Federal Register / Vol. 77, No. 35 / Wednesday, February 22, 2012 / Notices 10579 

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

2 17 CFR 240.19b–4. 

3The Select Symbols are identified by their ticker 

symbol on the Exchange’s Schedule of Fees. 4The term ‘‘market makers’’ refers to 

‘‘Competitive Market Makers’’ and ‘‘Primary Market 

Makers’’ collectively. See ISE Rule 100(a)(25). 5The term ‘‘Professional Order’’ means an order 

that is for the account of a person or entity that is 

not a Priority Customer. See ISR [sic] Rule 

100(a)(37C). 6The term ‘‘Non-ISE Market Maker’’ means a 

market maker as defined in Section 3(a)(38) of the 

Securities Exchange Act of 1934 (the ‘‘Act’’) 

registered in the same options class on another 

options exchange. See Schedule of Fees, page 4. 7See Securities Exchange Act Release No. 66084 

(January 3, 2012), 77 FR 1103 (January 9, 2012) (SR– 

ISE–2011–84). 

8See Securities Exchange Act Release No. 65548 

(October 13, 2011), 76 FR 64980 (October 19, 2011) 

(SR–ISE–2011–39). 

9See Securities Exchange Act Release No. 65958 

(December 15, 2011), 76 FR 79236 (December 21, 

2011) (SR–ISE–2011–81). The Exchange notes that 

XOP is currently in the Penny Pilot program and 

XLB and EFA are currently Select Symbols. 

10The term ‘‘Priority Customer’’ means a person 

or entity that (i) is not a broker or dealer in 

securities, and (ii) does not place more than 390 

orders in listed options per day on average during 

a calendar month for its own beneficial account. 

See ISE Rule 100(a)(37A). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66406; File No. SR–ISE– 

2012–07] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Fees for Certain 

Complex Orders Executed on the 

Exchange 

February 16, 2012. 

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

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on February 1, 2012, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The ISE is proposing to amend fees 

for certain complex orders executed on 

the Exchange. 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 Exchange currently assesses a per 

contract transaction fee to market 

participants that add or remove 

liquidity in the Complex Order Book 

(‘‘maker/taker fees’’) in symbols that are 

in the Penny Pilot program. Included 

therein is a subset of 101 symbols that 

are assessed a slightly higher taker fee 

(the ‘‘Select Symbols’’).3 Specifically, 

the Exchange charges ISE market maker 

orders,4 firm proprietary orders and 

Customer (Professional Orders) 5 $0.10 

per contract for providing liquidity on 

the Complex Order Book and $0.30 per 

contract ($0.32 per contract in the Select 

Symbols) for taking liquidity from the 

Complex Order Book. ISE market 

makers who take liquidity from the 

Complex Order Book by trading with 

orders that are preferenced to them are 

charged $0.28 per contract ($0.30 per 

contract in the Select Symbols). Non-ISE 

Market Makers 6 are currently charged 

$0.20 per contract for providing 

liquidity and $0.35 per contract ($0.36 

per contract in the Select Symbols) for 

taking liquidity from the Complex Order 

Book. Priority Customer orders are not 

charged a fee for trading in the Complex 

Order Book and receive a rebate of $0.25 

per contract ($0.30 per contract in the 

Select Symbols) when those orders trade 

with non-customer orders in the 

Complex Order Book. 

The Exchange also recently adopted 

fees for complex orders in two of the 

most actively-traded index option 

products, the NASDAQ 100 Index 

option (‘‘NDX’’) and the Russell 2000 

Index option (‘‘RUT’’).7 Specifically, the 

Exchange charges ISE market maker 

orders, firm proprietary orders and 

Customer (Professional Orders) $0.25 

per contract for providing liquidity on 

the Complex Order Book in NDX and 

RUT and $0.70 per contract for taking 

liquidity from the Complex Order Book 

in NDX and RUT. Non-ISE Market 

Makers are charged $0.25 per contract 

for providing liquidity and $0.75 per 

contract for taking liquidity from the 

Complex Order Book in NDX and RUT. 

ISE market makers who remove 

liquidity from the Complex Order Book 

in NDX and RUT by trading with orders 

that are preferenced to them are charged 

$0.68 per contract. Priority Customer 

orders are not charged a fee for trading 

in the Complex Order Book in NDX and 

RUT and receive a rebate of $0.50 per 

contract when those orders trade with 

non-Priority Customer orders in the 

Complex Order Book in NDX and RUT. 

Further, pursuant to Securities and 

Exchange Commission (‘‘SEC’’) 

approval, the Exchange allows market 

makers to enter quotations for complex 

order strategies in the Complex Order 

Book.8 Given this enhancement to the 

complex order functionality, and in 

order to maintain a competitive fee and 

rebate structure for Priority Customer 

orders, the Exchange recently amended 

fees that apply to transactions in the 

Complex Order Book in the following 

three symbols: XOP, XLB and EFA.9

Specifically, the Exchange amended its 

maker fees for complex orders in these 

three symbols when these orders 

interact with Priority Customers.10 In 

SR–ISE–2011–81, the Exchange 

increased its maker fee from $0.10 per 

contract to $0.30 per contract in XOP 

($0.32 per contract in XLB and EFA) for 

ISE market maker orders, firm 

proprietary orders, and Customer 

(Professional Orders) when these orders 

interact with Priority Customer orders. 

The Exchange also increased its maker 

fee from $0.20 per contract to $0.30 per 

contract in XOP ($0.32 per contract in 

XLB and EFA) for Non-ISE Market 

Makers orders when these orders 

interact with Priority Customer orders. 

The Exchange did not make any change 

to fees for Priority Customer orders that 

trade in the Complex Order Book. 

Further, for Priority Customer 

complex orders in XOP, the Exchange 

currently provides a rebate of $0.25 per 

contract ($0.30 per contract for XLB and 

EFA) when these orders trade with nonPriority Customer orders in the Complex 

Order Book. 

Further, the Exchange provides ISE 

market makers with a two cent discount 

when trading against orders that are 

preferenced to them. Prior to SR–ISE– 

2011–81, this discount was only 

applicable when ISE Market Makers 

removed liquidity from the Complex 

Order Book. Pursuant to SR–ISE–2011– 


srobinson on DSK4SPTVN1PROD with NOTICES
10580 Federal Register / Vol. 77, No. 35 / Wednesday, February 22, 2012 / Notices 

11See Exchange Act Release No. 61869 (April 7, 

2010), 75 FR 19449 (April 14, 2010) (SR–ISE–2010– 

25). 

12See Exchange Act Release No. 62048 (May 6, 

2010), 75 FR 26830 (May 12, 2010) (SR–ISE–2010– 

43). The Exchange subsequently increased this 

rebate to $0.25 per contract. See Exchange Act 

Release No. 63283 (November 9, 2010), 75 FR 70059 

(November 16, 2010) (SR–ISE–2010–106). 

13See Exchange Act Release No. 63283 

(November 9, 2010), 75 FR 70059 (November 16, 

2010) (SR–ISE–2010–106). 

14The Exchange notes that AA, ABX, MSFT, MU, 

NVDA, VZ, and WFC are currently Select Symbols. 

15 ISE acknowledged that it does not currently 

provide this fee discount for the seven symbols 

included in this proposal. Instead, the proposal 

establishes this discount for these seven symbols. 

Telephone conversation among Boris Ilyevsky, 

Managing Director, ISE; Samir Patel, Assistant 

General Counsel, ISE; Victoria Crane, Assistant 

Director, Commission; Yvonne Fraticelli, Special 

Counsel, Commission; and Kathleen Gross, 

Counsel, Commission on February 13, 2012. 

16 15 U.S.C. 78f(b). 

17 15 U.S.C. 78f(b)(4). 

18See PHLX Fee Schedule, Section I, Part B., at 

http://www.nasdaqtrader.com/content/ 

marketregulation/membership/phlx/feesched.pdf. 

19See CBOE Fees Schedule, Section 1.VI. at 

http://www.cboe.com/publish/feeschedule/ 

CBOEFeeSchedule.pdf. 

81, the Exchange began to provide this 

fee discount when ISE Market Makers 

added or removed liquidity from the 

Complex Order Book. As a result, the 

Exchange currently provides this fee 

discount when ISE market makers add 

or remove liquidity from the Complex 

Order Book in XOP, XLB and EFA. 

Specifically, ISE market makers that add 

or remove liquidity in XLB and EFA in 

the Complex Order Book are charged 

$0.30 per contract ($0.28 per contract in 

XOP) when trading with orders that are 

preferenced to them. 

Additionally, to incentivize members 

to trade in the Exchange’s various 

auction mechanisms, the Exchange 

currently provides a per contract rebate 

to those contracts that do not trade with 

the contra order in the Exchange’s 

Facilitation Mechanism,11 Price 

Improvement Mechanism 12 and 

Solicited Order Mechanism.13 This 

rebate currently applies to all complex 

orders in symbols that are subject to the 

Exchange’s maker/taker fees. For the 

Facilitation and Solicited Order 

Mechanisms, the rebate is currently 

$0.15 per contract. For the Price 

Improvement Mechanism, the rebate is 

currently $0.25 per contract. 

Accordingly, a per contract rebate at the 

current levels currently applies to those 

contracts in XOP, XLB, and EFA that do 

not trade with the contra order in the 

Exchange’s Facilitation Mechanism, 

Price Improvement Mechanism and 

Solicited Order Mechanism. 

The Exchange now proposes to extend 

the fees for complex orders adopted in 

SR–ISE–2011–81 to the following 

additional seven symbols: AA, ABX, 

MSFT, MU, NVDA, VZ, and WFC.14 The 

Exchange proposes to expand the 

pricing structure and fees applicable to 

these orders in a manner that is gradual 

and measured. For that reason, the 

Exchange selected symbols that have 

moderate trading activity. In this case, 

each of the seven symbols selected by 

the Exchange has an average daily 

trading volume in complex orders of 

500 contracts to 10,000 contracts on the 

Exchange. 

Specifically, the Exchange proposes to 

increase its maker fee from $0.10 per 

contract to $0.32 per contract in AA, 

ABX, MSFT, MU, NVDA, VZ, and WFC 

for ISE market maker orders, firm 

proprietary orders, and Customer 

(Professional Orders) when these orders 

interact with Priority Customer orders. 

The Exchange proposes to increase its 

maker fee from $0.20 per contract to 

$0.32 per contract in AA, ABX, MSFT, 

MU, NVDA, VZ, and WFC for Non-ISE 

Market Makers orders when these orders 

interact with Priority Customer orders. 

The Exchange does not propose any 

change to fees for Priority Customer 

orders that trade in the Complex Order 

Book. 

Further, the Exchange provides ISE 

market makers with a two cent discount 

when trading against orders that are 

preferenced to them. Accordingly, the 

Exchange currently provides this fee 

discount when ISE Market Makers add 

or remove liquidity from the Complex 

Order Book in AA, ABX, MSFT, MU, 

NVDA, VZ, and WFC.15 Specifically, 

ISE market makers that add or remove 

liquidity in AA, ABX, MSFT, MU, 

NVDA, VZ, and WFC in the Complex 

Order Book are charged $0.30 per 

contract when trading with orders that 

are preferenced to them. 

Further, for Priority Customer 

complex orders in AA, ABX, MSFT, 

MU, NVDA, VZ, and WFC, the 

Exchange currently provides a rebate of 

$0.30 per contract when these orders 

trade with non-Priority Customer orders 

in the Complex Order Book. The 

Exchange does not propose any change 

to this rebate. 

Finally, as noted above, to incentivize 

members to trade in the Exchange’s 

various auction mechanisms, the 

Exchange currently provides a per 

contract rebate to those contracts that do 

not trade with the contra order in the 

Exchange’s Facilitation Mechanism, 

Price Improvement Mechanism and 

Solicited Order Mechanism. This rebate 

currently applies to all complex orders 

in symbols that are subject to the 

Exchange’s maker/taker fees. For the 

Facilitation and Solicited Order 

Mechanisms, the rebate is currently 

$0.15 per contract. For the Price 

Improvement Mechanism, the rebate is 

currently $0.25 per contract. 

Accordingly, a per contract rebate at the 

current levels currently applies to those 

contracts in AA, ABX, MSFT, MU, 

NVDA, VZ, and WFC that do not trade 

with the contra order in the Exchange’s 

Facilitation Mechanism, Price 

Improvement Mechanism and Solicited 

Order Mechanism. The Exchange does 

not propose any change to this rebate. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Schedule of Fees 

is consistent with Section 6(b) of the 

Act 16 in general, and furthers the 

objectives of Section 6(b)(4) of the Act 17

in particular, in that it is an equitable 

allocation of reasonable dues, 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 add or remove 

liquidity in options overlying AA, ABX, 

MSFT, MU, NVDA, VZ, and WFC in the 

Complex Order Book. 

The Exchange believes that increasing 

the fees applicable to orders executed in 

the Complex Order Book when trading 

against Priority Customers in AA, ABX, 

MSFT, MU, NVDA, VZ, and WFC is 

appropriate given the new functionality 

that allows market makers to quote in 

the Complex Order Book. Additionally, 

the Exchange’s fees remain competitive 

with fees charged by other exchanges 

and are therefore reasonable and 

equitably allocated to those members 

that opt to direct orders to the Exchange 

rather than to a competing exchange. 

Specifically, the Exchange believes that 

its proposal to assess a ‘make’ fee of 

$0.32 per contract for AA, ABX, MSFT, 

MU, NVDA, VZ, and WFC when orders 

in these symbols interact with Priority 

Customers is reasonable and equitable 

because the fee is within the range of 

fees assessed by other exchanges 

employing similar pricing schemes. For 

example, the ‘make’ fee for a broker/ 

dealer complex order in MSFT when 

trading against a Priority Customer at 

NASDAQ OMX PHLX (‘‘PHLX’’) is 

$0.20 per contract 18 while the same 

order that is electronically delivered at 

the Chicago Board Options Exchange 

(‘‘CBOE’’) is $0.45 per contract.19

Furthermore, one of the primary goals of 

this fee change, as well as the fees 

adopted in SR–ISE–2011–81, is to 

maintain the attractive and competitive 

economics for Priority Customer 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 35 / Wednesday, February 22, 2012 / Notices 10581 

20 15 U.S.C. 78s(b)(3)(A)(ii). 

21 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

complex orders, while introducing an 

enhancement to the way complex orders 

trade on the Exchange. 

The Exchange also believes that it is 

reasonable and equitable to provide a 

two cent discount to ISE market makers 

on preferenced orders because this will 

provide an incentive for market makers 

to quote in the Complex Order Book. 

The Exchange believes that it is 

reasonable and equitable to continue to 

provide rebates for Priority Customer 

complex orders because paying a rebate 

will continue to attract additional order 

flow to the Exchange and thereby create 

liquidity that ultimately will benefit all 

market participants who trade on the 

Exchange. 

The Exchange believes that it is 

reasonable and equitable to charge the 

fees proposed herein as they are already 

applicable to complex orders in XOP, 

XLB and EFA; with this proposed rule 

change, the Exchange is simply 

extending its current fees to an 

additional seven symbols. Moreover, the 

Exchange believes that the proposed 

fees are fair, equitable and not unfairly 

discriminatory because the proposed 

fees are consistent with price 

differentiation that exists today at other 

options exchanges. The Exchange 

believes it remains an attractive venue 

for market participants to trade complex 

orders despite its proposed fee change 

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. 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 

Exchange 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 Exchange Act.20 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 Exchange 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 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 rulecomments@sec.gov. Please include File 

Number SR–ISE–2012–07 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–2012–07. 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– 

2012–07 and should be submitted on or 

before March 14, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–4084 Filed 2–21–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66401; File No. SR–NYSE– 

2012–03] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending 

Exchange Rule 123C(4) To Provide for 

How Certain Interest Is Included in the 

Calculation of MOC and LOC 

Imbalances 

February 15, 2012. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on February 

2, 2012, New York Stock Exchange LLC 

(‘‘NYSE’’ or the ‘‘Exchange’’) 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 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 Exchange proposes to amend 

Exchange Rule 123C(4) to provide for 

how certain interest is included in the 

calculation of MOC and LOC 


srobinson on DSK4SPTVN1PROD with NOTICES