Document ID: SEC-2015-0739-0001
Agency: sec
Document Type: Notice
Title: Self-RegulatoryOrganizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2015-04-30T04:00Z

[Federal Register Volume 80, Number 83 (Thursday, April 30, 2015)]
[Notices]
[Pages 24300-24302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10038]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74804; File No. SR-ISE-2015-15]

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

April 24, 2015.
    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 April 10, 2015, 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 amend the Schedule of Fees as described in more 
detail below. 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 as described in more detail below.
1. Market Maker Fees & Tier Discounts
    The Exchange charges a taker fee for regular orders in Select 
Symbols \3\ that is $0.42 per contract for Market Maker \4\ orders, 
including Market Maker Plus \5\ orders, $0.45 per contract for Non-ISE 
Market Maker,\6\ Firm Proprietary \7\/Broker-Dealer,\8\ and 
Professional Customer \9\ orders, and $0.30 per contract for Priority 
Customer \10\ orders. The Exchange now proposes to increase this taker 
fee to $0.44 per contract for Market Maker orders, including Market 
Maker Plus orders.
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    \3\ ``Select Symbols'' are options overlying all symbols listed 
on the ISE that are in the Penny Pilot Program.
    \4\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule 
100(a)(25).
    \5\ A Market Maker Plus is a Market Maker who is on the National 
Best Bid or National Best Offer at least 80% of the time for series 
trading between $0.03 and $3.00 (for options whose underlying 
stock's previous trading day's last sale price was less than or 
equal to $100) and between $0.10 and $3.00 (for options whose 
underlying stock's previous trading day's last sale price was 
greater than $100) in premium in each of the front two expiration 
months. A Market Maker's single best and single worst quoting days 
each month based on the front two expiration months, on a per symbol 
basis, will be excluded in calculating whether a Market Maker 
qualifies for this rebate, if doing so will qualify a Market Maker 
for the rebate.
    \6\ A ``Non-ISE Market Maker'' is a market maker as defined in 
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended, 
registered in the same options class on another options exchange.
    \7\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \8\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account.
    \9\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
    \10\ A ``Priority Customer'' is a person or entity that is not a 
broker/dealer in securities, and does not place more than 390 orders 
in listed options per day on average during a calendar month for its 
own beneficial account(s), as defined in ISE Rule 100(a)(37A).
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    The Exchange also charges Market Makers a maker/taker fee and a fee 
for Crossing Orders \11\ that is $0.22 per contract for regular orders 
in Non-Select Symbols \12\ as well as regular and complex orders in 
Foreign Currency (``FX'') Option Symbols.\13\ In addition, Market 
Makers that execute a monthly volume of 250,000 contracts or more are 
entitled to a discounted rate of $0.15 per contract (together, ``Market 
Maker Discount Tiers''). The Exchange now proposes to increase these 
fees. In particular, applicable Market Maker orders will now be charged 
a fee of $0.25 per contract, subject to a discounted rate of $0.20 per 
contract for Market Makers that meet the volume threshold described 
above.
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    \11\ The fee for Crossing Orders applies to Crossing Orders 
other than PIM orders of 100 or fewer contracts, which are billed 
separately.
    \12\ ``Non-Select Symbols'' are options overlying all symbols 
excluding Select Symbols.
    \13\ Fees in FX options do not apply to Early Adopter Market 
Makers. Market Maker orders sent by an Electronic Access Member 
(``EAM'') are charged separately.
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2. Fees for Firm Proprietary/Broker-Dealer, Non-ISE Market Maker, & 
Professional Customer Orders
    The Exchange also charges a maker/taker fee for regular orders in 
Non-Select Symbols as well as regular and complex orders in FX Option 
Symbols that is $0.30 per contract for Firm Proprietary/Broker-Dealer, 
and Professional Customer orders, and $0.45 per contract for Non-ISE 
Market Maker orders. The Exchange now proposes to increase fees for 
each of these market participants to $0.50 per contract.
3. Complex Order Maker Fees
    The Exchange charges a maker fee for complex orders in Non-Select 
Symbols that is $0.10 per contract for Market Maker, Firm Proprietary/
Broker-Dealer, and Professional Customer orders, and $0.20 per contract 
for Non-ISE Market Maker orders, in each case when trading against 
other non-Priority Customer orders. The Exchange now proposes to 
increase this maker fee to $0.20 per contract for Market Maker, Firm 
Proprietary/Broker-Dealer, and Professional Customer orders, in line 
with the current fees charged for Non-ISE Market Maker orders.

[[Page 24301]]

    The Exchange also charges a uniform maker fee of $0.43 per contract 
for non-Priority Customer orders that trade against Priority Customer 
orders in Complex Quoting Symbols,\14\ i.e., symbols in which Market 
Makers can enter quotes in the complex order book. In addition, Market 
Makers receive a discount of $0.02 per contract in Complex Quoting 
Symbols when trading against Priority Customer orders preferenced to 
them in the complex order book. The Exchange now proposes to eliminate 
these special fees applicable to Complex Quoting Symbols. As such, Non-
Priority Customer orders in Complex Quoting Symbols will now be charged 
applicable maker fee for Select Symbols when trading against Priority 
Customer orders. This fee is $0.44 per contract for Non-ISE Market 
Maker, Firm Proprietary/Broker-Dealer and Professional Customer orders, 
and $0.43 per contract (subject to a preference discount) for Market 
Maker orders.
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    \14\ The Complex Quoting Symbols are AA, ABX, EFA, GLD, MSFT, 
MU, NVDA, VXX, VZ, WFC, XLB and XOP.
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4. Fee for Responses to Crossing Orders
    The Exchange charges all market participants a fee for responses to 
Crossing Orders that is $0.45 per contract for regular and complex 
orders in Select Symbols and FX Option Symbols,\15\ as well as regular 
orders in Non-Select Symbols. The Exchange now proposes to increase 
this response fee to $0.47 per contract. The Exchange is not proposing 
any changes to the response fees for complex orders in Non-Select 
Symbols, which will continue to be charged at a rate of $0.90 per 
contract for Market Maker orders, and $0.95 per contract for all other 
market participants.
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    \15\ The Exchange notes that Early Adopter Market Makers in FX 
option classes are not charged a fee for responses to Crossing 
Orders. The Exchange is not proposing any changes to response fees 
for Early Adopter Market Makers.
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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,\16\ in general, and 
Section 6(b)(4) of the Act,\17\ 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.
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    \16\ 15 U.S.C. 78f.
    \17\ 15 U.S.C. 78f(b)(4).
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1. Market Maker Fees & Tier Discounts
    The Exchange believes that it is reasonable and equitable to 
increase Market Maker fees (including applicable Market Maker Discount 
Tiers) as the proposed fees are designed to continue to be attractive 
to Market Makers that trade on ISE, and are within the range of fees 
charged by other options exchanges. Furthermore, the Exchange notes 
that while it is increasing Market Maker fees, Market Makers will 
continue to be charged fees that are generally lower than the fees 
applicable to other market participants, except for Priority Customers. 
The Exchange does not believe that it is unfairly discriminatory to 
provide lower fees to Market Maker orders as Market Makers are subject 
to additional requirements and obligations (such as quoting 
requirements) that other market participants are not.
2. Fees for Firm Proprietary/Broker-Dealer, Non-ISE Market Maker, & 
Professional Customer Orders
    The Exchange believes that it is reasonable and equitable to 
increase the fees charged to Firm Proprietary/Broker-Dealer, Non-ISE 
Market Maker, and Professional Customer orders as the proposed fees are 
designed to be attractive to market participants that choose to bring 
order flow to the ISE, and remain well within the range of fees charged 
by some of the Exchange's competitors. Furthermore, the Exchange does 
not believe that the proposed fees are unfairly discriminatory as the 
fees would apply to equally to Non-ISE Market Maker, Firm Proprietary/
Broker-Dealer, and Professional Customer orders. In connection with 
this proposed change, the Exchange notes that fees charged to Market 
Maker orders are also increasing (see above) but will remain lower than 
the fees described here for Firm Proprietary/Broker-Dealer, Non-ISE 
Market Maker, and Professional Customer orders. The Exchange does not 
believe that this is unfairly discriminatory for the reasons already 
discussed.
3. Complex Order Maker Fees
    The Exchange believes that the proposed change to increase complex 
order maker fees is reasonable and equitable as the proposed fees are 
set at levels that the Exchange believes will continue be attractive to 
market participants that provide liquidity in complex orders, and are 
within the range of fees charged by other options exchanges. Moreover, 
with the proposed change, Market Maker, Firm Proprietary/Broker-Dealer, 
and Professional Customer complex orders in Non-Select Symbols will now 
be charged the same maker fee as is currently applicable to Non-ISE 
Market Maker complex orders. As the proposed fees will be applied 
equally to all market participants that trade complex orders in these 
symbols, the Exchange further believes that this proposed change is not 
unfairly discriminatory. In addition, the Exchange believes that it is 
reasonable, equitable, and not unfairly discriminatory to eliminate 
special fees for Complex Quoting Symbols, as the Exchange believes that 
these fee discounts are no longer needed to attract liquidity in these 
symbols. Furthermore, the Exchange believes that it is not unfairly 
discriminatory to eliminate this distinction for Complex Quoting 
Symbols, as members will now be charged the standard maker fee for all 
complex orders in Select Symbols, including the Complex Quoting 
Symbols.
4. Fee for Responses to Crossing Orders
    The Exchange believes that the proposed fees for responses to 
Crossing Orders, which are being increased slightly, are appropriate to 
attract price improvement for Crossing Orders submitted to ISE, and 
therefore qualify as reasonable and equitable. In this regard, the 
Exchange notes that other options exchanges charge various fees for 
responses to Crossing Orders, and the fees proposed here are within the 
range of fees charged by these competitor markets. Additionally, the 
Exchange believes that the proposed response fees are not unfairly 
discriminatory as the Exchange will continue to charge a uniform 
response fee that is applicable to all market participants that respond 
to Crossing Orders in affected symbols. As is the case today, responses 
to Crossing Orders will be charged a higher fee than contra-side orders 
submitted as part of a crossing transaction. The Exchange continues to 
believe that this is reasonable, equitable, and not unfairly 
discriminatory as contra-side orders guarantee the agency order, and 
are subject to market risk during the time period that the agency order 
is exposed to other market participants for potential price 
improvement. Finally, the Exchange notes that it will continue to 
charge a higher fee for responses to complex Crossing Orders in Non-
Select symbols, which reflects the higher fees and rebates generally 
applicable to complex orders in these symbols.

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

    In accordance with Section 6(b)(8) of the Act,\18\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or

[[Page 24302]]

intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that the 
proposed fees and rebates are competitive with fees and rebates offered 
to orders executed on other options exchanges. 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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    \18\ 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 \19\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\20\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 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 proposal 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-2015-15 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-ISE-2015-15. 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 changes 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 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 No. SR-ISE-2015-15 and should be 
submitted on or before May 21, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-10038 Filed 4-29-15; 8:45 am]
 BILLING CODE 8011-01-P