[Federal Register Volume 74, Number 198 (Thursday, October 15, 2009)]
[Notices]
[Pages 52994-52995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-24790]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60801; File No. SR-ISE-2009-70]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Payment for Order Flow Fees
October 8, 2009.
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 29, 2009, 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, II, and III below, which items have been prepared
by the self-regulatory organization. The Exchange has designated this
proposal as one establishing or changing a due, fee, or other charge
imposed by ISE under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule
19b-4(f)(2) thereunder,\4\ which renders the proposal effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The ISE proposes to amend its payment for order flow program. 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 has a payment-for-order-flow (``PFOF'')
program that helps its market makers establish PFOF arrangements with
an EAM in exchange for that EAM preferencing some or all of its order
flow to that market maker. This program is funded through a fee paid by
Exchange market makers for each customer contract they execute, and is
administered by both Primary Market Makers (``PMM'') \5\ and
Competitive Market Makers (``CMM''),\6\ depending on who the order is
preferenced to.
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\5\ See Securities Exchange Act Release No. 43833 (January 10,
2001), 66 FR 7822 (January 25, 2001).
\6\ See Securities Exchange Act Release No. 53127 (January 13,
2006), 71 FR 3582 (January 23, 2006).
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The Exchange now proposes to adopt an administrative fee to offset
its costs in administering the PFOF program. Specifically, ISE proposes
to assess an
[[Page 52995]]
administrative fee of 0.45% of the total amount of funds collected each
month. ISE will closely monitor the amount of funds raised by this
administrative fee and amend the fee in the future if necessary, so
that the fee provides sufficient funds to adequately offset ISE's costs
in administering the PFOF program. The Chicago Board Options Exchange
currently assesses a similar fee to administer its PFOF program. ISE
proposes to implement this fee beginning on October 1, 2009. ISE is not
making any other changes to its PFOF program.
2. Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Exchange
Act'') for this proposed rule change is the requirement under Section
6(b)(4) that an exchange have an equitable allocation of reasonable
dues, fees and other charges among its members and other persons using
its facilities. In particular, the proposed fee change will allow the
Exchange to offset its costs of administering its PFOF program.
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) of the Act \7\ and Rule 19b-4(f)(2) \8\ thereunder. At any
time within 60 days of the filing of such proposed rule change the
Commission may summarily abrogate 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.
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\7\ 15 U.S.C. 78s(b)(3)(A). [sic]
\8\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the 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 e-mail to [email protected]. Please include
File Number SR-ISE-2009-70 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-2009-70. This file
number should be included on the subject line if e-mail 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 inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2009-70 and should be
submitted on or before November 5, 2009.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-24790 Filed 10-14-09; 8:45 am]
BILLING CODE 8011-01-P