[Federal Register Volume 77, Number 102 (Friday, May 25, 2012)]
[Notices]
[Pages 31411-31413]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12722]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67035; File No. SR-ISE-2012-37]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change to Terminate a Pilot Program Related to an Incentive Plan for
Certain Foreign Currency Options Traded on the Exchange and To Make a
Technical Change to the Schedule of Fees
May 21, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is
hereby given that on May 8, 2012, the International Securities
Exchange, LLC (the ``Exchange'' or the ``ISE'') filed with the
Securities and Exchange Commission (``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 proposes to terminate a pilot program related to an
incentive plan for certain Foreign Currency (``FX'') options traded on
the Exchange and to make a technical change to its Schedule of Fees.
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 proposes to terminate a pilot program related to an
incentive plan for certain FX options traded on the Exchange and to
make a technical change to its Schedule of Fees. First, the Exchange
currently trades a number of FX options, including options on the New
Zealand dollar (``NZD''), the Mexican peso (``PZO''), the Swedish krona
(``SKA''), the Brazilian real (``BRB''), the Australian dollar
(``AUX''), the British pound (``BPX''), the Canadian dollar (``CDD''),
the euro (``EUI''), the Japanese yen (``YUK'') and the Swiss franc
(``SFC'').\3\ On August 3, 2009, the Exchange adopted an incentive plan
applicable to market makers in NZD, PZO and SKA,\4\ and on January 19,
2010, added BRB to the
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incentive plan,\5\ and on March 1, 2011, added AUX, BPX, CDD, EUI, YUK
and SFC to the incentive plan.\6\
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\3\ The Commission previously approved the trading of options on
NZD, PZO, SKA, BRB, AUX, BPX, CDD, EUI, YUK and SFC. See Securities
Exchange Act Release No. 55575 (April 3, 2007), 72 FR 17963 (April
10, 2007) (SR-ISE-2006-59).
\4\ See Securities Exchange Act Release No. 60536 (August 19,
2009), 74 FR 43204 (August 26, 2009) (SR-ISE-2009-59).
\5\ See Securities Exchange Act Release No. 61459 (February 1,
2010), 75 FR 6248 (February 8, 2010) (SR-ISE-2010-07).
\6\ See Securities Exchange Act Release No. 64012 (March 2,
2011), 76 FR 12778 (March 8, 2011) (SR-ISE-2011-11).
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The Exchange adopted the incentive plan to promote trading in NZD,
PZO SKA, BRB, AUX, BPX, CDD, EUI, YUK and SFC (``Incentive Plan
Symbols''). Pursuant to the incentive plan, the Exchange waives the
transaction fees for the Early Adopter \7\ FXPMM \8\ and all Early
Adopter FXCMMs \9\ that make a market in the Incentive Plan Symbols for
as long as the incentive plan is in effect. Further, pursuant to a
revenue sharing agreement entered into between an Early Adopter Market
Maker and ISE, the Exchange pays the Early Adopter FXPMM forty percent
(40%) of the transaction fees collected on any customer trade in the
Incentive Plan Symbols and pays up to ten (10) Early Adopter FXCMMs
twenty percent (20%) of the transaction fees collected for trades
between a customer and that FXCMM in the Incentive Plan Symbols.
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\7\ Participants in the incentive plan are known on the
Exchange's Schedule of Fees as Early Adopter Market Makers.
\8\ A FXPMM is a primary market maker selected by the Exchange
that trades and quotes in FX Options only. See ISE Rule 2213.
\9\ A FXCMM is a competitive market maker selected by the
Exchange that trades and quotes in FX Options only. See ISE Rule
2213.
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Market makers interested in the [sic] participating in the
incentive plan are required to enroll by a certain date. Since the
inception of the incentive plan, the Exchange has continuously extended
the date by which market makers may join the incentive plan,\10\ with
the most recent extension expiring on March 30, 2012.\11\ The Exchange
notes that the incentive plan has not achieved its intended objective
of attracting more market makers and therefore, the Exchange has
decided to no longer extend the date by which market makers may join
the incentive plan. With this proposed rule change, the Exchange is
essentially closing the window for market makers to join the incentive
plan. The Exchange notes that while market makers will no longer be
able to enroll in the incentive plan, those market makers that enrolled
in the incentive plan on or before March 30, 2012 will continue to
participate in the incentive plan. The Exchange proposes to reflect
this change on its Schedule of Fees by amending the text that reflects
the incentive plan.
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\10\ See Securities Exchange Act Release Nos. 60810 (October 9,
2009), 74 FR 53527 (October 19, 2009) (SR-ISE-2009-80), 61334
(January 12, 2010), 75 FR 2913 (January 19, 2010) (SR-ISE-2009-115),
61851 (April 6, 2010), 75 FR 18565 (April 12, 2010) (SR-ISE-2010-
27), 62503 (July 15, 2010), 75 FR 42812 (July 22, 2010) (SR-ISE-
2010-71), 36045 (October 5, 2010), 75 FR 62900 (October 13, 2010)
(SR-ISE-2010-100), 63639 (January 4, 2011), 76 FR 1488 (January 10,
2011) (SR-ISE-2010-121), 64202 (April 6, 2011), 76 FR 20431 (April
12, 2011) (SR-ISE-2011-16), 64861 (July 12, 2011), 76 FR 42145 (July
18, 2011) (SR-ISE-2011-38); and 65530 (October 11, 2011), 76 FR
64136 (October 17, 2011) (SR-ISE-2011-66).
\11\ See Securities Exchange Act Release No. 66103 (January 5,
2012), 77 FR 1757 (January 11, 2012) (SR-ISE-2011-85).
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Second, the Exchange recently filed a proposed rule change to amend
an existing fee cap program and a related service fee (``Fee Cap
Filing'').\12\ In the Fee Cap Filing, the Exchange deleted what was
previously footnote 2 on page 17 of the Schedule of Fees and renumbered
what was previously footnote 3 to be footnote 2. The previous footnote
3, which is now footnote 2, references a discount available to
subscribers of the Exchange's various market data products. In the Fee
Cap Filing, the Exchange failed to renumber footnote 3 in the body of
the Schedule of Fees as footnote 2. The Exchange proposes to make that
change with this filing.
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\12\ See Securities Exchange Act Release No. 66793 (April 12,
2012), 77 FR 23313 (April 18, 2012) (SR-ISE-2012-27).
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2. Statutory Basis
The Exchange believes that its proposal to clarify its Schedule of
Fees is consistent with Section 6(b) of the Securities and Exchange Act
of 1934 (the ``Exchange Act'') \13\ in general, and furthers the
objectives of Section 6(b)(4) of the Exchange Act \14\ 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. In particular, the Exchange believes that because the
incentive plan has not achieved its intended objective of attracting
more market makers, it is reasonable for ISE to no longer permit market
makers to enroll in the incentive plan. The Exchange believes the
proposed rule change is also reasonable because it corrects a
footnoting error and thereby provides greater transparency to the
Exchange's Schedule of Fees. The Exchange notes that the proposed rule
change is also equitably allocated and not unfairly discriminatory in
that it treats similarly situated market participants in the same
manner, i.e., all Exchange market makers are now excluded from
enrolling in the incentive plan.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4).
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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.\15\ 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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\15\ 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 rule-comments@sec.gov. Please
include File Number SR-ISE-2012-37 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-2012-37. This file
number should be included on the subject line if email is used. To help
the
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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 10:00 a.m. and
3:00 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-2012-37 and should be
submitted on or before June 15, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-12722 Filed 5-24-12; 8:45 am]
BILLING CODE 8011-01-P