84014 Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Notices 

39 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3A ‘‘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 

Options 1, Section 1(a)(37). 

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

symbols excluding Select Symbols. ‘‘Select 

Symbols’’ are options overlying all symbols listed 

on the Exchange that are in the Penny Interval 

Program. 

5 ‘‘Non-Priority Customers’’ include Market 

Makers, Non-Nasdaq ISE Market Makers (FarMMs), 

Firm Proprietary/Broker-Dealers, and Professional 

Customers. 

6See Options 7, Section 3, note 3. 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

ISE–2023–30 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–ISE–2023–30. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

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

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–ISE–2023–30 and should be 

submitted on or before December 22, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–26486 Filed 11–30–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99024; File No. SR–ISE– 

2023–28] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Pricing Schedule at 

Options 7 

November 28, 2023. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

13, 2023, 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 amend the 

Exchange’s Pricing Schedule at Options 

7. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/ise/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

Pricing Schedule at Options 7. Each 

change is described below. 

The Exchange initially filed the 

proposed pricing changes on November 

1, 2023 (SR–ISE–2023–26). On 

November 13, 2023, the Exchange 

withdrew that filing and submitted this 

filing. 

Background 

Regular Order Fees and Rebates 

As set forth in Options 7, Section 3, 

the Exchange currently has a maker/ 

taker pricing model where all market 

participants (except Priority 

Customers) 3 are assessed a uniform 

Regular Order maker fee of $0.70 per 

contract for Non-Select Symbol 4

executions that add liquidity on the 

Exchange, and a uniform Regular Order 

taker fee of $0.90 per contract for NonSelect Symbol executions that remove 

liquidity. Priority Customers are 

currently assessed a $0.86 per contract 

Regular Order maker rebate in NonSelect Symbols and a $0.00 per contract 

Regular Order taker fee in Non-Select 

Symbols. Additionally, all market 

participants are charged higher Regular 

Order taker fees for trades in Non-Select 

Symbols executed against Priority 

Customers. Specifically, Non-Priority 

Customers 5 are charged a taker fee of 

$1.10 per contract for trades executed 

against a Priority Customer, while 

Priority Customers are charged a taker 

fee of $0.86 per contract for trades 

executed against another Priority 

Customer.6

As it relates to the $0.86 per contract 

Priority Customer Regular Order maker 


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7A ‘‘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 this Pricing Schedule, orders 

executed in the Block Order Mechanism are also 

considered Crossing Orders. 

8 ‘‘Responses to Crossing Order’’ is any contraside interest submitted after the commencement of 

an auction in the Exchange’s Facilitation 

Mechanism, Solicited Order Mechanism, Block 

Order Mechanism or PIM. 

9 ‘‘Customer Total Consolidated Volume’’ means 

the total national volume cleared at The Options 

Clearing Corporation in the Customer range in 

equity and ETF options in that month. 

10See Options 7, Section 3, note 15. 

11Priority Customer Complex Tiers are based on 

Total Affiliated Member or Affiliated Entity 

Complex Order Volume (Excluding Crossing Orders 

and Responses to Crossing Orders) Calculated as a 

Percentage of Customer Total Consolidated Volume. 

All Complex Order volume executed on the 

Exchange, including volume executed by Affiliated 

Members, is included in the volume calculation, 

except for volume executed as Crossing Orders and 

Responses to Crossing Orders. Affiliated Entities 

may aggregate their Complex Order volume for 

purposes of calculating Priority Customer Rebates. 

The Appointed OFP would receive the rebate 

associated with the qualifying volume tier based on 

aggregated volume. See Options 7, Section 4, note 

16. 

12See Options 7, Section 4, note 1. 

rebate described above, the Exchange 

also currently offers Members an 

additional rebate of $0.14 per contract if 

they execute more than 0.06% of 

Regular Order Non-Select Symbol 

Priority Customer volume (excluding 

Crossing Orders 7 and Responses to 

Crossing Orders) 8 calculated as a 

percentage of Customer Total 

Consolidated Volume 9 per day in a 

given month (‘‘Note 15 Incentive’’).10

The Note 15 Incentive is designed to 

encourage Members to transact in 

greater Regular Order Non-Select 

Symbol Priority Customer volume on 

the Exchange to receive rebates up to 

$1.00 per contract (i.e., the current $0.86 

base maker rebate plus the additional 

$0.14 Note 15 Incentive). 

Complex Order Fees and Rebates 

As set forth in Options 7, Section 4, 

the Exchange currently offers tiered 

Complex Order Priority Customer 

rebates for Select Symbols and NonSelect Symbols based on the Priority 

Customer Complex Tier achieved.11 The 

tiered Complex Order Priority Customer 

rebates for Select Symbols and NonSelect Symbols are presently as follows: 

TOTAL AFFILIATED MEMBER OR AFFILIATED ENTITY COMPLEX ORDER VOLUME

[Excluding Crossing Orders and Responses to Crossing Orders] 

Priority customer complex tier Calculated as a percentage of customer total consolidated volume Rebate for 

select symbols 

Rebate for 

non-select 

symbols 

Tier 1 ................................................ 0.000%–0.200% ........................................................................................ ($0.25) ($0.40) 

Tier 2 ................................................ Above 0.200%–0.400% ............................................................................. (0.30) (0.55) 

Tier 3 ................................................ Above 0.400%–0.450% ............................................................................. (0.35) (0.70) 

Tier 4 ................................................ Above 0.450%–0.750% ............................................................................. (0.40) (0.75) 

Tier 5 ................................................ Above 0.750%–1.000% ............................................................................. (0.45) (0.80) 

Tier 6 ................................................ Above 1.000%–1.350% ............................................................................. (0.48) (0.85) 

Tier 7 ................................................ Above 1.350%–1.750% ............................................................................. (0.51) (0.92) 

Tier 8 ................................................ Above 1.750%–2.750% ............................................................................. (0.55) (1.03) 

Tier 9 ................................................ Above 2.750%–4.500% ............................................................................. (0.56) (1.04) 

Tier 10 .............................................. Above 4.500% ........................................................................................... (0.57) (1.05) 

The above rebates are provided per 

contract per leg if the order trades with 

Non-Priority Customer orders in the 

Complex Order Book. Today, this rebate 

is reduced by $0.15 per contract in 

Select Symbols where the largest leg of 

the Complex Order is under fifty (50) 

contracts and trades with quotes and 

orders on the regular order book (the 

‘‘Note 1 Rebate Discount’’). No Priority 

Customer Complex Order rebates are 

provided in Select Symbols if any leg of 

the order that trades with interest on the 

regular order book is fifty (50) contracts 

or more. Lastly, no Priority Customer 

Complex Order rebates are provided in 

Non-Select Symbols if any leg of the 

order trades with interest on the regular 

order book, irrespective of order size.12

Separately, the Exchange currently 

assesses Complex Order maker and 

taker fees for Select and Non-Select 

Symbols based on the pricing schedule 

below: 

MAKER AND TAKER FEES

Market participant Maker fee for 

select symbols 

Maker fee for 

non-select 

symbols 

Maker fee for 

select symbols 

when trading 

against priority 

customer 

Maker fee for 

non-select 

symbols when 

trading against 

priority 

customer 

Taker fee for 

select symbols 

Taker fee for 

non- select 

symbols 

Market Maker ........................................... 0.10 0.20 0.50 0.86 0.50 0.98 

Non-Nasdaq ISE Market Maker (FarMM) 0.20 0.20 0.50 0.88 0.50 0.98 

Firm Proprietary/Broker-Dealer ................ 0.10 0.20 0.50 0.88 0.50 0.98 

Professional Customer ............................. 0.10 0.20 0.50 0.88 0.50 0.98 

Priority Customer ..................................... 0.00 0.00 0.00 0.00 0.00 0.00 

Proposal 1—Regular Priority Customer 

Maker Rebates in Non-Select Symbols 

The Exchange proposes to increase 

the Regular Order Non-Select Symbol 

Priority Customer maker rebate in 

Options 7, Section 3 from $0.86 to $1.00 

per contract. 

Proposal 2—Note 15 Incentive 

The Exchange also proposes to amend 

the qualifications for the Note 15 

Incentive by increasing the volume 


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13As discussed later in this filing, the Exchange 

is also proposing a number of changes to the 

Priority Customer Complex Order rebates for both 

Select and Non-Select Symbols in Options 7, 

Section 4. 

14The term ‘‘Market Makers’’ refers to 

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

Makers’’ collectively. See Options 1, Section 

1(a)(21). 

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. 

16A ‘‘Firm Proprietary’’ order is an order 

submitted by a member for its own proprietary 

account. 

threshold from 0.06% to 0.10% of 

Regular Order Non-Select Symbol 

Priority Customer volume on ISE 

(excluding Crossing Orders and 

Responses to Crossing Orders) 

calculated as a percentage of Customer 

Total Consolidated Volume per day in a 

given month. While the Exchange is 

increasing the volume threshold in the 

Note 15 Incentive, the Exchange is not 

amending the $0.14 per contract 

additional rebate under this proposal. 

As such, Members that meet the 

proposed volume threshold may be 

eligible for rebates up to $1.14 per 

contract (i.e., the proposed $1.00 base 

maker rebate plus the additional $0.14 

Note 15 Incentive) on their Priority 

Customer Regular Orders in Non-Select 

Symbols that add liquidity on ISE. 

Further, the Exchange proposes to 

link the amended Note 15 Incentive to 

the Priority Customer Complex Order 

rebates in Options 7, Section 4, as 

further described above. Specifically, 

Members that meet the amended Note 

15 Incentive volume requirement (i.e., 

execute more than 0.10% of regular 

order Non-Select Symbol Priority 

Customer volume on ISE (excluding 

Crossing Orders and Responses to 

Crossing Orders) calculated as a 

percentage of Customer Total 

Consolidated Volume per day in a given 

month) will also be eligible to receive 

the Section 4 Priority Customer 

Complex Order rebates in Select 

Symbols and Non-Select Symbols that 

apply to one tier higher than the tier for 

which they currently qualify. For 

example, if a Member currently qualifies 

for Priority Customer Complex Tier 1 

AND meets the proposed 0.10% volume 

requirement in the Note 15 Incentive, 

that Member will be eligible to receive 

the Priority Customer Complex Tier 2 

rebate for Select Symbols and NonSelect Symbols instead of the Priority 

Customer Complex Tier 1 rebate for 

Select Symbols and Non-Select 

Symbols. The Exchange also proposes 

that Members that already qualify for 

the highest Priority Customer Complex 

Tier (i.e., Tier 10) will instead receive an 

additional rebate of $0.01 per contract 

in Select Symbols and Non-Select 

Symbols because they are already in the 

highest tier (and therefore unable to 

receive the benefit of a higher tier).13

In connection with linking the Note 

15 Incentive with the Priority Customer 

Complex Order rebates in Options 7, 

Section 4, the Exchange also proposes to 

add new note 17 in Options 7, Section 

4 that would provide: ‘‘Members that 

execute more than 0.10% of Regular 

Order Non-Select Symbol Priority 

Customer Volume (excluding Crossing 

Orders and Responses to Crossing 

Orders) calculated as a percentage of 

Customer Total Consolidated Volume 

per day in a given month will be eligible 

to receive the Priority Customer 

Complex Order rebates in Select 

Symbols and Non-Select Symbols that 

apply to one tier higher than the tier for 

which they currently qualify, except 

Members that already qualify for the 

highest Priority Customer Complex Tier 

will instead receive an additional rebate 

of $0.01 per contract in Select Symbols 

and Non-Select Symbols.’’ New note 17 

would make clear that the Priority 

Customer Complex Order rebates in 

Section 4 are linked to the proposed 

volume threshold in the note 15 

incentive, as further described above. 

Proposal 3—Regular Taker Fees in NonSelect Symbols 

The Exchange proposes to increase 

the Regular Order taker fees in note 3 of 

Options 7, Section 3 for trades in NonSelect Symbols that are executed against 

Priority Customers. As proposed, NonPriority Customer orders will be charged 

a taker fee of $1.25 (increased from 

$1.10) per contract for trades executed 

against a Priority Customer. Priority 

Customer orders will be charged a taker 

fee of $1.00 (increased from $0.86) per 

contract for trades executed against a 

Priority Customer. 

Proposal 4—Complex Priority Customer 

Rebates 

The Exchange proposes a number of 

adjustments to the tiered Priority 

Customer Complex Order rebates 

described above. Specifically, the 

Exchange proposes to increase the 

Priority Customer Complex Tier 7 rebate 

in Select Symbols from $0.51 to $0.54 

per contract. The Exchange also 

proposes to increase the Priority 

Customer Complex Order rebates in 

Non-Select Symbols as follows: Tier 1 

would increase from $0.40 to $0.50 per 

contract, Tier 2 would increase from 

$0.55 to $0.60 per contract, Tier 3 

would increase from $0.70 to $0.75 per 

contract, Tier 4 would increase from 

$0.75 to $0.80 per contract, Tier 5 

would increase from $0.80 to $0.85 per 

contract, Tier 6 would increase from 

$0.85 to $0.95 per contract, Tier 7 

would increase from $0.92 to $1.00 per 

contract, Tier 8 would increase from 

$1.03 to $1.10 per contract, Tier 9 

would increase from $1.04 to $1.12 per 

contract, and Tier 10 would increase 

from $1.05 to $1.15 per contract. The 

Exchange is amending the rebate 

amounts without changing the tier 

qualifications so that Members can send 

the same amount of order flow as they 

do today to receive larger rebates 

described above. Overall, the Exchange 

believes that these increased Complex 

Order Priority Customer rebates will 

attract more Complex Order flow to ISE. 

The Exchange also proposes to 

increase the Note 1 Rebate Discount for 

smaller-sized Complex Orders in Select 

Symbols that leg into the regular order 

book and trade with regular interest. 

Today, the Note 1 Rebate Discount 

reduces the Priority Customer Complex 

Tiers 1–10 rebates for Select Symbols by 

$0.15 per contract when the largest leg 

of the Complex Order is under fifty (50) 

contracts and trades with quotes and 

orders on the regular order book. The 

Exchange now proposes to increase this 

reduction to $0.20 per contract. 

Proposal 5—Complex Maker and Taker 

Fees in Non-Select Symbols 

The Exchange proposes to increase 

the Complex Order maker and taker fees 

in Non-Select Symbols described above. 

Specifically, the Exchange proposes to 

increase the maker fees in Non-Select 

Symbols when trading against Priority 

Customers as follows: $0.86 to $1.03 per 

contract for Market Makers 14 and $0.88 

to $1.05 per contract for all other NonPriority Customers. Further, the 

Exchange proposes to increase the taker 

fees in Non-Select Symbols from $0.98 

to $1.15 per contract for all Non-Priority 

Customers. Priority Customers will 

continue to receive free executions for 

their Complex Orders. 

Proposal 6—Routing Fees 

The Exchange proposes to amend the 

Exchange’s Pricing Schedule at Options 

7, Section 6.F (Route-Out Fees). The 

routing fees in this section apply to 

executions of orders in all symbols that 

are routed to one or more exchanges in 

connection with the Options Order 

Protection and Locked/Crossed Market 

Plan. 

Today, the Exchange assesses Market 

Makers, Non-Nasdaq ISE Market Makers 

(FarMM),15 Firm Proprietary 16/BrokerVerDate Sep<11>2014 18:47 Nov 30, 2023 Jkt 262001 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 E:\FR\FM\01DEN1.SGM 01DEN1

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17A ‘‘Broker-Dealer’’ order is an order submitted 

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

its own proprietary account. 

18A ‘‘Professional Customer’’ is a person or entity 

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

Customer. See Options 7, Section 1(c). 

19See Supplementary Material .04 to Options 3, 

Section 7. 

20See MEMX’s Options Fee Schedule at https:// 

info.memxtrading.com/us-options-tradingresources/us-options-fee-schedule/. MEMX assesses 

a $0.60 per contract Penny Symbol routing fee and 

a $1.20 Non-Penny Symbol routing fee. 

21 15 U.S.C. 78f(b). 

22 15 U.S.C. 78f(b)(4) and (5). 

23NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSEArca–2006–21)). 

24Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

Dealers 17 and Professional Customers 18

a $0.55 per contract Select Symbol 

routing fee and a $1.09 Non-Select 

Symbol routing fee to route to another 

options exchange. Additionally, today, 

the Exchange assess Priority Customers 

a $0.48 per contract Select Symbol 

routing fee and a $0.70 Non-Select 

Symbol routing fee to route to another 

options exchange. 

The Exchange now proposes to assess 

a $0.60 per contract Select Symbol 

routing fee and a $1.20 Non-Select 

Symbol routing fee to route to another 

options exchange, regardless of the 

capacity of the order. The purpose of the 

proposed routing fees is to recoup costs 

incurred by the Exchange when routing 

orders to other options exchanges on 

behalf of options Members. In 

determining its proposed routing fees, 

the Exchange took into account 

transaction fees assessed by other 

options exchanges, the Exchange’s 

projected clearing costs, and the 

projected administrative, regulatory, 

and technical costs associated with 

routing orders to other options 

exchanges. The Exchange will continue 

to use its affiliated broker-dealer, 

Nasdaq Execution Services, to route 

orders to other options exchanges. 

Routing services offered by the 

Exchange are completely optional and 

market participants can readily select 

between various providers of routing 

services, including other exchanges and 

broker-dealers. Also, the Exchange notes 

that market participants may elect to 

mark their orders as ‘‘Do-Not-Route’’ to 

avoid any routing fees.19 The proposed 

structure for routing fees is similar to 

another options market.20 The Exchange 

believes that the proposed routing fees 

would enable the Exchange to recover 

the costs it incurs to route orders to 

away markets after taking into account 

the other costs associated with routing 

orders to other options exchanges. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with section 6(b) 

of the Act,21 in general, and furthers the 

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

of the Act,22 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 Exchange’s proposed changes to 

its Pricing Schedule are reasonable in 

several respects. As a threshold matter, 

the Exchange is subject to significant 

competitive forces in the market for 

options securities transaction services 

that constrain its pricing determinations 

in that market. The fact that this market 

is competitive has long been recognized 

by the courts. In NetCoalition v. 

Securities and Exchange Commission, 

the D.C. Circuit stated as follows: ‘‘[n]o 

one disputes that competition for order 

flow is ‘fierce.’ . . . As the SEC 

explained, ‘[i]n the U.S. national market 

system, buyers and sellers of securities, 

and the broker-dealers that act as their 

order-routing agents, have a wide range 

of choices of where to route orders for 

execution’; [and] ‘no exchange can 

afford to take its market share 

percentages for granted’ because ‘no 

exchange possesses a monopoly, 

regulatory or otherwise, in the execution 

of order flow from broker dealers’ 

. . . .’’ 23

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.’’ 24

Numerous indicia demonstrate the 

competitive nature of this market. For 

example, clear substitutes to the 

Exchange exist in the market for options 

security transaction services. The 

Exchange is only one of seventeen 

options exchanges to which market 

participants may direct their order flow. 

Within this environment, market 

participants can freely and often do shift 

their order flow among the Exchange 

and competing venues in response to 

changes in their respective pricing 

schedules. As such, the proposal 

represents a reasonable attempt by the 

Exchange to increase its liquidity and 

market share relative to its competitors. 

Proposal 1—Regular Priority Customer 

Maker Rebates in Non-Select Symbols 

The Exchange believes that its 

proposal to increase the Regular Order 

Priority Customer maker rebate in NonSelect Symbols from $0.86 to $1.00 per 

contract is reasonable because Members 

will be further incentivized to add 

liquidity in Priority Customer Regular 

Orders in Non-Select Symbols in order 

to receive the increased rebate. The 

Exchange believes that this proposal is 

equitable and not unfairly 

discriminatory as all Priority Customers 

will be uniformly assessed the $1.00 

maker rebate. The Exchange further 

believes that it is equitable and not 

unfairly discriminatory to provide only 

Priority Customers with this maker 

rebate because the Exchange has 

historically offered more favorable 

pricing for those market participants. In 

addition, increased Priority Customer 

order flow enhances liquidity on the 

Exchange for the benefit of all market 

participants by providing more trading 

opportunities, which in turn attracts 

Market Makers and other market 

participants that may trade with this 

order flow. 

Proposal 2—Note 15 Incentive 

The Exchange believes that the 

proposed changes to the Note 15 

Incentive are reasonable for the reasons 

that follow. As discussed above, the 

Exchange is increasing the volume 

threshold from 0.06% to 0.10% such 

that Members would now need to 

execute more than 0.10% of Regular 

Order Non-Select Symbol Priority 

Customer volume (excluding Crossing 

Orders and Responses to Crossing 

Orders) calculated as a percentage of 

Customer Total Consolidated Volume 

per day in a given month in order to 

receive an additional rebate of $0.14 per 

contract. While the volume threshold is 

increasing under this proposal, the 

Exchange believes that Members will 

continue to be incentivized to increase 

market participation in Non-Select 

Symbol Priority Customer orders to 

qualify for the $0.14 additional Note 15 

Incentive, especially in light of the 

significant increase in the base NonSelect Symbol Priority Customer maker 

rebate to $1.00 per contract as discussed 

above. Taken together, Members would 

be able to receive up to $1.14 per 

contract on their Priority Customer 

Regular Orders in Non-Select Symbols 


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25As previously discussed, the Exchange is 

proposing a significant increase in the base maker 

rebate provided to Priority Customer Regular Orders 

in Non-Select Symbols from $0.86 to $1.00 per 

contract. In addition, the Exchange is linking the 

Note 15 Incentive to the Section 4 Priority Customer 

Complex Tier rebates to further incentivize Priority 

Customer order flow to the Exchange. Finally, the 

Exchange is increasing the Section 4 Priority 

Customer Complex Tier rebates without changing 

the tier qualifications so that Members can send the 

same amount of order flow as they do today to 

receive larger rebates. 26See supra note 25. 

that add liquidity on ISE. The Exchange 

believes that increased Priority 

Customer order flow in Non-Select 

Symbols would create additional 

liquidity to the benefit of all market 

participants and investors that trade on 

the Exchange. 

The Exchange also believes that 

linking the proposed volume threshold 

in the Note 15 Incentive to the Options 

7, Section 4 Priority Customer Complex 

Order rebates in the manner described 

above is reasonable because the 

proposal may further incentivize 

Members to increase market 

participation in Priority Customer 

Regular Orders in Non-Select Symbols 

to receive the next higher Priority 

Customer Complex Tier rebate than the 

tier for which they currently qualify (or 

$0.01 additional rebate if they are 

already in the highest Priority Customer 

Complex Tier 10). The Exchange also 

believes that the proposal would 

incentivize Members to increase their 

Priority Customer Complex Order flow 

in both Select and Non-Select Symbols 

to the Exchange in order to qualify for 

a higher Priority Customer Complex 

Tier (which in turn could set the 

Member up to receive the next higher 

Priority Customer Complex Tier 

rebate—or an additional $0.01 rebate if 

they are already in Priority Customer 

Complex Tier 10—if they meet the 

proposed volume threshold in the 

amended Note 15 Incentive). 

The Exchange believes that the 

proposed changes to the Note 15 

Incentive as discussed above are 

equitable and not unfairly 

discriminatory because they will apply 

uniformly to all similarly situated 

market participants. The Exchange 

believes that it is equitable and not 

unfairly discriminatory to offer the Note 

15 Incentive to only Priority Customers 

because Priority Customer liquidity 

benefits all market participants by 

providing 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. 

Proposal 3—Regular Taker Fees in NonSelect Symbols 

The Exchange believes that its 

proposal to increase the Regular Order 

taker fees in note 3 of Options 7, Section 

3 for trades in Non-Select Symbols that 

are executed against Priority Customers 

is reasonable because they are designed 

to offset the significant incentives that 

the Exchange is proposing for Priority 

Customer orders.25 As discussed above, 

Non-Priority Customer orders will be 

charged a taker fee of $1.25 (increased 

from $1.10) per contract for trades 

executed against a Priority Customer. 

Priority Customer orders will be charged 

a taker fee of $1.00 (increased from 

$0.86) per contract for trades executed 

against a Priority Customer. The 

Exchange believes that Members will 

benefit from the additional liquidity 

created by the Priority Customer 

incentives proposed in this filing, and it 

is therefore appropriate to charge 

increased taker fees for trades executed 

against a Priority Customer. 

The Exchange believes that its 

proposal to increase the taker fees in 

note 3 of Options 7, Section 3 for trades 

that are executed against Priority 

Customers is equitable and not unfairly 

discriminatory because the changes will 

apply uniformly to all similarly situated 

market participants. Priority Customers 

will continue to be charged a lower 

taker fee pursuant to note 3 compared 

to other market participants, which the 

Exchange believes is equitable and not 

unfairly discriminatory because the 

Exchange has historically provided 

Priority Customers with more favorable 

pricing. Furthermore, Priority Customer 

liquidity benefits all market participants 

by providing 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. 

Proposal 4—Complex Priority Customer 

Rebates 

The Exchange believes that its 

proposal to increase the tiered Priority 

Customer Complex Order rebates in the 

manner discussed above is reasonable 

because these increased Complex Order 

Priority Customer rebates will attract 

more Complex Order flow to ISE to the 

benefit of all market participants. The 

Exchange believes that each rebate is set 

at appropriate levels that will encourage 

market participants to increase their 

Priority Customer Complex Order 

activity on the Exchange. As noted 

above, the Exchange is amending the 

rebate amounts without changing the 

tier qualifications so that Members can 

send the same amount of order flow as 

they do today to receive larger rebates 

described above. 

The Exchange also believes that its 

proposal to increase the Note 1 Rebate 

Discount for smaller-sized Complex 

Orders (i.e., largest leg of the order is 

under fifty contracts) in Select Symbols 

that leg into the regular order book and 

trade with regular interest from $0.15 to 

$0.20 per contract is reasonable because 

Members will continue to be 

incentivized to send Priority Customer 

Complex Order flow to the Exchange 

despite the increased reduction in order 

to receive the tiered rebates. Also, the 

Exchange will continue to pay rebates 

for Priority Customer Complex Orders of 

any size that trade with Non-Priority 

Customer orders in the Complex Order 

Book, based on the Priority Customer 

Complex Tier achieved, thereby 

continuing to incentivize Members to 

bring Complex Order flow to the 

Exchange to earn the rebate on their 

Priority Customer Complex Order 

volume. Overall, the Exchange believes 

that the Priority Customer Complex 

Order rebate program, as modified 

under this proposal, is reasonable 

because the program is optional and all 

Members can choose to participate or 

not. 

The Exchange believes that offering 

the Priority Customer Complex Order 

rebate program, as modified, to only 

Priority Customers is equitable and not 

unfairly discriminatory as the proposed 

changes are intended to increase 

Priority Customer Complex Order flow 

to ISE. An increase in Priority Customer 

order flow enhances liquidity on the 

Exchange to the benefit of all market 

participants by providing more trading 

opportunities, which in turn attracts 

Market Makers and other market 

participants that may interact with this 

order flow. 

Proposal 5—Complex Maker and Taker 

Fees in Non-Select Symbols 

The Exchange believes that its 

proposal to increase the Complex Order 

maker and taker fees in Non-Select 

Symbols in the manner described above 

is reasonable because it is designed to 

offset the significant incentives that the 

Exchange is proposing for Priority 

Customer orders.26 The Exchange 

believes that Members will benefit from 

the additional liquidity created by the 

Priority Customer incentives proposed 

in this filing, and it is therefore 

appropriate to charge all Non-Priority 


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Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Notices 84019 

27See supra note 20. 

Customers increased maker fees for 

trades executed against a Priority 

Customer and increased taker fees. 

The Exchange also believes that its 

proposal is equitable and not unfairly 

discriminatory. As discussed above, the 

Exchange proposes to increase the 

maker fees in Non-Select Symbols when 

trading against Priority Customers as 

follows: $0.86 to $1.03 per contract for 

Market Makers and $0.88 to $1.05 per 

contract for all other Non-Priority 

Customers. Further, the Exchange 

proposes to increase the taker fees in 

Non-Select Symbols from $0.98 to $1.15 

per contract for all Non-Priority 

Customers. Priority Customers will 

continue to receive free executions for 

their Complex Orders. Market Makers 

will continue to be assessed lower 

maker fees in Non-Select Symbols than 

other Non-Priority Customers when 

trading against Priority Customers. The 

Exchange believes this is equitable and 

not unfairly discriminatory because 

Market Makers are subject to additional 

requirements and obligations (such as 

quoting obligations) that other market 

participants are not. In addition, the 

Exchange believes that it is equitable 

and not unfairly discriminatory to 

continue to offer Priority Customers 

Complex Orders free executions in order 

to incentivize Priority Customer order 

flow to ISE. Priority Customer order 

flow enhances liquidity on the 

Exchange for the benefit of all market 

participants by providing more trading 

opportunities, which in turn attracts 

Market Makers and other market 

participants that may interact with this 

order flow. 

Proposal 6—Routing Fees 

The Exchange’s proposal to amend its 

routing fees such that all Members 

would pay a $0.60 per contract Select 

Symbol routing fee and a $1.20 NonSelect Symbol routing fee to route to 

another options exchange, regardless of 

capacity, is reasonable because the 

proposed routing fees would enable the 

Exchange to recover the costs it incurs 

to route orders to away markets after 

taking into account the other costs 

associated with routing orders to other 

options exchanges. Routing services 

offered by the Exchange are completely 

optional and market participants can 

readily select between various providers 

of routing services, including other 

exchanges and broker-dealers. Also, the 

Exchange notes that market participants 

may elect to mark their orders as ‘‘DoNot-Route’’ to avoid any routing fees. As 

noted above, the proposed structure for 

routing fee is similar to another options 

market.27

The Exchange’s proposal to amend its 

routing fees such that all Members 

would pay a $0.60 per contract Select 

Symbol Routing Fee and a $1.20 NonSelect Symbol Routing Fee, regardless of 

capacity, to route to another options 

exchange is equitable and not unfairly 

discriminatory because these uniform 

Routing Fees will apply equally to all 

options Members. 

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. 

Intra-Market Competition 

In terms of intra-market competition, 

the Exchange does not believe that its 

proposal will place any category of 

market participant at a competitive 

disadvantage. While some aspects of the 

proposal apply directly to Priority 

Customers (through rebates or more 

favorable pricing) and Market Makers 

(through lower Complex Order maker 

fees when trading against Priority 

Customers) as discussed above, the 

Exchange believes that the changes, 

taken together, will ultimately fortify 

and encourage activity on the Exchange. 

As discussed above, all market 

participants will benefit from any 

increase in market activity that the 

proposal effectuates. 

Proposal 1—Regular Priority Customer 

Maker Rebates in Non-Select Symbols 

The Exchange does not believe that its 

proposal to increase the Regular Order 

Priority Customer maker rebate in NonSelect Symbols from $0.86 to $1.00 per 

contract will impose an undue burden 

on intra-market competition all Priority 

Customers will be uniformly assessed 

the $1.00 maker rebate. The Exchange 

does not believe that its proposal to 

provide only Priority Customers with 

this maker rebate will impose an undue 

burden on intra-market competition 

because the Exchange has historically 

offered more favorable pricing for those 

market participants. In addition, 

increased Priority Customer order flow 

enhances liquidity on the Exchange for 

the benefit of all market participants by 

providing more trading opportunities, 

which in turn attracts Market Makers 

and other market participants that may 

trade with this order flow. 

Proposal 2—Note 15 Incentive 

The Exchange does not believe that 

the proposed changes to the Note 15 

Incentive as discussed above will 

impose an undue burden on intramarket competition as the proposal will 

apply uniformly to all Priority 

Customers. While the proposed Note 15 

incentive will only apply to Priority 

Customers, Priority Customer liquidity 

benefits all market participants by 

providing 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. 

Proposal 3—Regular Taker Fees in NonSelect Symbols 

The Exchange does not believe that its 

proposal to increase the taker fees in 

note 3 of Options 7, Section 3 for trades 

that are executed against Priority 

Customers will impose an undue 

burden on intra-market competition 

because the changes will apply 

uniformly to all similarly situated 

market participants. Priority Customers 

will continue to be charged a lower 

taker fee pursuant to note 3 compared 

to other market participants, which the 

Exchange believes is equitable and not 

unfairly discriminatory because the 

Exchange has historically provided 

Priority Customers with more favorable 

pricing. Furthermore, Priority Customer 

liquidity benefits all market participants 

by providing 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. 

Proposal 4—Complex Priority Customer 

Rebates 

The Exchange does not believe that 

offering the Priority Customer Complex 

Order rebate program, as modified 

under this proposal, to only Priority 

Customers will impose an undue 

burden on intra-market competition 

because the proposed changes are 

intended to increase Priority Customer 

Complex Order flow to ISE. An increase 

in Priority Customer order flow 

enhances liquidity on the Exchange to 

the benefit of all market participants by 

providing more trading opportunities, 

which in turn attracts Market Makers 

and other market participants that may 

interact with this order flow. 


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84020 Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Notices 

28 15 U.S.C. 78s(b)(3)(A)(ii). 

29 17 CFR 240.19b–4(f)(2). 30 17 CFR 200.30–3(a)(12). 

Proposal 5—Complex Maker and Taker 

Fees in Non-Select Symbols 

The Exchange does not believe that its 

proposal to increase the Complex Order 

maker and taker fees in Non-Select 

Symbols in the manner described above 

will impose an undue burden on intramarket competition. As discussed 

above, the Exchange proposes to 

increase the maker fees in Non-Select 

Symbols when trading against Priority 

Customers as follows: $0.86 to $1.03 per 

contract for Market Makers and $0.88 to 

$1.05 per contract for all other NonPriority Customers. Further, the 

Exchange proposes to increase the taker 

fees in Non-Select Symbols from $0.98 

to $1.15 per contract for all Non-Priority 

Customers. Priority Customers will 

continue to receive free executions for 

their Complex Orders. Market Makers 

will continue to be assessed lower 

maker fees in Non-Select Symbols than 

other Non-Priority Customers when 

trading against Priority Customers. The 

Exchange believes this is equitable and 

not unfairly discriminatory because 

Market Makers are subject to additional 

requirements and obligations (such as 

quoting obligations) that other market 

participants are not. In addition, the 

Exchange believes that it is equitable 

and not unfairly discriminatory to 

continue to offer Priority Customers 

Complex Orders free executions in order 

to incentivize Priority Customer order 

flow to ISE. Priority Customer order 

flow enhances liquidity on the 

Exchange for the benefit of all market 

participants by providing more trading 

opportunities, which in turn attracts 

Market Makers and other market 

participants that may interact with this 

order flow. 

Proposal 6—Routing Fees 

The Exchange’s proposal to amend its 

routing fees such that all Members 

would pay a $0.60 per contract Select 

Symbol routing fee and a $1.20 NonSelect Symbol routing fee to route to 

another options exchange, regardless of 

capacity, will not impose an undue 

burden on intra-market competition 

because these uniform routing fees will 

apply equally to all options Members. 

Inter-Market Competition 

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. 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 

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 28 and Rule 

19b–4(f)(2) 29 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

ISE–2023–28 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–ISE–2023–28. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

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

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–ISE–2023–28 and should be 

submitted on or before December 22, 

2023. 

For the Commission, by the Division 

of Trading and Markets, pursuant to 

delegated authority.30

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–26499 Filed 11–30–23; 8:45 am] 

BILLING CODE 8011–01–P 


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