Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees, 3952-3958 [2013-00873]
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Federal Register / Vol. 78, No. 12 / Thursday, January 17, 2013 / Notices
participants’ understanding of how the
aggregation provisions of the Minor
Rule Violation Rule will operate and be
applied.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CFE does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act.10
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The proposed rule change will
become effective on January 23, 2013.
At any time within 60 days of the date
of effectiveness of the proposed rule
change, the Commission, after
consultation with the CFTC, may
summarily abrogate the proposed rule
change and require that the proposed
rule change be refiled in accordance
with the provisions of Section 19(b)(1)
of the Act.11
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 Act.
Comments may be submitted by any of
the following methods:
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 on official business
days between the hours of 10:00 a.m.
and 3:00 p.m. Copies of such filing also
will be available for inspection and
copying at the principal offices 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–CFE–
2013–001, and should be submitted on
or before February 7, 2013.
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Kevin M. O’Neill,
Deputy Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2013–00875 Filed 1–16–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68631; File No. SR–ISE–
2013–03]
• 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–CFE–2013–001 on the
subject line.
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend the Schedule of
Fees
Paper Comments
pmangrum on DSK3VPTVN1PROD with
Electronic Comments
January 11, 2013.
• 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–CFE–2013–001. 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
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 January 3,
2013, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission the proposed
rule change, as described in Items I, II,
and III below, which items have been
prepared by the self-regulatory
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
10 15
U.S.C. 78a et seq.
11 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE proposes to amend 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.
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 190
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 in all symbols that are
not in the Penny Pilot Program (‘‘NonPenny Pilot Symbols’’).5
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 Nos. 65724
(November 10, 2011), 76 FR 71413 (November 17,
2011) (SR–ISE–2011–72); 66597 (March 14, 2012),
77 FR 16295 (March 20, 2012) (SR–ISE–2012–17);
66961 (May 10, 2012), 77 FR 28914 (May 16, 2012)
(SR–ISE–2012–38); 67628 (August 9, 2012), 77 FR
49049 (August 15, 2012) (SR–ISE–2012–71); and
68034 (October 11, 2012), 77 FR 63911 (October 17,
2012) (SR–ISE–2012–85).
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
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Federal Register / Vol. 78, No. 12 / Thursday, January 17, 2013 / Notices
The purpose of this proposed rule
change is to amend the list of Select
Symbols. Specifically, the Exchange
proposes to add the following 39
symbols to the list of Select Symbols:
Aetna, Inc. (‘‘AET’’), Amgen, Inc.
(‘‘AMGN’’), Amarin Corp. PLC
(‘‘AMRN’’), Celgene Corporation
(‘‘CELG’’), CF Industries Holdings, Inc.
(‘‘CF’’), Comcast Corporation
(‘‘CMCSA’’), Costco Wholesale
Corporation (‘‘COST’’), Cree, Inc.
(‘‘CREE’’), Electronic Arts, Inc. (‘‘EA’’),
Express Scripts, Inc. (‘‘ESRX’’),
Facebook, Inc. (‘‘FB’’), Fifth Third
Bancorp. (‘‘FITB’’), The Gap, Inc.
(‘‘GPS’’), Groupon, Inc. (‘‘GRPN’’),
Starwoods Hotels and Resorts (‘‘HOT’’),
Interoil Corporation (‘‘IOC’’), JDS
Uniphase Corporation (‘‘JDSU’’), Juniper
Networks, Inc. (‘‘JNPR’’), Knight Capital
Group, Inc. (‘‘KCG’’), Keycorp. (‘‘KEY’’),
Lennar Corporation (‘‘LEN’’), Eli Lilly &
Company (‘‘LLY’’), Cheniere Energy,
Inc. (‘‘LNG’’), LinkedIn Corporation
(‘‘LNKD’’), Macys, Inc. (‘‘M’’), Marathon
Oil (‘‘MRO’’), Noble Drilling
Corporation (‘‘NE’’), Annaly Mortgage
Management (‘‘NLY’’), Occidental
Petroleum Corporation (‘‘OXY’’),
MetroPCS Communications, Inc.
(‘‘PCS’’), Pulte Group, Inc. (‘‘PHM’’),
Philip Morris International, Inc. (‘‘PM’’),
Suntech Power Holdings (‘‘STP’’),
Seagate Technology (‘‘STX’’), Direxion
Small Cap Bull 3X (‘‘TNA’’), Vringo,
Inc. (‘‘VRNG’’), Consumer Discretionary
Select Sector SPDR Fund (‘‘XLY’’),
SPDR S&P Metals & Mining ETF
(‘‘XME’’) and Xerox Corporation
(‘‘XRX’’) (‘‘Additional Select
Symbols’’).6
With the addition of the Additional
Select Symbols to Select Symbols, the
fees currently applicable to regular and
complex orders in the Select Symbols
will now be applied to regular and
complex orders in the Additional Select
Symbols.
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Regular Order Fees and Rebates
The Exchange currently applies
transaction fees to regular orders in the
Additional Select Symbols, as follows:7
(February 21, 2012) (SR–ISE–2012–06); 66962 (May
10, 2012), 77 FR 28917 (May 16, 2012) (SR–ISE–
2012–35); 67400 (July 11, 2012), 77 FR 42036 (July
17, 2012) (SR–ISE–2012–63); 67628 (August 9,
2012), 77 FR 49049 (August 15, 2012) (SR–ISE–
2012–71); and 68034 (October 11, 2012), 77 FR
63911 (October 17, 2012) (SR–ISE–2012–85).
6 The following 9 of the Additional Select
Symbols were added to the Penny Pilot Program on
January 3, 2013: AMRN, FB, GRPN, KCG, LNG,
LNKD, PCS, TNA and VRNG (‘‘New Penny Pilot
Symbols’’). The New Penny Pilot Symbols are a
subset of the Additional Select Symbols.
7 Additional Select Symbols are currently subject
to the standard transaction fee listed in the table
titled Non-Select Symbols. See Schedule of Fees,
Section I, Regular Order Fees and Rebates.
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➢ for Market Maker 8 orders, a fee of
$0.18 per contract 9;
➢ for Market Maker (for orders sent
by Electronic Access Members), Firm
Proprietary/Broker-Dealer and
Professional Customer 10 orders, a fee of
$0.20 per contract;
➢ for Non-ISE Market Maker 11
orders, a fee of $0.45 per contract;
➢ for Priority Customer 12 orders, a
fee of $0.00 per contract.
The Exchange currently charges a fee
of $0.20 per contract to all market
participants (except for Market Makers,
this fee is currently $0.18 per contract,13
and for Priority Customers, this fee is
$0.00 per contract) for regular Crossing
Orders in the Non-Select Symbols (this
fee currently applies to the Additional
Select Symbols as they are a subset of
Non-Select Symbols). The Exchange
also currently charges a fee of $0.20 per
contract to all market participants
(except for Non-ISE Market Makers, this
fee is currently $0.45 per contract, and
for Market Makers, this fee is $0.18 per
contract 14) for regular Responses to
Crossing Orders in the Non-Select
Symbols (this fee currently applies to
the Additional Select Symbols as they
are a subset of Non-Select Symbols).
With this proposed rule change, the
Additional Select Symbols will now be
subject to the maker/taker fees and
rebates applicable to Regular orders in
the Select Symbols.15 The Exchange
currently charges the following maker
fees and rebates for Select Symbols: (i)
for Market Maker, Non-ISE Market
Maker, Firm Proprietary/Broker-Dealer
and Professional Customer orders, $0.10
per contract; (ii) for Priority Customer
orders, $0.00 per contract; and (iii) for
8 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See ISE Rule 100(a)(25).
9 The Exchange provides a volume-based
discount to fees to ISE Market Maker contracts for
regular orders in Non-Select Symbols. See Schedule
of Fees, Section IV, C. ISE Market Maker Discount
Tiers.
10 A Professional Customer is a person who is not
a broker/dealer and is not a Priority Customer.
11 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 registered in the same options class on
another options exchange.
12 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).
13 The volume-based discount to fees to ISE
Market Maker contracts also applies to regular
Crossing Orders. See supra, note 9.
14 The volume-based discount to fees to ISE
Market Maker contracts also applies to regular
Responses to Crossing Orders. See supra, note 9.
15 See Schedule of Fees, Section I, Regular Order
Fees and Rebates.
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Market Maker Plus 16 orders, a rebate of
$0.10 per contract. The Exchange also
currently charges the following taker
fees for Select Symbols: (i) For Market
Maker and Market Maker Plus orders,
$0.32 per contract; (ii) for Non-ISE
Market Maker orders, $0.36 per contract;
(iii) for Firm Proprietary/Broker-Dealer
and Professional Customer orders, $0.33
per contract; and iv) for Priority
Customer orders, $0.25 per contract.
The Exchange currently charges
Market Maker, Non-ISE Market Maker,
Firm Proprietary/Broker-Dealer and
Professional Customers a fee of $0.20
per contract ($0.00 per contract for
Priority Customers) for regular Crossing
Orders in the Select Symbols, and a fee
of $0.40 per contract to all market
participants for regular Responses to
Crossing Orders in the Select Symbols.
With this proposed rule change, the fee
for regular Crossing Orders in the
Additional Select Symbols will remain
at $0.20 per contract for most market
participants. For Priority Customers,
this fee will remain at $0.00 per
contract, and for Market Makers, this fee
will increase, from $0.18 per contract 17
to $0.20 per contract. With this
proposed rule change, the fee for regular
Responses to Crossing Orders will
increase for most market participants,
from $0.20 per contract to $0.40 per
contract, with the exception of Non-ISE
Market Makers who will now pay a
lower fee of $0.40 per contract as
opposed to $0.45 per contract.
The Exchange also currently provides
a rebate of $0.25 per contract for
contracts that are submitted to the Price
Improvement Mechanism that do not
trade with their contra order in the
Select Symbols, and a rebate of $0.15
16 In order to promote and encourage liquidity in
the Select Symbols, the Exchange currently offers
a $0.10 per contract rebate to Market Makers if the
quotes they sent to the Exchange qualify the Market
Maker to become a Market Maker Plus. A Market
Maker Plus is a 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 for all
expiration months in that symbol during the current
trading month. A Market Maker’s single best and
single worst overall quoting days each month, on
a per symbol basis, is excluded in calculating
whether a Market Maker qualifies for this rebate, if
doing so will qualify a Market Maker for the rebate.
17 The volume-based discount to fees to ISE
Market Maker contracts also applies. See supra,
note 9.
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per contract for contracts that are
submitted to the Facilitation and
Solicited Order Mechanisms that do not
trade with their contra order in the
Select Symbols except when those
contracts trade against pre-existing
orders and quotes on the Exchange’s
orderbook. With this proposed rule
change, market participants trading in
the Additional Select Symbols will now
be eligible for rebates that were not
previously available for this group of
symbols. Specifically, market
participants will now receive a rebate of
$0.25 per contract for contracts that are
submitted to the Price Improvement
Mechanism that do not trade with their
contra order in the Additional Select
Symbols. Further, market participants
will now also receive a rebate of $0.15
per contract for contracts that are
submitted to the Facilitation and
Solicited Order Mechanisms that do not
trade with their contra order in the
Additional Select Symbols except when
those contracts trade against preexisting orders and quotes on the
Exchange’s orderbook.
Further, the Exchange currently
charges Primary Market Makers (PMMs)
a transaction fee of $0.18 per contract 18
in the Additional Select Symbols when
they trade report a Priority Customer or
Professional Customer order in
accordance with their obligation to
provide away market price protection.
PMMs in Select Symbols do not receive
a maker rebate nor pay a taker fee when
trade reporting.19 With this proposed
rule change, PMMs in the Additional
Select Symbols will also not receive a
maker rebate nor pay a taker fee when
trade reporting.
Finally, for the New Penny Pilot
Symbols (prior to their inclusion to the
Penny Pilot Program), the Exchange
charged a payment for order flow
(PFOF) fee of $0.70 per contract,
applicable to Market Makers when
trading against Priority Customer orders,
and for the remaining Additional Select
Symbols, the Exchange currently
charges a PFOF fee of $0.25 per
contract, applicable to Market Makers
when trading against Priority Customer
orders. With this proposed rule change,
the Exchange will no longer charge a
PFOF fee for trading in the Additional
Select Symbols.
Complex Order Fees and Rebates
With this proposed rule change, the
maker fee for complex orders in the
Additional Select Symbols will remain
18 The volume-based discount to fees to ISE
Market Maker contracts also applies. See supra,
note 9.
19 See Schedule of Fees, Section I, Regular Order
Fees and Rebates, footnote 9.
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unchanged because the Exchange
currently charges the same maker fee for
complex orders in the Select Symbols,
in the Penny Pilot Symbols and in the
Non-Penny Pilot Symbols.20
Specifically, for Select Symbols, Penny
Pilot Symbols and Non-Penny Pilot
Symbols, the Exchange currently
charges a complex order maker fee of: (i)
$0.10 per contract for Market Maker,
Firm Proprietary/Broker-Dealer and
Professional Customer orders; (ii) $0.20
per contract for Non-ISE Market Maker
orders; and (iii) $0.00 per contract for
Priority Customer orders.
With this proposed rule change, the
maker fee for complex orders in the
Additional Select Symbols (except for
the New Penny Pilot Symbols) when
trading against Priority Customers will
remain unchanged because the
Exchange currently charges the same
maker fee for complex orders in the
Select Symbols (excluding SPY) when
trading against Priority Customers and
in the Non-Select Penny Pilot Symbols
when trading against Priority
Customers.21 Specifically, for complex
orders in the Select Symbols (excluding
SPY) when trading against Priority
Customer and for complex orders in the
Non-Select Penny Pilot Symbols when
trading against Priority Customers, the
Exchange currently charges a maker fee
of: (i) $0.39 per contract for Market
Maker orders; (ii) $0.40 per contract for
Non-ISE Market Maker, Firm
Proprietary/Broker-Dealer and
Professional Customer orders; and (iii)
$0.00 per contract for Priority Customer
orders. Thus, these fees will remain
unchanged.
Prior to their inclusion to the Penny
Pilot Program, the New Penny Pilot
Symbols, which are a subset of the
Additional Select Symbols, were
charged a higher maker fee when
trading against Priority Customer
complex orders. Specifically, for
complex orders in the New Penny Pilot
Symbols when trading against Priority
Customer complex orders, the Exchange
charged a maker fee of: (i) $0.82 per
contract for Market Maker orders; (ii)
20 The New Penny Pilot Symbols were subject to
the fee listed in the Column titled Maker Fee for
Non-Penny Pilot Symbols. The remaining
Additional Select Symbols are currently subject to
the fee listed in the column titled Maker Fee for
Select Symbols and Penny Pilot Symbols. See
Schedule of Fees, Section II, Complex Order Fees
and Rebates.
21 The New Penny Pilot Symbols were subject to
the fee listed in the Column titled Maker Fee for
Non-Penny Pilot Symbols when trading against
Priority Customer. The remaining Additional Select
Symbols are currently subject to the fee listed in the
column titled Maker Fee for Non-Select Penny Pilot
Symbols when trading against Priority Customer.
See Schedule of Fees, Section II, Complex Order
Fees and Rebates.
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$0.84 per contract for Non-ISE Market
Maker, Firm Proprietary/Broker-Dealer
and Professional Customer orders; and
(iii) $0.00 per contract for Priority
Customer orders.22 With this proposed
rule change, the New Penny Pilot
Symbols will now be subject to the same
maker fee as the remaining Additional
Select Symbols, as noted above, which
is lower (except for Priority Customer
orders which fee will remain the same)
than those the Exchange charged for the
New Penny Pilot Symbols when trading
against Priority Customer complex
orders.
With this proposed rule change, the
taker fee for complex orders in the
Additional Select Symbols (except for
the New Penny Pilot Symbols) will
remain unchanged because the
Exchange currently charges the same
taker fee for complex orders in the
Select Symbols (excluding SPY) and in
the Non-Select Penny Pilot Symbols.23
Specifically, for complex orders in the
Select Symbols (excluding SPY) and in
the Non-Select Penny Pilot Symbols, the
Exchange currently charges a taker fee
of: (i) $0.39 per contract for Market
Maker orders; (ii) $0.40 per contract for
Non-ISE Market Maker, Firm
Proprietary/Broker-Dealer and
Professional Customer orders; and (iii)
$0.00 per contract for Priority Customer
orders. Thus, these fees will remain
unchanged.
Prior to their inclusion to the Penny
Pilot Program, the New Penny Pilot
Symbols, which are a subset of the
Additional Select Symbols, were
charged a higher taker fee for trading
complex orders. Specifically, for
complex orders in the New Penny Pilot
Symbols, the Exchange charged a taker
fee of: (i) $0.82 per contract for Market
Maker orders; (ii) $0.84 per contract for
Non-ISE Market Maker, Firm
Proprietary/Broker-Dealer and
Professional Customer orders; and (iii)
$0.00 per contract for Priority Customer
orders.24 With this proposed rule
change, the New Penny Pilot Symbols
will now be subject to the same taker fee
as the remaining Additional Select
Symbols, as noted above, which is lower
(except for Priority Customer orders
which fee will remain the same) than
22 The per contract fees noted reflect changes
proposed by the Exchange in an earlier filing. See
SR–ISE–2013–01.
23 The New Penny Pilot Symbols were subject to
the fee listed in the Column titled Taker Fee for
Non-Penny Pilot Symbols. The remaining
Additional Select Symbols are currently subject to
the fee listed in the column titled Taker Fee for
Non-Select Penny Pilot Symbols. See Schedule of
Fees, Section II, Complex Order Fees and Rebates.
24 The per contract fees noted reflect changes
proposed by the Exchange in an earlier filing. See
SR–ISE–2013–01.
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those the Exchange charged for the New
Penny Pilot Symbols.
With this proposed rule change, the
Fee for Crossing Orders when trading
complex orders in the Additional Select
Symbols will remain unchanged
because the Exchange currently charges
$0.20 per contract (for largest leg only)
for complex Crossing Orders in all
symbols, except for Priority Customers
who are currently charged $0.00 per
contract.
With this proposed rule change, the
Fee for Responses to Crossing Orders
when trading complex orders in the
Additional Select Symbols will remain
unchanged (except for the New Penny
Pilot Symbols) because the Exchange
currently charges $0.40 per contract for
Responses to Crossing Orders when
trading complex orders in the Select
Symbols and in the Penny Pilot
Symbols. The Fee for Responses to
Crossing Orders when trading complex
orders in the New Penny Pilot Symbols
will, however, decrease because the
Exchange currently charges $0.82 per
contract for Market Maker orders and
$0.84 per contract for Non-ISE Market
Maker, Firm Proprietary/Broker-Dealer
and Professional Customer orders.25 The
New Penny Pilot Symbols, which are a
subset of the Additional Select Symbols,
will now be charged $0.40 per contract
for Market Maker, Non-ISE Market
Maker, Firm Proprietary/Broker-Dealer
and Professional Customer orders.26
With this proposed rule change, the
rebate levels payable for Priority
Customer complex orders in the
Additional Select Symbols (except for
the New Penny Pilot Symbols) will
increase because the rebate levels
payable for Priority Customer complex
orders in the Select Symbols are higher
than the rebate levels currently payable
for Priority Customer complex orders in
Non-Select Penny Pilot Symbols, as
described below.
For the Additional Select Symbols
(except for the New Penny Pilot
Symbols), 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.27
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25 Id.
26 The New Penny Pilot Symbols were subject to
the fee listed in the Column titled Fee for Responses
to Crossing Orders for non-Penny Pilot Symbols.
The remaining Additional Select Symbols are
currently subject to the fee listed in the column
titled Fee for Responses to Crossing Orders for
Select Symbols and Penny Pilot Symbols. See
Schedule of Fees, Section II, Complex Order Fees
and Rebates.
27 Additional Select Symbols (except for the New
Penny Pilot Symbols) are currently subject to the
rebate listed in the column titled Rebate for non-
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Additionally, Members who achieve a
certain level of average daily volume
(ADV) of executed Priority Customer
complex order contracts across all
symbols during a calendar month are
provided a rebate of $0.35 per contract,
per leg, in these symbols, if a Member
achieves an ADV of 40,000 Priority
Customer complex order contracts;
$0.37 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 75,000 Priority Customer complex
order contracts; $0.38 per contract, per
leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority
Customer complex order contracts; and
$0.39 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 225,000 Priority Customer complex
order contracts.28 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.
For Select Symbols (excluding SPY),
the Exchange currently provides a base
rebate of $0.34 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 a certain level of
average daily volume (ADV) of executed
Priority Customer complex order
contracts across all symbols during a
calendar month are provided a rebate of
$0.37 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 40,000 Priority Customer complex
order contracts; $0.38 per contract, per
leg, in these symbols, if a Member
achieves an ADV of 75,000 Priority
Customer complex order contracts;
$0.39 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 125,000 Priority Customer complex
order contracts; and $0.40 per contract,
per leg, in these symbols, if a Member
achieves an ADV of 225,000 Priority
Customer complex order contracts.29
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.
Select Penny Pilot Symbols. See Schedule of Fees,
Section II, Complex Order Fees and Rebates.
28 The per contract rebates noted reflect changes
proposed by the Exchange in an earlier filing. See
SR–ISE–2013–01.
29 Id.
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
3955
With this proposed rule change, the
increased rebate levels currently
payable for Priority Customer complex
orders in Select Symbols will now apply
to Priority Customer complex orders in
the Additional Select Symbols.
With this proposed rule change, the
rebate levels payable for Priority
Customer complex orders in the New
Penny Pilot Symbols will, however,
decrease because the these symbols will
now be subject to much lower maker
and taker fees and thus receive lower
rebates, as described below.
For the New Penny Pilot Symbols
(prior to their inclusion to the Penny
Pilot Program), the Exchange provided a
base rebate of $0.66 per contract, per
leg, for Priority Customer complex
orders when these orders traded with
non-Priority Customer complex orders
in the complex order book.30
Additionally, Members who achieve a
certain level of average daily volume
(ADV) of executed Priority Customer
complex order contracts across all
symbols during a calendar month are
provided a rebate of $0.72 per contract,
per leg, in these symbols, if a Member
achieves an ADV of 40,000 Priority
Customer complex order contracts;
$0.75 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 75,000 Priority Customer complex
order contracts; $0.77 per contract, per
leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority
Customer complex order contracts; and
$0.78 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 225,000 Priority Customer complex
order contracts.31 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.
For Select Symbols (excluding SPY),
the Exchange currently provides a base
rebate of $0.34 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 a certain level of
average daily volume (ADV) of executed
Priority Customer complex order
contracts across all symbols during a
30 The New Penny Pilot Symbols were subject to
the rebate listed in the column titled Rebate for
non-Select non-Penny Pilot Symbols. See Schedule
of Fees, Section II, Complex Order Fees and
Rebates.
31 The per contract rebates noted reflect changes
proposed by the Exchange in an earlier filing. See
SR–ISE–2013–01.
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calendar month are provided a rebate of
$0.37 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 40,000 Priority Customer complex
order contracts; $0.38 per contract, per
leg, in these symbols, if a Member
achieves an ADV of 75,000 Priority
Customer complex order contracts;
$0.39 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 125,000 Priority Customer complex
order contracts; and $0.40 per contract,
per leg, in these symbols, if a Member
achieves an ADV of 225,000 Priority
Customer complex order contracts.32
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.
With this proposed rule change, the
lower rebate levels currently payable for
Priority Customer complex orders in the
Select Symbols will now apply to
Priority Customer complex orders in the
New Penny Pilot Symbols.
Further, the Exchange currently
provides a base rebate of $0.06 per
contract, per leg, for Priority Customer
complex orders in all symbols traded on
the Exchange (excluding SPY) when
these orders trade against quotes or
orders in the regular orderbook.
Additionally, Members who achieve a
certain level of average daily volume
(ADV) of executed Priority Customer
complex order contracts across all
symbols during a calendar month are
provided a rebate of $0.08 per contract,
per leg, in these symbols, if a Member
achieves an ADV of 40,000 Priority
Customer complex order contracts;
$0.09 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 75,000 Priority Customer complex
order contracts; $0.10 per contract, per
leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority
Customer complex order contracts; and
$0.11 per contract, per leg, in these
symbols, if a Member achieves an ADV
of 225,000 Priority Customer complex
order contracts.33 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. This rebate is currently
applicable to the Additional Select
Symbols and with this proposed rule
34 The Exchange has submitted a separate filing
to increase the discount from $0.02 per contract to
$0.05 per contract. See SR–ISE–2013–02.
32 Id.
33 Id.
VerDate Mar<15>2010
change, will continue to apply at the
current rates.
Additionally, the Exchange currently
provides Market Makers with a discount
when trading against Priority Customer
orders that are preferenced to them.34
This discount is applicable when
Market Makers add or remove liquidity
in, among other symbols, Select
Symbols, Non-Select Penny Pilot
Symbols and Non-Penny Pilot Symbols.
The Additional Select Symbols are
currently a part of the Non-Select Penny
Pilot Symbols and Non-Penny Pilot
Symbols and therefore the discount
which currently applies to these
symbols will continue to apply to these
symbols when they become Select
Symbols.
Further, the Exchange currently
provides a $0.20 per contract fee credit
to PMMs for execution of Priority
Customer orders in the Non-Select
Symbols—for classes in which it serves
as a PMM—that send an Intermarket
Sweep Order to other exchanges. This
credit is applied regardless of the
transaction fee charged by a destination
market. For PMMs in the Select
Symbols, this credit is equal to the fee
charged by the destination market. With
this proposed rule change, PMMs in the
Additional Select Symbols will now be
provided with a credit that that is equal
to the fee charged by the destination
market.
The Exchange also currently provides
a $0.20 per contract credit for responses
to flash orders in the Non-Select
Symbols when trading against
Professional Customers. For Select
Symbols, the per contract fee credit for
responses to flash orders is (i) $0.10 per
contract when trading against Priority
Customers; (ii) $0.12 per contract when
trading against Preferenced Priority
Customers; and (iii) $0.10 per contract
when trading against Professional
Customers. Market participants trading
in the Additional Select Symbols will
now be provided the rebate at levels that
are currently in place for Select
Symbols, as described above.
With this proposed rule change, the
Exchange expects to attract additional
order flow of regular and complex
orders in the Additional Select Symbols.
The Exchange’s maker/taker fees and
rebates have been effective in attracting
order flow of regular and complex
orders in the Select Symbols and
increasing its market share in these
symbols. The Exchange believes that
applying its maker/taker fees and
rebates to the Additional Select Symbols
14:19 Jan 16, 2013
Jkt 229001
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
will result in the Exchange increasing
its market share for regular and complex
orders in these symbols.
With this proposed rule change, the
maker and taker fees and the Fee for
Responses to Crossing Orders for the
New Penny Pilot Symbols will decrease
because these symbols will now be
charged the fees currently in place for
Select Symbols, which are considerably
lower. While the fees for the New Penny
Pilot Symbols will decrease, the rebates
payable for Priority Customer complex
orders in these symbols will also
correspondingly decrease. Further,
Market Makers will now be eligible for
the Market Maker Plus rebate, which
was previously not applicable to the
Additional Select Symbols. This
proposed rule change does not propose
any change to the maker and taker fees
for complex orders in the Additional
Select Symbols (except the New Penny
Pilot Symbols, as noted above) as those
fees remain unchanged. The rebate
levels payable for Priority Customer
complex orders in the Additional Select
Symbols will increase compared to the
current rebate levels for this group of
symbols, except as noted above, for the
New Penny Pilot Symbols, whose rebate
levels will decrease.
Since the rate changes to the Schedule
of Fees pursuant to this proposal will be
effective upon filing, for the transactions
occurring in January 2013 prior to the
effective date of this filing, members
will be assessed the rates in effect
immediately prior to those proposed by
this filing. For transactions occurring in
January 2013 on and after the effective
date of this filing, members will be
assessed the rates proposed by this
filing.
2. Basis
The Exchange believes that its
proposal to amend its Schedule of Fees
is consistent with Section 6(b) of the
Act 35 in general, and furthers the
objectives of Section 6(b)(4) of the Act 36
in particular, in that it is an equitable
allocation of reasonable fees and other
charges among Exchange members and
other persons using its facilities.
The Exchange believes that it is
reasonable to add the Additional Select
Symbols to the current list of Select
Symbols. The Exchange believes that
applying the fees and rebates applicable
to Select Symbols to the Additional
Select Symbols will attract additional
order flow to the Exchange. Select
Symbol pricing has proven beneficial
for the Exchange and its participants
and the Exchange believes that moving
35 15
36 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(4).
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the Additional Select Symbols to Select
Symbols pricing would enhance
liquidity and participation in those
symbols.
The Exchange believes that it is
equitable and not unfairly
discriminatory to amend its list of Select
Symbols to add the Additional Select
Symbols because the fees and rebates for
Select Symbols would apply uniformly
to all categories of participants in the
same manner. All market participants
who trade options in the Select Symbols
would be uniformly subject to the fees
and rebates applicable to those symbols.
The Exchange believes the proposed
rule change is reasonable and equitable
because it generally lowers the maker
fees applicable to market participants
(and considerably lowers the maker fees
for the New Penny Pilot Symbols) and
believes that the lower maker fees will
attract additional maker liquidity and
size to the Exchange in the Additional
Select Symbols. Additionally, while this
proposed rule change proposes to
increase the taker fees applicable to
market participants (except for the New
Penny Pilot Symbols, whose taker fees
will become considerably lower), the
Exchange believes the benefits of better
market quality will outweigh the taker
fee increases based on the Exchange’s
experience with trading in the Select
Symbols. Further, the Exchange believes
this proposed rule change is reasonable
and equitable because it will result in
market participants receiving higher
rebates for Priority Customer complex
orders when these orders trade with
non-Priority Customer complex orders
in the complex order book as the current
rebate payable for these orders in Select
Symbols is higher than the current
rebate payable for these orders in
Additional Select Symbols. The
Exchange notes, however, that the
rebates payable to the New Penny Pilot
Symbols will be decreased to
correspond with the lower maker and
taker fees these symbols will now be
subject to.
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 rebates, and is now
merely proposing to adjust the rebate
amounts applicable to the Additional
Select Symbols. With this proposed rule
VerDate Mar<15>2010
14:19 Jan 16, 2013
Jkt 229001
change, Market Makers will also now be
eligible to receive the Market Maker
Plus rebate which was not previously
applicable to the Additional Select
Symbols. 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
discount to Market Makers on
preferenced orders as an incentive for
them to quote in the complex order
book. ISE notes that with this proposed
rule change, the Exchange will continue
to maintain the differential that was
previously in place for the Additional
Select Symbols.
The Exchange believes that the
proposed changes are nondiscriminatory because the proposal
simply moves the Additional Select
Symbols from one category of fees into
another category thereby applying fees
currently in effect. Further, the
Exchange believes that it is equitable
and not unfairly discriminatory to
amend its list of Select Symbols to add
the Additional Select Symbols to the
Select Symbols because the fees
applicable to the Select Symbols would
apply uniformly to all categories of
participants in the same manner. All
market participants who trade the Select
Symbols would be uniformly subject to
the fees and rebates applicable to those
symbols.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
ISE does not believe that the proposed
rule change will impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. This rule change,
which proposes to move a group of
symbols to an existing category of
symbols, does not impose any burden
on competition. With this proposed rule
change, the Additional Select Symbols
will be subject to fees that are already
in place on the Exchange and therefore,
do not impose any additional burden on
competition that is not necessary or
appropriate in furthering the purposes
of the Act. The Exchange believes that
the proposed changes promote
competition, as they are designed to
allow the Exchange to better compete
for order flow and improve the
Exchange’s competitive position.
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
3957
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act 37 and
subparagraph (f)(2) of Rule 19b–4
thereunder,38 because it establishes a
due, fee, or other charge imposed by
ISE.
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 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
No. SR–ISE–2013–03 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–ISE–2013–03. 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
37 15
38 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
17JAN1
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Federal Register / Vol. 78, No. 12 / Thursday, January 17, 2013 / Notices
post all comments on the Commissions
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. Copies of such filing
also will be available for inspection and
copying at the principal office of the
ISE. 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–2013–03 and should be
submitted by February 7, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.39
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–00873 Filed 1–16–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
This order approves the proposed rule
change.
[Release No. 34–68635; File No. SR–NYSE–
2012–54]
II. Description of the Proposals
Self-Regulatory Organizations; New
York Stock Exchange LLC; Order
Granting Approval to Proposed Rule
Change Amending the Listed Company
Manual Section 204.00 To Create a
Uniform Method for a Company To
Provide Notice to the Exchange When
Required Pursuant to Sections 204.06,
204.12, 204.17, 204.21, 204.22, 311.01,
401.02, and 601.00 of the Listed
Company Manual, and To Make
Conforming Changes
January 11, 2013.
I. Introduction
On November 8, 2012, the New York
Stock Exchange LLC (‘‘NYSE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend Section 204.00 of the Listed
Company Manual, which sets forth the
required procedures that listed
companies must follow to notify the
Exchange upon the occurrence of
certain events, and to amend related
provisions of the Manual to make clear
which provisions trigger the reporting
procedures set forth in amended Section
204.00. The proposed rule changes were
published for comment in the Federal
Register on November 27, 2012.3 The
Commission did not receive any
comments on the proposed rule change.
Section
Current method
pmangrum on DSK3VPTVN1PROD with
204.00 Notice to and Filings with the Exchange (notice in connection
with certain actions or events as specified in Sections 204.01
through 204.25).
204.06 Closing of Transfer Books ............................................................
204.12 Dividends and Stock Distributions (notice of dividend action or
action relating to a stock distribution).
204.17 Meetings of Shareholders ............................................................
204.21 Record Date (notice of the fixing of a date for the taking of a
record of shareholders or for the closing of transfer books).
204.22 Redemption of Listed Securities ..................................................
311.01 Publicity and Notice to the Exchange of Redemption (notice of
corporate action which will result in, or which looks toward, either the
partial or full call for redemption of a listed security).
401.02 Notice to the Exchange (notice of dates set in connection with
the calling of any meeting of shareholders, including changes in
record date).
601.00 Services to be Provided by Transfer Agents and Registrars (notice by transfer agents of the number of shares outstanding at the
end of each calendar quarter).
39 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
VerDate Mar<15>2010
14:19 Jan 16, 2013
2 17
Jkt 229001
Companies that list their securities on
the Exchange are subject to a number of
reporting requirements set forth in the
Exchange’s Listed Company Manual
(‘‘Manual’’). The Exchange proposes to
amend the methods by which listed
companies give notice to the Exchange
of matters or events where timely
notification is essential to the ability of
investors to arrange to be holders of a
security by a certain date for a
distribution or shareholder meeting.
These events are: Closing of transfer
books; notice of dividend action or
action relating to a stock distribution;
meetings of shareholders, notice of the
fixing of a date for the taking of a record
of shareholders or for the closing of
transfer books; redemption of listed
securities; notice of corporate action
which will result in, or which looks
toward, either the partial or full call for
redemption of a listed security; notice of
dates set in connection with the calling
of any meeting of shareholders; and
notice by transfer agents of the number
of shares outstanding at the end of each
calendar quarter.
Currently, the Manual contains
sections governing the notice that listed
companies are required to provide the
Exchange in case of each of these
events; however, these sections set forth
either different or no precise method for
providing such notice. The following
chart summarizes how these various
notification provisions currently are
addressed in the Manual.
PO 00000
Notice methods include fax, telephone, telegram, and letter.
No method specified.
Notice methods include fax, telephone, telegram, and letter.
No method specified.
Notice methods include fax, telephone, telegram, and letter.
No method specified.
Notice methods include fax and telephone.
Notice methods include telephone and writing or fax.
Notice methods include fax and email.
CFR 240.19b–4.
Frm 00081
Fmt 4703
3 See Securities Exchange Act Release No. 68276
(November 20, 2012), 77 FR 70868 (November 27,
2012) (‘‘Notice’’).
Sfmt 4703
E:\FR\FM\17JAN1.SGM
17JAN1
]]>Agencies
[Federal Register Volume 78, Number 12 (Thursday, January 17, 2013)]
[Notices]
[Pages 3952-3958]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-00873]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68631; File No. SR-ISE-2013-03]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Amend the Schedule of Fees
January 11, 2013.
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 January 3, 2013, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission the proposed rule change, as described in Items I,
II, and III below, which items have been prepared by the self-
regulatory organization. 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 amend 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 190 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 in all symbols that are not in the Penny Pilot
Program (``Non-Penny Pilot Symbols'').\5\
---------------------------------------------------------------------------
\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 Nos. 65724 (November 10, 2011), 76
FR 71413 (November 17, 2011) (SR-ISE-2011-72); 66597 (March 14,
2012), 77 FR 16295 (March 20, 2012) (SR-ISE-2012-17); 66961 (May 10,
2012), 77 FR 28914 (May 16, 2012) (SR-ISE-2012-38); 67628 (August 9,
2012), 77 FR 49049 (August 15, 2012) (SR-ISE-2012-71); and 68034
(October 11, 2012), 77 FR 63911 (October 17, 2012) (SR-ISE-2012-85).
\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); 66962 (May 10,
2012), 77 FR 28917 (May 16, 2012) (SR-ISE-2012-35); 67400 (July 11,
2012), 77 FR 42036 (July 17, 2012) (SR-ISE-2012-63); 67628 (August
9, 2012), 77 FR 49049 (August 15, 2012) (SR-ISE-2012-71); and 68034
(October 11, 2012), 77 FR 63911 (October 17, 2012) (SR-ISE-2012-85).
---------------------------------------------------------------------------
[[Page 3953]]
The purpose of this proposed rule change is to amend the list of
Select Symbols. Specifically, the Exchange proposes to add the
following 39 symbols to the list of Select Symbols: Aetna, Inc.
(``AET''), Amgen, Inc. (``AMGN''), Amarin Corp. PLC (``AMRN''), Celgene
Corporation (``CELG''), CF Industries Holdings, Inc. (``CF''), Comcast
Corporation (``CMCSA''), Costco Wholesale Corporation (``COST''), Cree,
Inc. (``CREE''), Electronic Arts, Inc. (``EA''), Express Scripts, Inc.
(``ESRX''), Facebook, Inc. (``FB''), Fifth Third Bancorp. (``FITB''),
The Gap, Inc. (``GPS''), Groupon, Inc. (``GRPN''), Starwoods Hotels and
Resorts (``HOT''), Interoil Corporation (``IOC''), JDS Uniphase
Corporation (``JDSU''), Juniper Networks, Inc. (``JNPR''), Knight
Capital Group, Inc. (``KCG''), Keycorp. (``KEY''), Lennar Corporation
(``LEN''), Eli Lilly & Company (``LLY''), Cheniere Energy, Inc.
(``LNG''), LinkedIn Corporation (``LNKD''), Macys, Inc. (``M''),
Marathon Oil (``MRO''), Noble Drilling Corporation (``NE''), Annaly
Mortgage Management (``NLY''), Occidental Petroleum Corporation
(``OXY''), MetroPCS Communications, Inc. (``PCS''), Pulte Group, Inc.
(``PHM''), Philip Morris International, Inc. (``PM''), Suntech Power
Holdings (``STP''), Seagate Technology (``STX''), Direxion Small Cap
Bull 3X (``TNA''), Vringo, Inc. (``VRNG''), Consumer Discretionary
Select Sector SPDR Fund (``XLY''), SPDR S&P Metals & Mining ETF
(``XME'') and Xerox Corporation (``XRX'') (``Additional Select
Symbols'').\6\
---------------------------------------------------------------------------
\6\ The following 9 of the Additional Select Symbols were added
to the Penny Pilot Program on January 3, 2013: AMRN, FB, GRPN, KCG,
LNG, LNKD, PCS, TNA and VRNG (``New Penny Pilot Symbols''). The New
Penny Pilot Symbols are a subset of the Additional Select Symbols.
---------------------------------------------------------------------------
With the addition of the Additional Select Symbols to Select
Symbols, the fees currently applicable to regular and complex orders in
the Select Symbols will now be applied to regular and complex orders in
the Additional Select Symbols.
Regular Order Fees and Rebates
The Exchange currently applies transaction fees to regular orders
in the Additional Select Symbols, as follows:\7\
---------------------------------------------------------------------------
\7\ Additional Select Symbols are currently subject to the
standard transaction fee listed in the table titled Non-Select
Symbols. See Schedule of Fees, Section I, Regular Order Fees and
Rebates.
---------------------------------------------------------------------------
[rtarr8] for Market Maker \8\ orders, a fee of $0.18 per contract
\9\;
---------------------------------------------------------------------------
\8\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule
100(a)(25).
\9\ The Exchange provides a volume-based discount to fees to ISE
Market Maker contracts for regular orders in Non-Select Symbols. See
Schedule of Fees, Section IV, C. ISE Market Maker Discount Tiers.
---------------------------------------------------------------------------
[rtarr8] for Market Maker (for orders sent by Electronic Access
Members), Firm Proprietary/Broker-Dealer and Professional Customer \10\
orders, a fee of $0.20 per contract;
---------------------------------------------------------------------------
\10\ A Professional Customer is a person who is not a broker/
dealer and is not a Priority Customer.
---------------------------------------------------------------------------
[rtarr8] for Non-ISE Market Maker \11\ orders, a fee of $0.45 per
contract;
---------------------------------------------------------------------------
\11\ 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 registered in the same options class
on another options exchange.
---------------------------------------------------------------------------
[rtarr8] for Priority Customer \12\ orders, a fee of $0.00 per
contract.
---------------------------------------------------------------------------
\12\ 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).
---------------------------------------------------------------------------
The Exchange currently charges a fee of $0.20 per contract to all
market participants (except for Market Makers, this fee is currently
$0.18 per contract,\13\ and for Priority Customers, this fee is $0.00
per contract) for regular Crossing Orders in the Non-Select Symbols
(this fee currently applies to the Additional Select Symbols as they
are a subset of Non-Select Symbols). The Exchange also currently
charges a fee of $0.20 per contract to all market participants (except
for Non-ISE Market Makers, this fee is currently $0.45 per contract,
and for Market Makers, this fee is $0.18 per contract \14\) for regular
Responses to Crossing Orders in the Non-Select Symbols (this fee
currently applies to the Additional Select Symbols as they are a subset
of Non-Select Symbols).
---------------------------------------------------------------------------
\13\ The volume-based discount to fees to ISE Market Maker
contracts also applies to regular Crossing Orders. See supra, note
9.
\14\ The volume-based discount to fees to ISE Market Maker
contracts also applies to regular Responses to Crossing Orders. See
supra, note 9.
---------------------------------------------------------------------------
With this proposed rule change, the Additional Select Symbols will
now be subject to the maker/taker fees and rebates applicable to
Regular orders in the Select Symbols.\15\ The Exchange currently
charges the following maker fees and rebates for Select Symbols: (i)
for Market Maker, Non-ISE Market Maker, Firm Proprietary/Broker-Dealer
and Professional Customer orders, $0.10 per contract; (ii) for Priority
Customer orders, $0.00 per contract; and (iii) for Market Maker Plus
\16\ orders, a rebate of $0.10 per contract. The Exchange also
currently charges the following taker fees for Select Symbols: (i) For
Market Maker and Market Maker Plus orders, $0.32 per contract; (ii) for
Non-ISE Market Maker orders, $0.36 per contract; (iii) for Firm
Proprietary/Broker-Dealer and Professional Customer orders, $0.33 per
contract; and iv) for Priority Customer orders, $0.25 per contract.
---------------------------------------------------------------------------
\15\ See Schedule of Fees, Section I, Regular Order Fees and
Rebates.
\16\ In order to promote and encourage liquidity in the Select
Symbols, the Exchange currently offers a $0.10 per contract rebate
to Market Makers if the quotes they sent to the Exchange qualify the
Market Maker to become a Market Maker Plus. A Market Maker Plus is a
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 for all expiration months in that symbol during the current
trading month. A Market Maker's single best and single worst overall
quoting days each month, on a per symbol basis, is excluded in
calculating whether a Market Maker qualifies for this rebate, if
doing so will qualify a Market Maker for the rebate.
---------------------------------------------------------------------------
The Exchange currently charges Market Maker, Non-ISE Market Maker,
Firm Proprietary/Broker-Dealer and Professional Customers a fee of
$0.20 per contract ($0.00 per contract for Priority Customers) for
regular Crossing Orders in the Select Symbols, and a fee of $0.40 per
contract to all market participants for regular Responses to Crossing
Orders in the Select Symbols. With this proposed rule change, the fee
for regular Crossing Orders in the Additional Select Symbols will
remain at $0.20 per contract for most market participants. For Priority
Customers, this fee will remain at $0.00 per contract, and for Market
Makers, this fee will increase, from $0.18 per contract \17\ to $0.20
per contract. With this proposed rule change, the fee for regular
Responses to Crossing Orders will increase for most market
participants, from $0.20 per contract to $0.40 per contract, with the
exception of Non-ISE Market Makers who will now pay a lower fee of
$0.40 per contract as opposed to $0.45 per contract.
---------------------------------------------------------------------------
\17\ The volume-based discount to fees to ISE Market Maker
contracts also applies. See supra, note 9.
---------------------------------------------------------------------------
The Exchange also currently provides a rebate of $0.25 per contract
for contracts that are submitted to the Price Improvement Mechanism
that do not trade with their contra order in the Select Symbols, and a
rebate of $0.15
[[Page 3954]]
per contract for contracts that are submitted to the Facilitation and
Solicited Order Mechanisms that do not trade with their contra order in
the Select Symbols except when those contracts trade against pre-
existing orders and quotes on the Exchange's orderbook. With this
proposed rule change, market participants trading in the Additional
Select Symbols will now be eligible for rebates that were not
previously available for this group of symbols. Specifically, market
participants will now receive a rebate of $0.25 per contract for
contracts that are submitted to the Price Improvement Mechanism that do
not trade with their contra order in the Additional Select Symbols.
Further, market participants will now also receive a rebate of $0.15
per contract for contracts that are submitted to the Facilitation and
Solicited Order Mechanisms that do not trade with their contra order in
the Additional Select Symbols except when those contracts trade against
pre-existing orders and quotes on the Exchange's orderbook.
Further, the Exchange currently charges Primary Market Makers
(PMMs) a transaction fee of $0.18 per contract \18\ in the Additional
Select Symbols when they trade report a Priority Customer or
Professional Customer order in accordance with their obligation to
provide away market price protection. PMMs in Select Symbols do not
receive a maker rebate nor pay a taker fee when trade reporting.\19\
With this proposed rule change, PMMs in the Additional Select Symbols
will also not receive a maker rebate nor pay a taker fee when trade
reporting.
---------------------------------------------------------------------------
\18\ The volume-based discount to fees to ISE Market Maker
contracts also applies. See supra, note 9.
\19\ See Schedule of Fees, Section I, Regular Order Fees and
Rebates, footnote 9.
---------------------------------------------------------------------------
Finally, for the New Penny Pilot Symbols (prior to their inclusion
to the Penny Pilot Program), the Exchange charged a payment for order
flow (PFOF) fee of $0.70 per contract, applicable to Market Makers when
trading against Priority Customer orders, and for the remaining
Additional Select Symbols, the Exchange currently charges a PFOF fee of
$0.25 per contract, applicable to Market Makers when trading against
Priority Customer orders. With this proposed rule change, the Exchange
will no longer charge a PFOF fee for trading in the Additional Select
Symbols.
Complex Order Fees and Rebates
With this proposed rule change, the maker fee for complex orders in
the Additional Select Symbols will remain unchanged because the
Exchange currently charges the same maker fee for complex orders in the
Select Symbols, in the Penny Pilot Symbols and in the Non-Penny Pilot
Symbols.\20\ Specifically, for Select Symbols, Penny Pilot Symbols and
Non-Penny Pilot Symbols, the Exchange currently charges a complex order
maker fee of: (i) $0.10 per contract for Market Maker, Firm
Proprietary/Broker-Dealer and Professional Customer orders; (ii) $0.20
per contract for Non-ISE Market Maker orders; and (iii) $0.00 per
contract for Priority Customer orders.
---------------------------------------------------------------------------
\20\ The New Penny Pilot Symbols were subject to the fee listed
in the Column titled Maker Fee for Non-Penny Pilot Symbols. The
remaining Additional Select Symbols are currently subject to the fee
listed in the column titled Maker Fee for Select Symbols and Penny
Pilot Symbols. See Schedule of Fees, Section II, Complex Order Fees
and Rebates.
---------------------------------------------------------------------------
With this proposed rule change, the maker fee for complex orders in
the Additional Select Symbols (except for the New Penny Pilot Symbols)
when trading against Priority Customers will remain unchanged because
the Exchange currently charges the same maker fee for complex orders in
the Select Symbols (excluding SPY) when trading against Priority
Customers and in the Non-Select Penny Pilot Symbols when trading
against Priority Customers.\21\ Specifically, for complex orders in the
Select Symbols (excluding SPY) when trading against Priority Customer
and for complex orders in the Non-Select Penny Pilot Symbols when
trading against Priority Customers, the Exchange currently charges a
maker fee of: (i) $0.39 per contract for Market Maker orders; (ii)
$0.40 per contract for Non-ISE Market Maker, Firm Proprietary/Broker-
Dealer and Professional Customer orders; and (iii) $0.00 per contract
for Priority Customer orders. Thus, these fees will remain unchanged.
---------------------------------------------------------------------------
\21\ The New Penny Pilot Symbols were subject to the fee listed
in the Column titled Maker Fee for Non-Penny Pilot Symbols when
trading against Priority Customer. The remaining Additional Select
Symbols are currently subject to the fee listed in the column titled
Maker Fee for Non-Select Penny Pilot Symbols when trading against
Priority Customer. See Schedule of Fees, Section II, Complex Order
Fees and Rebates.
---------------------------------------------------------------------------
Prior to their inclusion to the Penny Pilot Program, the New Penny
Pilot Symbols, which are a subset of the Additional Select Symbols,
were charged a higher maker fee when trading against Priority Customer
complex orders. Specifically, for complex orders in the New Penny Pilot
Symbols when trading against Priority Customer complex orders, the
Exchange charged a maker fee of: (i) $0.82 per contract for Market
Maker orders; (ii) $0.84 per contract for Non-ISE Market Maker, Firm
Proprietary/Broker-Dealer and Professional Customer orders; and (iii)
$0.00 per contract for Priority Customer orders.\22\ With this proposed
rule change, the New Penny Pilot Symbols will now be subject to the
same maker fee as the remaining Additional Select Symbols, as noted
above, which is lower (except for Priority Customer orders which fee
will remain the same) than those the Exchange charged for the New Penny
Pilot Symbols when trading against Priority Customer complex orders.
---------------------------------------------------------------------------
\22\ The per contract fees noted reflect changes proposed by the
Exchange in an earlier filing. See SR-ISE-2013-01.
---------------------------------------------------------------------------
With this proposed rule change, the taker fee for complex orders in
the Additional Select Symbols (except for the New Penny Pilot Symbols)
will remain unchanged because the Exchange currently charges the same
taker fee for complex orders in the Select Symbols (excluding SPY) and
in the Non-Select Penny Pilot Symbols.\23\ Specifically, for complex
orders in the Select Symbols (excluding SPY) and in the Non-Select
Penny Pilot Symbols, the Exchange currently charges a taker fee of: (i)
$0.39 per contract for Market Maker orders; (ii) $0.40 per contract for
Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and Professional
Customer orders; and (iii) $0.00 per contract for Priority Customer
orders. Thus, these fees will remain unchanged.
---------------------------------------------------------------------------
\23\ The New Penny Pilot Symbols were subject to the fee listed
in the Column titled Taker Fee for Non-Penny Pilot Symbols. The
remaining Additional Select Symbols are currently subject to the fee
listed in the column titled Taker Fee for Non-Select Penny Pilot
Symbols. See Schedule of Fees, Section II, Complex Order Fees and
Rebates.
---------------------------------------------------------------------------
Prior to their inclusion to the Penny Pilot Program, the New Penny
Pilot Symbols, which are a subset of the Additional Select Symbols,
were charged a higher taker fee for trading complex orders.
Specifically, for complex orders in the New Penny Pilot Symbols, the
Exchange charged a taker fee of: (i) $0.82 per contract for Market
Maker orders; (ii) $0.84 per contract for Non-ISE Market Maker, Firm
Proprietary/Broker-Dealer and Professional Customer orders; and (iii)
$0.00 per contract for Priority Customer orders.\24\ With this proposed
rule change, the New Penny Pilot Symbols will now be subject to the
same taker fee as the remaining Additional Select Symbols, as noted
above, which is lower (except for Priority Customer orders which fee
will remain the same) than
[[Page 3955]]
those the Exchange charged for the New Penny Pilot Symbols.
---------------------------------------------------------------------------
\24\ The per contract fees noted reflect changes proposed by the
Exchange in an earlier filing. See SR-ISE-2013-01.
---------------------------------------------------------------------------
With this proposed rule change, the Fee for Crossing Orders when
trading complex orders in the Additional Select Symbols will remain
unchanged because the Exchange currently charges $0.20 per contract
(for largest leg only) for complex Crossing Orders in all symbols,
except for Priority Customers who are currently charged $0.00 per
contract.
With this proposed rule change, the Fee for Responses to Crossing
Orders when trading complex orders in the Additional Select Symbols
will remain unchanged (except for the New Penny Pilot Symbols) because
the Exchange currently charges $0.40 per contract for Responses to
Crossing Orders when trading complex orders in the Select Symbols and
in the Penny Pilot Symbols. The Fee for Responses to Crossing Orders
when trading complex orders in the New Penny Pilot Symbols will,
however, decrease because the Exchange currently charges $0.82 per
contract for Market Maker orders and $0.84 per contract for Non-ISE
Market Maker, Firm Proprietary/Broker-Dealer and Professional Customer
orders.\25\ The New Penny Pilot Symbols, which are a subset of the
Additional Select Symbols, will now be charged $0.40 per contract for
Market Maker, Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and
Professional Customer orders.\26\
---------------------------------------------------------------------------
\25\ Id.
\26\ The New Penny Pilot Symbols were subject to the fee listed
in the Column titled Fee for Responses to Crossing Orders for non-
Penny Pilot Symbols. The remaining Additional Select Symbols are
currently subject to the fee listed in the column titled Fee for
Responses to Crossing Orders for Select Symbols and Penny Pilot
Symbols. See Schedule of Fees, Section II, Complex Order Fees and
Rebates.
---------------------------------------------------------------------------
With this proposed rule change, the rebate levels payable for
Priority Customer complex orders in the Additional Select Symbols
(except for the New Penny Pilot Symbols) will increase because the
rebate levels payable for Priority Customer complex orders in the
Select Symbols are higher than the rebate levels currently payable for
Priority Customer complex orders in Non-Select Penny Pilot Symbols, as
described below.
For the Additional Select Symbols (except for the New Penny Pilot
Symbols), 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.\27\ Additionally, Members who achieve a certain level of
average daily volume (ADV) of executed Priority Customer complex order
contracts across all symbols during a calendar month are provided a
rebate of $0.35 per contract, per leg, in these symbols, if a Member
achieves an ADV of 40,000 Priority Customer complex order contracts;
$0.37 per contract, per leg, in these symbols, if a Member achieves an
ADV of 75,000 Priority Customer complex order contracts; $0.38 per
contract, per leg, in these symbols, if a Member achieves an ADV of
125,000 Priority Customer complex order contracts; and $0.39 per
contract, per leg, in these symbols, if a Member achieves an ADV of
225,000 Priority Customer complex order contracts.\28\ 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.
---------------------------------------------------------------------------
\27\ Additional Select Symbols (except for the New Penny Pilot
Symbols) are currently subject to the rebate listed in the column
titled Rebate for non-Select Penny Pilot Symbols. See Schedule of
Fees, Section II, Complex Order Fees and Rebates.
\28\ The per contract rebates noted reflect changes proposed by
the Exchange in an earlier filing. See SR-ISE-2013-01.
---------------------------------------------------------------------------
For Select Symbols (excluding SPY), the Exchange currently provides
a base rebate of $0.34 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 a certain level of average daily volume (ADV) of executed
Priority Customer complex order contracts across all symbols during a
calendar month are provided a rebate of $0.37 per contract, per leg, in
these symbols, if a Member achieves an ADV of 40,000 Priority Customer
complex order contracts; $0.38 per contract, per leg, in these symbols,
if a Member achieves an ADV of 75,000 Priority Customer complex order
contracts; $0.39 per contract, per leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority Customer complex order contracts;
and $0.40 per contract, per leg, in these symbols, if a Member achieves
an ADV of 225,000 Priority Customer complex order contracts.\29\ 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.
With this proposed rule change, the increased rebate levels currently
payable for Priority Customer complex orders in Select Symbols will now
apply to Priority Customer complex orders in the Additional Select
Symbols.
---------------------------------------------------------------------------
\29\ Id.
---------------------------------------------------------------------------
With this proposed rule change, the rebate levels payable for
Priority Customer complex orders in the New Penny Pilot Symbols will,
however, decrease because the these symbols will now be subject to much
lower maker and taker fees and thus receive lower rebates, as described
below.
For the New Penny Pilot Symbols (prior to their inclusion to the
Penny Pilot Program), the Exchange provided a base rebate of $0.66 per
contract, per leg, for Priority Customer complex orders when these
orders traded with non-Priority Customer complex orders in the complex
order book.\30\ Additionally, Members who achieve a certain level of
average daily volume (ADV) of executed Priority Customer complex order
contracts across all symbols during a calendar month are provided a
rebate of $0.72 per contract, per leg, in these symbols, if a Member
achieves an ADV of 40,000 Priority Customer complex order contracts;
$0.75 per contract, per leg, in these symbols, if a Member achieves an
ADV of 75,000 Priority Customer complex order contracts; $0.77 per
contract, per leg, in these symbols, if a Member achieves an ADV of
125,000 Priority Customer complex order contracts; and $0.78 per
contract, per leg, in these symbols, if a Member achieves an ADV of
225,000 Priority Customer complex order contracts.\31\ 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.
---------------------------------------------------------------------------
\30\ The New Penny Pilot Symbols were subject to the rebate
listed in the column titled Rebate for non-Select non-Penny Pilot
Symbols. See Schedule of Fees, Section II, Complex Order Fees and
Rebates.
\31\ The per contract rebates noted reflect changes proposed by
the Exchange in an earlier filing. See SR-ISE-2013-01.
---------------------------------------------------------------------------
For Select Symbols (excluding SPY), the Exchange currently provides
a base rebate of $0.34 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 a certain level of average daily volume (ADV) of executed
Priority Customer complex order contracts across all symbols during a
[[Page 3956]]
calendar month are provided a rebate of $0.37 per contract, per leg, in
these symbols, if a Member achieves an ADV of 40,000 Priority Customer
complex order contracts; $0.38 per contract, per leg, in these symbols,
if a Member achieves an ADV of 75,000 Priority Customer complex order
contracts; $0.39 per contract, per leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority Customer complex order contracts;
and $0.40 per contract, per leg, in these symbols, if a Member achieves
an ADV of 225,000 Priority Customer complex order contracts.\32\ 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.
With this proposed rule change, the lower rebate levels currently
payable for Priority Customer complex orders in the Select Symbols will
now apply to Priority Customer complex orders in the New Penny Pilot
Symbols.
---------------------------------------------------------------------------
\32\ Id.
---------------------------------------------------------------------------
Further, the Exchange currently provides a base rebate of $0.06 per
contract, per leg, for Priority Customer complex orders in all symbols
traded on the Exchange (excluding SPY) when these orders trade against
quotes or orders in the regular orderbook. Additionally, Members who
achieve a certain level of average daily volume (ADV) of executed
Priority Customer complex order contracts across all symbols during a
calendar month are provided a rebate of $0.08 per contract, per leg, in
these symbols, if a Member achieves an ADV of 40,000 Priority Customer
complex order contracts; $0.09 per contract, per leg, in these symbols,
if a Member achieves an ADV of 75,000 Priority Customer complex order
contracts; $0.10 per contract, per leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority Customer complex order contracts;
and $0.11 per contract, per leg, in these symbols, if a Member achieves
an ADV of 225,000 Priority Customer complex order contracts.\33\ 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.
This rebate is currently applicable to the Additional Select Symbols
and with this proposed rule change, will continue to apply at the
current rates.
---------------------------------------------------------------------------
\33\ Id.
---------------------------------------------------------------------------
Additionally, the Exchange currently provides Market Makers with a
discount when trading against Priority Customer orders that are
preferenced to them.\34\ This discount is applicable when Market Makers
add or remove liquidity in, among other symbols, Select Symbols, Non-
Select Penny Pilot Symbols and Non-Penny Pilot Symbols. The Additional
Select Symbols are currently a part of the Non-Select Penny Pilot
Symbols and Non-Penny Pilot Symbols and therefore the discount which
currently applies to these symbols will continue to apply to these
symbols when they become Select Symbols.
---------------------------------------------------------------------------
\34\ The Exchange has submitted a separate filing to increase
the discount from $0.02 per contract to $0.05 per contract. See SR-
ISE-2013-02.
---------------------------------------------------------------------------
Further, the Exchange currently provides a $0.20 per contract fee
credit to PMMs for execution of Priority Customer orders in the Non-
Select Symbols--for classes in which it serves as a PMM--that send an
Intermarket Sweep Order to other exchanges. This credit is applied
regardless of the transaction fee charged by a destination market. For
PMMs in the Select Symbols, this credit is equal to the fee charged by
the destination market. With this proposed rule change, PMMs in the
Additional Select Symbols will now be provided with a credit that that
is equal to the fee charged by the destination market.
The Exchange also currently provides a $0.20 per contract credit
for responses to flash orders in the Non-Select Symbols when trading
against Professional Customers. For Select Symbols, the per contract
fee credit for responses to flash orders is (i) $0.10 per contract when
trading against Priority Customers; (ii) $0.12 per contract when
trading against Preferenced Priority Customers; and (iii) $0.10 per
contract when trading against Professional Customers. Market
participants trading in the Additional Select Symbols will now be
provided the rebate at levels that are currently in place for Select
Symbols, as described above.
With this proposed rule change, the Exchange expects to attract
additional order flow of regular and complex orders in the Additional
Select Symbols. The Exchange's maker/taker fees and rebates have been
effective in attracting order flow of regular and complex orders in the
Select Symbols and increasing its market share in these symbols. The
Exchange believes that applying its maker/taker fees and rebates to the
Additional Select Symbols will result in the Exchange increasing its
market share for regular and complex orders in these symbols.
With this proposed rule change, the maker and taker fees and the
Fee for Responses to Crossing Orders for the New Penny Pilot Symbols
will decrease because these symbols will now be charged the fees
currently in place for Select Symbols, which are considerably lower.
While the fees for the New Penny Pilot Symbols will decrease, the
rebates payable for Priority Customer complex orders in these symbols
will also correspondingly decrease. Further, Market Makers will now be
eligible for the Market Maker Plus rebate, which was previously not
applicable to the Additional Select Symbols. This proposed rule change
does not propose any change to the maker and taker fees for complex
orders in the Additional Select Symbols (except the New Penny Pilot
Symbols, as noted above) as those fees remain unchanged. The rebate
levels payable for Priority Customer complex orders in the Additional
Select Symbols will increase compared to the current rebate levels for
this group of symbols, except as noted above, for the New Penny Pilot
Symbols, whose rebate levels will decrease.
Since the rate changes to the Schedule of Fees pursuant to this
proposal will be effective upon filing, for the transactions occurring
in January 2013 prior to the effective date of this filing, members
will be assessed the rates in effect immediately prior to those
proposed by this filing. For transactions occurring in January 2013 on
and after the effective date of this filing, members will be assessed
the rates proposed by this filing.
2. Basis
The Exchange believes that its proposal to amend its Schedule of
Fees is consistent with Section 6(b) of the Act \35\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \36\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities.
---------------------------------------------------------------------------
\35\ 15 U.S.C. 78f(b).
\36\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that it is reasonable to add the Additional
Select Symbols to the current list of Select Symbols. The Exchange
believes that applying the fees and rebates applicable to Select
Symbols to the Additional Select Symbols will attract additional order
flow to the Exchange. Select Symbol pricing has proven beneficial for
the Exchange and its participants and the Exchange believes that moving
[[Page 3957]]
the Additional Select Symbols to Select Symbols pricing would enhance
liquidity and participation in those symbols.
The Exchange believes that it is equitable and not unfairly
discriminatory to amend its list of Select Symbols to add the
Additional Select Symbols because the fees and rebates for Select
Symbols would apply uniformly to all categories of participants in the
same manner. All market participants who trade options in the Select
Symbols would be uniformly subject to the fees and rebates applicable
to those symbols.
The Exchange believes the proposed rule change is reasonable and
equitable because it generally lowers the maker fees applicable to
market participants (and considerably lowers the maker fees for the New
Penny Pilot Symbols) and believes that the lower maker fees will
attract additional maker liquidity and size to the Exchange in the
Additional Select Symbols. Additionally, while this proposed rule
change proposes to increase the taker fees applicable to market
participants (except for the New Penny Pilot Symbols, whose taker fees
will become considerably lower), the Exchange believes the benefits of
better market quality will outweigh the taker fee increases based on
the Exchange's experience with trading in the Select Symbols. Further,
the Exchange believes this proposed rule change is reasonable and
equitable because it will result in market participants receiving
higher rebates for Priority Customer complex orders when these orders
trade with non-Priority Customer complex orders in the complex order
book as the current rebate payable for these orders in Select Symbols
is higher than the current rebate payable for these orders in
Additional Select Symbols. The Exchange notes, however, that the
rebates payable to the New Penny Pilot Symbols will be decreased to
correspond with the lower maker and taker fees these symbols will now
be subject to.
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 rebates, and is now merely proposing to adjust the
rebate amounts applicable to the Additional Select Symbols. With this
proposed rule change, Market Makers will also now be eligible to
receive the Market Maker Plus rebate which was not previously
applicable to the Additional Select Symbols. 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 discount to Market Makers on preferenced orders as an
incentive for them to quote in the complex order book. ISE notes that
with this proposed rule change, the Exchange will continue to maintain
the differential that was previously in place for the Additional Select
Symbols.
The Exchange believes that the proposed changes are non-
discriminatory because the proposal simply moves the Additional Select
Symbols from one category of fees into another category thereby
applying fees currently in effect. Further, the Exchange believes that
it is equitable and not unfairly discriminatory to amend its list of
Select Symbols to add the Additional Select Symbols to the Select
Symbols because the fees applicable to the Select Symbols would apply
uniformly to all categories of participants in the same manner. All
market participants who trade the Select Symbols would be uniformly
subject to the fees and rebates applicable to those symbols.
B. Self-Regulatory Organization's Statement on Burden on Competition
ISE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. This rule change, which
proposes to move a group of symbols to an existing category of symbols,
does not impose any burden on competition. With this proposed rule
change, the Additional Select Symbols will be subject to fees that are
already in place on the Exchange and therefore, do not impose any
additional burden on competition that is not necessary or appropriate
in furthering the purposes of the Act. The Exchange believes that the
proposed changes promote competition, as they are designed to allow the
Exchange to better compete for order flow and improve the Exchange's
competitive position.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \37\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\38\ because it establishes a due, fee, or other charge
imposed by ISE.
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\37\ 15 U.S.C. 78s(b)(3)(A)(ii).
\38\ 17 CFR 240.19b-4(f)(2).
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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 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 No. SR-ISE-2013-03 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2013-03. 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
[[Page 3958]]
post all comments on the Commissions 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. Copies of such filing also will be available for
inspection and copying at the principal office of the ISE. 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-2013-03 and should be
submitted by February 7, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
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\39\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00873 Filed 1-16-13; 8:45 am]
BILLING CODE 8011-01-P
