Federal Register / Vol. 75, No. 32 / Thursday, February 18, 2010 / Notices 7299 

27See PIABA Letter at 2 (noting that if the 

proposed amendments were adopted, a hearing 

session fee of $450 would be charged for an 

unspecified damage claim heard by one arbitrator, 

but that a hearing session fee of $1,000 would apply 

for an unspecified damage claim heard by three 

arbitrators). 

28See FINRA Response at 3–4. 

29 Id. at 4. 

30 Id. 

31 Id. 

32See PIABA Letter at 1. 

33See FINRA Response at 4. 

34 Id. 

35 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

36 15 U.S.C. 78o–3(b)(6). 

37 15 U.S.C. 78o–3(b)(5). 

38 15 U.S.C. 78s(b)(2). 

39 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. 61005 

(November 16, 2009), 74 FR 61398 (‘‘Notice’’). 

4See Securities and Exchange Act Release No. 

59135 (December 22, 2008); 73 FR 79954 (December 

30, 2008) (SR–ISE–2008–85) (relating to a corporate 

transaction in which: (1) ISE Holdings purchased an 

ownership interest in Direct Edge by contributing 

cash and the marketplace then operated by ISE 

Stock Exchange, LLC for the trading of U.S. cash 

equity securities; and (2) Direct Edge’s whollyowned subsidiary, Maple Merger Sub LLC became 

the operator of the marketplace as a facility of ISE. 

5The Commission published the Form 1 

Applications, as modified by Amendment No. 1, on 

September 17, 2009. See Securities Exchange Act 

Release No. 60651 (September 11, 2009), 74 FR 179 

(File No. 10–193 and 10–194). 

the fee charged for an unspecified 

damages claim before three arbitrators.27

FINRA disagreed with this assertion, 

explaining that the hearing session fee 

is used to not only cover arbitrator 

honoraria, but also to address certain 

fixed costs that are incurred in 

scheduling a hearing, regardless of the 

amount in dispute or the number of 

arbitrators.28 Moreover, FINRA noted 

that the Codes authorize the Director to 

determine whether the hearing session 

fee for an unspecified damages claim 

should be more or less than the amount 

specified in the fee schedule.29

Therefore, FINRA indicated that the 

proposed amendments would not 

change its practice of reducing or 

waiving the fees in documented cases of 

financial hardship.30 FINRA also noted 

that the proposed fee for such 

unspecified damage claims is the same 

as the fee charged for hearing sessions 

heard by one arbitrator involving claims 

of $10,000.01 to over $500,000, thus 

providing case administration with a 

uniform fee structure that is easy to 

apply.31

Finally, the PIABA Letter also 

asserted that both of the proposed 

amendments would result in higher fees 

to the customer in a FINRA arbitration 

proceeding.32 In its response, FINRA 

noted that the fees contemplated by the 

proposed amendments are not new and 

do not represent an increase in the fees 

currently charged.33 FINRA stated that 

the proposed amendments clarify the 

fees applicable in these situations.34

IV. Discussion and Commission 

Findings 

After carefully reviewing the 

proposed rule change, the comments 

and FINRA’s response, the Commission 

finds that the proposal is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.35 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

15A(b)(6) of the Act,36 which requires, 

among other things, that FINRA rules be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, and, in general, to protect 

investors and the public interest. 

More specifically, the Commission 

believes clarifying the applicability of 

the fee waiver provision of the 

postponement rule will assist in 

FINRA’s efficient administration of the 

arbitration process by ensuring that 

arbitrators receive some compensation 

in the event that a scheduled hearing 

session is postponed as a result of a late 

postponement request, and may serve as 

an incentive to parties to settle their 

disputes earlier to avoid the imposition 

of additional fees. 

The Commission also believes 

codifying the hearing session fee for an 

unspecified damages claim heard by one 

arbitrator will ensure consistent 

assessment of fees in FINRA’s 

arbitration forum, will provide more 

transparency in FINRA’s fee structure, 

and will enhance the efficiency of the 

forum by making the rules easier to 

understand and apply. 

Further, the Commission believes that 

the proposed amendments are 

consistent with Section 15A(b)(5) of the 

Act, which requires that a national 

securities association have rules that 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among its members and other persons 

using its facilities.37

For the reasons discussed above, the 

Commission finds that the rule change 

is consistent with the Act and the rules 

and regulations thereunder. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,38 that the 

proposed rule change (SR–FINRA– 

2009–075) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3075 Filed 2–17–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61498; File No. SR–ISE– 

2009–90] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Order Approving Proposed Rule 

Change Relating to Changes to the 

U.S. Exchange Holdings, Inc. 

Corporate Documents and 

International Securities Exchange 

Trust Agreement 

February 4, 2010. 

On November 9, 2009, the 

International Securities Exchange, LLC 

(‘‘ISE’’ or ‘‘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 

relating to the U.S. Exchange Holdings, 

Inc. (‘‘U.S. Exchange Holdings’’) 

Corporate Documents (as defined below) 

and the ISE Trust Agreement (as defined 

below). The proposed rule change was 

published for comment in the Federal 

Register on November 24, 2009.3 The 

Commission received no comment 

letters on the proposed rule change. 

This order approves the proposed rule 

change. 

I. Background 

U.S. Exchange Holdings wholly owns 

ISE Holdings, Inc. (‘‘ISE Holdings’’). ISE 

Holdings wholly owns ISE, as well as a 

31.54% interest in Direct Edge 

Holdings, LLC (‘‘Direct Edge’’). Direct 

Edge currently owns and operates a 

facility of the Exchange.4 In addition, on 

May 7, 2009, Direct Edge’s direct 

subsidiaries, EDGA Exchange, Inc. 

(‘‘EDGA’’) and EDGX Exchange, Inc. 

(‘‘EDGX’’), each filed a Form 1 

Application 5 (as amended, the ‘‘Form 1 

Applications’’) with the Commission, to 

own and operate a registered national 

securities exchange. 

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7300 Federal Register / Vol. 75, No. 32 / Thursday, February 18, 2010 / Notices 

6See Securities Exchange Act Release No. 56955 

(December 13, 2007), 72 FR 71979 (December 19, 

2007) (File No. SR–ISE–2007–101) (‘‘Eurex 

Acquisition Order’’). 

7 15 U.S.C. 78f(b) and 15 U.S.C. 78s(g). 

8 ISE Trust Agreement, Articles V, VI, and VIII. 

9 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

10 15 U.S.C. 78f(b)(1). 

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78s(b)(1). 

13 17 CFR 240.19b–4. 

14See Eurex Acquisition Order, supra note 6. 

15See Eurex Acquisition Order, supra note 6. 

16See Notice, supra note 3. Approval of this 

proposed rule change in no way prejudges or 

determines what actions the Commission may take 

with respect to the Form 1 Applications. 

17See Eurex Acquisition Order, supra note 6, for 

an additional discussion of specific provisions in 

the Corporate Documents. 

18 ISE Trust Agreement, Articles V, VI, and VIII. 

19See Eurex Acquisition Order, supra note 6, for 

an additional discussion of specific provisions in 

the ISE Trust Agreement. 

U.S. Exchange Holdings is a whollyowned subsidiary of Eurex Frankfurt AG 

(Eurex Frankfurt). Eurex Frankfurt is a 

wholly-owned subsidiary of Eurex 

Zu ̈rich AG (‘‘Eurex Zu ̈rich’’), which in 

turn is jointly owned by Deutsche Bo ̈rse 

AG (‘‘Deutsche Bo ̈rse’’) and SIX Swiss 

Exchange (‘‘SIX’’). SIX is owned by SIX 

Group (Eurex Frankfurt, Eurex Zu ̈rich, 

Deutsche Bo ̈rse, SIX, SIX Group, and 

U.S. Exchange Holdings, Inc. are 

collectively referred to herein as the 

‘‘Upstream Owners’’). 

In connection with the acquisition of 

ISE Holdings by the Upstream Owners 

in December 2007,6 ISE Holdings, U.S. 

Exchange Holdings, Wilmington Trust 

Company, as Delaware trustee, and 

Sharon Brown-Hruska, Robert Schwartz 

and Heinz Zimmermann, as trustees, 

entered into a Trust Agreement, dated as 

of December 19, 2007 (the ‘‘ISE Trust 

Agreement’’). As discussed in the Eurex 

Acquisition Order, the ISE Trust 

Agreement is designed to enable the 

Exchange to operate in a manner that 

complies with the federal securities 

laws, including the objectives and 

requirements of Sections 6(b) and 19(g) 

of the Act,7 and to facilitate the ability 

of the Exchange and the Commission to 

fulfill their regulatory and oversight 

obligations under the Act.8

II. Description of the Proposal 

In the instant filing, the Exchange, on 

behalf of the U.S. Exchange Holdings, 

proposed amendments to (i) the 

Certificate of Incorporation and Bylaws 

of U.S. Exchange Holdings (the 

‘‘Corporate Documents’’); and (ii) the ISE 

Trust Agreement, to provide that the 

Regulatory Provisions (as defined 

below) in the Corporate Documents and 

the ISE Trust Agreement, which 

currently apply only to ISE, also shall 

apply to any ‘‘Controlled National 

Securities Exchange,’’ defined to any 

mean national securities exchange, or 

facility thereof, that U.S. Exchange 

Holdings may control, directly or 

indirectly. 

Specifically, and as more fully 

described in the Notice, the Exchange 

proposed to replace certain references to 

‘‘ISE’’ in the Corporate Documents with 

the term ‘‘each Controlled National 

Securities Exchange.’’ These references 

appear in the ownership and voting 

limitations sections of the Corporate 

Documents, as well as other 

miscellaneous sections, including, but 

not limited to, the confidentiality 

section, the books and records section, 

the compliance with laws section, the 

jurisdiction section, and the 

amendments section (the ‘‘Regulatory 

Provisions’’). Similarly, the Exchange 

proposed to amend certain provisions of 

the ISE Trust Agreement to replace 

certain references to ‘‘ISE’’ that appear in 

Articles II through VIII of the ISE Trust 

Agreement with references to ‘‘each 

Controlled National Securities 

Exchange.’’ 

III. Discussion 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.9 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(1) of the Act,10 which requires, 

among other things, that a national 

securities exchange be so organized and 

have the capacity to carry out the 

purposes of the Act, and the rules and 

regulation thereunder, and Section 

6(b)(5) of the Act 11 in that it is designed 

to promote just and equitable principles 

of trade, to prevent fraudulent and 

manipulative acts, and, in general, to 

protect investors and the public interest. 

Section 19(b) 12 of the Act and Rule 

19b–4 13 thereunder require a selfregulatory organization to file proposed 

rule changes with the Commission. 

Although U.S. Exchange Holdings and 

the ISE Trust are not self-regulatory 

organizations, the Corporate Documents 

and certain provisions of the ISE Trust 

Agreement are rules of an exchange if 

they are stated policies, practices, or 

interpretations (as defined in Rule 19b– 

4 under the Act) of the exchange, and 

must therefore be filed with the 

Commission pursuant to Section 

19(b)(4) of the Act and Rule 19b–4 

thereunder.14 Accordingly, the 

Exchange filed the Corporate 

Documents and the ISE Trust 

Agreement with the Commission. 

The Corporate Documents currently 

include Regulatory Provisions designed 

to maintain the independence of the 

regulatory functions of the Exchange, 

the sole national securities exchange 

controlled, directly or indirectly, by 

U.S. Exchange Holdings.15 However, the 

Regulatory Provisions, by their terms, 

currently do not apply to additional 

national securities exchanges that U.S. 

Exchange Holdings might control, 

directly or indirectly, as a result of a 

subsequent transaction. The Exchange 

notes that EDGA and EDGX have filed 

the Form 1 Applications with the 

Commission that, if approved, would 

result in U.S. Exchange Holdings, 

indirectly controlling two additional 

national securities exchanges.16

Accordingly, the Exchange proposes to 

amend the Corporate Documents to 

apply the Regulatory Provisions to any 

national securities exchange, or facility 

thereof, that U.S. Exchange Holdings 

may control, directly or indirectly. The 

Commission believes that the amended 

Corporate Documents are designed to 

assist any national securities exchange, 

or facility thereof, that U.S. Exchange 

Holdings may control, directly or 

indirectly, in fulfilling their selfregulatory obligations and in 

administering and complying with the 

requirements of the Act.17

The ISE Trust Agreement contains 

provisions that are designed to enable 

the Exchange to operate in a manner 

that complies with the federal securities 

laws, and to facilitate the ability of the 

Exchange and the Commission to fulfill 

their regulatory and oversight 

obligations under the Act.18 These 

provisions, however, are limited solely 

to the Exchange and not to any other 

national securities exchange that ISE 

Holdings might control, directly or 

indirectly. The Exchange proposes that 

the ISE Trust Agreement be amended 

and restated to replace references to ISE 

with references to any national 

securities exchange controlled, directly 

or indirectly, by ISE Holdings, or facility 

thereof. The Commission believes that 

amending and restating the ISE Trust 

Agreement to reference any national 

securities exchange, or facility thereof, 

that ISE Holdings may control, directly 

or indirectly, is designed to facilitate the 

ability of those national securities 

exchanges to comply with the 

requirements of the Act.19

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act, that the 

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Federal Register / Vol. 75, No. 32 / Thursday, February 18, 2010 / Notices 7301 

20 17 CFR 200.30–3(a)(12). 

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

2See Securities Exchange Act Release No. 56458 

(September 18, 2007), 72 FR 54309 (September 24, 

2007) (SR–CBOE–2007–107) for a description of the 

Temporary Membership status under Rule 3.19.02. 

3See Securities Exchange Act Release No. 58178 

(July 17, 2008), 73 FR 42634 (July 22, 2008) (SR– 

CBOE–2008–40) for a description of the Interim 

Trading Permits under Rule 3.27. 

4Rule 3.27(b) defines the clearing firm floating 

monthly rate as the floating monthly rate that a 

Clearing Member designates, in connection with 

transferable membership leases that the Clearing 

Member assisted in facilitating, for leases that 

utilize that monthly rate. 

5The concepts of an indicative lease rate and of 

a clearing firm floating month rate were previously 

utilized in the CBOE rule filings that set and 

adjusted the Temporary Member access fee. Both 

concepts are also codified in Rule 3.27(b) in relation 

to ITPs. 

6See Securities Exchange Act Release No. 57293 

(February 8, 2008), 73 FR 8729 (February 14, 2008) 

(SR–CBOE–2008–12), which established the 

original Temporary Member access fee, for detail 

regarding the rationale in support of the original 

Temporary Member access fee and the process used 

to set that fee, which is also applicable to this 

proposed change to the Temporary Member access 

fee as well. 

7See Securities Exchange Act Release No. 58200 

(July 21, 2008), 73 FR 43805 (July 28, 2008) (SR– 

CBOE–2008–77), which established the original ITP 

access fee, for detail regarding the rationale in 

support of the original ITP access fee and the 

process used to set that fee, which is also applicable 

to this proposed change to the ITP access fee as 

well. 

8 15 U.S.C. 78s(b)(3)(A)(ii). 

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

10 15 U.S.C. 78f(b)(4). 

proposed rule change (SR–ISE–2008– 

90), be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3076 Filed 2–17–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61500; File No. SR–CBOE– 

2010–010)] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Temporary 

Membership Status and Interim 

Trading Permit Access Fees 

February 4, 2010. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

January 29, 2010, the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’ or the ‘‘Exchange’’) 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 CBOE. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested parties. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

CBOE proposes to adjust (i) the 

monthly access fee for persons granted 

temporary CBOE membership status 

(‘‘Temporary Members’’) pursuant to 

Interpretation and Policy .02 under 

CBOE Rule 3.19 (‘‘Rule 3.19.02’’) and (ii) 

the monthly access fee for Interim 

Trading Permit (‘‘ITP’’) holders under 

CBOE Rule 3.27. The text of the 

proposed rule change is available on the 

Exchange’s Web site (http:// 

www.cboe.org/Legal/), at the Exchange’s 

Office of the Secretary, 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, 

CBOE 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 CBOE 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 current access fee for Temporary 

Members under Rule 3.19.02 2 and the 

current access fee for ITP holders under 

Rule 3.27 3 are both $7,928 per month. 

Both access fees are currently set at the 

indicative lease rate (as defined below) 

for January 2010. The Exchange 

proposes to adjust both access fees 

effective at the beginning of February 

2010 to be equal to the indicative lease 

rate for February 2010 (which is $5,433). 

Specifically, the Exchange proposes to 

revise both the Temporary Member 

access fee and the ITP access fee to be 

$5,433 per month commencing on 

February 1, 2010. 

The indicative lease rate is defined 

under Rule 3.27(b) as the highest 

clearing firm floating monthly rate 4 of 

the CBOE Clearing Members that assist 

in facilitating at least 10% of the CBOE 

transferable membership leases.5 The 

Exchange determined the indicative 

lease rate for February 2010 by polling 

each of these Clearing Members and 

obtaining the clearing firm floating 

monthly rate designated by each of 

these Clearing Members for that month. 

The Exchange used the same process 

to set the proposed Temporary Member 

and ITP access fees that it used to set 

the current Temporary Member and ITP 

access fees. The only difference is that 

the Exchange used clearing firm floating 

monthly rate information for the month 

of February 2010 to set the proposed 

access fees (instead of clearing firm 

floating monthly rate information for the 

month of January 2010 as was used to 

set the current access fees) in order to 

take into account changes in clearing 

firm floating monthly rates for the 

month of February 2010. 

The Exchange believes that the 

process used to set the proposed 

Temporary Member access fee and the 

proposed Temporary Member access fee 

itself are appropriate for the same 

reasons set forth in CBOE rule filing SR– 

CBOE–2008–12 with respect to the 

original Temporary Member access fee.6

Similarly, the Exchange believes that 

the process used to set the proposed ITP 

access fee and the proposed ITP access 

fee itself are appropriate for the same 

reasons set forth in CBOE rule filing SR– 

CBOE–2008–77 with respect to the 

original ITP access fee.7

Each of the proposed access fees will 

remain in effect until such time either 

that the Exchange submits a further rule 

filing pursuant to Section 19(b)(3)(A)(ii) 

of the Act 8 to modify the applicable 

access fee or the applicable status (i.e., 

the Temporary Membership status or 

the ITP status) is terminated. 

Accordingly, the Exchange may, and 

likely will, further adjust the proposed 

access fees in the future if the Exchange 

determines that it would be appropriate 

to do so taking into consideration lease 

rates for transferable CBOE 

memberships prevailing at that time. 

The procedural provisions of the 

CBOE Fee Schedule related to the 

assessment of each proposed access fee 

are not proposed to be changed and will 

remain the same as the current 

procedural provisions relating to the 

assessment of that access fee. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change 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 

designed to provide for the equitable 

allocation of reasonable dues, fees, and 

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