Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees, 69170-69172 [2014-27451]

Download as PDF 69170 Federal Register / Vol. 79, No. 224 / Thursday, November 20, 2014 / Notices 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. 2014–27450 Filed 11–19–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73601; File No. SR–ISE– 2014–51] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees November 14, 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 November 3, 2014, the International Securities Exchange, LLC (the ‘‘Exchange’’ or the ‘‘ISE’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change, as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. rmajette on DSK2VPTVN1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The ISE is proposing to (1) eliminate special fees for Singly Listed Symbols, and (2) amend its rules for excluding days from its average daily volume (‘‘ADV’’) calculations when the market is not open for the entire trading day. The text of the proposed rule change is available on the Exchange’s Web site (http://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 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 13:37 Nov 19, 2014 Jkt 235001 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 proposes to (1) eliminate special fees for Singly Listed Symbols,3 and (2) amend its rules for excluding days from its ADV calculations when the market is not open for the entire trading day. Each of the proposed changes is described in more detail below. The Exchange’s Schedule of Fees has separate fees applicable to Standard Options and Mini Options. The Exchange notes that while the discussion below relates to fees for Standard Options, the fees for Mini Options, which are not discussed below, are and shall continue to be 1/10th of the fees for Standard Options. 1. Singly Listed Symbols Other than applicable response fees, simple Priority Customer 4 orders in Non-Select symbols 5 executed on the Exchange are generally not charged a transaction fee or fee for Crossing Orders,6 including a fee for Price Improvement Mechanism (‘‘PIM’’) orders of fewer than 100 contracts. By contrast, the Exchange charges Priority Customer orders in a special group of Non-Select Symbols that trade solely on the ISE (‘‘Singly Listed Symbols’’) a fee of $0.20 per contract for regular and Crossing Orders, including PIM orders of 100 or fewer contracts. The Exchange now proposes to eliminate the special fees for these Singly Listed Symbols, which will now be subject to the same fees as other Priority Customer orders in Non-Select Symbols. In connection with this change, the Exchange also proposes to remove other references to Singly Listed Symbols, including the definition of Singly Listed 3 ‘‘Singly Listed Symbols’’ are options overlying FXO, QQEW, PLTM, SMDD and FIW. 4 A ‘‘Priority Customer’’ is 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), as defined in ISE Rule 100(a)(37A). 5 ‘‘Non-Select Symbols’’ are options overlying all symbols excluding Select Symbols. 6 A ‘‘Crossing Order’’ is an order executed in the Exchange’s Facilitation Mechanism, Solicited Order Mechanism, Price Improvement Mechanism (PIM) or submitted as a Qualified Contingent Cross order. For purposes of this Fee Schedule, orders executed in the Block Order Mechanism are also considered Crossing Orders. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 Symbols in the Preface to the Schedule of Fees, and certain fee waivers that apply to Singly Listed Symbols as described below. The Exchange has a Payment for Order Flow (‘‘PFOF’’) fee of $0.70 per contract, which is paid by Market Makers 7 for each Priority Customer contract executed against the Market Maker in Non-Select Symbols other than Singly Listed Symbols and FX Option Symbols,8 or for Flash Orders 9 and Complex Orders. In addition, Market Makers making or taking liquidity receive a discount of $0.02 per contract in Standard Options only when trading against Priority Customer orders preferenced to them in the Complex order book in equity options that are able to be listed and traded on more than one options exchange. This discount similarly does not apply to Singly Listed Symbols and FX Options Symbols, or to option classes designated by the Exchange to receive a guaranteed allocation pursuant to ISE Rule 722(b)(3)(i)(B). As the Exchange is eliminating special fees for Singly Listed Symbols, the five symbols currently designated as Singly Listed Symbols will now be subject to the PFOF program and will be eligible for the Market Maker complex order discount described above. 2. ADV Calculation The Exchange provides a Market Maker Plus 10 rebate for adding liquidity of $0.22 per contract instead of the regular $0.20 per contract for Market Makers that meet the quoting requirements for Market Maker Plus and are affiliated with an Electronic Access Member that executes a total affiliated Priority Customer ADV of 200,000 contracts or more in a calendar month. Similarly, the Exchange charges a discounted Priority Customer taker fee of $0.25 per contract instead of the 7 The term ‘‘Market Makers’’ refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. See ISE Rule 100(a)(25). 8 ‘‘FX Option Symbols’’ are options overlying AUM, GBP, EUU and NDO. 9 A ‘‘Flash Order’’ is an order that is exposed at the National Best Bid or Offer by the Exchange to all members for execution, as provided under Supplementary Material .02 to ISE Rule 1901. 10 A Market Maker Plus is a Market Maker who is on the National Best Bid or National Best Offer at least 80% of the time for series trading between $0.03 and $3.00 (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 $3.00 (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. A Market Maker’s single best and single worst quoting days each month based on the front two expiration months, on a per symbol basis, will be excluded in calculating whether a Market Maker qualifies for this rebate, if doing so will qualify a Market Maker for the rebate. E:\FR\FM\20NON1.SGM 20NON1 Federal Register / Vol. 79, No. 224 / Thursday, November 20, 2014 / Notices regular $0.30 per contract for members with a total affiliated Priority Customer ADV that equals or exceeds 200,000 contracts. And for PIM orders of 100 or fewer contracts, the Exchange charges a discounted fee of $0.03 per contract instead of the regular $0.05 per contract for non-Priority Customer orders executed by members that have an ADV of 20,000 or more Priority Customer contracts in a given month executed in the PIM.11 In addition, the Exchange provides tiered rebates for Priority Customer 69171 complex orders when these orders trade with non-Priority Customer orders in the complex order book, or trade with quotes and orders on the regular order book, based on the member’s ADV in Priority Customer complex contracts as shown in the table below. PRIORITY CUSTOMER COMPLEX ORDER REBATE Select symbols 12 Priority customer complex ADV rmajette on DSK2VPTVN1PROD with NOTICES Tier Tier Tier Tier Tier Tier 1; 2; 3; 4; 5; 6; 0–29,999 ...................................................................................................................................................... 30,000–74,999 ............................................................................................................................................. 75,000–124,999 ........................................................................................................................................... 125,000–224,999 ......................................................................................................................................... 225,000–299,999 ......................................................................................................................................... 300,000+ ...................................................................................................................................................... Currently, for purposes of determining Priority Customer ADV 13 and Priority Customer Complex ADV, any day that the market is not open for the entire trading day may be excluded from such calculation. Although the regular and complex order books may function independently, the Exchange interprets this rule to require a general halt in trading before days can be excluded pursuant to this rule. This means, for instance, that if the regular market is open for trading but the complex order book is not accepting orders, the day could not be excluded from ADV calculations for complex order tiers, even though complex order volume on the ISE would be negatively impacted for that day. The Exchange now proposes to independently exclude days from its ADV calculations when the regular or complex order books are not open for the entire trading day. As proposed, days may be excluded from the Exchange’s regular and complex order ADV calculations, if the corresponding order book is not open for the entire trading day. Furthermore, the Exchange notes that some members may be inadvertently disadvantaged when the ISE removes a day from its ADV calculation if the member executes a large volume of contracts during that day. As this disadvantages members that continue to trade significant volume on days where the regular or complex order book is halted, the Exchange proposes to only exclude days for members that would have a lower ADV with the day included. 11 This discounted fee is applied retroactively to all eligible PIM volume in that month once the threshold has been reached. 12 ‘‘Select Symbols’’ are options overlying all symbols listed on the ISE that are in the Penny Pilot Program. VerDate Sep<11>2014 13:37 Nov 19, 2014 Jkt 235001 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,14 in general, and Section 6(b)(4) of the Act,15 in particular, 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. 1. Singly Listed Symbols The Exchange believes that it is reasonable and equitable to eliminate special fees for Singly Listed Symbols as this will simplify the Schedule of Fees to the benefit of members and investors. The Singly Listed Symbols account for a negligible amount of volume traded and the Exchange believes that it is no longer necessary to distinguish between multiply- and singly-listed options in determining the applicable execution fees described above. Furthermore, the Exchange believes that this proposed change is not unfairly discriminatory as members will now pay the same fees regardless of whether a particular symbol is multiply- or singly-listed. 2. ADV Calculation The Exchange believes that it is reasonable and equitable to separately account for the regular and complex order books when determining whether a day may be excluded from its ADV calculations. Without this proposed change, aberrant low volume days would have to be counted for ADV purposes if an issue in one order book did not affect the entire market at ISE, resulting in an unintended cost increase 13 The Exchange notes that this provision currently references ‘‘total affiliated’’ Priority Customer ADV and proposes to clarify that this encompasses all calculations that include Priority Customer ADV, such as Priority Customer PIM ADV PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 ($0.30) ($0.35) ($0.39) ($0.41) ($0.43) ($0.45) Non-select symbols ($0.63) ($0.71) ($0.75) ($0.80) ($0.82) ($0.83) for members. The proposed change preserves the Exchange’s intent behind adopting volume-based pricing by adjusting the ADV calculations to account for days where there is no general trading halt but one or the other order book is nevertheless unavailable to members. Similarly, the Exchange believes that it is reasonable and equitable to only exclude a day from its ADV calculations for members that would otherwise have a lower ADV for the month. Without this change, members that step up and trade significant volume on days where the regular or complex order book is unavailable for a portion of the trading day may be negatively impacted, resulting in an effective cost increase for those members. The Exchange further believes that the proposed changes to its ADV calculations are not unfairly discriminatory because they apply equally to all members and ADV calculations. As is the ISE’s current practice, the Exchange will provide a notice, and post it on the Exchange’s Web site, to inform members of any day that is to be excluded from its ADV calculations in connection with this proposed rule change. The Exchange notes that it has determined to charge fees and provide rebates in Mini Options at a rate that is 1/10th the rate of fees and rebates the Exchange provides for trading in Standard Options. The Exchange believes it is reasonable and equitable and not unfairly discriminatory to assess lower fees and rebates to provide market participants an incentive to trade Mini Options on the Exchange. The discussed above, which is a subset of total affiliated Priority Customer ADV. 14 15 U.S.C. 78f. 15 15 U.S.C. 78f(b)(4). E:\FR\FM\20NON1.SGM 20NON1 69172 Federal Register / Vol. 79, No. 224 / Thursday, November 20, 2014 / Notices Exchange believes the proposed fees and rebates are reasonable and equitable in light of the fact that Mini Options have a smaller exercise and assignment value, specifically 1/10th that of a standard option contract, and, as such, is providing fees and rebates for Mini Options that are 1/10th of those applicable to Standard Options. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,16 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. The Exchange believes that eliminating special fees for Singly Listed Symbols will reduce the complexity of the Schedule of Fees to the benefit of members and investors, and will not have any competitive impact. In addition, the Exchange believes that the proposed modifications to its ADV calculation are pro-competitive and will result in lower total costs to end users, a positive outcome of competitive markets. The Exchange operates in a highly competitive market in which market participants can readily direct their order flow to competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and rebates to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed fee changes reflect this competitive environment. 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. rmajette on DSK2VPTVN1PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 17 and subparagraph (f)(2) of Rule 19b–4 thereunder,18 because it establishes a due, fee, or other charge imposed by ISE. 16 15 U.S.C. 78f(b)(8). U.S.C. 78s(b)(3)(A)(ii). 18 17 CFR 240.19b–4(f)(2). 17 15 VerDate Sep<11>2014 13:37 Nov 19, 2014 Jkt 235001 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– ISE–2014–51 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–2014–51. 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 (http://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 office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ISE– 2014–51, and should be submitted on or before December 11, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–27451 Filed 11–19–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73598; File No. SR– NYSEArca–2014–56] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Designation of a Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change Relating to Listing and Trading of Shares of the PIMCO Income Exchange-Traded Fund Under NYSE Arca Equities Rule 8.600 November 14, 2014. On May 1, 2014, NYSE Arca, Inc. 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 list and trade shares of the PIMCO Income Exchange-Traded Fund under NYSE Arca Equities Rule 8.600. The proposed rule change was published for comment in the Federal Register on May 21, 2014.3 On June 24, 2014, the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.4 On August 19, 2014, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act 5 to determine whether to approve or disapprove the 19 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. 72170 (May 15, 2014), 79 FR 29231. 4 See Securities Exchange Act Release No. 72458, 79 FR 36849 (Jun. 30, 2014). The Commission determined that it was appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change. Accordingly, the Commission designated August 19, 2014 as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. 5 15 U.S.C. 78s(b)(2)(B). 1 15 E:\FR\FM\20NON1.SGM 20NON1

Agencies

[Federal Register Volume 79, Number 224 (Thursday, November 20, 2014)]
[Notices]
[Pages 69170-69172]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27451]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73601; File No. SR-ISE-2014-51]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Amend the Schedule of Fees

November 14, 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 November 3, 2014, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange Commission (``SEC'' or ``Commission'') the proposed rule 
change, as described in Items I, II, and III below, which Items have 
been prepared by the self-regulatory organization. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The ISE is proposing to (1) eliminate special fees for Singly 
Listed Symbols, and (2) amend its rules for excluding days from its 
average daily volume (``ADV'') calculations when the market is not open 
for the entire trading day. The text of the proposed rule change is 
available on the Exchange's Web site (http://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 proposes to (1) eliminate special fees for Singly 
Listed Symbols,\3\ and (2) amend its rules for excluding days from its 
ADV calculations when the market is not open for the entire trading 
day. Each of the proposed changes is described in more detail below. 
The Exchange's Schedule of Fees has separate fees applicable to 
Standard Options and Mini Options. The Exchange notes that while the 
discussion below relates to fees for Standard Options, the fees for 
Mini Options, which are not discussed below, are and shall continue to 
be 1/10th of the fees for Standard Options.
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    \3\ ``Singly Listed Symbols'' are options overlying FXO, QQEW, 
PLTM, SMDD and FIW.
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1. Singly Listed Symbols
    Other than applicable response fees, simple Priority Customer \4\ 
orders in Non-Select symbols \5\ executed on the Exchange are generally 
not charged a transaction fee or fee for Crossing Orders,\6\ including 
a fee for Price Improvement Mechanism (``PIM'') orders of fewer than 
100 contracts. By contrast, the Exchange charges Priority Customer 
orders in a special group of Non-Select Symbols that trade solely on 
the ISE (``Singly Listed Symbols'') a fee of $0.20 per contract for 
regular and Crossing Orders, including PIM orders of 100 or fewer 
contracts. The Exchange now proposes to eliminate the special fees for 
these Singly Listed Symbols, which will now be subject to the same fees 
as other Priority Customer orders in Non-Select Symbols.
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    \4\ A ``Priority Customer'' is 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), as defined in ISE Rule 100(a)(37A).
    \5\ ``Non-Select Symbols'' are options overlying all symbols 
excluding Select Symbols.
    \6\ A ``Crossing Order'' is an order executed in the Exchange's 
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement 
Mechanism (PIM) or submitted as a Qualified Contingent Cross order. 
For purposes of this Fee Schedule, orders executed in the Block 
Order Mechanism are also considered Crossing Orders.
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    In connection with this change, the Exchange also proposes to 
remove other references to Singly Listed Symbols, including the 
definition of Singly Listed Symbols in the Preface to the Schedule of 
Fees, and certain fee waivers that apply to Singly Listed Symbols as 
described below. The Exchange has a Payment for Order Flow (``PFOF'') 
fee of $0.70 per contract, which is paid by Market Makers \7\ for each 
Priority Customer contract executed against the Market Maker in Non-
Select Symbols other than Singly Listed Symbols and FX Option 
Symbols,\8\ or for Flash Orders \9\ and Complex Orders. In addition, 
Market Makers making or taking liquidity receive a discount of $0.02 
per contract in Standard Options only when trading against Priority 
Customer orders preferenced to them in the Complex order book in equity 
options that are able to be listed and traded on more than one options 
exchange. This discount similarly does not apply to Singly Listed 
Symbols and FX Options Symbols, or to option classes designated by the 
Exchange to receive a guaranteed allocation pursuant to ISE Rule 
722(b)(3)(i)(B). As the Exchange is eliminating special fees for Singly 
Listed Symbols, the five symbols currently designated as Singly Listed 
Symbols will now be subject to the PFOF program and will be eligible 
for the Market Maker complex order discount described above.
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    \7\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule 
100(a)(25).
    \8\ ``FX Option Symbols'' are options overlying AUM, GBP, EUU 
and NDO.
    \9\ A ``Flash Order'' is an order that is exposed at the 
National Best Bid or Offer by the Exchange to all members for 
execution, as provided under Supplementary Material .02 to ISE Rule 
1901.
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2. ADV Calculation
    The Exchange provides a Market Maker Plus \10\ rebate for adding 
liquidity of $0.22 per contract instead of the regular $0.20 per 
contract for Market Makers that meet the quoting requirements for 
Market Maker Plus and are affiliated with an Electronic Access Member 
that executes a total affiliated Priority Customer ADV of 200,000 
contracts or more in a calendar month. Similarly, the Exchange charges 
a discounted Priority Customer taker fee of $0.25 per contract instead 
of the

[[Page 69171]]

regular $0.30 per contract for members with a total affiliated Priority 
Customer ADV that equals or exceeds 200,000 contracts. And for PIM 
orders of 100 or fewer contracts, the Exchange charges a discounted fee 
of $0.03 per contract instead of the regular $0.05 per contract for 
non-Priority Customer orders executed by members that have an ADV of 
20,000 or more Priority Customer contracts in a given month executed in 
the PIM.\11\
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    \10\ A Market Maker Plus is a Market Maker who is on the 
National Best Bid or National Best Offer at least 80% of the time 
for series trading between $0.03 and $3.00 (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 $3.00 (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. A Market Maker's single best and single worst quoting days 
each month based on the front two expiration months, on a per symbol 
basis, will be excluded in calculating whether a Market Maker 
qualifies for this rebate, if doing so will qualify a Market Maker 
for the rebate.
    \11\ This discounted fee is applied retroactively to all 
eligible PIM volume in that month once the threshold has been 
reached.
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    In addition, the Exchange provides tiered rebates for Priority 
Customer complex orders when these orders trade with non-Priority 
Customer orders in the complex order book, or trade with quotes and 
orders on the regular order book, based on the member's ADV in Priority 
Customer complex contracts as shown in the table below.

                 Priority Customer Complex Order Rebate
------------------------------------------------------------------------
                                              Select        Non-select
      Priority customer complex ADV        symbols \12\       symbols
------------------------------------------------------------------------
Tier 1; 0-29,999........................         ($0.30)         ($0.63)
Tier 2; 30,000-74,999...................         ($0.35)         ($0.71)
Tier 3; 75,000-124,999..................         ($0.39)         ($0.75)
Tier 4; 125,000-224,999.................         ($0.41)         ($0.80)
Tier 5; 225,000-299,999.................         ($0.43)         ($0.82)
Tier 6; 300,000+........................         ($0.45)         ($0.83)
------------------------------------------------------------------------

    Currently, for purposes of determining Priority Customer ADV \13\ 
and Priority Customer Complex ADV, any day that the market is not open 
for the entire trading day may be excluded from such calculation. 
Although the regular and complex order books may function 
independently, the Exchange interprets this rule to require a general 
halt in trading before days can be excluded pursuant to this rule. This 
means, for instance, that if the regular market is open for trading but 
the complex order book is not accepting orders, the day could not be 
excluded from ADV calculations for complex order tiers, even though 
complex order volume on the ISE would be negatively impacted for that 
day. The Exchange now proposes to independently exclude days from its 
ADV calculations when the regular or complex order books are not open 
for the entire trading day. As proposed, days may be excluded from the 
Exchange's regular and complex order ADV calculations, if the 
corresponding order book is not open for the entire trading day.
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    \12\ ``Select Symbols'' are options overlying all symbols listed 
on the ISE that are in the Penny Pilot Program.
    \13\ The Exchange notes that this provision currently references 
``total affiliated'' Priority Customer ADV and proposes to clarify 
that this encompasses all calculations that include Priority 
Customer ADV, such as Priority Customer PIM ADV discussed above, 
which is a subset of total affiliated Priority Customer ADV.
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    Furthermore, the Exchange notes that some members may be 
inadvertently disadvantaged when the ISE removes a day from its ADV 
calculation if the member executes a large volume of contracts during 
that day. As this disadvantages members that continue to trade 
significant volume on days where the regular or complex order book is 
halted, the Exchange proposes to only exclude days for members that 
would have a lower ADV with the day included.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\14\ in general, and 
Section 6(b)(4) of the Act,\15\ in particular, 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.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4).
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1. Singly Listed Symbols
    The Exchange believes that it is reasonable and equitable to 
eliminate special fees for Singly Listed Symbols as this will simplify 
the Schedule of Fees to the benefit of members and investors. The 
Singly Listed Symbols account for a negligible amount of volume traded 
and the Exchange believes that it is no longer necessary to distinguish 
between multiply- and singly-listed options in determining the 
applicable execution fees described above. Furthermore, the Exchange 
believes that this proposed change is not unfairly discriminatory as 
members will now pay the same fees regardless of whether a particular 
symbol is multiply- or singly-listed.
2. ADV Calculation
    The Exchange believes that it is reasonable and equitable to 
separately account for the regular and complex order books when 
determining whether a day may be excluded from its ADV calculations. 
Without this proposed change, aberrant low volume days would have to be 
counted for ADV purposes if an issue in one order book did not affect 
the entire market at ISE, resulting in an unintended cost increase for 
members. The proposed change preserves the Exchange's intent behind 
adopting volume-based pricing by adjusting the ADV calculations to 
account for days where there is no general trading halt but one or the 
other order book is nevertheless unavailable to members. Similarly, the 
Exchange believes that it is reasonable and equitable to only exclude a 
day from its ADV calculations for members that would otherwise have a 
lower ADV for the month. Without this change, members that step up and 
trade significant volume on days where the regular or complex order 
book is unavailable for a portion of the trading day may be negatively 
impacted, resulting in an effective cost increase for those members. 
The Exchange further believes that the proposed changes to its ADV 
calculations are not unfairly discriminatory because they apply equally 
to all members and ADV calculations. As is the ISE's current practice, 
the Exchange will provide a notice, and post it on the Exchange's Web 
site, to inform members of any day that is to be excluded from its ADV 
calculations in connection with this proposed rule change.
    The Exchange notes that it has determined to charge fees and 
provide rebates in Mini Options at a rate that is 1/10th the rate of 
fees and rebates the Exchange provides for trading in Standard Options. 
The Exchange believes it is reasonable and equitable and not unfairly 
discriminatory to assess lower fees and rebates to provide market 
participants an incentive to trade Mini Options on the Exchange. The

[[Page 69172]]

Exchange believes the proposed fees and rebates are reasonable and 
equitable in light of the fact that Mini Options have a smaller 
exercise and assignment value, specifically 1/10th that of a standard 
option contract, and, as such, is providing fees and rebates for Mini 
Options that are 1/10th of those applicable to Standard Options.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\16\ 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. The Exchange 
believes that eliminating special fees for Singly Listed Symbols will 
reduce the complexity of the Schedule of Fees to the benefit of members 
and investors, and will not have any competitive impact. In addition, 
the Exchange believes that the proposed modifications to its ADV 
calculation are pro-competitive and will result in lower total costs to 
end users, a positive outcome of competitive markets. The Exchange 
operates in a highly competitive market in which market participants 
can readily direct their order flow to competing venues. In such an 
environment, the Exchange must continually review, and consider 
adjusting, its fees and rebates to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
the proposed fee changes reflect this competitive environment.
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    \16\ 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \17\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\18\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \18\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-ISE-2014-51 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-2014-51. 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 (http://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 office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ISE-2014-51, and should be 
submitted on or before December 11, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27451 Filed 11-19-14; 8:45 am]
BILLING CODE 8011-01-P