Notice2025-23657
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend FLEX Order Fees
Primary source
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Published
December 23, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 244 (Tuesday, December 23, 2025)</title>
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[Federal Register Volume 90, Number 244 (Tuesday, December 23, 2025)]
[Notices]
[Pages 60199-60201]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23657]
[[Page 60199]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104455; File No. SR-ISE-2025-39]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend FLEX Order
Fees
December 18, 2025.
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 December 10, 2025, 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.
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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 its Pricing Schedule at Options 7,
Section 6, D., FLEX Order Fees.\3\
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\3\ On December 1, 2025 the Exchange filed SR-ISE-2025-37. On
December 12, [sic] 2025, the Exchange withdrew SR-ISE-2025-37 and
filed this proposal.
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The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/ise/rulefilings">https://listingcenter.nasdaq.com/rulebook/ise/rulefilings</a>,
and at the principal office of the Exchange.
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 amend its Pricing Schedule at Options 7, Section 6,
D., FLEX Order Fees, to decrease the FLEX \4\ Order Fees for a FLEX
Price Improvement Auction (``FLEX PIM''),\5\ or a FLEX Solicited Order
Mechanism (``FLEX SOM'').\6\
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\4\ FLEX Options are designed to meet the needs of market
participants for greater flexibility in selecting the terms of
options within the parameters of the Exchange's rules. Options 3A
Rules govern FLEX.
\5\ The FLEX PIM is a paired auction mechanism pursuant to
Options 3A, Section 12 through which an Exchange member may
electronically submit for execution an order (which may be a simple
or complex order) it represents as agent (``Agency Order'') against
principal interest or a solicited order(s) (except, if the Agency
Order is a simple order, for an order for the account of any FLEX
Market Maker with an appointment in the applicable FLEX Option class
on the Exchange) (an ``Initiating Order''), provided it submits the
Agency Order for electronic execution into a FLEX PIM Auction
pursuant to Options 3A, Section 12.
\6\ The FLEX SOM is a paired auction mechanism pursuant to
Options 3A, Section 13 through which an Exchange member (the
``Initiating Member'') may electronically submit for execution an
order (which may be a simple or complex order) it represents as
agent (``Agency Order'') against a solicited order (``Solicited
Order'') if it submits the Agency Order for electronic execution
into a FLEX SOM Auction pursuant to Options 3A, Section 13.
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FLEX Order Fees
The Exchange proposes to amend Options 7, Section 6, D., FLEX Order
Fees. Today, a Member may electronically submit a FLEX Order into an
electronic FLEX Auction pursuant to Options 3A, Section 11(b). Today,
for the FLEX Auction, the Exchange assesses $0.10 per contract for
Market Makers,\7\ Non-Nasdaq ISE Market Makers (FarMM),\8\ Firm
Proprietary \9\/Broker Dealers,\10\ and Professional Customers.\11\ The
Exchange assesses no Fees for FLEX Auctions to Priority Customers.\12\
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\7\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Options 1,
Section 1(a)(21).
\8\ A ``Non-Nasdaq ISE Market Maker'' is a market maker as
defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended, registered in the same options class on another options
exchange. See Options 7, Section 1(c).
\9\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account. See Options 7, Section 1(c).
\10\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
See Options 7, Section 1(c).
\11\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer. See Options 7,
Section 1(c).
\12\ A ``Priority Customer'' is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s), as defined in Nasdaq ISE Options 1,
Section 1(a)(38). Unless otherwise noted, when used in this Pricing
Schedule the term ``Priority Customer'' includes ``Retail.'' A
``Retail'' order is a Priority Customer order that originates from a
natural person, provided that no change is made to the terms of the
order with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology. See Options 7, Section 1(c).
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Today, a Member may also electronically submit a FLEX Order into a
FLEX PIM and FLEX SOM pursuant to Options 3A, Section 12 and Options
3A, Section 13, respectively. For the FLEX PIM and FLEX SOM, today, the
Exchange assesses $0.07 per contract for Market Makers, Non-Nasdaq ISE
Market Makers (FarMM), Firm Proprietary/Broker Dealers, and
Professional Customers. The Exchange assesses no FLEX Order Fees for
FLEX PIM and FLEX SOM to Priority Customers.
Finally, today, any Member other than an Initiating Member may
submit responses to a FLEX PIM and FLEX SOM pursuant to Options 3A,
Section 12(c)(5) and Options 3A, Section 13(c)(5), respectively. For
responses to a FLEX PIM and FLEX SOM, today, the Exchange assesses
$0.50 per contract for Market Makers, Non-Nasdaq ISE Market Makers
(FarMM), Firm Proprietary/Broker Dealers, Professional Customers, and
Priority Customers.
At this time, the Exchange proposes to decrease Non-Priority
Customer Fees for FLEX PIM and FLEX SOM from $0.07 to $0.06 per
contract. The Exchange believes that this decrease will incentivize
greater activity in FLEX PIM and FLEX SOM for potential price
improvement.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\13\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\14\ 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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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed changes to its Pricing Schedule are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for options
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities,
[[Page 60200]]
and the broker-dealers that act as their order-routing agents, have a
wide range of choices of where to route orders for execution'; [and]
`no exchange can afford to take its market share percentages for
granted' because `no exchange possesses a monopoly, regulatory or
otherwise, in the execution of order flow from broker dealers'. . . .''
\15\
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\15\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \16\
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\16\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options security transaction services. The Exchange is only one of
eighteen options exchanges to which market participants may direct
their order flow. Within this environment, market participants can
freely and often do shift their order flow among the Exchange and
competing venues in response to changes in their respective pricing
schedules. As such, the proposal represents a reasonable attempt by the
Exchange to increase its liquidity and market share relative to its
competitors.
FLEX Order Fees
The Exchange's proposal to decrease Non-Priority Customer Fees for
FLEX PIM and FLEX SOM from $0.07 to $0.06 per contract is reasonable
because the fee reduction will incentivize greater activity in FLEX PIM
and FLEX SOM for potential price improvement. Further, as proposed, the
fees are competitive with market dynamics and consider the price
improvement opportunities of the order mechanisms. Priority Customers
will continue to be assessed no Fee for FLEX PIM and FLEX SOM.
The Exchange's proposal to decrease Non-Priority Customer Fees for
FLEX PIM and FLEX SOM from $0.07 to $0.06 per contract is equitable and
not unfairly discriminatory. The Fees for FLEX PIM and SOM will apply
in a like manner to all Non-Priority Customers. Priority Customers will
continue to be assessed no Fees for FLEX PIM and FLEX SOM. The Exchange
believes that it is equitable and not unfairly discriminatory to assess
more favorable pricing for Priority Customers. Priority Customer order
flow enhances liquidity on the Exchange to the benefit of all market
participants by providing more trading opportunities, which in turn
attracts Market Makers and other market participants who may interact
with this order flow.
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. In terms of intra-market
competition, the Exchange does not believe that its proposal will place
any category of market participant at a competitive disadvantage.
FLEX Order Fees
The proposed Fees for FLEX PIM and FLEX SOM do not impose an undue
burden on competition because the Exchange will apply the same fees to
all Non-Priority Customers. Priority Customers will continue to be
assessed no Fees for FLEX PIM and FLEX SOM. The Exchange believes that
it does not impose an undue burden on competition to assess more
favorable pricing for Priority Customers. Priority Customer order flow
enhances liquidity on the Exchange to the benefit of all market
participants by providing more trading opportunities, which in turn
attracts Market Makers and other market participants who may interact
with this order flow. Nasdaq does not believe that the proposed fee
changes place an unnecessary burden on competition.
In terms of inter-market 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. 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. In sum, if the changes proposed herein are
unattractive to market participants, it is likely that the Exchange
will lose market share as a result. Accordingly, the Exchange does not
believe that the proposed changes will impair the ability of members or
competing order execution venues to maintain their competitive standing
in the financial markets.
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.\17\ 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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\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#96e4e3faf3bbf5f9fbfbf3f8e2e5d6e5f3f5b8f1f9e0"><span class="__cf_email__" data-cfemail="7604031a135b15191b1b131802053605131558111900">[email protected]</span></a>. Please include
file number SR-ISE-2025-39 on the subject line.
Paper Comments
<bullet> 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-2025-39. 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
[[Page 60201]]
post all comments on the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing 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-2025-39 and should
be submitted on or before January 13, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23657 Filed 12-22-25; 8:45 am]
BILLING CODE 8011-01-P
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