Document ID: SEC-2012-0460-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2012-03-20T04:00Z

[Federal Register Volume 77, Number 54 (Tuesday, March 20, 2012)]
[Notices]
[Pages 16287-16288]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6615]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66590; File No. SR-ISE-2012-12]

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

March 14, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is 
hereby given that on February 29, 2012, 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 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 uses 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) 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 only 
order entry and listening are functionalities available 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 entered by that Market Maker. 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 a standardized fee of $1,000 
per month for each quoting session of up to 1.8 million quotes per day, 
on average for a month, including for any incremental usage. For 
example, a Market Maker with 10 logins currently pays $10,000 in fees 
as long as it quotes on average 18 million quotes or less per day. If 
that Market Maker instead sends an average of 20 million quotes per day 
during a month, its fees would total $12,000 for a total of 12 
sessions, with the extra 2 million quotes per day counting towards two 
additional sessions.
    The Exchange now proposes to lower the quote allowance for each 
login session from 1.8 million quotes per day to 1.5 million quotes per 
day, including the quote allowance for each incremental login. The 
Exchange is not proposing any changes to the fee charged for each login 
session. The fee for each login session will remain at $1,000 per 
month. With this proposed rule change, ISE expects to raise revenue to 
offset the lower quoting volume at the Exchange.
    The Exchange has designated this proposal to be operative on March 
1, 2012.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Schedule of 
Fees is consistent with Section 6(b) of the

[[Page 16288]]

Act \6\ in general, and furthers the objectives of Section 6(b)(4) of 
the Act \7\ 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 allocating the 
same quoting allowance to all Members. The Exchange further believes 
that its proposal to lower the quote allowance per each login is both 
equitable and reasonable as it will help the Exchange manage quote 
message traffic. The Exchange believes that Market Makers are generally 
quoting more efficiently on the Optimise trading platform and does not 
believe that lowering the quoting allowance will impact Market Makers 
adversely from conducting their activity on the Exchange. Further, the 
Exchange's proposal does not preclude Members from obtaining additional 
logins if they have a need beyond the quoting allowance allocated per 
each login.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 Exchange 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 Exchange Act.\8\ 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 Exchange 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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    \8\ 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 Exchange 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-2012-12 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-2012-12. 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 
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-2012-12 and should be 
submitted on or before April 10, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6615 Filed 3-19-12; 8:45 am]
BILLING CODE 8011-01-P