Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend FLEX Order Fees

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-104455; File No. SR-ISE-2025-39]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend FLEX Order Fees</SUBJECT> <DATE>December 18, 2025.</DATE> Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> 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. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <HD SOURCE="HD1">I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change</HD> The Exchange proposes to amend its Pricing Schedule at Options 7, Section 6, D., FLEX Order Fees. <SU>3</SU> <FTREF/> <FTNT> <SU>3</SU>  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. </FTNT> The text of the proposed rule change is available on the Exchange's website at <E T="03">https://listingcenter.nasdaq.com/rulebook/ise/rulefilings,</E> and at the principal office of the Exchange. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> 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. <HD SOURCE="HD2">A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> <HD SOURCE="HD3">1. Purpose</HD> ISE proposes to amend its Pricing Schedule at Options 7, Section 6, D., FLEX Order Fees, to decrease the FLEX  <SU>4</SU> <FTREF/> Order Fees for a FLEX Price Improvement Auction (“FLEX PIM”), <SU>5</SU> <FTREF/> or a FLEX Solicited Order Mechanism (“FLEX SOM”). <SU>6</SU> <FTREF/> <FTNT> <SU>4</SU>  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. </FTNT> <FTNT> <SU>5</SU>  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. </FTNT> <FTNT> <SU>6</SU>  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. </FTNT> <HD SOURCE="HD3">FLEX Order Fees</HD> 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, <SU>7</SU> <FTREF/> Non-Nasdaq ISE Market Makers (FarMM), <SU>8</SU> <FTREF/> Firm Proprietary  and Professional Customers. <SU>11</SU> <FTREF/> The Exchange assesses no Fees for FLEX Auctions to Priority Customers. <SU>12</SU> <FTREF/> <FTNT> <SU>7</SU>  The term “Market Makers” refers to “Competitive Market Makers” and “Primary Market Makers” collectively. <E T="03">See</E> Options 1, Section 1(a)(21). </FTNT> <FTNT> <SU>8</SU>  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. <E T="03">See</E> Options 7, Section 1(c). </FTNT> <FTNT> <SU>9</SU>  A “Firm Proprietary” order is an order submitted by a member for its own proprietary account. <E T="03">See</E> Options 7, Section 1(c). </FTNT> <FTNT> <SU>10</SU>  A “Broker-Dealer” order is an order submitted by a member for a broker-dealer account that is not its own proprietary account. <E T="03">See</E> Options 7, Section 1(c). </FTNT> <FTNT> <SU>11</SU>  A “Professional Customer” is a person or entity that is not a broker/dealer and is not a Priority Customer. <E T="03">See</E> Options 7, Section 1(c). </FTNT> <FTNT> <SU>12</SU>  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. <E T="03">See</E> Options 7, Section 1(c). </FTNT> 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. <HD SOURCE="HD3">2. Statutory Basis</HD> The Exchange believes that its proposal is consistent with Section 6(b) of the Act, <SU>13</SU> <FTREF/> in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act, <SU>14</SU> <FTREF/> 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. <FTNT> <SU>13</SU>  15 U.S.C. 78f(b). </FTNT> <FTNT> <SU>14</SU>  15 U.S.C. 78f(b)(4) and (5). </FTNT> 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 <E T="03">NetCoalition</E> v. <E T="03">Securities and Exchange Commission,</E> 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, 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'. . . .”  <SU>15</SU> <FTREF/> <FTNT> <SU>15</SU>   <E T="03">NetCoalition</E> v. <E T="03">SEC,</E> 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)). </FTNT> 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 impor ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 17k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━