Document ID: SEC-2017-1223-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq ISE, LLC
Posted Date: 2017-07-20T04:00Z

[Federal Register Volume 82, Number 138 (Thursday, July 20, 2017)]
[Notices]
[Pages 33527-33529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-15189]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81144; File No. SR-ISE-2017-69]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Schedule of Fees in Connection With the ISE System Migration

July 14, 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 3, 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 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 Schedule of Fees to indicate the 
treatment of various symbols which are migrating to INET technology in 
July 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Schedule of 
Fees to: (1) Exclude certain Select Symbols \3\ which will migrate to 
INET from July 3rd through July 30th 2017 from the Market Maker Plus 
\4\ Tiers for the month of July 2017; and (2) exclude certain activity 
for certain Select Symbols which will migrate to INET on July 31, 2017 
from the Market Maker Plus Tiers for the month of July 2017. Each rule 
change will be described in greater detail below.
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    \3\ ``Select Symbols'' are options overlying all symbols listed 
on ISE that are in the Penny Pilot Program.
    \4\ A Market Maker Plus is a Market Maker who is on the National 
Best Bid or National Best Offer a specified percentage of the time 
for series trading between $0.03 and $3.00 (for options whose 
underlying stock's previous trading day's last sale price was less 
than or equal to $100) and between $0.10 and $3.00 (for options 
whose underlying stock's previous trading day's last sale price was 
greater than $100) in premium in each of the front two expiration 
months. The specified percentage is at least 80% but lower than 85% 
of the time for Tier 1, at least 85% but lower than 95% of the time 
for Tier 2, and at least 95% of the time for Tier 3. A Market 
Maker's single best and single worst quoting days each month based 
on the front two expiration months, on a per symbol basis, will be 
excluded in calculating whether a Market Maker qualifies for this 
rebate, if doing so will qualify a Market Maker for the rebate.
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    These rule changes are being made in connection with the migration 
of the Exchange's trading system to the Nasdaq INET technology, which 
began on June 12, 2017.\5\ On June 9, 2017, the Exchange filed a 
proposed rule change that eliminated fees and rebates for trades in FX 
Options that began trading on INET with the launch of the re-platformed 
trading system.\6\ In addition, on June 27, 2017 the Exchange filed 
another proposed rule change that eliminated fees and rebates for 
trades in symbol KANG that began trading on INET on that date.\7\ The 
Exchange recently filed a proposed rule change that eliminated fees and 
rebates for trades executed on June 30, 2017 in the following symbols: 
ACN, ACOR, AEO, AFSI, AMJ, AOBC, BKD, BTE, BV, CBI, CCL, CLR, CME, CNQ, 
ADM, ADSK, AGNC, ASHR, BBT, BK, BSX, CIEN, and

[[Page 33528]]

IBM.\8\ Additionally, that rule change also proposed that activity in 
the following Select Symbols will not be counted for purposes of 
determining Market Maker Plus tiers: ADM, ADSK, AGNC, ASHR, BBT, BK, 
BSX, CIEN, and IBM.\9\
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    \5\ See Securities Exchange Act Release No. 80432 (April 11, 
2017), 82 FR 18191 (April 17, 2017) (SR-ISE-2017-03). See also 
Options Trader Alert 2017-51.
    \6\ See Securities Exchange Act Release No. 80999 (June 22, 
2017) 82 FR 29354 (June 28, 2017) (SR-ISE-2017-59).
    \7\ See SR-ISE-2017-63 (publication pending).
    \8\ See SR-ISE-2017-66 (publication pending).
    \9\ Id.
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Current Proposal--Number 1

    The Exchange proposes that Select Symbols which will migrate to 
INET from July 3rd through July 30th 2017, as noticed by the Exchange 
in Options Trader Alert #2017-51\10\ (``Migrated Symbols'') will not be 
subject to Market Maker Plus Tiers 1-3 for the month of July 2017. 
These Migrated Symbols will be subject to Market Maker Plus Tiers 1-3 
as of August 1, 2017 and thereafter.
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    \10\ This alert contains a link to the specific symbols that 
migrate on each date.
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    During the transition symbols will migrate from the legacy T7 
system to the INET system. The two systems utilize different billing 
systems. For ease of transition and to ensure that Members are not 
impacted by the transition to a new billing system, the Exchange is 
proposing to simply not apply the Market Maker Plus Tiers to the 
symbols which will be transitioning from July 3rd through July 30th 
2017 for the month of July 2017. In August 2017, the Migrated Symbols 
will all be subject to the INET billing system and therefore the 
Exchange would begin applying the Market Maker Plus Tiers at that time.
Current Proposal--Number 2
    The Exchange proposes to exclude Select Symbols which will migrate 
to INET on July 31, 2017, as noticed by the Exchange at Options Trader 
Alert #2017-51 (``July 31 Migrated Symbols'') and only include activity 
from July 3, 2017 through July 30, 2017 for purposes of qualifying for 
the Market Maker Plus Tiers for the month of July 2017.
    As noted above, since the July 31 Migrated Symbols will migrate 
from the legacy T7 system to the INET system and utilize two different 
billing systems the Exchange proposes this exclusion. The Exchange 
believes that the exclusion will provide ease of transition and ensure 
that Members are not impacted by the transition to a new billing 
system. In August 2017, the July 31 Migrated Symbols will be subject to 
the INET billing system and therefore the Exchange would begin applying 
the Market Maker Plus Tiers at that time for the entire month of August 
2017.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\11\ in general, and 
Section 6(b)(4) of the Act,\12\ in particular, in that it is designed 
to provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and other persons using its facilities.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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Current Proposal--Number 1
    The Exchange's proposal that Migrated Symbols will not be subject 
to Market Maker Plus Tiers 1-3 for the month of July 2017 is reasonable 
because the Exchange will utilize two billing systems with the 
migration from legacy T7 to INET. For ease of transition and to ensure 
that Members are not impacted by the transition to a new billing 
system, the Exchange believes it is reasonable to not apply the Market 
Maker Plus Tiers to the symbols which will be transitioning from July 
3rd through July 30th 2017 for the month of July 2017. The new INET 
system would result in higher performance, scalability, and more robust 
architecture for ISE Members.
    The Exchange's proposal that Migrated Symbols will not be subject 
to Market Maker Plus Tiers 1-3 for the month of July 2017 is equitable 
and not unfairly discriminatory as it will apply to all transactions in 
Migrated Symbols on INET.
Current Proposal--Number 2
    The Exchange's proposal that July 31 Migrated Symbols will only 
include activity from July 3, 2017 through July 30, 2017 for purposes 
of qualifying for the Market Maker Plus Tiers for the month of July 
2017 is reasonable because the Exchange will utilize two billing 
systems with the migration from legacy T7 to INET. For ease of 
transition and to ensure that Members are not impacted by the 
transition to a new billing system, the Exchange believes it is 
reasonable to exclude the July 31, 2017 trading activity from the 
Market Maker Plus Tiers for the July 31 Migrated Symbols and only apply 
activity from July 3rd through July 30th 2017 for purposes of 
qualifying for the Market Maker Plus Tiers for the month of July 2017. 
The new INET system would result in higher performance, scalability, 
and more robust architecture for ISE Members.
    The Exchange's proposal to exclude activity for July 31, 2017 for 
the July 31 Migrated Symbols qualification for July 2017 and only 
include activity from July 3, 2017 through July 30, 2017 for purposes 
of qualifying for the Market Maker Plus Tiers for the month of July 
2017 is equitable and not unfairly discriminatory as it will apply to 
all transactions in July 31 Migrated Symbols on INET.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\13\ the Exchange 
does not believe that the proposed rule changes will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
changes are intended to ease members' transition to the re-platformed 
INET trading system and is not designed to have any significant 
competitive impact. The proposed changes will apply to all transactions 
in both the Migrated Symbols and the July 31 Migrated Symbols. The 
Exchange operates in a highly competitive market in which market 
participants can readily direct their order flow to competing venues. 
In such an environment, the Exchange must continually review, and 
consider adjusting, its fees and rebates to remain competitive with 
other exchanges. For the reasons described above, the Exchange believes 
that the proposed fee changes reflect this competitive environment.
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    \13\ 15 U.S.C. 78f(b)(8).
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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,\14\ and Rule 19b-4(f)(2) \15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).

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[[Page 33529]]

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-2017-69 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-2017-69. 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 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-ISE-2017-69 and should be 
submitted on or before August 10, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Jill M. Peterson,
Assistant Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-15189 Filed 7-19-17; 8:45 am]
 BILLING CODE 8011-01-P