20754 Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 

12 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 64040 

(March 4, 2011), 76 FR 13249. 

4 15 U.S.C. 78s(b)(2). 

5 15 U.S.C. 78s(b)(2)(A)(ii)(I). 

6 17 CFR 200.30–3(a)(31). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

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. Copies of such 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–2011–21 and should be 

submitted by May 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8923 Filed 4–12–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64274; File No. SR– 

NYSEAmex-2011–11] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Notice of Designation of a 

Longer Period for Commission Action 

on a Proposed Rule Change Amending 

Rule 103B—NYSE Amex Equities To 

Modify the Application of the 

Exchange’s Designated Market Maker 

Allocation Policy in the Event of a 

Merger Involving One or More Listed 

Companies 

April 8, 2011. 

On February 24, 2011, NYSE Amex 

LLC (‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend Rule 103B—NYSE Amex 

Equities to modify the application of the 

Exchange’s Designated Market Maker 

allocation policy in the event of a 

merger involving one or more listed 

companies. The proposed rule change 

was published for comment in the 

Federal Register on March 10, 2011.3

Section 19(b)(2) of the Act 4 provides 

that within 45 days of the publication of 

notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or as to which the 

self-regulatory organization consents, 

the Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day for this filing 

is April 24, 2011. 

The Commission is hereby extending 

the 45-day period for Commission 

action on the proposed rule change. The 

Commission finds that it is appropriate 

to designate a longer period within 

which to take action on the proposed 

rule change. In particular, the extension 

of time will ensure that the Commission 

has sufficient time to consider and take 

action on the Exchange’s proposal. 

Accordingly, pursuant to Section 

19(b)(2)(A)(ii)(I) of the Act 5 and for the 

reasons stated above, the Commission 

designates June 8, 2011, as the date by 

which the Commission should either 

approve or disapprove, or institute 

proceedings to determine whether to 

disapprove, the proposed rule change 

File No. SR–NYSEAmex-2011–11. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8922 Filed 4–12–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64270; File No. SR–ISE– 

2011–13] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Adopt a Fee Cap and a 

Service Fee 

April 8, 2011. 

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 March 31, 

2011, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The ISE is proposing to establish a fee 

cap of $100,000 per month and a related 

service fee for member firms on all 

proprietary trading, with certain 

exclusions, in all ISE products. 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 the proposed rule 

change is to establish a monthly fee cap 

per ISE member organization, subject to 

certain exclusions, across all products 

traded on ISE. The proposed fee cap 

shall apply to transactions executed in 

a member’s proprietary account. The 

cap also would apply to crossing 

transactions for the account of entities 

affiliated with a member. That is, the 

cap will apply to a member’s crossing 

transactions even if the member 

executes crosses in the account of an 

affiliate, rather than the member’s own 

account. This will provide members 

with the flexibility to effect transactions 

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Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 20755 

3Each member would be responsible for notifying 

the Exchange of its affiliations so that fees and 

contracts of the member and its affiliates involved 

in crossing transactions may be aggregated for 

purposes of the fee cap. 

4The Commission recently approved the QCC 

order type. See Securities Exchange Act Release No. 

63955 (February 24, 2011) (SR–ISE–2010–73). The 

Exchange filed a separate proposed rule change to 

adopt fees for QCC orders. See Securities Exchange 

Act Release No. 64112 (March 23, 2011) (SR–ISE– 

2011–14). 

5Other account designations include Prop-firm 

(Member trading for its own account and clearing 

in the F range at OCC), Prop-cust (Member trading 

for its own account and clearing in the C range at 

OCC), BD-firm (Member trading on behalf of 

another registered broker/dealer clearing in the F 

range at OCC), BD-cust (Member trading on behalf 

of another registered broker/dealer clearing in the 

C range at OCC), FarMM (Member trading on behalf 

of another registered broker/dealer clearing in the 

M range at OCC). 

6Other exchanges currently employ exclusions to 

their fee cap programs. For example, at the Chicago 

Board Options Exchange, Inc. (‘‘CBOE’’), Automated 

Improvement Mechanism (‘‘AIM’’) execution fees do 

not count towards the fee cap employed by that 

exchange. See CBOE Fees Schedule, Section 1 

(Equity Options Fees). 

7The Exchange currently charges a surcharge that 

ranges between $0.02 per contract to $0.22 per 

contract on the following licensed products: BKX, 

MFX, MID, MSH, SML, UKX, RMN, RUI, RUT, 

MVR, NDX, MNX, FUM, HSX, POW, TNY, WMX 

and NXTQ. 

8Special orders are order types that involve a 

crossing transaction or an auction, where a 

broadcast is transmitted to Exchange members for 

potential participation and/or price improvement. 

9A Complex Order is defined in Exchange Rule 

722(a)(1) as any order involving the simultaneous 

purchase and/or sale of two or more different 

options series in the same underlying security, for 

the same account, in a ratio that is equal to or 

greater than one-to-three (.333) and less than or 

equal to three-to-one (3.00) and for the purpose of 

executing a particular investment strategy. 

10The proposed exclusion applies to options 

classes that are subject to Rebates and Fees for 

Adding and Removing Liquidity in Select Symbols 

(‘‘Select Symbols’’). 

11An order means a commitment to buy or sell 

securities as defined in Exchange Rule 715. 

12The CBOE fees are capped at $75,000. See 

CBOE Fees Schedule, Section 1 (Equity Options 

Fees). 

13PHLX Firms are subject to a maximum fee of 

$75,000. See PHLX Fee Schedule, Section II (Equity 

Options Fees). 

14 15 U.S.C. 78f(b). 

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

16See supra notes 12 and 13. 

17For example, the customer fee is $0.00 per 

contract for products other than Second Market 

Options, Singly Listed Indexes, Singly Listed ETFs 

and FX Options. For Second Market Options, the 

customer fee is $0.05 per contract and for Singly 

Listed Options, Singly Listed ETFs and FX Options, 

Continued 

where it makes the most business sense 

within their family of companies. 

For example, a member engaged in 

trading activity on ISE may have an 

affiliate engaged in a market making 

capacity on another exchange, which 

may be a separate broker/dealer entity. 

A crossing transaction by that member 

in which a customer order is facilitated 

against the proprietary trading interest 

of the member’s affiliate would be 

eligible for the proposed fee cap. On the 

other hand, a crossing transaction by the 

same member where a customer order is 

facilitated against the proprietary 

trading interest of an unaffiliated entity 

would not be eligible for the fee cap.3

Specifically, the Exchange proposes to 

cap proprietary transaction fees in all 

products traded on ISE, in the aggregate, 

at $100,000 per month per member, 

with certain exclusions which are noted 

below. All proprietary transactions, 

including non-ISE market maker 

contracts that are part of a crossing 

transaction, are eligible towards the 

proposed fee cap. Volume from regular 

and complex orders, as well as 

Facilitation Mechanism, Price 

Improvement Mechanism, Solicited 

Order Mechanism, Block Order 

Mechanism and Qualified Contingent 

Cross (‘‘QCC’’) orders,4 will also count 

towards the fee cap. 

In addition to adopting a fee cap, ISE 

proposes to adopt a service fee of $0.01 

per side on all non-QCC transactions 

that are eligible for the fee cap. For QCC 

volume, the Exchange proposes to adopt 

a higher service fee of $0.05 per side, 

recognizing that this is a premium 

service that required substantial 

investment by the ISE to deliver to 

members. The proposed service fee shall 

apply once a member reaches the fee 

cap level and shall apply to every 

contract side included in and above the 

fee cap. A member who does not reach 

the monthly fee cap will not be charged 

the proposed service fee. Additionally, 

the proposed service fee is not 

calculated in reaching the fee cap. Once 

the fee cap is reached, the proposed 

service fee shall apply to both 

proprietary and other account 

designations 5 in all ISE products in 

addition to those transactions that were 

included in reaching the fee cap. The 

proposed service fee, when charged for 

volume above the cap when no other 

transaction fees are collected, is being 

instituted to defray the Exchange’s costs 

of providing services to members, which 

include trade matching and processing, 

post trade allocation, submission for 

clearing and customer service activities 

related to trading activity on the 

Exchange. 

In calculating the proposed fee cap, 

the Exchange proposes to exclude the 

following: 6 (1) Any surcharge fee 

charged by the Exchange on licensed 

products,7 (2) fees from Non-ISE Market 

Maker volume not related to an 

affiliated member’s crossing activity, (3) 

the fee for responses to special orders 8

in all products, (4) the maker and taker 

fees charged by the Exchange for 

complex orders 9 for certain option 

classes,10 and (5) the taker fees charged 

by the Exchange for regular orders 11 for 

the Select Symbols. 

The proposed fee cap is functionally 

similar to a ‘‘Multiply-Listed Option Fee 

Cap’’ in place at the CBOE 12 and a ‘‘Firm 

Related Equity Option Cap’’ in place at 

NASDAQ OMX PHLX, Inc. (‘‘PHLX’’).13

The Exchange believes the proposed fee 

cap would create an incentive for 

members to continue to send order flow 

to the Exchange. 

The Exchange has designated this 

proposal to be operative on April 1, 

2011. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Schedule of Fees 

is consistent with Section 6(b) of the 

Act 14 in general, and furthers the 

objectives of Section 6(b)(4) of the Act 15

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 Exchange believes that adopting 

the fee cap is reasonable because it will 

potentially lower transaction fees for 

members providing liquidity on the 

Exchange. Members who reach the fee 

cap during a month will not have to pay 

regular transaction fees and thus will be 

able to lower their monthly fees. 

The Exchange believes that the fee 

cap is not unfairly discriminatory 

because all members, including non-ISE 

market makers are eligible to reach the 

cap. Moreover, the transactional fees 

that apply to the cap are not focused on 

any particular type of trading or 

member. Indeed, the cap covers all 

types of proprietary business members 

conduct on the Exchange, including 

regular transactions, complex orders, as 

well as all ‘‘special’’ transactions, such 

as trades in the Facilitation Mechanism, 

Price Improvement Mechanism, 

Solicited Order Mechanism, Block 

Order Mechanism, and Qualified 

Contingent Crosses. The Exchange is 

applying the fee cap only to firm 

proprietary business, and not customer 

or market maker business, because the 

Exchange is specifically targeting this 

type of business as a competitive 

response to similar fee caps other 

exchanges have adopted,16 and thus to 

make it more attractive for members to 

send such business to the Exchange. 

The Exchange has adopted other 

incentive programs targeting other 

business areas: lower fees (or no fees) 

for customer orders; 17 and tiered 

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20756 Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 

the customer fee is $0.18 per contract. The 

Exchange also currently has an incentive plan in 

place for certain specific FX Options which has its 

own pricing. See ISE Schedule of Fees. 18The Exchange currently has a sliding scale fee 

structure that ranges from $0.01 per contract to 

$0.18 per contract depending on the level of volume 

a Member trades on the Exchange in a month. 19See Phlx Fee Schedule, Section VI (Equity 

Options Fees). 

20See CBOE Fees Schedule—Duplicate Fees 

Related To Manual Data Entry (Keypunch) Errors. 

21 15 U.S.C. 78s(b)(3)(A)(ii). 22 17 CFR 200.30–3(a)(12). 

pricing that reduces rates for market 

makers based on the level of business 

they bring to the Exchange.18

The Exchange further believes the 

proposal to adopt the fee cap is 

equitable because it would uniformly 

apply to all members engaged in 

proprietary trading in option classes 

traded on the Exchange. As noted, ISE 

market makers currently receive the 

benefit of a fee reduction under a sliding 

scale fee structure applicable to nonSelect Symbols. 

The Exchange believes that adopting 

the service fee is reasonable because it 

will also potentially lower transaction 

fees for members. Members who reach 

the fee cap during a month will pay the 

service fee instead of the regular 

transaction fees and thus will be able to 

lower their monthly fees. The Exchange 

believes that charging a service fee is 

also reasonable because it will allow the 

Exchange to recoup the costs incurred 

in providing certain services, which 

include trade matching and processing, 

post trade allocation, submission for 

clearing and customer service activities 

related to trading activity on the 

Exchange. The Exchange also believes it 

is reasonable to charge a higher service 

fee for providing certain unique orders, 

such as QCC orders, recognizing the 

unique efforts and costs associated with 

developing that product. The Exchange 

believes the proposed fee change will 

attract additional order flow to the 

Exchange and thereby will benefit all 

market participants. 

The Exchange believes the proposal to 

adopt the service fee is equitable and 

not unfairly discriminatory because it 

would uniformly apply to all members 

engaged in proprietary trading. The 

proposed fee is designed to give 

members who trade a lot on the 

Exchange a benefit by way of a lower 

transaction fee. 

The Exchange believes the proposed 

service fee change will benefit market 

participants by potentially lowering 

their fees while allowing the Exchange 

to remain competitive with other 

exchanges that offer similar fee cap 

programs. The Exchange notes that the 

proposed service fee is similar to fees 

other exchanges charge for providing 

certain services to its members. For 

example, Phlx currently assesses a risk 

management fee.19 Additionally, the 

CBOE has a matched-unmatched fee 

that it applies.20 Both the Phlx and the 

CBOE fees are in essence fees charged 

by those exchanges for services they 

provide to their members. 

For the reasons noted above, the 

Exchange believes that the proposed 

fees are fair, equitable and not unfairly 

discriminatory. 

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.21 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. 

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 rulecomments@sec.gov. Please include File 

No. SR–ISE–2011–13 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–ISE–2011–13. 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 Commissions 

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. Copies of such 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–2011–13 and should be 

submitted by May 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Cathy Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8921 Filed 4–12–11; 8:45 am] 

BILLING CODE 8011–01–P 

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