[Federal Register Volume 77, Number 200 (Tuesday, October 16, 2012)]
[Notices]
[Pages 63391-63393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-25345]


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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''),\1\ and Rule 19b-4 thereunder,\2\ notice 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.
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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 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.

[[Page 63392]]

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 Orders \3\ in 65 option classes 
(``Special Non-Select Penny Pilot Symbols'').\4\ Specifically, for ISE 
Market Maker,\5\ Firm Proprietary/Broker-Dealer and Professional 
Customer \6\ orders that trade against Priority Customer \7\ orders in 
the Special Non-Select Penny Pilot Symbols, the Exchange currently 
charges a taker fee of $0.30 per contract; for Non-ISE Market Maker \8\ 
orders 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.
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    \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.
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    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 Act \9\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \10\ in 
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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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    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.\11\ Additionally, 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.
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    \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.
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    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.\12\ 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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    \12\ 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

[[Page 63393]]

     Send an email to [email protected]. 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\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25345 Filed 10-15-12; 8:45 am]
BILLING CODE 8011-01-P