The International Securities Exchange, LLC (ISE) filed a proposed rule change to (i) give certain non-broker-dealer orders, identified as “professional orders,” the priority given broker-dealer orders and market maker quotes rather than the priority currently given all public customer orders, and (ii) charge the same transaction fees for professional orders as charged for the orders of broker-dealers and market makers. The Securities and Exchange Commission has approved the proposed rule, as modified by Amendments Nos. 1 and 2.
The ISE proposed to create two new order types: Priority Customer Orders and Professional Orders. Priority Customer Orders would be orders for the account of a Priority Customer, which would be defined as a person or entity that is not a broker-dealer in securities and that does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). Professional Orders would be defined as orders for the account of a person or entity that is not a Priority Customer, and would include proprietary orders of ISE members and non-member broker-dealers. Priority Customer Orders would have priority over Professional Orders at the same price. Thus, Public Customers who now have priority over broker-dealers and market makers at the same price would be on parity with market markers and broker-dealers at the same price, if those Public Customers placed more than 390 orders in listed options per day on average during a calendar month. These Professional Orders also would be assessed the same fees that ISE charges for broker-dealer transactions.