Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend the Threshold Levels for Tier-Based Rebates for Qualified Contingent Cross Orders and Solicitation Orders Executed on the Exchange, 77279-77281 [2011-31735]
Download as PDF
Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
• Send an email to rulecomments@sec.gov. Please include File
Number SR–Phlx–2011–163 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–Phlx-2011–163. 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 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
publicly available. All submissions
should refer to File Number SR–Phlx–
2011–163 and should be submitted on
or before January 3, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–31734 Filed 12–9–11; 8:45 am]
jlentini on DSK4TPTVN1PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65898; File No. SR–ISE–
2011–78]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change to Amend the Threshold
Levels for Tier-Based Rebates for
Qualified Contingent Cross Orders and
Solicitation Orders Executed on the
Exchange
December 6, 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 November 22, 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 the
threshold levels for tier-based rebates
for Qualified Contingent Cross (‘‘QCC’’)
orders and Solicitation orders. 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.
1 15
8 17
CFR 200.30–3(a)(12).
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15:55 Dec 09, 2011
2 17
Jkt 226001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00077
Fmt 4703
Sfmt 4703
77279
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to amend the threshold
contract levels to encourage members to
submit greater numbers of QCC orders
and Solicitation orders to the Exchange.
The Exchange currently provides a
rebate to Members who reach a certain
volume threshold in QCC orders and/or
Solicitation orders during a month.3
Once a Member reaches the volume
threshold, the Exchange provides a
rebate to that Member for all of its QCC
and Solicitation traded contracts for that
month. The rebate is paid to the
Member entering a qualifying order, i.e.,
a QCC order and/or a Solicitation order.
The rebate applies to QCC orders and
Solicitation orders in all symbols traded
on the Exchange. Additionally, the
threshold levels are based on the
originating side so if, for example, a
Member submits a Solicitation order for
1,000 contracts, all 1,000 contracts are
counted to reach the established
threshold even if the order is broken up
and executed with multiple counter
parties.
The current volume threshold and
corresponding rebate per contract is:
Originating contract sides
0–99,999 ...............................
100,000–1,699,999 ...............
1,700,000–2,499,999 ............
2,500,000–3,499,999 ............
3,500,000+ ............................
Rebate per
contract
$0.00
0.01
0.03
0.05
0.07
The Exchange now proposes to amend
the current tiers by: (1) Increasing the
threshold for Members to qualify for a
rebate, from a minimum of 100,000
qualifying contracts to 200,000
qualifying contracts. While the
Exchange proposes to increase the
minimum threshold level, the Exchange
also proposes to increase the rebate
payable for this tier, from $0.01 per
contract to $0.02 per contract; (2)
lowering the contract threshold level for
the middle tier while maintaining the
rebate at $0.03 per contract; (3) lowering
the contract threshold and the per
contract rebate for the fourth tier; and
(4) lowering the amount of qualifying
contracts a Member must trade to
qualify for the maximum per contract
3 See Exchange Act Release Nos. 65087 (August
10, 2011), 76 FR 50783 (August 16, 2011) (SR–ISE–
2011–47); 65583 (October 18, 2011), 76 FR 65555
(October 21, 2011) (SR–ISE–2011–68); and 65705
(November 8, 2011), 76 FR 70789 (November 15,
2011) (SR–ISE–2011–70).
E:\FR\FM\12DEN1.SGM
12DEN1
77280
Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
rebate, from 3,500,000 qualifying
contracts to 2,000,000 qualifying
contracts. To accommodate the
proposed lower threshold, the Exchange
also proposes to lower the rebate
payable for this tier, from $0.07 per
contract to $0.05 per contract. With the
proposed changes to the tiers, the
Exchange is attempting to strike the
right balance between the number of
qualifying contracts and its
corresponding rebate to ensure that the
incentive program achieves its intended
purpose of attracting greater order flow
from its Members.
With the proposed amended tiers, the
volume threshold and corresponding
rebate per contract will be as follows:
Originating contract sides
0–199,999 .............................
200,000–999,999 ..................
1,000,000–1,699,999 ............
1,700,000–1,999,999 ............
2,000,000+ ............................
Rebate per
contract
$0.00
0.02
0.03
0.04
0.05
Further, the Exchange currently
assesses per contract transaction charges
and credits to market participants that
add or remove liquidity from the
Exchange (‘‘maker/taker fees’’) in a
select number of options classes (the
‘‘Select Symbols’’).4 For Solicitation
orders in the Select Symbols, the
Exchange currently provides a rebate of
$0.15 to contracts that do not trade with
the contra order in the Solicited Order
Mechanism. The Exchange does not
propose any change to that rebate and
that rebate will continue to apply.
The Exchange has designated this
proposal to be operative on December 1,
2011.
jlentini on DSK4TPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal to amend its Schedule of Fees
is consistent with Section 6(b) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 5 in general, and
furthers the objectives of Section 6(b)(4)
of the Exchange Act 6 in particular, in
that it is an equitable allocation of
reasonable dues, fees and other charges
among Exchange Members. The
Exchange believes that the proposed fee
change will generally allow the
Exchange and its Members to better
compete for order flow and thus
enhance competition. Specifically, the
Exchange believes that its proposal,
which among other things, lowers the
4 Options classes subject to maker/taker fees are
identified by their ticker symbol on the Exchange’s
Schedule of Fees.
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(4).
VerDate Mar<15>2010
15:55 Dec 09, 2011
Jkt 226001
threshold level for Members to qualify
for the highest per contract rebate
payable, is reasonable as it will
encourage Members who direct their
QCC and Solicitation orders to the
Exchange to continue to do so instead
of sending this order flow to a
competing exchange. The Exchange
believes that with the proposed
amended tiers, more Members are now
likely to qualify for higher rebates for
sending their QCC and Solicitation
orders to the Exchange.
The Exchange notes that it currently
has other incentive programs to promote
and encourage growth in specific
business areas. For example, the
Exchange has lower fees (or no fees) for
customer orders; 7 and tiered pricing
that reduces rates for market makers
based on the level of business they bring
to the Exchange.8 This proposed rule
change targets a particular segment in
which the Exchange seeks to garnish
greater order flow. The Exchange further
believes that the rebate currently in
place for QCC and Solicitation orders is
reasonable because it is designed to give
Members who trade a minimum of
200,000 qualifying contracts in QCC and
Solicitation orders on the Exchange a
benefit by way of a lower transaction
fee. As noted above, once a Member
reaches an established volume
threshold, all of the trading activity in
the specified order type by that Member
will be subject to the corresponding
rebate.
The Exchange also believes that its
rebate program for QCC and Solicitation
orders is equitable because it would
uniformly apply to all Members engaged
in QCC and Solicitation trading in all
option classes traded on the Exchange.
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.
7 For example, the customer fee is $0.00 per
contract for products other than Singly Listed
Indexes, Singly Listed ETFs and FX Options. For
Singly Listed Options, Singly Listed ETFs and FX
Options, the customer fee is $0.18 per contract. The
Exchange also currently has an incentive plan in
place for certain specific FX Options which has its
own pricing. See ISE Schedule of Fees.
8 The Exchange currently has a sliding scale fee
structure that ranges from $0.01 per contract to
$0.18 per contract depending on the level of volume
a Member trades on the Exchange in a month.
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
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.9 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 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 rulecomments@sec.gov. Please include File
Number SR–ISE–2011–78 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–2011–78. 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
9 15
E:\FR\FM\12DEN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
12DEN1
Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
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–
2011–78 and should be submitted on or
before January 3, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–31735 Filed 12–9–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65901; File No. SR–DTC–
2011–10]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Rules Relating to Existing Operational
Arrangements Involving Eligibility of
Securities
with the Commission.2 The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested parties.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The purpose of this proposed rule
change is to update the existing
contractual operational arrangements
necessary for a securities issue to
become and remain eligible for the
services at DTC.3
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
DTC 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. DTC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.4
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
(1) Purpose
DTC’s operational arrangement
(‘‘Operational Arrangement’’ or ‘‘OA’’)
was first published in June 1987 and
subsequently updated in June 1988,
February 1992, December 1994, January
1998, May 2002, and most recently in
January 2009.5 The OA is designed to
maximize the number of issues of
securities that may be made eligible for
DTC services and to provide for the
orderly processing of such securities
and the timely payments to DTC
participants. DTC’s experience
demonstrates that when participants,
jlentini on DSK4TPTVN1PROD with NOTICES
December 6, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
November 25, 2011, The Depository
Trust Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change described in Items I and II
below, which items have been prepared
primarily by DTC. DTC filed the
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) and Rule 19b–
4(f)(4) thereunder so that the proposed
rule change was effective upon filing
10 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
VerDate Mar<15>2010
19:31 Dec 09, 2011
Jkt 226001
2 15 U.S.C. 78s(b)(3)(A)(iii) and 17 CFR 240.19b–
4(f)(4).
3 The text of the proposed rule change is attached
as Exhibit 5 to DTC’s filing, which is available at
https://www.dtcc.com/downloads/legal/rule_filings/
2011/dtc/2011-10.pdf.
4 The Commission has modified the text of the
summaries prepared by NSCC.
5 Securities Exchange Act Release 24818 (August
19, 1987), 52 FR 31833 (August 24, 1987) (File No.
SR–DTC–87–10); 25948 (July 27, 1988), 53 FR
29294 (August 3, 1988) (File No. SR–DTC–88–13);
30625 (April 30, 1992), 57 FR 18534 (April 30,
1992) (File No. SR–DTC–92–06); 35342 (February 8,
1995), 60 FR 8434 (February 14, 1995) (File No. SR–
DTC–94–19); 39894 (April 21, 1998), 63 FR 23310
(April 28, 1998) (File No. SR–DTC–97–23); 45994
(May 29, 2002), 68 FR 35037 (June 11, 2003) (File
No. SR–DTC–2002–02); 59199 (January 6, 2009), 74
FR 1266 (January 12, 2009) (File No. SR–DTC–
2008–14).
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
77281
issuers, underwriters, agents (as such
terms are defined in the DTC rules or in
the OA), and their counsel are aware of
DTC’s requirements, those requirements
may be more readily met. DTC is now
proposing to update the OA to clarify
DTC’s processes and to mitigate certain
risk associated with those processes.
Additionally, DTC is proposing to make
several ministerial changes, including
changes related to methods of
notification, and to add clarifying
language to provide a more concise
description of OA procedures.
The primary differences between the
proposed amended OA and the OA as
filed with the Commission in 2009 are
as follows:
1. Matters that were previously the
subject of proposed rule change filings
with the Commission but were never
incorporated into the OA:
a. In March 2010, DTC filed with the
Commission a proposed rule change
modifying the required notification
method for the assumption or
termination of transfer agent services.6
DTC is now proposing to update the OA
to reflect those methods for notifying
DTC of transfer agency changes.
b. In May 2010, DTC filed with the
Commission a proposed rule change
updating DTC procedures regarding the
Participant Tender Offer Program in
order to provide DTC participants with
a more efficient process for making
elections regarding corporate action
events which DTC deemed appropriate
for processing.7 DTC is now proposing
to update the OA to reflect that process.
c. In November 2010, DTC filed with
the Commission a proposed rule change
to automate the approval process
relating to providing trustee access to
the Security Position Report Service at
the point of eligibility.8 DTC is now
proposing to update the OA to reflect
that process.
d. In April 2011, the Commission
approved a DTC proposed rule change
amending the requirements for transfer
agents to maintain a balance certificate
in the Fast Automated Securities
Transfer Program (‘‘FAST’’).9 DTC is
now proposing to update the OA to
specify that transfer agents participating
in FAST that act for issues participating
in the Direct Registration System no
6 Securities Exchange Release Act No. 61620
(March 1, 2010) 75 FR 10539 (March 8, 2010) (File
No. SR–DTC–2010–04).
7 For Securities Exchange Act Release No. 62119
(May 18, 2010) 75 FR 29374 (May 25, 2010) (File
No. SR–DTC–2010–08).
8 Securities Exchange Release Act No. 63245
(November 4, 2010) 75 FR 69150 (November 10,
2010) (File No. SR–DTC–2010–10).
9 Securities Exchange Act Release No. 64191
(April 5, 2011), 76 FR 20061 (April 11, 2011) (File
No. SR–DTC–2010–15).
E:\FR\FM\12DEN1.SGM
12DEN1
Agencies
[Federal Register Volume 76, Number 238 (Monday, December 12, 2011)]
[Notices]
[Pages 77279-77281]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31735]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65898; File No. SR-ISE-2011-78]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change to Amend the Threshold Levels for Tier-Based Rebates for
Qualified Contingent Cross Orders and Solicitation Orders Executed on
the Exchange
December 6, 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 November 22, 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 the threshold levels for tier-based
rebates for Qualified Contingent Cross (``QCC'') orders and
Solicitation orders. 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 purpose of this proposed rule change is to amend the threshold
contract levels to encourage members to submit greater numbers of QCC
orders and Solicitation orders to the Exchange. The Exchange currently
provides a rebate to Members who reach a certain volume threshold in
QCC orders and/or Solicitation orders during a month.\3\ Once a Member
reaches the volume threshold, the Exchange provides a rebate to that
Member for all of its QCC and Solicitation traded contracts for that
month. The rebate is paid to the Member entering a qualifying order,
i.e., a QCC order and/or a Solicitation order. The rebate applies to
QCC orders and Solicitation orders in all symbols traded on the
Exchange. Additionally, the threshold levels are based on the
originating side so if, for example, a Member submits a Solicitation
order for 1,000 contracts, all 1,000 contracts are counted to reach the
established threshold even if the order is broken up and executed with
multiple counter parties.
---------------------------------------------------------------------------
\3\ See Exchange Act Release Nos. 65087 (August 10, 2011), 76 FR
50783 (August 16, 2011) (SR-ISE-2011-47); 65583 (October 18, 2011),
76 FR 65555 (October 21, 2011) (SR-ISE-2011-68); and 65705 (November
8, 2011), 76 FR 70789 (November 15, 2011) (SR-ISE-2011-70).
---------------------------------------------------------------------------
The current volume threshold and corresponding rebate per contract
is:
------------------------------------------------------------------------
Rebate per
Originating contract sides contract
------------------------------------------------------------------------
0-99,999................................................ $0.00
100,000-1,699,999....................................... 0.01
1,700,000-2,499,999..................................... 0.03
2,500,000-3,499,999..................................... 0.05
3,500,000+.............................................. 0.07
------------------------------------------------------------------------
The Exchange now proposes to amend the current tiers by: (1)
Increasing the threshold for Members to qualify for a rebate, from a
minimum of 100,000 qualifying contracts to 200,000 qualifying
contracts. While the Exchange proposes to increase the minimum
threshold level, the Exchange also proposes to increase the rebate
payable for this tier, from $0.01 per contract to $0.02 per contract;
(2) lowering the contract threshold level for the middle tier while
maintaining the rebate at $0.03 per contract; (3) lowering the contract
threshold and the per contract rebate for the fourth tier; and (4)
lowering the amount of qualifying contracts a Member must trade to
qualify for the maximum per contract
[[Page 77280]]
rebate, from 3,500,000 qualifying contracts to 2,000,000 qualifying
contracts. To accommodate the proposed lower threshold, the Exchange
also proposes to lower the rebate payable for this tier, from $0.07 per
contract to $0.05 per contract. With the proposed changes to the tiers,
the Exchange is attempting to strike the right balance between the
number of qualifying contracts and its corresponding rebate to ensure
that the incentive program achieves its intended purpose of attracting
greater order flow from its Members.
With the proposed amended tiers, the volume threshold and
corresponding rebate per contract will be as follows:
------------------------------------------------------------------------
Rebate per
Originating contract sides contract
------------------------------------------------------------------------
0-199,999............................................... $0.00
200,000-999,999......................................... 0.02
1,000,000-1,699,999..................................... 0.03
1,700,000-1,999,999..................................... 0.04
2,000,000+.............................................. 0.05
------------------------------------------------------------------------
Further, the Exchange currently assesses per contract transaction
charges and credits to market participants that add or remove liquidity
from the Exchange (``maker/taker fees'') in a select number of options
classes (the ``Select Symbols'').\4\ For Solicitation orders in the
Select Symbols, the Exchange currently provides a rebate of $0.15 to
contracts that do not trade with the contra order in the Solicited
Order Mechanism. The Exchange does not propose any change to that
rebate and that rebate will continue to apply.
---------------------------------------------------------------------------
\4\ Options classes subject to maker/taker fees are identified
by their ticker symbol on the Exchange's Schedule of Fees.
---------------------------------------------------------------------------
The Exchange has designated this proposal to be operative on
December 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 Exchange Act of
1934 (``Exchange Act'') \5\ in general, and furthers the objectives of
Section 6(b)(4) of the Exchange Act \6\ in particular, in that it is an
equitable allocation of reasonable dues, fees and other charges among
Exchange Members. The Exchange believes that the proposed fee change
will generally allow the Exchange and its Members to better compete for
order flow and thus enhance competition. Specifically, the Exchange
believes that its proposal, which among other things, lowers the
threshold level for Members to qualify for the highest per contract
rebate payable, is reasonable as it will encourage Members who direct
their QCC and Solicitation orders to the Exchange to continue to do so
instead of sending this order flow to a competing exchange. The
Exchange believes that with the proposed amended tiers, more Members
are now likely to qualify for higher rebates for sending their QCC and
Solicitation orders to the Exchange.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
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The Exchange notes that it currently has other incentive programs
to promote and encourage growth in specific business areas. For
example, the Exchange has lower fees (or no fees) for customer orders;
\7\ and tiered pricing that reduces rates for market makers based on
the level of business they bring to the Exchange.\8\ This proposed rule
change targets a particular segment in which the Exchange seeks to
garnish greater order flow. The Exchange further believes that the
rebate currently in place for QCC and Solicitation orders is reasonable
because it is designed to give Members who trade a minimum of 200,000
qualifying contracts in QCC and Solicitation orders on the Exchange a
benefit by way of a lower transaction fee. As noted above, once a
Member reaches an established volume threshold, all of the trading
activity in the specified order type by that Member will be subject to
the corresponding rebate.
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\7\ For example, the customer fee is $0.00 per contract for
products other than Singly Listed Indexes, Singly Listed ETFs and FX
Options. For Singly Listed Options, Singly Listed ETFs and FX
Options, the customer fee is $0.18 per contract. The Exchange also
currently has an incentive plan in place for certain specific FX
Options which has its own pricing. See ISE Schedule of Fees.
\8\ The Exchange currently has a sliding scale fee structure
that ranges from $0.01 per contract to $0.18 per contract depending
on the level of volume a Member trades on the Exchange in a month.
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The Exchange also believes that its rebate program for QCC and
Solicitation orders is equitable because it would uniformly apply to
all Members engaged in QCC and Solicitation trading in all option
classes traded on the Exchange.
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 Act.\9\ 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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\9\ 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 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-2011-78 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-2011-78. 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
[[Page 77281]]
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-2011-78 and should be submitted on
or before January 3, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31735 Filed 12-9-11; 8:45 am]
BILLING CODE 8011-01-P