Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Rebates for Certain Complex Orders, 35727-35729 [2012-14531]

Download as PDF Federal Register / Vol. 77, No. 115 / Thursday, June 14, 2012 / Notices proposed rule change (SR–Phlx–2012– 40), as modified by Amendment No.1, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–14534 Filed 6–13–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67166; File No. SR–ISE– 2012–48] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Rebates for Certain Complex Orders June 8, 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 June 1, 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 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. pmangrum on DSK3VPTVN1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The ISE is proposing to make a change to its schedule of fees. 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 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 14:34 Jun 13, 2012 Jkt 226001 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 per contract transaction fees and provides rebates to market participants that add or remove liquidity from the Exchange (‘‘maker/taker fees and rebates’’) in a number of options classes (the ‘‘Select Symbols’’).3 The Exchange’s maker/ taker fees and rebates are applicable to regular and complex orders executed in the Select Symbols. The Exchange also currently assesses maker/taker fees and rebates for complex orders in symbols that are in the Penny Pilot program but are not a Select Symbol (‘‘Non-Select Penny Pilot Symbols’’) 4 and for complex orders in all symbols that are not in the Penny Pilot Program (‘‘NonPenny Pilot Symbols’’).5 Maker/taker fees and rebates for complex orders are assessed on the following order-type categories: ISE Market Maker,6 Market Maker Plus,7 Firm Proprietary, 3 Options classes subject to maker/taker fees and rebates are identified by their ticker symbol on the Exchange’s Schedule of Fees. 4 See Exchange Act Release No. 65724 (November 10, 2011), 76 FR 71413 (November 17, 2011) (SR– ISE–2011–72). 5 See Exchange Act Release Nos. 66084 (January 3, 2012), 77 FR 1103 (January 9, 2012) (SR–ISE– 2011–84); 66392 (February 14, 2012), 77 FR 10016 (February 21, 2012) (SR–ISE–2012–06); and 66961 (May 10, 2012), 77 FR 28914 (May 16, 2012) (SR– ISE–2012–38). 6 The term ‘‘Market Makers’’ refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. See ISE Rule 100(a)(25). 7 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. A Market Maker’s single best and single worst overall quoting days each month, on a per symbol basis, are excluded in calculating whether a Market Maker qualifies for this rebate, if doing so qualifies a Market Maker for the rebate. 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 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 35727 Customer (Professional),8 Non-ISE Market Maker,9 and Priority Customer.10 The Exchange is proposing to increase certain rebate amounts for complex orders in options on the Select Symbols, the Non-Select Penny Pilot Symbols, the Non-Penny Pilot Symbols and in options on one Select Symbol—SPY— which has a distinct rebate amount. Specifically, the Exchange now proposes to increase certain rebates associated with complex order volume tiers. In the Select Symbols, the Exchange currently provides a base rebate of $0.32 per contract, per leg, for Priority Customer complex orders when these orders trade with non-Priority Customer complex orders in the complex order book. Additionally, Members can earn a higher rebate amount by achieving certain average daily volume (ADV) thresholds on a month-to-month basis, as follows: If a Member achieves an ADV of 75,000 Priority Customer complex order contracts, the rebate amount for such option contracts is $0.33 per contract per leg; if a Member achieves an ADV of 125,000 Priority Customer complex order contracts, the rebate amount for such option contracts is $0.34 per contract per leg. The Exchange now proposes to adopt a new tier for Priority Customer complex order contracts in the Select Symbols of 250,000 contracts such that if a Member achieves an ADV of 250,000 Priority Customer complex order contracts, the rebate amount for such option contracts shall be $0.345 per contract per leg. The highest rebate amount achieved by a Member for the current calendar month shall apply retroactively to all Priority Customer complex order contracts that trade with non-Priority Customer complex orders in the complex order book executed by a Member during such calendar month. In the Non-Select Penny Pilot Symbols, the Exchange currently provides a base rebate of $0.28 per contract, per leg, for Priority Customer complex orders when these orders trade with non-Priority Customer complex orders in the complex order book. a daily basis with quoting statistics so that Market Makers can determine whether or not they are meeting the Exchange’s stated criteria. 8 A Customer (Professional) is a person who is not a broker/dealer and is not a Priority Customer. 9 A Non-ISE Market Maker, or Far Away Market Maker (‘‘FARMM’’), is a market maker as defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended (‘‘Exchange Act’’), registered in the same options class on another options exchange. 10 A Priority Customer is defined in ISE Rule 100(a)(37A) as a person or entity that is not a broker/dealer in securities, and does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). E:\FR\FM\14JNN1.SGM 14JNN1 pmangrum on DSK3VPTVN1PROD with NOTICES 35728 Federal Register / Vol. 77, No. 115 / Thursday, June 14, 2012 / Notices Additionally, Members can earn a higher rebate amount on a month-tomonth basis, as follows: If a Member achieves an ADV of 75,000 Priority Customer complex order contracts, the rebate amount for such option contracts is $0.30 per contract per leg; if the Member achieves an ADV of 125,000 Priority Customer complex order contracts, the rebate amount for such option contracts is $0.32 per contract per leg. The Exchange now proposes to adopt a new tier for Priority Customer complex order contracts in the NonSelect Penny Pilot Symbols of 250,000 contracts such that if a Member achieves an ADV of 250,000 Priority Customer complex order contracts, the rebate amount for such option contracts shall be $0.325 per contract per leg. The highest rebate amount achieved by a Member for the current calendar month shall apply retroactively to all Priority Customer complex order contracts that trade with non-Priority Customer complex orders in the complex order book executed by a Member during such calendar month. In the Non-Penny Pilot Symbols, the Exchange currently provides a base rebate of $0.57 per contract, per leg, for Priority Customer complex orders when these orders trade with non-Priority Customer complex orders in the complex order book. Additionally, Members can earn a higher rebate amount on a month-to-month basis, as follows: If a Member achieves an ADV of 75,000 Priority Customer complex order contracts, the rebate amount for such option contracts is $0.59 per contract per leg; if the Member achieves an ADV of 125,000 Priority Customer complex order contracts, the rebate amount for such option contracts is $0.61 per contract per leg. The Exchange now proposes to adopt a new tier for Priority Customer complex order contracts in the Non-Penny Pilot Symbols of 250,000 contracts such that if a Member achieves an ADV of 250,000 Priority Customer complex order contracts, the rebate amount for such option contracts shall be $0.615 per contract per leg. The highest rebate amount achieved by a Member for the current calendar month shall apply retroactively to all Priority Customer complex order contracts that trade with non-Priority Customer complex orders in the complex order book executed by a Member during such calendar month. Finally, for SPY, the Exchange currently provides a base rebate of $0.33 per contract, per leg, for Priority Customer complex orders when these orders trade with non-Priority Customer complex orders in the complex order book. Additionally, Members can earn a VerDate Mar<15>2010 14:34 Jun 13, 2012 Jkt 226001 higher rebate amount on a month-tomonth basis, as follows: If a Member achieves an ADV of 75,000 Priority Customer complex order contracts, the rebate amount for such option contracts is $0.34 per contract per leg; if the Member achieves an ADV of 125,000 Priority Customer complex order contracts, the rebate amount for such option contracts is $0.35 per contract per leg. The Exchange now proposes to adopt a new tier for Priority Customer complex order contracts in SPY of 250,000 contracts such that if a Member achieves an ADV of 250,000 Priority Customer complex order contracts, the rebate amount for such option contracts shall be $0.355 per contract per leg. The highest rebate amount achieved by a Member for the current calendar month shall apply retroactively to all Priority Customer complex order contracts that trade with non-Priority Customer complex orders in the complex order book executed by a Member during such calendar month. The Exchange is not proposing any other changes in this filing. 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 11 in general, and furthers the objectives of Section 6(b)(4) of the Exchange Act 12 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 interact with and respond to certain types of orders. The Exchange believes that it is reasonable and equitable to provide rebates for Priority Customer complex orders when these orders trade with Non-Priority Customer complex orders in the complex order book because paying a rebate would continue to attract additional order flow to the Exchange and create liquidity in the symbols that are subject to the rebate, which the Exchange believes ultimately will benefit all market participants who trade on ISE. The Exchange has already established a volume-based incentive program, and is now merely proposing to adopt an additional tier to that program. The Exchange believes that the proposed rebates are competitive with rebates provided by other exchanges and are therefore reasonable and 11 15 12 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(4). Frm 00072 Fmt 4703 equitably allocated to those members that direct orders to the Exchange rather than to a competing exchange. The complex order pricing employed by the Exchange has proven to be an effective pricing mechanism and attractive to Exchange participants and their customers. The Exchange believes that increasing its complex order rebates will attract additional complex order business. The Exchange further believes that the Exchange’s maker/taker fees and rebates are not unfairly discriminatory because those structures are consistent with fee structures that exist today at other options exchanges. Additionally, the Exchange believes that the proposed rebates are fair, equitable and not unfairly discriminatory because the proposed rebates are consistent with price differentiation that exists today at other option exchanges. The Exchange operates in a highly competitive market in which market participants can readily direct order flow to another exchange if they deem rebate levels at a particular exchange to be low. With this proposed rebate change, the Exchange believes it remains an attractive venue for market participants to trade complex orders. 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.13 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 13 15 Sfmt 4703 E:\FR\FM\14JNN1.SGM U.S.C. 78s(b)(3)(A)(ii). 14JNN1 Federal Register / Vol. 77, No. 115 / Thursday, June 14, 2012 / Notices 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: • 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–2012–48 on the subject line. Paper Comments pmangrum on DSK3VPTVN1PROD with NOTICES • 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–2012–48. 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– 14:34 Jun 13, 2012 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–14531 Filed 6–13–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67167; File No. SR–ISE– 2012–47] Electronic Comments VerDate Mar<15>2010 2012–48 and should be submitted on or before July 5, 2012. Jkt 226001 Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Fees June 8, 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 June 1, 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 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 change the treatment of certain orders executed in the Exchange’s Facilitation and Solicited Order Mechanisms. 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 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 35729 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 In 2010, the Exchange began assessing per contract transaction fees and rebates to market participants that add or remove liquidity from the Exchange (‘‘maker/taker fees and rebates’’) 3 in a number of options classes (the ‘‘Select Symbols’’).4 The Exchange’s maker/ taker fees and rebates are applicable to regular and complex orders executed in the Select Symbols. The Exchange subsequently adopted maker/taker fees and rebates for complex orders in symbols that are in the Penny Pilot program but are not a Select Symbol (‘‘Non-Select Penny Pilot Symbols’’) 5 and then adopted maker/taker fees and rebates for complex orders in all symbols that are not in the Penny Pilot Program (‘‘Non-Penny Pilot Symbols’’).6 Pursuant to Commission approval, the Exchange will soon introduce a new order type called ‘‘Add Liquidity Order’’ or ‘‘ALO.’’ 7 ALOs are limit orders that will only be executed as a ‘‘maker’’ on the Exchange. An ALO allows market participants to specify that they only seek to provide liquidity, thus avoiding taker fees. Currently, when a Facilitation or Solicitation order interacts with pre-existing orders and quotes, the pre-existing order or quote is treated as taker of liquidity and the Facilitation or Solicitation order that interacts with the pre-existing order or quote is provided with a rebate.8 The Exchange believes that all pre-existing orders and quotes in the Select Symbols, the Non-Select Penny Pilot Symbols and the Non-Penny Pilot Symbols should be 3 See Exchange Act Release No. 61869 (April 7, 2010), 75 FR 19449 (April 14, 2010) (SR–ISE–2010– 25). 4 The Select Symbols are identified by their ticker symbol on the Exchange’s Schedule of Fees. 5 See Exchange Act Release No. 65724 (November 10, 2011), 76 FR 71413 (November 17, 2011) (SR– ISE–2011–72). 6 See Exchange Act Release Nos. 66084 (January 3, 2012), 77 FR 1103 (January 9, 2012) (SR–ISE– 2011–84); and 66392 (February 14, 2012), 77 FR 10016 (February 21, 2012) (SR–ISE–2012–06). 7 See Exchange Act Release No. 66617 (March 19, 2012), 77 FR 17102 (March 23, 2012) (SR–ISE– 2012–20). The Exchange expects to launch ALO on June 4, 2012. 8 Currently, the Exchange provides a rebate of $0.15 to contracts that do not trade with the contra order in the Facilitation Mechanism and Solicited Order Mechanism. This rebate currently applies to the Select Symbols and to Non-Select Penny Pilot Symbols and does not apply to Non-Penny Pilot Symbols. E:\FR\FM\14JNN1.SGM 14JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 115 (Thursday, June 14, 2012)]
[Notices]
[Pages 35727-35729]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14531]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67166; File No. SR-ISE-2012-48]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Regarding Rebates for Certain Complex Orders

June 8, 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 June 1, 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 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 make a change to its schedule of fees. 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 per contract transaction fees and
provides rebates to market participants that add or remove liquidity
from the Exchange (``maker/taker fees and rebates'') in a number of
options classes (the ``Select Symbols'').\3\ The Exchange's maker/taker
fees and rebates are applicable to regular and complex orders executed
in the Select Symbols. The Exchange also currently assesses maker/taker
fees and rebates for complex orders in symbols that are in the Penny
Pilot program but are not a Select Symbol (``Non-Select Penny Pilot
Symbols'') \4\ and for complex orders in all symbols that are not in
the Penny Pilot Program (``Non-Penny Pilot Symbols'').\5\ Maker/taker
fees and rebates for complex orders are assessed on the following
order-type categories: ISE Market Maker,\6\ Market Maker Plus,\7\ Firm
Proprietary, Customer (Professional),\8\ Non-ISE Market Maker,\9\ and
Priority Customer.\10\ The Exchange is proposing to increase certain
rebate amounts for complex orders in options on the Select Symbols, the
Non-Select Penny Pilot Symbols, the Non-Penny Pilot Symbols and in
options on one Select Symbol--SPY--which has a distinct rebate amount.
---------------------------------------------------------------------------

\3\ Options classes subject to maker/taker fees and rebates are
identified by their ticker symbol on the Exchange's Schedule of
Fees.
\4\ See Exchange Act Release No. 65724 (November 10, 2011), 76
FR 71413 (November 17, 2011) (SR-ISE-2011-72).
\5\ See Exchange Act Release Nos. 66084 (January 3, 2012), 77 FR
1103 (January 9, 2012) (SR-ISE-2011-84); 66392 (February 14, 2012),
77 FR 10016 (February 21, 2012) (SR-ISE-2012-06); and 66961 (May 10,
2012), 77 FR 28914 (May 16, 2012) (SR-ISE-2012-38).
\6\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule
100(a)(25).
\7\ 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. A Market Maker's single best
and single worst overall quoting days each month, on a per symbol
basis, are excluded in calculating whether a Market Maker qualifies
for this rebate, if doing so qualifies a Market Maker for the
rebate. 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.
\8\ A Customer (Professional) is a person who is not a broker/
dealer and is not a Priority Customer.
\9\ A Non-ISE Market Maker, or Far Away Market Maker
(``FARMM''), is a market maker as defined in Section 3(a)(38) of the
Securities Exchange Act of 1934, as amended (``Exchange Act''),
registered in the same options class on another options exchange.
\10\ A Priority Customer is defined in ISE Rule 100(a)(37A) as a
person or entity that is not a broker/dealer in securities, and does
not place more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s).
---------------------------------------------------------------------------

Specifically, the Exchange now proposes to increase certain rebates
associated with complex order volume tiers. In the Select Symbols, the
Exchange currently provides a base rebate of $0.32 per contract, per
leg, for Priority Customer complex orders when these orders trade with
non-Priority Customer complex orders in the complex order book.
Additionally, Members can earn a higher rebate amount by achieving
certain average daily volume (ADV) thresholds on a month-to-month
basis, as follows: If a Member achieves an ADV of 75,000 Priority
Customer complex order contracts, the rebate amount for such option
contracts is $0.33 per contract per leg; if a Member achieves an ADV of
125,000 Priority Customer complex order contracts, the rebate amount
for such option contracts is $0.34 per contract per leg. The Exchange
now proposes to adopt a new tier for Priority Customer complex order
contracts in the Select Symbols of 250,000 contracts such that if a
Member achieves an ADV of 250,000 Priority Customer complex order
contracts, the rebate amount for such option contracts shall be $0.345
per contract per leg. The highest rebate amount achieved by a Member
for the current calendar month shall apply retroactively to all
Priority Customer complex order contracts that trade with non-Priority
Customer complex orders in the complex order book executed by a Member
during such calendar month.
In the Non-Select Penny Pilot Symbols, the Exchange currently
provides a base rebate of $0.28 per contract, per leg, for Priority
Customer complex orders when these orders trade with non-Priority
Customer complex orders in the complex order book.

[[Page 35728]]

Additionally, Members can earn a higher rebate amount on a month-to-
month basis, as follows: If a Member achieves an ADV of 75,000 Priority
Customer complex order contracts, the rebate amount for such option
contracts is $0.30 per contract per leg; if the Member achieves an ADV
of 125,000 Priority Customer complex order contracts, the rebate amount
for such option contracts is $0.32 per contract per leg. The Exchange
now proposes to adopt a new tier for Priority Customer complex order
contracts in the Non-Select Penny Pilot Symbols of 250,000 contracts
such that if a Member achieves an ADV of 250,000 Priority Customer
complex order contracts, the rebate amount for such option contracts
shall be $0.325 per contract per leg. The highest rebate amount
achieved by a Member for the current calendar month shall apply
retroactively to all Priority Customer complex order contracts that
trade with non-Priority Customer complex orders in the complex order
book executed by a Member during such calendar month.
In the Non-Penny Pilot Symbols, the Exchange currently provides a
base rebate of $0.57 per contract, per leg, for Priority Customer
complex orders when these orders trade with non-Priority Customer
complex orders in the complex order book. Additionally, Members can
earn a higher rebate amount on a month-to-month basis, as follows: If a
Member achieves an ADV of 75,000 Priority Customer complex order
contracts, the rebate amount for such option contracts is $0.59 per
contract per leg; if the Member achieves an ADV of 125,000 Priority
Customer complex order contracts, the rebate amount for such option
contracts is $0.61 per contract per leg. The Exchange now proposes to
adopt a new tier for Priority Customer complex order contracts in the
Non-Penny Pilot Symbols of 250,000 contracts such that if a Member
achieves an ADV of 250,000 Priority Customer complex order contracts,
the rebate amount for such option contracts shall be $0.615 per
contract per leg. The highest rebate amount achieved by a Member for
the current calendar month shall apply retroactively to all Priority
Customer complex order contracts that trade with non-Priority Customer
complex orders in the complex order book executed by a Member during
such calendar month.
Finally, for SPY, the Exchange currently provides a base rebate of
$0.33 per contract, per leg, for Priority Customer complex orders when
these orders trade with non-Priority Customer complex orders in the
complex order book. Additionally, Members can earn a higher rebate
amount on a month-to-month basis, as follows: If a Member achieves an
ADV of 75,000 Priority Customer complex order contracts, the rebate
amount for such option contracts is $0.34 per contract per leg; if the
Member achieves an ADV of 125,000 Priority Customer complex order
contracts, the rebate amount for such option contracts is $0.35 per
contract per leg. The Exchange now proposes to adopt a new tier for
Priority Customer complex order contracts in SPY of 250,000 contracts
such that if a Member achieves an ADV of 250,000 Priority Customer
complex order contracts, the rebate amount for such option contracts
shall be $0.355 per contract per leg. The highest rebate amount
achieved by a Member for the current calendar month shall apply
retroactively to all Priority Customer complex order contracts that
trade with non-Priority Customer complex orders in the complex order
book executed by a Member during such calendar month.
The Exchange is not proposing any other changes in this filing.
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 \11\ in
general, and furthers the objectives of Section 6(b)(4) of the Exchange
Act \12\ 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
interact with and respond to certain types of orders.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable and equitable to
provide rebates for Priority Customer complex orders when these orders
trade with Non-Priority Customer complex orders in the complex order
book because paying a rebate would continue to attract additional order
flow to the Exchange and create liquidity in the symbols that are
subject to the rebate, which the Exchange believes ultimately will
benefit all market participants who trade on ISE. The Exchange has
already established a volume-based incentive program, and is now merely
proposing to adopt an additional tier to that program. The Exchange
believes that the proposed rebates are competitive with rebates
provided by other exchanges and are therefore reasonable and equitably
allocated to those members that direct orders to the Exchange rather
than to a competing exchange.
The complex order pricing employed by the Exchange has proven to be
an effective pricing mechanism and attractive to Exchange participants
and their customers. The Exchange believes that increasing its complex
order rebates will attract additional complex order business.
The Exchange further believes that the Exchange's maker/taker fees
and rebates are not unfairly discriminatory because those structures
are consistent with fee structures that exist today at other options
exchanges. Additionally, the Exchange believes that the proposed
rebates are fair, equitable and not unfairly discriminatory because the
proposed rebates are consistent with price differentiation that exists
today at other option exchanges. The Exchange operates in a highly
competitive market in which market participants can readily direct
order flow to another exchange if they deem rebate levels at a
particular exchange to be low. With this proposed rebate change, the
Exchange believes it remains an attractive venue for market
participants to trade complex orders.

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.\13\ 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

[[Page 35729]]

Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule should be approved
or disapproved.
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\13\ 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-2012-48 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-2012-48. 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-2012-48 and should be
submitted on or before July 5, 2012.
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\14\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14531 Filed 6-13-12; 8:45 am]
BILLING CODE 8011-01-P

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