[Federal Register Volume 77, Number 194 (Friday, October 5, 2012)]
[Notices]
[Pages 61036-61037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-24577]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67956; File No. SR-ISE-2012-78]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Amend the Exchange's Schedule of Fees
October 1, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 25, 2012, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission the proposed rule change, as described in Items I,
II, and III below, which items have been prepared by the self-
regulatory organization. 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 the
Substance of the Proposed Rule Change
The ISE is proposing to amend its Schedule of Fees to note that
responses to Non-Customer Flash Orders exposed to members are not
charged a fee nor provided a credit. 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
Under the intermarket linkage rules, the ISE cannot execute orders
at a price that is inferior to the national best bid or offer
(``NBBO''), nor can the Exchange place an order on its book that would
cause the ISE best bid or offer to lock or cross another exchange's
quote.\3\ How the Exchange handles orders in these circumstances
depends on whether they are Public Customer Orders (i.e., orders for
the account of a person that is not a broker-dealer) \4\ or Non-
Customer Orders (i.e., orders for the account of a broker-dealer).\5\
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\3\ See ISE Rules 1901 and 1902.
\4\ See ISE Rule 100(a)(39).
\5\ See ISE Rule 100(a)(28).
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Currently, when ISE is not at the NBBO, Public Customer Order are
exposed to all ISE members to give them an opportunity to match the
NBBO \6\ (``Flash Orders \7\'') before a Primary Market Maker (``PMM'')
sends the order to another exchange for execution. The Exchange
recently amended its rules to expose Non-Customer Orders in such
circumstance before rejecting them, similar to the process used to
expose Public Customer Orders before those orders are sent for
execution pursuant to intermarket linkage rules.\8\
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\6\ See Securities Exchange Act Release Nos. 57812 (May 12,
2008), 73 FR 28846 (May 19, 2008) (SR-ISE-2008-50); 58038 (June 26,
2008), 73 FR 38261 (June July 3, 2008) (SR-ISE-2008-50).
\7\ The term Flash Order is currently defined in the Preface of
the Exchange's Schedule of Fees as a Priority or Professional
Customer order that is exposed at the National Best Bid or Offer by
the Exchange to all members for execution, as provided under
Supplementary Material .02 to ISE Rule 803.
\8\ See Securities Exchange Act Release No. 67606 (August 7,
2012), 77 FR 48180 (August 13, 2012) (SR-ISE-2012-69). The Exchange
anticipates implementing this functionality in October 2012.
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For Public Customer Flash Orders, the Exchange currently charges a
regular execution fee for orders that are flashed in Non-Select Symbols
and a taker fee for orders that are flashed in all other symbols.\9\
The Exchange also currently provides a credit for responses that trade
against a flashed order.\10\
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\9\ See ISE Schedule of Fees, Section I, Regular Order Fees and
Rebates.
\10\ See ISE Schedule of Fees, Section G, Credit for Responses
to Flash Orders.
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For Non-Customer Flash Orders, the Exchange will also charge a
regular execution fee or a taker fee, as applicable, for the order that
is flashed to Exchange Members. However, for responses that trade
against Non-Customer Flash Orders, the Exchange will not provide a
credit nor charge an
[[Page 61037]]
execution fee. The purpose of this proposed rule change is to adopt
rule text on the Exchange's Schedule of Fees to note that responses to
Non-Customer Flash Orders will not be charged a fee or provided a
credit.
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 ``Exchange Act'') \11\ in general, and furthers the
objectives of Section 6(b)(4) of the Act \12\ 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
Exchange believes that the proposed rule change which seeks to adopt
clarifying text regarding the application of fees and credits for
responses to certain flashed orders is both reasonable and equitable
because members would benefit from clear guidance provided on the
Exchange's fee schedule. Further, the Exchange does not believe it
needs to provide an incentive to attract Non-Customer orders to the
Exchange and therefore, has determined not to provide a credit for
responses to Non-Customer Flash Orders. The Exchange provides a credit
for responses to Customer Flash Orders as an incentive to attract
Customer orders to the Exchange. The Exchange believes the proposed
rule change is also reasonable because it makes clarifying changes to
the Preface of the Schedule of Fees by amending the definition of Flash
Orders to also include all orders, and to Section G of the Schedule of
Fees thereby providing greater transparency to the Exchange's fees and
rebates.
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\11\ 15 U.S.C. 78f(b).
\12\ 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 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 Act.\13\ 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 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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\13\ 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 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-2012-78 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-2012-78. 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 on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of such filing also will be available for inspection and copying
at the principal offices of ISE. 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-2012-78, and should be submitted on or before
October 26, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-24577 Filed 10-4-12; 8:45 am]
BILLING CODE 8011-01-P