[Federal Register Volume 90, Number 88 (Thursday, May 8, 2025)]
[Notices]
[Pages 19590-19592]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-07984]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102976; File No. SR-ISE-2025-13]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Discontinue
the Options Regulatory Fee Model Scheduled To Be Implemented in June
2025
May 2, 2025.
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 April 28, 2025, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') 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 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 discontinue the ORF model scheduled to be
implemented in June 2025.\3\
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\3\ See Securities Exchange Act Release No. 101877 (December 11,
2024), 89 FR 102215 (December 17, 2024) (SR-ISE-2024-56) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt
a New Approach to the Options Regulatory Fee (ORF) in 2025). See
also Securities Exchange Act Release No. 102356 (February 5, 2025),
90 FR 9350 (February 11, 2025) (SR-ISE-2025-06) (Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Delay the
Implementation of the New Options Regulatory Fee (ORF) and ORF
Methodology Proposed in SR-ISE-2024-56) (collectively ``June 2025
ORF'').
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The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/ise/rulefilings,
at the principal
[[Page 19591]]
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
ISE proposes to discontinue the ORF model scheduled to be
implemented in June 2025.\4\
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\4\ See June 2025 ORF.
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ISE previously filed a proposed amendment to its ORF, effective as
of January 1, 2025,\5\ to amend its methodology of collection to: (1)
specify that it is including options transactions in ISE proprietary
products; and (2) assess ORF in all clearing ranges except market
makers who clear as ``M'' at The Options Clearing Corporation
(``OCC''). Additionally, ISE proposed to assess a different rate for
trades executed on ISE (``Local ORF Rate'') and trades executed on non-
ISE exchanges (``Away ORF Rate'').\6\ The Exchange also filed to delay
the implementation of SR-ISE-2024-56, with respect to the new ORF and
methodology therein which was effective on January 1, 2025, so that it
would be implemented on June 1, 2025.\7\
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\5\ See June 2025 ORF.
\6\ See June 2025 ORF.
\7\ See Securities Exchange Act Release No. 102356 (February 5,
2025), 90 FR 9350 (February 11, 2025) (SR-ISE-2025-06) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Delay the Implementation of the New Options Regulatory Fee (ORF) and
ORF Methodology Proposed in SR-ISE-2024-56).
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At this time, the Exchange proposes to discontinue its June 2025
ORF. The Exchange received feedback from Members \8\ and SIFMA \9\
related to the implementation of its June 2025 ORF. In particular, two
fields necessary for information sharing of executing exchange
information among Members and Clearing Members will not be available
after an upcoming technology migration at OCC.\10\ In light of this
information, the Exchange has been re-evaluating its ORF model and
plans to revamp the current process of assessing and collecting ORF,
which would be subject to, and described further in, a future rule
filing. Particularly, the Exchange is exploring proposing a modified
ORF model in which ORF would only be assessed to on-exchange
transactions and would continue to be assessed only to customers. At
this this time, the Exchange expects to continue assessing ORF as it
does today and will continue to ensure that ORF Regulatory Revenue, in
combination with its other regulatory fees and fines, does not exceed
Options Regulatory Cost.
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\8\ The Exchange has discussed the implementation of its June
2025 ORF with various Clearing Members.
\9\ See SIFMA comment letter at https://www.sec.gov/comments/sr-nasdaq-2024-078/srnasdaq2024078-550079-1574622.pdf.
\10\ See https://www.theocc.com/company-information/occ-transformation.
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To create real ORF reform, moving to a new ORF model that only
assesses a fee to transactions that occur on the Exchange would remove
any duplicative ORF billing. The Exchange believes that each exchange
should likewise adopt a similar model to ensure consistent industry
billing of ORF to the benefit of market participants. A consistent
methodology of assessing and collecting ORF will also remove confusion
and complexity in the billing of ORF. The Exchange has been engaged in
remodeling its current ORF over the last year and has held many
conversations with market participants to establish a framework that is
practical and fair. The Exchange remains committed to ORF reform and
will continue to evaluate its ORF model and seek feedback from market
participants.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\11\ Specifically, the
Exchange believes the proposed rule change is consistent with Section
6(b)(4) of the Act,\12\ which provides that Exchange rules may provide
for the equitable allocation of reasonable dues, fees, and other
charges among its members, and other persons using its facilities.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \13\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4).
\13\ 15 U.S.C. 78f(b)(5).
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The Exchange's proposal to discontinue its June 2025 ORF is
reasonable because it has come to light that certain information
necessary for billing of ORF would not be available later in 2025. In
light of this information, the Exchange has been re-evaluating its ORF
model and plans to revamp the current process of assessing and
collecting ORF, which would be subject to, and described further in, a
future rule filing. Particularly, the Exchange anticipates moving to a
modified ORF model in which ORF would only be assessed to on-exchange
transactions and would continue to be assessed only to customers. At
this this time, the Exchange expects to continue assessing ORF as it
does today and will continue to ensure that ORF Regulatory Revenue, in
combination with its other regulatory fees and fines, does not exceed
Options Regulatory Cost.
The Exchange's proposal to discontinue its June 2025 ORF is
equitable and not unfairly discriminatory as the proposal would not
apply to any Member.
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.
This proposal does not create an unnecessary or inappropriate
intra-market burden on competition because no Member would be subject
to the June 2025 ORF as a result of this proposal.
Additionally, this proposal does not create an unnecessary or
inappropriate inter-market burden on competition because it is a
regulatory fee that supports regulation in furtherance of the purposes
of the Act. The Exchange is obligated to ensure that the amount of ORF
Regulatory Revenue collected from the ORF, in combination with its
other regulatory fees and fines, does not exceed Options Regulatory
Cost.
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)
[[Page 19592]]
of the Act \14\ and paragraph (f) of Rule 19b-4 \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 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 will institute proceedings to determine whether
the proposed rule change should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f).
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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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-ISE-2025-13 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-2025-13. 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 (https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-ISE-2025-13 and should be
submitted on or before May 29, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-07984 Filed 5-7-25; 8:45 am]
BILLING CODE 8011-01-P