Document ID: SEC-2010-0531-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2010-04-08T04:00Z

[Federal Register Volume 75, Number 67 (Thursday, April 8, 2010)]
[Notices]
[Pages 17980-17981]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7973]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61825; File No. SR-ISE-2010-23]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Amending the Direct Edge ECN Fee Schedule

April 1, 2010.
    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 March 24, 2010, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') 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 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 Exchange proposes to amend Direct Edge ECN's (``DECN'') fee 
schedule for ISE Members \3\ to (i) reflect pass through charges of 
other market centers; and (ii) make typographical and clarifying 
changes. All of the changes described herein are applicable to ISE 
Members.
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    \3\ References to ISE Members in this filing refer to DECN 
Subscribers who are ISE Members.
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    All of the changes described herein are applicable to ISE Members. 
The text of the proposed rule change is available on the Exchange's 
Internet Web site at http://www.ise.com.

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
    DECN, a facility of ISE, operates two trading platforms, EDGX and 
EDGA.\4\
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    \4\ This fee filing relates to the trading facility operated by 
ISE and not EDGA Exchange, Inc. and EDGX Exchange, Inc. Direct Edge 
ECN LLC (EDGA and EDGX) will cease to operate in its capacity as an 
electronic communications network following the commencement of 
operations of EDGA Exchange, Inc. and EDGX Exchange, Inc. as 
national securities exchanges.
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    In SR-ISE-2009-57,\5\ the Exchange adopted a fee of $0.0024 per 
share for securities priced at or above $1.00 which add liquidity to 
LavaFlow ECN (``LavaFlow'') and are routed from either EDGX or EDGA. 
Such a strategy is deemed a ROLF routing strategy, which is a 
destination specific routing strategy that will first sweep the EDGA or 
EDGX order book before being delivered to LavaFlow. A conforming 
amendment was made to the fee schedule to yield an ``M'' flag to 
account for this fee. Conversely, for liquidity that is routed through 
either EDGA or EDGX and removes liquidity from LavaFlow, the Exchange 
adopted a fee for ISE members of $0.0029 per share for securities 
priced at or above $1.00. Such situation will yield a flag of ``U.'' 
However, if an ISE member posts an average of 50,000 shares or more 
using a ROLF routing strategy, yielding flag M, then such ISE member's 
fee, when removing liquidity from LavaFlow, will decrease to $0.0022 
per share and yield flag U.
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    \5\ See Securities Exchange Act Release No. 60442 (August 5, 
2009), 74 FR 40249 (August 11, 2009) (SR-ISE-2009-57).
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    First, because the Exchange proposes to pass through to Exchange 
members the actual transaction fees assessed by away markets, the 
Exchange is proposing to amend its fees schedule to reflect LavaFlow's 
increase in fees. Effective March 1, 2010, LavaFlow increased its fees 
and thresholds for meeting the above-described tier. Members that 
remove liquidity from LavaFlow if the Member's attributable MPID 
executes a minimum of 100,000 shares (instead of 50,000 shares 
currently) average daily volume using strategy ROLF (yielding Flag M) 
will now be charged $0.0023 per share (instead of $0.0022 per share 
currently). The Exchange is proposing to pass through this change to 
its members by reflecting it in footnote 6 on the fee schedule.
    Secondly, effective April 1, 2010, the Nasdaq Stock Market updated 
its transaction fee schedule to introduce a unified removal rate 
($0.0030 per share executed) for all U.S. equities, across Tapes A, B, 
and C.\6\ As a result of this proposed change, the Exchange is 
proposing to make a conforming change to delete footnote number 8 on 
the ``2'' flag and re-number it as footnote number 7 since the Nasdaq 
Stock Market no longer differentiates its removal rate across Tapes A, 
B, and C.
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    \6\ See Equity Trader Alert 2010-12 (effective April 1, 2010).
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    Finally, the Exchange proposes to make the following typographical 
and clarifying changes to the schedule: (i) On flag H, for EDGA, 0.001 
is proposed to be changed to read ``0.0010'' to conform the numbering 
with the other fees on the schedule (emphasis added); (ii) in footnote 
number 6, delete an additional parenthesis at the end of the phrase 
``(yielding Flag U)''.
    The changes discussed in this filing will become operative on April 
1, 2010.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\7\ in general, and 
furthers the objectives of Section 6(b)(4),\8\ in particular, as 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. ISE notes that DECN operates in a highly competitive market 
in which market participants can readily direct order flow to competing 
venues if they deem fee levels at a particular venue to be

[[Page 17981]]

excessive. The proposed rule change reflects a competitive pricing 
structure designed to incent market participants to direct their order 
flow to DECN. Finally, the Exchange believes that the proposed rates 
are equitable in that they apply uniformly to all Members and provide 
higher rebates for higher volume thresholds, resulting from lower 
administrative costs. ISE believes the fees and credits remain 
competitive with those charged by other venues and therefore continue 
to be reasonable and equitably allocated to those members that opt to 
direct orders to DECN rather than competing venues.
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    \7\ 15 U.S.C. 78f.
    \8\ 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. 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 \9\ and Rule 19b-4(f)(2) \10\ 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 19b-4(f)(2).
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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 rule-comments@sec.gov. Please include 
File Number SR-ISE-2010-23 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-2010-23. 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,\11\ 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 
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-
2010-23 and should be submitted on or before April 29, 2010.
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    \11\ The text of the proposed rule change is available on ISE's 
Web site at http://www.ise.com, on the Commission's Web site at 
http://www.sec.gov, at ISE, and at the Commission's Public Reference 
Room.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7973 Filed 4-7-10; 8:45 am]
BILLING CODE 8011-01-P