Document ID: SEC-2017-1555-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq ISE, LLC
Posted Date: 2017-09-18T04:00Z

[Federal Register Volume 82, Number 179 (Monday, September 18, 2017)]
[Notices]
[Pages 43618-43621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19807]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81598; File No. SR-ISE-2017-83]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Make Non-
Substantive, Clarifying Changes to ISE's Rulebook and Schedule of Fees

September 13, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 1, 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 make non-substantive, clarifying changes 
to ISE's Rulebook and Schedule of Fees.
    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 make non-substantive, 
clarifying changes to the ISE Rulebook and Schedule of Fees to avoid 
confusion

[[Page 43619]]

in the Exchange's rules. Each change is discussed below.

    1. ISE Rulebook

    The Exchange proposes to remove text from ISE Rule 721, entitled 
``Crossing Orders.'' Specifically, the Exchange proposes to remove the 
following rule text, ``ISE will migrate symbols to the INET platform 
pursuant to a symbol migration commencing in the second quarter of 
2017. For symbols that have migrated to the INET platform, the 
functionality provided under ISE Rule 721(c) and the Supplementary 
Material thereto, permitting QCC with Stock Orders, will be temporarily 
suspended. The Exchange will specify the symbol migration schedule in 
an Options Trader Alert to be issued by the Exchange. The Exchange will 
recommence offering QCC with Stock Orders by announcing a date of 
implementation in a separate Options Trader Alert which will be issued 
prior to August 1, 2017. For symbols that have migrated to INET, QCC 
with Stock Orders will be rejected until the Exchange has recommenced 
this offering.'' This rule text was added at the time the Exchange 
proposed to delay this functionality.\3\ The Exchange recommenced the 
QCC with Stock Orders functionality on June 27, 2017.\4\ The text is no 
longer applicable.
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    \3\ See Securities Exchange Act Release No. 80718 (May 18, 
2017), 82 FR 23932 (May 24, 2017) (SR-ISE-2017-44).
    \4\ See Options Trader Alert #2017-48.
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    The Exchange also proposes to remove text from ISE Rule 1901, 
entitled ``Order Protection.'' \5\ Specifically, the Exchange proposes 
to remove the following rule text, ``The amended rule text will be 
implemented on a symbol by symbol basis for Nasdaq GEMX, LLC in Q1 
2017, for Nasdaq ISE in Q2 2017 and for Nasdaq MRX, LLC in Q3 2017, the 
specific dates will be announced in a separate notice.'' This rule text 
was added at the time the Exchange proposed to delay implementation of 
the changes to Rule 1901 in connection with a system migration to 
Nasdaq INET technology.\6\ Each of ISE, GEMX and MRX completed its 
symbol migration to INET.\7\ Accordingly, the Exchange seeks to remove 
the outdated rule text in Rule 1901 as described above in order to 
alleviate potential confusion regarding the operation of the rule.

    \5\ The Exchange notes that Chapter 19 of the ISE Rulebook, 
including Rule 1901, is incorporated by referenced into the 
rulebooks of Nasdaq GEMX, LLC (``GEMX'') and Nasdaq MRX, LLC 
(``MRX''). As such, the amendments to ISE Rule 1901 will also impact 
GEMX and MRX rules.
    \6\ See Securities Exchange Act Release No. 80009 (February 10, 
2017), 82 FR 10927 (February 16, 2017) (SR-ISE-2016-31).
    \7\ See Options Trader Alerts #2017-19 (GEMX symbol migration 
schedule), #2017-61 (ISE symbol migration schedule) and #2017-66 
(MRX symbol migration schedule).

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    2. Schedule of Fees

    The Exchange further proposes to remove the following outdated 
sentences or footnotes, including any references thereto, in the 
Preface and in Sections I and III of the Schedule of Fees:
     There will be no fees or rebates for trades in symbol KANG 
executed on the INET trading system from June 27-30, 2017. Volume 
executed in KANG during this period will not be counted towards a 
member's tier for June activity.\8\
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    \8\ This rule text was added to the Schedule of Fees in 
connection with a pricing change. See Securities Exchange Act 
Release No. 81106 (July 10, 2017), 82 FR 32597 (July 14, 2017) (SR-
ISE-2017-63).
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     There will be no fees or rebates for trades executed on 
the INET trading system 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 IBM. Volume executed in these 
symbols on this date will not be counted towards a member's tier for 
June activity. In addition, June 30, 2017 will not be counted for 
purposes of determining Market Maker Plus tiers for the following 
symbols: ADM, ADSK, AGNC, ASHR, BBT, BK, BSX, CIEN, and IBM.\9\
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    \9\ This rule text was added to the Schedule of Fees in 
connection with a pricing change. See Securities Exchange Act 
Release No. 81128 (July 12, 2017), 82 FR 32893 (July 18, 2017) (SR-
ISE-2017-66).
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     Select Symbols which will migrate to INET from July 3rd 
through July 30th 2017 as noticed by Nasdaq ISE in Options Trader Alert 
#2017-51 (``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. Additionally, Select Symbols which will migrate to INET on 
July 31, 2017 as noticed by Nasdaq ISE at Options Trader Alert #2017-51 
(``July 31 Migrated Symbols'') will only use activity from July 3rd 
through July 30th 2017 for purposes of qualifying for Market Maker Plus 
Tiers 1-3 for the month of July 2017.\10\
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    \10\ This footnote (and references thereto) was added to the 
Schedule of Fees in connection with a pricing change. See Securities 
Exchange Act Release No. 81144 (July 14, 2017), 82 FR 33527 (July 
20, 2017) (SR-ISE-2017-69).
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     There will be no fees or rebates for trades in FX Options 
executed on the INET trading system from June 12-30, 2017. Volume 
executed in FX Options during this period will not be counted towards a 
member's tier for June activity.\11\
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    \11\ This rule text was added to the Schedule of Fees in 
connection with a pricing change. See Securities Exchange Act 
Release No. 80999 (June 22, 2017), 82 FR 29354 (June 28, 2017) (SR-
ISE-2017-59).
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    The operative dates for the pricing noted above have expired. The 
Exchange therefore desires to remove the outdated text from its 
Schedule of Fees to avoid confusion.
    Finally, the Exchange proposes to make certain clarifying changes 
in Section II of the Schedule of Fees entitled, ``Complex Order Fees 
and Rebates'' (hereinafter, ``Complex Fee Schedule''). In particular, 
the Exchange proposes to add references to footnotes 11 and 12 in the 
Complex Fee Schedule, both of which presently do not refer to any 
particular complex order fee or activity. Footnote 11 currently states 
that fees apply to the originating and contra order, but the footnote 
itself does not refer to any particular fees under the Complex Fee 
Schedule. The Exchange notes that when it adopted footnote 11 in the 
Complex Fee Schedule, it had appended references to the footnote to the 
fees for Crossing Orders and for orders executed in the Price 
Improvement Mechanism (``PIM''),\12\ but inadvertently did not reflect 
the changes appending these references to the two fees in the Schedule 
of Fees itself. The Exchange therefore proposes to append footnote 11 
to the fees for Crossing Orders and PIM orders to clarify that these 
fees apply to both the originating and contra order for complex orders.
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    \12\ See Securities Exchange Release No. 71914 (April 9, 2014), 
79 FR 21321 (April 15, 2014) (SR-ISE-2014-20).
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    In addition, the Exchange proposes to clarify the application of 
footnote 12,\13\ which also does not refer to anything under the 
Complex Fee Schedule today. The Exchange adopted footnote 12 when it 
introduced the stock handling fee \14\ for stock-option orders,\15\ and 
now

[[Page 43620]]

proposes to insert a reference to this footnote at the top of the 
Complex Fee Schedule (i.e., at Section II) to clarify that this fee 
applies to all orders that have a stock component as described in 
footnote 12.\16\
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    \13\ Footnote 12 currently states that the Exchange will charge 
a stock handling fee of $0.0010 per share (capped at $50 per trade) 
for the stock leg of stock-option orders executed against other 
stock-option orders in the complex order book.
    \14\ See Securities Exchange Release No. 74117 (January 22, 
2015), 80 FR 4600 (January 28, 2015) (SR-ISE-2015-03) (hereinafter, 
``Stock Handling Fee Notice'').
    \15\ A stock-option order is an order to buy or sell a stated 
number of units of an underlying stock or a security convertible 
into the underlying stock (``convertible security'') coupled with 
the purchase or sale of options contract(s) on the opposite side of 
the market representing either (A) the same number of units of the 
underlying stock or convertible security, or (B) the number of units 
of the underlying stock necessary to create a delta neutral 
position, but in no case in a ratio greater than eight-to-one 
(8.00), where the ratio represents the total number of units of the 
underlying stock or convertible security in the option leg to the 
total number of units of the underlying stock or convertible 
security in the stock leg. See ISE Rule 722(a)(2).
    \16\ The Exchange will continue to bill pass-through fees for 
the stock leg of stock-option orders that trade against liquidity on 
the stock venue, instead of being matched in the complex order book. 
See Stock Handling Fee Notice at 4601.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\17\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\18\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
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    As discussed above, the Exchange seeks to make non-substantive, 
clarifying amendments to its Rulebook and Schedule of Fees by removing 
outdated text and by appending references to footnotes 11 and 12 at 
particular places in the Complex Fee Schedule. The Exchange believes 
that the proposed changes herein will add further clarification to the 
Rulebook and Schedule of Fees, and will also alleviate potential 
confusion as to the applicability of the Exchange's rules, all of which 
will protect investors and the public interest.

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 changes are non-substantive, clarifying amendments to the 
Exchange's Rulebook and Schedule of Fees, and are merely intended to 
add further clarification to the Exchange's rules and alleviate 
potential confusion.

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 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 \19\ and Rule 19b-4(f)(6) thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \21\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \22\ 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 Exchange may immediately make the proposed changes to its Rulebook 
and Schedule of Fees. The Exchange believes that removing the outdated 
or duplicative language and clarifying the application of footnotes 11 
and 12 will provide its rules with greater clarity and will avoid 
confusion as to their applicability. The Commission believes the waiver 
of the operative delay is consistent with the protection of investors 
and the public interest. Accordingly, the Commission hereby waives the 
operative delay and designates the proposed rule change operative upon 
filing.\23\
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    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ For 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).
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    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-2017-83 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

    All submissions should refer to File Number SR-ISE-2017-83. 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 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-2017-83, and should be 
submitted on or before October 10, 2017.

[[Page 43621]]

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-19807 Filed 9-15-17; 8:45 am]
 BILLING CODE 8011-01-P