[Federal Register Volume 74, Number 130 (Thursday, July 9, 2009)]
[Notices]
[Pages 33003-33004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16189]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60233; File No. SR-ISE-2009-44]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Order Granting Accelerated Approval to a 
Proposed Rule Change Relating to the Amounts That Direct Edge ECN, in 
Its Capacity as an Introducing Broker for Non-ISE Members, Passes 
Through to Such Non-ISE Members

July 2, 2009.
    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 June 30, 2009, the International Securities Exchange, LLC (the 
``Exchange'' or ``ISE'') filed with the Securities and Exchange 
Commission (``Commission'') a proposed rule change as described in 
Items I and II below, which Items have been prepared by ISE. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons, and is approving the 
proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the amounts that Direct Edge ECN 
(``DECN''), in its capacity as an introducing broker for non-ISE 
Members, passes through to such non-ISE Members.
    The text of the proposed rule change is available on the Exchange's 
Internet Web site at http://www.ise.com 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 III 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. On June 30, 2009, the ISE filed for immediate effectiveness a 
proposed rule change to amend DECN's fee schedule for ISE Members \3\ 
to: (1) Reinstate the Super Tier Rebates that apply to ISE Members 
whose transactions meet certain volume thresholds; \4\ (2) adopt new 
Ultra Tier Rebates that apply to ISE Members whose transactions meet 
certain other volume thresholds; \5\ (3) adopt a new fee of $0.0015 per 
share for securities priced at or above $1.00 any time the ROUQ or ROUC 
routing strategy is used on either EDGX or EDGA and this routing 
strategy results in an execution by an Enhanced Liquidity Provider; \6\ 
and (4) make certain other clean-up changes.\7\ The fee changes made 
pursuant to SR-ISE-2009-43 became operative on July 1, 2009.
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    \3\ References to ISE Members in this filing refer to DECN 
Subscribers who are ISE Members.
    \4\ In SR-ISE-2009-43, the Exchange amended the DECNs' fee 
schedule to include a per share rebate in securities reported to 
Tape A and Tape C of $0.003 for securities priced at or above $1.00 
when ISE Members add liquidity on EDGX if the ISE Member satisfies 
any of the following three criteria on a daily basis, measured 
monthly: (i) Adding 40,000,000 shares or more on either EDGX, EDGA 
or EDGX and EDGA combined; (ii) adding 20,000,000 shares or more on 
either EDGX, EDGA or EDGX and EDGA combined and routing 20,000,000 
shares or more through EDGA; or (iii) adding 10,000,000 shares or 
more of liquidity to EDGX, so long as added liquidity on EDGX is at 
least 5,000,000 shares greater than the previous calendar month.
    \5\ In SR-ISE-2009-43, the Exchange adopted Ultra Tier Rebates 
that provide ISE Members 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 satisfies one of the following criteria on a 
daily basis, measured monthly: (i) Adding 100,000,000 shares or more 
on EDGX; or (ii) adding 50,000,000 shares or more of liquidity to 
EDGX, so long as added liquidity on EDGX is at least 20,000,000 
shares greater than the previous calendar month. The liquidity 
required to qualify for criteria (i) above shall be adjusted in the 
event that Total Consolidated Volume (``TCV''), defined as volume 
reported by all exchanges and trade reporting facilities to the 
consolidated transaction reporting plans for Tape A, B and C 
securities, falls below an average of 10,000,000,000 shares per day 
(``Target TCV'') in the relevant calendar month. In such 
circumstances, the adjusted amount of liquidity required to qualify 
under criteria (i) above shall be the percentage that actual 
reported TCV represents of Target TCV, multiplied by 100,000,000.
    \6\ See SR-ISE-2009-43.
    \7\ Id.
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    In its capacity as a member of ISE, DECN currently serves as an 
introducing broker for the non-ISE Member subscribers of DECN to access 
EDGX and EDGA. DECN, as an ISE Member and introducing broker, receives 
rebates and is assessed charges from DECN for transactions it executes 
on EDGX or EDGA in its capacity as introducing broker for non-ISE 
Members. Since the amounts of such rebates and charges were changed 
pursuant to SR-ISE-2009-43, DECN wishes to make corresponding changes 
to the amounts it passes through to non-ISE Member subscribers of DECN 
for which it acts as introducing broker. As a result, the per share 
amounts that non-ISE Member subscribers receive and are charged will be 
the same as the amounts that ISE Members receive and are charged.
    ISE is seeking accelerated approval of this proposed rule change, 
as well as a retroactive effective date of July 1, 2009. ISE represents 
that this proposal will ensure that both ISE Members and non-ISE 
Members (by virtue of the pass-through described above) will in effect 
receive and be charged equivalent amounts and that the imposition of 
such

[[Page 33004]]

amounts will begin on the same July 1, 2009 start date.
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, in that 
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, this proposal will ensure that dues, 
fees and other charges imposed on ISE Members are equitably allocated 
to both ISE Members and non-ISE Members (by virtue of the pass-through 
described above).
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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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. 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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7"><span class="__cf_email__" data-cfemail="9fedeaf3fab2fcf0f2f2faf1ebecdfecfafcb1f8f0e9">[email protected]</span></a>. Please include 
File No. SR-ISE-2009-44 on the subject line.

Paper Comments

    <bullet> 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-2009-44. 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 inspection and 
copying 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 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-2009-44 and should be 
submitted on or before July 30, 2009.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    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.\10\ 
Specifically, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(4) \11\ of the Act, which requires that 
the rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees, and other charges among members 
and issuers and other persons using its facilities.
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    \10\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C 78c(f).
    \11\ 15 U.S.C. 78f(b)(4).
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    As described more fully above, ISE recently amended DECN's fee 
schedule for ISE Members to, among other things, reinstate volume 
thresholds applicable to the Super Tier Rebates, adopt a new Ultra Tier 
Rebate, and adopt a new fee in connection with the use of the ROUQ and 
ROUC routing strategies.\12\ The fee changes made pursuant to the 
Member Fee Filing became operative on July 1, 2009. DECN receives 
rebates and is charged fees for transactions it executes on EGDX or 
EDGA in its capacity as an introducing broker for its non-ISE member 
subscribers.
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    \12\ See File No. SR-ISE-2009-43 (the ``Member Fee Filing'').
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    The current proposal, which will apply retroactively to July 1, 
2009, will allow DECN to pass through the revised rebates and fees to 
the non-ISE member subscribers for which it acts an introducing broker. 
The Commission finds that the proposal is consistent with the Act 
because it will provide rebates and charge fees to non-ISE member 
subscribers that are equivalent to those established for ISE member 
subscribers in the Member Fee Filing.\13\
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    \13\ Id.
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    ISE has requested that the Commission find good cause for approving 
the proposed rule change prior to the thirtieth day after publication 
of notice of filing thereof in the Federal Register. As discussed 
above, the proposal will allow DECN to pass through to non-ISE member 
subscribers the revised rebate and fees established for ISE member 
subscribers in the Member Fee Filing, resulting in equivalent rebates 
and fees for ISE member and non-member subscribers. In addition, 
because the proposal will apply the revised rebates and fees 
retroactively to July 1, 2009, the revised rebates and fees will have 
the same effective date, thereby promoting consistency in the DECN's 
fee schedule. Accordingly, the Commission finds good cause, pursuant to 
Section 19(b)(2) of the Act, for approving the proposed rule change 
prior to the thirtieth day after the date of publication of notice of 
filing thereof in the Federal Register.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change (SR-ISE-2009-44) be, and hereby 
is, approved on an accelerated basis.
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    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-16189 Filed 7-8-09; 8:45 am]
BILLING CODE 8010-01-P


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