Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Payment for Order Flow Fees, 33549-33550 [E7-11625]
Download as PDF
<![CDATA[
Federal Register / Vol. 72, No. 116 / Monday, June 18, 2007 / Notices
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room. Copies of the filing also will be
available for inspection and copying at
the principal office of the CBOE. 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–CBOE–2007–57 and should
be submitted on or before July 9, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E7–11628 Filed 6–15–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55895; File No. SR–ISE–
2007–38]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Relating to Payment for Order
Flow Fees
June 11, 2007.
jlentini on PROD1PC65 with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 1,
2007, the International Securities
Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been substantially prepared by the
Exchange. ISE has designated this
proposal as one establishing or changing
a due, fee, or other charge imposed by
ISE under Section 19(b)(3)(A)(ii) of the
Act 3 and Rule 19b–4(f)(2) thereunder,4
which renders the proposal effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
11 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
VerDate Aug<31>2005
18:19 Jun 15, 2007
Jkt 211001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE is proposing to amend its
Schedule of Fees to reduce the payment
for order flow (‘‘PFOF’’) fees for options
on issues that trade as part of the Penny
Pilot (‘‘Pilot’’).5 The text of the proposed
rule change is available at the Exchange,
the Commission’s Public Reference
Room, and https://www.iseoptions.com.
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. ISE
has substantially 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 January 26, 2007, ISE and all of
the other options exchanges commenced
the Pilot for the quoting and trading of
specified options contracts in $.01
increments. The Exchange currently
operates a PFOF program as approved
by the Commission.6 This program is
funded through a fee, currently set at
$0.65 per contract, paid by Exchange
market makers for each customer
contract they execute. All funds
collected by the Exchange are
administered by specified market
makers.7 PFOF fees collected by the
Exchange that are not distributed are
rebated back to the market makers.
Subsequent to the commencement of the
Pilot, the Exchange amended its
5 See Securities Exchange Act Release No. 54603
(October 16, 2006), 71 FR 62024 (October 20, 2006)
(SR–ISE–2006–62) (Notice of Filing of Proposed
Rule Change to Implement a Pilot Program To
Quote and To Trade Options in Pennies).
6 See Securities Exchange Act Release No. 43833
(January 10, 2001), 66 FR 7822 (January 25, 2001)
(SR–ISE–2000–10).
7 Initially only Primary Market Makers
administered PFOF pools. However, the Exchange
recently amended its PFOF program to allow a
preferenced Competitive Market Maker (‘‘CMM’’) to
administer the PFOF funds collected by the
Exchange with respect to orders in a group of
options classes preferenced to that CMM. See
Securities Exchange Act Release No. 53127 (January
13, 2006), 71 FR 3582 (January 23, 2006) (SR–ISE–
2005–57).
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
33549
Schedule of Fees by reducing the PFOF
fees for issues that trade as part of the
Pilot from $0.65 per contract to $0.25
per contract (‘‘Pilot PFOF Fees’’).8
The Exchange now proposes to reduce
the Pilot PFOF Fees from $0.25 per
contract to $0.10 per contract for
transactions in all Pilot issues. This fee
reduction shall also apply to other
issues that become a part of the Pilot in
the event the Pilot is expanded beyond
the current 13 securities. The Exchange
notes that quoting and trading in one
cent increments pursuant to the Pilot
has resulted in narrower spreads in the
13 Pilot securities. PFOF, as a result, has
become less of a competitive factor in
the Pilot securities. The Exchange thus
believes that while it is prudent for it to
maintain its PFOF fee, $0.10 per
contract is an appropriate PFOF rate
relative to the trading increments in
these instruments.
2. Statutory Basis
The Exchange believes that the
proposed rule change 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, because it is
an equitable allocation of reasonable
dues, fees, and other charges among
exchange members and other persons
using exchange facilities. In particular,
the Exchange believes that lowering
PFOF fees further in Pilot issues would
enhance competition.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will 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
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
has been designated as a fee change
pursuant to Section 19(b)(3)(A)(ii) of the
8 See Exchange Act Release No. 55271 (February
12, 2007), 72 FR 7699 (February 16, 2007) (SR–ISE–
2007–08) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change Relating to
Payment for Order Flow Fees).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4).
E:\FR\FM\18JNN1.SGM
18JNN1
33550
Federal Register / Vol. 72, No. 116 / Monday, June 18, 2007 / Notices
Act 11 and Rule 19b–4(f)(2) 12
thereunder, because it establishes or
changes a due, fee, or other charge
imposed by the Exchange. Accordingly,
the proposal will take effect upon filing
with the Commission. At any time
within 60 days of the filing of such
proposed rule change the Commission
may summarily abrogate 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.
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–2007–38 and should be
submitted on or before July 9, 2007.
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:
BILLING CODE 8010–01–P
jlentini on PROD1PC65 with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–ISE–2007–38 on the subject
line.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Nancy M. Morris,
Secretary.
[FR Doc. E7–11625 Filed 6–15–07; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55892; File No. SR–
NASDAQ–2007–043]
Self-Regulatory Organizations;
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change and
Amendments No. 1 and 2 Thereto To
Remove Provisions Governing the
Operation of the ACES Service
June 11, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Paper Comments
notice is hereby given that on April 25,
• Send paper comments in triplicate
2007, the NASDAQ Stock Market LLC
to Nancy M. Morris, Secretary,
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission,
Securities and Exchange Commission
100 F Street, NE., Washington, DC
(‘‘Commission’’) the proposed rule
20549–1090.
change as described in Items I, II, and
All submissions should refer to File
III below, which Items have been
Number SR–ISE–2007–38. This file
substantially prepared by the Exchange.
number should be included on the
The Exchange filed Amendments No. 1
subject line if e-mail is used. To help the and 2 to the proposed rule change on
Commission process and review your
May 29, 2007, and June 5, 2007,
comments more efficiently, please use
respectively. The Commission is
only one method. The Commission will publishing this notice to solicit
post all comments on the Commission’s comment on the proposed rule change,
Internet Web site (https://www.sec.gov/
as amended, from interested persons.
rules/sro.shtml). Copies of the
I. Self-Regulatory Organization’s
submission, all subsequent
Statement of the Terms of Substance of
amendments, all written statements
the Proposed Rule Change
with respect to the proposed rule
change that are filed with the
Nasdaq proposes to remove from its
Commission, and all written
rules provisions governing the
communications relating to the
operations of the ACES communications
proposed rule change between the
service. Nasdaq’s rule book contains
Commission and any person, other than rules pertaining to ‘‘facilities’’ of the
those that may be withheld from the
exchange, and ACES is not such a
public in accordance with the
‘‘facility’’ within the meaning of the Act.
provisions of 5 U.S.C. 552, will be
Specifically, Nasdaq proposes to
available for inspection and copying in
delete: (a) The entire Rule 6200 Series
the Commission’s Public Reference
(titled ACES), consisting of Rules 6210,
Room. Copies of such filing also will be 6220, 6230, 6240 and 6250; and (b) the
available for inspection and copying at
entire Rule 7026 (titled ACES). The Rule
the principal office of ISE. All
13 17
11
12
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
15 U.S.C. 78s(b)(3)(A)(ii).
17 CFR 240.19b–4(f)(2).
VerDate Aug<31>2005
18:19 Jun 15, 2007
1 15
Jkt 211001
PO 00000
Frm 00106
Fmt 4703
Sfmt 4703
book will show the Rule 6200 Series
and Rule 7026 as ‘‘Reserved.’’
The text of the proposed rule change
is available at Nasdaq, at the
Commission’s Public Reference Room,
and at https://www.nasdaq.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NASDAQ 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
Exchange 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
ACES is a neutral communications
service that allows market participants
to route orders to one another. ACES
does not effect trade executions, and it
does not report executed trades to ‘‘the
tape.’’ Moreover, market participants
receiving orders through ACES may
execute them in any manner that they
deem consistent with duties of best
execution and other applicable industry
obligations. As the ACES service can be
of value to all market participants, both
members and non-members of Nasdaq
are permitted to use it.
Sections 6(b) 3 and 19(b)(1) 4 of the
Act and Rule 19b–4 thereunder 5 require
a national securities exchange to file its
rules with the Commission. Section
3(a)(27) of the Act 6 and Rule 19b–4
define the ‘‘rules’’ of an exchange with
reference to its ‘‘facilities’’: a rule
includes ‘‘any material aspect of the
operation of the facilities’’ of the
exchange or any statement with respect
to ‘‘the rights, obligations or privileges’’
of exchange members or persons having
or seeking access to the facilities of the
exchange. 7 Finally, Section 3(a)(2) of
the Act defines ‘‘facility,’’ when used
with respect to an exchange, to include:
its premises, tangible or intangible property
whether on the premises or not, any right to
the use of such premises or property or any
services thereof for the purpose of effecting
3 15
U.S.C. 78f(b).
U.S.C. 78s(b)(1).
5 17 CFR 240.19b–4.
6 15 U.S.C. 78c(a)(27).
7 17 CFR 240.19b–4.
4 15
E:\FR\FM\18JNN1.SGM
18JNN1
]]>Agencies
[Federal Register Volume 72, Number 116 (Monday, June 18, 2007)]
[Notices]
[Pages 33549-33550]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-11625]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55895; File No. SR-ISE-2007-38]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change Relating to Payment for Order Flow Fees
June 11, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 1, 2007, the International Securities Exchange, LLC (``ISE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been substantially prepared by the
Exchange. ISE has designated this proposal as one establishing or
changing a due, fee, or other charge imposed by ISE under Section
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\
which renders the proposal effective upon filing with the Commission.
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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The ISE is proposing to amend its Schedule of Fees to reduce the
payment for order flow (``PFOF'') fees for options on issues that trade
as part of the Penny Pilot (``Pilot'').\5\ The text of the proposed
rule change is available at the Exchange, the Commission's Public
Reference Room, and https://www.iseoptions.com.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 54603 (October 16,
2006), 71 FR 62024 (October 20, 2006) (SR-ISE-2006-62) (Notice of
Filing of Proposed Rule Change to Implement a Pilot Program To Quote
and To Trade Options in Pennies).
---------------------------------------------------------------------------
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. ISE has substantially 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 January 26, 2007, ISE and all of the other options exchanges
commenced the Pilot for the quoting and trading of specified options
contracts in $.01 increments. The Exchange currently operates a PFOF
program as approved by the Commission.\6\ This program is funded
through a fee, currently set at $0.65 per contract, paid by Exchange
market makers for each customer contract they execute. All funds
collected by the Exchange are administered by specified market
makers.\7\ PFOF fees collected by the Exchange that are not distributed
are rebated back to the market makers. Subsequent to the commencement
of the Pilot, the Exchange amended its Schedule of Fees by reducing the
PFOF fees for issues that trade as part of the Pilot from $0.65 per
contract to $0.25 per contract (``Pilot PFOF Fees'').\8\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 43833 (January 10,
2001), 66 FR 7822 (January 25, 2001) (SR-ISE-2000-10).
\7\ Initially only Primary Market Makers administered PFOF
pools. However, the Exchange recently amended its PFOF program to
allow a preferenced Competitive Market Maker (``CMM'') to administer
the PFOF funds collected by the Exchange with respect to orders in a
group of options classes preferenced to that CMM. See Securities
Exchange Act Release No. 53127 (January 13, 2006), 71 FR 3582
(January 23, 2006) (SR-ISE-2005-57).
\8\ See Exchange Act Release No. 55271 (February 12, 2007), 72
FR 7699 (February 16, 2007) (SR-ISE-2007-08) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change Relating to
Payment for Order Flow Fees).
---------------------------------------------------------------------------
The Exchange now proposes to reduce the Pilot PFOF Fees from $0.25
per contract to $0.10 per contract for transactions in all Pilot
issues. This fee reduction shall also apply to other issues that become
a part of the Pilot in the event the Pilot is expanded beyond the
current 13 securities. The Exchange notes that quoting and trading in
one cent increments pursuant to the Pilot has resulted in narrower
spreads in the 13 Pilot securities. PFOF, as a result, has become less
of a competitive factor in the Pilot securities. The Exchange thus
believes that while it is prudent for it to maintain its PFOF fee,
$0.10 per contract is an appropriate PFOF rate relative to the trading
increments in these instruments.
2. Statutory Basis
The Exchange believes that the proposed rule change 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, because it
is an equitable allocation of reasonable dues, fees, and other charges
among exchange members and other persons using exchange facilities. In
particular, the Exchange believes that lowering PFOF fees further in
Pilot issues would enhance competition.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
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
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has been designated as a fee
change pursuant to Section 19(b)(3)(A)(ii) of the
[[Page 33550]]
Act \11\ and Rule 19b-4(f)(2) \12\ thereunder, because it establishes
or changes a due, fee, or other charge imposed by the Exchange.
Accordingly, the proposal will take effect upon filing with the
Commission. At any time within 60 days of the filing of such proposed
rule change the Commission may summarily abrogate 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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-ISE-2007-38 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2007-38. This file
number should be included on the subject line if e-mail 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 (https://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 inspection and
copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office 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-2007-38 and should be submitted on or before July 9, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E7-11625 Filed 6-15-07; 8:45 am]
BILLING CODE 8010-01-P
