Document ID: SEC-2018-1147-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq ISE, LLC
Posted Date: 2018-07-24T04:00Z

[Federal Register Volume 83, Number 142 (Tuesday, July 24, 2018)]
[Notices]
[Pages 35038-35040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15767]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83660; File No. SR-ISE-2018-63]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Schedule of Fees To Waive Fees and Rebates for Trades in NQX 
Options

July 18, 2018.
    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 6, 2018, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Schedule of Fees, as 
further described below.
    The text of the proposed rule change is available on the Exchange's 
website at http://ise.cchwallstreet.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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange recently received approval to list index options on 
the Nasdaq 100 Reduced Value Index (``NQX'') on a pilot basis.\3\ The 
NQX options contract will be the same in all respects as the current 
Nasdaq-100 Index (``NDX'') options contract listed on the Exchange, 
except that it will be based on \1/5\ of the value of the Nasdaq 100 
Index, and will be P.M. settled with an exercise settlement value based 
on the closing index value of the Nasdaq 100 on the day of 
expiration.\4\ The

[[Page 35039]]

Exchange will begin to list NQX on June 26, 2018.\5\
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    \3\ See Securities Exchange Act Release No. 82911 (March 20, 
2018), 83 FR 12966 (March 26, 2018) (SR-ISE-2017-106).
    \4\ Id. The Exchange notes that similar features are available 
with other index options contracts listed on the Exchange and other 
options exchanges, including P.M. settled options on the full value 
of the Nasdaq-100 Index (``NDXP'').
    \5\ The Exchange initially filed the proposed pricing changes on 
June 26, 2018 (SR-ISE-2018-58). On July 6, 2018, the Exchange 
withdrew that filing and submitted this filing.
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    The Exchange now proposes to amend its Schedule of Fees to provide 
that there will be no fees or rebates for trades in NQX options 
executed from June 26-29, 2018. Volume executed in NQX options during 
this period will continue to be counted toward a member's tier for June 
activity. As such, NQX executions from June 26-29, 2018 will be 
included in the applicable volume tier calculations for a member's June 
activity, including those volume calculations specific to Non-Select 
Symbols (i.e., options overlying all symbols that are not in the Penny 
Pilot Program).\6\ The Exchange plans to adopt pricing for NQX as of 
July 2, 2018, and will do so through the SEC rulemaking process. The 
proposed changes would simplify the Exchange's billing by allowing the 
Exchange to bill for NQX activity traded as of July 2nd, and is an 
inducement for members to trade NQX options during the first week of 
listing as there would be no transaction fees for doing so.
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    \6\ For example, the Exchange provides Market Makers discounted 
fees for regular orders in Non-Select Symbols if the Market Maker 
executes a monthly volume of 250,000 contracts or more. See Schedule 
of Fees, Section IV.D. As proposed, the Market Maker's executions in 
NQX between June 26-29, 2018 would not be entitled to any discounted 
fees given that no fees or rebates would be provided during the 
proposed period, but such executions would still be counted toward 
the monthly volume calculation (i.e., to reach the 250,000 contract 
threshold). NQX is a Non-Select Symbol.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\8\ 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that it is reasonable and equitable to assess 
no fees or rebates for executions in NQX from June 26-29, 2018 because 
it will simplify the Exchange's billing and promote members to trade in 
NQX during the first week of listing, as further discussed above. For 
the same foregoing reasons, the Exchange also believes that it is 
reasonable and equitable to provide that volume executed in NQX during 
this time period will continue to be counted toward a member's tier for 
June activity. The Exchange also believes that it is reasonable to 
include NQX volume in this manner because it would be more burdensome 
to make changes to the Exchange's billing system in the middle of the 
month rather than the start to exclude a new symbol from the applicable 
volume tier calculations, as described above. The Exchange further 
believes that its proposal is not unfairly discriminatory as it will 
apply to trades in NQX that are executed by all market participants.

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. As discussed above, the 
proposed change to not assess any fees or rebates for executions of NQX 
orders from June 26-29, 2018 is merely intended to simplify the 
Exchange's billing, and promote members to trade in NQX during the 
first week of listing. Furthermore, the proposal will apply uniformly 
to all similarly situated market participants, as discussed above. For 
the foregoing reasons, the Exchange does not believe that its proposal 
will impose an undue burden on competition.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive, or rebate 
opportunities available at other venues to be more favorable. In such 
an environment, the Exchange must continually adjust its fees to remain 
competitive with other exchanges and with alternative trading systems 
that have been exempted from compliance with the statutory standards 
applicable to exchanges. Because competitors are free to modify their 
own fees in response, and because market participants may readily 
adjust their order routing practices, the Exchange believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\9\ and Rule 19b-4(f)(2) \10\ thereunder. At 
any time within 60 days of the filing of the proposed rule change, the 
Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is: (i) Necessary or 
appropriate in the public interest; (ii) for the protection of 
investors; or (iii) otherwise in furtherance of the purposes of the 
Act. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule should be 
approved or disapproved.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
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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 [email protected]. Please include 
File Number SR-ISE-2018-63 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-2018-63. 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

[[Page 35040]]

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-
2018-63 and should be submitted on or before August 14, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15767 Filed 7-23-18; 8:45 am]
BILLING CODE 8011-01-P