Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fees for Certain Orders Executed on the Exchange, 71416-71417 [2011-29671]

Download as PDF 71416 Federal Register / Vol. 76, No. 222 / Thursday, November 17, 2011 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65723; File No. SR–ISE– 2011–73] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fees for Certain Orders Executed on the Exchange November 10, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that, on October 28, 2011, 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 and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The ISE is proposing to amend transaction fees for certain orders executed on the Exchange. The text of the proposed rule change is available on the Exchange’s Web site (https:// 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. jlentini on DSK4TPTVN1PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange currently assesses a per contract transaction charge to market participants that add or remove 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Mar<15>2010 17:25 Nov 16, 2011 Jkt 226001 liquidity from the Exchange (‘‘maker/ taker fees’’) in a number of options classes (the ‘‘Select Symbols’’).3 For removing liquidity in the Select Symbols, the Exchange currently charges a ‘‘take’’ fee of: (i) $0.26 per contract for Market Maker 4 and Market Maker Plus orders,5 and (ii) $0.28 per contract for Firm Proprietary and Customer (Professional) 6 orders. The Exchange now proposes to increase the ‘‘take’’ fee for Market Maker and Market Maker Plus orders in the Select Symbols from $0.26 per contract to $0.28 per contract, and for Firm Proprietary and Customer (Professional) orders in the Select Symbols from $0.28 per contract to $0.29 per contract. The Exchange has designated this proposal to be operative on November 1, 2011. 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 ‘‘Act’’) 7 in general, and furthers the objectives of Section 6(b)(4) of the Act 8 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 impact of the proposal upon the net fees paid by a particular market participant will depend on a number of variables, most important of which will 3 Options classes subject to maker/taker fees are identified by their ticker symbol on the Exchange’s Schedule of Fees. 4 The term ‘‘Market Makers’’ refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. See ISE Rule 100(a)(25). 5 A Market Maker Plus is an ISE Market Maker who is on the National Best Bid or National Best Offer 80% of the time for series trading between $0.03 and $5.00 (for options whose underlying stock’s previous trading day’s last sale price was less than or equal to $100) and between $0.10 and $5.00 (for options whose underlying stock’s previous trading day’s last sale price was greater than $100) in premium in each of the front two expiration months and 80% of the time for series trading between $0.03 and $5.00 (for options whose underlying stock’s previous trading day’s last sale price was less than or equal to $100) and between $0.10 and $5.00 (for options whose underlying stock’s previous trading day’s last sale price was greater than $100) in premium across all expiration months in order to receive the rebate. The Exchange determines whether a Market Maker qualifies as a Market Maker Plus at the end of each month by looking back at each Market Maker’s quoting statistics during that month. If at the end of the month, a Market Maker meets the Exchange’s stated criteria, the Exchange rebates $0.10 per contract for transactions executed by that Market Maker during that month. The Exchange provides Market Makers a report on a daily basis with quoting statistics so that Market Makers can determine whether or not they are meeting the Exchange’s stated criteria. 6 A Customer (Professional) is a person who is not a broker/dealer and is not a Priority Customer. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(4). PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 be its propensity to add or remove liquidity in options overlying the Select Symbols. The Exchange believes that its proposal to assess a $0.28 per contract ‘‘take’’ fee for Market Maker and Market Maker Plus orders in the Select Symbols is reasonable and equitably allocated because the fee is within the range of fees assessed by other exchanges employing similar pricing schemes. For example, NASDAQ OMX PHLX, Inc. (‘‘PHLX’’) currently charges Specialists $0.33 per contract for removing liquidity in symbols that are subject to that exchange’s maker/taker fees.9 Further, the proposed increase will bring this fee closer to the fee the Exchange currently charges to other market participants that employ a similar trading strategy. The Exchange also notes that with this proposed rule change, the fee charged to Market Maker and Market Maker Plus orders will remain lower than the fee currently charged by the Exchange to certain other market participants. The Exchange also believes that its proposal to assess a $0.29 per contract ‘‘take’’ fee for Firm Proprietary and Customer (Professional) orders in the Select Symbols is reasonable and equitably allocated because the fee is also within the range of fees assessed by other exchanges employing similar pricing schemes. By comparison, the proposed fees assessed to Firm Proprietary and Customer (Professional) orders are lower than the rates assessed by PHLX for similar orders. PHLX currently charges a ‘‘take’’ fee of $0.45 for Firm and Broker-Dealer orders and $0.40 for Professional orders in its regular order book.10 The Exchange believes that the price differentiation between the various market participants is justified because Market Makers have obligations to the market that the other market participants do not. The Exchange believes that it is equitable to assess a higher fee to market participants that do not have the quoting requirements that Exchange Market Makers do. Moreover, the Exchange believes that the proposed fees are fair, equitable and not unfairly discriminatory because the proposed fees are consistent with price differentiation that exists today at other options exchanges. Additionally, the Exchange believes it remains an attractive venue for market participants to direct their order flow in the Select Symbols as its fees are competitive with 9 See PHLX Fee Schedule at https:// www.nasdaqtrader.com/content/marketregulation/ membership/phlx/feesched.pdf. 10 Id. E:\FR\FM\17NON1.SGM 17NON1 Federal Register / Vol. 76, No. 222 / Thursday, November 17, 2011 / Notices those charged by other exchanges for similar trading strategies. The Exchange operates in a highly competitive market in which market participants can readily direct order flow to another exchange if they deem fee levels at a particular exchange to be excessive. For the reasons noted above, the Exchange believes that the proposed fees are fair, equitable and not unfairly discriminatory. 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 Exchange 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 Exchange Act.11 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 Exchange 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 Exchange Act. Comments may be submitted by any of the following methods: Number SR–ISE–2011–73 on the subject line. SOCIAL SECURITY ADMINISTRATION Paper Comments [Docket No. SSA–2011–0070] • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Privacy Act of 1974, as Amended; Computer Matching Program (SSA/Law Enforcement Agencies (LEA)) Match Number 5001 All submissions should refer to File Number SR–ISE–2011–73. 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 (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 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 a.m. and 3 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– 2011–73 and should be submitted on or before December 8, 2011. (SSA). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–29671 Filed 11–16–11; 8:45 am] BILLING CODE 8011–01–P jlentini on DSK4TPTVN1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File 11 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 17:25 Nov 16, 2011 12 17 Jkt 226001 71417 PO 00000 CFR 200.30–3(a)(12). Frm 00111 Fmt 4703 Sfmt 4703 AGENCY: Social Security Administration Notice of a renewal of an existing computer matching program that will expire on April 9, 2012. ACTION: In accordance with the provisions of the Privacy Act, as amended, this notice announces a renewal of an existing computer matching program that we are currently conducting with LEA. DATES: We will file a report of the subject matching program with the Committee on Homeland Security and Governmental Affairs of the Senate; the Committee on Oversight and Government Reform of the House of Representatives, and the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB). The matching program will be effective as indicated below. ADDRESSES: Interested parties may comment on this notice by either telefaxing to (410) 966–0869 or writing to the Acting Executive Director, Office of Privacy and Disclosure, Office of the General Counsel, 617 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235–6401. All comments received will be available for public inspection at this address. FOR FURTHER INFORMATION CONTACT: The Acting Executive Director, Office of Privacy and Disclosure, Office of the General Counsel, as shown above. SUPPLEMENTARY INFORMATION: SUMMARY: A. General The Computer Matching and Privacy Protection Act of 1988 (Pub. L. 100– 503), amended the Privacy Act (5 U.S.C. 552a) by describing the conditions under which computer matching involving the Federal government could be performed and adding certain protections for persons applying for, and receiving, Federal benefits. Section 7201 of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101– 508) further amended the Privacy Act regarding protections for such persons. The Privacy Act, as amended, regulates the use of computer matching by Federal agencies when records in a system of records are matched with other Federal, State, or local government records. It requires Federal agencies E:\FR\FM\17NON1.SGM 17NON1

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[Federal Register Volume 76, Number 222 (Thursday, November 17, 2011)]
[Notices]
[Pages 71416-71417]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29671]



[[Page 71416]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65723; File No. SR-ISE-2011-73]


 Self-Regulatory Organizations; International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Fees for Certain Orders Executed on the 
Exchange

November 10, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that, on October 28, 2011, 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 and II below, which Items have been prepared by 
the Exchange. 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 is proposing to amend transaction fees for certain orders 
executed on the Exchange. The text of the proposed rule change is 
available on the Exchange's Web site (https://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
    The Exchange currently assesses a per contract transaction charge 
to market participants that add or remove liquidity from the Exchange 
(``maker/taker fees'') in a number of options classes (the ``Select 
Symbols'').\3\ For removing liquidity in the Select Symbols, the 
Exchange currently charges a ``take'' fee of: (i) $0.26 per contract 
for Market Maker \4\ and Market Maker Plus orders,\5\ and (ii) $0.28 
per contract for Firm Proprietary and Customer (Professional) \6\ 
orders. The Exchange now proposes to increase the ``take'' fee for 
Market Maker and Market Maker Plus orders in the Select Symbols from 
$0.26 per contract to $0.28 per contract, and for Firm Proprietary and 
Customer (Professional) orders in the Select Symbols from $0.28 per 
contract to $0.29 per contract.
---------------------------------------------------------------------------

    \3\ Options classes subject to maker/taker fees are identified 
by their ticker symbol on the Exchange's Schedule of Fees.
    \4\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule 
100(a)(25).
    \5\ A Market Maker Plus is an ISE Market Maker who is on the 
National Best Bid or National Best Offer 80% of the time for series 
trading between $0.03 and $5.00 (for options whose underlying 
stock's previous trading day's last sale price was less than or 
equal to $100) and between $0.10 and $5.00 (for options whose 
underlying stock's previous trading day's last sale price was 
greater than $100) in premium in each of the front two expiration 
months and 80% of the time for series trading between $0.03 and 
$5.00 (for options whose underlying stock's previous trading day's 
last sale price was less than or equal to $100) and between $0.10 
and $5.00 (for options whose underlying stock's previous trading 
day's last sale price was greater than $100) in premium across all 
expiration months in order to receive the rebate. The Exchange 
determines whether a Market Maker qualifies as a Market Maker Plus 
at the end of each month by looking back at each Market Maker's 
quoting statistics during that month. If at the end of the month, a 
Market Maker meets the Exchange's stated criteria, the Exchange 
rebates $0.10 per contract for transactions executed by that Market 
Maker during that month. The Exchange provides Market Makers a 
report on a daily basis with quoting statistics so that Market 
Makers can determine whether or not they are meeting the Exchange's 
stated criteria.
    \6\ A Customer (Professional) is a person who is not a broker/
dealer and is not a Priority Customer.
---------------------------------------------------------------------------

    The Exchange has designated this proposal to be operative on 
November 1, 2011.
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 ``Act'') \7\ in general, and furthers the objectives of 
Section 6(b)(4) of the Act \8\ 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 impact of 
the proposal upon the net fees paid by a particular market participant 
will depend on a number of variables, most important of which will be 
its propensity to add or remove liquidity in options overlying the 
Select Symbols.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that its proposal to assess a $0.28 per 
contract ``take'' fee for Market Maker and Market Maker Plus orders in 
the Select Symbols is reasonable and equitably allocated because the 
fee is within the range of fees assessed by other exchanges employing 
similar pricing schemes. For example, NASDAQ OMX PHLX, Inc. (``PHLX'') 
currently charges Specialists $0.33 per contract for removing liquidity 
in symbols that are subject to that exchange's maker/taker fees.\9\ 
Further, the proposed increase will bring this fee closer to the fee 
the Exchange currently charges to other market participants that employ 
a similar trading strategy. The Exchange also notes that with this 
proposed rule change, the fee charged to Market Maker and Market Maker 
Plus orders will remain lower than the fee currently charged by the 
Exchange to certain other market participants.
---------------------------------------------------------------------------

    \9\ See PHLX Fee Schedule at https://www.nasdaqtrader.com/content/marketregulation/membership/phlx/feesched.pdf.
---------------------------------------------------------------------------

    The Exchange also believes that its proposal to assess a $0.29 per 
contract ``take'' fee for Firm Proprietary and Customer (Professional) 
orders in the Select Symbols is reasonable and equitably allocated 
because the fee is also within the range of fees assessed by other 
exchanges employing similar pricing schemes. By comparison, the 
proposed fees assessed to Firm Proprietary and Customer (Professional) 
orders are lower than the rates assessed by PHLX for similar orders. 
PHLX currently charges a ``take'' fee of $0.45 for Firm and Broker-
Dealer orders and $0.40 for Professional orders in its regular order 
book.\10\
---------------------------------------------------------------------------

    \10\ Id.
---------------------------------------------------------------------------

    The Exchange believes that the price differentiation between the 
various market participants is justified because Market Makers have 
obligations to the market that the other market participants do not. 
The Exchange believes that it is equitable to assess a higher fee to 
market participants that do not have the quoting requirements that 
Exchange Market Makers do. Moreover, the Exchange believes that the 
proposed fees are fair, equitable and not unfairly discriminatory 
because the proposed fees are consistent with price differentiation 
that exists today at other options exchanges. Additionally, the 
Exchange believes it remains an attractive venue for market 
participants to direct their order flow in the Select Symbols as its 
fees are competitive with

[[Page 71417]]

those charged by other exchanges for similar trading strategies. The 
Exchange operates in a highly competitive market in which market 
participants can readily direct order flow to another exchange if they 
deem fee levels at a particular exchange to be excessive. For the 
reasons noted above, the Exchange believes that the proposed fees are 
fair, equitable and not unfairly discriminatory.

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 Exchange 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 Exchange Act.\11\ 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 Exchange Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \11\ 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 Exchange 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 email to rule-comments@sec.gov. Please include 
File Number SR-ISE-2011-73 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-2011-73. 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 (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 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 
a.m. and 3 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-2011-73 and should be 
submitted on or before December 8, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-29671 Filed 11-16-11; 8:45 am]
BILLING CODE 8011-01-P
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