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34 15 U.S.C. 78s(b)(3)(A). 

35 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

36 17 CFR 240.19b–4(f)(6)(iii). 

37See supra notes 9 and 10. 

38For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

39 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 34 and Rule 19b– 

4(f)(6) thereunder.35

A proposed rule change filed 

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

Act normally does not become operative 

for 30 days after the date of its filing. 

However, Rule 19b–4(f)(6)(iii) 36 permits 

the Commission to designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has requested 

that the Commission waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange notes that the 

Commission has approved and noticed 

for immediate effectiveness proposed 

rule changes to permit listing and 

trading on the Exchange of Active Proxy 

Portfolio Shares similar to the Fund.37

The proposed listing rule for the Fund 

raises no novel legal or regulatory 

issues. Thus, the Commission believes 

that waiver of the 30-day operative 

delay is consistent with the protection 

of investors and the public interest. 

Accordingly, the Commission hereby 

waives the 30-day operative delay and 

designates the proposed rule change 

operative upon filing.38

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. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2022–29 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–NYSEArca–2022–29. 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–NYSEArca–2022–29 and 

should be submitted on or before June 

8, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10618 Filed 5–17–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94897; File No. SR–ISE– 

2022–11] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Routing 

Functionality in Connection With a 

Technology Migration 

May 12, 2022. 

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 April 27, 

2022, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend the 

following sections within Options 5, 

Order Protection and Locked and 

Crossed Markets: Section 2, Order 

Protection; Section 3, Locked and 

Crossed Markets; and Section 4, Order 

Routing to Other Exchanges. 

Additionally, the Exchange proposes 

to make corresponding amendments to 

the following sections within Options 3, 

Options Trading Rules: Section 5, Entry 

and Display of Single-Leg Orders; 

Section 7, Types of Orders and Order 

and Quote Protocols; Section 9, Trading 

Halts; Section 10, Priority of Quotes and 

Orders; and Section 11, Auction 

Mechanisms. Also, amendments are 

proposed to the following sections 

within Options 7, Pricing Schedule: 

Section 1, General Provisions; Section 3, 

Regular Order Fees and Rebates; and 

Section 6, Other Options Fees and 

Rebates. 


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3 GEMX and MRX incorporate ISE Options 5 by 

reference. 

4NES is a broker-dealer and the Routing Facility 

of the Exchange. NES routes orders in options listed 

and open for trading on the System to away markets 

either directly or through one or more third-party 

unaffiliated routing broker-dealers pursuant to 

Exchange Rules on behalf of the Exchange. NES is 

subject to regulation as a facility of the Exchange, 

including the requirement to file proposed rule 

changes under Section 19 of the Securities 

Exchange Act of 1934, as amended. See Options 5, 

Section 4(a). 

5A do-not-route order is a market or limit order 

that is to be executed in whole or in part on the 

Exchange only. Due to prices available on another 

options exchange (as provided in Options 5 (Order 

Protection; Locked and Crossed Markets)), any 

balance of a do-not-route order that cannot be 

executed upon entry, or placed on the Exchange’s 

limit order book, will be automatically cancelled. 

See Options 3, Section 7(m). 

6See Supplementary Material .02 to Options 5, 

Section 4. 

7Options 5, Section 1(h) provides, ‘‘Intermarket 

Sweep Order (‘‘ISO’’)’’ means a limit order for an 

options series that, simultaneously with the routing 

of the ISO, one or more additional ISOs, as 

necessary, are routed to execute against the full 

displayed size of any Protected Bid, in the case of 

a limit order to sell, or any Protected Offer, in the 

case of a limit order to buy, for the options series 

with a price that is superior to the limit price of 

the ISO. A Member may submit an Intermarket 

Sweep Order to the Exchange only if it has 

simultaneously routed one or more additional 

Intermarket Sweep Orders to execute against the 

full displayed size of any Protected Bid, in the case 

of a limit order to sell, or Protected Offer, in the 

case of a limit order to buy, for an options series 

with a price that is superior to the limit price of 

the Intermarket Sweep Order. An ISO may be either 

an Immediate-Or-Cancel Order or an order that 

expires on the day it is entered.’’ 

8See Supplementary Material .01 and .07 to 

Options 5, Section 2. 

9 If a trading halt is initiated during the exposure 

period, the exposure period will be terminated 

without execution. See Supplementary Material .02 

to Options 5, Section 2. 10The percentage of the total number of contracts 

available at the same price that is represented by 

the size of a Member’s response. See 

Supplementary Material .02(a) to Options 5, Section 

2. 

11Such interest will be executed in price priority. 

At the same price, Priority Customer Orders will be 

executed first in time priority and then all other 

interest (orders, quotes and responses) will be 

allocated pro-rata based on size. See Supplementary 

Material .02(b) to Options 5, Section 2. 

12See Supplementary Material .02(c) to Options 

5, Section 2. 

13Supplementary Material .06 to Options 5, 

Section 2 provides that in addressing Public 

Customer orders that are not automatically executed 

because there is a displayed bid or offer on another 

exchange trading the same options contract that is 

better than the best bid or offer on the Exchange 

pursuant to the Supplementary Material of Options 

5, Section 2, the Exchange will act in compliance 

with its rules and with the provisions of the 

Exchange Act and the rules thereunder, including, 

but not limited to, the requirements in Section 

(6)(b)(4) and (5) of the Exchange Act that the rules 

of national securities exchange provide for the 

equitable allocation of reasonable dues, fees, and 

other charges among its Members and issuers and 

Continued 

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 

In connection with a technology 

migration to an enhanced Nasdaq, Inc. 

(‘‘Nasdaq’’) functionality which results 

in higher performance, scalability, and 

more robust architecture, the Exchange 

intends to adopt certain trading 

functionality currently utilized at 

Nasdaq affiliate exchanges. Specifically, 

the Exchange proposes to conform the 

routing functionality available on ISE to 

that of Nasdaq BX, Inc.3 The Exchange 

proposes to amend the following 

sections within Options 5, Order 

Protection and Locked and Crossed 

Markets: Section 2, Order Protection; 

Section 3, Locked and Crossed Markets; 

and Section 4, Order Routing to Other 

Exchanges. Additionally, the Exchange 

proposes to make corresponding 

amendments to the following sections 

within Options 3, Options Trading 

Rules: Section 5, Entry and Display of 

Single-Leg Orders; Section 7, Types of 

Orders and Order and Quote Protocols; 

Section 9, Trading Halts; Section 10, 

Priority of Quotes and Orders; and 

Section 11, Auction Mechanisms, to 

account for the proposed amendments 

to Options 5. Also, amendments are 

proposed within the following sections 

of Options 7, Pricing Schedule: Section 

1, General Provisions; Section 3, Regular 

Order Fees and Rebates; and Section 6, 

Other Options Fees and Rebates. 

Today, ISE Options 5 describes how 

ISE routes orders in options via Nasdaq 

Execution Services, LLC (‘‘NES’’) 4 to 

away markets. Utilizing NES to route 

orders to away markets is optional. 

Today, Members may elect to not route 

orders through NES and designate those 

orders as Do-Not-Route-Orders pursuant 

to Options 5, Section 4(b).5 In the event 

that NES cannot provide Routing 

Services, the Exchange will cancel 

orders that, if processed by the 

Exchange, would violate Options 5, 

Section 2 (prohibition on tradethroughs) or Options 5, Section 3 

(prohibition on locked and crossed 

markets).6 Further, ISE Options 5 

describes the manner in which ISE may 

route to another exchange via an 

Intermarket Sweep Order (‘‘ISO’’) 7

under certain circumstances.8

Pursuant to Supplementary Material 

.02 to Options 5, Section 2, ISE permits 

certain orders to first be exposed at the 

NBBO to all Members for execution at 

the National Best Bid or Offer (‘‘NBBO’’) 

before the order would be routed to 

another market for execution (‘‘flash 

functionality’’). Currently, with respect 

to flash functionality, when an 

incoming order is priced at or through 

the Away Best Bid or Offer (‘‘ABBO’’), 

when the ABBO is better than the 

Exchange Best Bid or Offer (‘‘BBO’’), 

such order is exposed at the current 

NBBO to all Exchange Members for a 

period of time established by the 

Exchange not to exceed one (1) second. 

During the exposure period, Exchange 

Members may enter responses up to the 

size of the order being exposed in the 

regular trading increment applicable to 

the option.9 If at the end of the exposure 

period, the order is executable at the 

then-current NBBO and ISE is not at the 

then-current NBBO, responses that 

equal or better the NBBO will be 

executed in price priority, and at the 

same price, allocated pro-rata based on 

size, after Priority Customer orders are 

allocated.10 If during the exposure 

period, the order becomes executable on 

ISE at the prevailing NBBO, the 

exposure period will be terminated, and 

the order will be executed against orders 

and quotes on the order book and 

responses received during the exposure 

period.11 If during the exposure period 

the Exchange receives an unrelated 

order on the opposite side of the market 

from the exposed order that could trade 

against the exposed order at the 

prevailing NBBO price, the exposure 

period will be terminated and the orders 

will be executed.12 If after an order is 

exposed, the order cannot be executed 

in full on the Exchange at the thencurrent NBBO or better, and it is 

marketable, the lesser of the full 

displayed size of the Protected Bid(s) or 

Protected Offer(s) that are priced better 

than ISE’s quote or the balance of the 

order will be sent to NES and any 

additional balance will be executed on 

ISE if it is marketable.13 Any additional 


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other persons using its facilities, and not be 

designed to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

14See Supplementary Material .02(d) to Options 

5, Section 2. 

15The term ‘‘Non-Customer’’ means a person or 

entity that is a broker or dealer in securities. See 

Options 1, Section 1(a)(24). 

16See Supplementary Material .04 to Options 5, 

Section 2. 

17See Supplementary Material .04(a) to Options 

5, Section 2. 

18A Sweep Order is a limit order that is to be 

executed in whole or in part on the Exchange and 

the portion not so executed shall be routed 

pursuant to Supplementary Material .05 to Options 

5, Section 2 to Eligible Exchange(s) for immediate 

execution as soon as the order is received by the 

Eligible Exchange(s). Any portion not immediately 

executed by the Eligible Exchange(s) shall be 

canceled. If a Sweep Order is not marketable when 

it is submitted to the Exchange, it shall be canceled. 

See Options 3, Section 7(s). 

19See Supplementary Material .05(a) to Options 

5, Section 2. 

20See Supplementary Material .05(b) to Options 

5, Section 2. 

21See Securities Exchange Act Release No. 72816 

(August 12, 2014), 79 FR 48811 (August 18, 2014) 

(SR–ISE–2014–37) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change on NonCustomer Linkage and Sweep Orders). Prior to the 

introduction of Sweep Orders, the Exchange only 

routed Public Customer orders to away markets and 

cancelled any marketable Non-Customer orders that 

could not be executed on the ISE in compliance 

with the Options Order Protection and Locked/ 

Crossed Market Plan. Sweep Orders were intended 

to facilitate the routing of Public Customer and 

Non-Customer orders to away markets. 

22See note 13 above. 

23See Securities Exchange Act Release No. 60559 

(August 21, 2009), 74 FR 44425 (August 28, 2009) 

(SR–ISE–2009–27) (Order Granting Approval of a 

Proposed Rule Change as Modified by Amendment 

No. 1 Thereto To Adopt Rules Implementing the 

balance of the order that is not 

marketable against the then-current 

NBBO will be placed on ISE’s order 

book.14 A Do-Not-Route Order that 

meets the criteria for the flash order 

functionality will also be exposed. If the 

Do-Not-Route Order cannot be executed 

in full on the Exchange at the thencurrent NBBO or better, the balance of 

the order will be placed on ISE’s order 

book if it is not marketable against the 

then-current NBBO, or the balance of 

the order will be cancelled. 

Today, Non-Customer orders 15 may 

opt out of being processed in 

accordance with Supplementary 

Material .02 of Options 5, Section 2.16

If a Non-Customer opts out, when the 

automatic execution of an incoming 

Non-Customer order would result in an 

impermissible Trade Through, and it is 

marketable, the lesser of the full 

displayed size of the Protected Bid(s) or 

Protected Offer(s) that are priced better 

than ISE’s quote or the balance of the 

order will be sent to NES and any 

additional balance of the order will be 

executed on ISE if it is marketable. Any 

additional balance of the order that is 

not marketable against the then-current 

NBBO will be placed on ISE’s order 

book.17

Today, Sweep Orders 18 will not be 

processed in accordance with 

Supplementary Material .02 of this 

Options 5, Section 2. Rather, when the 

automatic execution of an incoming 

Sweep Order would result in an 

impermissible Trade Through, and it is 

marketable, the lesser of the full 

displayed size of the Protected Bid(s) or 

Protected Offer(s) that are priced better 

than ISE’s quote or the balance of the 

order will be sent to NES and any 

additional balance of the order will be 

executed on ISE if it is marketable. Any 

portion of the order not executed shall 

be cancelled.19 If a Sweep Order is not 

marketable when it is submitted to the 

Exchange, it shall be cancelled.20

Proposal 

The Exchange proposes to amend 

ISE’s order routing functionality to 

conform to that of BX Options 5, Section 

4. As part of the technology migration, 

Nasdaq seeks to conform certain trading 

functionality to functionality currently 

available on other Nasdaq affiliated 

options markets to create a similar 

routing experience for market 

participants across the Nasdaq options 

markets. Similar to BX, ISE would 

continue to route orders to away 

markets via NES. Similar to BX, ISE 

would offer the following order types 

for routing: DNR Order, FIND Order and 

SRCH Order. Each order type for routing 

will be explained below. 

ISE would no longer offer flash 

functionality because the proposed 

routing functionality, similar to BX, 

would permit an order to be exposed for 

a period of time that would allow other 

Members to trade with the order prior 

to the order routing to an away market. 

ISE proposes to remove the rule text 

related to flash functionality within 

Supplementary Material .02 to Options 

5, Section 2. 

Sweep Orders were adopted on ISE in 

2014, to supplement ISE’s away market 

routing capabilities.21 Sweep Orders do 

not enter the flash functionality process 

of Supplementary Material .02 of 

Options 5, Section 2 and are processed 

separately. This proposal would 

eliminate the Sweep Order type within 

Options 3, Section 7(s) and remove the 

Sweep Order routing discussion within 

Supplementary Material .05 to Options 

5, Section 2. Sweep Orders are not 

necessary to facilitate the routing of 

Public Customer and Non-Customer 

orders to away markets because the 

proposed routing functionality would 

route all orders to away markets 

uniformly. Additionally, uniformly, all 

orders would be subject to re-pricing if 

the order would otherwise lock or cross 

an away market. The Exchange would 

continue to not cancel marketable 

orders that could not be executed on ISE 

because the order would lock or cross 

an away market, rather the order would 

be re-priced with the new routing 

functionality. 

With the new routing process, a Route 

Timer would begin for each order that 

is subject to routing on the Exchange. 

While Members may not opt out of the 

Route Timer, as is the case today, the 

proposed routing process would create 

a uniform streamlined process for 

routing all orders (FIND and SRCH) 

where a market participant has elected 

to have an order routed; Member may 

continue to elect to not have their orders 

routed. The new routing process does 

not distinguish as between Public 

Customer orders and Non-Customer 

orders, rather all orders would be 

processed in the same manner. Further, 

the proposed routing process would 

serve to further harmonize routing 

across Nasdaq affiliated markets. 

The Exchange also proposes to 

remove Supplementary Material .04 to 

Options 5, Section 2, which sets forth 

routing procedures for Non-Customer 

orders that opt out of being processed 

under the flash functionality. The 

Exchange has proposed to replace its 

current away routing regime with the 

proposed FIND and SRCH order routing 

types. The processing of Sweep Orders 

and the routing procedures under 

Supplementary Material .04 to Options 

5, Section 2 were established as 

alternative routing procedures to the 

flash functionality and because the 

Exchange proposes to eliminate the 

flash order functionality, these routing 

procedures are no longer needed under 

the proposed routing procedures. 

Finally, the rule text within 

Supplementary Material .06 to Options 

5, Section 2,22 relating to Public 

Customer orders that are not 

automatically executed because there is 

a displayed bid or offer on another 

exchange trading the same options 

contract that is better than the best bid 

or offer on the Exchange, would be 

removed as handling of Public Customer 

orders is being amended to conform to 

BX Options 4 handling. The Exchange 

will explain that handling below. The 

rule text within Supplementary Material 

.06 to Options 5, Section 2 was adopted 

in 2009 when ISE adopted new rules to 

implement the Options Order Protection 

and Locked/Crossed Market Plan.23 ISE 


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Options Order Protection and Locked/Crossed 

Market Plan). 

24 15 U.S.C. 78f(b)(4) and (5). 

25An immediate-or-cancel order is a limit order 

that is to be executed in whole or in part upon 

receipt. Any portion not so executed is to be treated 

as cancelled. An immediate-or-cancel order entered 

by a Market Maker through the Specialized Quote 

Feed protocol will not be subject to the (i) Limit 

Order Price Protection and Size Limitation 

Protection as defined in Options 3, Section 15(b)(2) 

and (3); or (ii) Limit Order Price Protection as 

defined in Supplementary Material .07(d) to 

Options 3, Section 14. See Options 3, Section 

7(b)(3). 

26A fill-or-kill order is a limit order that is to be 

executed in its entirety as soon as it is received and, 

if not so executed, treated as cancelled. See Options 

3, Section 7(b)(2). 

27Supplementary Material .01 to Options 5, 

Section 3 provides, ‘‘When the price of an incoming 

limit order that is not executable upon entry would 

lock or cross a Protected Quotation, such order shall 

be handled in accordance with the provisions of 

Supplementary Material .02, .04 or .05 to Options 

5, Section 2, as applicable.’’ 

28Options 3, Section 10(a)(ii) provides, 

‘‘Applicability. This rule does not apply to the 

Block Order Mechanism described within Options 

3, Section 11(a), the Facilitation Mechanism 

described within Options 3, Section 11(b), the 

Solicited Order Mechanism described within 

Options 3, Section 11(d), the Price Improvement 

Mechanism described within Options 3, Section 13, 

orders described within Options 3, Section 12 or an 

exposure period as provided in Options 5, Section 

2 at Supplementary Material .02, unless Options 3, 

Section 10 is specifically referenced within ISE 

Rules applicable to the aforementioned 

functionality.’’ 

29Options 3, Section 11(g) provides, ‘‘Concurrent 

Complex Order and single leg auctions. An auction 

in the Block Order Mechanism at Options 3, Section 

11(a), Facilitation Mechanism at Options 3, Section 

11(b), Solicited Order Mechanism at Options 3, 

Section 11(d), or Price Improvement Mechanism at 

Options 3, Section 13(d), respectively, or an 

exposure period as provided in Supplementary 

Material .02 to Options 5, Section 2, for an option 

series may occur concurrently with a Complex 

Order Exposure Auction at Supplementary Material 

.01 to Options 3, Section 14, Complex Facilitation 

Auction at Options 3, Section 11(c), Complex 

Solicited Order Auction at Options 3, Section 11(e), 

or Complex Price Improvement Mechanism auction 

at Options 11, Section 13(e), respectively, for a 

Complex Order that includes that series. To the 

extent that there are concurrent Complex Order and 

single leg auctions involving a specific option 

series, each auction will be processed sequentially 

based on the time the auction commenced. At the 

time an auction concludes, including when it 

concludes early, the auction will be processed 

pursuant to Options 3, Section 11(a), (b), (d), or 

Section 13(a) or Supplementary Material .02 to 

Options 5, Section 2, as applicable, for the single 

option, or pursuant to Supplementary Material .01 

to Options 3, Section 14, Options 3, Section 11(c), 

11(e), Options 3, Section 13(e), as applicable, for the 

Complex Order, except as provided for at Options 

3, Section 13(e)(4)(vi).’’ 

30A ‘‘Flash Order’’ is an order that is exposed at 

the National Best Bid or Offer by the Exchange to 

all members for execution, as provided under 

Supplementary Material .02 to Options 5, Section 

2. Unless otherwise noted in Section 3 pricing, 

Flash Orders will be assessed the applicable 

‘‘Taker’’ Fee for the initiation of a Flash Order and 

will be paid/assessed the applicable ‘‘Maker’’ 

Rebate/Fee for responses. See Options 7, Section 1. 

31A market participant’s order that initiates a 

Flash Order will be assessed the appropriate Taker 

Fee in Section 3. All market participant responses 

to Flash Orders in Select Symbols will be paid/ 

assessed the appropriate Maker Rebate/Fee in 

Section 3. Responses to Flash Orders in Non-Select 

Symbols will be $0.25 per contract for non-Priority 

Customers and $0.00 for Priority Customers. See 

Options 7, Section 3 at note 17. The Exchange 

proposes to reserve note 17 within Options 7, 

Section 3. 

32Today, Marketing fees are waived NDX, NQX, 

MNX, Flash Orders and for Complex Orders in all 

symbols. See Options 7, Section 6E. 

33The Exchange is not defining a ‘‘System 

Routing Table’’ within this rule similar to BX as 

that term is not utilized elsewhere in the rule. 

continues to be subject to compliance 

with its Rules, the Act, and the rules 

thereunder, including Sections 6(b)(4) 

and (5) of the Act 24 which require the 

Exchange to: (1) Provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

participants and other persons using its 

facilities; and (2) prohibit unfair 

discrimination among customers, 

issuers, brokers or dealers. As noted in 

the Approval Order to SR–ISE–2009–27, 

Customers may choose to avoid having 

their orders routed away by entering 

their order with an Immediate-orCancel 25 or Fill-or-Kill designation 26 in 

addition to the DNR functionality. 

The Exchange proposes to remove the 

Supplementary Material to Options 5, 

Section 3 27 which describes how an 

order would be handled when the price 

of an incoming limit order that is not 

executable upon entry would lock or 

cross a Protected Quotation because that 

functionality is being amended with this 

filing. Specifically, today, the order 

would be handled in accordance with 

the provisions of Supplementary 

Material .02, .04 or .05 to Options 5, 

Section 2, as applicable. The Exchange’s 

proposal removes Supplementary 

Material .02, .04 and .05 to Options 5, 

Section 2, therefore this section would 

no longer be possible as the current 

order handling is being amended with 

this proposal. 

The Exchange also proposes to make 

certain conforming amendments within 

Options 3. First, the Exchange proposes 

to remove rule text within Options 3, 

Section 5(b)(1) which relates to flash 

functionality. Options 3, Section 5(b)(1) 

provides, ‘‘Orders that are not 

automatically executed will be handled 

as provided in Supplementary Material 

.02 to Options 5, Section 2; provided 

that Members may specify that a NonCustomer order should instead be 

accepted and immediately canceled 

automatically by the System at the time 

of receipt.’’ This rule text would no 

longer be necessary as the flash 

functionality is being eliminated. 

The Exchange also proposes to 

renumber Options 3, Section 5(b)(2) as 

Options 3, Section 5(b)(1). 

The Exchange proposes to amend 

Options 3, Section 9, Trading Halts, at 

subparagraph (d)(2). Among other 

things, the trading halt rule describes 

the processing of Market Orders 

exposed at the NBBO pursuant to 

Supplementary Material. 02 to Options 

5, Section 2 after a trading halt. This 

rule text is no longer necessary with the 

elimination of flash functionality. 

The Exchange also proposes to amend 

Options 3, Section 10(a)(ii) 28 to remove 

a reference to the flash functionality that 

is being eliminated. The Exchange also 

proposes to renumber Options 3, 

Section 10(a)(i) and (ii) as Options 3, 

Section 10(a)(1) and (2) to conform the 

numbering in that rule and correct a 

citation within Options 3, Section 

10(c)(1)(B)(i)(b) from subparagraph 

(a)(1)(E) to subparagraph (c)(1)(E). The 

Exchange proposes to amend Options 3, 

Section 11(g) 29 to remove a reference to 

the flash functionality that is being 

eliminated. 

Finally, the Exchange proposes to 

amend Options 7, Pricing Schedule, to 

remove all references to pricing related 

to the flash functionality. This would 

include the description of a Flash 

Order 30 within Options 7, Section 1, 

General Provisions; the pricing for Flash 

Orders within Options 7, Section 3, 

Regular Order Fees and Rebates; 31 and 

the waiver of the Marketing Fee for 

Flash Orders within Options 7, Section 

6, Other Options Fees and Rebates.32

The Exchange proposes to re-title 

Options 5, Section 4 as ‘‘Order Routing’’ 

similar to BX Options 5, Section 4. 

Proposed new Options 5, Section 4(a) 

defines various terms similar to BX such 

as ‘‘exposure’’ and ‘‘exposing’’, except 

for terms specific to ISE such as 

utilizing ‘‘Member’’ instead of 

‘‘Participant’’ and not capitalizing the 

term ‘‘Order Book’’.33

As noted above, the Exchange 

proposes to offer 2 new routing 

strategies, FIND and SRCH, as well as an 

option to ‘‘Do Not Route’’ or ‘‘DNR.’’ 

Additionally, the Exchange proposes to 

amend Options 3, Section 7 to add a 

new Supplementary Material .04 that 

provides, ‘‘Routing Strategies. Orders 

may be entered on the Exchange with a 

routing strategy of FIND or SRCH, or, in 

the alternative, an order may be marked 

Do-Not-Route (‘‘DNR’’) as provided in 

Options 5, Section 4 through FIX only.’’ 

The addition of this sentence will make 

clear which routing strategies may be 

utilized when submitting an order type 

and it will provide a citation to the 

routing rule for ease of reference. 

Routing options may be combined with 

all available order types and times-inforce, with the exception of order types 


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30298 Federal Register / Vol. 87, No. 96 / Wednesday, May 18, 2022 / Notices 

34 ‘‘Financial Information eXchange’’ or ‘‘FIX’’ is 

an interface that allows Members and their 

Sponsored Customers to connect, send, and receive 

messages related to orders and auction orders to the 

Exchange. Features include the following: (1) 

Execution messages; (2) order messages; (3) risk 

protection triggers and cancel notifications; and (4) 

post trade allocation messages. See Supplementary 

Material .03(a) to Options 3, Section 7. 

35 ‘‘Ouch to Trade Options’’ or ‘‘OTTO’’ is an 

interface that allows Members and their Sponsored 

Customers to connect, send, and receive messages 

related to orders, auction orders, and auction 

responses to the Exchange. Features include the 

following: (1) Options symbol directory messages 

(e.g., underlying and complex instruments); (2) 

System event messages (e.g., start of trading hours 

messages and start of opening); (3) trading action 

messages (e.g., halts and resumes); (4) execution 

messages; (5) order messages; (6) risk protection 

triggers and cancel notifications; (7) auction 

notifications; (8) auction responses; and (9) post 

trade allocation messages. See Supplementary 

Material .03(b) to Options 3, Section 7. 

36The term ‘‘System’’ means the electronic 

system operated by the Exchange that receives and 

disseminates quotes, executes orders and reports 

transactions. See Options 1, Section (a)(50). 

37See proposed Options 5, Section 4(a). With 

respect to Reserve Orders, only the displayed 

portion of the order would be exposed. 

38For purposes of this Rule, ‘‘exposure’’ or 

‘‘exposing’’ an order shall mean a notification sent 

to Members with the price, size, and side of interest 

that is available for execution. See proposed 

Options 5, Section 4(a). 

39Nasdaq ISE Order Feed (‘‘Order Feed’’) 

provides information on new orders resting on the 

book (e.g., price, quantity and market participant 

capacity). In addition, the feed also announces all 

auctions. The data provided for each option series 

includes the symbols (series and underlying 

security), put or call indicator, expiration date, the 

strike price of the series, and whether the option 

series is available for trading on ISE and identifies 

if the series is available for closing transactions 

only. The feed also provides order imbalances on 

opening/reopening. See Options 3, Section 23(a)(2). 

40Members whose orders are routed to away 

markets shall be obligated to honor such trades that 

are executed on away markets to the same extent 

they would be obligated to honor a trade executed 

on the Exchange. See proposed Options 5, Section 

4(a)(ii). 

41See proposed Options 5, Section 4(a)(i). 42See proposed Options 5, Section 4(a). 

and times-in-force whose terms are 

inconsistent with the terms of a 

particular routing option. Also, the 

Exchange would remove the current 

description of ‘‘Do-Not-Route Orders’’ 

within Options 3, Section 7(m). 

With respect to order entry protocols, 

the Exchange notes that FIX 34 is the 

only order entry protocol on ISE that 

permits routing. OTTO,35 another order 

entry protocol on ISE, does not permit 

routing. 

Proposed Options 5, Section 4(a) 

provides that the System 36 will route 

FIND and SRCH Orders with no other 

contingencies. Of note, Immediate-orCancel Orders (‘‘IOC’’) will be canceled 

immediately if not executed, and will 

not be routed. ISE’s System would first 

check the order book for available 

contracts for potential execution against 

the FIND or SRCH Orders. After the 

System checks the order book for 

available contracts, orders are sent to 

other available market centers for 

potential execution. When checking the 

order book, the System will seek to 

execute at the price at which it would 

send the order to an away market.37

The System will initiate a Route 

Timer for each FIND or SRCH order it 

receives that locks/crosses an away 

market price. An order will not route to 

an away market before the conclusion of 

the Route Timer which shall not exceed 

one second and shall begin at the time 

orders are accepted into the System. At 

the conclusion of each Route Timer, the 

System will consider whether an order 

can be routed. While the Route Timer is 

running, each order will be exposed 38

on the Nasdaq ISE Order Feed.39 This 

exposure allows other Members to 

interact with the order before it is 

routed to an away market. If an 

incoming order is joining an already 

established BBO price when the ABBO 

is locked or crossed with the BBO such 

order will join the established BBO 

price and no exposure notification will 

be sent, otherwise a notification will be 

sent. Also, an order exposure will be 

sent when the order size is modified. 

For purposes of this Rule, the 

Exchange’s opening process is governed 

by Options 3, Section 8 and includes an 

opening after a trading halt (‘‘Opening 

Process’’). The order routing process 

would be available to Members from 

9:30 a.m. Eastern Time until market 

close and shall route orders as described 

within proposed Options 5, Section 4. 

Finally, all routing of orders shall 

comply with Options 5, Options Order 

Protection and Locked and Crossed 

Market Rules. 

With respect to priority when routing 

as proposed within Options 5, Section 

4(a)(i), orders sent to other markets do 

not retain time priority with respect to 

other orders in the System and the 

System shall continue to execute other 

orders while routed orders are away at 

another market center. Once routed by 

the System, an order becomes subject to 

the rules and procedures of the 

destination market including,40 but not 

limited to, order cancellation. A routed 

order can be for less than the original 

incoming order’s size. If a routed order 

is subsequently returned to the 

Exchange, in whole or in part, that 

routed order, or its remainder, shall 

receive a new time stamp reflecting the 

time of its return to the System, unless 

any portion of the original order 

remains on the System, in which case 

the routed order shall retain its 

timestamp and its priority.41 As 

proposed, the priority when routing is 

the same as priority described in BX 

Options 5, Section 4(a)(i). 

The Exchange proposes to relocate 

current Options 5, Section 4(f) into 

proposed Options 5, Section 4(a)(ii). 

This is identical to rule text within BX 

Options 5, Section 4(a)(ii). 

The Exchange proposes to remove the 

following sentence within current 

Options 5, Section 4, ‘‘The Exchange 

may automatically route ISOs to other 

exchanges under certain circumstances, 

including pursuant to Supplementary 

Material .02 to Options 5, Section 2 

(‘‘Routing Services’’). In connection 

with such services, the following shall 

apply:.’’ This sentence is no longer 

necessary and is being replaced by 

proposed Options 5, Section 4(a). 

The Exchange proposes to retain the 

current provisions regarding NES within 

current Options 5, Section 4(a)–(e) and 

re-letter those paragraphs (A)–(E) to 

correspond with lettering within BX 

Options 5, Section 4 which contains 

similar rule text. No substantive 

amendments are proposed to those 

paragraphs. 

The Exchange also proposes to update 

a citation within new Options 5, Section 

4(a)(ii)(B) from Options 3, Section 7(m), 

which is being reserved, to proposed 

Options 5, Section 4(a)(iii)(A). Finally, 

the Exchange proposes to conform a 

citation to subparagraph (d) to ‘‘D’’ 

within new Options 5, Section 

4(a)(ii)(E). 

The Exchange proposes to add the 

new routing order types within 

proposed Options 5, Section 4(iii). The 

Exchange proposes to state, ‘‘The 

following order types are available:’’. Of 

note, a routing option may be combined 

with all available order types and timesin-force noted within Options 3, Section 

7, with the exception of order types and 

times-in-force whose terms are 

inconsistent with the terms of a 

particular routing option.42

The proposed first routing option is a 

DNR Order. The proposed rule text is 

substantively the same as BX Options 5, 

Section 4(iii)(A). The Exchange 

proposes to describe a DNR Order 

within proposed Options 5, Section 

4(iii)(A). A DNR Order will never be 

routed outside of the Exchange 

regardless of the prices displayed by 

away markets. In order to avoid trading 

through, a DNR Order may execute on 

the Exchange at a price equal to or better 

than, but not inferior to, the best away 

market price. If an away market is at a 

better price, the DNR Order will remain 

in the Exchange’s order book and would 

display re-priced. Specifically, the 

Exchange would re-price the DNR Order 


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Federal Register / Vol. 87, No. 96 / Wednesday, May 18, 2022 / Notices 30299 

43As explained below, FIND Orders that are not 

marketable with the ABBO upon receipt will be 

treated as DNR for the remainder of the trading day 

and post to the Order Book, even in the event that 

there is a new Opening Process after a trading halt. 

at a price one minimum price variation 

(‘‘MPV’’) inferior to that away best bid/ 

offer. For example, if the DNR Order is 

locking or crossing the ABBO, the DNR 

Order shall be entered into the order 

book at the ABBO price and displayed 

one MPV away from the ABBO. The 

Exchange would immediately expose 

the order at the ABBO to Members, 

provided the option series has opened 

for trading. Of note, today, ISE would 

cancel any unexecuted balances that 

cannot be placed on the order book. 

With the re-platform, any unexecuted 

balances may rest on the order book as 

the Exchange would re-price an order 

that locks or crosses an away market as 

described within this proposal. 

Any incoming order interacting with 

a DNR Order that is resting on the 

Exchange’s order book would execute at 

the ABBO price, unless the ABBO is 

improved to a price which crosses the 

DNR Order’s already displayed price. In 

the case where the ABBO crosses the 

DNR Order’s price, the incoming order 

will execute at the previous ABBO price 

as the away market crossed a displayed 

price. Away markets have similar 

obligations not to trade through ISE’s 

market. In the case where the ABBO is 

improved to a price which locks the 

DNR Order’s displayed price, the 

incoming order will execute at the DNR 

Order’s displayed price. Should the best 

away market move to an inferior price 

level, the DNR Order will automatically 

re-price from its one MPV inferior to the 

original ABBO and display one MPV 

away from the new ABBO or its original 

limit price, and expose such orders at 

the new ABBO. Once an order is booked 

to the order book at its original limit 

price, it will remain at that price until 

executed or cancelled. Thereafter, 

should the best away market improve its 

price such that it locks or crosses the 

DNR Order limit price on the order 

book, the Exchange will execute the 

resulting incoming order that is routed 

from the away market that locked or 

crossed the DNR Order limit price. By 

way of example, consider the following 

sequence of events in the System for a 

DNR Order: 

9:45:00:00:00—MIAX Quote 0.95 × 1.20 

9:45:00:00:10—OPRA updates MIAX BBO 

0.95 × 1.20 

9:45:00:00:20—ISE Local BBO Quote 1.00 × 

1.15 

9:45:00:00:30—OPRA disseminates ISE BBO 

updates: 1.00 × 1.15 

9:45:00:00:35: CBOE Quote 1.00 × 1.12 

9:45:00:00:45—OPRA disseminates CBOE 

BBO 1.00 × 1.12 

9:45:00:00:50—DNR Order: Buy 5 @1.15 

(exposes @ABBO of 1.12, displays 1 MPV 

from ABBO @1.11) 

9:45:00:00:51—OPRA disseminates ISE BBO 

updates: 1.11 × 1.15 (1.11 being the DNR 

Order displaying 1 MPV from ABBO) 

9:45:00:00:60—MIAX Quote updates to 1.00 

× 1.10 (1.10 crosses the displayed DNR 

Order price, violating locked/crossed 

market rules; henceforth, we need not 

protect this price) 

9:45:00:00:65—OPRA disseminates MIAX 

BBO 1.00 × 1.10 

9:45:00:00:75—ISE Market Maker Order to 

Sell 5 @1.09 

9:45:00:00:76—Market Maker Order 

immediately executes against DNR Order 

5 contracts @1.12 (1.12 being the 

‘previous’ ABBO price disseminated by 

CBOE before the receipt of the DNR 

Order that was subsequently and 

illegally crossed by MIAX’s 2nd quote) 

9:45:00:00:77—OPRA disseminates ISE BBO 

updates: 1.00 x 1.15 (reverts back to BBO 

set by ISE Local Quote since the DNR 

Order has executed) 

Members may also elect to route their 

orders. The Exchange proposes to offer 

market participants two choices for 

routing options orders: FIND and SRCH. 

At a high level, a FIND Order will only 

attempt to route once and then post to 

the order book; it will not be eligible for 

routing until the next time the option 

series is subject to a new Opening 

Process.43 In contrast, a SRCH Order 

may route at any time, including during 

and after an Opening Process. A SRCH 

Order that rests on the order book may 

be routed to an away market if it is 

locked or crossed by an away market. 

Each of these proposed options for 

routing will be explained in greater 

detail below. 

FIND Order 

The Exchange proposes to adopt a 

new routing option at Options 5, 

Section 4(a)(iii)(B) for FIND Orders. The 

routing process for a FIND Order is the 

same as BX Options 5, Section 

4(a)(iii)(B). As noted above, a FIND 

Order is an order that is: (i) Routable at 

the conclusion of an Opening Process; 

and (ii) routable upon receipt during 

regular trading, after an option series is 

open. Each order marked as ‘‘FIND’’ that 

is submitted after an Opening Process 

would initiate a Route Timer and route 

in the order in which its Route Timer 

ends. FIND Orders that are not 

marketable with the ABBO upon receipt 

will be treated as DNR for the remainder 

of the trading day, and will not be 

subject to routing even in the event that 

there is a new Opening Process after a 

trading halt. At the end of an Opening 

Process, any FIND Order that is priced 

through the Opening Price, which is 

defined within ISE Options 3, Section 

8(a)(3), will be cancelled, and any FIND 

Order that is at or inferior to the 

Opening Price will execute or book 

pursuant to ISE Opening Process at 

Options 3, Section 8(j). The Opening 

Process is described in greater detail 

within Options 3, Section 8. 

With respect to FIND Orders, Options 

5, Section 4(a)(iii)(B)(2) provides that 

generally, a FIND Order will be 

included in the displayed BBO at its 

limit price, unless the FIND Order locks 

or crosses the ABBO, in which case it 

will be entered into the order book at 

the ABBO price and displayed at one 

MPV inferior to the ABBO. If there 

exists a locked ABBO when the FIND 

Order is entered onto the order book, 

the FIND Order will be entered into the 

order book at the ABBO price and 

displayed and re-priced one MPV 

inferior to the ABBO. If during a Route 

Timer, ABBO markets move and the 

FIND Order becomes non-marketable 

against the ABBO and BBO, the FIND 

Order will post on the order book at its 

limit price. If the FIND Order is locked 

or crossed by away quotes, it will route 

at the completion of the Route Timer. 

However, if the ABBO worsens but 

remains better than the BBO, the FIND 

Order will re-price and be re-exposed at 

the new price(s) without interrupting 

the Route Timer. 

If, during the Route Timer, any new 

interest arrives opposite the FIND Order 

that is equal to or better than the ABBO 

price, the FIND Order will trade against 

such new interest at the ABBO price, 

unless the ABBO is improved to a price 

which crosses the FIND Order’s already 

displayed price, in which case the 

incoming order will execute at the 

previous ABBO price as the away 

market crossed a displayed price. 

Paragraph (a)(iii)(B)(2) of Options 5, 

Section 4 is intended to describe the 

possible scenarios that may occur 

during a Route Timer that has been 

initiated for a FIND Order. The 

Exchange believes that describing these 

scenarios in this introductory paragraph 

will provide a basis to understand 

certain FIND Order behaviors in certain 

circumstances and eliminate the need to 

have these circumstances repeated 

throughout the rule. The proposed 

remaining paragraphs outline System 

behavior in various circumstances 

taking into consideration away market 

pricing to provide market participants 

with expected outcomes. 

Proposed ISE Options 5, Section 

4(a)(iii)(B)(3) sets forth a scenario where 

a FIND Order received after an Opening 

Process is not marketable against the 

BBO or the ABBO. In this case, the FIND 

Order will be entered into the order 

book at its limit price and treated as 


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30300 Federal Register / Vol. 87, No. 96 / Wednesday, May 18, 2022 / Notices 

44A Good-Till-Canceled Order is an order to buy 

or sell that remains in force until the order is filled, 

canceled or the option contract expires; provided, 

however, that GTC Orders will be canceled in the 

event of a corporate action that results in an 

adjustment to the terms of an option contract. See 

ISE Options 3, Section 7(r). 

45See Options 3, Section 8(j)(6)(A). The Exchange 

notes that ‘‘priced through the Opening Price’’ 

within Options 3, Section 8 is intended to mean 

buying interest with a price higher than the 

Opening Price and selling interest with a price 

lower than the Opening Price. 

DNR for the remainder of the trading 

day, even if there is a new Opening 

Process after a trading halt. As noted 

above, the FIND Order will only attempt 

to route once. 

Proposed ISE Options 5, Section 

4(a)(iii)(B)(4) describes a scenario where 

a FIND Order received after an Opening 

Process is marketable against the BBO 

when the ABBO is inferior to the BBO. 

In this case the FIND Order will be 

traded on the Exchange at or better than 

the BBO price. If the FIND Order has 

size remaining after exhausting the 

BBO, the Exchange proposes that it may: 

(1) Trade at the next BBO price (or 

prices) if the order price is locking or 

crossing that price (or prices) up to and 

including the ABBO price, (2) be 

entered into the order book at its limit 

price, or (3) if locking or crossing the 

ABBO, be entered into the order book at 

the ABBO price and displayed one MPV 

away from the ABBO. The FIND Order 

will be treated as DNR for the remainder 

of the trading day, even in the event that 

there is a new Opening Process after a 

trading halt. 

Proposed ISE Options 5, Section 

4(a)(iii)(B)(5) describes a scenario where 

a FIND Order received after an Opening 

Process is marketable against the BBO 

when the ABBO is equal to the BBO. In 

this case, the FIND Order will be traded 

on the Exchange at the BBO. If the FIND 

Order has size remaining after 

exhausting the BBO, it will initiate a 

Route Timer, and expose the FIND 

Order at the ABBO to allow market 

participants an opportunity to interact 

with the remainder of the FIND Order. 

During the Route Timer, the FIND Order 

will be included in the BBO at a price 

one MPV away from the ABBO. If 

during the Route Timer, the ABBO 

markets move such that the FIND Order 

is no longer marketable against the 

ABBO, the Exchange proposes that it 

may: (i) Trade at the next BBO price (or 

prices) if the FIND Order price is 

locking or crossing that price (or prices), 

and/or (ii) be entered into the order 

book at its limit price if not locking or 

crossing the BBO. 

Proposed ISE Options 5, Section 

4(a)(iii)(B)(6) describes a scenario where 

at the end of the Route Timer pursuant 

to subparagraph (5) above, the FIND 

Order is still marketable with the ABBO. 

In this case, the FIND Order will route 

to an away market up to a size equal to 

the lesser of either: (1) An away 

market’s size or (2) the remaining size 

of the FIND Order. If the FIND Order 

still has remaining size after routing, the 

Exchange proposes that it will (i) trade 

at the next BBO price or better, subject 

to the order’s limit price, and, if 

contracts still remain unexecuted, the 

remaining size will be routed to away 

markets disseminating the same price as 

the BBO, or (ii) be entered into the order 

book and posted either at its limit price 

or re-priced one MPV away if the order 

would otherwise lock or cross the 

ABBO. If size still remains, as is always 

the case, the FIND Order will not be 

eligible for routing until the next time 

the option series is subject to a new 

Opening Process, which may include a 

re-opening after a trading halt. 

Proposed ISE Options 5, Section 

4(a)(iii)(B)(7) describes a scenario where 

a FIND Order is received after an 

Opening Process that is marketable 

against the ABBO when the ABBO is 

better than the BBO. In this case, the 

FIND Order will initiate a Route Timer, 

and expose the order at the ABBO to 

allow Members and other market 

participants an opportunity to interact 

with the FIND Order. As described 

within ISE Options 5, Section 

4(a)(iii)(B)(8), if, at the end of the Route 

Timer pursuant to subparagraph (7) 

above, the ABBO is still at the best price 

and is marketable with the FIND Order, 

the order will route to the away 

market(s) whose disseminated price(s) is 

better than the BBO, up to a size equal 

to the lesser of either: (1) The away 

markets’ size, or (2) the remaining size 

of the FIND Order. If the FIND Order 

still has remaining size after such 

routing, it will (i) trade at the BBO price 

or better, subject to the order’s limit 

price, and, if contracts still remain 

unexecuted, the remaining size will be 

routed to away markets disseminating 

the same price as the BBO, or (ii) be 

entered into the order book and posted 

either at its limit price or re-priced one 

MPV away if the order would otherwise 

lock or cross the ABBO. If the FIND 

Order still has remaining size it will not 

be eligible for routing until the next 

time the option series is subject to a new 

Opening Process, which may include a 

re-opening after a trading halt. 

Finally, proposed ISE Options 5, 

Section 4(a)(iii)(B)(9) provides that a 

FIND Order that is routed to an away 

market(s) will be marked as an 

Intermarket Sweep Order ‘‘ISO’’ and 

designated as an IOC order. 

SRCH Orders 

The Exchange proposes to adopt a 

SRCH Order functionality at proposed 

Options 5, Section 4(a)(iii)(C). The 

routing process for a SRCH Order is the 

same as BX Options 5, Section 

4(a)(iii)(C). A SRCH Order is routable at 

any time the option series is open for 

trading. A SRCH Order on the order 

book during an Opening Process 

(including a re-opening following a 

trading halt), whether it is received 

prior to an Opening Process or it is a 

Good-Till-Canceled Order 44 (‘‘GTC’’) 

SRCH Order from a prior day, may be 

routed as part of an Opening Process. 

Similar to FIND Orders, SRCH Orders 

would initiate their own Route Timers 

and route in the order in which their 

Route Timers end. 

Proposed ISE Options 5, Section 

4(a)(iii)(C)(1) provides, similar to a FIND 

Order, that at the end of an Opening 

Process, any SRCH Order that is priced 

through the Opening Price, as defined 

within Options 3, Section 8(a)(iii), will 

be cancelled, and any SRCH Order that 

is at or inferior to the Opening Price will 

execute or book pursuant to Options 3, 

Section 8(k). With respect to both FIND 

and SRCH Orders, Options 3, Section 8 

provides a process whereby ISE arrives 

at an Opening Price. The System cancels 

any order or quote priced through the 

Opening Price which was not able to be 

satisfied either by routing to an away 

destination or trading in full as part of 

the opening trade.45

Similar to the FIND Order proposal, 

the Exchange proposes to add a 

paragraph at proposed ISE Options 5, 

Section 4(a)(iii)(C)(2), which is intended 

to describe at the outset possible 

scenarios that may occur during a Route 

Timer, including if the ABBO moves 

and if marketable new interest arrives. 

In the paragraphs that follow, paragraph 

(C)(2) would apply in the case where a 

Route Timer is initiated. Proposed ISE 

Options 5, Section 4(a)(iii)(C)(2) would 

provide that, generally, during a Route 

Timer a SRCH Order will be included in 

the displayed BBO at its limit price, 

unless the SRCH Order locks or crosses 

the ABBO, in which case it will be 

entered into the order book at the ABBO 

price and displayed one MPV inferior to 

the ABBO. If there exists a locked ABBO 

when the SRCH Order is entered onto 

the order book, the SRCH Order will be 

entered into the order book at the ABBO 

price and displayed one MPV inferior to 

the ABBO. Once on the order book, the 

SRCH Order may route if it is locked or 

crossed by an away market. 

If during a Route Timer, ABBO 

markets move such that the SRCH Order 

is no longer marketable against the 

ABBO or BBO, the SRCH Order will 


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Federal Register / Vol. 87, No. 96 / Wednesday, May 18, 2022 / Notices 30301 

46Options 5, Section 1(j) provides, ‘‘ ‘NBBO’ 

means the national best bid and offer in an options 

series as calculated by an Eligible Exchange.’’ 

47See Options 3, Section 5(d). 

book on the order book at its limit price. 

If, during the Route Timer, any new 

interest arrives opposite the SRCH 

Order that is equal to or better than the 

ABBO price, the SRCH Order will trade 

against such new interest at the ABBO 

price, unless the ABBO is improved to 

a price which crosses the SRCH Order’s 

already displayed price, in which case 

the incoming order will execute at the 

previous ABBO price as the away 

market crossed a displayed price. If the 

ABBO worsens but remains better than 

the BBO, the SRCH Order will re-price 

and be re-exposed at the new price(s) 

without interrupting the Route Timer. If 

an ABBO locks or crosses the SRCH 

Order during a new Route Timer, which 

would subsequently initiate at the 

conclusion of any Route Timer if 

interest remains, the SRCH Order may 

route to the away market at the ABBO 

at the conclusion of such Route Timer. 

Finally, if the SRCH Order is locked or 

crossed by away quotes, it will route at 

the completion of the Route Timer. The 

System will route and execute contracts 

contemporaneously at the end of the 

Route Timer. 

As noted herein and proposed within 

proposed ISE Options 5, Section 

4(a)(iii)(C)(3), a SRCH Order received 

after an Opening Process that is not 

marketable against the BBO or the 

ABBO will be entered into the order 

book at its limit price. Once on the order 

book, the SRCH Order is eligible for 

routing if it is locked or crossed by an 

away market. 

Proposed ISE Options 5, Section 

4(a)(iii)(C)(4) presents a scenario where 

a SRCH Order received after an Opening 

Process is marketable against the BBO 

when the ABBO is inferior to the BBO. 

In this case, the SRCH Order will trade 

at or better than the BBO price. If the 

SRCH Order has size remaining after 

exhausting the BBO, the Exchange 

proposes that it may: (1) Trade at the 

next BBO price (or prices) if the order 

price is locking or crossing that price (or 

prices) up to and including the ABBO 

price, and/or (2) be routed, subject to a 

Route Timer, to away markets if all 

Exchange interest at better or equal 

prices has been exhausted, and/or (3) be 

entered into the order book at its limit 

price if not locking or crossing the BBO 

or the ABBO. 

Proposed ISE Options 5, Section 

4(a)(iii)(C)(5) provides a scenario where 

the SRCH Order received after an 

Opening Process is marketable against 

the BBO when the ABBO is equal to the 

BBO. In this case, the SRCH Order will 

trade at the BBO. If the SRCH Order has 

size remaining after exhausting the 

BBO, it will initiate a Route Timer and 

expose the SRCH Order at the ABBO to 

allow Members an opportunity to 

interact with the remainder of the SRCH 

Order. During the Route Timer, the 

SRCH Order will be included in the 

BBO at a price one MPV away from the 

ABBO. 

Proposed ISE Options 5, Section 

4(a)(iii)(C)(6) provides that if at the end 

of the Route Timer pursuant to 

subparagraph (5), the SRCH Order is 

still marketable with the ABBO, the 

SRCH Order will route to an away 

market up to a size equal to the lesser 

of either: (1) The away market’s size, or 

(2) the remaining size of the SRCH 

Order. If after that the SRCH Order still 

has remaining size after routing, it may: 

(i) Trade at the next BBO price (or 

prices) if the order price is locking or 

crossing that price (or prices) up to the 

ABBO price, and/or (ii) be entered into 

the order book at its limit price if not 

locking or crossing the BBO or the 

ABBO. 

Proposed ISE Options 5, Section 

4(a)(iii)(C)(7) provides a scenario where 

a SRCH Order received after an Opening 

Process is marketable against the ABBO 

when the ABBO is better than the BBO. 

In this case, the SRCH Order will 

initiate a Route Timer, and expose the 

SRCH Order at the ABBO to allow 

Members an opportunity to interact 

with the SRCH Order. If during the 

Route Timer, the ABBO markets move 

such that the SRCH Order is no longer 

marketable against the ABBO, it may: (i) 

Trade at the next BBO price (or prices) 

if the SRCH Order price is locking or 

crossing that price (or prices), and/or (ii) 

be entered into the order book at its 

limit price if not locking or crossing the 

BBO. 

Proposed ISE Options 5, Section 

4(a)(iii)(C)(8) provides that if at the end 

of the Route Timer pursuant to 

subparagraph (7), the ABBO is still the 

best price and is marketable with the 

SRCH Order, the order will route to the 

away market(s) whose disseminated 

price(s) is better than the BBO, up to a 

size equal to the lesser of either: (1) The 

away markets’ size, or (2) the remaining 

size of the SRCH Order. However, if the 

SRCH Order still has remaining size 

after such routing, the Exchange 

proposes that it may: (i) Trade at the 

next BBO price (or prices) if the order 

price is locking or crossing that price (or 

prices) up to the ABBO price, and/or (ii) 

be entered into the order book at its 

limit price if not locking or crossing the 

BBO or the ABBO. 

Finally, as proposed in ISE Options 5, 

Section 4(a)(iii)(C)(9), and similar to 

FIND Orders, a SRCH Order that is 

routed to an away market(s) will be 

marked as an ISO and designated as an 

IOC Order. 

Re-Pricing 

Currently, Options 3, Section 5(b) 

provides that orders, other than 

Intermarket Sweep Orders (as defined in 

Options 5, Section 1(h)), will not be 

automatically executed by the System at 

prices inferior to the NBBO (as defined 

in Options 5, Section 1(j)).46 Orders that 

are not automatically executed are 

handled pursuant to the flash 

functionality as provided in 

Supplementary Material .02 to Options 

5, Section 2; provided that Members 

may specify that a Non-Customer order 

should instead be accepted and 

immediately cancelled automatically by 

the System at the time of receipt. Orders 

are not executed at a price that trades 

through another market or displayed at 

a price that would lock or cross another 

market. An order that is designated by 

the Member as routable is routed in 

compliance with applicable TradeThrough and Locked and Crossed 

Markets restrictions.47

The Exchange proposes to amend 

Options 3, Section 5(c) to specify that 

the System will automatically execute 

eligible orders using the Exchange’s 

displayed BBO or the Exchange’s nondisplayed order book (‘‘internal BBO’’) 

if the best bid and/or offer on the 

Exchange has been re-priced. With this 

change, a DNR order that locks or 

crosses the ABBO may re-price and rest 

on the order book. Today, the DNR 

Order that locks or crosses the ABBO 

would be cancelled. The re-pricing itself 

is proposed to be described within 

Options 3, Section 5(c) and (d) similar 

to BX Options 3, Section 5(c) and (d). 

Currently, Options 3, Section 5(d) 

describes Trade-Through Compliance 

and Locked or Crossed Market behavior. 

The Exchange proposes to add rule 

text within Options 3, Section 5(d) to 

describe how a non-routable order 

would be re-priced and remove rule text 

that describes the flash functionality, 

which is being eliminated, and language 

providing that, in lieu of using the flash 

functionality, Members may specify that 

a Non-Customer order should instead be 

cancelled automatically by the System 

at the time of receipt. 

Specifically, the Exchange proposes to 

state within Options 3, Section 5(c), 

‘‘The System automatically executes 

eligible orders using the Exchange’s 

displayed best bid and offer (‘‘BBO’’) or 

the Exchange’s non-displayed order 

book (‘‘internal BBO’’) if the best bid 

and/or offer on the Exchange has been 

re-priced pursuant to subsection (d) 


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48See e.g., Phlx Options 3, Section 7(b)(3), The 

Nasdaq Options Market LLC Options 3, Section 

7(a)(7), and BX Options 3, Section 7(a)(6). 

49 15 U.S.C. 78f(b). 

50 15 U.S.C. 78f(b)(4) and (5). 

51See BX Options 5, Section 4, Order Routing. 

below.’’ Also, the Exchange proposes to 

state within Options 3, Section 5(d), 

‘‘An order that is designated by a 

Member as non-routable will be repriced in order to comply with 

applicable Trade-Through and Locked 

and Crossed Markets restrictions. If, at 

the time of entry, an order that the 

entering party has elected not to make 

eligible for routing would cause a 

locked or crossed market violation or 

would cause a trade-through violation, 

it will be re-priced to the current 

national best offer (for bids) or the 

current national best bid (for offers) and 

displayed at one minimum price 

variance above (for offers) or below (for 

bids) the national best price.’’ The 

Exchange believes that the addition of 

this language, similar to language within 

BX Options 3, Section 5(d), will provide 

Members with additional information as 

to the manner in which orders are 

handled by the System when those 

orders would lock or cross an away 

market. 

Supplementary Material to Options 5, 

Section 2 

The Exchange proposes to remove the 

rule text within Supplementary Material 

.01 to Options 5, Section 2 that 

provides, 

All public customer ISOs entered by an 

Electronic Access Member on behalf of an 

Eligible Exchange shall be represented on the 

Exchange as Priority Customer Orders, as 

defined in Options 1, Section 1(a)(38). There 

shall be no obligation on Electronic Access 

Members to determine whether the public 

customer for whom the Eligible Exchange is 

routing an ISO meets the definition of a 

Priority Customer. 

Current ISE Options 5, Section 4(f) 

provides, ‘‘Entering Members whose 

orders are routed to away markets shall 

be obligated to honor such trades that 

are executed on away markets to the 

same extent they would be obligated to 

honor a trade executed on the 

Exchange.’’ The Exchange believes that 

Options 5, Section 4(f), which is 

proposed to be relocated to Options 5, 

Section 4(a)(ii), is more expansive than 

Supplementary Material .01 to Options 

5, Section 4 and would apply to the 

indicator for the type of market 

participant. Furthermore, obligations 

associated with submitting ISO Orders 

are born by the member submitting the 

ISO Order. Each Exchange’s rules 

describe how ISO Orders may be 

utilized.48

The Exchange proposes to remove the 

rule text within Supplementary Material 

.07 to Options 5, Section 2 that 

provides, ‘‘All orders entered on the 

Exchange and routed to another 

exchange via an ISO pursuant to the 

Supplementary Material of this Options 

5, Section 2 that result in an execution 

shall be binding on the Member that 

entered such orders.’’ As noted above, 

current ISE Options 5, Section 4(f) 

provides that, ‘‘Entering Members 

whose orders are routed to away 

markets shall be obligated to honor such 

trades that are executed on away 

markets to the same extent they would 

be obligated to honor a trade executed 

on the Exchange.’’ Supplementary 

Material .07 to Options 5, Section 2 

refers to orders entered pursuant to the 

flash functionality pursuant to 

Supplementary Material .02 to Options 

5, Section 2, which will be eliminated 

and, therefore, renders the rule text 

within Supplementary Material .07 to 

Options 5, Section 2 unnecessary. 

Supplementary Material to Options 5, 

Section 4 

The Exchange proposes to remove the 

rule text within Supplementary Material 

.01 to Options 5, Section 4 that 

provides, ‘‘Options 5, Section 4 does not 

prohibit NES or third-party unaffiliated 

routing broker-dealers used by NES 

from designating a preferred marketmaker at the other exchange to which 

the order is being routed pursuant to 

Options 5, Section 4.’’ As noted above, 

current Options 5, Section 4(f) provides, 

‘‘Entering Members whose orders are 

routed to away markets shall be 

obligated to honor such trades that are 

executed on away markets to the same 

extent they would be obligated to honor 

a trade executed on the Exchange.’’ The 

Exchange believes that this rule is more 

expansive than Supplementary Material 

.01 to Options 5, Section 4 and would 

apply to designating a preferred marketmaker. 

The Exchange proposes to remove the 

rule text within the Supplementary 

Material .02 to Options 5, Section 4 that 

provides, ‘‘In the event that NES cannot 

provide Routing Services, the Exchange 

will cancel orders that, if processed by 

the Exchange, would violate Options 5, 

Section 1 (prohibition on tradethroughs) or Options 5, Section 3 

(prohibition on locked and crossed 

markets).’’ The Exchange’s proposal to 

re-price orders which would otherwise 

lock or cross an away market would 

cause an order, that was subject to 

routing, to rest on the order book in the 

event that NES was unable to provide 

routing services. The Exchange proposes 

to remove the rule text within 

Supplementary Material .02 to Options 

5, Section 4 to permit the Exchange to 

re-price and rest such orders on the 

order book, similar to DNR Orders. 

Finally, the Exchange proposes to 

renumber the rule text within 

Supplementary Material .03 to Options 

5, Section 4 to .01. 

Implementation 

The Exchange intends to begin 

implementation of the proposed rule 

change for ISE prior to December 22, 

2023. Separately, the Exchange plans to 

begin implementation of the proposed 

rule change prior to December 23, 2022, 

with respect to MRX, and prior to 

September 1, 2023, with respect to 

GEMX. Each implementation would 

commence with a limited symbol 

migration and continue to migrate 

symbols over several weeks. The 

Exchange will issue an Options Trader 

Alert to Members to provide notification 

of the symbols that will migrate and the 

relevant dates for each exchange. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,49 in general, and furthers the 

objectives of Sections 6(b)(4) and 

Section 6(b)(5) of the Act,50 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 

and is designed to promote just and 

equitable principles of trade and to 

protect investors and the public interest. 

The Exchange’s proposal to adopt 

routing strategies, that are substantially 

the same as BX, with respect to DNR, 

FIND, and SRCH Orders is consistent 

with the Act because the functionality 

will provide ISE Members the same 

flexibility for routing orders that is 

afforded to BX Participants today.51

With this proposal, Members would 

continue to route orders to away 

markets to obtain the best price, while 

also accessing ISE’s order book. Further, 

with this proposal, Members will have 

the added ability to elect a particular 

routing strategy, FIND or SRCH, when 

routing their order. Also, Members may 

continue to elect not to route their 

order, as is the case today. 

Additionally, today, orders that are 

not automatically executed are handled 

pursuant to the flash functionality as 

provided in Supplementary Material .02 

to Options 5, Section 2; provided that 

Members may specify that a NonVerDate Sep<11>2014 19:29 May 17, 2022 Jkt 256001 PO 00000 Frm 00139 Fmt 4703 Sfmt 4703 E:\FR\FM\18MYN1.SGM 18MYN1

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52See Supplementary Material .02(b) and (c) to 

Options 5, Section 2. 53See BX Options 3, Section 5. 

Customer order should instead be 

accepted and immediately cancelled 

automatically by the System at the time 

of receipt. This proposal eliminates 

flash functionality and proposes to reprice orders that would otherwise lock 

or cross an away market. As is the case 

today, an order that is designated by the 

Member as routable will route in 

compliance with applicable TradeThrough and Locked and Crossed 

Markets restrictions. 

While the Exchange is eliminating the 

current flash functionality, ISE is 

proposing to adopt order routing 

strategies that include a Route Timer 

that, similar to flash functionality, will 

continue to advertise orders prior to 

routing them in an attempt to obtain a 

local execution. Unlike the flash 

functionality where Non-Customer 

orders may opt out, the Route Timer 

will be established for each order that 

may route. During the Route Timer, 

similar to the flash functionality, 

Members may enter responses up to the 

size of the order being exposed. 

However, unlike flash functionality, an 

order that matches the price of an order 

during the Route Time will trade against 

that order without waiting for the Route 

Timer to complete. In contrast, with 

flash functionality, orders allocate at the 

end of the timer, with the exception of 

specific scenarios that will cause early 

termination 52 and allocate pursuant to 

Options 3, Section 10, with Priority 

Customers executing first in time and all 

other market participant orders being 

allocated size pro-rata. 

The Exchange’s proposal to remove 

Sweep Orders within Supplementary 

Material .05 to Options 5, Section 2 and 

Options 3, Section 7(s) is consistent 

with the Act as a Sweep Order would 

no longer be necessary without the flash 

functionality and Sweep Orders would 

be discontinued. Sweep Orders do not 

enter the flash functionality process of 

Supplementary Material .02 of Options 

5, Section 2 and are processed 

separately. Sweep Orders are not 

necessary to facilitate the routing of 

Public Customer and Non-Customer 

orders to away markets because the 

proposed routing functionality would 

route all orders to away markets 

uniformly. Additionally, uniformly, all 

orders would be subject to re-pricing if 

the order would otherwise lock or cross 

an away market. The Exchange would 

continue to not cancel marketable 

orders that could not be executed on ISE 

because the order would lock or cross 

an away market, rather the order would 

be re-priced with the new routing 

functionality. With the new routing 

process, a Route Timer would begin for 

each order that is subject to routing on 

the Exchange. While Members may not 

opt out of the Route Timer, as is the case 

today, the proposed routing process 

would create a uniform streamlined 

process for routing all orders (FIND and 

SRCH) where a market participant has 

elected to have an order routed; 

Members may continue to elect to not 

have their orders routed. The new 

routing process does not distinguish as 

between Public Customer orders and 

Non-Customer orders, rather all orders 

would be processed in the same 

manner. Further, the proposed routing 

process would serve to further 

harmonize routing across Nasdaq 

affiliated markets. 

The Exchange’s proposal to remove 

Supplementary Material .04 to Options 

5, Section 2, which sets forth routing 

procedures for Non-Customer orders 

that opt out of being processed under 

the flash functionality is consistent with 

the Act. The Exchange’s proposal 

replaces its current away routing regime 

with the proposed FIND and SRCH 

order routing types; all orders would be 

processed in a uniform manner. The 

processing of Sweep Orders and the 

routing procedures under 

Supplementary Material .04 to Options 

5, Section 2 were established as 

alternative routing procedures to the 

flash functionality and because the 

Exchange proposes to eliminate the 

flash order functionality, these routing 

procedures are no longer needed under 

the proposed routing procedures. 

NES will continue to route orders to 

away markets on behalf of ISE. Orders 

executed on ISE would continue to not 

trade through away markets. Orders 

would execute at the best price, whether 

locally or on an away market. For these 

above reasons, the Exchange believes 

that eliminating the flash functionality 

and adopting routing functionality 

similar to BX will continue to protect 

investors and the general public by 

continuing to provide Members with an 

ability to route to away markets at the 

best price in the event ISE is not at the 

best price or elect not to route. 

The Exchange’s proposal to offer two 

new routing strategies to Members, 

similar to BX, is consistent with the Act 

as it will provide Members with a 

greater choice when routing. FIND and 

SRCH Orders will route away when ISE 

is not at the best price. All Members 

may elect to route orders, as FIND or 

SRCH, or elect not to route orders (DNR 

Orders). 

Re-pricing orders that would 

otherwise lock or cross an away market, 

as proposed within Options 3, Section 

5 is consistent with the Act. Today, BX 

re-prices orders by displaying them one 

MPV away from the best bid or offer.53

This behavior is consistent with the 

protection of investors and the general 

public because it affords Participants 

the ability to obtain the best price 

offered among the various options 

markets while not locking or crossing an 

away market. As noted above, the 

Exchange would continue to not trade 

through an away market. Any order that 

locks or crosses an away market on ISE 

would be re-priced as a result of this 

amendment. This would include DNR 

orders resting on the order book and 

FIND and SRCH Orders that have not 

yet routed and are subject to a Route 

Timer. 

The Exchange’s proposal describes a 

number of potential routing scenarios to 

provide Members with greater 

transparency as to the manner in which 

the System would handle their order. 

The proposed rule also serves to inform 

Members about potential outcomes if a 

member elects to mark their order as 

‘‘DNR.’’ The various scenarios are 

intended to bring greater transparency 

to the Exchange’s Rules. 

The Exchange’s proposal to only 

utilize FIX to route orders is consistent 

with the Act because the OTTO protocol 

is not designed for routing. Today, 

Members may not route orders through 

OTTO and this will not be changing as 

a result of the change in routing rules. 

Members on ISE may submit and route 

all orders through FIX. OTTO is an 

optional port available to all Members 

on ISE for the submission of orders. 

The Exchange’s proposal to remove 

the rule text within Supplementary 

Material .01 to Options 5, Section 2 is 

consistent with the Act. Today, ISE 

Options 5, Section 4(f) requires 

Members to honor trades that are 

executed on away markets to the same 

extent they would be obligated to honor 

a trade executed on the Exchange. This 

is the case for all options exchanges that 

receive routing instructions from their 

members. Today, an ISE Member that 

submits an order and does not mark that 

order as DNR would be subject to the 

flash functionality and routing rules 

within Options 5, Section 4. If that order 

routed to an away market, the Member 

would be obligated to honor that trade 

on the away market. Supplementary 

Material .01 to Options 5, Section 2 

would require a public customer ISO 

entered by an Electronic Access Member 

to be represented on the Exchange as a 


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54Options 1, Section 1(a)(38) provides that the 

term ‘‘Priority Customer’’ means a person or entity 

that (i) is not a broker or dealer in securities, and 

(ii) does not place more than 390 orders in listed 

options per day on average during a calendar month 

for its own beneficial account(s). 

55See note 48 above. 56See BX Options 5, Section 4, Order Routing. 57See note 48 above. 

Priority Customer Order 54 pursuant to 

Options 1, Section 1(a)(38). On ISE, a 

public customer order from an away 

market equates to a Priority Customer 

Order on ISE. Supplementary Material 

.01 to Options 5, Section 2 further states 

that there is no obligation for an 

Electronic Access Member to determine 

whether the public customer order from 

the away market meets the definition of 

a Priority Customer. As specified in 

Options 5, Section 4(f), Members are 

required to honor trades from away 

markets. A trade from an away market 

from a public customer would be 

honored on ISE as a Priority Customer 

without the need for additional due 

diligence. Finally, obligations associated 

with submitting ISO Orders are born by 

the member submitting the ISO Order. 

Each Exchange’s rules describe how ISO 

Orders may be utilized.55

The Exchange’s proposal to remove 

the rule text within Supplementary 

Material .07 to Options 5, Section 2 is 

consistent with the Act. Supplementary 

Material .07 to Options 5, Section 2 

refers to orders entered pursuant to the 

flash functionality within 

Supplementary Material .02 to Options 

5, Section 2, which will be eliminated, 

and, therefore, renders the rule text 

within Supplementary Material .07 to 

Options 5, Section 2 unnecessary. 

The Exchange’s proposal to remove 

the rule text within Supplementary 

Material .01 to Options 5, Section 4 is 

consistent with the Act. Supplementary 

Material .01 to Options 5, Section 4 

states that Options 5, Section 4 does not 

prohibit NES or third-party unaffiliated 

routing broker-dealers used by NES 

from designating a preferred marketmaker at the other exchange to which 

the order is being routed pursuant to 

Options 5, Section 4. The Exchange 

believes that it is not necessary to retain 

this rule text, as Options 5, Section 4(f) 

obligates Members to honor such trades 

that are executed on away markets, to 

the same extent they would be obligated 

to honor a trade executed on the 

Exchange. The Exchange notes that once 

an order is routed to an away market, 

the rules of the away market are in 

effect. For example, if an order was 

routed from Nasdaq ISE to Nasdaq Phlx 

LLC (‘‘Phlx’’), the Phlx rules would 

apply with respect to the execution of 

that order. The ISE Member would be 

required to honor the trade executed on 

Phlx pursuant to Phlx’s rules. 

The Exchange’s proposal to remove 

the rule text within the Supplementary 

Material .02 to Options 5, Section 4 is 

consistent with the Act because the 

Exchange proposes to re-price orders 

which would otherwise lock or cross an 

away market. This proposal would 

permit the Exchange to re-price and rest 

such orders on the order book, similar 

to DNR Orders. 

The Exchange’s proposal to remove 

pricing related to flash functionality is 

reasonable, equitable and not unfairly 

discriminatory because the flash 

functionality would no longer be 

available to any Member. It is 

reasonable to remove the fees related to 

flash orders and the references to flash 

orders from the Pricing Schedule 

because the Exchange is removing the 

flash functionality from its Rulebook. 

Additionally, it is equitable and not 

unfairly discriminatory to remove the 

fees related to flash orders and the 

references to flash orders from the 

Pricing Schedule because no Exchange 

Member would be able to utilize the 

flash functionality once it is removed 

from the System. 

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’s proposal to adopt 

routing, similar to BX,56 does not 

impose an undue burden on intermarket competition as the proposal will 

permit ISE Members to continue to 

route orders to away markets to obtain 

the best price, while also accessing ISE’s 

order book, albeit with new routing 

options that are afforded to BX 

Participants today. The FIND and SRCH 

routing options would be available to all 

ISE Members. Finally, the options not to 

route (DNR Order) would continue to be 

offered to all ISE Members. 

The Exchange’s proposal to remove 

Sweep Orders within Supplementary 

Material .05 to Options 5, Section 2 and 

Options 3, Section 7(s) does not impose 

an undue burden on competition 

because a Sweep Order would no longer 

be necessary without the flash 

functionality and Sweep Orders would 

be discontinued. 

The Exchange’s proposal to only 

utilize FIX to route order does not 

impose an undue burden on 

competition because the OTTO protocol 

is not designed for routing. Today, 

Members may not route orders through 

OTTO and this will not be changing as 

a result of the change in routing rules. 

Members on ISE may submit and route 

all orders through FIX. OTTO is an 

optional port available to all Members 

on ISE for submitting orders. 

The Exchange’s proposal to re-price 

orders that would lock or cross away 

markets does not impose an undue 

burden on inter-market competition. 

Similar to BX Options 5, Section 4, the 

Exchange would re-price orders one 

MPV away from the best bid or offer. 

Better priced orders would continue to 

be accessible on ISE’s order book. ISE 

would continue to not trade through an 

away market. Any order that locks or 

crosses an away market on ISE would be 

re-priced as a result of this amendment. 

This would include DNR orders resting 

on the order book and FIND and SRCH 

Orders that have not yet routed and are 

subject to a Route Timer. 

The Exchange’s proposal to remove 

the rule text within Supplementary 

Material .01 to Options 5, Section 2, 

Supplementary Material .07 to Options 

5, Section 2 and Supplementary 

Material .01 to Options 5, Section 4 does 

not impose an undue burden on 

competition because ISE Options 5, 

Section 4(f) already requires Members to 

honor trades that are executed on away 

markets to the same extent they would 

be obligated to honor a trade executed 

on the Exchange. This would apply to 

the indicator for the type of market 

participant and designating a preferred 

market-maker, as well as obviate the 

need for redundant or unnecessary rule 

text. 

The proposal to remove 

Supplementary Material .07 to Options 

5, Section 2 does not impose an undue 

burden on competition. This rule 

discusses the obligation of a member 

who has entered an order on the 

Exchange that is routed away via an ISO 

pursuant to the flash functionality. The 

Exchange is proposing to remove the 

flash functionality, so the rule is no 

longer needed. In addition, obligations 

associated with submitting ISO Orders 

are born by the member submitting the 

ISO Order. Each Exchange’s rules 

describe how ISO Orders may be 

utilized.57 Finally, the Exchange’s 

proposal to remove the rule text within 

the Supplementary Material .02 to 

Options 5, Section 4 does not impose an 

undue burden on competition because 

the Exchange proposes to re-price orders 

which would otherwise lock or cross an 

away market. 

The Exchange’s proposal to remove 

pricing related to flash functionality 

does not impose an undue burden on 

competition because the flash 


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58 15 U.S.C. 78s(b)(3)(A). 

59 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 60 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

functionality would no longer be 

available to any Member. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 58 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.59

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

ISE–2022–11 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–2022–11. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–ISE–2022–11 and should be 

submitted on or before June 8, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.60

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10612 Filed 5–17–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94901; File No. SR–MRX– 

2022–04] 

Self-Regulatory Organizations; Nasdaq 

MRX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend MRX’s Pricing 

Schedule at Options 7 To Assess 

Membership, Port and Market Data 

Fees 

May 12, 2022. 

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 May 2, 

2022, Nasdaq MRX, LLC (‘‘MRX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, 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 

MRX’s Pricing Schedule at Options 7 to 

assess membership, port and market 

data fees. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/mrx/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. 


lotter on DSK11XQN23PROD with NOTICES1