Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Options Regulatory Fee, 33535-33537 [2012-13643]
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Federal Register / Vol. 77, No. 109 / Wednesday, June 6, 2012 / Notices
mstockstill on DSK4VPTVN1PROD 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
Numbers SR–BATS–2011–038; SR–
BYX–2011–025; SR–BX–2011–068; SR–
CBOE–2011–087; SR–C2–2011–024;
SR–CHX–2011–30; SR–EDGA–2011–31;
SR–EDGX–2011–30; SR–FINRA–2011–
054; SR–ISE–2011–61; SR–NASDAQ–
2011–131; SR–NSX–2011–11; SR–
NYSE–2011–48; SR–NYSEAmex–2011–
73; SR–NYSEArca–2011–68; SR–Phlx–
2011–129 on the subject line.
should refer to File Numbers SR–BATS–
2011–038; SR–BYX–2011–025; SR–BX–
2011–068; SR–CBOE–2011–087; SR–
C2–2011–024; SR–CHX–2011–30; SR–
EDGA–2011–31; SR–EDGX–2011–30;
SR–FINRA–2011–054; SR–ISE–2011–61;
SR–NASDAQ–2011–131; SR–NSX–
2011–11; SR–NYSE–2011–48; SR–
NYSEAmex–2011–73; SR–NYSEArca–
2011–68; SR–Phlx–2011–129 and
should be submitted on or before June
27, 2012.
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
Numbers SR–BATS–2011–038; SR–
BYX–2011–025; SR–BX–2011–068; SR–
CBOE–2011–087; SR–C2–2011–024;
SR–CHX–2011–30; SR–EDGA–2011–31;
SR–EDGX–2011–30; SR–FINRA–2011–
054; SR–ISE–2011–61; SR–NASDAQ–
2011–131; SR–NSX–2011–11; SR–
NYSE–2011–48; SR–NYSEAmex–2011–
73; SR–NYSEArca–2011–68; SR–Phlx–
2011–129. These file numbers 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
10:00 a.m. and 3:00 p.m. Copies of the
filings also will be available for
inspection and copying at the principal
offices of the exchanges and FINRA,
respectively. 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
The Amendments revised the SRO
Proposals to, among other things,
specify that the proposed rule change
will be operative on a pilot basis,
beginning February 4, 2013, and
continuing until February 4, 2014. The
Amendments will allow the
Commission, the SROs and market
participants to further consider, during
the pilot period, issues raised by
commenters with respect to certain
aspects of the SRO Proposals, and to
benefit from the experience with the
Limit Up-Limit Down mechanism for
individual securities that also is being
approved today on a pilot basis. Such
further consideration will allow the
Commission to consider whether
modifications to the market-wide circuit
breakers are warranted prior to any
decision as to whether to approve them
on a permanent basis. Accordingly, the
Commission also finds good cause,
pursuant to Section 19(b)(2) of the
Act,48 for approving the SRO Proposals,
as modified by the Amendments, prior
to the 30th day after the date of
publication of notice in the Federal
Register.
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17:24 Jun 05, 2012
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VI. Accelerated Approval of Proposed
Rule Changes, as Modified by the
Amendments
VII. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,49 that the
proposed rule changes (SR–BATS–
2011–038; SR–BYX–2011–025; SR–BX–
2011–068; SR–CBOE–2011–087; SR–
C2–2011–024; SR–CHX–2011–30; SR–
EDGA–2011–31; SR–EDGX–2011–30;
SR–FINRA–2011–054; SR–ISE–2011–61;
SR–NASDAQ–2011–131; SR–NSX–
2011–11; SR–NYSE–2011–48; SR–
NYSEAmex–2011–73; SR–NYSEArca–
2011–68; SR–Phlx–2011–129), as
modified by the Amendments, be, and
hereby are, approved on an accelerated
basis.
48 15
49 15
PO 00000
U.S.C. 78s(b)(2).
U.S.C. 78s(b)(2).
Frm 00148
Fmt 4703
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012–13652 Filed 6–5–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67087; File No. SR–ISE–
2012–43]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to the Options
Regulatory Fee
May 31, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on May 25, 2012, the International
Securities Exchange, LLC (the
‘‘Exchange’’ or the ‘‘ISE’’) 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
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 proposes to increase its
Options Regulatory Fee. 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
2 17
Sfmt 4703
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E:\FR\FM\06JNN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
06JNN1
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Federal Register / Vol. 77, No. 109 / Wednesday, June 6, 2012 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
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 Options
Regulatory Fee (‘‘ORF’’) to increase it
from $0.0035 per contract to $0.0042 per
contract in order to recoup increased
regulatory expenses while also ensuring
that the ORF will not exceed costs.
The ORF is assessed by the Exchange
to each member for all options
transactions executed or cleared by the
member that are cleared by The Options
Clearing Corporation (‘‘OCC’’) in the
customer range, i.e., transactions that
clear in the customer account of the
member’s clearing firm at OCC,
regardless of the marketplace of
execution. In other words, ISE imposes
the ORF on all customer-range
transactions executed by a member,
even if the transactions do not take
place on the Exchange.3 The ORF also
is charged for customer-range
transactions that are not executed by an
ISE member but are ultimately cleared
by an ISE member. In the case where an
ISE member executes a transaction and
an ISE member clears the transaction,
the ORF is assessed to the member who
executed the transaction. In the case
where a non-ISE member executes a
transaction and an ISE member clears
the transaction, the ORF is assessed to
the ISE member who clears the
transaction.
The dues and fees paid by members
go into the general funds of the
Exchange, a portion of which is used to
help pay the costs of regulation. The
Exchange monitors the amount of
revenue collected from the ORF to
ensure that it, in combination with other
regulatory fees and fines, does not
exceed regulatory costs. The ORF is
collected indirectly from members
through their clearing firms by OCC on
behalf of the Exchange.
The ORF is designed to recover a
material portion of the costs to the
Exchange of the supervision and
regulation of its members, including
performing routine surveillances,
investigations, as well as policy,
rulemaking, interpretive and
enforcement activities. The Exchange
believes that revenue generated from the
ORF, when combined with all of the
3 Exchange rules require each member to submit
trade information in order to allow the Exchange to
properly prioritize and match orders and quotations
and report resulting transactions to the OCC. See
ISE Rule 712. The Exchange represents that it has
surveillances in place to verify that members
comply with the rule.
VerDate Mar<15>2010
17:24 Jun 05, 2012
Jkt 226001
Exchange’s other regulatory fees, will
cover a material portion, but not all, of
the Exchange’s regulatory costs. The
Exchange notes that its regulatory
responsibilities with respect to member
compliance with options sales practice
rules have been allocated to FINRA
under a 17d–2 agreement. The ORF is
not designed to cover the cost of options
sales practice regulation. The Exchange
will continue to monitor the amount of
revenue collected from the ORF to
ensure that it, in combination with its
other regulatory fees and fines, does not
exceed regulatory costs. If the Exchange
determines regulatory revenues exceed
regulatory costs, the Exchange will
adjust the ORF by submitting a fee filing
change to the Commission. The
Exchange has designated this proposal
to be operative on June 1, 2012.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Schedule of Fees
is consistent with Section 6(b) of the
Exchange Act 4 in general, and furthers
the objectives of Section 6(b)(4) of the
Exchange Act 5 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 Exchange
believes that the proposed fee change is
reasonable because the Exchange’s
collection of the ORF has declined due
to a decrease in industry volume and
the adjustment would serve to provide
the Exchange with additional ORF. The
additional ORF will help offset
regulatory expenses, but does not
exceed regulatory costs.
The Exchange believes that the ORF is
equitable and not unfairly
discriminatory because it is objectively
allocated to Exchange members in that
it would continue to be charged to all
members on all of their transactions that
clear as customer at OCC. Moreover, the
Exchange believes the ORF ensures
fairness by assessing higher fees to those
member firms that require more
Exchange regulatory services based on
the amount of customer options
business they conduct. Regulating
customer trading activity is more labor
intensive and requires greater
expenditure of human and technical
resources than regulating non-customer
trading activity. Surveillance and
regulation of non-customer trading
activity tends to be more automated and
less labor-intensive. As a result, the
costs associated with administering the
customer component of the Exchange’s
overall regulatory program are
4 15
5 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
Frm 00149
Fmt 4703
anticipated to be higher than the costs
associated with administering the noncustomer component of its regulatory
program. As such, the Exchange
proposes assessing higher fees to those
firms that will require more Exchange
regulatory services based on the amount
of customer options business they
conduct. The ORF is not charged for
orders that clear in categories other than
the customer range (e.g., market maker
orders) because members incur the costs
of owning memberships and through
their memberships are charged
transaction fees, dues and other fees
which go into the general funds of the
Exchange, a portion of which is used to
help pay the costs of regulation.
As previously stated, OCC collects the
ORF on behalf of ISE through each
member’s clearing firm. In addition, the
ORF seeks to recover the costs of
supervising and regulating members,
including performing routine
surveillances, investigations, as well as
policy, rulemaking, interpretive and
enforcement activities. The Exchange
will continue to monitor the amount of
revenue collected from the ORF to
ensure that it, in combination with its
other regulatory fees and fines, does not
exceed regulatory costs. If the Exchange
determines regulatory revenues exceed
regulatory costs, the Exchange will
adjust the ORF by submitting a fee filing
change to the Commission.
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.6 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
6 15
Sfmt 4703
E:\FR\FM\06JNN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
06JNN1
Federal Register / Vol. 77, No. 109 / Wednesday, June 6, 2012 / Notices
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.
should refer to File Number SR–ISE–
2012–43 and should be submitted on or
before June 27, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–13643 Filed 6–5–12; 8:45 am]
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–2012–43 on the subject
line.
mstockstill on DSK4VPTVN1PROD with NOTICES
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:
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change Relating to the
Handling of Stop and Stop Limit
Orders
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–ISE–2012–43. 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
10:00 a.m. and 3:00 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
VerDate Mar<15>2010
17:24 Jun 05, 2012
Jkt 226001
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67085; File No. SR–FINRA–
2012–026]
May 31, 2012.
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 May 24,
2012, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. 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
FINRA is proposing to amend
FINRA’s rules relating to the handling of
stop and stop limit orders.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
7 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00150
Fmt 4703
33537
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
FINRA Rule 6140(h) addresses the
handling of stop orders in NMS stocks.3
Specifically, the Rule provides that a
member may, but is not obligated to,
accept a stop order in a designated
security.4 The Rule further provides that
a stop order becomes a market order (or
a stop limit order becomes a limit order)
when a transaction takes place at or
above the stop price (in the case of a buy
stop order) or at or below the stop price
(in the case of a sell stop order).5
Although Rule 6140(h) provides that
a stop order is triggered by a transaction,
FINRA understands that certain firms
and their customers prefer alternative
triggers for activating a stop or stop limit
order. For example, some members have
noted that using quotations may be
preferable because, for some securities,
quotations serve as a better indicator of
the current price than transactions.
Thinly traded securities (e.g., certain
exchange-traded funds) have limited
trading during the trading day, although
quotations may be continuously
updated and would serve as the better
indicator of the current market price for
these securities. As such, investors in
these securities may prefer that their
stop order be monitored against
quotations instead of waiting for trades.
Conversely, some members have
indicated that customers could be
disadvantaged by the triggering of a stop
order on a quotation because doing so
may result in an execution at a price
that the stock had never traded at that
day—an outcome that may be
considered undesirable for an investor
placing a stop order.6
3 The requirements in Rule 6140(h) were initially
adopted by NASD (and the national securities
exchanges) in 1975. See Notice to Members 75–42
(June 10, 1975) (Rules Governing Reporting of
Transactions to Consolidated Tape).
4 Rule 6140(a) defines a ‘‘designated security’’ as
any NMS stock as defined in Rule 600(b)(47) of SEC
Regulation NMS.
5 Stop buy orders generally are entered by
investors with short positions to limit losses should
the stock price increase. Stop sell orders generally
are entered in a stock whose price has increased
substantially in order to protect the investor’s
profits should the stock price decline.
6 Other concerns with using quotations include
that quotations may be more vulnerable to abuse
because they can be manipulated to trigger stops
and then withdrawn/changed. However, other
members note that using transactions also could
result in the improper triggering of a customer’s
stop order due to trades at prices outside of the
Continued
Sfmt 4703
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06JNN1
Agencies
[Federal Register Volume 77, Number 109 (Wednesday, June 6, 2012)]
[Notices]
[Pages 33535-33537]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-13643]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67087; File No. SR-ISE-2012-43]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to the Options Regulatory Fee
May 31, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is
hereby given that on May 25, 2012, the International Securities
Exchange, LLC (the ``Exchange'' or the ``ISE'') 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 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 proposes to increase its Options Regulatory Fee. 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.
[[Page 33536]]
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 Options
Regulatory Fee (``ORF'') to increase it from $0.0035 per contract to
$0.0042 per contract in order to recoup increased regulatory expenses
while also ensuring that the ORF will not exceed costs.
The ORF is assessed by the Exchange to each member for all options
transactions executed or cleared by the member that are cleared by The
Options Clearing Corporation (``OCC'') in the customer range, i.e.,
transactions that clear in the customer account of the member's
clearing firm at OCC, regardless of the marketplace of execution. In
other words, ISE imposes the ORF on all customer-range transactions
executed by a member, even if the transactions do not take place on the
Exchange.\3\ The ORF also is charged for customer-range transactions
that are not executed by an ISE member but are ultimately cleared by an
ISE member. In the case where an ISE member executes a transaction and
an ISE member clears the transaction, the ORF is assessed to the member
who executed the transaction. In the case where a non-ISE member
executes a transaction and an ISE member clears the transaction, the
ORF is assessed to the ISE member who clears the transaction.
---------------------------------------------------------------------------
\3\ Exchange rules require each member to submit trade
information in order to allow the Exchange to properly prioritize
and match orders and quotations and report resulting transactions to
the OCC. See ISE Rule 712. The Exchange represents that it has
surveillances in place to verify that members comply with the rule.
---------------------------------------------------------------------------
The dues and fees paid by members go into the general funds of the
Exchange, a portion of which is used to help pay the costs of
regulation. The Exchange monitors the amount of revenue collected from
the ORF to ensure that it, in combination with other regulatory fees
and fines, does not exceed regulatory costs. The ORF is collected
indirectly from members through their clearing firms by OCC on behalf
of the Exchange.
The ORF is designed to recover a material portion of the costs to
the Exchange of the supervision and regulation of its members,
including performing routine surveillances, investigations, as well as
policy, rulemaking, interpretive and enforcement activities. The
Exchange believes that revenue generated from the ORF, when combined
with all of the Exchange's other regulatory fees, will cover a material
portion, but not all, of the Exchange's regulatory costs. The Exchange
notes that its regulatory responsibilities with respect to member
compliance with options sales practice rules have been allocated to
FINRA under a 17d-2 agreement. The ORF is not designed to cover the
cost of options sales practice regulation. The Exchange will continue
to monitor the amount of revenue collected from the ORF to ensure that
it, in combination with its other regulatory fees and fines, does not
exceed regulatory costs. If the Exchange determines regulatory revenues
exceed regulatory costs, the Exchange will adjust the ORF by submitting
a fee filing change to the Commission. The Exchange has designated this
proposal to be operative on June 1, 2012.
2. Statutory Basis
The Exchange believes that its proposal to amend its Schedule of
Fees is consistent with Section 6(b) of the Exchange Act \4\ in
general, and furthers the objectives of Section 6(b)(4) of the Exchange
Act \5\ 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 Exchange believes that the
proposed fee change is reasonable because the Exchange's collection of
the ORF has declined due to a decrease in industry volume and the
adjustment would serve to provide the Exchange with additional ORF. The
additional ORF will help offset regulatory expenses, but does not
exceed regulatory costs.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that the ORF is equitable and not unfairly
discriminatory because it is objectively allocated to Exchange members
in that it would continue to be charged to all members on all of their
transactions that clear as customer at OCC. Moreover, the Exchange
believes the ORF ensures fairness by assessing higher fees to those
member firms that require more Exchange regulatory services based on
the amount of customer options business they conduct. Regulating
customer trading activity is more labor intensive and requires greater
expenditure of human and technical resources than regulating non-
customer trading activity. Surveillance and regulation of non-customer
trading activity tends to be more automated and less labor-intensive.
As a result, the costs associated with administering the customer
component of the Exchange's overall regulatory program are anticipated
to be higher than the costs associated with administering the non-
customer component of its regulatory program. As such, the Exchange
proposes assessing higher fees to those firms that will require more
Exchange regulatory services based on the amount of customer options
business they conduct. The ORF is not charged for orders that clear in
categories other than the customer range (e.g., market maker orders)
because members incur the costs of owning memberships and through their
memberships are charged transaction fees, dues and other fees which go
into the general funds of the Exchange, a portion of which is used to
help pay the costs of regulation.
As previously stated, OCC collects the ORF on behalf of ISE through
each member's clearing firm. In addition, the ORF seeks to recover the
costs of supervising and regulating members, including performing
routine surveillances, investigations, as well as policy, rulemaking,
interpretive and enforcement activities. The Exchange will continue to
monitor the amount of revenue collected from the ORF to ensure that it,
in combination with its other regulatory fees and fines, does not
exceed regulatory costs. If the Exchange determines regulatory revenues
exceed regulatory costs, the Exchange will adjust the ORF by submitting
a fee filing change to the Commission.
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.\6\ 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
[[Page 33537]]
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.
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\6\ 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-2012-43 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2012-43. 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
10:00 a.m. and 3:00 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-2012-43 and should be
submitted on or before June 27, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-13643 Filed 6-5-12; 8:45 am]
BILLING CODE 8011-01-P