[Federal Register Volume 77, Number 196 (Wednesday, October 10, 2012)]
[Notices]
[Pages 61645-61647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-24886]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67973; File No. SR-ISE-2012-73]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Make Non-Substantive Clarifications to the Exchange's
Schedule of Fees
October 3, 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 ``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 Substance
of the Proposed Rule Change
The ISE is proposing to make non-substantive clarifications 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.
[[Page 61646]]
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
On July 25 of this year, the Exchange submitted a rule filing to
relocate various fees within the Exchange's Schedule of Fees (the ``old
fee schedule'') to group fees so that the Exchange's fees would be
easily located within the fee schedule (the ``re-formatted fee
schedule'').\3\ The Exchange did not propose to make any substantive
changes in that filing, and did not change the manner in which it
assessed the fees as a result of the adoption of the re-formatted fee
schedule. Nevertheless, some uncertainty as to the application of
certain fees and rebates was introduced by the re-formatted fee
schedule. The purpose of this proposed rule change is to make two
clarifications on the re-formatted fee schedule. The Exchange is not
proposing any substantive changes to its fees.
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\3\ See Exchange Act Release No. 67545 (July 31, 2012), 77 FR
46776 (August 6, 2012) (SR-ISE-2012-65).
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First, on the old fee schedule, there was a footnote to the
crossing order execution fees for Select Symbols \4\ stating that a
rebate of $0.15 per contract for Facilitation and Solicited Orders, and
$0.25 per contract for PIM orders, applied to contracts that do not
trade with their contra order. This footnote indicated that the rebate
would be applied in lieu of the execution fee. On the re-formatted fee
schedule, separate columns were added to the table of fees for Select
Symbols to indicate these rebates. As a result, it might not be clear
that the execution fee for crossing orders is not applied to contracts
that receive the rebate. Accordingly, the Exchange proposes to add the
following text in the footnotes to each rebate: ``The fee for Crossing
Orders is not applied to any contracts for which a rebate is
provided.''
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\4\ ``Select Symbols'' are options overlying C, BAC, SPY, IWM,
XLF, GE, JPM, INTC, RIMM, T, VZ, UNG, FCX, CSCO, DIA, X, AA, AIG,
AXP, BBY, CAT, CHK, DNDN, EEM, EFA, EWZ, F, FAS, FAZ, FSLR, GDX,
GLD, IYR, MGM, MS, MSFT, MU, PBR, PG, POT, RIG, SLV, XLE, XOM, ABX,
BMY, BP, DELL, FXI, HAL, IBM, KO, LVS, MCD, MO, MON, NOK, ORCL, PFE,
QCOM, SLB, SNDK, TBT, USO, V, VALE, WFT, XLI, XRT, YHOO, AKAM, AMD,
APC, BA, BRCM, GG, HPQ, LCC, NEM, NFLX, NVDA, QID, TEVA, TLT, UAL,
WFC, XLB, SBUX, VVUS, MSI, AAPL, BIDU, and VXX.
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Second, on the old fee schedule, an execution fee of $0.20 per
contract was specified for Non-Select Symbols \5\ for ``Customer
(entered in response to special order broadcast).'' This fee was
adopted in January 2007 and has always been applied to ``response
messages'' entered with respect to a particular broadcast message, but
not to orders that are received on the limit order book after an
auction commences.\6\ The Exchange later adopted a similar response fee
for Regular Orders in Select Symbols,\7\ for complex orders in Select
Symbols \8\ and then for Regular Orders in Special Non-Select Penny
Pilot Symbols \9\ of $0.40 per contract, and more recently, adopted a
fee for complex orders in Non-Penny Pilot Symbols \10\ of $0.70 per
contract ($0.75 per contract for Non-ISE Market Makers (FarMM)) for
responses to special orders,\11\ but specified that a ``response'' is
any contra-side interest submitted after the commencement of an
auction. Thus, the fees for Regular Orders in Select Symbols and
Special Non-Select Penny Pilot Symbols and all complex orders are
applied to both response messages and to orders received on the limit
order book after an auction commences, whereas the fees for Regular
Orders in Non-Select Symbols are applied to response messages.
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\5\ ``Non-Select Symbols'' are options overlying all symbols
excluding Select Symbols and Special Non-Select Penny Pilot Symbols.
\6\ See Exchange Act Release No. 55060 (Jan. 8, 2007), 72 FR
2050 (Jan. 17, 2007) (SR-ISE-2006-72).
\7\ See Exchange Act Release No. 63283 (Nov. 9, 2010), 75 FR
70059 (Nov. 16, 2010) (SR-ISE-2010-106).
\8\ See Exchange Act Release No. 65550 (October 13, 2011), 76 FR
64984 (October 19, 2012 [sic]) (SR-ISE-2011-65). In this filing, the
Exchange also adopted a response fee for complex orders for symbols
that are in the Penny Pilot Program.
\9\ See Exchange Act Release No. 67201 (June 14, 2012), 77 FR
37082 (June 20, 2012) (SR-ISE-2012-49). ``Special Non-Select Penny
Pilot Symbols'' are options overlying ACI, AGNC, AMLN, AMZN, ANR,
APA, ARNA, ATPG, AUY, BAX, BTU, CLF, COP, CRM, CVX, DAL, DD, DE,
DIS, DOW, EBAY, FDX, GLW, GM, GMCR, GS, HD, HGSI, JCP, JOY, KBH,
KGC, LULU, MA, MBI, MCP, MDT, MMR, MOS, MRK, NKE, PEP, QQQ, S, SD,
SDS, SHLD, SINA, SIRI, SLW, SSO, TZA, UNP, UPS, USB, UTX, VLO, WAG,
WDC, WLT, WYNN, XHB, XLK, XLU and ZNGA.
\10\ See Exchange Act Release No. 66084 (January 3, 2012), 77 FR
1103 (January 9, 2012) (SR-ISE-2011-84). This fee was later
increased to $0.75 per contract ($0.78 per contract for Non-ISE
Market Makers). See Exchange Act Release No. 66962 (May 10, 2012),
77 FR 28917 (May 16, 2012) (SR-ISE-2012-35).
\11\ The term ``special order'' was changed to ``crossing
order'' in the re-formatted fee schedule.
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When the fee schedule was re-formatted, a single definition of
``Response to Crossing Orders'' that reflects the definition for
Regular Orders in Select Symbols and Special Non-Select Penny Pilot
Symbols and all complex orders was added to the Preface of the fee
schedule. Because the defined terms in the Preface apply to all
symbols, including Non-Select Symbols, it appears as though regular
customer orders received after the commencement of an auction in Non-
Select Symbols are now being charged the $0.20 response fee when that
is not the case. Accordingly, the Exchange proposes to amend the
Preface of the fee schedule to clearly indicate that the current
definition of ``Responses to Crossing Order'' is applicable to Regular
Orders in Select Symbols and Special Non-Select Penny Pilot Symbols and
all complex orders and to add the appropriate definition for Non-Select
Symbols as follows:
[rtarr8] ``Responses to Crossing Order'' (other than Regular Orders
in Non-Select Symbols) is any contra-side interest submitted after the
commencement of an auction in the Exchange's Facilitation Mechanism,
Solicited Order Mechanism, Block Order Mechanism or PIM.
[rtarr8] ``Responses to Crossing Order'' (for Regular Orders in
Non-Select Symbols) is any response message entered with respect to a
specific auction in the Exchange's Facilitation Mechanism, Solicited
Order Mechanism, Block Order Mechanism or PIM.
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'') \12\ in general, and furthers the
objectives of Section 6(b)(4) of the Act \13\ 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 its proposal to clarify the application of
certain fees is both reasonable and equitable because members would
benefit from clear guidance in the fee schedule that describes the
manner in which the Exchange would assess fees. The
[[Page 61647]]
Exchange believes the proposed rule change is also reasonable because
it makes clarifying changes to the Preface and to footnotes and thereby
provides greater transparency to the Exchange's Schedule of Fees.
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\12\ 15 U.S.C. 78f(b).
\13\ 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.\14\ 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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\14\ 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-2012-73 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-2012-73. 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
10:00 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-2012-73 and should be
submitted on or before October 31, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-24886 Filed 10-9-12; 8:45 am]
BILLING CODE 8011-01-P