Document ID: SEC-2011-1938-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2011-12-14T05:00Z

[Federal Register Volume 76, Number 240 (Wednesday, December 14, 2011)]
[Notices]
[Pages 77881-77883]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32001]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65916; File No. SR-ISE-2011-80]

 Self-Regulatory Organizations; International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to API Fees

December 8, 2011.
    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 November 25, 2011, 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.
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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 regarding the 
Exchange's API or login fees. 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 ISE is proposing to amend its Schedule of Fees regarding the 
Exchange's API or login fees. ISE currently charges its Members a fee 
for each login that a Member utilizes for quoting or order entry, with 
a lesser charge for logins used for the limited purpose of 
``listening'' to broadcast messages.\3\ The Exchange currently has the 
following categories of authorized logins: (1) Quoting, order entry and 
listening (allowing the user to enter quotes, orders, and perform all 
other miscellaneous functions, such as setting parameters and pulling 
quotes); (2)

[[Page 77882]]

order entry and listening (allowing the user to enter orders and 
perform all other miscellaneous functions, such as setting parameters 
and pulling quotes (but not quoting)); and (3) listening (allowing the 
user only to query the system and to respond to broadcast messages).\4\ 
The Exchange notes that quoting, order entry and listening are 
functionalities available only to Exchange Market Makers, i.e., Primary 
Market Makers and Competitive Market Makers, while order entry and 
listening are functionalities available only to non-Market Makers, 
i.e., Electronic Access Members.
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    \3\ See Exchange Act Release No. 53522 (March 20, 2006), 71 FR 
14975 (March 24, 2006) (SR-ISE-2006-09).
    \4\ Id.
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    ISE Market Makers currently receive an allocation of 1.8 million 
quotes per day per user.\5\ If a Market Maker submits more quotes than 
those allocated, i.e., 1.8 million quotes per day per user as measured 
on average in a single month, the Market Maker is charged for 
additional users depending upon the number of quotes submitted. Each 
month, the total number of quotes submitted by a Market Maker is 
divided by the number of trading days, resulting in the average quotes 
per day. This number is then divided by 1.8 million and rounded up to 
the nearest whole number, resulting in an implied number of users based 
on quotes. Market Makers are charged on a monthly basis for the greater 
of (a) the greatest number of users that logged into the system, or (b) 
the number of implied users based on quotes.
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    \5\ See Exchange Act Release No. 64269 (April 8, 2011), 76 FR 
20752 (April 13, 2011) (SR-ISE-2011-21).
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    ISE currently charges Market Makers $1,200 per month for each 
quoting session for up to 1.8 million quotes per day, on average for a 
month. Market Makers are charged an additional user fee of $950 for 
each incremental usage of up to 1.8 million quotes per day per user. 
The Exchange now proposes to standardize this fee by charging a flat 
fee of $1,000 for each login session. Each login session will continue 
to permit a Market Maker to enter up to 1.8 million quotes per day. 
Market Makers who exceed their monthly quoting allowance will also be 
charged $1,000 per month for each subsequent usage of 1.8 million 
quotes per day in a month.
    Earlier this year, the Exchange launched an enhanced trading system 
called Optimise. Under its old trading system, prior to Optimise, the 
Exchange had an additional category of login known as a ``High 
Throughput User.'' \6\ A High Throughput User was a Market Maker who 
was allocated up to 3.6 million quotes per day in a month.\7\ A High 
Throughput User was able to enter quotes, orders, and perform all other 
miscellaneous functions, such as setting parameters and pulling 
quotes.\8\ High Throughput Users were charged a fee of $2,400 per month 
and an additional user fee of $1,900 for each incremental usage of up 
to 3.6 million quotes per day per user. Now that ISE has fully migrated 
to Optimise, the Exchange no longer has a need for the ``High 
Throughput User'' and proposes to remove it from its Schedule of Fees.
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    \6\ See Securities Exchange Act Release No. 55941 (June 21, 
2007), 72 FR 35535 (June 28, 2007) (SR-ISE-2007-36).
    \7\ See supra note 5.
    \8\ Id.
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    Additionally, now that the Exchange has transitioned to Optimise, 
Members no longer have a need to use their quote allocation across two 
trading platforms. As such, the Exchange proposes to delete text from 
its Schedule of Fees that permitted Members to use their quote 
allocation to access either the old trading system or Optimise.
    The Exchange has designated this proposal to be operative on 
December 1, 2011.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Schedule of 
Fees is consistent with Section 6(b) of the Act \9\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \10\ 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 Exchange believes that the proposal does not 
constitute an inequitable allocation of fees, as all similarly situated 
Members will be subject to the same fee structure, and access to the 
Exchange's market is offered on fair and non-discriminatory terms. In 
other words, the proposed rule change will treat similarly situated 
Members in the same manner by assessing the same fees to all Members 
based on their quoting needs. The Exchange further believes that its 
proposal is both equitable and reasonable as it will standardize the 
fees charged by the Exchange. With this proposed rule change, all 
Members will be assessed the same access fee.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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)(A)(ii) of the Act.\11\ 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 email to rule-comments@sec.gov. Please include 
File Number SR-ISE-2011-80 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-2011-80. 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

[[Page 77883]]

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-2011-80 and should be submitted on 
or before January 4, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32001 Filed 12-13-11; 8:45 am]
BILLING CODE 8011-01-P