Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fees and Rebates for Certain Complex Orders Executed on the Exchange, 42036-42038 [2012-17328]

Download as PDF 42036 Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices Number SR–NYSEArca–2012–68 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–NYSEArca–2012–68. 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 Section, 100 F Street NE., Washington, DC 20549. Copies of the filing will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at www.nyse.com. 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– NYSEArca–2012–68 and should be submitted on or before August 7, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–17329 Filed 7–16–12; 8:45 am] tkelley on DSK3SPTVN1PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67400; File No. SR–ISE– 2012–63] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fees and Rebates for Certain Complex Orders Executed on the Exchange July 11, 2012. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 2, 2012, 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, 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 is proposing to amend transaction fees and rebates for certain complex orders executed on the Exchange. The text of the proposed rule change is available on the Exchange’s Web site (https://www.ise.com), at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements. 1 15 14 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 16:53 Jul 16, 2012 2 17 Jkt 226001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00070 Fmt 4703 Sfmt 4703 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 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 all symbols that are not in the Penny Pilot Program (‘‘NonPenny Pilot Symbols’’).4 The purpose of this proposed rule change is to amend maker/taker fees and rebates for complex orders in the Non-Penny Pilot Symbols. For complex orders in the Non-Penny Pilot Symbols, the Exchange currently charges a ‘‘taker’’ fee of: (i) $0.73 per contract for ISE Market Maker,5 Firm Proprietary and Customer (Professional) 6 orders; and (ii) $0.78 per contract for Non-ISE Market Maker 7 orders. Priority Customer 8 orders are not charged a ‘‘taker’’ fee for complex orders in the Non-Penny Pilot Symbols. For complex orders in these same symbols, the Exchange currently charges a ‘‘maker’’ fee of $0.10 per contract for ISE Market Maker, Non-ISE Market Maker, Firm Proprietary and Customer (Professional) orders. Priority Customer orders are not charged a ‘‘maker’’ fee for complex orders in these symbols. The Exchange now proposes to increase the ‘‘taker’’ fee for complex orders in the Non-Penny Pilot Symbols to (i) [sic] $0.75 per contract for ISE 3 Options classes subject to maker/taker fees are identified by their ticker symbol on the Exchange’s Schedule of Fees. 4 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 66962 (May 10, 2012), 77 FR 28917 (May 16, 2012) (SR– ISE–2012–35). 5 The term ‘‘Market Makers’’ refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. See ISE Rule 100(a)(25). 6 A Customer (Professional) is a person who is not a broker/dealer and is not a Priority Customer. 7 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. 8 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\17JYN1.SGM 17JYN1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices Market Maker, Firm Proprietary and Customer (Professional) orders. The Exchange is not proposing any change to the ‘‘taker’’ fees for Non-ISE Market Maker and Priority Customer orders. Further, the Exchange currently provides volume-based tiered rebates for Priority Customer complex orders in the Non-Penny Pilot Symbols when these orders trade with non-Priority Customer orders in the complex order book. Specifically, the Exchange currently provides a 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 who achieve certain average daily volume (ADV) of Priority Customer complex order contracts across all symbols executed during a calendar month are provided a rebate of $0.59 per contract per leg, if a Member achieves an ADV of 75,000 Priority Customer complex order contracts; $0.61 per contract per leg, if a Member achieves an ADV of 125,000 Priority Customer complex order contracts; and $0.615 per contract per leg, if a Member achieves an ADV of 250,000 Priority Customer complex order contracts. The highest rebate amount achieved by the Member for the current calendar month applies retroactively to all Priority Customer complex order contracts that trade with non-Priority Customer complex orders in the complex order book executed by the Member during such calendar month. In order to enhance the Exchange’s competitive position and to incentivize Members to increase the amount of Priority Customer complex orders that they send to the Exchange, the Exchange now proposes to increase the base amount of the rebate to $0.62 per contract. Additionally, the Exchange proposes to increase the amount of that rebate even further, on a month-bymonth and Member-by-Member basis, if such Member achieves an ADV of Priority Customer complex order contracts across all symbols executed during the calendar month, as follows: If the Member achieves an ADV of 75,000 Priority Customer complex order contracts, the rebate amount shall be $0.64 per contract per leg; if the Member achieves an ADV of 125,000 Priority Customer complex order contracts, the rebate amount shall be $0.66 per contract per leg; and if the Member achieves an ADV of 250,000 Priority Customer complex order contracts, the rebate amount shall be $0.67 per contract per leg. Additionally, the Exchange provides ISE Market Makers with a two cent VerDate Mar<15>2010 16:53 Jul 16, 2012 Jkt 226001 discount when trading against orders that are preferenced to them. This discount is applicable when ISE Market Makers remove liquidity in the NonPenny Pilot Symbols from the complex order book. With the proposed increase to the ‘‘taker’’ fee for complex orders in the Non-Penny Pilot Symbols, ISE Market Makers who remove liquidity in the Non-Penny Pilot Symbols from the complex order book by trading with orders that are preferenced to them will be charged $0.73 per contract. 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 9 in general, and furthers the objectives of Section 6(b)(4) of the Exchange Act 10 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 it is reasonable and equitable to charge ISE Market Maker, Firm Proprietary and Customer (Professional) orders a ‘‘taker’’ fee of $0.75 per contract for complex orders in the Non-Penny Pilot Symbols because the Exchange is seeking to recoup the cost associated with paying increased rebates for Priority Customer complex orders. The Exchange believes the proposed fees are also reasonable and equitably allocated because they are within the range of fees assessed by other exchanges employing similar pricing schemes. 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 already provides these types of rebates, and is now merely proposing to increase those rebate amounts. The Exchange believes that the proposed rebates are competitive with rebates provided by other exchanges and are therefore reasonable and equitably allocated to PO 00000 9 15 U.S.C. 78f(b). U.S.C. 78f(b)(4). 10 15 Frm 00071 Fmt 4703 Sfmt 4703 42037 those members that direct orders to the Exchange rather than to a competing exchange. The Exchange believes that it is reasonable and equitable to provide a two cent discount to ISE Market Makers on preferenced orders as an incentive for them to quote in the complex order book. The Exchange notes that PHLX currently provides a similar discount. Accordingly, ISE Market Makers who remove liquidity in the Non-Penny Pilot Symbols from the complex order book will be charged $0.73 per contract when trading with orders that are preferenced to them. The Exchange notes that with this proposed fee change, the Exchange, while increasing this fee, will continue to maintain a two cent differential that was previously in place. 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 to the Exchange. The Exchange further believes that the Exchange’s complex order rebates and its maker/ taker fees are not unfairly discriminatory because these fee structures are consistent with fee structures that exist today at other options exchanges. Additionally, the Exchange believes that the proposed fees and rebates are fair, equitable and not unfairly discriminatory because the proposed fees and 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 fee levels at a particular exchange to be excessive. 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 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. E:\FR\FM\17JYN1.SGM 17JYN1 42038 Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices 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.11 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the 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–2012–63 on the subject line. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–17328 Filed 7–16–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67409; File No. SR–C2– 2012–022] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Continuous Quotes July 11, 2012. Paper Comments tkelley on DSK3SPTVN1PROD with NOTICES 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– 2012–63 and should be submitted on or before August 7, 2012. • 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–2012–63. 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 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 5, 2012, C2 Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) filed with the Securities and Exchange Commission (the ‘‘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 Exchange proposes to amend its Rules relating to continuous quotes. The text of the proposed rule change is available on the Exchange’s Web site (https://www.c2exchange.com/Legal/), at the Exchange’s Office of the Secretary, and at the Commission. 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 11 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 16:53 Jul 16, 2012 Jkt 226001 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend Rule 8.5, ‘‘Obligations of Market-Makers,’’ to reduce to 90% the percentage of time for which a Market-Maker is required to provide quotes in an appointed option class. The proposed rule change is comparable to the rules of other options exchanges applicable to equivalent market participants.3 Rule 8.5(a)(1) provides that during trading hours, a Market-Maker must maintain a continuous two-sided market in 60% of the non-adjusted option series 4 of each registered class that have a time to expiration of less than nine months. For purposes of that obligation, ‘‘continuous’’ means 99% of the time. The rule also provides that if a technical failure or limitation of the Exchange’s system prevents a Market-Maker from maintaining, or from communicating to the Exchange, timely and accurate quotes in a series, the duration of such failure will not be considered in determining whether that Market-Maker 3 The continuous quoting obligations for NASDAQ Options Market (‘‘NOM’’) market-makers and NASDAQ OMX PHLX LLC (‘‘PHLX’’) streaming quote trades (‘‘SQTs’’) and remote SQTs (‘‘RSQTs) are generally as follows: (1) NOM Chapter VII, Section 6(d)—market-makers must enter continuous bids and offers in at least 60% of the series in options in which the market-maker is registered for 90% of the trading day (as a percentage of the total number of minutes in such trading day) or such higher percentage as NASDAQ may announce in advance; and (2) PHLX Rule 1014(b)(ii)(D)(1)— SQTs and RSQTs must quote two-sided markets in 60% of series of the options in which they are assigned for at least 90% of the trading day (as a percentage of the total number of minutes in such trading day). 4 The rule defines an ‘‘adjusted option series’’ as an option series wherein, as a result of a corporate action by the issuer of the underlying security, one option contract in the series represents the delivery of other than 100 shares of underlying stock or Units. E:\FR\FM\17JYN1.SGM 17JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 137 (Tuesday, July 17, 2012)]
[Notices]
[Pages 42036-42038]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17328]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67400; File No. SR-ISE-2012-63]

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

July 11, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\
notice is hereby given that on July 2, 2012, 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, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The ISE is proposing to amend transaction fees and rebates for
certain complex orders executed on the Exchange. The text of the
proposed rule change is available on the Exchange's Web site (https://www.ise.com), at the principal office of the Exchange, and at the
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in sections A, B and C below, of the
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange currently assesses per contract transaction fees and
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 all symbols that are not in the
Penny Pilot Program (``Non-Penny Pilot Symbols'').\4\ The purpose of
this proposed rule change is to amend maker/taker fees and rebates for
complex orders in the Non-Penny Pilot Symbols.
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\3\ Options classes subject to maker/taker fees are identified
by their ticker symbol on the Exchange's Schedule of Fees.
\4\ 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 66962 (May 10,
2012), 77 FR 28917 (May 16, 2012) (SR-ISE-2012-35).
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For complex orders in the Non-Penny Pilot Symbols, the Exchange
currently charges a ``taker'' fee of: (i) $0.73 per contract for ISE
Market Maker,\5\ Firm Proprietary and Customer (Professional) \6\
orders; and (ii) $0.78 per contract for Non-ISE Market Maker \7\
orders. Priority Customer \8\ orders are not charged a ``taker'' fee
for complex orders in the Non-Penny Pilot Symbols. For complex orders
in these same symbols, the Exchange currently charges a ``maker'' fee
of $0.10 per contract for ISE Market Maker, Non-ISE Market Maker, Firm
Proprietary and Customer (Professional) orders. Priority Customer
orders are not charged a ``maker'' fee for complex orders in these
symbols.
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\5\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule
100(a)(25).
\6\ A Customer (Professional) is a person who is not a broker/
dealer and is not a Priority Customer.
\7\ 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.
\8\ 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).
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The Exchange now proposes to increase the ``taker'' fee for complex
orders in the Non-Penny Pilot Symbols to (i) [sic] $0.75 per contract
for ISE

[[Page 42037]]

Market Maker, Firm Proprietary and Customer (Professional) orders. The
Exchange is not proposing any change to the ``taker'' fees for Non-ISE
Market Maker and Priority Customer orders.
Further, the Exchange currently provides volume-based tiered
rebates for Priority Customer complex orders in the Non-Penny Pilot
Symbols when these orders trade with non-Priority Customer orders in
the complex order book. Specifically, the Exchange currently provides a
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 who achieve
certain average daily volume (ADV) of Priority Customer complex order
contracts across all symbols executed during a calendar month are
provided a rebate of $0.59 per contract per leg, if a Member achieves
an ADV of 75,000 Priority Customer complex order contracts; $0.61 per
contract per leg, if a Member achieves an ADV of 125,000 Priority
Customer complex order contracts; and $0.615 per contract per leg, if a
Member achieves an ADV of 250,000 Priority Customer complex order
contracts. The highest rebate amount achieved by the Member for the
current calendar month applies retroactively to all Priority Customer
complex order contracts that trade with non-Priority Customer complex
orders in the complex order book executed by the Member during such
calendar month.
In order to enhance the Exchange's competitive position and to
incentivize Members to increase the amount of Priority Customer complex
orders that they send to the Exchange, the Exchange now proposes to
increase the base amount of the rebate to $0.62 per contract.
Additionally, the Exchange proposes to increase the amount of that
rebate even further, on a month-by-month and Member-by-Member basis, if
such Member achieves an ADV of Priority Customer complex order
contracts across all symbols executed during the calendar month, as
follows: If the Member achieves an ADV of 75,000 Priority Customer
complex order contracts, the rebate amount shall be $0.64 per contract
per leg; if the Member achieves an ADV of 125,000 Priority Customer
complex order contracts, the rebate amount shall be $0.66 per contract
per leg; and if the Member achieves an ADV of 250,000 Priority Customer
complex order contracts, the rebate amount shall be $0.67 per contract
per leg.
Additionally, the Exchange provides ISE Market Makers with a two
cent discount when trading against orders that are preferenced to them.
This discount is applicable when ISE Market Makers remove liquidity in
the Non-Penny Pilot Symbols from the complex order book. With the
proposed increase to the ``taker'' fee for complex orders in the Non-
Penny Pilot Symbols, ISE Market Makers who remove liquidity in the Non-
Penny Pilot Symbols from the complex order book by trading with orders
that are preferenced to them will be charged $0.73 per contract.
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 \9\ in
general, and furthers the objectives of Section 6(b)(4) of the Exchange
Act \10\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
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The Exchange believes it is reasonable and equitable to charge ISE
Market Maker, Firm Proprietary and Customer (Professional) orders a
``taker'' fee of $0.75 per contract for complex orders in the Non-Penny
Pilot Symbols because the Exchange is seeking to recoup the cost
associated with paying increased rebates for Priority Customer complex
orders. The Exchange believes the proposed fees are also reasonable and
equitably allocated because they are within the range of fees assessed
by other exchanges employing similar pricing schemes.
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 already
provides these types of rebates, and is now merely proposing to
increase those rebate amounts. 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 Exchange believes that it is reasonable and equitable to
provide a two cent discount to ISE Market Makers on preferenced orders
as an incentive for them to quote in the complex order book. The
Exchange notes that PHLX currently provides a similar discount.
Accordingly, ISE Market Makers who remove liquidity in the Non-Penny
Pilot Symbols from the complex order book will be charged $0.73 per
contract when trading with orders that are preferenced to them. The
Exchange notes that with this proposed fee change, the Exchange, while
increasing this fee, will continue to maintain a two cent differential
that was previously in place.
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 to the
Exchange. The Exchange further believes that the Exchange's complex
order rebates and its maker/taker fees are not unfairly discriminatory
because these fee structures are consistent with fee structures that
exist today at other options exchanges. Additionally, the Exchange
believes that the proposed fees and rebates are fair, equitable and not
unfairly discriminatory because the proposed fees and 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 fee levels at a particular exchange to be
excessive. 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 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.

[[Page 42038]]

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.\11\ At any time within 60 days of the
filing of such proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the 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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\11\ 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-2012-63 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-2012-63. 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-2012-63 and should be
submitted on or before August 7, 2012.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17328 Filed 7-16-12; 8:45 am]
BILLING CODE 8011-01-P

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