[Federal Register Volume 75, Number 109 (Tuesday, June 8, 2010)]
[Notices]
[Pages 32528-32529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13767]



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SECURITIES AND EXCHANGE COMMISSION



[Release No. 34-62206; File No. SR-ISE-2010-56]




Self-Regulatory Organizations; International Securities Exchange, 

LLC; Notice of Filing and Order Granting Accelerated Approval to a 

Proposed Rule Change Relating to the Amounts That Direct Edge ECN, in 

Its Capacity as an Introducing Broker for Non-ISE Members, Passes 

Through to Such Non-ISE Members



June 2, 2010.

    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 May 28, 2010, 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 self-

regulatory organization. The Commission is publishing this notice to 

solicit comments on the proposed rule change from interested persons, 

and is approving the proposal on an accelerated basis.

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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 Substance 

of the Proposed Rule Change



    The Exchange proposes to modify the amounts that Direct Edge ECN 

(``DECN''), in its capacity as an introducing broker for non-ISE 

Members, passes through to such non-ISE Members.

    The text of the proposed rule change is available on the Exchange's 

Internet Web site at http://www.ise.com, on the Commission's Internet 

Web site at http://www.sec.gov, at ISE, 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 III 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

    DECN, a facility of ISE, operates two trading platforms, EDGX and 

EDGA.\3\ On May xx, [sic] 2010, the ISE filed for immediate 

effectiveness a proposed rule change to amend Direct Edge ECN's 

(``DECN'') fee schedule for ISE Members \4\ to pass through charges 

from other market centers.\5\ The changes made pursuant to SR-ISE-2010-

55 became operative on June 1, 2010.

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    \3\ This fee filing relates to the trading facility operated by 

ISE and not EDGA Exchange, Inc. and EDGX Exchange, Inc. Direct Edge 

ECN LLC (EDGA and EDGX) will cease to operate in its capacity as an 

electronic communications network following the commencement of 

operations of EDGA Exchange, Inc. and EDGX Exchange, Inc. as 

national securities exchanges.

    \4\ References to ISE Members in this filing refer to DECN 

Subscribers who are ISE Members.

    \5\ On June 1, 2010, in SR-ISE-2010-55, the Exchange increased 

the ``Q'' flag from $0.0018 to $0.0020 per share to more closely 

reflect the costs of removing liquidity from the NYSE. By way of 

background, on May 1, 2010, in SR-ISE-2010-37, the Exchange amended 

the fees for orders that either route or re-route to the NYSE in 

response to an increase in NYSE's fee for removing liquidity to 

$0.0021 per share (from $0.0018 per share). As part of that 

amendment, the ``Q'' flag, which denotes an order type (ROUC) that 

routes to the NYSE, was increased from $0.0015 per share to $0.0018 

per share on EDGA and EDGX to reflect the increase. See Securities 

Exchange Act Release No. 62050 (May 6, 2010), 75 FR 27029 (May 13, 

2010) (SR-ISE-2010-37).

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    In its capacity as a member of ISE, DECN currently serves as an 

introducing broker for the non-ISE Member subscribers of DECN to access 

EDGX and EDGA. DECN, as an ISE Member and introducing broker, receives 

rebates and is assessed charges from DECN for transactions it executes 

on EDGX or EDGA in its capacity as introducing broker for non-ISE 

Members. Since the amounts of charges were changed pursuant to SR-ISE-

2010-55, DECN wishes to make corresponding changes to the amounts it 

passes through to non-ISE Member subscribers of DECN for which it acts 

as introducing broker. As a result, the per share amounts that non-ISE 

Member subscribers receive and are charged will be the same as the 

amounts that ISE Members receive and are charged.

    ISE is seeking accelerated approval of this proposed rule change, 

as well an effective date of June 1, 2010. ISE represents that this 

proposal will ensure that both ISE Members and non-ISE Members (by 

virtue of the pass-through described above) will in effect be charged 

equivalent amounts and that the imposition of such amounts will begin 

on the same June 1, 2010, start date.

2. Statutory Basis

    The Exchange believes that the proposed rule change is consistent 

with the objectives of Section 6 of the Act,\6\ in general, and 

furthers the objectives of Section 6(b)(4),\7\ 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. In particular, this proposal will ensure that dues, 

fees and other charges imposed on ISE Members are equitably allocated 

to both ISE Members and non-ISE Members (by virtue of the pass-through 

described above).

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    \6\ 15 U.S.C. 78f.

    \7\ 15 U.S.C. 78f(b)(4).

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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. 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



[[Page 32529]]



     Send an e-mail to [email protected]. Please include 

File Number SR-ISE-2010-56 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-2010-56. 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 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 

a.m. and 3 p.m. Copies of the filing also will be available for 

inspection and copying at the principal office of the ISE. All comments 

received will be posted without change; the Commission does not edit 

personal identifying information from submissions. You should submit 

only information that you wish to make available publicly. All 

submissions should refer to File Number SR-ISE-2010-56 and should be 

submitted on or before June 29, 2010.



IV. Commission's Findings and Order Granting Accelerated Approval of 

Proposed Rule Change



    The Commission finds that the proposed rule change is consistent 

with the requirements of the Act and the rules and regulations 

thereunder applicable to a national securities exchange.\8\ 

Specifically, the Commission finds that the proposed rule change is 

consistent with Section 6(b)(4) \9\ of the Act, which requires that the 

rules of a national securities exchange provide for the equitable 

allocation of reasonable dues, fees, and other charges among members 

and issuers and other persons using its facilities.

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    \8\ In approving this proposal, the Commission has considered 

its impact on efficiency, competition, and capital formation. 15 

U.S.C 78c(f).

    \9\ 15 U.S.C. 78f(b)(4).

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    As described more fully above, ISE recently amended DECN's fee 

schedule for ISE Members pursuant to SR-ISE-2010-55 (the ``Member Fee 

Filing''). The fee change made pursuant to the Member Fee Filing became 

operative on June 1, 2010. DECN receives rebates and is charged fees 

for transactions it executes on EGDX or EDGA in its capacity as an 

introducing broker for its non-ISE member subscribers. The current 

proposal, which will apply beginning on June 1, 2010, will allow DECN 

to pass through the revised fee to the non-ISE member subscribers for 

which it acts an introducing broker. The Commission finds that the 

proposal is consistent with the Act because it will charge fees to non-

ISE member subscribers that are equivalent to those established for ISE 

member subscribers in the Member Fee Filing.

    ISE has requested that the Commission find good cause for approving 

the proposed rule change prior to the thirtieth day after publication 

of notice of filing thereof in the Federal Register. As discussed 

above, the proposal will allow DECN to pass through to non-ISE member 

subscribers the revised fee established for ISE member subscribers in 

the Member Fee Filing, resulting in equivalent fees for ISE member and 

non-member subscribers. In addition, because the proposal will apply 

the revised fee beginning on June 1, 2010, the revised fees will have 

the same effective date, thereby promoting consistency in the DECN's 

fee schedule. Accordingly, the Commission finds good cause, pursuant to 

Section 19(b)(2) of the Act, for approving the proposed rule change 

prior to the thirtieth day after the date of publication of notice of 

filing thereof in the Federal Register.



V. Conclusion



    It is therefore ordered, pursuant to Section 19(b)(2) of the 

Act,\10\ that the proposed rule change (SR-ISE-2010-56) is approved on 

an accelerated basis.

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    \10\ 15 U.S.C. 78s(b)(2).



    For the Commission, by the Division of Trading and Markets, 

pursuant to delegated authority.\11\

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    \11\ 17 CFR 200.30-3(a)(12).

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Florence E. Harmon,

Deputy Secretary.

[FR Doc. 2010-13767 Filed 6-7-10; 8:45 am]

BILLING CODE 8011-01-P