[Federal Register Volume 77, Number 235 (Thursday, December 6, 2012)]
[Notices]
[Pages 72901-72902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29451]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68324; File No. SR-ISE-2012-89]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Adopt Gateway Fees
November 30, 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 November 20, 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 Substance
of the Proposed Rule Change
The ISE proposes to adopt gateway 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
Prior to the launch of the Optimise trading system, ISE Members
were able to lease ``gateway'' equipment, i.e., Routers, Switches and
Servers, through ISE to connect to the Exchange. Members also were able
to use their own equipment, which ISE managed. With the launch of the
Optimise trading system, ISE began to maintain shared gateways at its
datacenters without charging any fees to Members and removed the
gateway fees it previously charged from its Schedule of Fees.\3\
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\3\ See Securities Exchange Act Release No. 65861 (December 1,
2011), 76 FR 76463 (December 7, 2011) (SR-ISE-2011-77).
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The Exchange now proposes to adopt monthly gateway fees.
Specifically, the Exchange proposes to adopt a monthly fee of $250 per
shared gateway. Also, some Members have requested their own dedicated
gateways as an alternative to using the shared gateways. While the
shared gateways provide for full redundancy and the same latency, these
Members nevertheless desire their own dedicated gateways as a risk
management alternative. To accommodate these Members, the Exchange
proposes to adopt an optional dedicated gateway offering for a monthly
fee of $2,000 per dedicated gateway pair.\4\
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\4\ For redundancy and load balancing purposes, Members that
choose the dedicated gateway option would be connected to a pair of
dedicated gateways for which the Exchange would charge one fee.
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ISE has expended significant amount of resources in developing this
infrastructure and the proposed gateway fees will be used to recover
the costs the Exchange incurs in providing and maintaining this
infrastructure. With this proposed rule change, Members will have the
ability to utilize a shared gateway or, if they have [sic] choose,
utilize a dedicated gateway. The use of the dedicated gateway is
voluntary and therefore, Members who do not opt for a dedicated gateway
will be able to connect to the Exchange through a shared gateway.
The Exchange has designated this proposal to be operative on
December 3, 2012.
2. Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Securities Exchange Act of 1934
(``Act''),\5\ in general, and with Section 6(b)(4) of the Act,\6\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among Exchange members and
other persons using its facilities. In particular, the proposed rule
change will provide greater transparency into the connectivity options
available to Members.
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\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed rule change constitutes an
equitable allocation of fees because all similarly situated Members
would be charged the same amount, based on their preference for either
a shared gateway or a dedicated gateway. While Members may opt for a
dedicated gateway, those that do not will continue to be able to access
the Exchange via a shared gateway. And both gateway options provide
full redundancy and the same latency. Thus, access to the Exchange
would continue to be offered on fair and non-discriminatory terms.
The Exchange also believes the proposed fee for a dedicated gateway
is equitably allocated in that all Exchange Members that opt for a
dedicated gateway will be charged the same amount. All Exchange Members
have the option to select a dedicated gateway connection and those that
choose not to will continue to access the Exchange via a shared
gateway.
With respect to the increase in fees, the proposed fee change for
gateways is expected to offset increasing connectivity costs, including
costs for gateway software and hardware enhancements and resources
dedicated to gateways development, quality assurance, and support.
The Exchange believes the proposed fees are not unfairly
discriminatory in that all Exchange Members have the option of
accessing the Exchange via shared gateways or dedicated gateways, and
there is no differentiation among Members with regard to the fees
charged for either option.
[[Page 72902]]
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.\7\ 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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\7\ 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-2012-89 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-2012-89. 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 20549-1090, 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 ISE's principal office and on
its Internet Web site. 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-2012-89, and should be submitted on or before December 27, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29451 Filed 12-5-12; 8:45 am]
BILLING CODE 8011-01-P