Notice2026-05015
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Rules at Options 7, Section 4-Complex Order Fees and Rebates
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 16, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 50 (Monday, March 16, 2026)</title>
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[Federal Register Volume 91, Number 50 (Monday, March 16, 2026)]
[Notices]
[Pages 12661-12663]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05015]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104965; File No. SR-ISE-2026-10]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Rules at Options 7, Section 4--Complex Order Fees and
Rebates
March 11, 2026.
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 March 3, 2026, 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 the Exchange's Rules at Options 7,
Section 4--Complex Order Fees and Rebates. Specifically, the Exchange
proposes to modify the schedule of Priority Customer complex order
rebates.\3\
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\3\ The Exchange initially filed this proposal on February 27,
2026, with a designated operative date of March 2, 2026 (SR-ISE-
2026-06). On March 3, 2026, the Exchange withdrew SR-ISE-2026-06 and
submitted this filing.
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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
The purpose of the proposed rule change is to amend the complex
order \4\ rebates in the Exchange's Pricing Schedule (Options 7).
Specifically, the Exchange proposes to amend its Pricing Schedule at
Section 4--Complex Order Fees and Rebates.
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\4\ A ``Complex Order'' is any order involving the simultaneous
purchase and/or sale of two or more different options series in the
same underlying security, as provided in Options 3, Section 14, as
well as Stock-Option Orders, as that term is defined in Options 3,
Section 14(a)(2). See Options 7, Section 1(c).
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Currently, the Exchange offers tiered complex order rebates for
Select Symbols \5\ and Non-Select Symbols \6\ based on the Priority
Customer \7\ Complex Tier achieved.\8\ The schedule of tiered complex
order Priority Customer rebates for Select Symbols and Non-Select
Symbols is currently as follows:
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\5\ ``Select Symbols'' are options overlying all symbols listed
on the Nasdaq ISE that are in the Penny Interval Program. See
Options 7, Section 1(c)
\6\ ``Non-Select Symbols'' are options overlying all symbols
excluding Select Symbols. No Priority Customer complex order rebates
will be paid for orders in NDX, XND or MNX. See Options 7, Section
4, note 4.
\7\ The term ``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 Options 1, Section
1(a)(38). Unless otherwise noted, when used in the Pricing Schedule,
the term ``Priority Customer'' includes ``Retail''. See Options 7,
Section 1(c). 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 id.
\8\ Priority Customer Complex Tiers are based on Total
Affiliated Member or Affiliated Entity Complex Order Volume
(Excluding Crossing Orders and Responses to Crossing Orders)
Calculated as a Percentage of Customer Total Consolidated Volume.
``Customer Total Consolidated Volume'' means the total national
volume cleared at The Options Clearing Corporation in the Customer
range in equity and ETF options in that month. See Options 7,
Section 1(c). All Complex Order volume executed on the Exchange,
including volume executed by Affiliated Members, is included in the
volume calculation, except for volume executed as Crossing Orders
and Responses to Crossing Orders. Affiliated Entities may aggregate
their Complex Order volume for purposes of calculating Priority
Customer Rebates. An ``Appointed OFP'' would receive the rebate
associated with the qualifying volume tier based on aggregated
volume. See Options 7, Section 4, note 16. As set forth in Options
7, Section 1(c), an Appointed OFP is an Order Flow Provider who has
been appointed by a Market Maker for purposes of qualifying as an
Affiliated Entity, and an Order Flow Provider is any Member, other
than a Market Maker, that submits orders, as agent or principal, to
the Exchange.
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Total affiliated member or affiliated
entity complex order volume (excluding
crossing orders and responses to Rebate for Rebate for
Priority customer complex tier crossing orders) calculated as a select non-select
percentage of customer total symbols symbols
consolidated volume
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Tier 1........................................ 0.000%-0.200%......................... ($0.25) ($0.50)
Tier 2........................................ Above 0.200%-0.400%................... (0.30) (0.60)
Tier 3........................................ Above 0.400%-0.550%................... (0.40) (0.80)
Tier 4........................................ Above 0.550%-0.750%................... (0.45) (0.85)
[[Page 12662]]
Tier 5........................................ Above 0.750%-1.000%................... (0.46) (0.90)
Tier 6........................................ Above 1.000%-1.350%................... (0.48) (0.95)
Tier 7........................................ Above 1.350%-1.750%................... (0.54) (1.00)
Tier 8........................................ Above 1.750%-2.25%.................... (0.56) (1.10)
Tier 9........................................ Above 2.25%-4.500%.................... (0.58) (1.12)
Tier 10....................................... Above 4.500%.......................... (0.59) (1.15)
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The above rebates are provided per contract, per leg, if the order
trades with Non-Priority Customer \9\ orders in the complex order book.
This rebate will be reduced by $0.20 per contract in Select Symbols
where the largest leg of the Complex Order is under fifty (50)
contracts and trades with quotes and orders on the regular order book.
No Priority Customer Complex Order rebates will be provided in Select
Symbols if any leg of the order that trades with interest on the
regular order book is fifty (50) contracts or more. No Priority
Customer Complex Order rebates will be provided in Non-Select Symbols
if any leg of the order trades with interest on the regular order book,
irrespective of order size.
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\9\ ``Non-Priority Customers'' include Market Makers, Non-Nasdaq
ISE Market Makers, Firm Proprietary/Broker-Dealers, and Professional
Customers. See Options 7, Section 1(c).
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The Exchange now proposes to modify the volume thresholds to
qualify for the Tier 5 and Tier 6 rebates as follows: the threshold
limits to qualify for the Tier 5 rebate will be above 0.750% to 0.900%,
instead of above 0.750% to 1.000%; and the threshold limits to qualify
for the Tier 6 rebate will be above 0.900% to 1.350%, instead of above
1.000% to 1.350%. The Exchange also proposes to modify the amount of
the Priority Customer complex rebate for Tiers 6, 8, 9, and 10, as
follows: the Tier 6 rebate for Select Symbols will be $0.53, instead of
$0.48, and for Non-Select Symbols it will be $0.99, instead of $0.95;
the Tier 8 rebate for Select Symbols will be $0.57, instead of $0.56,
and for Non-Select Symbols it will be $1.11, instead of $1.10; the Tier
9 rebate for Select Symbols will be $0.59, instead of $0.58, and for
Non-Select Symbols it will be $1.13, instead of $1.12; and the Tier 10
rebate for Select Symbols will be $0.60, instead of $0.59, and for Non-
Select Symbols it will be $1.16, instead of $1.15.
Therefore, the amended Priority Customer complex rebate schedule
will be as follows:
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Total affiliated member or affiliated
entity complex order volume (excluding
crossing orders and responses to Rebate for Rebate for
Priority customer complex tier crossing orders) calculated as a select Non-select
percentage of customer total symbols symbols
consolidated volume
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Tier 1........................................ 0.000%-0.200%......................... ($0.25) ($0.50)
Tier 2........................................ Above 0.200%-0.400%................... (0.30) (0.60)
Tier 3........................................ Above 0.400%-0.550%................... (0.40) (0.80)
Tier 4........................................ Above 0.550%-0.750%................... (0.45) (0.85)
Tier 5........................................ Above 0.750%-0.900%................... (0.46) (0.90)
Tier 6........................................ Above 0.900%-1.350%................... (0.53) (0.99)
Tier 7........................................ Above 1.350%-1.750%................... (0.54) (1.00)
Tier 8........................................ Above 1.750%-2.25%.................... (0.57) (1.11)
Tier 9........................................ Above 2.25%-4.500%.................... (0.59) (1.13)
Tier 10....................................... Above 4.500%.......................... (0.60) (1.16)
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The Exchange believes that these changes to its Pricing Schedule
will help drive additional order flow to the Exchange, which will
benefit all market participants by providing them the opportunity to
interact with such increased order flow.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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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.'' \12\
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\12\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005).
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Likewise, in NetCoalition v. Securities and Exchange Commission
\13\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of
a market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\14\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \15\
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\13\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\14\ See NetCoalition, at 534-535.
\15\ Id. at 537.
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Further, ``[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, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution';
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[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'. . . .''
\16\ Although the court and the SEC were discussing the cash equities
markets, the Exchange believes that these views apply with equal force
to the options markets.
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\16\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (Dec. 2, 2008), 73 FR 74770, 74782-83 (Dec. 9, 2008) (File No.
SR-NYSEArca-2006-21)).
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The proposed amended schedule of Priority Customer complex rebates
is equitable and not unfairly discriminatory because the Exchange would
uniformly apply the new rebates to any member or member organization
that meets the criteria for these rebates. The proposed amended
schedule of Priority Customer complex rebates is also reasonable, as
well as equitable and not unfairly discriminatory, because it is
intended to attract more Priority Customer order flow to the Exchange.
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 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.
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange believes its proposal remains
competitive with other options markets and will offer market
participants with another choice of where to transact options. 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.
Intra-Market Competition
The Exchange's proposed amendments to the schedule of Priority
Customer complex rebates will not impose an undue burden on intra-
market competition that is not necessary or appropriate in furtherance
of the purposes of the Act, because the Exchange will uniformly apply
the new schedule of complex rebates to all Priority Customers. The
proposed amended schedule of Priority Customer complex rebates will
also not impose an undue burden on intra-market competition that is not
necessary or appropriate in furtherance of the purposes of the Act,
because it is intended to attract more Priority Customer order flow to
the Exchange. 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 other market participants
who may interact with this order flow.
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#255750494008464a4848404b5156655640460b424a53"><span class="__cf_email__" data-cfemail="f381869f96de909c9e9e969d8780b3809690dd949c85">[email protected]</span></a>. Please include
file number SR-ISE-2026-10 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-2026-10. 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 (<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-2026-10 and should be submitted on
or before April 6, 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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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-05015 Filed 3-13-26; 8:45 am]
BILLING CODE 8011-01-P
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