Document ID: SEC-2014-1752-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2014-10-20T04:00Z

[Federal Register Volume 79, Number 202 (Monday, October 20, 2014)]
[Notices]
[Pages 62691-62693]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24778]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73349; File No. SR-ISE-2014-47]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Amend the Schedule of Fees

October 14, 2014.
    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 October 1, 2014, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange 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.
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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 ISE is proposing to amend its Schedule of Fees to introduce a 
new rebate tier for members that execute a specified volume of 
Qualified Contingent Cross (``QCC'') and/or other solicited crossing 
orders in a month. 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 purpose of the proposed rule change is to amend the Schedule of 
Fees to introduce a new rebate tier for members that execute a 
specified volume of QCC and/or other solicited crossing orders in a 
month. The Exchange's Schedule of Fees has separate tables for fees and 
rebates applicable to Standard Options and Mini Options. The Exchange 
notes that while the discussion below relates to rebates for Standard 
Options, the rebates for Mini Options, which are not discussed below, 
are and shall continue to be \1/10\th of the rebates for Standard 
Options.
    The Exchange offers members tiered rebates in QCC and/or other 
solicited crossing orders, i.e. orders executed in the solicitation, 
facilitation, or price improvement mechanisms where the agency order is 
executed against an order solicited from another party (the

[[Page 62692]]

``QCC and Solicitation Rebate''). These rebates are provided for each 
originating side of a crossing order, based on a member's volume in the 
crossing mechanisms during a given month.\3\ Currently, the rebate is 
$0.07 per contract for members that execute from 200,000 to 499,999 
originating contract sides, $0.08 per contract for members that execute 
from 500,000 to 699,999 originating contract sides, $0.09 per contract 
for members that execute from 700,000 to 999,999 originating contract 
sides, and $0.11 per contract for members that execute 1,000,000 
originating contract sides or more.\4\ The Exchange now proposes to 
extend this pricing initiative to members that execute from 100,000 to 
199,999 originating contract sides in a given month, who will now be 
eligible to receive a QCC and Solicitation Rebate of $0.05 per contract 
for their QCC and/or other solicited crossing orders.
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    \3\ Volume in Standard Options and Mini Options is combined to 
calculate the tier a Member has reached. Based on the tier achieved, 
the member is rebated for that tier for all the Standard Options 
traded at the Standard Option rebate amount and for all the Mini 
Options traded at the Mini Option rebate amount.
    \4\ The rebate is applied on all QCC and solicited crossing 
order contracts traded in a given month once a member reaches the 
specified volume threshold during that month.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and Section 
6(b)(4) of the Act,\6\ 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. 
Currently, members must execute a minimum of 200,000 originating 
contract sides in QCC and/or other solicited crossing orders, in order 
to qualify for a QCC and Solicitation Rebate. The Exchange believes 
that the proposed fee change is reasonable and equitable as members 
that meet the lower volume threshold established in this filing will 
now be entitled to receive a rebate for their QCC and/or solicited 
crossing orders. Moreover, lowering the threshold level at which 
members are entitled to receive a rebate for their QCC and/or solicited 
crossing orders will attract more of this order flow to the ISE, to the 
benefit of all members that trade on the Exchange. The Exchange does 
not believe that the proposed fee change is unfairly discriminatory as 
the rebate will be uniformly applied to all members that meet the 
volume threshold for the new tier. By lowering the volume threshold 
required to receive a QCC and Solicitation Rebate, the proposed fee 
change is designed to allow more members to qualify. At the same time, 
members who execute a higher volume of QCC and/or solicited crossing 
orders will continue to receive rebates at the current higher rates.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange notes that it has determined to charge fees and 
provide rebates in Mini Options at a rate that is \1/10\th the rate of 
fees and rebates the Exchange provides for trading in Standard Options. 
The Exchange believes it is reasonable and equitable and not unfairly 
discriminatory to assess lower fees and rebates to provide market 
participants an incentive to trade Mini Options on the Exchange. The 
Exchange believes the proposed rebates are reasonable and equitable in 
light of the fact that Mini Options have a smaller exercise and 
assignment value, specifically \1/10\th that of a standard option 
contract, and, as such, is providing fees and rebates for Mini Options 
that are \1/10\th of those applicable to Standard Options.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\7\ the Exchange does 
not believe that the proposed rule change will impose any burden on 
intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. To the contrary, 
the Exchange believes that the proposed rule change is pro-competitive 
as it is designed to attract additional crossing order flow by offering 
attractive rebates to members that bring their QCC and/or solicited 
crossing orders to the ISE. The Exchange operates in a highly 
competitive market in which market participants can readily direct 
their order flow to competing venues. In such an environment, the 
Exchange must continually review, and consider adjusting, its fees to 
remain competitive with other exchanges. For the reasons described 
above, the Exchange believes that the proposed fee changes reflect this 
competitive environment.
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    \7\ 15 U.S.C. 78f(b)(8).
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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 Act \8\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\9\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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    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 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 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 rule-comments@sec.gov. Please include 
File No. SR-ISE-2014-47 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2014-47. 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

[[Page 62693]]

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 
10:00 a.m. and 3:00 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-2014-47 and should be 
submitted by November 10, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24778 Filed 10-17-14; 8:45 am]
BILLING CODE 8011-01-P