Document ID: SEC-2013-0668-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2013-04-08T04:00Z

[Federal Register Volume 78, Number 67 (Monday, April 8, 2013)]
[Notices]
[Pages 20988-20997]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08092]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69270; File No. SR-ISE-2013-28]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Establish Fees and Rebates for Mini Options

April 2, 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 March 21, 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 amend its Schedule of Fees to establish fees 
for Mini Options. 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
    ISE recently amended its rules to allow for the listing of Mini 
Options on SPDR S&P 500 (``SPY''), Apple, Inc. (``AAPL''), SPDR Gold 
Trust (``GLD''), Google Inc. (``GOOG'') and Amazon.com Inc. 
(``AMZN'').\3\ In the Mini Options Filing, the Exchange represented to 
the Commission that ``the current Schedule of Fees is not applicable to 
Mini Options and that the Exchange will not begin to trade Mini Options 
without a prior submission of a proposed rule change to adopt 
transaction fees for Mini Options.'' \4\ The Exchange is therefore 
submitting this proposed rule change to establish fees and rebates 
applicable to Mini Options. This proposal also seeks to adopt a 
definition for Mini Options in the Preface of the Schedule of Fees, as 
options overlying ten (10) shares of AAPL, AMZN, GLD, GOOG, and SPY. 
For purposes of the Exchange's fee schedule, Mini Options in SPY, AAPL, 
GLD and AMZN are classified as Select Symbols \5\ while Mini Options in 
GOOG is classified as a Non-Select Symbol.\6\
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    \3\ Mini Options were approved for trading on September 28, 
2012. See Securities Exchange Act Release No. 67948 (September 28, 
2012), 77 FR 60735 (October 4, 2012) (SR-ISE-2012-58) (``Mini 
Options Filing'').
    \4\ Id.
    \5\ ``Select Symbols'' are options overlying all symbols listed 
on the ISE that are in the Penny Pilot Program.
    \6\ ``Non-Select Symbols'' are options overlying all symbols 
excluding Select Symbols.
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    Mini Options have a smaller exercise and assignment value due to 
the reduced number of shares they deliver as compared to standard 
option contracts. As such, the Exchange is proposing to adopt per 
contract fees and rebates that are 1/10th of the fees and rebates for 
standard option contracts, with some exceptions. Despite the

[[Page 20989]]

smaller exercise and assignment value of Mini Options, the cost to the 
Exchange to process quotes and orders in Mini Options, perform 
regulatory surveillance and retain quotes and orders for archival 
purposes is the same as for a standard contract. The Exchange believes 
that adopting fees and rebates for Mini Options that are in some cases 
lower than fees and rebates for standard option contracts, and in other 
cases the same as for standard option contracts, is appropriate, not 
unreasonable, not unfairly discriminatory and not burdensome to 
competition between participants, or between the Exchange and other 
exchanges that list and trade Mini Options.
A. Regular Order Fees and Rebates for Mini Options
    The Exchange proposes to adopt separate tables for fees and rebates 
applicable to regular orders in Mini Options. The fees and rebates 
listed in the table below are 1/10th of the fees and rebates currently 
applicable to regular orders for standard options in classes that 
overlie SPY, AAPL, GLD, AMZN, and GOOG:

                                                 Select Symbols
----------------------------------------------------------------------------------------------------------------
                                                                                                    Facilitation
                                                               Fee for      Fee for                      and
       Market participant             Maker      Taker fee     crossing    responses    PIM break-  solicitation
                                   rebate/fee                   orders    to crossing   up rebate     break-up
                                                                             orders                    rebate
----------------------------------------------------------------------------------------------------------------
Market Maker Plus...............      ($0.010)       $0.032       $0.020       $0.040          N/A           N/A
Market Maker....................        0.010         0.032        0.020        0.040          N/A           N/A
Non-ISE Market Maker (FarMM)....        0.010         0.036        0.020        0.040     ($0.025)      ($0.015)
Firm Proprietary/Broker-Dealer..        0.010         0.033        0.020        0.040      (0.025)       (0.015)
Professional Customer...........        0.010         0.033        0.020        0.040      (0.025)       (0.015)
Priority Customer...............        0.000         0.025        0.000        0.040      (0.025)       (0.015)
----------------------------------------------------------------------------------------------------------------

                                               Non-Select Symbols
----------------------------------------------------------------------------------------------------------------
                                                                                                      Fee for
                                                                                      Fee for      responses to
                       Market participant                               Fee          crossing        crossing
                                                                                      orders          orders
----------------------------------------------------------------------------------------------------------------
Market Maker....................................................          $0.018          $0.018          $0.018
Market Maker (for orders sent by Electronic Access Members).....           0.020           0.020           0.020
Non-ISE Market Maker (FarMM)....................................           0.045           0.020           0.045
Firm Proprietary/Broker-Dealer..................................           0.020           0.020           0.020
Professional Customer...........................................           0.020           0.020           0.020
Priority Customer...............................................           0.000           0.000           0.020
----------------------------------------------------------------------------------------------------------------

    For Mini Options in the Select Symbols, the following maker fees 
and rebates shall apply: (i) For Market Maker,\7\ Non-ISE Market 
Maker,\8\ Firm Proprietary/Broker-Dealer and Professional Customer \9\ 
orders, $0.010 per contract; (ii) for Priority Customer \10\ orders, 
$0.000 per contract; and (iii) for Market Maker Plus \11\ orders, a 
rebate of $0.010 per contract. For Mini Options in the Select Symbols, 
the following taker fees shall apply: (i) For Market Maker and Market 
Maker Plus orders, $0.032 per contract; (ii) for Non-ISE Market Maker 
orders, $0.036 per contract; (iii) for Firm Proprietary/Broker-Dealer 
and Professional Customer orders, $0.033 per contract; and (iv) for 
Priority Customer orders, $0.025 per contract.
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    \7\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule 
100(a)(25).
    \8\ A Non-ISE Market Maker, or Far Away Market Maker 
(``FarMM''), is a market maker as defined in Section 3(a)(38) of the 
Securities Exchange Act of 1934 registered in the same options class 
on another options exchange.
    \9\ A Professional Customer is a person who is not a broker/
dealer and is not a Priority Customer.
    \10\ A Priority Customer is defined in ISE Rule 100(a)(37A) as 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).
    \11\ In order to promote and encourage liquidity in Mini Options 
in the Select Symbols, the Exchange proposes to adopt a $0.010 per 
contract rebate to Market Makers if the quotes they sent to the 
Exchange qualify the Market Maker to become a Market Maker Plus. A 
Market Maker Plus is a Market Maker who is on the National Best Bid 
or National Best Offer 80% of the time for series trading between 
$0.03 and $5.00 (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 $5.00 (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 and 80% of the 
time for series trading between $0.03 and $5.00 (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 $5.00 (for options 
whose underlying stock's previous trading day's last sale price was 
greater than $100) in premium for all expiration months in that 
symbol during the current trading month. A Market Maker's single 
best and single worst overall quoting days each month, on a per 
symbol basis, is excluded in calculating whether a Market Maker 
qualifies for this rebate, if doing so will qualify a Market Maker 
for the rebate.
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    Additionally, the Exchange proposes to charge Market Maker, Market 
Maker Plus, Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and 
Professional Customers a fee of $0.020 per contract ($0.000 per 
contract for Priority Customers) for regular Crossing Orders for Mini 
Options in the Select Symbols, and a fee of $0.040 per contract to all 
market participants for regular Responses to Crossing Orders for Mini 
Options in the Select Symbols.
    The Exchange also proposes to adopt a rebate of $0.025 per contract 
for contracts that are submitted to the Price Improvement Mechanism 
that do not trade with their contra order for Mini Options in the 
Select Symbols, and a rebate of $0.015 per contract for contracts that 
are submitted to the Facilitation and Solicited Order Mechanisms that 
do not trade with their contra order for Mini Options in the Select 
Symbols except when those contracts trade against pre-existing orders 
and quotes on the Exchange's orderbook.
    For Mini Options in Non-Select Symbols, the following fees shall 
apply: (i) For Market Maker orders, a fee of $0.018 per contract; (ii) 
for Market

[[Page 20990]]

Maker (for orders sent by Electronic Access Members), Firm Proprietary/
Broker-Dealer and Professional Customer orders, a fee of $0.020 per 
contract; (iii) for Non-ISE Market Maker orders, a fee of $0.045 per 
contract; and (iv) for Priority Customer orders, a fee of $0.000 per 
contract.
    Additionally, for regular Crossing Orders for Mini Options in Non-
Select Symbols, the following fees shall apply: (i) Ct Market Makers, a 
fee of $0.018 per contract; (ii) for Market Maker (for orders sent by 
Electronic Access Members), Non-ISE Market Maker, Firm Proprietary/
Broker-Dealer and Professional Customers, a fee of $0.020 per contract; 
and (iii) for Priority Customers, a fee of $0.000 per contract. For 
regular Responses to Crossing Orders for Mini Options in Non-Select 
Symbols, the following fees shall apply: (i) For Market Makers, $0.018 
per contract; (ii) for Non-ISE Market Maker, $0.045 per contract; and 
(iii) for Market Maker (for orders sent by Electronic Access Members), 
Firm Proprietary/Broker-Dealer, Professional Customer and Priority 
Customers, a fee of $0.020 per contract.
    Further, the Exchange currently charges Primary Market Makers 
(PMMs) a transaction fee for standard options in Non-Select Symbols 
when they trade report a Priority Customer or Professional Customer 
order in accordance with their obligation to provide away market price 
protection. This fee shall also apply to Mini Options in Non-Select 
Symbols. On the other hand, for standard options in the Select Symbols, 
PMMs do not receive a maker rebate nor pay a taker fee when trade 
reporting. With this proposed rule change, PMMs in Mini Options in the 
Select Symbols will also not receive a maker rebate nor pay a taker fee 
when trade reporting.
PMM Linkage Credit
    The Exchange also proposes to adopt a $0.020 per contract fee 
credit to PMMs for execution of Priority Customer orders in Mini 
Options in Non-Select Symbols \12\--for classes in which it serves as a 
PMM--that send an Intermarket Sweep Order to other exchanges. This 
credit will be applied regardless of the transaction fee charged by a 
destination market. For PMMs executing Priority Customer orders in Mini 
Options in the Select Symbols, this credit will be equal to the fee 
charged by the destination market, and for executing Professional 
Customer orders, the fee credit will be equal to the fee charged by a 
destination market, but not more than $0.045 per contract.
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    \12\ This fee credit applies to only GOOG as GOOG is the only 
Non-Select Symbol approved as a Mini Option.
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Credit for Responses to Flash Orders
    The Exchange proposes to adopt a $0.020 per contract credit for 
responses to Flash Orders for Mini Option in Non-Select Symbols when 
trading against Professional Customers. For Mini Options in the Select 
Symbols, the per contract fee credit for responses to Flash Orders will 
be (i) $0.010 per contract when trading against Priority Customers; and 
(ii) $0.010 per contract when trading against Professional Customers.
Payment for Order Flow
    The Exchange proposes to adopt a payment for order flow (PFOF) fee 
of $0.07 per contract, applicable to Market Makers when trading against 
Priority Customer orders in Mini Options in Non-Penny Pilot 
Symbols.\13\ The Exchange will not charge a PFOF fee for trading Mini 
Options in the Select Symbols.
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    \13\ For the purposes of the PFOF fee noted in the Schedule of 
Fees, GOOG is a Non-Penny Pilot Symbol because all Non-Select 
Symbols are Non-Penny Pilot Symbols. Therefore, the PFOF fee 
proposed in this filing will apply only to Mini Options in GOOG.
---------------------------------------------------------------------------

Route-Out Fees
    Consistent with Distributive Linkage and pursuant to ISE rules, 
PMMs have an obligation to address customer \14\ orders when there is a 
better market displayed on another exchange. ISE's PMMs meet this 
obligation via the use of Intermarket Sweep Orders (``ISOs''). With the 
costs associated with servicing customer orders that must be executed 
at another exchange, the Exchange currently charges a fee, at a rate of 
$0.45 per contract for Professional Customers and $0.35 per contract 
for Priority Customers, for executions that result from the PMM routing 
ISOs to another exchange. This fee applies to standard options in all 
symbols traded on the Exchange. At this time, the Exchange proposes to 
charge 1/10th of the fee for routing out Mini Options than the fee 
charged by the Exchange for routing out standard options. Specifically, 
the Exchange proposes to adopt a route-out fee of $0.045 per contract 
for Professional Customer orders in Mini Options that are routed out 
for execution and a fee of $0.035 per contract for Priority Customer 
orders in Mini Options that are routed out for execution.
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    \14\ Pursuant to ISE Rule 1900(f) of the Distributive Linkage 
rules, a customer is an individual or organization that is not a 
broker-dealer.
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B. Complex Order Fees and Rebates for Mini Options
    The Exchange proposes to adopt separate tables for fees and rebates 
applicable to complex orders in Mini Options. The fees and rebates 
listed in the table below are 1/10th of the fees and rebates currently 
applicable to complex orders for standard options in classes that 
overlie SPY, AAPL, GLD, AMZN, and GOOG:

                                                                         Rebates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Rebate for
                                                                                                  Priority       Rebate for
                                                                                                  Customer        Priority                  Facilitation
                                                         Rebate for                              orders that      Customer                       and
                                                           Select                  Rebate for    trade with      orders that   PIM  Break-  solicitation
                  Market participant                      Symbols     Rebate for   Non-select    quotes and      trade with     up  Rebate     Break-up
                                                         (excluding      SPY        Symbols    orders on  the    quotes and     for Select   Rebate for
                                                            SPY)                                   regular     orders on  the    Symbols       Select
                                                                                                  orderbook        regular                     Symbols
                                                                                                 (excluding     orderbook In
                                                                                                    SPY)             SPY
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker..........................................          N/A          N/A          N/A             N/A             N/A          N/A           N/A
Non-ISE Market Maker (FarMM)..........................          N/A          N/A          N/A             N/A             N/A     ($0.025)      ($0.015)
Firm Proprietary/Broker-Dealer........................          N/A          N/A          N/A             N/A             N/A      (0.025)       (0.015)
Professional Customer.................................          N/A          N/A          N/A             N/A             N/A      (0.025)       (0.015)

[[Page 20991]]

 
Priority Customer Complex ADV 0-39,999................     ($0.033)     ($0.036)     ($0.066)        ($0.006)        ($0.007)      (0.025)       (0.015)
Priority Customer Complex ADV 40,000-74,999...........      (0.035)      (0.038)      (0.072)         (0.008)         (0.009)      (0.025)       (0.015)
Priority Customer Complex ADV 75,000-124,999..........      (0.037)      (0.039)      (0.075)         (0.009)         (0.010)      (0.025)       (0.015)
Priority Customer Complex ADV 125,000-224,999.........      (0.039)      (0.040)      (0.077)         (0.010)         (0.011)      (0.025)       (0.015)
Priority Customer Complex ADV 225,000+................      (0.040)      (0.041)      (0.078)         (0.011)         (0.012)      (0.025)       (0.015)
Incremental Priority Customer Complex ADV above             (0.001)      (0.001)      (0.001)         (0.000)         (0.000)      (0.000)       (0.000)
 225,000..............................................
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                                                   Maker Fees
----------------------------------------------------------------------------------------------------------------
                                                                   Maker Fee for
                                                                      Select                       Maker Fee for
                                                                   Symbols when    Maker Fee for    Non-Select
                                         Maker Fee    Maker Fee       trading        SPY when      symbols when
          Market Participant             for Select   for  Non-       against         trading         trading
                                          Symbols       select       Priority         against         against
                                                       Symbols       Customer        Priority        Priority
                                                                    (excluding       Customer        Customer
                                                                       SPY)
----------------------------------------------------------------------------------------------------------------
Market Maker..........................       $0.010       $0.010          $0.039          $0.039          $0.082
Non-ISE Market Maker (FarMM)..........        0.020        0.020           0.040           0.041           0.084
Firm Proprietary/Broker-Dealer........        0.010        0.010           0.040           0.041           0.084
Professional Customer.................        0.010        0.010           0.040           0.041           0.084
Priority Customer.....................        0.000        0.000           0.000           0.000           0.000
----------------------------------------------------------------------------------------------------------------

                                              Taker and Other Fees
----------------------------------------------------------------------------------------------------------------
                                                                                          Fee for      Fee for
                                     Taker Fee                 Taker Fee     Fee for     Responses    Responses
                                     for Select   Taker Fee    for  Non-     Crossing   to Crossing  to Crossing
        Market participant            Symbols      for SPY       Select       Orders     Orders for   Orders for
                                     (excluding                 Symbols      (largest      Select     non-Select
                                        SPY)                                leg only)     Symbols       Symbols
----------------------------------------------------------------------------------------------------------------
Market Maker......................       $0.039       $0.039       $0.082       $0.020       $0.040       $0.082
Non-ISE Market Maker (FarMM)......        0.040        0.041        0.084        0.020        0.040        0.084
Firm Proprietary/Broker-Dealer....        0.040        0.041        0.084        0.020        0.040        0.084
Professional Customer.............        0.040        0.041        0.084        0.020        0.040        0.084
Priority Customer.................        0.000        0.000        0.000        0.000        0.040       $0.000
----------------------------------------------------------------------------------------------------------------

    For complex orders in Mini Options in the Select Symbols and Non-
Select Symbols, the following maker fees shall apply: (i) $0.010 per 
contract for Market Maker, Firm Proprietary/Broker-Dealer and 
Professional Customer orders; (ii) $0.020 per contract for Non-ISE 
Market Maker orders; and (iii) $0.000 per contract for Priority 
Customer orders. For complex orders in Mini Options in the Select 
Symbols when trading against Priority Customers (excluding SPY), the 
following maker fees shall apply: (i) $0.039 per contract for Market 
Maker orders; (ii) $0.040 for Non-ISE Market Maker, Firm Proprietary/
Broker-Dealer and Professional Customer orders; and (iii) $0.000 per 
contract for Priority Customer orders. For complex orders in Mini 
Options in SPY when trading against Priority Customers, the following 
maker fees shall apply: (i) $0.039 per contract for Market Maker 
orders; (ii) $0.041 for Non-ISE Market Maker, Firm Proprietary/Broker-
Dealer and Professional Customer orders; and (iii) $0.000 per contract 
for Priority Customer orders. For complex orders in Mini Options in 
non-Select Symbols when trading against Priority Customers, the 
following maker fees shall apply: (i) $0.082 per contract for Market 
Maker orders; (ii) $0.084 for Non-ISE Market Maker, Firm Proprietary/
Broker-Dealer and Professional Customer orders; and (iii) $0.000 per 
contract for Priority Customer orders.
    For complex orders in Mini Options in the Select Symbols (excluding 
SPY), the following taker fees shall apply: (i) $0.039 per contract for 
Market Maker

[[Page 20992]]

orders; (ii) $0.040 for Non-ISE Market Maker, Firm Proprietary/Broker-
Dealer and Professional Customer orders; and (iii) $0.000 per contract 
for Priority Customer orders. For complex orders in Mini Options in 
SPY, the following taker fees shall apply: (i) $0.039 per contract for 
Market Maker orders; (ii) $0.041 for Non-ISE Market Maker, Firm 
Proprietary/Broker-Dealer and Professional Customer orders; and (iii) 
$0.000 per contract for Priority Customer orders. For complex orders in 
Mini Options in non-Select Symbols, the following taker fees shall 
apply: (i) $0.082 per contract for Market Maker orders; (ii) $0.084 for 
Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and Professional 
Customer orders; and (iii) $0.000 per contract for Priority Customer 
orders.
    Additionally, the Exchange proposes to charge Market Maker, Non-ISE 
Market Maker, Firm Proprietary/Broker-Dealer and Professional Customers 
a fee of: (i) $0.020 per contract ($0.000 per contract for Priority 
Customers) for Crossing Orders for complex orders in Mini Options; (ii) 
$0.040 per contract to all market participants for Responses to 
Crossing Orders for complex orders in Mini Options in the Select 
Symbols; and (iii) $0.082 per contract for Market Makers ($0.084 per 
contract for Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and 
Professional Customers and $0.000 per contract for Priority Customers) 
for Responses to Crossing Orders for complex orders in Mini Options in 
non-Select Symbols).
    The Exchange currently provides volume-based tiered rebates for 
Priority Customer complex orders in the Select Symbols (excluding SPY), 
in SPY, and in the Non-Select Symbols for standard options when these 
orders trade with non-Priority Customer orders in the complex order 
book. The Exchange proposes to extend this rebate program to Mini 
Options also, as follows:
    For Mini Options in Select Symbols (excluding SPY), the Exchange 
proposes to adopt a base rebate of $0.033 per contract, per leg, for 
Priority Customer complex orders when these orders trade with non-
Priority Customer complex orders in the complex order book. 
Additionally, members who achieve a certain level of average daily 
volume (ADV) of executed Priority Customer complex order contracts 
across all symbols during a calendar month will be provided a rebate of 
$0.035 per contract, per leg, in these symbols, if a Member achieves an 
ADV of 40,000 Priority Customer complex order contracts; $0.037 per 
contract, per leg, in these symbols, if a Member achieves an ADV of 
75,000 Priority Customer complex order contracts; $0.039 per contract, 
per leg, in these symbols, if a Member achieves an ADV of 125,000 
Priority Customer complex order contracts; and $0.040 per contract, per 
leg, in these symbols, if a Member achieves an ADV of 225,000 Priority 
Customer complex order contracts. Additionally, the Exchange also 
proposes to adopt a rebate of $0.001 per contract payable for 
incremental Priority Customer complex order volume when trading against 
non-Priority Customer complex orders in the complex order book above 
the highest tier for Mini Options in the Select Symbols (excluding 
SPY).
    For Mini Options in SPY, the Exchange proposes to adopt a base 
rebate of $0.036 per contract, per leg, for Priority Customer complex 
orders when these orders trade with non-Priority Customer complex 
orders in the complex order book. Additionally, members who achieve a 
certain level of ADV of executed Priority Customer complex order 
contracts across all symbols during a calendar month will be provided a 
rebate of $0.038 per contract, per leg, in these symbols, if a Member 
achieves an ADV of 40,000 Priority Customer complex order contracts; 
$0.039 per contract, per leg, in these symbols, if a Member achieves an 
ADV of 75,000 Priority Customer complex order contracts; $0.040 per 
contract, per leg, in these symbols, if a Member achieves an ADV of 
125,000 Priority Customer complex order contracts; and $0.041 per 
contract, per leg, in these symbols, if a Member achieves an ADV of 
225,000 Priority Customer complex order contracts. Additionally, the 
Exchange also proposes to adopt a rebate of $0.001 per contract payable 
for incremental Priority Customer complex order volume when trading 
against non-Priority Customer complex orders in the complex order book 
above the highest tier for Mini Options in SPY.
    For Mini Options in non-Select Symbols, the Exchange proposes to 
adopt a base rebate of $0.066 per contract, per leg, for Priority 
Customer complex orders when these orders trade with non-Priority 
Customer complex orders in the complex order book. Additionally, 
members who achieve a certain level of average daily volume (ADV) of 
executed Priority Customer complex order contracts across all symbols 
during a calendar month will be provided a rebate of $0.072 per 
contract, per leg, in these symbols, if a Member achieves an ADV of 
40,000 Priority Customer complex order contracts; $0.075 per contract, 
per leg, in these symbols, if a Member achieves an ADV of 75,000 
Priority Customer complex order contracts; $0.077 per contract, per 
leg, in these symbols, if a Member achieves an ADV of 125,000 Priority 
Customer complex order contracts; and $0.078 per contract, per leg, in 
these symbols, if a Member achieves an ADV of 225,000 Priority Customer 
complex order contracts. Additionally, the Exchange also proposes to 
adopt a rebate of $0.001 per contract payable for incremental Priority 
Customer complex order volume when trading against non-Priority 
Customer complex orders in the complex order book above the highest 
tier for Mini Options in the non-Select Symbols.
    Further, the Exchange currently provides volume-based tiered 
rebates for Priority Customer complex orders in all symbols for 
standard options when these orders trade against quotes or orders in 
the regular orderbook. The Exchange proposes to extend this rebate to 
Mini Options also, as follows:
    For Mini Options (excluding SPY), the Exchange proposes to adopt a 
base rebate of $0.006 per contract, per leg, for Priority Customer 
complex orders when these orders trade against quotes or orders in the 
regular orderbook. Additionally, members who achieve a certain level of 
ADV of executed Priority Customer complex order contracts across all 
symbols during a calendar month will be provided a rebate of $0.008 per 
contract, per leg, in these symbols, if a Member achieves an ADV of 
40,000 Priority Customer complex order contracts; $0.009 per contract, 
per leg, in these symbols, if a Member achieves an ADV of 75,000 
Priority Customer complex order contracts; $0.010 per contract, per 
leg, in these symbols, if a Member achieves an ADV of 125,000 Priority 
Customer complex order contracts; and $0.011 per contract, per leg, in 
these symbols, if a Member achieves an ADV of 225,000 Priority Customer 
complex order contracts.
    For Mini Options in SPY, the Exchange proposes to adopt a base 
rebate of $0.007 per contract, per leg, for Priority Customer complex 
orders when these orders trade against quotes or orders in the regular 
orderbook. Additionally, members who achieve a certain level of ADV of 
executed Priority Customer complex order contracts across all symbols 
during a calendar month will be provided a rebate of $0.009 per 
contract, per leg, in these symbols, if a Member achieves an ADV of 
40,000 Priority Customer complex order contracts; $0.010 per contract, 
per leg, in these symbols, if a Member achieves an ADV of 75,000 
Priority Customer complex order contracts; $0.011 per contract, per 
leg, in these

[[Page 20993]]

symbols, if a Member achieves an ADV of 125,000 Priority Customer 
complex order contracts; and $0.012 per contract, per leg, in these 
symbols, if a Member achieves an ADV of 225,000 Priority Customer 
complex order contracts.
    For each of the volume-based tiered rebates noted above, the 
highest rebate amount achieved by the Member for the current calendar 
month will apply retroactively to all Priority Customer complex order 
contracts that trade with non-Priority Customer complex orders in the 
complex order book executed by the Member during such calendar month, 
with the exception of the incremental rebate, as noted above. For 
purposes of these volume-based tiered rebates, volume in standard 
options and Mini Options will be combined to calculate the tier a 
Member has reached. Based on the tier achieved, the Member will be 
rebated for that tier for all the standard options traded at the 
standard option rebate amount and for all the Mini Options traded at 
the Mini Option rebate amount.
    The Exchange also proposes to adopt a rebate of $0.025 per contract 
for contracts that are submitted to the Price Improvement Mechanism 
that do not trade with their contra order for Mini Options in the 
Select Symbols, and a rebate of $0.015 per contract for contracts that 
are submitted to the Facilitation and Solicited Order Mechanisms that 
do not trade with their contra order for Mini Options in the Select 
Symbols except when those contracts trade against pre-existing orders 
and quotes on the Exchange's orderbook.
Firm Fee Cap
    The Exchange currently has a fee cap program that, subject to 
certain exclusions noted in the Schedule of Fees, is applicable across 
all products traded on ISE. Under the fee cap program, the Exchange 
caps proprietary transaction fees in all products traded on ISE, in the 
aggregate, at $75,000 per month per Member. All proprietary 
transactions, including non-ISE market maker transactions, that are 
part of a crossing transaction are eligible towards the fee cap. 
Crossing volume from regular and complex orders in Mini Options, such 
as orders executed in the Facilitation Mechanism, Price Improvement 
Mechanism, Solicited Order Mechanism, Block Order Mechanism and 
Qualified Contingent Cross orders in Mini Options, counts towards the 
fee cap. The Exchange proposes to extend the fee cap to also include 
proprietary transactions in Mini Options that are part of a crossing 
transaction.
    ISE also currently has a service fee of $0.01 per side on all 
transactions that are eligible for the fee cap. The service fee applies 
once a member reaches the fee cap level and applies to every contract 
side included in and above the fee cap. A member who does not reach the 
monthly fee cap is not charged the service fee. The service fee is not 
calculated in reaching the fee cap. Once the fee cap is reached, the 
service fee applies to both proprietary and other account designations 
\15\ in all ISE products in addition to those transactions that were 
included in reaching the fee cap. For Mini Options, the Exchange 
proposes to adopt a service fee of $0.001 per side on all transactions 
that are eligible for the fee cap.
---------------------------------------------------------------------------

    \15\ Other account designations include Prop-firm (Member 
trading for its own account and clearing in the F range at OCC), 
Prop-cust (Member trading for its own account and clearing in the C 
range at OCC), BD-firm (Member trading on behalf of another 
registered broker/dealer clearing in the F range at OCC), BD-cust 
(Member trading on behalf of another registered broker/dealer 
clearing in the C range at OCC), FarMM (Member trading on behalf of 
another registered broker/dealer clearing in the M range at OCC).
---------------------------------------------------------------------------

QCC and Solicitation Rebate
    The Exchange currently provides a rebate for Qualified Contingent 
Cross (``QCC'') orders and Solicitation orders for standard options to 
further encourage members to submit greater numbers of QCC orders and 
Solicitation orders to the Exchange. The Exchange proposes to extend 
that rebate incentive to Mini Options. With this proposed rule change, 
the Exchange will provide a rebate to members who reach a certain 
volume threshold in QCC orders and/or Solicitation orders in standard 
options and Mini Options during a month. Once a Member reaches a volume 
threshold, the Exchange will provide a rebate to that Member for all of 
its QCC and Solicitation contracts traded for that month. For purposes 
of this rebate, volume in standard options and Mini Options will be 
combined to calculate the tier a Member has reached. Based on the tier 
achieved, the Member will be rebated for that tier for all the standard 
options traded at the standard option rebate amount and for all the 
Mini Options traded at the Mini Option rebate amount, as provided in 
the following table:

------------------------------------------------------------------------
                                           Rebate for
      Originating contract sides            sandard      Rebate for Mini
                                            options          Options
------------------------------------------------------------------------
0 to 199,999..........................           $0.00           $0.000
200,000 to 499,999....................           (0.07)          (0.007)
500,000 to 699,999....................           (0.08)          (0.008)
700,000 to 999,999....................           (0.09)          (0.009)
1,000,000+............................           (0.11)          (0.011)
------------------------------------------------------------------------

    The rebate will be paid to the Member entering a qualifying order, 
i.e., a QCC order and/or a Solicitation order. The rebate applies to 
QCC orders and Solicitation orders in all symbols traded on the 
Exchange. Additionally, the threshold levels are based on the 
originating side so if an order is broken up and executed with multiple 
counter parties, all contracts of the originating side will be counted 
to reach the established threshold levels.
Complex Quoting in GLD
    The Exchange currently allows Market Makers to enter quotations for 
complex order strategies in the complex order book in a limited group 
of symbols (``Complex Quoting Symbols''), one of which is GLD, a Mini 
Option class. Given this enhancement to the complex order 
functionality, and in order to maintain a competitive fee and rebate 
structure for Priority Customer orders, the Exchange has adopted maker 
fees that apply to transactions in the complex order book when they 
interact with Priority Customer orders in options overlying the Complex 
Quoting Symbols, including GLD. Specifically, the Exchange currently 
charges a maker fee of $0.39 per contract for standard options in the 
Complex Quoting Symbols, including GLD. Of all the Complex Quoting 
Symbols, only GLD is approved for Mini Options trading and therefore, 
the Exchange proposes to

[[Page 20994]]

charge a maker fee of $0.039 per contract for Mini Options in GLD for 
Market Maker, Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and 
Professional Customer orders when these orders interact with Priority 
Customer orders. Priority Customer orders in GLD that trade in the 
complex order book are not charged a fee and do not receive a rebate 
when interacting with other Priority Customer orders.
Options Regulatory Fee
    The Exchange currently charges an Options Regulatory Fee (``ORF'') 
of $0.0042 per contract. The ORF is assessed to each member for all 
options transactions executed or cleared by the member that are cleared 
by The Options Clearing Corporation (``OCC'') in the customer range, 
regardless of the exchange on which the transaction occurs. The 
Exchange is proposing to charge the same rate for transactions in Mini 
options, $0.0042 per contract, since, as noted above, the costs to the 
Exchange to perform the necessary regulatory surveillance programs and 
procedures for Mini Options are the same as for standard option 
contracts. As such, the Exchange feels that it is appropriate to charge 
the ORF at the same rate as the standard option contract.
    The Exchange has designated this proposal to be operative on March 
18, 2013.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Schedule of 
Fees is consistent with Section 6(b) of the Act \16\ in general, and 
furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act \17\ 
in particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members and other persons using its 
facilities and does not unfairly discriminate between issuers, brokers 
or dealers.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

Regular Order Fees and Rebates for Mini Options
    The Exchange has determined to charge fees and provide rebates for 
regular orders in Mini Options at a rate that is 1/10th the rate of 
fees and rebates the Exchange currently provides for trading in 
standard options. The Exchange believes it is reasonable and equitable 
and not unfairly discriminatory to assess lower fees and rebates to 
provide market participants an incentive to trade Mini Options on the 
Exchange. The Exchange believes the proposed fees and rebates are 
reasonable and equitable in light of the fact that Mini Options do have 
a smaller exercise and assignment value, specifically 1/10th that of a 
standard option contract, and, as such, levying fees that are 1/10th of 
what market participants pay today. As for Priority Customers, for the 
most part, the Exchange does not charge Priority Customers a fee 
(Priority Customers have traditionally traded options on the Exchange 
without a fee) and to the extent they pay a transaction fee for trading 
in standard options, they will continue to pay a transaction fee in 
Mini Options but at 1/10th the rate they pay for standard options. The 
Exchange believes charging lower fees, or no fees, to Priority Customer 
orders attracts that order flow to the Exchange and thereby creates 
liquidity to the benefit of all market participants who trade on the 
Exchange. With respect to fees to Non-ISE Market Maker orders, the 
Exchange believes that charging Non-ISE Market Maker orders a higher 
rate than the fee charged to Market Maker, Firm Proprietary/Broker-
Dealer and Professional Customer regular orders is appropriate and not 
unfairly discriminatory because Non-ISE Market Makers are not subject 
to many of the non-transaction based fees that these other categories 
of membership are subject to, e.g., membership fees, access fees, API/
Session fees, market data fees, etc. Therefore, the Exchange believes 
it is appropriate and not unfairly discriminatory to assess a higher 
transaction fee to Non-ISE Market Makers because the Exchange incurs 
costs associated with these types of orders that are not recovered by 
non-transaction based fees paid by members. With respect to fees for 
Market Maker orders, the Exchange believes that the price 
differentiation between the various market participants is appropriate 
and not unfairly discriminatory because Market Makers have different 
requirements and obligations to the Exchange that the other market 
participants do not (such as quoting requirements and paying 
membership-related non-transaction fees). The Exchange believes that it 
is equitable and not unfairly discriminatory to assess a higher fee to 
market participants that do not have such requirements and obligations 
that Exchange Market Makers do. The Exchange believes the proposed fees 
and rebates for regular orders in Mini Options will encourage use of 
Mini Options, which are designed to allow investors to reduce risk in 
high-priced underlying securities.
PMM Linkage Credit
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to provide a fee credit to PMMs for execution of 
Priority Customer orders in Mini Options in Non-Select Symbols and to 
Priority Customer and Professional Customer orders in Mini Options in 
Select Symbols to offset the costs incurred by PMMs as these fees will 
be uniformly applied to all PMMs that route out these orders at a rate 
that is 1/10th of the rate the Exchange currently provides for such 
orders in standard options.
Credit for Responses to Flash Orders
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to provide a fee credit for responses to Flash Orders 
when trading against Professional Customers orders in Mini Options in 
Non-Select Symbols and for responses to Flash Orders when trading 
against Priority Customers and Professional Customers in the Select 
Symbols at a rate that is 1/10th of the rate the Exchange currently 
provides for such orders in standard options. The Exchange believes the 
credit provides an incentive for members to trade these orders on the 
Exchange. The Exchange further believes that adopting a fee credit for 
executions resulting from responses to Priority Customer orders is 
reasonable and equitable because doing so will incentivize Exchange 
members to execute Priority Customer orders on the Exchange by trading 
against these orders at the National Best Bid or Offer. Further, the 
Exchange believes that the proposed fee credit is not unfairly 
discriminatory because the credit would be applied uniformly to 
responses to Priority Customer orders that are flashed and executed on 
the Exchange.
Payment for Order Flow
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to charge a PFOF fee to Market Makers when trading 
against Priority Customers in GOOG because the Exchange already charges 
this fee for standard options in GOOG and is simply proposing to charge 
this fee at a level that is 1/10th the rate for standard options in 
GOOG. The Exchange believes the proposed fee is equitable and not 
unfairly discriminatory because it will apply to all Exchange Market 
Makers. The Exchange does not currently charge a PFOF fee for standard 
options in AAPL, AMZN, GLD and SPY and therefore does not propose a 
PFOF fee for Mini Options in these symbols.

[[Page 20995]]

Route-Out Fee
    Despite the Exchange's costs in routing orders to other exchanges, 
which are fixed regardless of whether the routed order is a standard 
option or a Mini Option, the Exchange has determined to charge a fee 
for routing out orders in Mini Options that is 1/10th of the fee the 
Exchange charges for routing out orders in standard options. The 
Exchange believes it is reasonable, equitable and not unfairly 
discriminatory as these fees will be uniformly applied to all market 
participants that choose to trade Mini Options on the Exchange.
Complex Order Fees and Rebates for Mini Options
    The Exchange has determined to charge fees and provide rebates for 
complex orders in Mini Options at a rate that is 1/10th the rate of 
fees and rebates the Exchange currently provides for trading in 
standard options. The Exchange believes it is reasonable and equitable 
and not unfairly discriminatory to assess lower fees and rebates to 
provide market participants an incentive to trade Mini Options on the 
Exchange. The Exchange believes the proposed fees and rebates are 
reasonable and equitable in light of the fact that Mini Options do have 
a smaller exercise and assignment value, specifically 1/10th that of a 
standard option contract, and, as such, levying fees that are 1/10th of 
what market participants pay today. As for Priority Customers, for the 
most part, the Exchange does not charge Priority Customers a fee 
(Priority Customers have traditionally traded options on the Exchange 
without a fee) and to the extent they pay a transaction fee for trading 
in standard options, they will continue to pay a transaction fee in 
Mini Options but at 1/10th the rate they pay for standard options. With 
respect to fees to Non-ISE Market Maker orders, the Exchange believes 
that charging Non-ISE Market Maker orders a higher rate than the fee 
charged to Market Maker, Firm Proprietary/Broker-Dealer and 
Professional Customer complex orders is appropriate and not unfairly 
discriminatory because Non-ISE Market Makers are not subject to many of 
the non-transaction based fees that these other categories of 
membership are subject to, e.g., membership fees, access fees, API/
Session fees, market data fees, etc. Therefore, the Exchange believes 
it is appropriate and not unfairly discriminatory to assess a higher 
transaction fee to Non-ISE Market Makers because the Exchange incurs 
costs associated with these types of orders that are not recovered by 
non-transaction based fees paid by members. With respect to fees for 
Market Maker orders, the Exchange believes that the price 
differentiation between the various market participants is appropriate 
and not unfairly discriminatory because Market Makers have different 
requirements and obligations to the Exchange that the other market 
participants do not (such as quoting requirements and paying 
membership-related non-transaction fees). The Exchange believes that it 
is equitable and not unfairly discriminatory to assess a higher fee to 
market participants that do not have such requirements and obligations 
that Exchange Market Makers do. The Exchange believes the proposed fees 
and rebates for complex orders in Mini Options will encourage use of 
Mini Options, which are designed to allow investors to reduce risk in 
high-priced underlying securities.
    The Exchange believes that it is reasonable and equitable to 
provide rebates for Priority Customer complex orders in Mini Options 
when these orders trade with Non-Priority Customer complex orders in 
the complex order book because paying a rebate will attract additional 
order flow to the Exchange and create liquidity in Mini Options, which 
the Exchange believes ultimately will benefit all market participants 
who trade on ISE. The Exchange already provides these rebates for 
standard options that overlie the five securities on which Mini Options 
are approved for trading. The Exchange believes that the proposed 
rebates are competitive and are therefore reasonable and equitably 
allocated to those members that direct orders to the Exchange rather 
than to a competing exchange. The Exchange also believes it is 
reasonable, equitable and not unfairly discriminatory to combine volume 
in standard options and Mini Options to calculate the tier a Member has 
reached because doing so will provided members with an opportunity to 
qualify for increased rebates and therefore, incentivize members to 
trade more of such order flow on the Exchange.
Firm Fee Cap
    The Exchange believes it is reasonable and equitable and not 
unfairly discriminatory to include Mini Options in the Exchange's fee 
cap program because it will potentially lower transaction fees for 
members providing liquidity in Mini Options on the Exchange. Members 
who reach the fee cap during a month will not have to pay incremental 
transaction fees and thus will be able to lower their monthly fees. The 
Exchange believes that the fee cap is not unfairly discriminatory 
because all members, including non-ISE market makers, are eligible to 
reach the cap. The Exchange believes that the proposed service fee, 
which is 1/10th of the service fee charged for standard options, is 
reasonable because members who reach the fee cap during a month will 
pay the service fee instead of the regular transaction fees and thus 
will be able to lower their monthly fees.
QCC and Solicitation Rebate
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to provided rebates for QCC and Solicitation orders in 
Mini Options. The Exchange believes that the proposed fee change will 
generally allow the Exchange and its members to better compete for 
order flow and thus enhance competition. Specifically, the Exchange 
believes that its proposal is reasonable as it will encourage members 
to direct their QCC and Solicitation orders in Mini Options to the 
Exchange instead of sending this order flow to a competing exchange. 
The Exchange believes that with the various tiers, which provides for 
additional volume thresholds, members will have the ability to qualify 
for higher rebates for sending their QCC and Solicitation orders in 
Mini Options to the Exchange. While the Exchange proposes to adopt the 
rebate levels for QCC and Solicitation orders in Mini Options that are 
1/10th of the rebate for standard options, the Exchange is also 
proposing to combine volume in Mini Options and standard options to 
allow members to reach a higher tier and therefore, qualify for higher 
rebates. The Exchange also believes that its rebate program for QCC and 
Solicitation orders is equitable because it would uniformly apply to 
all members engaged in QCC and Solicitation trading in Mini Options 
traded on the Exchange.
Complex Quoting in GLD
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to charge the proposed maker fee for complex quoting in 
Mini Options in GLD. The Exchange believes it is reasonable and 
equitable to charge fees for orders in standard options executed in the 
complex order book when trading against Priority Customers in GLD given 
this unique functionality that allows Market Makers to quote in the 
complex order book. The Exchange believes that the proposed maker fee 
for complex orders in Mini Options in GLD is not unfairly 
discriminatory because the fees proposed herein are already applicable 
to complex orders in

[[Page 20996]]

standard options in GLD; with this proposed rule change, the Exchange 
is simply extending fees that are already established on the Exchange 
to Mini Options in GLD at a rate that is 1/10th of the fee charged for 
standard options in GLD.
Options Regulatory Fee
    The Exchange is not proposing any change to the ORF with the 
introduction of Mini Options. The Exchange believes it is reasonable, 
equitable and not unfairly discriminatory to charge the ORF at the same 
rate for Mini Options as the Exchange charges for standard options. The 
Exchange believes that the cost to perform surveillance to ensure 
compliance with various Exchange and industry-wide rules is no 
different for Mini Options that it is for standard options. Reducing 
the ORF for Mini Options could result in a higher ORF for standard 
options. Such an outcome would arguably be discriminatory towards 
investors in standard options for the benefit of investors in Mini 
Options. Therefore, the Exchange believes it is appropriate to treat 
both Mini Options and standard options the same with respect to the 
amount of ORF that is being charged.

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

    ISE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. This rule change is designed to 
provide greater specificity within the Schedule of Fees with respect to 
fees and rebates applicable to Mini Options.
    The Exchange believes that the proposed fees and rebates for Mini 
Options which, with the exception to the ORF, are 1/10th of the fees 
and rebates the Exchange currently charges for standard options will 
not impose a burden on competition among various market participants on 
the Exchange, or between the Exchange and other exchanges that list and 
trade Mini Options, that is not necessary or appropriate in furtherance 
of the purposes of the Act. The Exchange believes that charging 
different rates to different market participants does not impose a 
burden on competition for a number of reasons. For one, charging lower 
fees, or no fees, to Priority Customer orders attracts that order flow 
to the Exchange and thereby creates liquidity to the benefit of all 
market participants who trade on the Exchange. Further, Market Makers 
have certain obligations and commitments to the Exchange that non-
Market Makers (i.e., Non-ISE Market Makers, Firm Proprietary/Broker-
Dealer and Professional Customer participants) do not and therefore it 
is appropriate for the Exchange to charge Market Makers fees that are 
different from those charged to other market participants. Further, the 
Exchange notes that for standard options a greater difference in fees 
for various market participants already exists than that which is 
proposed for Mini Options. For example, Priority Customers already 
trade for lower taker fees than do Market Makers when trading complex 
orders on the Exchange. For complex orders in standard options, ISE 
Market Makers currently pays a taker fee as high as $0.82 per contract 
for Non-Select Symbols (which are essentially non-Penny Pilot symbols) 
while the taker fee for Non-ISE Market Maker, Firm Proprietary/Broker-
Dealer and Professional Customer orders in these symbols is $0.84 per 
contract. For complex orders in standard options in these symbols, 
Priority Customers do not pay a taker fee. For Mini Options in these 
symbols, the taker fee proposed by the Exchange for ISE Market Makers 
is $0.082 per contract, 1/10th of the fee charged for standard options 
in these symbols, while the taker fee proposed by the Exchange for Non-
ISE Market Maker, Firm Proprietary/Broker-Dealer and Professional 
Customer orders in these symbols is $0.084 per contract, again 1/10th 
of the fee charged for standard options. The differential for Mini 
Options is de minimus compared to the differential for standard 
options.
    The Exchange notes that the difference in fees for various 
participants in standard options has not proven to be a burden on 
competition. Therefore, the fee differential for Mini Options, being 
quite a bit smaller, should not prove to be a burden on competition. 
Mini Options are a new product being introduced to the listed options 
market and while the Exchange at this time believes that the proposed 
fees and rebates are appropriate, the impact of this proposed rule 
change will only be known for certain once Mini Options have begun 
trading.
    The Exchange notes that it operates in a highly competitive 
environment in which market participants can readily direct their order 
flow to competing exchanges. 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 noted above, 
the Exchange believes that the proposed rule change reflects this 
competitive environment.

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 \18\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\19\ because it establishes a due, fee, or other charge 
imposed by ISE.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \19\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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-2013-28 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-2013-28. 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

[[Page 20997]]

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 10:00 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-2013-28 and should be submitted on or before April 
29, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08092 Filed 4-5-13; 8:45 am]
BILLING CODE 8011-01-P