Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Market Wide Risk Protection

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<title>Federal Register, Volume 91 Issue 194 (Thursday, October 8, 2026)</title>
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[Federal Register Volume 91, Number 194 (Thursday, October 8, 2026)]
[Notices]
[Pages 64428-64430]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20597]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106595; File No. SR-ISE-2026-52]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the Market 
Wide Risk Protection

October 5, 2026.
    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 September 25, 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 Options 3, Section 15(a)(1)(C) 
related to the Market Wide Risk Protection.
    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.

[[Page 64429]]

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 Exchange proposes to amend Options 3, Section 15(a)(1)(C) 
(Market Wide Risk Protection) to eliminate the existing cross-market 
functionality between ISE and its affiliate, Nasdaq GEMX, LLC 
(``GEMX'').
Background
    The Market Wide Risk Protection (``MWRP'') imposes mandatory 
activity-based risk protections that require Members to provide 
parameters for order entry and order execution rate protections. The 
Exchange's System maintains one or more counting programs for each 
Member that maintain rolling counts of orders entered and contracts 
traded on ISE. When a Member's designated thresholds are exceeded, the 
System automatically rejects subsequent incoming orders and, if the 
Member has so elected, cancels the Member's existing orders.
    Currently, Options 3, Section 15(a)(1)(C) permits Members to elect 
to have the Exchange maintain counting programs for orders entered and 
contracts traded either (i) on ISE only, or (ii) across both ISE and 
GEMX. Where a Member elects to apply the risk protection across both 
markets, a breach of the Member's threshold results in the System 
rejecting subsequent incoming orders, and optionally cancelling 
existing orders, on both ISE and GEMX.
    Of the Nasdaq affiliated options exchanges,\3\ only ISE and GEMX 
currently offer MWRP counting programs that may be applied on a cross-
market basis; the corresponding rules of MRX, Phlx, NTX Options, and 
NOM apply MWRP on a per-exchange basis only.
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    \3\ ISE has five affiliated options exchanges, GEMX; Nasdaq MRX, 
LLC (``MRX''); Nasdaq PHLX LLC (``Phlx''); Nasdaq Texas, LLC (``NTX 
Options''); and The Nasdaq Options Market LLC (``NOM'').
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Proposal
    The Exchange has determined to harmonize the MWRP functionality 
across the Nasdaq affiliated options exchanges. Because MWRP on MRX, 
Phlx, NTX Options, and NOM operates on a per-exchange basis only, 
harmonization requires removing the cross-market functionality 
currently available between ISE \4\ and GEMX.\5\ The Exchange 
accordingly proposes to amend Options 3, Section 15(a)(1)(C) to delete 
the references that presently permit Members to elect cross-market 
application of the MWRP counting programs, rejection of subsequent 
orders, and cancellation of existing orders. Nasdaq GEMX will file a 
companion rule change to make conforming amendments to its Options 3, 
Section 15(a)(1)(C).\6\
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    \4\ See Securities Exchange Act Release No. 77875 (May 20, 
2016), 81 FR 33561 (May 26, 2016) (SR-ISE-2016-08) (Order Approving 
Proposed Rule Change Related to Market Wide Risk Protection).
    \5\ See Securities Exchange Act Release No. 77881 (May 20, 
2016), 81 FR 33565 (May 26, 2016) (SR-ISEGemini-2016-03) (Order 
Approving Proposed Rule Change Related to Market Wide Risk 
Protection).
    \6\ See SR-GEMX-2026-35.
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    Following the proposed amendments, all Members will apply MWRP 
parameters on a per-exchange basis on ISE. GEMX separately offers a 
MWRP rule at GEMX Options 3, Section 15(a)(1)(C) on a per-exchange 
basis. Members will retain the ability to configure separate risk 
parameters for each Nasdaq affiliated options exchange on which they 
are authorized to trade.
Implementation
    The Exchange will announce the operative date of the proposed rule 
change in an Options Trader Alert. The Exchange will implement the 
change on or before Q2 2027.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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. Additionally, the Exchange 
believes the proposed rule change is consistent with the Section 
(6)(b)(5) \9\ requirement that the rules of an exchange not be designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that harmonizing the MWRP functionality 
across the Nasdaq affiliated options exchanges will remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system by promoting consistent, transparent, and predictable 
risk-management functionality for Members that access more than one 
Nasdaq affiliated options exchange. Today, Members that trade across 
the Nasdaq affiliated options exchanges must understand and administer 
two different MWRP models: (i) a per-exchange model on MRX, Phlx, NTX 
Options, and NOM, and (ii) a hybrid model on ISE and GEMX that permits, 
but does not require, cross-market election. The Exchange believes that 
this differential treatment is a source of operational complexity that 
does not correspond to any material difference in the underlying risk 
protection provided. Aligning ISE with the per-exchange model reduces 
the risk of Member confusion or inadvertent misconfiguration when 
establishing MWRP parameters across markets.
    The Exchange further believes that the proposed rule change will 
protect investors and the public interest by preserving the substantive 
risk protection provided by MWRP on ISE. All Members will remain 
subject to mandatory MWRP thresholds on ISE. Members will continue to 
have discretion to establish their own parameters, subject to Exchange-
established minimum and maximum time periods and default values, and 
will continue to be able to use multiple counting programs to separate 
risk protections for different groups established within the Member. 
The only substantive change is that a Member's parameters on ISE will 
apply to that Member's activity on ISE, and will no longer aggregate 
with the Member's activity on GEMX. Members that wish to apply risk 
protections to their activity on GEMX will continue to do so pursuant 
to GEMX Options 3, Section 15(a)(1)(C).
    Removing this election in the interest of harmonization with the 
four other Nasdaq affiliated options exchanges is likewise consistent 
with the Act. Cross-market risk aggregation on ISE and

[[Page 64430]]

GEMX is an available feature that Members elect (or decline) to use; 
withdrawing the election does not diminish the mandatory MWRP that 
applies to every ISE 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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intra-market competition because no Member will be 
disadvantaged relative to any other Member as a result of the proposed 
change. Further, Members that wish to obtain aggregated risk protection 
across multiple exchanges may continue to configure their own risk-
management systems to that effect.
    The Exchange does not believe that the proposed rule change will 
impose any burden on inter-market competition. Rather, removing the 
cross-market election will bring ISE into greater alignment with the 
risk-protection framework generally available in the U.S. listed 
options markets and will harmonize the Exchange's MWRP with that of the 
other Nasdaq affiliated options exchanges.

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 foregoing 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)(iii) of the Act \10\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
The Exchange has satisfied this requirement.
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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

    <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#e193948d84cc828e8c8c848f9592a1928482cf868e97"><span class="__cf_email__" data-cfemail="3a484f565f17595557575f544e497a495f59145d554c">[email&#160;protected]</span></a>. Please include 
file number SR-ISE-2026-52 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-2026-52. 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-2026-52 and should be submitted on 
or before October 29, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-20597 Filed 10-7-26; 8:45 am]
BILLING CODE 8011-01-P


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