37936 Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices 

38 15 U.S.C 78s(b)(3)(A). 

39 17 CFR 240.19b–4(f)(2). 

40 17 CFR 240.19b–4(f)(4). 

41 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 80777 

(May 25, 2017) (SR–NYSEArca–2017–30) (order 

approving amendments to Commentary .01 and 

Commentary .02 to NYSE Arca Equities Rule 

5.2(j)(3) to provide for the inclusion of cash in an 

index underlying a series of Investment Company 

Units). 

19(b)(3)(A) 38 of the Act and 

subparagraphs (f)(2) 39 and (f)(4) 40 of 

Rule 19b–4 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

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– 

NSCC–2017–011 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–NSCC–2017–011. 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 Web site (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 Web site 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 NSCC and on DTCC’s Web site 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–NSCC– 

2017–011 and should be submitted on 

or before September 5, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.41

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–17044 Filed 8–11–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81340; File No. SR– 

NYSEAMER–2017–03] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend 

Supplementary Material .01 and .02 to 

NYSE American Rule 5.2E(j)(3) To 

Provide for the Inclusion of Cash in an 

Index Underlying a Series of 

Investment Company Units 

August 8, 2017. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on July 27, 

2017, NYSE American LLC (the 

‘‘Exchange’’ or ‘‘NYSE American’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. 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 

Supplementary Material .01 and .02 to 

NYSE American Rule 5.2E(j)(3) to 

provide for the inclusion of cash in an 

index underlying a series of Investment 

Company Units, which amendments 

conform to amendments to NYSE Arca 

Equities Rule 5.2(j)(3) previously 

approved by the Commission. The 

proposed rule change is available on the 

Exchange’s Web site at www.nyse.com, 

at the principal office of the Exchange, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes (1) to amend 

Supplementary Material .01 and .02 to 

NYSE American Rule 5.2E(j)(3) to 

provide for the inclusion of cash in an 

index underlying a series of Investment 

Company Units (‘‘Units’’), which 

amendments conform to amendments to 

NYSE Arca Equities Rule 5.2(j)(3) 

previously approved by the 

Commission.4

Amendments to NYSE American Rule 

5.2E(j)(3) 

NYSE American Rule 5.2E(j)(3) 

permits the trading of Units pursuant to 

unlisted trading privileges (‘‘UTP’’). The 

Exchange proposes to amend 

Commentaries .01 and .02 to NYSE 

American Rule 5.2E(j)(3) to permit 

trading of Units based on an index or 

portfolio that includes cash as a 

component. While Units, like mutual 

funds, will generally hold an amount of 

cash, NYSE American Rule 5.2E(j)(3) 

currently provides that components of 

an index or portfolio underlying a series 

of Units consist of securities—namely, 

US Component Stocks, Non-US 

Component Stocks, Fixed Income 

Securities or a combination thereof. As 

described below, the proposed 

amendments to Supplementary Material 

.01 and .02 to Rule 5.2E(j)(3) would 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices 37937 

5Rule 5.2E(j)(3) defines ‘‘US Component Stock’’ 

as an equity security that is registered under 

Sections 12(b) or 12(g) of the Act or an American 

Depositary Receipt, the underlying equity security 

of which is registered under Sections 12(b) or 12(g) 

of the Act. 6Supplementary Material .01(a)(A)(1) provides 

that component stocks (excluding Units and 

securities defined in Section 2 of Rule 8E, 

collectively, ‘‘Exchange Traded Products’’) that in 

the aggregate account for at least 90% of the weight 

of the US Component Stocks portion of the index 

or portfolio (excluding such Exchange Traded 

Products) each shall have a minimum market value 

of at least $75 million. 

7As defined in Supplementary Material .02 to 

NYSE American Rule 5.2E(j)(3), Fixed Income 

Securities are debt securities that are notes, bonds, 

debentures or evidence of indebtedness that 

include, but are not limited to, U.S. Department of 

Treasury securities (‘‘Treasury Securities’’), 

government-sponsored entity securities (‘‘GSE 

Securities’’), municipal securities, trust preferred 

securities, supranational debt and debt of a foreign 

country or a subdivision thereof. 

8Supplementary Material .02(a)(2) provides that 

Fixed Income Security components that in 

aggregate account for at least 75% of the Fixed 

Income Securities portion of the weight of the index 

or portfolio each shall have a minimum original 

principal amount outstanding of $100 million or 

more. 

9See Commentary .01(c) to NYSE Arca Equities 

Rule 8.600. 10 15 U.S.C. 78f(b)(5). 

permit inclusion of cash as an index or 

portfolio component. 

Currently, Supplementary Material 

.01(a)(A) to NYSE American Rule 

5.2E(j)(3) provides that an underlying 

index or portfolio of US Component 

Stocks 5 must meet specified criteria. 

The Exchange proposes to amend 

Supplementary Material .01(a)(A) to 

provide that the components of an index 

or portfolio underlying a series of Units 

may also include cash. In addition, the 

percentage weighting criteria in 

Supplementary Material .01(a)(A)(1) 

through (4) each would be amended to 

make clear that such criteria would be 

applied only to the US Component 

Stocks portion of an index or portfolio. 

For example, in applying the criteria in 

proposed Supplementary Material 

.01(a)(A)(1),6 if 85% of the weight of an 

index consists of US Component Stocks 

and 15% of the index weight is cash, the 

requirement that component stocks 

(excluding Exchange Traded Products) 

that in the aggregate account for at least 

90% of the weight of the US Component 

Stocks portion of the index or portfolio 

(excluding such Exchange Traded 

Products) each will have a minimum 

market value of $75 million minimum 

would be applied only to the 85% 

portion consisting of US Component 

Stocks. 

Supplementary Material .01 (a)(B) to 

NYSE American Rule 5.2E(j)(3), which 

relates to international or global indexes 

or portfolios, would be amended to 

provide that components of an index or 

portfolio underlying a series of Units 

may consist of (a) only Non-US 

Component Stocks, (b) Non-US 

Component Stocks and cash, (c) both US 

Component Stocks and Non-US 

Component Stocks, or (d) US 

Component Stocks, Non-US Component 

Stocks and cash. In addition, the 

percentage weighting criteria in 

Supplementary Material .01(a)(B)(1) 

through (4) each would be amended to 

make clear that such criteria would be 

applied only to the combined US and 

Non-US Component Stocks portions of 

an index or portfolio. 

Supplementary Material .02 to NYSE 

American Rule 5.2E(j)(3) provides 

generic criteria applicable to trading of 

Units whose underlying index or 

portfolio includes Fixed Income 

Securities.7 Currently, Commentary 

.02(a)(1) provides that an underlying 

index or portfolio must consist of Fixed 

Income Securities. The Exchange 

proposes to amend Commentary 

.02(a)(1) to provide that the index or 

portfolio may also include cash. In 

addition, the percentage weighting 

criteria in Supplementary Material 

.02(a)(2), (a)(4) and (a)(6) each would be 

amended to make clear that such criteria 

would be applied only to the Fixed 

Income Securities portion of an index or 

portfolio. For example, in applying the 

criteria in proposed Supplementary 

Material .02(a)(2),8 if 90% of the weight 

of an index or portfolio consists of Fixed 

Income Securities and 10% of the index 

weight is cash, the requirement that 

Fixed Income Security components 

accounting for at least 75% of the Fixed 

Income Securities portion of the weight 

of the index or portfolio each will have 

a minimum original principal amount 

outstanding of $100 million would be 

applied only to the 90% portion 

consisting of Fixed Income Securities. 

The Exchange notes that the 

Commission has previously approved 

NYSE Arca rules allowing portfolios 

held by issues of Managed Fund Shares 

(actively-managed exchange-traded 

funds) under Commentary .01 to NYSE 

Arca Equities Rule 8.600 to include 

cash.9 Like the provision in 

Supplementary Material .01(c) to 

Exchange Rule 8.600E (which is similar 

to Commentary .01(c) to NYSE Arca 

Equities Rule 8.600), which states that 

there is no limit to cash holdings by an 

issue of Managed Fund Shares traded 

under Supplementary Material .01 to 

Exchange Rule 8.600E, there is no 

proposed limit to the weighting of cash 

in an index underlying a series of Units. 

The Exchange believes this is 

appropriate in that cash does not, in 

itself, impose investment or market risk. 

The Exchange also proposes to make 

a non-substantive change to 

Supplementary Material .02 to Exchange 

Rule 5.2E(j)(3) to change ‘‘shall’’ to 

‘‘will’’ in one place to conform to other 

usages in Rule 5.2E(j)(3). 

The Exchange believes the proposed 

amendments, by permitting inclusion of 

cash as a component of indexes 

underlying series of Units, would 

provide issuers of Units with additional 

choice in indexes permitted to underlie 

Units that are permitted to trade on the 

Exchange pursuant to the Rule 19b–4(e), 

which would enhance competition 

among market participants, to the 

benefit of investors and the marketplace. 

In addition, the proposed amendments 

would provide investors with greater 

ability to hold Units based on 

underlying indexes that may accord 

more closely with an investor’s 

assessment of market risk, in that some 

investors may view cash as a desirable 

component of an underlying index 

under certain market conditions. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 10 that an 

exchange have rules that are designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to, and perfect the 

mechanism of a free and open market 

and, in general, to protect investors and 

the public interest. 

The proposed rule changes are 

designed to perfect the mechanism of a 

free and open market and, in general, to 

protect investors and the public interest. 

The basis under the Exchange Act for 

this proposed rule change is the 

requirement under Section 6(b)(5) that 

an exchange have rules that are 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to, and 

perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest. 

With respect to the proposed 

amendments to Supplementary Material 

.01(a)(B)(1) through (4) to Rule 

5.2E(j)(3), as described above, the 

percentage weighting criteria in 

Supplementary Material .01(a)(B)(1) 

through (4) to Rule 5.2E(j)(3) each 

would be amended to make clear that 

such criteria would be applied only to 

the combined US and Non-US 

Component Stocks portions of an index 

or portfolio. The percentage weighting 

criteria in Supplementary Material 


sradovich on DSK3GMQ082PROD with NOTICES
37938 Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). As required under Rule 

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

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. 

13 17 CFR 240.19b–4(f)(6)(iii). 

14See supra note 4. 

15For 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). 

.02(a)(2), (a)(4) and (a)(6) to Rule 

5.2E(j)(3) each would be amended to 

make clear that such criteria would be 

applied only to the Fixed Income 

Securities portion of an index or 

portfolio. Such applications of the 

proposed amendments would assure 

that the weighting requirements in 

Supplementary Material .01 and .02 

would continue to be applied only to 

securities in an index or portfolio, and 

would not be diluted as a result of 

inclusion of a cash component. In 

addition, the addition of cash as a 

permitted component of indexes 

underlying Units traded on the 

Exchange pursuant to Rule 19b–4(e) 

does not raise regulatory issues because 

cash does not, in itself, impose 

investment or market risk and is not 

susceptible to manipulation. The nonsubstantive change to Supplementary 

Material .02 to Exchange Rule 5.2E(j)(3) 

to change ‘‘shall’’ to ‘‘will’’ conforms to 

other usages in Rule 5.2E(j)(3). 

The Exchange believes these proposed 

amendments, by permitting inclusion of 

cash as a component of indexes 

underlying series of Units, would 

provide issuers of Units with additional 

choice in indexes permitted to underlie 

Units that are permitted to trade on the 

Exchange pursuant to UTP, which 

would enhance competition among 

market participants, to the benefit of 

investors and the marketplace. In 

addition, the proposed amendments 

would provide investors with greater 

ability to hold Units based on 

underlying indexes that may accord 

more closely with an investor’s 

assessment of market risk. 

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 that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. The Exchange 

believes the proposed rule change will 

enhance intermarket competition by 

allowing trading on the Exchange 

pursuant to UTP of the above-described 

securities pursuant to rules that have 

been previously approved by the 

Commission for NYSE Arca, Inc. 

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 11 and Rule 19b– 

4(f)(6) thereunder.12

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to 30 days after 

the date of filing. However, Rule 19b– 

4(f)(6)(iii)T 13 permits the Commission 

to designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has asked the Commission to 

waive the 30-day operative delay so that 

the proposal may become operative 

immediately upon filing. As noted 

above, the Exchange believes that the 

proposed rule change would provide 

additional choices to issuers of Units 

and investors in Units. The Exchange 

also noted that the amendments it is 

proposing to Rule 5.2E(j)(3) conform to 

amendments to NYSE Arca Equities 

Rule 5.2(j)(3) that the Commission 

previously approved,14 and that this 

proposed rule change may enhance 

competition between the exchanges. 

The Commission believes that waiver of 

the 30-day operative delay is consistent 

with the protection of investors and the 

public interest. Therefore, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change to be operative 

upon filing.15

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 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEAMER–2017–03 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–NYSEAMER–2017–03. 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 Web site (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 Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

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

filing will also be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEAMER–2017–03 and should be 

submitted on or before September 5, 

2017. 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices 37939 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release Nos. 61154 

(December 11, 2009), 74 FR 67278 (December 18, 

2009) (SR–ISE–2009–105) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

Relating to the Registered Representative Fee and 

an Options Regulatory Fee). 

4See Securities Exchange Act Release Nos. 62012 

(April 30, 2010), 75 FR 25306 (May 7, 2010) (SR– 

ISE–2010–36); 67087 (May 31, 2012), 77 FR 33535 

(June 6, 2012) (SR–ISE–2012–43); and 70859 

(November 13, 2013), 78 FR 69501 (November 19, 

2013) (SR–ISE–2014–54). 

5On June 30, 2016, Nasdaq, Inc. acquired all of 

the capital stock of U.S. Exchange Holdings, Inc., 

the ISE’s indirect parent company. As a result, ISE 

in addition to its affiliates, which are now known 

as Nasdaq GEMX, LLC and Nasdaq MRX, LLC, 

became a wholly-owned subsidiary of Nasdaq, Inc. 

See Securities Exchange Act Release No. 78119 

(June 21, 2016), 81 FR 41611 (June 27, 2016) (SR– 

ISE–2016–11). 

6See Options Trader Alert #2017–54. 

7Members must record the appropriate account 

origin code on all orders at the time of entry in 

order. The Exchange represents that it has 

surveillances in place to verify that members mark 

orders with the correct account origin code. 

8The Exchange uses reports from OCC when 

assessing and collecting the ORF. 

9CMTA or Clearing Member Trade Assignment is 

a form of ‘‘give-up’’ whereby the position will be 

assigned to a specific clearing firm at OCC. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–17045 Filed 8–11–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81345; File No. SR–ISE– 

2017–71] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend ISE’s 

Schedule of Fees With Respect to the 

Options Regulatory Fee 

August 8, 2017. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on July 26, 

2017, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, 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 revise ISE’s 

Schedule of Fees to: (i) Make 

adjustments to the amount of the 

Options Regulatory Fee (‘‘ORF’’); (ii) 

more closely reflect the manner in 

which ISE assesses and collects its ORF; 

and (iii) remove rule text related to the 

timing when the Exchange may increase 

or decrease the amount of the ORF. 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated the amendments [sic] 

become operative on August 1, 2017. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at www.ise.com, at the principal office 

of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

ISE initially filed to establish its ORF 

in 2010.3 The Exchange has amended its 

ORF several times since the inception of 

this fee.4 At this time, the Exchange 

proposes to: (i) Amend the amount of its 

ORF; (ii) more closely reflect the 

manner in which ISE assesses and 

collects its ORF; and (iii) remove rule 

text related to the timing when the 

Exchange may increase or decrease the 

amount of its ORF. 

The Exchange supports a common 

approach for the assessment and 

collection of ORF among the various 

options exchanges that assess such a fee. 

Furthermore, the Exchange supports 

guidance from the Commission 

regarding regulatory cost structures to 

ensure equal knowledge and treatment 

among options markets assessing ORF. 

Proposal 1—Amend the Amount of the 

ORF 

The Exchange assesses an ORF of 

$0.0039 per contract side. The Exchange 

proposes to decrease the ORF from 

$0.0039 per contract side to $0.0016 per 

contract side as of August 1, 2017 to 

account for synergies which resulted 

from Nasdaq’s acquisition of the 

Exchange. On June 30, 2016, Nasdaq 

completed its acquisition of the 

International Securities Exchange, 

which included acquiring three 

electronic options exchanges.5 With the 

acquisition, ISE [sic] regulatory program 

has been examined and conformed to 

certain best practices which exist today 

on NASDAQ PHLX LLC, The NASDAQ 

Options Market LLC and NASDAQ BX, 

Inc. (collectively ‘‘Nasdaq Markets’’) 

and Nasdaq GEMX, LLC. These 

synergies in combination with 

conforming the expense and revenue 

review of ISE to that of the Nasdaq 

Markets has resulted in a projected 

decreased in regulatory expenses for ISE 

and therefore ISE is decreasing the 

amount of its ORF. The Exchange 

believes that this decreased number 

reflects efficiencies in the regulatory 

program today within the Nasdaq 

Markets. 

The Exchange’s proposed change to 

the ORF should balance the Exchange’s 

regulatory cost [sic] against the 

anticipated revenue. The Exchange 

regularly reviews its ORF to ensure that 

the ORF, in combination with its other 

regulatory fees and fines, does not 

exceed regulatory costs. The Exchange 

believes this adjustment will permit the 

Exchange to cover a material portion of 

its regulatory costs, while not exceeding 

regulatory costs. 

The Exchange notified members of 

this ORF adjustment thirty (30) calendar 

days prior to the proposed operative 

date.6

Proposal 2—Reflect the Manner in 

Which ISE Assesses and Collects its 

ORF 

Currently, ISE assesses its ORF for 

each customer option transaction that is 

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

or (2) cleared by a ISE member at The 

Options Clearing Corporation (‘‘OCC’’) 

in the customer range,7 even if the 

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

exchange on which the transaction 

occurs.8 If the OCC clearing member is 

a ISE member, ORF is assessed and 

collected on all cleared customer 

contracts (after adjustment for CMTA 9); 

and (2) if the OCC clearing member is 

not a ISE member, ORF is collected only 

on the cleared customer contracts 

executed at ISE, taking into account any 


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