[Federal Register Volume 80, Number 229 (Monday, November 30, 2015)]
[Notices]
[Pages 74822-74824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30243]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76507; File No. SR-ISE-2015-41]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Amend the Schedule of Fees
November 23, 2015.
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 10, 2015, the International Securities Exchange, LLC
(the ``Exchange'' or ``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
ISE proposes to amend the Schedule of Fees as described in more
detail below. The text of the proposed rule change is available on the
Exchange's Internet Web site at 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 Exchange 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 purpose of the proposed rule change is to amend the Schedule of
Fees to introduce a new set of rebates to the Qualified Contingent
Cross (``QCC'') and/or other solicited crossing orders, including
solicited orders executed in the Solicitation, Facilitation or Price
Improvement Mechanisms, pricing initiative that offers rebates to
members who execute a specified volume of QCC and other solicited
crossing orders in a month. This new set of rebates, as proposed,
offers a lower rebate to members that execute a specified volume of QCC
and solicited orders between two Priority Customers \3\ (```Customer to
Customer' Orders''). The Exchange notes that there is no change to how
volume is calculated for the volume tiers. Thus, members will continue
to obtain the tier level based on all QCC and/or solicited crossing
orders' originating side volume. Members will receive the Non-
``Customer to Customer'' Order \4\ rebate for their Non-``Customer to
Customer'' Orders and the ``Customer to Customer'' Order rebate for
their ``Customer to Customer'' Orders.
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\3\ The term ``Priority Customer'' means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s).
\4\ ``Non-`Customer to Customer' Orders'' are QCC and/or other
solicited crossing orders, including solicited orders executed in
the Solicitation, Facilitation or Price Improvement Mechanisms, and
excluding ``Customer to Customer'' Orders.
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Currently, the Exchange offers members rebates in QCC and/or other
solicited crossing orders (including ``Customer to Customer'' Orders),
i.e. orders executed in the Solicitation,
[[Page 74823]]
Facilitation, or Price Improvement Mechanisms where the agency order is
executed against an order solicited from another party. These rebates
are provided for each originating side of a crossing order, based on a
member's volume in the crossing mechanisms during a given month.
Currently, for members that execute 0 to 99,999 originating contract
sides (``Tier 1'') the rebate is $0.00 per contract, for members that
execute 100,00 to 199,999 originating contract sides (``Tier 2'') the
rebate is $0.05 per contract, for members that execute 200,000 to
499,999 originating contract sides (``Tier 3'') the rebate is $0.07 per
contract, for members that execute 500,000 to 699,999 originating
contract sides (``Tier 4'') the rebate is $0.08 per contract, for
members that execute 700,000 to 999,999 originating contract sides
(``Tier 5'') the rebate is $0.09 per contract, and for members that
execute 1,000,000 originating contract sides or more (``Tier 6'') the
rebate is $0.11 per contract.\5\
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\5\ The rebate is applied to the originating contract side of
QCC and solicited crossing orders traded in a given month once a
member reaches the specified volume threshold/Tier during that
month.
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The Exchange now proposes to offer a new set of rebates for
``Customer to Customer'' Orders. These rebates will be provided to
members for each originating contract side of a ``Customer to
Customer'' Order in all symbols traded on the Exchange as follows: For
Tier 1 the rebate is $0.00, for Tiers 2 through 3 the rebate is $0.01,
and for Tiers 4 through 6 the rebate is $0.03.
Finally, the Exchange notes that all originating contract side
volume will continue to contribute to the member's Tier level. For
example, if a member has 175,000 originating contract sides for Non-
``Customer to Customer'' Orders and 75,000 originating contract sides
for ``Customer to Customer'' Orders, the member's aggregated volume
will be 250,000 placing them in Tier 3 (200,000 to 499,999). As a
result, the member will receive a rebate of $0.07 per originating
contract side for its Non-``Customer to Customer'' Orders and a rebate
of $0.01 per originating contract side for its ``Customer to Customer''
Orders.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\6\ in general, and Section
6(b)(4) of the Act,\7\ in particular, in that it is designed to provide
for the equitable allocation of reasonable dues, fees, and other
charges among its members and other persons using its facilities.
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable and equitable to offer
lower rebates for certain ``Customer to Customer'' Orders because other
exchanges, including the CBOE for example, offer no rebate (credit) for
customer to customer executions.\8\ Further, the Exchange believes it
is reasonable and equitable to continue to provide for the opportunity
to receive rebates as these proposed rebates are designed to attract
additional order flow to the Exchange and continue to remain attractive
to market participants. The Exchange believes that the proposed fees
are not unfairly discriminatory because these fees would be uniformly
applied to all ``Customer to Customer'' Orders. Additionally, as fees
for Priority Customer orders continue to decrease, it has become
necessary for the Exchange to lower rebates for ``Customer to
Customer'' Orders in order to balance the decrease in fees for Priority
Customer orders and the rebates provided for ``Customer to Customer''
Orders.
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\8\ See CBOE Fee Schedule, QCC Rate Table, Notes at https://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf.
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\9\ the Exchange does
not believe that the proposed rule change will impose any burden on
intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
believes that the proposed rebates remain competitive with the many
rebates (if any) offered by other options exchanges as discussed above.
Further, the rebates remain attractive to market participants. The
Exchange operates in a highly competitive market in which market
participants can readily direct their order flow to competing venues.
In such an environment, the Exchange must continually review, and
consider adjusting, its fees and rebates to remain competitive with
other exchanges. For the reasons described above, the Exchange believes
that the proposed fee changes reflect this competitive environment.
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\9\ 15 U.S.C. 78f(b)(8).
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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,\10\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\11\ because it establishes a due, fee, or other charge
imposed by ISE.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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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.
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 No. SR-ISE-2015-41 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2015-41. 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
[[Page 74824]]
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
such 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-2015-41 and should be submitted by December 21,
2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-30243 Filed 11-27-15; 8:45 am]
BILLING CODE 8011-01-P