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Options 11 Minor Rule Plan Violations
Section 1. Imposition of Fines for Minor Rule Violations

(a) General. In lieu of commencing a disciplinary proceeding, the Exchange may, subject to the requirements set forth herein, impose a fine, not to exceed $5,000, on any Member, or person associated with or employed by a Member, with respect to any Rule violation listed in section (b) of this Rule. Any fine imposed pursuant to this Rule that (i) does not exceed $2,500 and (ii) is not contested, shall be reported on a periodic basis, except as may otherwise be required by Rule 19d-1 under the Exchange Act or by any other regulatory authority. The Exchange is not required to impose a fine pursuant to this Rule with respect to the violation of any Rule included herein, and the Exchange may, whenever it determines that any violation is not minor in nature, proceed under the formal disciplinary process set forth in the Rule 9000 Series of the Exchange's Rules, rather than under this Rule.

(b) Violations Subject to Fines. The following is a list of the rule violations subject to, and the applicable sanctions that may be imposed by the Exchange pursuant to Rule 9216:

(1) Position Limits (Options 9, Section 13)

 

 

Number of Cumulative Violations Within Any Twenty-four Month Rolling Period *

Sanction (Imposed on Exchange Members or violations occurring in all other accounts)

First Offense

$500

Second Offense

$1,000

Third Offense

$2,500

Fourth and Each Subsequent

 

Offense

$5,000

* A violation that consists of (i) a 1 trade date overage, (ii) a consecutive string of trade date overage violations where the position does not change or where a steady reduction in the overage occurs, or (iii) a consecutive string of trade date overage violations resulting from other mitigating circumstances, may be deemed to constitute one offense, provided that the violations are inadvertent.

(2) Focus Reports (Options 6E, Section 4). Each Member shall file with the Exchange a report of financial condition on SEC Form X-17A-5 as required by Rule 17a-10 under the Exchange Act. Any Member who fails to file in a timely manner such report of financial condition pursuant to Exchange Act Rule 17a-10 shall be subject to the following fines:

 

 

Calendar Days Late

Sanction

1 to 30

$200

31 to 60

$400

61 to 90

$800

Over 90

Formal Disciplinary Action

(3) Requests for Trade Data (Options 6E, Section 5). Any Member who fails to respond within ten (10) business days to a request by the Exchange for submission of trade data shall be subject to the following fines:

 

 

Business Days Late

Sanction

1 to 9

$200

10 to 15

$500

16 to 30

$1,000

Over 30

Formal Disciplinary Action

Any Member who violates this Rule more than one (1) time in any calendar year shall be subject to the following fines, which fines shall be imposed in addition to any sanction imposed pursuant to the schedule above:

 

 

Number of Violations Within One Calendar Year

Sanction

2nd Offense

$500

3rd Offense

$1,000

4th Offense

$2,500

Subsequent Offenses

Formal Disciplinary Action

(4) Order Entry (Options 3, Section 22). Violations of Options 3, Section 22(d) and (e) regarding limitations on orders entered into the System by Electronic Access Members will be subject to the fines listed below.

 

 

Number of Violations Within One Calendar Year

Sanction

1 to 5

Letter of Caution

6 to 10

$500

11 to 15

$1000

16 to 20

$2000

Over 20

Formal Disciplinary Action

(5)(a) Pre-Opening Quotation Parameters (Options 2, Section 4). Violations of Options 2, Section 4(b)(4) regarding pre-opening quote spread parameters for Market Maker quotations, as well as violations of Options 2, Section 6(b)(1)(i) regarding orders entered by Market Makers, shall be subject to the fines listed below.

 

 

Number of Violations Within a Twenty-Four Month Rolling Period *

Sanction

First Offense

Letter of Caution

Second Offense

$1,000

Third Offense

$2,500

Fourth Offense

$5,000

Fifth Offense

Formal Disciplinary Action

* Violations occurring during a calendar month are aggregated and sanctioned as a single offense.

(b) Post-Opening Quotation Parameters (Options 2, Section 4). Violations of Options 2, Section 4(b)(4) regarding post-opening quote spread parameters for Market Maker quotations, as well as violations of Options 2, Section 6(b)(1)(i) regarding orders entered by Market Makers, shall be subject to the fines listed below. For purposes of this Rule, the spread parameters in Options 2, Section 4(b)(4) will not be violated upon a change in a bid (offer) if a Market Maker takes immediate action to adjust its offer (bid) to comply with the maximum allowable spread. Except in unusual market conditions, immediate shall mean within ten (10) seconds of a change in the Market Makers bid or offer.

 

 

Number of Violations Within a Twenty-Four Month Rolling Period *

Sanction

First Offense

Letter of Caution

Second Offense

$1,000

Third Offense

$2,500

Fourth Offense

$5,000

Fifth Offense

Formal Disciplinary Action

* Violations occurring during a calendar month are aggregated and sanctioned as a single offense.

(6) Execution of Orders in Appointed Options (Options 2, Section 6). Violations of Options 2, Section 6(b)(2) and (3) requiring Market Makers to execute in appointed options classes a minimum percentage of the total number of contracts executed during a quarter shall be subject to the following sanctions:

 

 

Number of Violations Within Rolling Twelve Month Period

Sanction

1st Offense

Letter of Caution

2nd Offense

$500

3rd Offense

$1,000

4th Offense

$2,500

Subsequent Offenses

Formal Disciplinary Action

(7) Mandatory Systems Testing (Options 9, Section 20). Failure to conduct or participate in the testing of computer systems, or failure to provide required reports or maintain required documentation, shall be subject to the fines listed below.

 

 

Violations Within One Calendar Year

Sanction

First Violation

$250

Second Violation

$500

Third Violation

$1000

Fourth Violation

$2000

Fifth Violation or more

Formal Disciplinary Action

(8) Exercise of Options Contracts (Options 6B, Section 1). Any Member who fails to submit to the Exchange in a timely manner pursuant to Options 6B, Section 1or a Options Regulatory Alert issued pursuant to Options 6B, Section 1, "Advice Cancel", or exercise instruction relating to the exercise or non-exercise of a noncash-settled equity option shall be subject to the following fines:

 

 

 

Number of Cumulative Violations Within Any Twenty-Four Month Rolling Period

Individual

Member Organization

1st Offense

$500

$1,000

2nd Offense

$1,000

$2,500

Subsequent Offenses

$2,500

$5,000

(9) Failure to Accurately Report Position and Account Information (Options 9, Section 16)

A fine shall be imposed upon a Member who violates Options 9, Section 16. Such fines shall be imposed on the basis of the following schedule:

 

 

Number of Violations Within Any Twenty-four Month Rolling Period*

Sanction (Imposed on Exchange Members or violations occurring in all other accounts)

First Offense

$500

Second Offense

$1,000

Third Offense

$2,500

Fourth and Each Subsequent Offense

$5,000

(10) Intra-day Quotes (Options 2, Section 5(e)). A Market Maker must enter intra-day quotations for the options classes to which it is appointed. Failure to comply shall be subject to the fines listed below.

 

 

Number of Violations (PMMs and/or CMMs) Within a Twenty-four Month Rolling Period *

Sanction

First Offense

Letter of Caution

Second Offense

$1,000

Third Offense

$2,500

Fourth Offense

$5,000

Fifth Offense

Formal Disciplinary Action

* Violations occurring during a calendar month are aggregated and sanctioned as a single offense.

(11) Failure to comply with the Consolidated Audit Trail Compliance Rule requirements. For failures to comply with the Consolidated Audit Trail Compliance Rule requirements under General 7, the Exchange may impose a minor rule violation fine of up to $2,500.

[Adopted June 6, 2019 (SR-ISE-2019-17); amended June 10, 2020 (SR-ISE-2020-22), operative July 10, 2020; amended Aug. 14, 2020 (SR-ISE-2020-31).]

 
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