[Federal Register Volume 75, Number 220 (Tuesday, November 16, 2010)]
[Notices]
[Pages 70059-70060]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28747]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63283; File No. SR-ISE-2010-106]


 Self-Regulatory Organizations; International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Fees and Rebates for Adding and Removing 
Liquidity

November 9, 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 October 26, 2010, 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 
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.
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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 amend its transaction fees and rebates for 
adding and removing liquidity. 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 a per contract transaction charge 
to market participants that add or remove liquidity from the Exchange 
(``maker/taker fees'') in 100 options classes (the ``Select 
Symbols'').\3\ The Exchange currently charges a take fee of: (i) $0.25 
per contract for Market Maker, Market Maker Plus,\4\ Firm Proprietary 
and Customer (Professional) \5\ orders; (ii) $0.35 per contract for 
Non-ISE Market Maker \6\ orders; (iii) $0.20 per contract for Priority 
Customer \7\ orders for 100 or more contracts. Priority Customer orders 
for less than 100 contracts are not assessed a fee for removing 
liquidity. The Exchange proposes to increase the take fee to $0.40 per 
contract for Market Maker, Market Maker Plus, Firm Proprietary, 
Customer (Professional) and Non-ISE Market Maker interest that responds 
to special orders.\8\ A special order is an order submitted for 
execution in the Exchange's Facilitation Mechanism, Solicited Order 
Mechanism, Block Order Mechanism and Price Improvement Mechanism. A 
response to a special order is any contra-side interest submitted after 
the commencement of an auction in the Exchange's Facilitation 
Mechanism, Solicited Order Mechanism, Block Order Mechanism and Price 
Improvement Mechanism.\9\
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    \3\ Options classes subject to maker/taker fees are identified 
by their ticker symbol on the Exchange's Schedule of Fees.
    \4\ A Market Maker Plus is a market maker who is on the National 
Best Bid or National Best Offer 80% of the time for series trading 
between $0.03 and $5.00 (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 $5.00 (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 and 80% 
of the time for series trading between $0.03 and $5.00 (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 $5.00 (for options 
whose underlying stock's previous trading day's last sale price was 
greater than $100) in premium across all expiration months in order 
to receive the rebate. The Exchange determines whether a market 
maker qualifies as a Market Maker Plus at the end of each month by 
looking back at each market maker's quoting statistics during that 
month. If at the end of the month, a market maker meets the 
Exchange's stated criteria, the Exchange rebates $0.10 per contract 
for transactions executed by that market maker during that month. 
The Exchange provides market makers a report on a daily basis with 
quoting statistics so that market makers can determine whether or 
not they are meeting the Exchange's stated criteria.
    \5\ A Customer (Professional) is a person who is not a broker/
dealer and is not a Priority Customer.
    \6\ 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, as amended (``Exchange Act''), 
registered in the same options class on another options exchange.
    \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\ The proposed fee for responses to special orders is similar 
to fees currently in place at other options exchanges. See 
Securities Exchange Act Release No. 62632 (August 3, 2010), 75 FR 
47869 (August 9, 2010) (Notice of Filing and Immediate Effectiveness 
of Proposed Rule Change To Amend the Fee Schedule of the Boston 
Options Exchange Facility) (SR-BX-2010-049).
    \9\ Pre-existing Market Maker, Market Maker Plus, Firm 
Proprietary and Customer (Professional) interest that trades with 
special orders in the Exchange's various auctions will continue to 
be charged $0.25 per contract.
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    Additionally, to incentivize members, the Exchange currently offers 
a rebate of $0.15 per contract to contracts that do not trade with the 
contra order in the Exchange's Facilitation Mechanism and Price 
Improvement Mechanism. The Exchange proposes to (i) extend that $0.15 
per contract rebate to contracts that do not trade with the contra 
order in the Exchange's Solicited Order Mechanism, and (ii) increase 
the rebate applied to contracts that do not trade with the contra order 
in the Exchange's Price Improvement Mechanism from $0.15 per contract 
to $0.25 per contract.
    Finally, the Exchange currently charges Non-ISE Market Maker orders 
a fee of $0.20 per contract for adding liquidity. The Exchange proposes 
to lower this fee to $0.10 per contract. With this proposed fee 
reduction, the fee charged to Non-ISE Market Maker orders that add 
liquidity shall be equal to all other non-Priority Customer orders that 
add liquidity.
    The Exchange also proposes to change the symbol for UAL Corporation 
on the Schedule of Fees from ``UAUA'' to

[[Page 70060]]

``UAL'' to reflect a recent corporate action.\10\
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    \10\ On October 1, 2010, UAL Corporation announced that as a 
result of a merger between UAL Corporation and Continental Airlines, 
Inc. that it would change its name and underlying symbol. UAL 
Corporation is now known as United Continental Holding, Inc.
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    The Exchange has designated this proposal to be operative on 
November 1, 2010.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(4) \11\ that an exchange have an 
equitable allocation of reasonable dues, fees and other charges among 
its 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 add or remove liquidity in options overlying the Select 
Symbols. 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. The 
Exchange believes that the proposed fees are within the range assessed 
by other exchanges \12\ and therefore continue to be reasonable and 
equitably allocated to those members that opt to direct orders to the 
Exchange rather than to a competing exchange. The Exchange's maker/
taker fees, which are currently applicable to each market participant, 
will continue to apply to the Select Symbols.
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    \11\ 15 U.S.C. 78f(b)(4).
    \12\ See supra note 8.
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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. 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.\13\ 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2010-106 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-2010-106. 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 website 
viewing and printing in the Commission's Public Reference Room on 
official business days between the hours of 10 a.m. and 3 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-2010-106, and should be submitted on or before 
December 7, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28747 Filed 11-15-10; 8:45 am]
BILLING CODE 8011-01-P