Document ID: SEC-2015-1707-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2015-10-22T04:00Z

[Federal Register Volume 80, Number 204 (Thursday, October 22, 2015)]
[Notices]
[Pages 64041-64042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26809]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76177; File No. SR-ISE-2015-31]

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

October 16, 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 October 1, 2015, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange Commission (``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.
---------------------------------------------------------------------------

    \1\15 U.S.C.78s(b)(1)
    \2\17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The ISE proposes to amend language in the Schedule of Fees related 
to excluding days from its average daily volume calculations when the 
market is not open for the entire trading day. 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
    Currently, for purposes of determining a member's average daily 
volume (``ADV''), any day that the regular or complex order books are 
not open for the entire trading day may be excluded from such 
calculation. The Exchange proposes to amend language in the Schedule of 
Fees related to excluding days from the ADV calculations used to 
determine applicable fee and rebate tiers. Specifically, the Exchange 
proposes to permit days to be excluded from its ADV calculations where 
the Exchange is technically open for the entire trading day, but has 
instructed members to route away due to a systems or other error that 
ultimately does not impact trading on the Exchange. Currently, the 
Exchange's ability to remove days from its ADV calculations is limited 
to days where the market is not open for the entire trading day. This 
allows the Exchange to exclude days, for example, where the Exchange 
declares a trading halt in all securities, honors a market-wide trading 
halt declared by another market, or closes early for holiday 
observance. Because these days generally have artificially lower 
trading volume, the Exchange believes that it is reasonable and 
equitable to not include such days in determining fee and rebate tiers. 
The Exchange notes, however, that if it has a systems issue in the 
morning before the market opens, it may instruct members to route away 
to other markets. If the systems issue continues into trading hours, 
the Exchange is permitted to exclude the day for all members that would 
have a lower ADV with the day included. If, however, the systems issue 
is resolved prior to the opening of trading, the Exchange is not 
permitted to exclude the day from its ADV calculations. This is the 
case regardless of the fact that many members would have already made 
arrangements to route away in accordance with the Exchange's 
instructions. To prevent this undesirable result, and preserve the 
Exchange's intent behind adopting volume-based pricing, the Exchange 
proposes to allow days to be excluded from its ADV calculation whenever 
all members are instructed, in writing, to route their orders to other 
markets.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\3\ in general, and Section 
6(b)(4) of the Act,\4\ in particular, in that it is designed to provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities. The 
Exchange believes that it is reasonable and equitable to exclude a day 
from its ADV calculations when members are instructed to route their 
orders to other markets as this preserves the Exchange's intent behind 
adopting volume-based pricing, and avoids penalizing members that 
follow this instruction. Without this change, members that route away 
in accordance with the Exchange's instructions may be negatively 
impacted, resulting in an effective cost increase for those members. 
The Exchange further believes that the proposed rule change is not 
unfairly discriminatory because it applies equally to all members and 
ADV calculations. As is the Exchange's current practice, the Exchange 
will inform members of any day to be excluded from its ADV calculations 
by sending members a notice and posting such notice on the Exchange's 
Web site.
---------------------------------------------------------------------------

    \3\15 U.S.C. 78f.
    \4\15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    In accordance with Section 6(b)(8) of the Act,\5\ the Exchange does 
not believe that the proposed rule change will impose any burden on 
intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
believes that the proposed modifications to its ADV calculation are 
pro-competitive and will result in lower total costs to end users, a 
positive outcome of competitive markets. 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

[[Page 64042]]

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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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 \6\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\7\ because it establishes a due, fee, or other charge 
imposed by ISE.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 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-2015-31 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2015-31. 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 
10:00 a.m. and 3:00 p.m. Copies of such 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-2015-31, and should be 
submitted on or before November 12, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-26809 Filed 10-21-15; 8:45 am]
BILLING CODE 8011-01-P