[Federal Register Volume 76, Number 235 (Wednesday, December 7, 2011)]
[Notices]
[Pages 76463-76464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31336]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65861; File No. SR-ISE-2011-77]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Network and Gateway Fees

December 1, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that, on November 17, 2011, the International Securities 
Exchange, LLC (the ``Exchange'' or the ``ISE'') filed with the 
Securities and Exchange Commission (the ``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the Exchange. 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 Substance 
of the Proposed Rule Change

    The ISE is proposing to amend its network and gateway 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 purpose of this proposed rule change is to amend the Exchange's 
network and gateway fees.
Network Fees
    The Exchange recently transitioned to new data centers. The 
Exchange's primary data center is at Equinix, while Telx serves as the 
back-up data center. At its old data center, ISE offered a number of 
connectivity options, including two Dedicated Line Connections and an 
Ethernet/Managed Service Provider connection with multiple Megabit 
connection options. At the new data centers, however, the Exchange only 
offers two Ethernet connection options, a one Gigabit (GB) connection 
at a cost of $500 per month and a ten GB connection at a cost of $4,000 
per month. As a result, the Exchange proposes to remove from its 
Schedule of Fees the other existing Ethernet/Managed Service Provider 
Megabit connection options \3\ as well as the two Dedicated Line 
Connection options \4\ as these are no longer available at the new data 
centers. With the unavailability of Dedicated Line Connections, the 
Exchange also no longer provides the Order Routing Service \5\ and 
proposes to remove this fee from its Schedule of Fees. Additionally, at 
the new data centers, members are no longer able to connect to the 
Exchange via third-party managed service providers. The Exchange, 
therefore, proposes to remove reference to Managed Service Provider 
from its Schedule of fees also.
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    \3\ The Ethernet/Managed Service Provider connection costs are 
identified on the Exchange's Schedule of Fees as follows: $100 per 
month for 1--10 Megabits (MB); $250 per month for 11--100 MBs; $500 
per month for 101 MBs--1 Gigabit (GB); and $4,000 per month for 
10GBs.
    \4\ The Dedicated Line Connection costs are identified on the 
Exchange's Schedule of Fees as follows: for a T-1 and smaller 
connections, $300 per line per month; for T-3 connections, $1,500 
per line per month.
    \5\ The Order Routing Service is identified on the Exchange's 
Schedule of Fees as follows: $100 per line per month.
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    Finally, in addition to ISE, the new data centers house a number of 
firms, some of whom are ISE members and others that are not. Non-ISE 
members at Equinix and Telx include software vendors who have developed 
a front end application that provides its customers a connection to 
ISE. These customers are members of ISE and instead of connecting to 
ISE directly choose to connect to the Exchange through these software 
vendors. To allow these and other prospective non-ISE members to cross-
connect their servers to ISE servers, we propose to offer the same 
connectivity options that we currently offer to ISE members.
Gateway Fees
    Up until the transition to the new data centers, members were able 
to lease ``gateway'' equipment, i.e., Routers, Switches and Servers, 
through ISE in order to establish a connection to the Exchange. As 
noted on the Exchange's Schedule of Fees, the cost of leasing this 
equipment was 4.75% of ISE's equipment costs. The Exchange also charged 
a one-time fee of $500 to members who wanted the Exchange to install, 
move, add, change or remove any such equipment. The Exchange no longer 
leases any such equipment and proposes to remove these fees from its 
Schedule of Fees.
    The Exchange has designated this proposal to be operative on 
December 1, 2011.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\6\ in general, and with 
Section 6(b)(4) of the Act,\7\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among Exchange members and other

[[Page 76464]]

persons using its facilities. In particular, the proposed rule change 
will provide greater transparency into the connectivity options 
available to market participants. The proposed rule change treats 
similarly situated market participants in the same manner by assessing 
the same fees to all market participants, whether or not they are a 
member of the Exchange, based on their connectivity needs. The Exchange 
notes that the one GB and the ten GB connectivity options are similar 
to those currently in place at other exchanges. For example, NASDAQ OMX 
PHLX, Inc. (``PHLX'') currently offers a one GB and a ten GB network 
connection option to market participants that connect to that 
exchange.\8\
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ See PHLX Fee Schedule at http://www.nasdaqtrader.com/content/marketregulation/membership/phlx/feesched.pdf.
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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.\9\ 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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    \9\ 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 Exchange 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 [email protected]. Please include 
File Number SR-ISE-2011-77 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-2011-77. 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 
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-2011-77 and should be 
submitted on or before December 28, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31336 Filed 12-6-11; 8:45 am]
BILLING CODE 8011-01-P