Federal Register / Vol. 75, No. 27 / Wednesday, February 10, 2010 / Notices 6767 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3References to ISE Members in this filing refer to 

DECN Subscribers who are ISE Members. 

4See Securities Exchange Act Release No. 60769 

(October 2, 2009), 74 FR 51903 (October 8, 2009) 

(SR–ISE–2009–68). 

5See Securities Exchange Act Release No. 61289 

(January 5, 2010), 75 FR 1674 (January 12, 2010) 

(SR–ISE–2009–108). 6On May 7, 2009, each of EDGA Exchange, Inc. 

and EDGX Exchange, Inc. (the ‘‘EDGA and EDGX 

Exchanges’’) filed their respective Form 1 

applications to register as a national securities 

exchange (‘‘Form 1’’) pursuant to Section 6 of the 

Securities Exchange Act of 1934. On July 30, 2009, 

the Exchanges filed Amendment No. 1 to the Form 

1 Application. On September 17, 2009, the Form 1 

was published in the Federal Register for notice 

and comment. See Securities Exchange Act Release 

No. 60651 (September 11, 2009), 74 FR 47827 

(September 17, 2009). 

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 such 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–CHX– 

2010–03 and should be submitted on or 

before March 3, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–2949 Filed 2–9–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61490; File No. SR–ISE– 

2010–10] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating To Amending the 

Direct Edge ECN Fee Schedule 

February 4, 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 January 

29, 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, II, and III below, which items 

have been prepared by the selfregulatory 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 Exchange proposes to amend 

Direct Edge ECN’s (‘‘DECN’’) fee 

schedule for ISE Members 3 to amend its 

fee schedule by (i) re-introducing a 

rebate; (ii) adding a fee for stocks priced 

less than $1 that remove liquidity on 

EDGA; (iii) eliminating certain tables on 

the fee schedule and (iv) making 

typographical and clarifying changes to 

the fee schedule. All of the changes 

described herein are applicable to ISE 

Members. 

All of the changes described herein 

are applicable to ISE Members. The text 

of the proposed rule change is available 

on the Exchange’s Internet Web site at 

http://www.ise.com. 

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 

DECN, a facility of ISE, operates two 

trading platforms, EDGX and EDGA. 

Re-introduction of Ultra Tier Rebate 

In SR–ISE–2009–68,4 the Exchange 

amended the criteria for meeting the 

Ultra Tier by allowing ISE Members to 

receive a $0.0032 rebate per share for 

securities priced at or above $1.00 when 

ISE Members add liquidity on EDGX if 

the attributed MPID posts 1% of the 

total consolidated volume (‘‘TCV’’) in 

average daily volume (‘‘ADV’’). TCV is 

defined as volume reported by all 

exchanges and trade reporting facilities 

to the consolidated transaction reporting 

plans for Tape A, B, and C securities. 

For competitive reasons, the Exchange 

is now seeking to re-introduce an Ultra 

Tier rebate of $0.0031 per share. 

The Ultra Tier rebate ($0.0031 per 

share), which is a higher rebate than the 

next best rebate ($0.0029 per share) for 

adding liquidity on EDGX, is also more 

difficult to reach, as a higher volume 

threshold is required based on recent 

TCV figures. For example, 1% of the 

average TCV for January 2010 (8.9 

billion) was approximately 89 million 

shares. This threshold far exceeds the 

criteria (no minimum share volume 

requirement) to meet the next best 

rebate of $0.0029 per share. In addition, 

the higher rebate also results in part 

from lower administrative costs 

associated with higher volume. 

Additional Changes to the Fee Schedule 

Effective January 1, 2010,5 DECN 

adjusted its pricing model to be more 

consistent with other exchanges (even 

though DECN is not an exchange),6 by 

de-linking the pricing structures of 

DECN to eliminate pricing offers that are 

contingent on activity across both 

platforms. Secondly, the Exchange 

simplified its fee schedule in order to 

provide Members with greater 

consistency and transparency during the 

period that the EDGA and EDGX 

Exchanges are preparing to launch, 

when volume will be transitioning from 

DECN to the EDGA and EDGX 

Exchanges (assuming their respective 

Form 1 applications are approved by the 

Commission). The Exchange believes 

that these same goals are also advanced 

for the most part in this filing, which 

proposes technical and clarifying 

changes to DECN’s fee schedule. 

To effectuate the foregoing, the 

Exchange deleted certain charges in 

footnote 1 of the fee schedule, including 

one whereby ISE Members were charged 

$0.0002 per share to add liquidity on 

EDGA unless the attributed MPID added 

a minimum average daily share volume, 

measured monthly, of at least 

50,000,000 shares on EDGA. Prior to 

January 1, 2010, any attributed MPID 

meeting the aforementioned minimum 

was not charged to add liquidity on 

EDGA. Since this charge was deleted 

from footnote 1, the Exchange proposes 


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6768 Federal Register / Vol. 75, No. 27 / Wednesday, February 10, 2010 / Notices 

7See Securities Exchange Act Release No. 61289 

(January 5, 2010), 75 FR 1674 (January 12, 2010). 

8 15 U.S.C. 78f. 

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

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 19b–4(f)(2). 

to delete the corresponding footnote 1 

from flags B, V, Y, 3, and 4 from the 

EDGA column as this footnote no longer 

applies. 

In order to further simplify its fee 

schedule for Members, the Exchange 

proposes to delete the table on the fee 

schedule entitled ‘‘Fees per Share for 

Special Order Types’’ as the Exchange 

believes that the information on this 

schedule is repetitive of the information 

in the ‘‘liquidity flags and associated 

fees’’ table below it. As a result of this 

proposed deletion, the Exchange 

proposes to relocate footnote numbers 4 

and 5. Footnote 4 is proposed to be relocated to ‘‘Flag E’’ and added to ‘‘Flag 

5’’ to clarify it. Footnote 5 is proposed 

to be relocated to ‘‘Flag O.’’ These are the 

corresponding areas where these 

references belong. 

The Exchange proposes to re-word the 

first sentence in footnote 1 to clarify that 

adding can include placing hidden 

orders. 

In addition, the Exchange proposes to 

add a fee to its schedule to provide that 

stocks priced less than $1 will be 

charged 0.20% of the dollar value if 

they do not meet the minimum average 

daily share volume of 50,000 shares on 

EDGA to qualify for the removal rate. A 

conforming footnote 1 is proposed to be 

added in the first table on the fee 

schedule (next to the word ‘‘Free’’) for 

removing liquidity in stocks less than 

$1.00 on EDGA. 

In SR–ISE–2009–108,7 for securities 

priced less than $1, the Exchange 

changed the fee for adding liquidity on 

EDGX from free to a rebate of 0.15% of 

the dollar value of the transaction. The 

Exchange proposes to correct a 

typographical error on its current 

schedule by adding parenthesis around 

the ‘‘0.15% of dollar value’’ to clarify 

that this is a rebate, and not a charge, 

for adding liquidity on EDGX in 

securities priced less than $1. 

For Flag P, the Exchange proposes to 

correct a typographical error on the 

schedule by inverting the columns that 

are currently displayed. For EDGX, flag 

P should read ‘‘N/A’’ and for EDGA it 

should read a rebate of $0.0025 per 

share (i.e., (0.0025)). 

The Exchange proposes to clarify 

Footnote 3. The second sentence of this 

footnote states that the ‘‘rebate for 

adding liquidity on the NYSE of $0.0010 

per share.’’ This information is already 

conveyed in Flag F and is proposed to 

be deleted in order to simplify and 

clarify the fee schedule. The first 

sentence of footnote 3 is also proposed 

to be deleted as it is repetitive of the 

amended third sentence in footnote 3 

(‘‘stocks prices below $1.00 on the NYSE 

are charged $0.0018 per share when 

removing liquidity.’’) As a result, on 

Flag J, footnote 3 is proposed to be 

deleted as the reference no longer 

applies. However, footnote 3 is 

proposed to be relocated to Flag D in 

order to further clarify it. 

The changes discussed in this filing 

will become operative on February 1, 

2010. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,8

in general, and furthers the objectives of 

Section 6(b)(4),9 in particular, as 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, simplifying the rate structure 

for Members provides pricing incentives 

to market participants that route orders 

to DECN, allowing DECN to remain 

competitive. ISE notes that DECN 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive. The 

proposed rule change reflects a 

competitive pricing structure designed 

to incent market participants to direct 

their order flow to DECN. The proposed 

re-introduction of an Ultra Tier rebate 

also provides an incentive to Members 

who add significant order flow to EDGX. 

Finally, the Exchange believes that the 

proposed rates are equitable in that they 

apply uniformly to all Members and 

provide higher rebates for higher 

volume thresholds, resulting from lower 

administrative costs. ISE believes the 

fees and credits remain competitive 

with those charged by other venues and 

therefore continue to be reasonable and 

equitably allocated to those members 

that opt to direct orders to DECN rather 

than competing venues. The ISE also 

believes that the proposed rates are 

equitable in that they apply uniformly 

to all Members. Finally, to adjust 

DECN’s pricing model to be more 

consistent with other exchanges (even 

though DECN is not an exchange), the 

Exchange desires to simplify part of its 

fee schedule in order to provide 

Members with greater consistency and 

transparency during the period that the 

EDGA and EDGX Exchanges are 

preparing to launch, when volume will 

be transitioning from DECN to EDGA/ 

EDGX Exchanges (assuming their 

respective Form 1 applications are 

approved by the Commission). 

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) of 

the Act 10 and Rule 19b–4(f)(2) 11

thereunder. At any time within 60 days 

of the filing of such proposed rule 

change, the Commission may summarily 

abrogate 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. 

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 

Number SR–ISE–2010–10 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–2010–10. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 


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Federal Register / Vol. 75, No. 27 / Wednesday, February 10, 2010 / Notices 6769 

12The text of the proposed rule change is 

available on ISE’s Web site at http://www.ise.com, 

on the Commission’s Web site at http:// 

www.sec.gov, at ISE, and at the Commission’s 

Public Reference Room. 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 74 FR 69184 (Dec. 30, 2009). 

4See letters from Steven B. Caruso, Maddox 

Hargett Caruso, P.C., dated December 29, 2009; 

Scott R. Shewan, President, Public Investors 

Arbitration Bar Association (‘‘PIABA’’), dated 

January 19, 2010; and Jill I. Gross, Director, The 

Investors Rights Clinic at Pace University Law 

School, dated January 20, 2010. 

5Hoboken, New Jersey is less than a mile by ferry 

across the Hudson River from FINRA’s New York 

City hearing location. 

6 If the customer requests a different hearing 

location other than the location closest to the 

customer’s residence at the time of the events giving 

rise to the dispute and makes the request before the 

arbitrator or arbitrators are selected, the Director 

will grant the request. If the customer requests a 

different hearing location other than the location 

closest to the customer’s residence at the time of the 

events giving rise to the dispute and makes the 

request after the arbitrator or arbitrators are 

selected, the customer must submit the request to 

the arbitrator or panel. 

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,12 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–2010–10 and should be 

submitted on or before March 3, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–2947 Filed 2–9–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61497; File No. SR–FINRA– 

2009–073] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Amend the 

Hearing Location Rules of the Codes 

of Arbitration Procedure for Customer 

and Industry Disputes 

February 4, 2010. 

I. Introduction 

On October 28, 2009, Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a National Association of 

Securities Dealers, Inc. (‘‘NASD’’)) filed 

with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘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 Rules 

12213(a) and 13313(a) of the Code of 

Arbitration Procedure for Customer 

Disputes (‘‘Customer Code’’) and the 

Code of Arbitration Procedure for 

Industry Disputes (‘‘Industry Code’’), 

respectively, to expand the criteria for 

selecting a hearing location for an 

arbitration proceeding. The proposed 

rule change was published for comment 

in the Federal Register on December 30, 

2009.3 The Commission received three 

comment letters, all of which supported 

the proposed rule change.4 This order 

approves the proposed rule change. 

II. Description of the Proposed Rule 

Change 

Hearing Location Selection Under the 

Customer Code 

Currently, Rule 12213(a) of the 

Customer Code states that generally, the 

Director of FINRA Dispute Resolution 

(‘‘Director’’) will select the hearing 

location closest to the customer’s 

residence at the time of the events 

giving rise to the dispute. FINRA has 

determined that its policy concerning 

selection of a hearing location under the 

Customer Code may be broader than the 

rule describes. 

Under the current rule in the 

Customer Code, for example, if a 

customer in an arbitration proceeding 

lives in Hoboken, New Jersey, the 

Director will select the New York City 

hearing location, because this hearing 

location is closer to the customer’s 

residence, Hoboken,5 than FINRA’s 

Newark, New Jersey hearing location. 

There have been instances, however, 

in which the Director has granted 

customers’ requests to select a hearing 

location in their state of residence at the 

time of the events giving rise to the 

dispute, even though the in-state 

hearing location may not be the closest 

hearing location. Thus, in the example 

above, if the customer requests the 

Newark, New Jersey hearing location, 

the Director generally will grant the 

request, even though the closest hearing 

location is the New York City location. 

The Director typically attempts to honor 

such requests as a convenience to public 

customers. 

FINRA is proposing, therefore, to 

amend Rule 12213(a) of the Customer 

Code to add this criterion for selecting 

a hearing location. The proposed 

amendment to the rule would state that 

the Director will select the hearing 

location closest to the customer’s 

residence at the time of the events 

giving rise to the dispute, unless the 

hearing location closest to the 

customer’s residence is in a different 

state. In that case, the customer may 

request a hearing location in the 

customer’s state of residence at the time 

of the events giving rise to the dispute. 

Under the proposal, the Director 

would continue to select the hearing 

location closest to the customer’s 

residence at the time of the events 

giving rise to the dispute. However, the 

Director would honor a customer’s 

request for a different hearing location 

in the customer’s state of residence.6

FINRA believes the proposal is 

customer-friendly because it gives 

customers more control over the 

arbitration process, by providing them 

with a choice of hearing locations. 

Hearing Location Selection Under the 

Industry Code 

Rule 13213(a) of the Industry Code 

states, in relevant part, that in cases 

involving an associated person, the 

Director will generally select the hearing 

location closest to where the associated 

person was employed at the time of the 

events giving rise to the dispute. FINRA 

has not received requests from 

associated persons for different hearing 

locations, other than the closest hearing 

location under the current rule. 

However, FINRA believes that 

associated persons also should have the 

option to select a hearing location in 

their state of employment at the time of 

the events giving rise to the dispute, if 

the closest hearing location to their 

employment is in a different state. 

Thus, FINRA is proposing to amend 

Rule 13213(a) of the Industry Code in 

two ways. First, FINRA would broaden 

the criteria for selecting the appropriate 

hearing location by referring to the time 


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