[Federal Register Volume 76, Number 222 (Thursday, November 17, 2011)]
[Notices]
[Pages 71416-71417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29671]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65723; File No. SR-ISE-2011-73]
Self-Regulatory Organizations; International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to Fees for Certain Orders Executed on the
Exchange
November 10, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that, on October 28, 2011, the International Securities Exchange,
LLC (the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission (the ``Commission'') the proposed rule change as
described in Items I and II 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 ISE is proposing to amend transaction fees for certain orders
executed on the Exchange. The text of the proposed rule change is
available on the Exchange's Web site (http://www.ise.com), at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
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 self-regulatory organization
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 self-regulatory organization
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 currently assesses a per contract transaction charge
to market participants that add or remove liquidity from the Exchange
(``maker/taker fees'') in a number of options classes (the ``Select
Symbols'').\3\ For removing liquidity in the Select Symbols, the
Exchange currently charges a ``take'' fee of: (i) $0.26 per contract
for Market Maker \4\ and Market Maker Plus orders,\5\ and (ii) $0.28
per contract for Firm Proprietary and Customer (Professional) \6\
orders. The Exchange now proposes to increase the ``take'' fee for
Market Maker and Market Maker Plus orders in the Select Symbols from
$0.26 per contract to $0.28 per contract, and for Firm Proprietary and
Customer (Professional) orders in the Select Symbols from $0.28 per
contract to $0.29 per contract.
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\3\ Options classes subject to maker/taker fees are identified
by their ticker symbol on the Exchange's Schedule of Fees.
\4\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule
100(a)(25).
\5\ A Market Maker Plus is an ISE Market Maker who is on the
National Best Bid or National Best Offer 80% of the time for series
trading between $0.03 and $5.00 (for options whose underlying
stock's previous trading day's last sale price was less than or
equal to $100) and between $0.10 and $5.00 (for options whose
underlying stock's previous trading day's last sale price was
greater than $100) in premium in each of the front two expiration
months and 80% of the time for series trading between $0.03 and
$5.00 (for options whose underlying stock's previous trading day's
last sale price was less than or equal to $100) and between $0.10
and $5.00 (for options whose underlying stock's previous trading
day's last sale price was greater than $100) in premium across all
expiration months in order to receive the rebate. The Exchange
determines whether a Market Maker qualifies as a Market Maker Plus
at the end of each month by looking back at each Market Maker's
quoting statistics during that month. If at the end of the month, a
Market Maker meets the Exchange's stated criteria, the Exchange
rebates $0.10 per contract for transactions executed by that Market
Maker during that month. The Exchange provides Market Makers a
report on a daily basis with quoting statistics so that Market
Makers can determine whether or not they are meeting the Exchange's
stated criteria.
\6\ A Customer (Professional) is a person who is not a broker/
dealer and is not a Priority Customer.
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The Exchange has designated this proposal to be operative on
November 1, 2011.
2. Statutory Basis
The Exchange believes that its proposal to amend its Schedule of
Fees is consistent with Section 6(b) of the Securities and Exchange Act
of 1934 (the ``Act'') \7\ in general, and furthers the objectives of
Section 6(b)(4) of the Act \8\ in particular, in that it is an
equitable allocation of reasonable dues, fees and other charges among
Exchange members and other persons using its facilities. The impact of
the proposal upon the net fees paid by a particular market participant
will depend on a number of variables, most important of which will be
its propensity to add or remove liquidity in options overlying the
Select Symbols.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposal to assess a $0.28 per
contract ``take'' fee for Market Maker and Market Maker Plus orders in
the Select Symbols is reasonable and equitably allocated because the
fee is within the range of fees assessed by other exchanges employing
similar pricing schemes. For example, NASDAQ OMX PHLX, Inc. (``PHLX'')
currently charges Specialists $0.33 per contract for removing liquidity
in symbols that are subject to that exchange's maker/taker fees.\9\
Further, the proposed increase will bring this fee closer to the fee
the Exchange currently charges to other market participants that employ
a similar trading strategy. The Exchange also notes that with this
proposed rule change, the fee charged to Market Maker and Market Maker
Plus orders will remain lower than the fee currently charged by the
Exchange to certain other market participants.
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\9\ See PHLX Fee Schedule at http://www.nasdaqtrader.com/content/marketregulation/membership/phlx/feesched.pdf.
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The Exchange also believes that its proposal to assess a $0.29 per
contract ``take'' fee for Firm Proprietary and Customer (Professional)
orders in the Select Symbols is reasonable and equitably allocated
because the fee is also within the range of fees assessed by other
exchanges employing similar pricing schemes. By comparison, the
proposed fees assessed to Firm Proprietary and Customer (Professional)
orders are lower than the rates assessed by PHLX for similar orders.
PHLX currently charges a ``take'' fee of $0.45 for Firm and Broker-
Dealer orders and $0.40 for Professional orders in its regular order
book.\10\
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\10\ Id.
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The Exchange believes that the price differentiation between the
various market participants is justified because Market Makers have
obligations to the market that the other market participants do not.
The Exchange believes that it is equitable to assess a higher fee to
market participants that do not have the quoting requirements that
Exchange Market Makers do. Moreover, the Exchange believes that the
proposed fees are fair, equitable and not unfairly discriminatory
because the proposed fees are consistent with price differentiation
that exists today at other options exchanges. Additionally, the
Exchange believes it remains an attractive venue for market
participants to direct their order flow in the Select Symbols as its
fees are competitive with
[[Page 71417]]
those charged by other exchanges for similar trading strategies. The
Exchange operates in a highly competitive market in which market
participants can readily direct order flow to another exchange if they
deem fee levels at a particular exchange to be excessive. For the
reasons noted above, the Exchange believes that the proposed fees are
fair, equitable and not unfairly discriminatory.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Exchange Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
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 Exchange Act.\11\ At any time within 60 days of
the filing of such 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 Exchange Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 Exchange Act. Comments may be submitted
by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-ISE-2011-73 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2011-73. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2011-73 and should be
submitted on or before December 8, 2011.
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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-29671 Filed 11-16-11; 8:45 am]
BILLING CODE 8011-01-P