[Federal Register Volume 77, Number 198 (Friday, October 12, 2012)]
[Notices]
[Pages 62280-62282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-25081]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67993; File No. SR-ISE-2012-80]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Regarding Fees for Singly Listed Options
October 5, 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 26, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The ISE proposes to amend 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.
[[Page 62281]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE proposes to increase the execution fee for Priority Customer
\3\ orders, from $0.18 per contract to $0.20 per contract, in certain
singly-listed products listed and traded on the Exchange (``Singly
Listed Symbols'').\4\ The Exchange also proposes to increase the fee
for Crossing Orders \5\ for Priority Customers in Singly Listed
Symbols, from $0.18 per contract to $0.20 per contract. With this
proposed fee change, the Exchange seeks to standardize the fees charged
to Priority Customer orders in Singly Listed Symbols with the fees the
Exchange currently charges Firm Proprietary and Professional Customer
orders that trade in these products. The execution fee and the fee for
Crossing Orders for both Firm Proprietary and Professional Customer
orders is currently $0.20 per contract in Singly Listed Symbols.
---------------------------------------------------------------------------
\3\ ISE rules distinguish between Priority Customers and
Professional Customer. A Priority Customer is a person or entity
that is not a broker/dealer in securities, and does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See ISE Rule
100(a)(37A). A Professional Customer is a person or entity that is
not a broker/dealer and is not a Priority Customer. See ISE Schedule
of Fees. A Professional Order is an order that is for the account of
a person or entity that is not a Priority Customer. See ISE Rule
100(a)(37C).
\4\ Singly Listed Symbols are identified by their ticker symbols
on the Exchange's Schedule of Fees.
\5\ A Crossing Order is an order executed in the Exchange's
various auction mechanisms, and also includes Qualified Contingent
Cross orders. See ISE Schedule of Fees.
---------------------------------------------------------------------------
While the Exchange currently does not charge a fee for Priority
Customer orders in Non-Select Symbols that are multiply-listed, the
Exchange believes it is appropriate to charge Priority Customers for
trading in Singly Listed Symbols to enable the Exchange, in part, to
recoup the costs associated with maintaining these products. The
Exchange notes that a number of its competitors currently charge a fee
to Priority Customer orders in singly-listed products traded on their
exchange. For example, NASDAQ OMX PHLX LLC (``PHLX'') charges Priority
Customers $0.35 per contract for trading in singly-listed options on
that exchange.\6\ The Chicago Board Options Exchange, Inc. (``CBOE'')
charges Priority Customers up to $0.44 per contract in certain index
options that are singly-listed on that exchange.\7\
---------------------------------------------------------------------------
\6\ See PHLX Fee Schedule, Section III, at http://www.nasdaqtrader.com/content/marketregulation/membership/phlx/feesched.pdf.
\7\ See CBOE Fees Schedule, at http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf.
---------------------------------------------------------------------------
The Exchange also proposes to amend the list of Singly Listed
Symbols on its Schedule of Fees in order to remove certain delisted
symbols from the list of Singly Listed Symbols. Singly Listed Symbols
are subject to the fees and rebates listed in Section I of the
Exchange's Schedule of Fees. The Exchange is proposing to remove the
following symbols from the list of Singly Listed Symbols, as that term
is defined in the Preface of the Schedule of Fees: DMA, FUM, HSX, OOG,
BYT, HVY, RUF, JLO, SIN, RND, HHO, PMP, POW, TNY, WMX, IXZ, UKX, and
NXTQ. The Exchange has delisted these products and therefore, these
products no longer trade on the Exchange and are no longer subject to
the fees and rebates listed in Section I of the Schedule of Fees.
Additionally, the Exchange had previously entered into a licensing
agreement with the owners of certain of the indexes and adopted a
surcharge to recoup the costs associated with licensing these
indexes.\8\ Since the Exchange no longer trades a number of the
licensed indexes, i.e., NXTQ, FUM, HSX, POW, TNY, WMX and UKX, the
Exchange proposes to remove the license surcharge associated with these
products from its Schedule of Fees.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release Nos. 51962 (July 1,
2005), 70 FR 40088 (July 12, 2005) (SR-ISE-2005-29); 53173 (January
24, 2006), 71 FR 5096 (January 31, 2006) (SR-ISE-2006-03); 53914
(June 7, 2006) [sic], 71 FR 33022 (June 7, 2006) (SR-ISE-2006-25);
54697 (November 2, 2006) (71 FR 65857 (November 9, 2006) (SR-ISE-
2006-61); 55407 (March 6, 2007), 72 FR 11411 (March 13, 2007) (SR-
ISE-2007-13); and 59171 (December 29, 2008), 74 FR 482 (January 6,
2009) (SR-ISE-2008-98).
---------------------------------------------------------------------------
The Exchange has designated this proposal to be operative on
October 1, 2012.
2. Basis
The Exchange believes that its proposal to amend its Schedule of
Fees is consistent with Section 6(b) of the Act \9\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \10\ in
particular, in that it is an equitable allocation of reasonable dues,
fees and other charges among Exchange members. The Exchange's proposal
to amend the fees for Singly Listed Symbols is reasonable because the
Exchange is seeking to recoup costs associated with the continued
listing and trading of these products.\11\ The Exchange also believes
the proposed fee change is equitable and not unfairly discriminatory
because the proposed fees will more closely align Priority Customer
fees with other market participant fees in these products. In addition,
the Exchange believes that the proposed fees are reasonable, equitable
and not unfairly discriminatory because the fees are consistent with
price differentiation that exists today at all option exchanges.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
\11\ The Exchange continues to incur costs for maintaining
Singly Listed Symbols including marketing expenses. In addition, the
Exchange incurs certain additional costs related to singly-listed
products as compared to multiply-listed products. For example, in
analyzing an obvious error for a singly-listed option, the Exchange
does not have the additional data points available in establishing a
theoretical price as is the case for a multiply-listed option. For
this reason, a singly-listed option requires additional analysis and
administrative time to comply with Exchange rules to resolve an
obvious error.
---------------------------------------------------------------------------
The Exchange believes that it is reasonable to remove DMA, FUM,
HSX, OOG, BYT, HVY, RUF, JLO, SIN, RND, HHO, PMP, POW, TNY, WMX, IXZ,
UKX, and NXTQ from the list of Select Symbols because these symbols
have been delisted and no longer trade on the Exchange. The Exchange
believes that it is equitable and not unfairly discriminatory to remove
these symbols from the list of Select Symbols because all members,
uniformly, would not be assessed either the rebates or the fees
pursuant to Section I of the Schedule of Fees with respect to these
symbols. The Exchange further believes that updating its Schedule of
Fees to remove singly-listed products that are no longer traded on the
Exchange will provide Exchange Members with clarity as to the symbols
that are singly-listed on the Exchange and their applicable fees.
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
[[Page 62282]]
19(b)(3)(A)(ii) of the Act.\12\ 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.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
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-2012-80 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-2012-80. 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-2012-80, and should be submitted on or before
November 2, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25081 Filed 10-11-12; 8:45 am]
BILLING CODE 8011-01-P