Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees, 60545-60547 [2014-23835]
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Federal Register / Vol. 79, No. 194 / Tuesday, October 7, 2014 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73276; File No. SR–ISE–
2014–41]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend the Schedule of
Fees
October 1, 2014.
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
September 17, 2014, the International
Securities Exchange, LLC (the
‘‘Exchange’’ or the ‘‘ISE’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE is proposing to amend the
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.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
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
On June 6, 2013 the ISE implemented
a temporary Managed Data Access
Service program that established a new
pricing and distribution model for the
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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sale of a number of real-time market
data products.3 On December 20, 2013,
the Exchange extended this program
until May 30, 2014, and the program
lapsed on that date.4 The Exchange now
proposes to institute another temporary
Managed Data Access Service program
on the same terms, for an additional one
year period ending August 31, 2015, so
that the Exchange can continue to
provide this alternative delivery option
for ISE data feeds.5 Managed Data
Access Service is a pricing and
administrative option whereby the ISE
assesses fees to Managed Data Access
Distributors,6 who redistribute market
data to Managed Data Access
Recipients.7 Managed Data Access
Distributors are required to monitor the
delivery of the data retransmitted to
their clients, and must agree to reformat,
redisplay and/or alter the data feeds
prior to retransmission without affecting
the integrity of the data feeds and
without rendering any of the feeds
inaccurate, unfair, uninformative,
fictitious, misleading, or discriminatory.
The proposed fees for the Managed
Data Access Service are as follows:
The Exchange proposes to charge a fee
to each Managed Data Access
Distributor of $2,500 per month for the
Depth Feed, $1,500 for each of the Top
Quote Feed and Spread Feed, and
$1,000 per month for the Order Feed.
The Exchange also proposes to charge a
fee for each IP address at Managed Data
Access Recipients that receive market
data redistributed by a Managed Data
3 See Securities Exchange Act Release No. 69806
(June 20, 2013), 78 FR 38424 (June 26, 2013) (ISE–
2013–39). The Exchange also offers a similar
Managed Data Access Service program for its
Implied Volatility and Greeks Feed. See Securities
Exchange Act Release No. 65678 (November 3,
2011), 76 FR 70178 (November 10, 2011) (ISE–
2011–67). This filing does not apply to the Managed
Data Access Service program for the Implied
Volatility and Greeks Feed, which is a permanent
program.
4 See Securities Exchange Act Release No. 71230
(January 2, 2014), 79 FR 1405 (January 8, 2014)
(ISE–2013–74).
5 The Managed Data Access Service program
provides an alternative delivery option for the Realtime Depth of Market Raw Data Feed (‘‘Depth
Feed’’), the Order Feed, the Top Quote Feed, and
the Spread Feed.
6 A Managed Data Access Distributor redistributes
ISE data feeds and permits access to the information
in those data feeds through a controlled device. A
Managed Data Access Distributor can also
redistribute a data feed solution to specific IP
addresses, including an Application Programming
Interface (‘‘API’’) or similar automated delivery
solutions, with only limited entitlement controls
(e.g., usernames and/or passwords) to a recipient of
the information.
7 A Managed Data Access Recipient is a
subscriber to the Managed Data Access Distributor
who receives a reformatted data feed in a controlled
device or at a specific IP address. Market Data
Access Recipients may be Professional or NonProfessional users.
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60545
Access Distributor, which is $750 per
month for the Depth Feed, $500 per
month for each of the Top Quote Feed
and Spread Feed, and $350 per month
for the Order Feed.8 In addition, the
Exchange proposes to charge a
controlled device fee for each controlled
device permitted to access market data
redistributed by a Managed Data Access
Distributor to a Market Data Access
Recipient that is a Professional user,9
which is $50 per month for the Depth
Feed, $20 per month for the Top Quote
Feed, $25 per month for the Spread
Feed, and $10 per month for the Order
Feed.10 Finally, the Exchange proposes
to charge a controlled device fee of $5
per month for each controlled device
permitted to access information in the
Depth Feed redistributed by a Managed
Data Access Distributor to a Market Data
Access Recipient that is a NonProfessional user.11 For each of the
above ISE data feeds, Market Data
Access Distributors are subject to a
minimum fee, which is $5,000 per
month for the Depth Feed, $3,000 per
month for each of the Top Quote Feed
and Spread Feed, and $2,000 per month
for the Order Feed.
These fees are the same as fees
previously charged under the lapsed the
Managed Data Access Service program.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the requirements of the Act,12 and the
rules and regulations thereunder that
are applicable to a national securities
exchange, including the requirements of
Section 6(b) of the Act.13 In particular,
8 This fee is charged per IP address, which covers
both primary and back-up IP addresses at a
Managed Data Access Recipient.
9 A ‘‘Professional user’’ is an authorized end-user
of the ISE data feeds that has not qualified as a NonProfessional user.
10 A controlled device is any device that a
distributor of an ISE data feed permits to access the
information in that data feed.
11 There is no controlled device fee for NonProfessional users of the Top Quote Feed, Spread
Feed, or Order Feed. A ‘‘Non-Professional user’’ is
an authorized end-user of the ISE data feeds who
is a natural person and who is neither: (a)
Registered or qualified with the Securities and
Exchange Commission, the Commodities Futures
Trading Commission, any state securities agency,
any securities exchange or association, or any
commodities or futures contract market or
association; (b) engaged as an ‘‘investment advisor’’
as that term is defined Section 202(a)(11) of the
Investment Advisers Act of 1940 (whether or not
registered or qualified under that act); nor (c)
employed by a bank or other organization exempt
from registration under Federal and/or state
securities laws to perform functions that would
require him/her to be so registered or qualified if
he/she were to perform such functions for an
organization not so exempt.
12 15 U.S.C. 78f.
13 15 U.S.C. 78f(b).
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Federal Register / Vol. 79, No. 194 / Tuesday, October 7, 2014 / Notices
the proposal is consistent with Section
6(b)(5) of the Act,14 because is designed
to promote just and equitable principles
of trade, remove impediments to and
perfect the mechanisms of a free and
open market and a national market
system and, in general, to protect
investors and the public interest. The
Exchange also believes that the
proposed rule change is consistent with
the provisions Section 6(b)(4) of the
Act 15 in that it is designed to provide
for the equitable allocation of reasonable
dues, fees, and other charges among its
members and other persons using its
facilities. The Exchange believes that
the proposed program is consistent with
the protection of investors and the
public interest as the terms of the
program are substantially similar to
managed data programs offered by other
options exchanges,16 and will provide a
competitive fee model for subscribers to
ISE market data. The Exchange initially
established a managed data program for
a six month period, later extended to a
year, in order gauge the level of interest
in this new pricing and distribution
model, and now wishes to institute
another temporary program so that it
may continue to offer an attractive
pricing program that competes with
programs offered by other options
exchanges. The Managed Data Access
Service promotes broader distribution of
controlled data, while offering a pricing
option that should result in lower fees
for subscribers. The Exchange continues
to believe that the fees for this program
are fair and equitable as they are
consistent with fees previously charged
under this program, and as explained
above are intended to offer a pricing
model that should result in lower fees
for ISE market data subscribers. The
Exchange is constrained in pricing the
Managed Data Access Service as these
services are entirely optional, and firms
may choose whether or not to purchase
proprietary ISE market data products or
to utilize any specific pricing
alternative. Moreover, the program is
not unfairly discriminatory because it
provides an opportunity for all
distributors and subscribers, both
Professional and Non-Professional, to
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,17 the Exchange does not believe
that the proposed rule change will
impose any burden on intermarket or
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, the Exchange believes that the
proposed rule change will promote
competition as it allows the ISE to
continue to offer a temporary program
that provides an attractive alternative
pricing model for ISE market data that
is similar to pricing programs in place
on other options exchanges. The vigor of
competition for market data is
significant and the Exchange believes
that this proposal clearly evidences
such competition. ISE proposes to offer
this optional Managed Access Data
Service pricing model in order to keep
pace with changes in the industry and
evolving customer needs.
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
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 18 and Rule 19b–
4(f)(6) thereunder.19
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
14 15
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U.S.C. 78f(b)(5).
U.S.C. 78f(b)(4).
16 A number of other exchanges have adopted
managed data access services to distribute their
proprietary market data. See e.g. Securities
Exchange Act Release Nos. 63276 (November 8,
2010), 75 FR 69717 (November 15, 2010) (SR–
NASDAQ–2010–138); and 69182 (March 19, 2013),
78 FR 18378 (March 26, 2013) (SR–PHLX–2013–28).
ISE also currently offers managed data access
service on a permanent basis for the ISE Implied
Volatility and Greeks Feed. See supra note 3.
access the ISE data feeds at a potentially
lower cost.
15 15
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17 15
U.S.C. 78f(b)(8).
U.S.C. 78s(b)(3)(A).
19 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The ISE has
satisfied this requirement.
18 15
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Sfmt 4703
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 Number SR–
ISE–2014–41 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–ISE–2014–41. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of 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–ISE–
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Federal Register / Vol. 79, No. 194 / Tuesday, October 7, 2014 / Notices
2014–41, and should be submitted on or
before October 28, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–23835 Filed 10–6–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73282; File No. SR–
NYSEArca–2014–04]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
a Proposed Rule Change, as Modified
by Amendment No. 1, To Amend NYSE
Arca, Inc.’s Rules by Revising the
Order of Priority of Bids and Offers
When Executing Orders in Open
Outcry
October 1, 2014.
I. Introduction
On January 15, 2014, NYSE Arca, Inc.
(‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 revise the order of priority of
bids and offers when executing orders
in open outcry. The proposed rule
change was published for comment in
the Federal Register on February 3,
2014.3 On March 18, 2014, the
Commission extended the time period
for Commission action on the proposal
to May 2, 2014.4 The Commission
received ten comment letters from seven
commenters regarding the proposal,5 as
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 71425
(January 28, 2014), 79 FR 6258 (‘‘Notice’’).
4 See Securities Exchange Act Release No. 71733
(March 18, 2014), 79 FR 16072 (March 24, 2014).
5 See Letter from Darren Story, dated January 29,
2014 (‘‘Story Letter I’’); Letter from Abraham Kohen,
AK FE Consultants LLC, dated January 31, 2014
(‘‘Kohen Letter I’’); Letter from David Spack, Chief
Compliance Officer, Casey Securities, LLC, dated
February 3, 2014 (‘‘Casey Letter’’); Letter from
Abraham Kohen, AK FE Consultants LLC, dated
February 4, 2014 (‘‘Kohen Letter II’’); Letter from
Angel Alvira, dated February 12, 2014 (‘‘Alvira
Letter’’); Letter from Donald Hart, dated February
12, 2014 (‘‘Hart Letter I’’); Letter from Doug
Patterson, Chief Compliance Officer, Cutler Group,
LP, dated February 13, 2014 (‘‘Cutler Letter’’); Letter
from Donald Hart, dated February 18, 2014 (‘‘Hart
Letter II’’); Letter from Gerald D. O’Connell, Chief
Regulatory Officer, Susquehanna International
Group, LLP (‘‘SIG’’), dated March 14, 2014 (‘‘SIG
Letter’’); and Letter from Darren Story, dated March
21, 2014 (‘‘Story Letter II’’).
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1 15
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well as a response to the comment
letters from NYSE Arca.6 On April 29,
2014, the Exchange filed Amendment
No. 1 to the proposed rule change.7 On
May 2, 2014, the Commission instituted
proceedings pursuant to Section
19(b)(2)(B) of the Act 8 to determine
whether to approve or disapprove the
proposed rule change.9 The Order
Instituting Proceedings was published
for comment in the Federal Register on
May 8, 2014.10 The Commission
received an additional response letter
and data submission from NYSE Arca.11
This order approves the proposed rule
change, as modified by Amendment No.
1.
II. Description of the Proposal
NYSE Arca proposed to amend its
rules governing the priority of bids and
offers on its Consolidated Book by
revising the order of priority in open
outcry to afford priority to bids and
offers represented by Market Makers 12
and Floor Brokers 13 (collectively,
‘‘Crowd Participants’’) 14 over certain
6 See Letter from Martha Redding, Chief Counsel,
NYSE Euronext, dated April 4, 2014 (‘‘NYSE Arca
Response I’’).
7 In Amendment No. 1, the Exchange revised the
rule text for proposed Rule 6.47: (1) To clarify that
Floor Brokers, when crossing two orders in open
outcry, may not trade through any non-Customer
bids or offers on the Consolidated Book that are
priced better than the proposed execution price;
and (2) to conform the term ‘‘bids and offers’’ to
‘‘bids or offers’’ in paragraphs (a) and (c)
thereunder. Amendment No. 1 has been placed in
the public comment file for SR–NYSEArca–2014–04
at https://www.sec.gov/comments/sr-nysearca-201404/nysearca201404.shtml (see letter from Martha
Redding, Chief Counsel, NYSE Euronext, to Kevin
M. O’Neill, Deputy Secretary, Commission, dated
April 30, 2014) and also is available on the
Exchange’s Web site at https://www.nyse.com/
nysenotices/nysearca/rule-filings/pdf.action;
jsessionid=FACF4F6772B1316D973F5D4E2
D258ACE?file_no=SR-NYSEArca-2014-04&
seqnum=2.
8 15 U.S.C. 78s(b)(2)(B).
9 See Securities Exchange Act Release No. 72081
(May 2, 2014), 79 FR 26474 (‘‘Order Instituting
Proceedings’’).
10 See Order Instituting Proceedings at 79 FR
26474. The comment period closed on May 29,
2014, and the rebuttal period closed on June 12,
2014. On July 29, 2014, the Commission extended
the time period for the proceedings for the
Commission to determine whether to approve or
disapprove the proposed rule change to October 1,
2014. See Securities Exchange Act Release No.
72703 (July 29, 2014), 79 FR 45535 (August 5,
2014).
11 See Letter from Martha Redding, Chief Counsel,
New York Stock Exchange, dated September 11,
2014 (‘‘NYSE Arca Response II’’). The response
letter included summary data concerning
participation and competition in non-Customer-toCustomer open outcry crossing transactions on
NYSE Arca and NYSE Amex Options and is
available at https://www.sec.gov/comments/srnysearca-2014-04/nysearca201404.shtml.
12 See Rule 6.32 (Market Maker Defined).
13 See Rule 6.43 (Options Floor Broker Defined).
14 The term ‘‘Crowd Participants’’ means the
Market Makers appointed to an option issue under
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Sfmt 4703
60547
equal-priced bids and offers of non–
Customers 15 on the Consolidated
Book 16 during the execution of an order
in open outcry on the Floor 17 of the
Exchange.18
Current Rule 6.75(a) provides that any
bids displayed on the Consolidated
Book have priority over same-priced
bids represented in open outcry. Such
priority also is described in current Rule
6.47, which governs crossing orders in
open outcry. Floor Broker crossing
transactions, as described in Rule
6.47(a)(3), may not trade ahead of bids
or offers on the Consolidated Book that
are priced equal to or better than the
proposed crossing price. The Exchange
stated that, because of this priority
afforded to the Consolidated Book,
Crowd Participants who have negotiated
a large transaction ultimately might not
be able to participate in its execution.19
The Exchange proposed to restructure
its priority rules so that bids and offers
of Crowd Participants would have
priority over equal-priced bids and
offers of non-Customers on the
Consolidated Book that are ranked in
time priority behind any equal-priced
Customer bids and offers on the
Consolidated Book. Equal-priced
Customer 20 interest would continue to
be afforded priority over Crowd
Participants in the execution of an open
outcry transaction. In addition,
consistent with the existing price/time
priority presently applicable to bids and
offers on the Consolidated Book, equalpriced non-Customer bids and offers
ranked in time priority ahead of
Customer interest also would be
Rule 6.35, and any Floor Brokers actively
representing orders at the best bid or offer on the
Exchange for a particular option series. See Rule
6.1(b)(38).
15 A non-Customer is a market participant who
does not meet the definition of Customer as defined
in paragraph (c)(6) of Rule 15c3–1 under the
Securities Exchange Act of 1934, 17 CFR 240.15c3–
1. See Rule 6.1(b)(29).
16 The term ‘‘Consolidated Book’’ means the
Exchange’s electronic book of limit orders for the
accounts of Public Customers and broker-dealers,
and Quotes with Size. See Rule 6.1(b)(37).
17 See Rule 1.1(i).
18 The Exchange also proposed to make nonsubstantive changes to existing rule text contained
in Rules 6.47 and 6.75. See Notice, 79 FR at 6260
for a description of these non-substantive changes.
19 See Notice, 79 FR at 6258. The Exchange stated
that Crowd Participants could negotiate a
transaction with an understanding of the make-up
of bids and offers on the Consolidated Book at the
beginning of open outcry. However, as the trade is
executed, the Consolidated Book could update with
newly-arriving electronically-entered bids and
offers that have priority under current Rule 6.75(a).
The Exchange noted that, given the speed at which
quotes can flicker in the Consolidated Book, Crowd
Participants who have agreed to a transaction in
open outcry do not know if they will actually
participate on the trade until after execution. Id. at
6258–59.
20 See supra note 15.
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]]>Agencies
[Federal Register Volume 79, Number 194 (Tuesday, October 7, 2014)]
[Notices]
[Pages 60545-60547]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-23835]
[[Page 60545]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73276; File No. SR-ISE-2014-41]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Amend the Schedule of Fees
October 1, 2014.
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 September 17, 2014, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The ISE is proposing to amend the 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
On June 6, 2013 the ISE implemented a temporary Managed Data Access
Service program that established a new pricing and distribution model
for the sale of a number of real-time market data products.\3\ On
December 20, 2013, the Exchange extended this program until May 30,
2014, and the program lapsed on that date.\4\ The Exchange now proposes
to institute another temporary Managed Data Access Service program on
the same terms, for an additional one year period ending August 31,
2015, so that the Exchange can continue to provide this alternative
delivery option for ISE data feeds.\5\ Managed Data Access Service is a
pricing and administrative option whereby the ISE assesses fees to
Managed Data Access Distributors,\6\ who redistribute market data to
Managed Data Access Recipients.\7\ Managed Data Access Distributors are
required to monitor the delivery of the data retransmitted to their
clients, and must agree to reformat, redisplay and/or alter the data
feeds prior to retransmission without affecting the integrity of the
data feeds and without rendering any of the feeds inaccurate, unfair,
uninformative, fictitious, misleading, or discriminatory.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 69806 (June 20,
2013), 78 FR 38424 (June 26, 2013) (ISE-2013-39). The Exchange also
offers a similar Managed Data Access Service program for its Implied
Volatility and Greeks Feed. See Securities Exchange Act Release No.
65678 (November 3, 2011), 76 FR 70178 (November 10, 2011) (ISE-2011-
67). This filing does not apply to the Managed Data Access Service
program for the Implied Volatility and Greeks Feed, which is a
permanent program.
\4\ See Securities Exchange Act Release No. 71230 (January 2,
2014), 79 FR 1405 (January 8, 2014) (ISE-2013-74).
\5\ The Managed Data Access Service program provides an
alternative delivery option for the Real-time Depth of Market Raw
Data Feed (``Depth Feed''), the Order Feed, the Top Quote Feed, and
the Spread Feed.
\6\ A Managed Data Access Distributor redistributes ISE data
feeds and permits access to the information in those data feeds
through a controlled device. A Managed Data Access Distributor can
also redistribute a data feed solution to specific IP addresses,
including an Application Programming Interface (``API'') or similar
automated delivery solutions, with only limited entitlement controls
(e.g., usernames and/or passwords) to a recipient of the
information.
\7\ A Managed Data Access Recipient is a subscriber to the
Managed Data Access Distributor who receives a reformatted data feed
in a controlled device or at a specific IP address. Market Data
Access Recipients may be Professional or Non-Professional users.
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The proposed fees for the Managed Data Access Service are as
follows:
The Exchange proposes to charge a fee to each Managed Data Access
Distributor of $2,500 per month for the Depth Feed, $1,500 for each of
the Top Quote Feed and Spread Feed, and $1,000 per month for the Order
Feed. The Exchange also proposes to charge a fee for each IP address at
Managed Data Access Recipients that receive market data redistributed
by a Managed Data Access Distributor, which is $750 per month for the
Depth Feed, $500 per month for each of the Top Quote Feed and Spread
Feed, and $350 per month for the Order Feed.\8\ In addition, the
Exchange proposes to charge a controlled device fee for each controlled
device permitted to access market data redistributed by a Managed Data
Access Distributor to a Market Data Access Recipient that is a
Professional user,\9\ which is $50 per month for the Depth Feed, $20
per month for the Top Quote Feed, $25 per month for the Spread Feed,
and $10 per month for the Order Feed.\10\ Finally, the Exchange
proposes to charge a controlled device fee of $5 per month for each
controlled device permitted to access information in the Depth Feed
redistributed by a Managed Data Access Distributor to a Market Data
Access Recipient that is a Non-Professional user.\11\ For each of the
above ISE data feeds, Market Data Access Distributors are subject to a
minimum fee, which is $5,000 per month for the Depth Feed, $3,000 per
month for each of the Top Quote Feed and Spread Feed, and $2,000 per
month for the Order Feed.
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\8\ This fee is charged per IP address, which covers both
primary and back-up IP addresses at a Managed Data Access Recipient.
\9\ A ``Professional user'' is an authorized end-user of the ISE
data feeds that has not qualified as a Non-Professional user.
\10\ A controlled device is any device that a distributor of an
ISE data feed permits to access the information in that data feed.
\11\ There is no controlled device fee for Non-Professional
users of the Top Quote Feed, Spread Feed, or Order Feed. A ``Non-
Professional user'' is an authorized end-user of the ISE data feeds
who is a natural person and who is neither: (a) Registered or
qualified with the Securities and Exchange Commission, the
Commodities Futures Trading Commission, any state securities agency,
any securities exchange or association, or any commodities or
futures contract market or association; (b) engaged as an
``investment advisor'' as that term is defined Section 202(a)(11) of
the Investment Advisers Act of 1940 (whether or not registered or
qualified under that act); nor (c) employed by a bank or other
organization exempt from registration under Federal and/or state
securities laws to perform functions that would require him/her to
be so registered or qualified if he/she were to perform such
functions for an organization not so exempt.
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These fees are the same as fees previously charged under the lapsed
the Managed Data Access Service program.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the requirements of the Act,\12\ and the rules and regulations
thereunder that are applicable to a national securities exchange,
including the requirements of Section 6(b) of the Act.\13\ In
particular,
[[Page 60546]]
the proposal is consistent with Section 6(b)(5) of the Act,\14\ because
is designed to promote just and equitable principles of trade, remove
impediments to and perfect the mechanisms of a free and open market and
a national market system and, in general, to protect investors and the
public interest. The Exchange also believes that the proposed rule
change is consistent with the provisions Section 6(b)(4) of the Act
\15\ in that it is designed to provide for the equitable allocation of
reasonable dues, fees, and other charges among its members and other
persons using its facilities. The Exchange believes that the proposed
program is consistent with the protection of investors and the public
interest as the terms of the program are substantially similar to
managed data programs offered by other options exchanges,\16\ and will
provide a competitive fee model for subscribers to ISE market data. The
Exchange initially established a managed data program for a six month
period, later extended to a year, in order gauge the level of interest
in this new pricing and distribution model, and now wishes to institute
another temporary program so that it may continue to offer an
attractive pricing program that competes with programs offered by other
options exchanges. The Managed Data Access Service promotes broader
distribution of controlled data, while offering a pricing option that
should result in lower fees for subscribers. The Exchange continues to
believe that the fees for this program are fair and equitable as they
are consistent with fees previously charged under this program, and as
explained above are intended to offer a pricing model that should
result in lower fees for ISE market data subscribers. The Exchange is
constrained in pricing the Managed Data Access Service as these
services are entirely optional, and firms may choose whether or not to
purchase proprietary ISE market data products or to utilize any
specific pricing alternative. Moreover, the program is not unfairly
discriminatory because it provides an opportunity for all distributors
and subscribers, both Professional and Non-Professional, to access the
ISE data feeds at a potentially lower cost.
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\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ 15 U.S.C. 78f(b)(4).
\16\ A number of other exchanges have adopted managed data
access services to distribute their proprietary market data. See
e.g. Securities Exchange Act Release Nos. 63276 (November 8, 2010),
75 FR 69717 (November 15, 2010) (SR-NASDAQ-2010-138); and 69182
(March 19, 2013), 78 FR 18378 (March 26, 2013) (SR-PHLX-2013-28).
ISE also currently offers managed data access service on a permanent
basis for the ISE Implied Volatility and Greeks Feed. See supra note
3.
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\17\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. To the contrary,
the Exchange believes that the proposed rule change will promote
competition as it allows the ISE to continue to offer a temporary
program that provides an attractive alternative pricing model for ISE
market data that is similar to pricing programs in place on other
options exchanges. The vigor of competition for market data is
significant and the Exchange believes that this proposal clearly
evidences such competition. ISE proposes to offer this optional Managed
Access Data Service pricing model in order to keep pace with changes in
the industry and evolving customer needs.
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\17\ 15 U.S.C. 78f(b)(8).
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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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The ISE has satisfied this requirement.
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At any time within 60 days of the filing of the 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 Number SR-ISE-2014-41 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2014-41. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of 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-ISE-
[[Page 60547]]
2014-41, and should be submitted on or before October 28, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23835 Filed 10-6-14; 8:45 am]
BILLING CODE 8011-01-P
