26830 Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(1). 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

added to the Pilot Program in a manner 

consistent with CBOE’s rule filing SR– 

CBOE–2009–76 to extend and expand 

the Pilot Program. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change will 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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The proposed rule change is filed for 

immediate effectiveness pursuant to 

Section 19(b)(3)(A) 7 of the Securities 

Exchange Act of 1934 and Rule 19b– 

4(f)(1) 8 thereunder as it constitutes a 

stated policy, practice, or interpretation 

with respect to the meaning, 

administration, or enforcement of an 

existing rule. At any time within 60 

days of the filing of the 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–CBOE–2010–040 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–CBOE–2010–040. 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 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 such filing 

also will be available for inspection and 

copying at CBOE’s principal office and 

on its Web site at http://www.cboe.com. 

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 No. 

SR–CBOE–2010–040 and should be 

submitted on or before June 2, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–11257 Filed 5–11–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62048; File No. SR–ISE– 

2010–43] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change Relating to Fees and Rebates 

for Adding and Removing Liquidity 

May 6, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on May 3, 

2010, International Securities Exchange, 

LLC (‘‘ISE’’ or ‘‘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 Exchange. ISE has 

designated this proposal as one 

establishing or changing a member due, 

fee, or other charge imposed under 

Section 19(b)(3)(A)(ii) of the Act 3 and 

Rule 19b–4(f)(2) thereunder,4 which 

renders the proposal effective upon 

filing with the Commission. 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 its 

Schedule of Fees in order to (i) increase 

the number of options classes to be 

included in the Exchange’s current 

schedule of transaction fees and rebates 

for adding and removing liquidity; and 

(ii) adopt a rebate for certain orders 

executed in the Exchange’s Price 

Improvement Mechanism. 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, at the Commission’s 

Public Reference Room, and on the 

Commission’s Web site at http:// 

www.sec.gov. 

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 proposes to increase 

liquidity and attract order flow by 

amending its transaction fees and 

rebates for adding and removing 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices 26831 

5These fees are similar to the ‘‘maker/taker’’ fees 

currently assessed by NASDAQ OMX PHLX 

(‘‘PHLX’’). PHLX currently charges a fee for 

removing liquidity to the following class of market 

participants: (i) Customer, (ii) Directed Participant, 

(iii) Specialist, ROT, SQT and RSQT, (iv) Firm, (v) 

Broker-Dealer, and (vi) Professional. PHLX also 

provides a rebate for adding liquidity to the 

following class of market participants: (i) Customer, 

(ii) Directed Participant, (iii) Specialist, ROT, SQT 

and RSQT, and (iv) Professional. See Securities 

Exchange Act Release Nos. 61684 (March 10, 2010), 

75 FR 13189 (March 18, 2010); 61932 (April 16, 

2010), 75 FR 21375 (April 23, 2010); and 61961 

(April 22, 2010), 75 FR 22881 (April 30, 2010). See 

e-mail from Samir M. Patel, Assistant General 

Counsel, ISE, to Andrew Madar, Special Counsel, 

Commission, dated May 5, 2010. 

6A Market Maker Plus is a market maker who is 

on the National Best Bid or National Best Offer 80% 

of the time in that symbol during the current 

trading month for series trading between $0.03 and 

$5.00 in premium. The Exchange will determine 

whether a market maker qualifies as a Market Maker 

Plus at the end of each month by looking back at 

each market maker’s quoting statistics during that 

month. If at the end of the month, a market maker 

meets the 80% criteria, the Exchange will rebate 

$0.10 per contract for transactions executed by that 

market maker during that month. The Exchange 

will provide market makers a report on a daily basis 

with quoting statistics so that market makers can 

determine whether or not they are meeting the 80% 

criteria. 

7A 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, as amended (‘‘Exchange Act’’), registered in 

the same options class on another options 

exchange. 

8A Customer (Professional) is a person who is not 

a broker/dealer and is not a Priority Customer. 

9A 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). 

10The Chicago Board Options Exchange (‘‘CBOE’’) 

currently makes a similar distinction between large 

size customer orders that are fee liable and small 

size customer orders whose fees are waived. CBOE 

currently waives fees for customer orders of 99 

contracts or less in options on exchange-traded 

funds (‘‘ETFs’’) and Holding Company Depositary 

Receipts (‘‘HOLDRs’’) and charges a transaction fee 

for customer orders that exceed 99 contracts. See 

Securities Exchange Act Release No. 59892 (May 8, 

2009), 74 FR 22790 (May 14, 2009). 

11Although these options classes will no longer 

be subject to the tiered market maker transaction 

fees, the volume from these options classes will 

continue to be used in the calculation of the tiers 

so that this new pricing does not affect a market 

maker’s fee in all other names. 

12The concept of incenting market makers with 

a rebate is not novel. In 2008, the CBOE established 

a program for its Hybrid Agency Liaison whereby 

it provides a $0.20 per contact rebate to its market 

makers provided that at least 80% of the market 

maker’s quotes in a class during a month are on one 

side of the national best bid or offer. Market makers 

not meeting CBOE’s criteria are not eligible to 

receive a rebate. See Securities Exchange Act 

Release No. 57231 (January 30, 2008), 73 FR 6752 

(February 5, 2008). The CBOE has since lowered the 

criteria from 80% to 60%. See Securities Exchange 

Act Release No. 57470 (March 11, 2008), 73 FR 

14514 (March 18, 2008). 

13 ISE currently has a payment-for-order-flow 

(‘‘PFOF’’) program that helps the Exchange’s market 

makers establish PFOF arrangements with an 

Electronic Access Member (‘‘EAM’’) in exchange for 

that EAM preferencing some or all of its order flow 

to that market maker. This program is funded 

through a fee paid by Exchange market makers for 

each customer contract they execute, and is 

administered by both Primary Market Makers 

(‘‘PMM’’) and Competitive Market Makers (‘‘CMM’’), 

depending to whom the order is preferenced. 

14The Exchange assesses a Cancellation Fee of 

$2.00 to EAMs that cancel at least 500 orders in a 

month, for each order cancellation in excess of the 

total number of orders such member executed that 

month. All orders from the same clearing EAM 

executed in the same underlying symbol at the 

same price within a 300 second period are 

aggregated and counted as one executed order for 

purposes of this fee. This fee is charged only to 

customer orders. 

15See Securities Exchange Act Release No. 61731 

(March 18, 2010), 75 FR 14233 (March 24, 2010). 

liquidity (‘‘maker/taker fees’’).5 The 

Exchange’s maker/taker fees apply to 

the following categories of market 

participants: (i) Market Maker; (ii) 

Market Maker Plus; 6 (iii) Non-ISE 

Market Maker; 7 (iv) Firm Proprietary; 

(v) Customer (Professional); 8 (vi) 

Priority Customer,9 100 or more 

contracts; and (vii) Priority Customer, 

less than 100 contracts.10

Current Transaction Charges for Adding 

and Removing Liquidity 

The Exchange currently assesses a per 

contract transaction charge to market 

participants that remove, or ‘‘take,’’ 

liquidity from the Exchange in the 

following three options classes: 

PowerShares QQQ trust (‘‘QQQQ’’), 

Bank of America Corporation (‘‘BAC’’) 

and Citigroup, Inc. (‘‘C’’). The per 

contract transaction charge depends on 

the category of market participant 

submitting an order or quote to the 

Exchange that removes liquidity.11

Priority Customer Complex orders, 

regardless of size, are not assessed a fee 

for removing liquidity. 

The Exchange also currently assesses 

transaction charges for adding liquidity 

in options on QQQQ, BAC and C. 

Priority Customer orders, regardless of 

size, and Market Maker Plus orders are 

not assessed a fee for adding liquidity. 

Current Rebates 

In order to promote and encourage 

liquidity in options classes that are 

subject to maker/taker fees, the 

Exchange currently offers a $0.10 per 

contract rebate for Market Maker Plus 

orders sent to the Exchange.12

Additionally, the Exchange’s 

Facilitation Mechanism has an auction 

which allows for participation in a trade 

by members other than the member who 

entered the trade. To incentivize 

members, the Exchange currently offers 

a rebate of $0.15 per contract to 

contracts that do not trade with the 

contra order in the Facilitation 

Mechanism. 

Fee Changes 

The Exchange proposes to add the 

following 17 options classes to be 

included in the Exchange’s maker/taker 

fee schedule: Standard and Poor’s 

Depositary Receipts/SPDRs (‘‘SPY’’), 

iShares Russell 2000 (‘‘IWM’’), Financial 

Select Sector SPDR (‘‘XLF’’), Apple, Inc. 

(‘‘AAPL’’), General Electric Company 

(‘‘GE’’), JPMorgan Chase & Co. (‘‘JPM’’), 

Intel Corporation (‘‘INTC’’), Goldman 

Sachs Group, Inc. (‘‘GS’’), Research in 

Motion Limited (‘‘RIMM’’), AT&T, Inc. 

(‘‘T’’), Verizon Communications, Inc. 

(‘‘VZ’’), United States Natural Gas Fund 

(‘‘UNG’’), Freeport-McMoRan Copper & 

Gold, Inc. (‘‘FCX’’), Cisco Systems, Inc. 

(‘‘CSCO’’), Diamonds Trust, Series 1 

(‘‘DIA’’), Amazon.com, Inc. (‘‘AMZN’’) 

and United States Steel Corporation 

(‘‘X’’). 

Additionally, as noted above, to 

incentivize members, the Exchange 

currently offers a rebate of $0.15 per 

contract to contracts that do not trade 

with the contra order in the Exchange’s 

Facilitation Mechanism. The Exchange 

proposes to extend that $0.15 per 

contract rebate to contracts that do not 

trade with the contra order in the 

Exchange’s Price Improvement 

Mechanism. 

Other Fees 

• Fees for orders executed in the 

Exchange’s Facilitation, Solicited Order, 

Price Improvement and Block Order 

Mechanisms are for contracts that are 

part of the originating or contra order. 

• Complex orders executed in the 

Facilitation and Solicited Order 

Mechanisms are charged fees only for 

the leg of the trade consisting of the 

most contracts. 

• Payment for Order Flow fees will 

not be collected on transactions on 

QQQQ, BAC, C, SPY, IWM, XLF, AAPL, 

GE, JPM, INTC, GS, RIMM, T, VZ, UNG, 

FCX, CSCO, DIA, AMZN and X 

options.13

• The Cancellation Fee will continue 

to apply in QQQQ, BAC, C, SPY, IWM, 

XLF, AAPL, GE, JPM, INTC, GS, RIMM, 

T, VZ, UNG, FCX, CSCO, DIA, AMZN 

and X options.14

• The Exchange has a $0.20 per 

contract fee credit for members who, 

pursuant to Supplementary Material .02 

to Rule 803, execute a transaction in the 

Exchange’s flash auction as a response 

to orders from persons who are not 

broker/dealers and who are not Priority 

Customers.15 For QQQQ, BAC, C, SPY, 

IWM, XLF, AAPL, GE, JPM, INTC, GS, 

RIMM, T, VZ, UNG, FCX, CSCO, DIA, 

AMZN and X options, the Exchange 

proposes to lower the per contract fee 

credit for members who execute a 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

26832 Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices 

16See Securities Exchange Act Release No. 60817 

(October 13, 2009), 74 FR 54111 (October 21, 2009). 

17 15 U.S.C. 78s(b)(3)(A). 

18 17 CFR 240.19b–4(f)(2). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

transaction in the Exchange’s flash 

auction as a response to orders from 

persons who are not broker/dealers and 

who are not Priority Customers to $0.10 

per contract. 

• The Exchange has a $0.20 per 

contract fee for market maker orders 

sent to the Exchange by EAMs.16 Market 

maker orders sent to the Exchange by 

EAMs will be assessed a fee of $0.25 per 

contract for removing liquidity in 

QQQQ, BAC, C, SPY, IWM, XLF, AAPL, 

GE, JPM, INTC, GS, RIMM, T, VZ, UNG, 

FCX, CSCO, DIA, AMZN and X options 

and $0.10 per contract for adding 

liquidity in QQQQ, BAC, C, SPY, IWM, 

XLF, AAPL, GE, JPM, INTC, GS, RIMM, 

T, VZ, UNG, FCX, CSCO, DIA, AMZN 

and X options. 

The Exchange has designated this 

proposal to be operative on May 3, 2010. 

2. Statutory Basis 

The basis under the Exchange Act for 

this proposed rule change is the 

requirement under Section 6(b)(4) that 

an exchange have an equitable 

allocation of reasonable dues, fees and 

other charges among its 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 

QQQQ, BAC, C, SPY, IWM, XLF, AAPL, 

GE, JPM, INTC, GS, RIMM, T, VZ, UNG, 

FCX, CSCO, DIA, AMZN and X options. 

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. The Exchange believes that 

the proposed fees it charges for options 

overlying QQQQ, BAC, C, SPY, IWM, 

XLF, AAPL, GE, JPM, INTC, GS, RIMM, 

T, VZ, UNG, FCX, CSCO, DIA, AMZN 

and X remain competitive with fees 

charged by other exchanges and 

therefore continue to be reasonable and 

equitably allocated to those members 

that opt to direct orders to the Exchange 

rather than to a competing exchange. 

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 17 and Rule 19b–4(f)(2) 18

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–2010–43 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, Station Place, 100 F Street, 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–ISE–2010–43. 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 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 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 

publicly available. All submissions 

should refer to File Number SR–ISE– 

2010–43 and should be submitted on or 

before June 2, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–11254 Filed 5–11–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62052; File No. SR– 

NYSEArca–2010–38] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Arca, Inc. to Clarify, Eliminate, Revise, 

or Delete Certain Out-Dated or 

Obsolete Rules 

May 6, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on April 28, 

2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘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. 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES