# Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend FLEX Order Fees
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.
[^1] 15 U.S.C. 78s(b)(1).
[^2] 17 CFR 240.19b-4.
**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]
[^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.
The text of the proposed rule change is available on the Exchange's website at *https://listingcenter.nasdaq.com/rulebook/ise/rulefilings,* 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]
[^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.
**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]
[^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).
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.
[^13] 15 U.S.C. 78f(b).
[^14] 15 U.S.C. 78f(b)(4) and (5).
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, 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]
[^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)).
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]
[^16] Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (“Regulation NMS Adopting Release”).
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.
[^17] 15 U.S.C. 78s(b)(3)(A)(ii).
**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-2025-39 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-2025-39. 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 post all comments on the Commission's internet website ( *https://www.sec.gov/rules/sro.shtml* ). 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]
[^18] 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,
Assistant Secretary.