87468 Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A ‘‘Crossing Order’’ is an order executed in the 

Exchange’s Facilitation Mechanism, Solicited Order 

Mechanism (‘‘SOM’’), Price Improvement 

Mechanism (‘‘PIM’’) or submitted as a Qualified 

Contingent Cross (‘‘QCC’’) order. For purposes of 

the Pricing Schedule, orders executed in the Block 

Order Mechanism are also considered Crossing 

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

4The PIM is a process by which an Electronic 

Access Member can provide price improvement 

opportunities for a transaction wherein the 

Electronic Access Member seeks to facilitate an 

order it represents as agent, and/or a transaction 

wherein the Electronic Access Member solicited 

interest to execute against an order it represents as 

agent. See Options 3, Section 13. 

5The Facilitation Mechanism is a process by 

which an Electronic Access Member can execute a 

transaction wherein the Electronic Access Member 

seeks to facilitate a block-size order it represents as 

agent, and/or a transaction wherein the Electronic 

Access Member solicited interest to execute against 

a block-size order it represents as agent. Electronic 

Access Members must be willing to execute the 

entire size of orders entered into the Facilitation 

Mechanism. See Options 3, Section 11(b). Complex 

Facilitation is described in Options 3, Section 11(c). 

6The Solicited Order Mechanism or ‘‘SOM’’ is a 

process by which an Electronic Access Member can 

attempt to execute orders of 500 or more contracts 

it represents as agent (the ‘‘Agency Order’’) against 

contra orders that it solicited. Each order entered 

into the Solicited Order Mechanism shall be 

designated as all-or-none. See Options 3, Section 

11(d). The Complex Solicited Order Mechanism is 

described in Options 3, Section 11(e). 

7A ’’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). 

8A QCC Order is comprised of an originating 

order to buy or sell at least 1000 contracts that is 

identified as being part of a qualified contingent 

trade, as that term is defined in Supplementary 

Material .01 to Options 3, Section 7, coupled with 

a contra-side order or orders totaling an equal 

number of contracts. See Options 3, Section 7(j). 

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– 

Phlx–2023–55 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–Phlx–2023–55. 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–Phlx–2023–55 and should be 

submitted on or before January 8, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27676 Filed 12–15–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99142; File No. SR–ISE– 

2023–35] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Amend ISE Options 7 

December 12, 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 December 

1, 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 to: (i) 

decrease the Fees for Crossing Orders,3

except Price Improvement Mechanism 

or ‘‘PIM’’ Orders,4 in Sections 3 and 4, 

(ii) eliminate the Crossing Fee Cap in 

Section 6.H and reserve certain 

footnotes related to the cap, (iii) 

increase the Facilitation 5 and 

Solicitation 6 Break-Up Rebates in 

Sections 3 and 4, (iv) eliminate the Fees 

for Crossing Orders applicable to 

Professional Customers 7 for Qualified 

Contingent Cross or ‘‘QCC’’ Orders 8 and 

SOM Orders in Sections 3 and 4, (v) 

amend the Solicitation Rebate in 

Section 6.A, and (vi) amend the QCC 


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Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 87469 

9 ‘‘Non-Priority Customers’’ include Market 

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

Firm Proprietary/Broker-Dealers, and Professional 

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

10A ‘‘Regular Order’’ is an order that consists of 

only a single option series and is not submitted 

with a stock leg. See Options 7, Section 1(c). 

11 ‘‘Select Symbols’’ are options overlying all 

symbols listed on the Nasdaq ISE that are in the 

Penny Interval Program. See Options 7, Section 

1(c). 

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

symbols excluding Select Symbols. See Options 7, 

Section 1(c). 

13For all executions in regular NDX, XND and 

NQX orders, the applicable index options fees in 

Section 5 will apply. See note 7 of Options 7, 

Section 3. 

14A ‘‘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). Unless otherwise noted, 

when used in this Pricing Schedule the term 

‘‘Priority Customer’’ includes ‘‘Retail’’ as defined 

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

15See note 2 of Options 7, Section 3. 

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

submitted by a member for its own proprietary 

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

17See note 1 of Options 7, Section 3. 

18See note 11 of Options 7, Section 4. 19See note 6 of Options 7, Section 4. 20See note 10 of Options 7, Section 4. The 

discounted fees are applied retroactively to all 

eligible PIM volume in that month once the 

threshold has been reached. 

21 Id. 

22A ‘‘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. See Options 7, Section 1(c). 23A ‘‘Firm Proprietary’’ order is an order 

submitted by a member for its own proprietary 

account. See Options 7, Section 1(c). 24A ‘‘Broker-Dealer’’ order is an order submitted 

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

its own proprietary account. See Options 7, Section 

1(c). 25The term ‘‘Market Makers’’ refers to 

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

Makers’’ collectively. See Options 1, Section 

1(a)(21). 

Rebate Program in Section 6.B. Each 

change is discussed in detail below. 

Fees for Crossing Orders, Except PIM 

Orders, and Crossing Fee Cap 

Today, the Exchange assesses all NonPriority Customers 9 a $0.20 per contract 

Regular Order 10 Fee for Crossing 

Orders, which fee does not apply to PIM 

Orders, in Select 11 and Non-Select 12

Symbols, excluding Index Options.13

Priority Customers 14 are not assessed a 

Regular Order Fee for Crossing Orders, 

except PIM Orders, in Select and NonSelect Symbols. The Regular Order Fees 

for Crossing Orders, except PIM Orders, 

apply to the originating and contra 

orders.15 Today, Regular Order Firm 

Proprietary 16 contracts traded are 

subject to the Crossing Fee Cap, as 

provided in Options 7, Section 6.H.17

With the Crossing Fee Cap, fees are 

capped at $200,000 per month, per 

Member on all Firm Proprietary 

transactions that are part of the 

originating or contra side of a Crossing 

Order. Once a Member exceeds the fee 

cap level, the Member is subject to a 

reduced transaction fee of $0.02 per 

capped contract, unless the Member 

also qualifies for free executions. 

The Exchange proposes to decrease 

the Non-Priority Customer Regular 

Order Fee for Crossing Orders, except 

for PIM Orders, from $0.20 to $0.17 per 

contract in Select and Non-Select 

Symbols. Priority Customers will 

continue to not be assessed a Regular 

Order Fee for Crossing Orders, except 

for PIM Orders, in Select and NonSelect Symbols. The Exchange proposes 

to no longer offer the Crossing Fee Cap 

for Firm Proprietary contracts and 

would therefore reserve note 1 of 

Options 7, Section 3. The Exchange is 

also reserving the Regular Order 

Crossing Fee Cap in Options 7, Section 

6.H for Select and Non-Select Symbols 

as the Crossing Fee Cap would not 

apply to pricing in Options 7, Section 4 

as explained below. Despite the 

elimination of the Crossing Fee Cap, the 

Exchange believes that the decreased 

Regular Order Fees for Crossing Orders, 

except PIM Orders, in Select and NonSelect Symbols will continue to attract 

certain Crossing Orders to the Exchange. 

Similarly, today, the Exchange 

assesses Non-Priority Customers a $0.17 

per contract Complex Order Fee for 

Crossing Orders, except PIM Orders, for 

Select and Non-Select Symbols. Priority 

Customers are assessed no Complex 

Order Fee for Crossing Orders, except 

PIM Orders, for Select and Non-Select 

Symbols. The Complex Order Fees for 

Crossing Orders, except PIM Orders, 

apply to the originating and contra 

orders.18 Today, Complex Order Firm 

Proprietary contracts traded are subject 

to the Crossing Fee Cap, as provided in 

Options 7, Section 6.H.19 Also, other 

than for Priority Customer orders, the 

Complex Order Fee for Crossing Orders 

is reduced to $0.05 per contract for 

orders executed by Members that 

execute an average daily volume 

(‘‘ADV’’) of 7,500 or more contracts in 

the PIM in a given month.20 Further, 

Members that execute an ADV of 12,500 

or more contracts in the PIM will not be 

charged a fee.21

Similar to Regular Orders, the 

Exchange proposes to decrease the NonPriority Customer Complex Order Fee 

for Crossing Orders, except PIM Orders, 

from $0.20 to $0.17 per contract for 

Select and Non-Select Symbols. Priority 

Customers will continue to not be 

assessed a Complex Order Fee for 

Crossing Orders, except PIM Orders, in 

Select and Non-Select Symbols. Similar 

to Regular Orders, the Exchange 

proposes to no longer offer the Crossing 

Fee Cap for Firm Proprietary contracts 

and would therefore reserve note 6 of 

Options 7, Section 4. As mentioned 

herein, the Exchange is also reserving 

the Crossing Fee Cap in Options 7, 

Section 6.H. Despite the elimination of 

the Crossing Fee Cap, the Exchange 

believes that the decreased Complex 

Order Fees for Crossing Orders, except 

PIM Orders, in Select and Non-Select 

Symbols will continue to attract 

Crossing Orders to the Exchange. 

Facilitation and Solicitation Break-Up 

Rebates 

Today, pursuant to Options 7, Section 

3, the Exchange pays Non-Nasdaq ISE 

Market Makers (FarMM),22 Firm 

Proprietary 23/Broker Dealers,24

Professionals and Priority Customers a 

Regular Order Facilitation and 

Solicitation Break-up Rebate of $0.15 

per contract in Select and Non-Select 

Symbols. Market Makers 25 are not paid 

a Regular Order Facilitation and 

Solicitation Break-up Rebate in Select 

and Non-Select Symbols. The Exchange 

proposes to increase the Regular Order 

Facilitation and Solicitation Break-up 

Rebate from $0.15 to $0.20 per contract 

in Select and Non-Select Symbols for 

Non-Nasdaq ISE Market Makers 

(FarMM), Firm Proprietary/Broker 

Dealers, Professionals and Priority 

Customers. Market Makers would 

continue to not be paid a Regular Order 

Facilitation and Solicitation Break-up 

Rebate in Select and Non-Select 

Symbols. The Exchange believes that 

the increase to the Regular Order 

Facilitation and Solicitation Break-up 

Rebate will attract ISE Members to 

utilize the Facilitation and Solicitation 

Mechanisms. 

Today, pursuant to Options 7, Section 

4, the Exchange pays Non-Nasdaq ISE 

Market Makers (FarMM), Firm 

Proprietary/Broker Dealers, 

Professionals and Priority Customers a 

Complex Order Facilitation and 

Solicitation Break-up Rebate of $0.15 

per contract in Select and Non-Select 

Symbols. Market Makers are not paid a 

Complex Order Facilitation and 

Solicitation Break-up Rebate in Select 

and Non-Select Symbols. The Exchange 

proposes to increase the Complex Order 

Facilitation and Solicitation Break-up 

Rebate from $0.15 to $0.20 per contract 

in Select and Non-Select Symbols for 

Non-Nasdaq ISE Market Makers 

(FarMM), Firm Proprietary/Broker 

Dealers, Professionals and Priority 

Customers. Market Makers would 


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87470 Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 

26See note 4 in Options 7, Section 3 and note 2 

in Options 7, Section 4. 

27 Id. 

28See note 16 of Options 7, Section 3 and note 

14 of Options 7, Section 4. 

29All eligible volume from affiliated Members 

will be aggregated in determining the combined 

QCC and Solicited Order volume totals, provided 

there is at least 75% common ownership between 

the Members as reflected on each Member’s Form 

BD, Schedule A. 

30As set forth in Options 7, Section 4, Priority 

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. 

continue to not be paid a Complex 

Order Facilitation and Solicitation 

Break-up Rebate in Select and NonSelect Symbols. The Exchange believes 

that the increase to the Complex Order 

Facilitation and Solicitation Break-up 

Rebate will attract ISE Members to 

utilize the Facilitation and Solicitation 

Mechanisms. 

Today, Facilitation and Solicitation 

Break-up Rebates for Regular Order and 

Comple Order Select and Non-Select 

Symbols are provided for contracts that 

are submitted to the Facilitation and 

Solicited Order Mechanisms that do not 

trade with their contra order except 

when those contracts trade against preexisting orders and quotes on the 

Exchanges order books.26 The 

applicable fee is applied to any 

contracts for which a rebate is 

provided.27 The Exchange proposes to 

amend this sentence in note 4 of 

Options 7, Section 3 and note 2 of 

Options 7, Section 4 to more specifically 

provide, ‘‘The applicable Fee for 

Responses to Crossing Orders is applied 

to any contracts for which a rebate is 

provided.’’ The Exchange believes that 

this proposed change to the wording of 

the sentence does not substantively 

amend the sentence, rather it conforms 

the reference to the Fee for Crossing 

Orders to the title of the fees in the 

tables of Options 7, Sections 3 and 4, 

which is the Fee for Responses to 

Crossing Orders for Regular Orders and 

Complex Orders in Select and NonSelect Symbols. This amendment adds 

clarity to the fee being referenced. 

Professional Customer QCC and SOM 

Fees For Crossing Orders 

As noted above, today, Professional 

Customers are assessed a $0.20 per 

contract Regular Order and Complex 

Order Fee for Crossing Orders, except 

PIM Orders, in Select and Non-Select 

Symbols. Also, today, transaction fees 

applicable to Professional Customers for 

an order submitted as a QCC Order and 

orders executed in the Solicited Order 

Mechanism would be assessed a $0.10 

per contract Regular Order and Complex 

Order Fee for Crossing Orders, except 

PIM Orders, instead of $0.20 per 

contract, in Select and Non-Select 

Symbols.28

At this time, the Exchange proposes to 

amend note 16 of Options 7, Section 3 

and note 14 of Options 7, Section 4 to 

provide, ‘‘Fees for Crossing Orders 

applicable to Professional Customers for 

an order submitted as a Qualified 

Contingent Cross order and orders 

executed in the Exchange’s Solicited 

Order Mechanism will be $0.00 per 

contract.’’ The Exchange proposes to 

substitute the words ‘‘Transaction fees’’ 

with ‘‘Fees for Crossing Orders’’ to 

conform to the title of the fees in the 

tables in Options 7, Sections 3 and 4, 

thereby providing additional clarity. 

The Exchange also proposes to 

eliminate the Professional Customer 

Regular Order and Complex Order Fee 

for Crossing Orders, except PIM Orders, 

in Select and Non-Select Symbols, when 

the order is submitted as a QCC Order 

or a SOM Order. The Exchange believes 

that reducing the Professional Customer 

Regular Order and Complex Order Fee 

for Crossing Orders, except PIM Orders, 

in Select and Non-Select Symbols, when 

the order is submitted as a QCC Order 

or a SOM Order from $0.10 to $0.00 per 

contract will attract additional 

Professional Customer QCC and SOM 

Orders to the Exchange. 

Solicitation Rebate 

Background 

Today, the Exchange offers a 

Solicitation Rebate program in Options 

7, Section 6.A whereby Members using 

QCC and/or other solicited orders 

executed in the Solicited Order 

Mechanism or Facilitation Mechanism 

receive rebates for solicited orders 

executed in the Solicited Order or 

Facilitation Mechanisms (‘‘Solicited 

Orders’’) according to the table in 

Section 6.A for each originating contract 

side in all symbols traded on the 

Exchange. Volume associated with QCC 

executions are aggregated in calculating 

the Solicitation Rebate volume tiers in 

Section 6.A, but Members that execute 

QCC volume receive the QCC Rebate in 

Section 6.B instead. 

Once a Member reaches a certain 

volume threshold in combined QCC and 

Solicited Orders during a month, the 

Exchange provides rebates to that 

Member for all of its Solicited Order 

traded contracts for that month.29

Today, Members receive the rebate for 

all Solicited Orders except for Solicited 

Orders between two Priority Customers. 

Solicited Orders between two Priority 

Customers do not receive any rebates 

under the Solicitation Rebate program. 

The volume threshold and 

corresponding rebates in Section 6.A are 

currently as follows: 

Originating contract sides Rebate 

Tier 1 ....................................................... 0 to 99,999 ............................................................................................................... $0.00 

Tier 2 ....................................................... 100,000 to 199,999 .................................................................................................. (0.05) 

Tier 3 ....................................................... 200,000 to 499,999 .................................................................................................. (0.07) 

Tier 4 ....................................................... 500,000 to 749,999 .................................................................................................. (0.09) 

Tier 5 ....................................................... 750,000 to 999,999 .................................................................................................. (0.10) 

Tier 6 ....................................................... 1,000,000+ ............................................................................................................... (0.11) 

Volume resulting from all QCC and 

Solicited Orders is aggregated in 

determining the applicable volume tier 

set forth above. For Members that 

achieve the highest volume threshold of 

1,000,000 or more originating contract 

sides (i.e., tier 6), the Exchange also 

currently provides an additional rebate 

of $0.01 per originating contract side on 

Solicited Orders that qualify for the 

Solicitation Rebate program if the 

Member achieves in a given month: (i) 

combined QCC and Solicited Order 

volume of more than 1,750,000 

originating contract sides and (ii) 

Priority Customer Complex Tier 6 or 

higher in Section 4 (the ‘‘note * 

incentive’’).30 In addition, the Exchange 

provides an additional rebate of $0.01 

per originating contract side on 

Solicited Orders that qualify for the 

Solicitation Rebate program, which is 

applied to each Solicitation Rebate 

volume tier where the Member receives 

the rebate (i.e., tier 2 or higher), if the 

Member also achieves Priority Customer 

Complex Tier 2 or higher in a given 


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Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 87471 

31As discussed above, the Exchange is proposing 

to eliminate the fees applicable to Professional 

Customers for SOM Orders and for QCC Orders. See 

proposed note 16 of Options 7, Section 3 and 

proposed note 14 of Options 7, Section 4. 

32Today, the rebates in tiers 1—4 range from 

$0.00 to $0.09 per contract for qualifying Members. 

33Today, the tier 5 rebate is $0.10 per contract for 

qualifying Members. 

34Today, the highest tier 6 rebate is $0.11 per 

contract for qualifying Members. 

35The Exchange notes that if a Member reaches 

a volume threshold between 1,000,000 to 1,499,999 

originating contract sides in a given month, they 

would continue to receive the same rebate amount 

(i.e., $0.11 per contract) under this proposal as they 

do currently. 

36As discussed above, Members may qualify for 

the note & incentive if they qualify for the 

Solicitation Rebate program and they also achieve 

Priority Customer Complex Tier 2 or higher in a 

given month. 

37As discussed above, the Exchange is proposing 

to eliminate the fees applicable to Professional 

Customers for QCC Orders and for SOM Orders. See 

proposed note 16 of Options 7, Section 3 and 

proposed note 14 of Options 7, Section 4. 

month (the ‘‘note & incentive’’). Thus, 

qualifying Members may receive up to 

$0.06 in tier 2, $0.08 in tier 3, $0.10 in 

tier 4, $0.11 in tier 5, and $0.13 in tier 

6 (i.e., the $0.11 base rebate, the $0.01 

note * incentive, and the $0.01 note & 

incentive). 

Proposal 

The Exchange now proposes to amend 

the Solicitation Rebate program in a 

number of ways. First, the Exchange 

proposes to no longer provide any 

rebates under this program when both 

sides of the Solicited Order transaction 

are between two Professional Customers 

or between a Priority Customer and a 

Professional Customer. This will be in 

addition to the current restriction that 

Solicited Orders between two Priority 

Customers will not receive any rebate 

under the Solicitation Rebate program. 

As such, the Exchange will only provide 

the Solicitation Rebate when at least one 

side of the Solicited Order is neither a 

Priority Customer nor Professional 

Customer (i.e., when at least one side is 

a Market Maker, Non-ISE Market Maker, 

or Firm Proprietary/Broker-Dealer). As 

amended, the language governing the 

Solicitation Rebate program in Section 

6.A will provide: 

Members will receive the rebate for all 

Solicited Orders when at least one side of the 

Solicited Order is neither a Priority Customer 

nor Professional Customer. Solicited Orders 

between two Priority Customers, two 

Professional Customers, or a Priority 

Customer and a Professional Customer will 

not receive any rebate. 

The Exchange is proposing to exclude 

Professional Customers from the 

Solicitation Rebate in the manner 

described above because it is also 

proposing to eliminate the fees 

applicable to Professional Customers for 

orders executed in the Solicited Order 

Mechanism (which are included as 

Solicited Orders for purposes of 

qualifying for and receiving the 

Solicitation Rebate).31 As such, the 

Exchange believes that Members will 

continue to be incentivized to send 

Professional Customer Solicited Orders 

to the Exchange without the added 

incentive of the Solicitation Rebate. 

The Exchange also proposes to amend 

the volume thresholds and rebate 

amounts described above as follows: 

Originating contract sides Rebate 

0 to 749,999 ............................... ($0.10) 

750,000 to 1,499,999 ................. (0.11) 

Originating contract sides Rebate 

1,500,000+ .................................. (0.12) 

As described above, the Exchange is 

proposing to condense the current 

Solicitation Rebate volume tiers 1–4 

into one new base volume tier, and 

increase the rebate to $0.10 for all 

qualifying Members.32 The current 

Solicitation Rebate volume tier 5 will be 

amended as the second highest volume 

tier, and expanded to be capped at a 

higher level of volume (1,499,999 versus 

the current 999,999 originating contract 

sides). The Exchange is also increasing 

the rebate to $0.11 per contract for this 

tier.33 As it relates to the highest volume 

tier under this proposal (i.e., 1,500,000+ 

originating contract sides), the Exchange 

is likewise increasing the rebate to $0.12 

per contract.34 As such, Members would 

generally receive higher rebates under 

this proposal for achieving the same 

amount of volume as they do today.35

Lastly, the Exchange proposes to 

apply the note & incentive to the new 

base volume tier such that qualifying 

Members may be eligible to receive an 

additional rebate of $0.01 per 

originating contract side in addition to 

the $0.10 rebate.36 Today, Members in 

the current base Solicitation Rebate tier 

are not eligible to receive this additional 

rebate. With the proposed extension to 

the new base tier, the Exchange seeks to 

encourage Members to send more order 

flow, particularly Solicited Order and 

complex order flow, to ISE. 

QCC Rebate 

Background 

Today, the Exchange offers a QCC 

Rebate program in Options 7, Section 

6.B whereby Members that submit QCC 

Orders when at least one side of the 

QCC transaction is a Non-Priority 

Customer receive the QCC Rebates in 

Section 6.B. By implication, the QCC 

Rebates are not available when both 

sides of the QCC transaction are Priority 

Customers. QCC Rebates are paid to 

each originating contract side (‘‘QCC 

Agency Side’’) in all symbols traded on 

the Exchange. Specifically: 

• When only one side of the QCC 

transaction is a Non-Priority Customer, 

the Member would receive a $0.14 per 

contract rebate for each QCC Agency 

Side (‘‘QCC Rebate 1’’) 

• When both sides of the QCC 

transaction are Non-Priority Customers, 

the Member would receive a $0.22 per 

contract rebate for each QCC Agency 

Side today (‘‘QCC Rebate 2’’). 

In addition, the Exchange currently 

offers an additional incentive of $0.03 

per contract for each QCC Agency Side 

that qualifies for the QCC Rebate 

program if they achieve Priority 

Customer Complex Tier 2 or higher in 

a given month. The additional incentive 

is applied to each QCC Rebate and is 

cumulative of the QCC Rebates so that 

qualifying Members could receive up to 

$0.17 per contract for each QCC Agency 

Side when only one side of the QCC 

transaction is a Non-Priority Customer, 

and up to $0.25 per contract for each 

QCC Agency Side when both sides of 

the QCC transaction are Non-Priority 

Customers. 

Proposal 

The Exchange now proposes to no 

longer provide any rebates under this 

program when both sides of the QCC 

transaction are between two 

Professional Customers or between a 

Priority Customer and a Professional 

Customer. This will be in addition to 

the current restriction that QCC Orders 

between two Priority Customers would 

not receive any rebates. Specifically, 

Section 6.B will be amended to provide 

that Members that submit QCC Orders 

when at least one side of the QCC 

transaction is neither a Priority 

Customer nor Professional Customer 

will receive the QCC Rebates in Section 

6.B. This is similar to the proposed 

changes in the Solicitation Rebate 

program where the Exchange is likewise 

proposing to exclude Professional 

Customers from the Solicitation Rebate 

in the manner described above. Similar 

to the Solicitation Rebate changes, the 

Exchange is proposing to exclude 

Professional Customers from the QCC 

Rebates because it is also proposing to 

eliminate the fees applicable to 

Professional Customers for QCC 

Orders.37 As such, the Exchange 

believes that Members will continue to 

be incentivized to send Professional 

Customer QCC Orders to the Exchange 


khammond on DSKJM1Z7X2PROD with NOTICES
87472 Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 

38 15 U.S.C. 78f(b). 

39 15 U.S.C. 78f(b)(4) and (5). 

40NetCoalition 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)). 

41Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

without the added incentive of the QCC 

Rebates. 

The Exchange also proposes to amend 

QCC Rebate 1 and QCC Rebate 2 to 

similarly exclude Professional 

Customers and to increase the rebate 

amounts. Specifically, QCC Rebate 1 

will be amended to provide that when 

only one side of the QCC transaction is 

neither a Priority Customer nor 

Professional Customer, the Member will 

receive a $0.15 per contract rebate for 

each QCC Agency Side. QCC Rebate 2 

will be amended to provide that when 

both sides of the QCC transaction are 

not any combination of Priority 

Customers and/or Professional 

Customers, the Member will receive a 

$0.23 per contract rebate for each QCC 

Agency Side. The Exchange also 

proposes to specifically delineate the 

QCC Rebates into two separate sections 

titled ‘‘QCC Rebate 1’’ and ‘‘QCC Rebate 

2.’’ 

Further, the Exchange proposes to 

amend the additional QCC incentive by 

decreasing the amount from $0.03 to 

$0.01 per contract as applied to QCC 

Rebate 1. The qualifications for this 

incentive will remain unchanged. 

Accordingly, the Exchange will add the 

following language in the QCC Rebate 1 

section: ‘‘Members will receive an 

additional rebate of $0.01 per contract 

for each QCC Agency Side that qualifies 

for QCC Rebate 1 if they achieve Priority 

Customer Complex Tier 2 or higher in 

a given month.’’ 

The Exchange also proposes to amend 

additional incentive as applied to QCC 

Rebate 2 by increasing the amount from 

$0.03 to $0.04 per contract. As noted 

above, the incentive qualifications will 

remain unchanged. Accordingly, the 

Exchange will add the following 

language in the QCC Rebate 2 section: 

‘‘Members will receive an additional 

rebate of $0.03 per contract for each 

QCC Agency Side that qualifies for QCC 

Rebate 2 if they achieve Priority 

Customer Complex Tier 2 or higher in 

a given month.’’ 

The additional incentives will 

continue to be cumulative of the QCC 

Rebates so that qualifying Members 

could receive up to $0.16 per contract 

for each QCC Agency Side when only 

one side of the QCC transaction is 

neither a Priority Customer nor 

Professional Customer, and up to $0.27 

per contract for each QCC Agency Side 

when both sides of the QCC transaction 

are not any combination of Priority 

Customers and/or Professional 

Customers. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with section 6(b) 

of the Act,38 in general, and furthers the 

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

of the Act,39 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’. . . .’’ 40

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.’’ 41

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. 

Fees for Crossing Orders Except PIM 

Orders and Crossing Fee Cap 

The Exchange’s proposal to decrease 

the Non-Priority Customer Regular 

Order and Complex Order Fees for 

Crossing Orders, except for PIM Orders, 

from $0.20 to $0.17 per contract, in 

Select and Non-Select Symbols, is 

reasonable because the reduction in 

these fees should attract additional 

Crossing Orders to the Exchange. 

Priority Customers will continue to not 

be assessed a Regular Order or Complex 

Order Fee for Crossing Orders in Select 

and Non-Select Symbols. 

The Exchange’s proposal to decrease 

the Non-Priority Customer Regular 

Order and Complex Order Fees for 

Crossing Orders, except for PIM Orders, 

from $0.20 to $0.17 per contract, in 

Select and Non-Select Symbols, is 

equitable and not unfairly 

discriminatory as all Non-Priority 

Customer Regular Order and Complex 

Order Fees for Crossing Orders will be 

reduced in Select and Non-Select 

Symbols. The Exchange believes that it 

is equitable and not unfairly 

discriminatory to not assess Priority 

Customers a Regular Order or Complex 

Order Fee for Crossing Orders in Select 

and Non-Select Symbols. 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. 

The Exchange’s proposal to no longer 

offer the Crossing Fee Cap for Firm 

Proprietary contracts is reasonable 

because the Exchange is lowering NonPriority Customer Regular Order and 

Complex Order Fees for Crossing 

Orders, except for PIM Orders, from 

$0.20 to $0.17 per contract, in Select 

and Non-Select Symbols. Despite the 

elimination of the Crossing Fee Cap, the 

Exchange believes that the decreased 

Regular Order and Complex Order Fees 

for Crossing Orders, except PIM Orders, 

in Select and Non-Select Symbols will 

continue to attract Crossing Orders to 

the Exchange. 

The Exchange’s proposal to no longer 

offer the Crossing Fee Cap for Firm 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 87473 

42See Options 7, Sections 6.C. 

43See note 5 at Options 7, Sections 3. 

44See Nasdaq Phlx LLC (‘‘Phlx’’) Options 7, 

Section 4. Phlx does not assess a QCC Transaction 

Fee to Customers and Professionals. See also BOX 

Exchange LLC’s (‘‘BOX’’) Fee Schedule at Section 

IV, D. BOX does not assess a QCC Transaction Fee 

to Customers and Professionals. 

Proprietary contracts is equitable and 

not unfairly discriminatory because no 

Member would be offered an 

opportunity to cap their Firm 

Proprietary transactions. 

Facilitation and Solicitation Break-Up 

Rebates 

The Exchange’s proposal to increase 

the Regular Order and Complex Order 

Facilitation and Solicitation Break-up 

Rebates from $0.15 to $0.20 per 

contract, in Select and Non-Select 

Symbols, for Non-Nasdaq ISE Market 

Makers (FarMM), Firm Proprietary/ 

Broker Dealers, Professionals and 

Priority Customers is reasonable 

because the increase will attract ISE 

Members to utilize the Facilitation and 

Solicitation Mechanisms. Specifically, 

the Exchange believes that the increased 

Facilitation and Solicitation Break-up 

Rebates will encourage increased 

originating Regular Order and Complex 

Order Non-Nasdaq ISE Market Maker, 

Firm Proprietary/Broker-Dealer, 

Professional Customer, and Priority 

Customer order flow to the Facilitation 

and Solicited Order Mechanisms, 

thereby potentially increasing the 

initiation of and volume executed 

through such auctions. Additional 

auction order flow provides market 

participants with additional trading 

opportunities at potentially improved 

prices. Market Makers would continue 

to not be paid a Regular Order 

Facilitation and Solicitation Break-up 

Rebate in Select and Non-Select 

Symbols. 

The Exchange’s proposal to increase 

the Regular Order and Complex Order 

Facilitation and Solicitation Break-up 

Rebates from $0.15 to $0.20 per 

contract, in Select and Non-Select 

Symbols, for Non-Nasdaq ISE Market 

Makers (FarMM), Firm Proprietary/ 

Broker Dealers, Professionals and 

Priority Customers is equitable and not 

unfairly discriminatory because the 

increased Facilitation and Solicitation 

Break-up Rebates will apply equally to 

all non-Market Maker originating orders 

submitted to the Facilitation and 

Solicited Order Mechanisms that do not 

trade with their contra orders (except 

when those originating contracts trade 

against pre-existing orders and quotes 

on the Exchange’s order books). While 

Market Makers will continue to not 

receive Regular Order and Complex 

Order Facilitation and Solicitation 

Break-up Rebates for Select and NonSelect Symbols, the Exchange believes 

that the application of the rebate is 

equitable and not unfairly 

discriminatory because Market Makers 

are not eligible for Facilitation and 

Solicitation Break-up Rebates today. In 

addition, the Exchange currently offers 

Market Makers other rebate programs 

that do not apply to non-Market Makers, 

such as the Market Maker Plus Program. 

The Exchange’s proposal to amend 

note 4 of Options 7, Section 3 and note 

2 of Options 7, Section 4 to more 

specifically provide, ‘‘The applicable 

Fee for Responses to Crossing Orders is 

applied to any contracts for which a 

rebate is provided’’ is reasonable, 

equitable and not unfairly 

discriminatory because the amendment 

conforms the reference to the Fees for 

Crossing Orders for Regular Orders and 

Complex Orders to the title of the fee in 

the tables of Options 7, Sections 3 and 

4, which is the Fee for Responses to 

Crossing Orders. This amendment adds 

clarity to the fee being referenced. 

Professional Customer QCC and SOM 

Fees for Crossing Orders 

The Exchange’s proposal to amend 

note 16 of Options 7, Section 3 and note 

14 of Options 7, Section 4 to provide, 

‘‘Fees for Crossing Orders applicable to 

Professional Customers for an order 

submitted as a Qualified Contingent 

Cross order and orders executed in the 

Exchange’s Solicited Order Mechanism 

will be $0.00 per contract’’ is reasonable 

because reducing the Professional 

Customer Regular Order and Complex 

Order Fees for Crossing Orders, except 

PIM Orders, in Select and Non-Select 

Symbols, when the order is submitted as 

a QCC Order or a SOM Order from $0.10 

to $0.00 per contract will attract 

additional Professional Customer QCC 

and SOM Orders to the Exchange. The 

proposed fee is designed to be attractive 

to Professional Customers that trade on 

ISE, and the fee is lower than the 

Regular Order and Complex Order Fees 

for Crossing Orders, except PIM Orders, 

in Select and Non-Select Symbols, 

except for Priority Customers. 

Additional auction order flow provides 

market participants with additional 

trading opportunities at potentially 

improved prices. 

The Exchange’s proposal to amend 

note 16 of Options 7, Section 3 and note 

14 of Options 7, Section 4 to provide, 

‘‘Fees for Crossing Orders applicable to 

Professional Customers for an order 

submitted as a Qualified Contingent 

Cross order and orders executed in the 

Exchange’s Solicited Order Mechanism 

will be $0.00 per contract’’ is equitable 

and not unfairly discriminatory because 

providing Professional Customers a 

lower Fee for Crossing Orders in Regular 

Orders and Complex Orders in Select 

and Non-Select Symbols submitted as a 

QCC or SOM Order will allow other 

market participants the opportunity to 

interact with those orders in the 

applicable auctions. The Exchange does 

not believe that it is unfairly 

discriminatory to offer Professional 

Customers lower Fees for Crossing 

Orders for QCC and SOM Orders 

because differentiated pricing 

encourages different segments of order 

flow. For instance, the Exchange 

generally provides Priority Customer 

orders more favorable pricing through 

lower or no transaction fees, including 

Priority Customer Crossing Orders that 

are presently assessed no fees. 

Professional Customer orders are 

presently charged a lower transaction 

fee for QCC and SOM Orders ($0.10 for 

Professional Customers versus $0.20 for 

all other non-Priority Customers). 

Additionally, Broker-Dealer and Firm 

Proprietary orders are incentivized in 

the Exchange’s PIM and Facilitation 

Rebate program.42 Market Makers are 

offered rebates through the Exchange’s 

Market Maker Plus program.43 The 

Exchange further believes there is 

nothing impermissible about offering 

Professional Customers lower 

transaction fee for QCC and SOM Orders 

given that this practice is consistent 

with lower Professional Fees for QCC on 

other options exchanges.44 To the extent 

the amended lower transaction fee for 

QCC and SOM Orders offered to 

Professional Customers continues to 

encourage market participants to send 

additional QCC and SOM Orders to ISE, 

such increased order flow brings 

increased liquidity and additional 

opportunities for interaction with this 

order flow, which ultimately benefits all 

market participants. 

Amending note 16 of Options 7, 

Section 3 and note 14 of Options 7, 

Section 4 to specifically refer to ‘‘Fees 

for Crossing Orders’’ is reasonable, 

equitable and not unfairly 

discriminatory because it will conform 

the wording to the title of the fees in the 

tables in Options 7, Sections 3 and 4 for 

Regular Orders and Complex Orders, 

thereby adding clarity. 

Solicitation Rebate 

The Exchange believes that the 

proposed changes to the Solicitation 

Rebate program are reasonable for the 

reasons that follow. The Exchange 

believes it is reasonable to exclude 

Professional Customers from the 

Solicitation Rebate program in the 

manner described above because it is 


khammond on DSKJM1Z7X2PROD with NOTICES
87474 Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 

45As noted above, if a Member reaches a volume 

threshold between 1,000,000 to 1,499,999 

originating contract sides in a given month, they 

would continue to receive the same rebate amount 

(i.e., $0.11 per contract) under this proposal as they 

do currently. 

46As described above, Members are eligible to 

receive the additional incentives for each QCC 

Agency Side that qualifies for the QCC Rebate 

program if they achieve Priority Customer Complex 

Tier 2 or higher in a given month. These 

qualifications are not changing under this proposal. 

simultaneously proposing to eliminate 

the fees applicable to Professional 

Customers for SOM Orders (which are 

included as Solicited Orders for 

purposes of qualifying for and receiving 

the Solicitation Rebate). As such, the 

Exchange believes that Members will 

continue to be incentivized to send 

more Professional Customer Solicited 

Orders to the Exchange without the 

added incentive of the Solicitation 

Rebate. 

The Exchange also believes that the 

proposed volume thresholds and rebate 

amounts for the Solicitation Rebate 

program are set at reasonable levels that 

would encourage additional Solicited 

Order flow to ISE. As described above, 

Members would generally receive 

higher rebates under this proposal for 

achieving the same amount of volume as 

they do today.45 As such, more 

Members may seek to qualify for the 

proposed Solicitation Rebates by 

sending additional Solicited Order flow 

to ISE, which benefits all market 

participants through quality of order 

interaction and increased trading 

opportunities. 

The Exchange further believes that its 

proposal to apply the note & incentive 

to the new base volume tier is 

reasonable as it is intended to encourage 

Members to send more Solicited Order 

and complex order flow to the 

Exchange. Today, Members in the 

current base volume tier are not eligible 

for the note & incentive. Under this 

proposal, Members may now be eligible 

to receive an additional rebate of $0.01 

per originating contract side in addition 

to the $0.10 base rebate on their 

Solicited Orders that qualify for the 

Solicitation Rebate program if the 

Member also achieves Priority Customer 

Complex Tier 2 or higher in a given 

month. To the extent the proposal 

incentivizes Members to send more 

order flow (particularly Solicited Order 

and complex order flow) to ISE, all 

market participants will benefit from 

increased order interaction when more 

order flow is available on the Exchange. 

The Exchange believes that the 

proposed changes to the Solicitation 

Rebate program in Options 7, Section 

6.A are equitable and not unfairly 

discriminatory because all Members 

will be eligible for the proposed rebates 

by sending Solicited Order and complex 

order flow to the Exchange. Further, the 

Exchange believes that excluding 

Professional Customers from the 

Solicitation Rebate program in the 

manner described above and applying 

the proposed rebates only where at least 

one party to the Solicited Order is 

neither a Priority Customer nor 

Professional Customer is equitable and 

not unfairly discriminatory because the 

Exchange is simultaneously eliminating 

the transaction fees for Professional 

Customer SAM Orders (which are 

included as Solicited Orders for 

purposes of qualifying for and receiving 

the Solicitation Rebate) under this 

proposal. As such, the Exchange 

believes that Members will continue to 

be incentivized to send Professional 

Customer Solicited Orders to the 

Exchange without the added incentive 

of the proposed rebates. In addition, to 

the extent the proposed Solicitation 

Rebate program encourages Members to 

send more Solicited Order and complex 

order flow to ISE, all market 

participants will benefit from the 

resulting additional liquidity and 

trading opportunities on ISE. 

QCC Rebate 

The Exchange believes that the 

proposed changes to the QCC Rebate 

program are reasonable for the reasons 

that follow. The Exchange believes it is 

reasonable to exclude Professional 

Customers from the QCC Rebate 

program in the manner described above 

because it is simultaneously proposing 

to eliminate the fees applicable to 

Professional Customers for their QCC 

Orders. As such, the Exchange believes 

that Members will continue to be 

incentivized to send more Professional 

Customer QCC Orders to the Exchange 

without the added incentive of the QCC 

Rebates. 

The Exchange also believes that the 

proposed changes to QCC Rebate 1 and 

QCC Rebate 2 are reasonable because 

the rebate amounts are increasing. As 

discussed above, QCC Rebate 1 will be 

amended to provide that when only one 

side of the QCC transaction is neither a 

Priority Customer nor Professional 

Customer, the Member will receive a 

$0.15 per contract rebate for each QCC 

Agency Side (increased from $0.14 per 

contract). QCC Rebate 2 will be 

amended to provide that when both 

sides of the QCC transaction are not any 

combination of Priority Customers and/ 

or Professional Customers, the Member 

will receive a $0.23 per contract rebate 

for each QCC Agency Side (increased 

from $0.22 per contract). With the 

proposed changes, more Members may 

seek to qualify for proposed QCC Rebate 

1 and proposed QCC Rebate 2 by 

sending additional QCC Order flow to 

ISE, which benefits all market 

participants through quality of order 

interaction and increased trading 

opportunities. 

The Exchange further believes that the 

proposed changes to the additional QCC 

incentives are reasonable. As applied to 

QCC Rebate 1, the Exchange is 

proposing to lower the additional 

incentive amount from $0.03 to $0.01 

per contract. As applied to QCC Rebate 

2, the Exchange is proposing to increase 

the additional incentive amount from 

$0.03 to $0.04 per contract.46 With the 

additional incentives, Members will be 

eligible to receive up to $0.16 per 

contract if they also qualify for QCC 

Rebate 1, and up to $0.27 per contract 

if they also qualify for QCC Rebate 2. 

The Exchange believes that the 

proposed additional incentives are 

structured at appropriate levels that 

would continue to encourage additional 

QCC and complex order flow to ISE, 

which benefits all market participants in 

the quality of order interaction and 

through increased trading opportunities. 

The Exchange believes that the 

proposed changes to the QCC Rebate 

program in Options 7, Section 6.B are 

equitable and not unfairly 

discriminatory because all Members 

will be eligible for the proposed rebates 

by sending more QCC and complex 

order flow to the Exchange. The 

Exchange further believes that 

excluding Professional Customers from 

the QCC Rebate program in the manner 

described above and applying the 

proposed rebates only where at least one 

party to the QCC transaction is neither 

a Priority Customer nor Professional 

Customer is equitable and not unfairly 

discriminatory because the Exchange is 

simultaneously eliminating transaction 

fees for Professional Customer QCC 

Orders under this proposal. As such, the 

Exchange believes that Members will 

continue to be incentivized to send 

Professional Customer QCC Orders to 

the Exchange without the added 

incentive of the proposed rebates. In 

addition, to the extent the proposed 

QCC Rebate program encourages 

Members to send more QCC Order and 

complex order flow to ISE, all market 

participants will benefit from the 

resulting additional liquidity and 

trading opportunities. 

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 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 87475 

47See Options 7, Sections 6.C. 

48See note 5 at Options 7, Sections 3. 

49See Nasdaq Phlx LLC (‘‘Phlx’’) Options 7, 

Section 4. Phlx does not assess a QCC Transaction 

Fee to Customers and Professionals. See also BOX 

Exchange LLC’s (‘‘BOX’’) Fee Schedule at Section 

IV, D. BOX does not assess a QCC Transaction Fee 

to Customers and Professionals. 

necessary or appropriate in furtherance 

of the purposes of the Act. 

In terms of intra-market competition, 

the Exchange does not believe that this 

proposal will place any category of 

market participant at a competitive 

disadvantage. 

Fees for Crossing Orders Except PIM 

Orders and Crossing Fee Cap 

The Exchange’s proposal to decrease 

the Non-Priority Customer Regular 

Order and Complex Order Fees for 

Crossing Orders, except for PIM Orders, 

from $0.20 to $0.17 per contract, in 

Select and Non-Select Symbols, does 

not impose an undue burden on 

competition because all Non-Priority 

Customer Regular Order and Complex 

Order Fees for Crossing Orders will be 

reduced in Select and Non-Select 

Symbols. 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. 

The Exchange’s proposal to no longer 

offer the Crossing Fee Cap for Firm 

Proprietary contracts does not impose 

an undue burden on competition 

because no Member would be offered an 

opportunity to cap their Firm 

Proprietary transactions. 

Facilitation and Solicitation Break-Up 

Rebates 

The Exchange’s proposal to increase 

the Regular Order and Complex Order 

Facilitation and Solicitation Break-up 

Rebates from $0.15 to $0.20 per 

contract, in Select and Non-Select 

Symbols, for Non-Nasdaq ISE Market 

Makers (FarMM), Firm Proprietary/ 

Broker Dealers, Professionals and 

Priority Customers does not impose an 

undue burden on competition because 

the increased Facilitation and 

Solicitation Break-up Rebates will apply 

equally to all non-Market Maker 

originating orders submitted to the 

Facilitation and Solicited Order 

Mechanisms that do not trade with their 

contra orders (except when those 

originating contracts trade against preexisting orders and quotes on the 

Exchange’s order books). Today, Market 

Makers are not eligible for Facilitation 

and Solicitation Break-up Rebates. 

Conversely, the Exchange currently 

offers Market Makers other rebate 

programs that do not apply to nonMarket Makers, such as the Market 

Maker Plus Program. 

The Exchange’s proposal to amend 

note 4 of Options 7, Section 3 and note 

2 of Options 7, Section 4 to more 

specifically provide, ‘‘The applicable 

Fee for Responses to Crossing Orders is 

applied to any contracts for which a 

rebate is provided’’ does not impose an 

undue burden on competition because 

the amendment conforms the reference 

to the Fees for Crossing Orders for 

Regular Orders and Complex Orders to 

the title of the fee in the tables of 

Options 7, Sections 3 and 4, which is 

the Fee for Responses to Crossing 

Orders. This amendment adds clarity to 

the fee being referenced. 

Professional Customer QCC and SOM 

Fees for Crossing Orders 

The Exchange’s proposal to amend 

note 16 of Options 7, Section 3 and note 

14 of Options 7, Section 4 to provide, 

‘‘Fees for Crossing Orders applicable to 

Professional Customers for an order 

submitted as a Qualified Contingent 

Cross order and orders executed in the 

Exchange’s Solicited Order Mechanism 

will be $0.00 per contract’’ does not 

impose an undue burden on 

competition because providing 

Professional Customers a lower Fee for 

Crossing Orders in Regular Orders and 

Complex Orders in Select and NonSelect Symbols submitted as a QCC or 

SOM Order will allow other market 

participants the opportunity to interact 

with those orders in the applicable 

auctions. The Exchange believes that 

offering Professional Customers lower 

Fees for Crossing Orders for QCC and 

SOM Orders does not impose an undue 

burden on competition because 

differentiated pricing encourages 

different segments of order flow. For 

instance, the Exchange generally 

provides Priority Customer orders more 

favorable pricing through lower or no 

transaction fees, including Priority 

Customer Crossing Orders that are 

presently assessed no fees. Professional 

Customer orders are presently charged a 

lower transaction fee for QCC and SOM 

Orders ($0.10 for Professional 

Customers versus $0.20 for all other 

non-Priority Customers). Additionally, 

Broker-Dealer and Firm Proprietary 

orders are incentivized in the 

Exchange’s PIM and Facilitation Rebate 

program.47 Market Makers are offered 

rebates through the Exchange’s Market 

Maker Plus program.48 The Exchange 

further believes there is nothing 

impermissible about offering 

Professional Customers lower 

transaction fee for QCC and SOM Orders 

given that this practice is consistent 

with lower Professional Fees for QCC on 

other options exchanges.49 To the extent 

the amended lower transaction fee for 

QCC and SOM Orders offered to 

Professional Customers continues to 

encourage market participants to send 

additional QCC and SOM Orders to ISE, 

such increased order flow brings 

increased liquidity and additional 

opportunities for interaction with this 

order flow, which ultimately benefits all 

market participants. 

Amending note 16 of Options 7, 

Section 3 and note 14 of Options 7, 

Section 4 to specifically refer to ‘‘Fees 

for Crossing Orders’’ does not impose an 

undue burden on competition because it 

will conform the wording to the title of 

the fees in the tables in Options 7, 

Sections 3 and 4 for Regular Orders and 

Complex Orders, thereby adding clarity. 

Solicitation Rebate 

The Exchange believes that the 

proposed changes to the Solicitation 

Rebate program in Options 7, Section 

6.A do not impose an undue burden on 

intra-market competition because all 

Members will be eligible for the 

proposed rebates by sending Solicited 

Order and complex order flow to the 

Exchange. As discussed above, the 

Exchange is proposing to exclude 

Professional Customers from the 

Solicitation Rebate program in the 

manner described above and to apply 

the proposed rebates only where at least 

one party to the Solicited Order is 

neither a Priority Customer nor 

Professional Customer because the 

Exchange is simultaneously eliminating 

the transaction fees for Professional 

Customer SAM Orders (which are 

included as Solicited Orders for 

purposes of qualifying for and receiving 

the Solicitation Rebate) under this 

proposal. As such, the Exchange 

believes that Members will continue to 

be incentivized to send Professional 

Customer Solicited Orders to the 

Exchange without the added incentive 

of the proposed rebates. In addition, to 

the extent the proposed Solicitation 

Rebate program encourages Members to 

send more Solicited Order and complex 

order flow to ISE, all market 

participants will benefit from the 

resulting additional liquidity and 

trading opportunities on ISE. 

QCC Rebate 

The Exchange believes that the 

proposed changes to the QCC Rebate 

program in Options 7, Section 6.B do 


khammond on DSKJM1Z7X2PROD with NOTICES
87476 Federal Register / Vol. 88, No. 241 / Monday, December 18, 2023 / Notices 

50 15 U.S.C. 78s(b)(3)(A)(ii). 

51 17 CFR 240.19b–4(f)(2). 

52 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)(iii). 

4 17 CFR 240.19b–4(f)(6). 

not impose an undue burden on 

competition because all Members will 

be eligible for the proposed rebates by 

sending more QCC and complex order 

flow to the Exchange. The Exchange is 

proposing to exclude Professional 

Customers from the QCC Rebate 

program in the manner described above 

and to apply the proposed rebates only 

where at least one party to the QCC 

transaction is neither a Priority 

Customer nor Professional Customer 

because the Exchange is simultaneously 

eliminating transaction fees for 

Professional Customer QCC Orders 

under this proposal. As such, the 

Exchange believes that Members will 

continue to be incentivized to send 

Professional Customer QCC Orders to 

the Exchange without the added 

incentive of the proposed rebates. In 

addition, to the extent the proposed 

QCC Rebate program encourages 

Members to send more QCC Order and 

complex order flow to ISE, all market 

participants will benefit from the 

resulting additional liquidity and 

trading opportunities. 

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 50 and Rule 

19b–4(f)(2) 51 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–2023–35 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–2023–35. 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–2023–35 and should be 

submitted on or before January 8, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.52

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27674 Filed 12–15–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99147; File No. SR– 

CboeBZX–2023–099] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend the 

Fee Schedule Applicable to Members 

and Non-Members of the Exchange 

Pursuant to BZX Rules 15.1(a) and (c) 

in Order To Adopt a New Tier Under 

Footnote 13 (Tape B Volume and 

Quoting) Specific to Single-Stock 

Exchange Traded Funds (‘‘SingleStock ETFs’’) 

December 12, 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 December 

1, 2023, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) 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 Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder.4 The 

Commission is publishing this notice to 


khammond on DSKJM1Z7X2PROD with NOTICES