Document ID: SEC-2013-2151-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2013-12-17T05:00Z

[Federal Register Volume 78, Number 242 (Tuesday, December 17, 2013)]
[Notices]
[Pages 76339-76341]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29960]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71053; File No. SR-ISE-2013-63]

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

December 12, 2013.
    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 27, 2013, 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 proposes to exclude from its ADV calculations any trading 
day on which the Exchange is closed early for holiday observance. 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 Exchange proposes to exclude from its average daily volume 
(``ADV'') calculations any trading day on which the Exchange is closed 
early for holiday observance. The Exchange provides volume-based tiered 
rebates for Priority Customer complex orders when these orders trade 
with non-Priority Customer orders in the complex order book, or trade 
with quotes and orders on the regular order book. These complex order 
rebates are provided to members in six tiers in both Standard and Mini 
Options based on the member's ADV in Priority Customer complex 
contracts. On September 30, 2013 the Exchange filed with the Commission 
an immediately

[[Page 76340]]

effective rule filing that, among other things, amended its Schedule of 
Fees to permit the Exchange to exclude from its ADV calculation, when 
determining Priority Customer complex order tiers, any day that the 
market is not open for the entire trading day.\3\ On November 1, 2013 
the Exchange further amended its Schedule of Fees to increase its 
Market Maker Plus rebate in Standard Options and Mini Options for 
Market Makers that meet the quoting requirements for Market Maker Plus 
and are affiliated with an Electronic Access Member that executes a 
total affiliated Priority Customer ADV of 200,000 contracts in a 
calendar month.\4\ When introducing this new Market Maker Plus rebate 
the Exchange also included language indicating that, for purposes of 
determining total affiliated Priority Customer ADV, any day that the 
market is not open for the entire trading day may be excluded from such 
calculation. Currently, each of these provisions allows the Exchange to 
exclude days where the Exchange declares a trading halt in all 
securities or honors a market-wide trading halt declared by another 
market. In these filings, however, the Exchange noted that, in contrast 
to the NASDAQ OMX PHLX, LLC (``PHLX'') and NASDAQ Options Market 
(``NOM'') filings on which this language was based,\5\ it would not 
exclude days on which the Exchange is closed early for holiday 
observance. The Exchange has since determined that it would be more 
equitable to exclude these days as well. While members are aware in 
advance of days subject to an early scheduled close--for example, the 
Friday after Thanksgiving--these are still low volume days, and 
including these days in the ADV calculation would have the detrimental 
effect of lowering members' daily and monthly ADV and thereby 
qualifying members for lower rebates. The Exchange believes that this 
effective cost increase during months where the Exchange has scheduled 
early market closes is undesirable to the Exchange and its members, and 
is therefore proposing to interpret this provision in the same manner 
as NOM and PHLX.\6\ The Exchange notes that it will not be making any 
textual changes to its fees as this proposed change brings its 
interpretation in line with that of other markets with substantially 
similar language to that already included in the Schedule Fees 
[sic].\7\
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    \3\ See Securities Exchange Act Release No. 70657 (October 10, 
2013), 78 FR 62899 (October 22, 2013) (ISE-2013-51).
    \4\ See Securities Exchange Act Release No. 70872 (November 14, 
2013), 78 FR 69718 (November 20, 2013) (ISE-2013-57).
    \5\ See Securities Exchange Act Release Nos. 70472 (September 
23, 2013), 78 FR 59738 (September 27, 2013) (PHLX-2013-93); 70470 
(September 23, 2013), 78 FR 59740 (September 27, 2013) (NASDAQ-2013-
117).
    \6\ Id.
    \7\ Id.
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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,\8\ in general, and Section 
6(b)(4) of the Act,\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. The 
Exchange believes that it is equitable and reasonable to eliminate days 
subject to an early scheduled closed [sic] from its ADV calculation 
because it preserves the Exchange's intent behind adopting volume-based 
pricing, and conforms the rules of the Exchange with those of other 
markets. The Exchange further believes that the proposed change is non-
discriminatory because it applies equally to all members and to all 
volume tiers.
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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

    In accordance with Section 6(b)(8) of the Act,\10\ 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 modification to its ADV 
calculation is pro-competitive and will result in lower total costs to 
end users, a positive outcome of competitive markets. Moreover, this 
proposed rule change conforms the rules of the Exchange with those of 
other markets that have adopted substantially similar rules for 
excluding certain days from their ADV calculations. 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 and rebates 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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    \10\ 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 \11\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\12\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 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 Number SR-ISE-2013-63 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-2013-63. 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

[[Page 76341]]

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 10:00 a.m. and 
3:00 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-2013-63 and should be 
submitted on or before January 7, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29960 Filed 12-16-13; 8:45 am]
BILLING CODE 8011-01-P