced at or above $1.00, 

the Exchange currently charges a fee of 

$0.00030 per share for Displayed orders 

that add or remove liquidity. The 

Exchange proposes to assess a standard 

rate of $0.00080 per share for Displayed 

orders that add liquidity for securities at 

or above $1.00 that are appended with 

fee codes B, V, Y, 3 or 4. The Exchange 

also proposes to provide a rebate of 

$0.00040 per share for orders that 

remove liquidity for securities at or 

above $1.00 that are appended with fee 

codes N, W, 6, or BB. All Displayed 

orders in securities priced below $1.00 

would continue to be free. 

Non-Displayed Order Fee Change 

In securities priced at or above $1.00, 

the Exchange currently charges a fee of 

$0.00050 per share for Non-Displayed 

orders that remove liquidity other than 

orders that yield fee code DT and DR 

(i.e., orders that yield fee codes HR, MT, 

PT). The Exchange notes that it does not 

assess a fee or provide a rebate for NonDisplayed orders that remove liquidity 

using Midpoint Discretionary Orders 

within discretionary range and yield fee 

code DT. The Exchange does assess a fee 

of $0.00030 for Non-Displayed orders 

that remove liquidity using MidPoint 

Discretionary Orders that are not within 

discretionary range and yield fee code 

DR. The Exchange does not currently 

assess a fee or provide a rebate for NonDisplayed orders that add liquidity 

other than orders that yield fee code DA 

(i.e., orders that yield fee codes DM, HA, 

MM, RP, PA). The Exchange does assess 

a fee of $0.00030 per share for NonVerDate Sep<11>2014 18:06 Jul 19, 2018 Jkt 244001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\20JYN1.SGM 20JYN1

daltland on DSKBBV9HB2PROD with NOTICES