Document ID: SEC-2014-1693-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2014-10-07T04:00Z

[Federal Register Volume 79, Number 194 (Tuesday, October 7, 2014)]
[Notices]
[Pages 60545-60547]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-23835]

[[Page 60545]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73276; File No. SR-ISE-2014-41]

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

October 1, 2014.
    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 September 17, 2014, 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 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 the Schedule of 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
    On June 6, 2013 the ISE implemented a temporary Managed Data Access 
Service program that established a new pricing and distribution model 
for the sale of a number of real-time market data products.\3\ On 
December 20, 2013, the Exchange extended this program until May 30, 
2014, and the program lapsed on that date.\4\ The Exchange now proposes 
to institute another temporary Managed Data Access Service program on 
the same terms, for an additional one year period ending August 31, 
2015, so that the Exchange can continue to provide this alternative 
delivery option for ISE data feeds.\5\ Managed Data Access Service is a 
pricing and administrative option whereby the ISE assesses fees to 
Managed Data Access Distributors,\6\ who redistribute market data to 
Managed Data Access Recipients.\7\ Managed Data Access Distributors are 
required to monitor the delivery of the data retransmitted to their 
clients, and must agree to reformat, redisplay and/or alter the data 
feeds prior to retransmission without affecting the integrity of the 
data feeds and without rendering any of the feeds inaccurate, unfair, 
uninformative, fictitious, misleading, or discriminatory.
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    \3\ See Securities Exchange Act Release No. 69806 (June 20, 
2013), 78 FR 38424 (June 26, 2013) (ISE-2013-39). The Exchange also 
offers a similar Managed Data Access Service program for its Implied 
Volatility and Greeks Feed. See Securities Exchange Act Release No. 
65678 (November 3, 2011), 76 FR 70178 (November 10, 2011) (ISE-2011-
67). This filing does not apply to the Managed Data Access Service 
program for the Implied Volatility and Greeks Feed, which is a 
permanent program.
    \4\ See Securities Exchange Act Release No. 71230 (January 2, 
2014), 79 FR 1405 (January 8, 2014) (ISE-2013-74).
    \5\ The Managed Data Access Service program provides an 
alternative delivery option for the Real-time Depth of Market Raw 
Data Feed (``Depth Feed''), the Order Feed, the Top Quote Feed, and 
the Spread Feed.
    \6\ A Managed Data Access Distributor redistributes ISE data 
feeds and permits access to the information in those data feeds 
through a controlled device. A Managed Data Access Distributor can 
also redistribute a data feed solution to specific IP addresses, 
including an Application Programming Interface (``API'') or similar 
automated delivery solutions, with only limited entitlement controls 
(e.g., usernames and/or passwords) to a recipient of the 
information.
    \7\ A Managed Data Access Recipient is a subscriber to the 
Managed Data Access Distributor who receives a reformatted data feed 
in a controlled device or at a specific IP address. Market Data 
Access Recipients may be Professional or Non-Professional users.
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    The proposed fees for the Managed Data Access Service are as 
follows:
    The Exchange proposes to charge a fee to each Managed Data Access 
Distributor of $2,500 per month for the Depth Feed, $1,500 for each of 
the Top Quote Feed and Spread Feed, and $1,000 per month for the Order 
Feed. The Exchange also proposes to charge a fee for each IP address at 
Managed Data Access Recipients that receive market data redistributed 
by a Managed Data Access Distributor, which is $750 per month for the 
Depth Feed, $500 per month for each of the Top Quote Feed and Spread 
Feed, and $350 per month for the Order Feed.\8\ In addition, the 
Exchange proposes to charge a controlled device fee for each controlled 
device permitted to access market data redistributed by a Managed Data 
Access Distributor to a Market Data Access Recipient that is a 
Professional user,\9\ which is $50 per month for the Depth Feed, $20 
per month for the Top Quote Feed, $25 per month for the Spread Feed, 
and $10 per month for the Order Feed.\10\ Finally, the Exchange 
proposes to charge a controlled device fee of $5 per month for each 
controlled device permitted to access information in the Depth Feed 
redistributed by a Managed Data Access Distributor to a Market Data 
Access Recipient that is a Non-Professional user.\11\ For each of the 
above ISE data feeds, Market Data Access Distributors are subject to a 
minimum fee, which is $5,000 per month for the Depth Feed, $3,000 per 
month for each of the Top Quote Feed and Spread Feed, and $2,000 per 
month for the Order Feed.
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    \8\ This fee is charged per IP address, which covers both 
primary and back-up IP addresses at a Managed Data Access Recipient.
    \9\ A ``Professional user'' is an authorized end-user of the ISE 
data feeds that has not qualified as a Non-Professional user.
    \10\ A controlled device is any device that a distributor of an 
ISE data feed permits to access the information in that data feed.
    \11\ There is no controlled device fee for Non-Professional 
users of the Top Quote Feed, Spread Feed, or Order Feed. A ``Non-
Professional user'' is an authorized end-user of the ISE data feeds 
who is a natural person and who is neither: (a) Registered or 
qualified with the Securities and Exchange Commission, the 
Commodities Futures Trading Commission, any state securities agency, 
any securities exchange or association, or any commodities or 
futures contract market or association; (b) engaged as an 
``investment advisor'' as that term is defined Section 202(a)(11) of 
the Investment Advisers Act of 1940 (whether or not registered or 
qualified under that act); nor (c) employed by a bank or other 
organization exempt from registration under Federal and/or state 
securities laws to perform functions that would require him/her to 
be so registered or qualified if he/she were to perform such 
functions for an organization not so exempt.
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    These fees are the same as fees previously charged under the lapsed 
the Managed Data Access Service program.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act,\12\ and the rules and regulations 
thereunder that are applicable to a national securities exchange, 
including the requirements of Section 6(b) of the Act.\13\ In 
particular,

[[Page 60546]]

the proposal is consistent with Section 6(b)(5) of the Act,\14\ because 
is designed to promote just and equitable principles of trade, remove 
impediments to and perfect the mechanisms of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest. The Exchange also believes that the proposed rule 
change is consistent with the provisions Section 6(b)(4) of the Act 
\15\ 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 the proposed 
program is consistent with the protection of investors and the public 
interest as the terms of the program are substantially similar to 
managed data programs offered by other options exchanges,\16\ and will 
provide a competitive fee model for subscribers to ISE market data. The 
Exchange initially established a managed data program for a six month 
period, later extended to a year, in order gauge the level of interest 
in this new pricing and distribution model, and now wishes to institute 
another temporary program so that it may continue to offer an 
attractive pricing program that competes with programs offered by other 
options exchanges. The Managed Data Access Service promotes broader 
distribution of controlled data, while offering a pricing option that 
should result in lower fees for subscribers. The Exchange continues to 
believe that the fees for this program are fair and equitable as they 
are consistent with fees previously charged under this program, and as 
explained above are intended to offer a pricing model that should 
result in lower fees for ISE market data subscribers. The Exchange is 
constrained in pricing the Managed Data Access Service as these 
services are entirely optional, and firms may choose whether or not to 
purchase proprietary ISE market data products or to utilize any 
specific pricing alternative. Moreover, the program is not unfairly 
discriminatory because it provides an opportunity for all distributors 
and subscribers, both Professional and Non-Professional, to access the 
ISE data feeds at a potentially lower cost.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ A number of other exchanges have adopted managed data 
access services to distribute their proprietary market data. See 
e.g. Securities Exchange Act Release Nos. 63276 (November 8, 2010), 
75 FR 69717 (November 15, 2010) (SR-NASDAQ-2010-138); and 69182 
(March 19, 2013), 78 FR 18378 (March 26, 2013) (SR-PHLX-2013-28). 
ISE also currently offers managed data access service on a permanent 
basis for the ISE Implied Volatility and Greeks Feed. See supra note 
3.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\17\ 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. To the contrary, 
the Exchange believes that the proposed rule change will promote 
competition as it allows the ISE to continue to offer a temporary 
program that provides an attractive alternative pricing model for ISE 
market data that is similar to pricing programs in place on other 
options exchanges. The vigor of competition for market data is 
significant and the Exchange believes that this proposal clearly 
evidences such competition. ISE proposes to offer this optional Managed 
Access Data Service pricing model in order to keep pace with changes in 
the industry and evolving customer needs.
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    \17\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

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

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The ISE has satisfied this requirement.
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    At any time within 60 days of the filing of the 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-2014-41 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-2014-41. 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 offices 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-

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2014-41, and should be submitted on or before October 28, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23835 Filed 10-6-14; 8:45 am]
BILLING CODE 8011-01-P