Document ID: SEC-2011-0532-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2011-04-13T04:00Z

[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Notices]
[Pages 20752-20754]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8923]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64269; File No. SR-ISE-2011-21]

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

April 8, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 6, 2011, 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 is proposing to amend its Schedule of Fees regarding the 
Exchange's API or login fees. The text of the proposed rule change is 
available on the Exchange's Web site (http://www.ise.com), at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in sections A, B and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The ISE is proposing to amend its Schedule of Fees regarding the 
Exchange's API or login fees. ISE currently charges its members a fee 
for each login that a Member utilizes for quoting or order entry, with 
a lesser charge for logins used for the limited purpose of 
``listening'' to broadcast messages.\3\ The Exchange currently has the 
following categories of authorized logins: (1) Quoting, order entry and 
listening (allowing the user to enter quotes, orders, and perform all 
other miscellaneous functions, such as setting parameters and pulling 
quotes); (2) order entry and listening (allowing the user to enter 
orders and perform all other miscellaneous functions, such as setting 
parameters and pulling quotes (but not quoting)); and (3) listening 
(allowing the user only to query the system and to respond to broadcast 
messages).\4\ The Exchange notes that quoting, order entry and 
listening are functionalities available only to Exchange market makers, 
i.e., Primary Market Makers and Competitive Market Makers, while order 
entry and listening are functionalities available only to non-market 
makers, i.e., Electronic Access Members.
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    \3\ See Exchange Act Release No. 53522 (March 20, 2006), 71 FR 
14975 (March 24, 2006) (SR-ISE-2006-09).
    \4\ Id.
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    ISE market makers currently receive an allocation of 1,300,000 
quotes per day per user.\5\ If a market maker submits more quotes than 
those allocated, i.e., 1,300,000 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 across all bins 
(i.e., group of options to which the market maker is appointed), is 
divided by the number of trading days, resulting in the average quotes 
per day. This number is then divided by 1,300,000 and rounded up to the 
nearest whole number, resulting in an implied number of users based on 
quotes. Market makers are invoiced 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. 56721 (October 30, 2007), 72 FR 
62502 (November 5, 2007) (SR-ISE-2007-91).

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[[Page 20753]]

    The Exchange also has an additional category of login known as a 
``High Throughput User.'' \6\ A High Throughput User is a market maker 
who is allocated up to 2,600,000 quotes per day in a month.\7\ A High 
Throughput User is able to enter quotes, orders, and perform all other 
miscellaneous functions, such as setting parameters and pulling 
quotes.\8\
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    \6\ See Securities Exchange Act Release No. 55941 (June 21, 
2007), 72 FR 35535 (June 28, 2007) (SR-ISE-2007-36).
    \7\ See supra note 3.
    \8\ Id.
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    ISE currently charges market makers $950 per month for each quoting 
session for up to 1,300,000 quotes per day, on average for a month. 
Market makers are charged an additional user fee of $950 for each 
incremental usage of up to 1,300,000 quotes per day per user. For High 
Throughput Users, ISE charges a fee of $1,900 per month. High 
Throughput Users are charged an additional user fee of $1,900 for each 
incremental usage of up to 2,600,000 quotes per day per user.
    The Exchange is scheduled to launch an enhanced trading system 
called Optimise on April 11, 2011. In anticipation of the launch of the 
Optimise trading platform, the Exchange proposes to amend its API quote 
fees. Specifically, ISE proposes to increase the monthly fee and quote 
allowance for non-High Throughput Users to $1,200 and 1,800,000 quotes 
per day per user, respectively. Members that quote in excess of 
1,800,000 quotes per day average in a month will be charged an 
additional login of $950 per month for each subsequent usage of 
1,800,000 quotes per day in a month. For example, a market maker who 
uses four million quotes per day would be charged as follows: $1,200 
for the initial session with an allowance of 1,800,000 quotes per day 
plus $1,900 for two additional quoting sessions, each with an allowance 
of 1,800,000 quotes per day.
    For ``High Throughput Users,'' ISE proposes to increase the monthly 
fee and quote allowance to $2,400 and 3,600,000 quotes per day, 
respectively. Members that quote in excess of 3,600,000 quotes per day 
in a month will be charged an additional login of $1,900 per month for 
each subsequent usage of 3,600,000 quotes per day in a month.
    As the Exchange migrates from its current trading platform to 
Optimise, Members will undoubtedly be required to login to access both 
trading systems and thus could be charged for accessing both systems. 
The Exchange does not intend to charge members for logging in to both 
systems simultaneously. Members will be charged a single login fee 
regardless of whether they use their quote allocation for the current 
trading system or for the Optimise trading system instead of charging 
for quote allocation separately for each of the trading systems. 
Therefore, until the Exchange fully migrates to the Optimise trading 
system, ISE proposes to waive any API fees that are duplicative.
    ISE represents that the proposed increase in the allocation of 
quotes per day per user will not have an adverse effect on capacity on 
the Exchange.
    The Exchange has designated this proposal to be operative on April 
11, 2011.
2. Basis
    The Exchange believes that its proposal to amend its Schedule of 
Fees is consistent with Section 6(b) of the Act \9\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \10\ in 
particular, in that it is an equitable allocation of reasonable dues, 
fees and other charges among Exchange members and other persons using 
its facilities. The Exchange believes that the proposal does not 
constitute an inequitable allocation of fees, as all similarly situated 
Members will be subject to the same fee structure, and access to the 
Exchange's market is offered on fair and non-discriminatory terms. In 
other words, the proposed rule change will treat similarly situated 
Members in the same manner by assessing the same fees to all Members 
based on their quoting needs. The Exchange also believes that it is 
equitable to assess different access fees based on the type of logins 
as long as the same access fee is assessed to all Members that are 
similarly situated. The Exchange also believes that the proposal is 
reasonable because during the transition period to the Optimise trading 
platform the Exchange will waive any API fees that are duplicative to 
ensure Members are not burdened by having to pay fees to login in to 
both the current trading platform and the Optimise platform.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\11\ At any time within 60 days of the 
filing of such proposed rule change, the Commission summarily may 
temporarily suspend such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form http://www.sec.gov/rules/sro.shtml); or
     Send an E-mail to rule-comments@sec.gov. Please include 
File No. SR-ISE-2011-21 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2011-21. This file 
number should be included on the subject line if e-mail 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 Commissions Internet Web site (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements

[[Page 20754]]

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. Copies of such 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 Number SR-ISE-
2011-21 and should be submitted by May 4, 2011.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8923 Filed 4-12-11; 8:45 am]
BILLING CODE 8011-01-P