44092 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CboeBZX–2021–054 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–CboeBZX–2021–054. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2021–054 and 

should be submitted on or before 

September 1, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17080 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92577; File No. SR–ISE– 

2021–16] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend ISE’s Options 

Regulatory Fee 

August 5, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on July 30, 

2021, 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 

ISE’s Pricing Schedule at Options 7, 

Section 9, Part C related to the Options 

Regulatory Fee or ‘‘ORF’’. 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated the amendments become 

operative on October 1, 2021. 

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 

Currently, ISE assesses an ORF of 

$0.0018 per contract side as specified in 

ISE’s Pricing Schedule at Options 7, 

Section 9, Part C. The Exchange 

proposes to waive its ORF from October 

1, 2021 to January 31, 2022, and then 

recommence the ORF on February 1, 

2022. 

By way of background, the options 

industry has experienced extremely 

high options trading volumes and 

volatility. This historical anomaly of 

persistent increased options volumes 

has impacted ISE’s ORF collection 

which, in turn, has caused the Exchange 

to continue to revisit its financial 

forecast to reflect the sustained elevated 

options volumes and volatility. As the 

Exchange continues to monitor the 

amount of revenue collected from the 

ORF to ensure that our ORF collection, 

in combination with other regulatory 

fees and fines, does not exceed 

regulatory costs, the Exchange has 

found it difficult to determine when 

volumes will return to more normal 

levels. In order to avoid iterative rule 

changes to amend its ORF, the Exchange 

believes it is prudent to instead waive 

its ORF from October 1, 2021 to January 

31, 2022, to permit the Exchange to plan 

future forecasts without the need to 

account for any ORF collection during 

that timeframe. This proposal would 

ensure that revenue collected from the 

ORF, in combination with other 

regulatory fees and fines, would not 

exceed the Exchange’s total regulatory 

costs. ISE would recommence assessing 

its current ORF rate of $0.0018 per 

contract side as of February 1, 2022. 

Furthermore, prior to February 1, 2022, 

ISE will examine its ORF rate to 

determine if the $0.0018 per contract 

side ORF is justified given the current 

volumes in 2022 as well as the current 

Exchange regulatory expenses at that 

time. ISE would file a proposed rule 

change to amend its per contract ORF if 

changes are necessary to ensure an 

equitable allocation of reasonable ORF, 

if e.g., the Exchange believes that the 

volumes ISE experiences in the second 

half of 2021 are likely to persist 

throughout 2022. Of note, ISE proposes 

to continue to operate with the ORF fee 

waived in January 2022 to allow its 

members and other broker dealers time 

to align their systems for February 1, 

2022, allowing for time after the holiday 

period which traditionally have yearend code freezes in place. 


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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44093 

3Participants must record the appropriate 

account origin code on all orders at the time of 

entry of the order. The Exchange represents that it 

has surveillances in place to verify that members 

mark orders with the correct account origin code. 

4The Exchange uses reports from OCC when 

assessing and collecting the ORF. 

5See Options Trader Alert 2021–41. 

6See data from OCC at: https://

www.businesswire.com/news/home/ 

20201202005584/en/OCC-November-2020-TotalVolume-Up-71-Percent-From-a-Year-Ago. 

7See data from OCC at: https://www.theocc.com/ 

Market-Data/Market-Data-Reports/Volume-andOpen-Interest/Volume-by-Account-Type. 

8 Id. 

Collection of ORF 

Currently, ISE assesses its ORF for 

each customer option transaction that is 

either: (1) Executed by a member on ISE; 

or (2) cleared by an ISE member at The 

Options Clearing Corporation (‘‘OCC’’) 

in the customer range,3 even if the 

transaction was executed by a nonmember of ISE, regardless of the 

exchange on which the transaction 

occurs.4

ORF Revenue and Monitoring of ORF 

The Exchange monitors the amount of 

revenue collected from the ORF to 

ensure that it, in combination with other 

regulatory fees and fines, does not 

exceed regulatory costs. In determining 

whether an expense is considered a 

regulatory cost, the Exchange reviews 

all costs and makes determinations if 

there is a nexus between the expense 

and a regulatory function. The Exchange 

notes that fines collected by the 

Exchange in connection with a 

disciplinary matter offset ORF. 

Revenue generated from ORF, when 

combined with all of the Exchange’s 

other regulatory fees and fines, is 

designed to recover a material portion of 

the regulatory costs to the Exchange of 

the supervision and regulation of 

member customer options business 

including performing routine 

surveillances, investigations, 

examinations, financial monitoring, and 

policy, rulemaking, interpretive, and 

enforcement activities. Regulatory costs 

include direct regulatory expenses and 

certain indirect expenses in support of 

the regulatory function. The direct 

expenses include in-house and thirdparty service provider costs to support 

the day-to-day regulatory work such as 

surveillances, investigations and 

examinations. The indirect expenses 

include support from such areas as 

Office of the General Counsel, 

technology, and internal audit. Indirect 

expenses are estimated to be 

approximately 42% of the total 

regulatory costs for 2021. Thus, direct 

expenses are estimated to be 

approximately 58% of total regulatory 

costs for 2021. 

The ORF is designed to recover a 

material portion of the costs to the 

Exchange of the supervision and 

regulation of its members, including 

performing routine surveillances, 

investigations, examinations, financial 

monitoring, and policy, rulemaking, 

interpretive, and enforcement activities. 

Proposal 

Based on the Exchange’s most recent 

review, the Exchange proposes to waive 

ORF from October 1, 2021 to January 31, 

2022, to help ensure that revenue 

collected from the ORF, in combination 

with other regulatory fees and fines, 

does not exceed the Exchange’s total 

regulatory costs. ISE would recommence 

assessing its current ORF rate of $0.0018 

per contract side as of February 1, 2022. 

The Exchange issued an Options Trader 

Alert on July 2, 2021 indicating the 

proposed rate change for October 1, 

2021.5

The proposed waiver is based on 

recent options volume which has 

remained at abnormally and 

unexpectedly high levels. Options 

volume in 2021 remains significantly 

high when that volume is compared to 

2019 and 2020 options volume. For 

example, total options contract volume 

in November 2020 was 71% higher than 

the total options contract volume in 

November 2019.6 Below is industry data 

from OCC 7 which illustrates the 

significant increase in volume during 

the fourth quarter of 2020. 

Volume October 2020 November 2020 December 2020 Q4 2020 

Total ................................................................................................. 633,365,184 673,660,858 753,568,354 2,060,594,396 

Customer ......................................................................................... 587,707,301 630,297,252 708,037,956 1,926,042,509 

Total ADV ........................................................................................ 28,789,326.55 33,683,042.90 34,253,107.00 32,196,787.44 

Customer ADV ................................................................................. 26,713,968.23 31,514,862.60 32,183,543.45 30,094,414.20 

Below is industry data from OCC8

which illustrates the significant increase 

in volume from January 2021 through 

March 2021. The options volume in the 

first quarter of 2021 was higher than the 

fourth quarter of 2020. Also, April and 

May 2021 volumes remain significantly 

high as compared to 2020 options 

volume in general. 

Volume January 2021 February 2021 March 2021 April 2021 May 2021 

Total ................................................................. 838,339,790 823,412,827 898,653,388 711,388,828 718,368,993 

Customer .......................................................... 784,399,878 782,113,450 837,247,059 667,208,963 659,913,862 

Total ADV ......................................................... 44,123,146.84 43,337,517.20 39,071,886.40 33,875,658.50 35,918,449.70 

Customer ADV ................................................. 41,284,204.11 41,163,865.79 36,402,046.04 31,771,855.38 32,995,693.10 

As a result of the historical anomaly 

created by these high options volumes, 

ISE has no assurance that the 

Exchange’s final costs for 2021 will not 

differ materially from these expectations 

and prior practice, nor can the Exchange 

predict with certainty whether options 

volume will remain at the current level 

going forward. The Exchange notes 

however, that when combined with 

regulatory fees and fines, the revenue 

being generated utilizing the current 

ORF rate may result in revenue in 

excess of the Exchange’s estimated 

regulatory costs for the year. 

Particularly, as noted above, the options 

market has seen a substantial increase in 

volume in 2021 as compared to 2020, 

due in large part to the continued 

extreme volatility in the marketplace as 

a result of the COVID–19 pandemic. 

This unprecedented spike in volatility 

resulted in significantly higher volume 

than was originally projected by the 

Exchange (thereby resulting in 

substantially higher ORF revenue than 

projected). The Exchange therefore 

proposes to waive ORF from October 1, 

2021 to January 31, 2022 to ensure it 

does not exceed its regulatory costs for 


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44094 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

9The Exchange notes that its regulatory 

responsibilities with respect to member compliance 

with options sales practice rules have largely been 

allocated to FINRA under a 17d–2 agreement. The 

ORF is not designed to cover the cost of that options 

sales practice regulation. 

10The Exchange will provide members with such 

notice at least 30 calendar days prior to the effective 

date of the change. 

11The Exchange notes that in connection with 

this proposal, it provided the Commission 

confidential details regarding the Exchange’s 

projected regulatory revenue, including projected 

revenue from ORF, along with a projected 

regulatory expenses. 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(4). 

14 15 U.S.C. 78f(b)(5). 

15 If the OCC clearing member is a ISE member, 

ORF is assessed and collected on all cleared 

customer contracts (after adjustment for CMTA); 

and (2) if the OCC clearing member is not a ISE 

member, ORF is collected only on the cleared 

customer contracts executed at ISE, taking into 

account any CMTA instructions which may result 

in collecting the ORF from a non-member. 

16See Securities Exchange Act Release No. 91420 

(March 26, 2021), 86 FR 17223 (April 1, 2021) (SR– 

ISE–2021–04) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Amend 

ISE’s Pricing Schedule at Options 7, Section 9, Part 

C To Reduce the Options Regulatory Fee). The 

Exchange also noted in this rule change that, ‘‘As 

a result, the costs associated with administering the 

customer component of the Exchange’s overall 

regulatory program are materially higher than the 

costs associated with administering the noncustomer component (e.g., member proprietary 

transactions) of its regulatory program. Moreover, 

the Exchange notes that it has broad regulatory 

responsibilities with respect to activities of its 

members, irrespective of where their transactions 

take place. Many of the Exchange’s surveillance 

programs for customer trading activity may require 

the Exchange to look at activity across all markets, 

such as reviews related to position limit violations 

and manipulation. Indeed, the Exchange cannot 

effectively review for such conduct without looking 

at and evaluating activity regardless of where it 

transpires. In addition to its own surveillance 

programs, the Exchange also works with other SROs 

2021. Particularly, the Exchange 

believes that waiving ORF from October 

1, 2021 to January 31, 2022 and 

considering all of the Exchange’s other 

regulatory fees and fines would allow 

the Exchange to continue covering a 

material portion of its regulatory costs, 

while lessening the potential for 

generating excess revenue that may 

otherwise occur using the current rate.9

ISE would recommence assessing its 

current ORF rate of $0.0018 per contract 

side as of February 1, 2022. Until 

October 1, 2021, the Exchange will 

continue to monitor the amount of 

revenue collected from the ORF to 

ensure that it, in combination with its 

other regulatory fees and fines, does not 

exceed regulatory costs. The Exchange 

would also continue monitoring the 

amount of revenue collected from the 

ORF when it recommences assessing 

ORF on February 1, 2022. If the 

Exchange determines regulatory 

revenues exceed regulatory costs, the 

Exchange will adjust the ORF by 

submitting a fee change filing to the 

Commission and notifying 10 its 

members via an Options Trader Alert.11

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.12 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,13 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members, and other persons using its 

facilities. Additionally, the Exchange 

believes the proposed rule change is 

consistent with the Section 6(b)(5) 14

requirement that the rules of an 

exchange not be designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes the proposed 

fee waiver is reasonable because 

customer transactions will be subject to 

no ORF from October 1, 2021 to January 

31, 2022. Moreover, the proposed 

waiver is necessary, so the Exchange 

does not collect revenue in excess of its 

anticipated regulatory costs, in 

combination with other regulatory fees 

and fines, which is consistent with the 

Exchange’s practices. 

The Exchange designed the ORF to 

generate revenues that would be less 

than the amount of the Exchange’s 

regulatory costs to ensure that it, in 

combination with its other regulatory 

fees and fines, does not exceed 

regulatory costs, which is consistent 

with the view of the Commission that 

regulatory fees be used for regulatory 

purposes and not to support the 

Exchange’s business operations. As 

discussed above, however, after review 

of its regulatory costs and regulatory 

revenues, which includes revenues from 

ORF and other regulatory fees and fines, 

the Exchange determined that absent a 

reduction in ORF, it may be collecting 

revenue in excess of its regulatory costs. 

Indeed, the Exchange notes that when 

considering the recent options volume, 

which included an increase in customer 

options transactions, it estimates the 

ORF may generate revenues that may 

cover more than the approximated 

Exchange’s projected regulatory costs. 

As such, the Exchange believes it’s 

reasonable and appropriate to waive 

ORF from October 1, 2021 to January 31, 

2022 and recommence assessing ORF on 

February 1, 2022. 

The Exchange also believes the 

proposed fee change is equitable and 

not unfairly discriminatory as no 

member would be assessed an ORF from 

October 1, 2021 to January 31, 2022. 

While the Exchange has assessed and 

collected ORF from January through 

September, 2021, but will not collect 

ORF, with this proposal, from October 

2021 through January 2022, the 

Exchange does not believe that it is 

unfairly discriminatory to not assess the 

ORF from October 2021 through January 

2022 because the ORF is designed and 

intended to recover a portion of the 

Exchange’s regulatory costs without 

collecting in excess of those costs. 

Unexpectedly high and sustained 

customer volume has resulted in higher 

revenues from the ORF that, if not 

suspended, will likely result in overcollection of ORF, which would be 

inconsistent with the Exchange’s prior 

representations and undertaking to not 

collect ORF in excess of regulatory 

expenses. Despite decreasing the 

amount of the ORF on April 1, 2021, the 

Exchange did not decrease the amount 

of the ORF again in 2021 because it did 

not expect, based on its prior 

experience, that customer volume 

would remain abnormally high. Also, it 

is equitable and not unfairly 

discriminatory to recommence the 

assessment of the ORF on February 1, 

2022 because assessing the ORF to each 

member for options transactions cleared 

by OCC in the customer range where the 

execution occurs on another exchange 

and is cleared by aa ISE member is an 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members and issuers and other persons 

using its facilities.15

The Exchange believes recommencing 

the ORF on February 1, 2022 at the same 

rate, unless options volumes or the 

Exchange’s regulatory expense at that 

time warrant a proposed rule change, 

continues to ensure fairness by 

assessing higher fees to those members 

that require more Exchange regulatory 

services based on the amount of 

customer options business they 

conduct. As noted in prior ORF rule 

changes which set the current ORF rate 

of $0.0018 per contract side, regulating 

customer trading activity is much more 

labor intensive and requires greater 

expenditure of human and technical 

resources than regulating non-customer 

trading activity, which tends to be more 

automated and less labor-intensive. For 

example, there are costs associated with 

main office and branch office 

examinations (e.g., staff expenses), as 

well as investigations into customer 

complaints and the terminations of 

registered persons.16


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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44095 

and exchanges on intermarket surveillance related 

issues. Through its participation in the Intermarket 

Surveillance Group (‘‘ISG’’) the Exchange shares 

information and coordinates inquiries and 

investigations with other exchanges designed to 

address potential intermarket manipulation and 

trading abuses. Accordingly, there is a strong nexus 

between the ORF and the Exchange’s regulatory 

activities with respect to customer trading activity 

of its members.’’ See 86 FR 17225. 

17See also Securities Exchange Act Release Nos. 

81345 (August 8, 2017), 82 FR 37939 (August 14, 

2017) (SR–ISE–2017–71); 70859 (November 13, 

2013), 78 FR 69501 (November 19, 2013) (SR–ISE– 

2014–54); 69270 (April 2, 2013), 78 FR 20988 (April 

8, 2013) (SR–ISE–2013–28); 67087 (May 31, 2012), 

77 FR 33535 (June 6, 2012) (SR–ISE–2012–43); and 

62012 (April 30, 2010), 75 FR 25306 (May 7, 2010) 

(SR–ISE–2010–36). 

18 Id. 

19See Securities Exchange Act Release Nos. 

85127 (February 13, 2019), 84 FR 5173 (February 

20, 2019) (SR–MRX–2019–03). 

20Of note, prior to February 1, 2019, MRX 

assessed no ORF thereby creating a calendar year 

where members were assessed no ORF for a period 

similar to what is proposed. 

21 15 U.S.C. 78s(b)(3)(A). 

22 17 CFR 240.19b–4(f)(2). 

23 15 U.S.C. 78s(b)(2)(B). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange does not believe that this 

proposal creates an unnecessary or 

inappropriate intra-market or intermarket burden on competition for 

several reasons. First, ORF has been 

amended several times since its 

inception in 2009.17 For example, most 

recently on April 1, 2021, ISE amended 

its ORF rate from $0.0020 to $0.0018 per 

contract side as of April 1, 2021. 

Members who either executed a 

transaction on ISE or cleared a 

transaction at OCC in the customer 

range would have been assessed a 

higher ORF for a transaction executed 

on ISE on March 31, 2021 ($0.0020 per 

contract side) as compared to April 1, 

2021 ($0.0018 per contract side). There 

have been other ORF amendments prior 

to 2021 which have caused ISE to assess 

different ORF rates to members for 

different time periods causing members 

to have paid different ORFs since 2009. 

Second, ISE’s regulatory costs have 

varied over time. For example, if ISE 

received payment of a fine from a 

disciplinary action, that fine would 

offset regulatory costs and would cause 

ISE to require less regulatory revenue 

for a particular period. The changing 

regulatory costs would impact the ORF 

assessed by ISE to members. In the past, 

the Exchange has amended ORF to be 

higher or lower,18 thereby impacting the 

amount paid by members in a calendar 

year. Third, options markets assess ORF 

at different rates. For instance, today, 

Nasdaq MRX, LLC (‘‘MRX’’) assesses a 

lower ORF of $0.0004 per contract 

side.19 MRX has assessed this rate since 

February 1, 2019.20 Depending on 

where a customer order is executed, a 

member could be assessed a much 

different ORF. For example, in the case 

where a customer order is sent to ISE 

and routed to MRX, and a non-member 

cleared that transaction, the ISE ORF of 

$0.0018 would not be assessed to the 

member who executed the transaction 

or cleared the transaction, rather the 

MRX rate of $0.0004 per contract side 

would be assessed. In that same 

scenario presuming a non-member 

cleared the transaction, if the customer 

order could have executed on ISE 

instead of routing away the member 

would have been assessed the ISE ORF 

of $0.0018 per contract side. The 

customer, in that instance, would have 

no knowledge of where the order could 

be executed, as the liquidity profile of 

each exchange may differ at that exact 

moment. Therefore, members could be 

assessed a different ORF on the same 

day on the same transaction based on 

routing decisions, and in those cases the 

member would continue to benefit from 

the regulatory program available on 

each market and discover where the 

liquidity is available, irrespective of any 

ORF rate differentials across markets. 

The Exchange believes recommencing 

the ORF on February 1, 2022 at the same 

rate, unless options volumes or the 

Exchange’s regulatory expense at that 

time warrant a proposed rule change, 

does not create an undue burden on 

competition because the ORF applies to 

all customer activity, thereby raising 

regulatory revenue to offset regulatory 

expenses. It also supplements the 

regulatory revenue derived from noncustomer activity. Recommencing the 

assessment of the current ORF does not 

create an unnecessary or inappropriate 

inter-market burden on competition 

because it is a regulatory fee that 

supports regulation in furtherance of the 

purposes of the Act. The Exchange is 

obligated to ensure that the amount of 

regulatory revenue collected from the 

ORF, in combination with its other 

regulatory fees and fines, does not 

exceed regulatory costs. 

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 is effective 

upon filing pursuant to Section 

19(b)(3)(A) 21 of the Act and 

subparagraph (f)(2) of Rule 19b–4 22

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 23 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File No. SR–ISE– 

2021–16 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 No. 

SR–ISE–2021–16. This file number 

should be included on the subject line 

if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 


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24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘member organization’’ means a 

corporation, partnership (general or limited), 

limited liability partnership, limited liability 

company, business trust or similar organization, 

transacting business as a broker or a dealer in 

securities and which has the status of a member 

organization by virtue of (i) admission to 

membership given to it by the Membership 

Department pursuant to the provisions of General 

3, Sections 5 and 10 or the By-Laws or (ii) the 

transitional rules adopted by the Exchange pursuant 

to Section 6–4 of the By-Laws. References herein to 

officer or partner, when used in the context of a 

member organization, shall include any person 

holding a similar position in any organization other 

than a corporation or partnership that has the status 

of a member organization. See General 1, Section 

1(17). 

4Participants must record the appropriate 

account origin code on all orders at the time of 

entry of the order. The Exchange represents that it 

has surveillances in place to verify that member 

organizations mark orders with the correct account 

origin code. 

5The Exchange uses reports from OCC when 

assessing and collecting the ORF. 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File No. 

SR–ISE–2021–16, and should be 

submitted on or before September 1, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17084 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92585; File No. SR–Phlx– 

2021–39] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Amend Phlx’s Options 

Regulatory Fee 

August 5, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on July 30, 

2021, Nasdaq PHLX LLC (‘‘Phlx’’ 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 

Phlx’s Pricing Schedule at Options 7, 

Section 6, Part D related to the Options 

Regulatory Fee or ‘‘ORF’’. 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated the amendments become 

operative on October 1, 2021. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/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 

Currently, Phlx assesses an ORF of 

$0.0042 per contract side as specified in 

Phlx’s Pricing Schedule at Options 7, 

Section 6, Part D. The Exchange 

proposes to waive its ORF from October 

1, 2021 to January 31, 2022, and then 

recommence the ORF on February 1, 

2022. 

By way of background, the options 

industry has experienced extremely 

high options trading volumes and 

volatility. This historical anomaly of 

persistent increased options volumes 

has impacted Phlx’s ORF collection 

which, in turn, has caused the Exchange 

to continue to revisit its financial 

forecast to reflect the sustained elevated 

options volumes and volatility. As the 

Exchange continues to monitor the 

amount of revenue collected from the 

ORF to ensure that our ORF collection, 

in combination with other regulatory 

fees and fines, does not exceed 

regulatory costs, the Exchange has 

found it difficult to determine when 

volumes will return to more normal 

levels. In order to avoid iterative rule 

changes to amend its ORF, the Exchange 

believes it is prudent to instead waive 

its ORF from October 1, 2021 to January 

31, 2022, to permit the Exchange to plan 

future forecasts without the need to 

account for any ORF collection during 

that timeframe. This proposal would 

ensure that revenue collected from the 

ORF, in combination with other 

regulatory fees and fines, would not 

exceed the Exchange’s total regulatory 

costs. Phlx would recommence 

assessing its current ORF rate of $0.0042 

per contract side as of February 1, 2022. 

Furthermore, prior to February 1, 2022, 

Phlx will examine its ORF rate to 

determine if the $0.0042 per contract 

side ORF is justified given the current 

volumes in 2022 as well as the current 

Exchange regulatory expenses at that 

time. Phlx would file a proposed rule 

change to amend its per contract ORF if 

changes are necessary to ensure an 

equitable allocation of reasonable ORF, 

if e.g., the Exchange believes that the 

volumes Phlx experiences in the second 

half of 2021 are likely to persist 

throughout 2022. Of note, Phlx proposes 

to continue to operate with the ORF fee 

waived in January 2022 to allow its 

member organizations and other broker 

dealers time to align their systems for 

February 1, 2022, allowing for time after 

the holiday period which traditionally 

have year-end code freezes in place. 

Collection of ORF 

Currently, Phlx assesses its ORF for 

each customer option transaction that is 

either: (1) Executed by a member 

organization 3 on Phlx; or (2) cleared by 

a Phlx member organization at The 

Options Clearing Corporation (‘‘OCC’’) 

in the customer range,4 even if the 

transaction was executed by a nonmember organization of Phlx, regardless 

of the exchange on which the 

transaction occurs.5

ORF Revenue and Monitoring of ORF 

The Exchange monitors the amount of 

revenue collected from the ORF to 

ensure that it, in combination with other 


jbell on DSKJLSW7X2PROD with NOTICES