77 FR 200 pgs. 63391-63393 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees
Type: NOTICEVolume: 77Number: 200Pages: 63391 - 63393
Docket number: [Release No. 34-68031; File No. SR-ISE-2012-84]
FR document: [FR Doc. 2012-25345 Filed 10-15-12; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68031; File No. SR-ISE-2012-84]
Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees
October 10, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the "Act"),1and Rule 19b-4 thereunder,2notice is hereby given that on October 1, 2012, 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.
Footnotes:
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 ( 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 currently assesses per contract transaction fees and provides rebates to market participants that add or remove liquidity from the Exchange for certain Regular Orders3in 65 option classes ("Special Non-Select Penny Pilot Symbols").4Specifically, for ISE Market Maker,5Firm Proprietary/Broker-Dealer and Professional Customer6orders that trade against Priority Customer7orders in the Special Non-Select Penny Pilot Symbols, the Exchange currently charges a taker fee of $0.30 per contract; for Non-ISE Market Maker8orders that trade against Priority Customer orders, the Exchange currently charges a taker fee of $0.40 per contract. The taker fee for Priority Customer orders that trade against other Priority Customer orders is $0.00 per contract. Additionally, the Exchange provides Market Makers with a two cent discount when trading against Priority Customer orders that are preferenced to them. This discount is applicable when Market Makers add or remove liquidity in the Special Non-Select Penny Pilot Symbols. Market Makers that remove liquidity in the Special Non-Select Penny Pilot Symbols when trading against Priority Customer orders that are preferenced to them are currently charged $0.28 per contract.
Footnotes:
3 A Regular Order is an order that consists of only a single option series and is not submitted with a stock leg. See Schedule of Fees, Preface.
4 See Securities Exchange Act Release Nos. 67201 (June 14, 2012), 77 FR 37082 (June 20, 2012) (SR-ISE-2012-49); and 67627 (August 9, 2012), 77 FR 49046 (August 15, 2012 (SR-ISE-2012-70). The Special Non-Select Penny Pilot Symbols are identified by their ticker symbol on the Exchange's Schedule of Fees.
5 The term "Market Makers" refers to "Competitive Market Makers" and "Primary Market Makers" collectively. See ISE Rule 100(a)(25).
6 A Professional Customer is a person who is not a broker/dealer and is not a Priority Customer.
7 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).
8 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.
The Exchange now proposes to increase the taker fee for Market Maker orders that trade against Priority Customer orders from $0.30 per contract to $0.32 per contract, and to increase the taker fee for Firm Proprietary/Broker-Dealer and Professional Customer orders that trade against Priority Customer orders from $0.30 per contract to $0.35 per contract. Market Makers that remove liquidity in the Special Non-Select Penny Pilot Symbols when trading against Priority Customer orders that are preferenced to them will be charged $0.30 per contract. The Exchange does not propose any change to the taker fee for Non-ISE Market Maker and Priority Customer orders that trade against Priority Customer orders in the Special Non-Select Penny Pilot Symbols.
2. Basis
The Exchange believes that its proposal to amend its Schedule of Fees is consistent with Section 6(b) of the Act9in general, and furthers the objectives of Section 6(b)(4) of the Act10in particular, in that it is an equitable allocation of reasonable fees and other charges among Exchange members and other persons using its facilities. The impact of the proposal upon the net fees paid by a particular market participant will depend on a number of variables, most important of which will be its propensity to interact with and respond to certain types of orders.
Footnotes:
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4).
The Exchange believes it is reasonable and equitable to charge a taker fee of $0.32 per contract for Market Maker orders, and $0.35 per contract for Firm Proprietary/Broker-Dealer and Professional Customer orders in the Special Non-Select Penny Pilot Symbols that trade against Priority Customer interest. The Exchange notes that the proposed fees are comparable to fees currently in place at other exchanges for Penny Pilot symbols.11Additionally, the Exchange believes that the proposed fees are fair, equitable and not unfairly discriminatory because they are consistent with price differentiation that exists today at other option exchanges.
Footnotes:
11 See NASDAQ OMX PHLX LLC Pricing Schedule at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLXTools/PlatformViewer.asp?selectednode=chp%5F1%5F4%5F1&manual=%2Fnasdaqomxphlx%2Fphlx%2Fphlx%2Drulesbrd%2F.
The Exchange believes that it is reasonable and equitable to provide a two cent discount to Market Makers on preferenced orders as an incentive for them to quote in the regular order book. Accordingly, Market Makers who remove liquidity in the Special Non-Select Penny Pilot Symbols will be charged $0.30 per contract when trading with Priority Customer orders that are preferenced to them. ISE notes that with this proposed fee change, the Exchange will continue to maintain a two cent differential that was previously in place.
The Exchange believes it remains an attractive venue for market participants to trade as its fees remain competitive with those charged by other exchanges for similar trading strategies. The Exchange operates in a highly competitive market in which market participants can readily direct order flow to another exchange if they deem fee levels at a particular exchange to be excessive. With this proposed fee change, the Exchange believes it remains an attractive venue for market participants to trade at favorable prices.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties.
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.12At 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.
Footnotes:
12 15 U.S.C. 78s(b)(3)(A)(ii).
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-2012-84 on the subject line.
Paper Comments
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2012-84. 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 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 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-2012-84, and should be submitted on or before November 6, 2012.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13
Footnotes:
13 17 CFR 200.30-3(a)(12).
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25345 Filed 10-15-12; 8:45 am]
BILLING CODE 8011-01-P