Document ID: SEC-2010-0068-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2010-01-12T05:00Z

[Federal Register: January 12, 2010 (Volume 75, Number 7)]
[Notices]               
[Page 1667-1668]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12ja10-92]                         

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SECURITIES AND EXCHANGE COMMISSION

Release No. 34-61296; File No. SR-ISE-2009-114]

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

January 6, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 31, 2009, International Securities Exchange, LLC (``ISE'' 
or ``Exchange'') 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 Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The ISE is proposing to amend its Schedule of Fees to increase the 
surcharge fee for transactions in options on the Nasdaq-100[supreg] 
Stock Index. 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 Exchange 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 Exchange 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 Exchange is proposing to amend its Schedule of Fees to increase 
the surcharge fee for transactions in options

[[Page 1668]]

on the Nasdaq-100 Stock Index, both full value (``NDX'') and 1/10 value 
(``MNX'').\3\ The Exchange currently charges an execution fee for most 
transactions in options on NDX and MNX.\4\ Specifically, the amount of 
the execution fee for transactions in options on NDX and MNX is $0.20 
per contract for all Firm Proprietary orders. The amount of the 
execution fee for all ISE Market Maker transactions in options on NDX 
and MNX is equal to the execution fee currently charged by the Exchange 
for ISE Market Maker transactions in equity options.\5\ Finally, the 
amount of the execution fee for all non-ISE Market Maker transactions 
is $0.45 per contract.\6\ For competitive reasons, the Exchange does 
not charge an execution fee for transactions in options on NDX and MNX 
executed by Public Customer Orders.\7\
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    \3\ See Securities Exchange Act Release No. 51121 (February 1, 
2005), 70 FR 6476 (February 7, 2005) (Order approving the trading of 
options on full and reduced values of the Nasdaq-100 Stock Index).
    \4\ These fees are charged only to Exchange members. Under a 
pilot program that is set to expire on July 31, 2010, these fees 
will also be charged to Linkage Principal Orders (``Linkage P 
Orders'') and Linkage Principal Acting as Agent Orders (``Linkage P/
A Orders''). The amount of the execution fee charged by the Exchange 
for Linkage P Orders and Linkage P/A Orders is $0.27 per contract 
side and $0.18 per contract side, respectively. See Securities 
Exchange Act Release No. 60175 (June 25, 2009), 74 FR 32026 (July 6, 
2009) (SR-ISE-2009-36).
    \5\ The Exchange applies a sliding scale, between $0.01 and 
$0.18 per contract side, based on the number of contracts an ISE 
market maker trades in a month.
    \6\ The amount of the execution fee for non-ISE Market Maker 
transactions executed in the Exchange's Facilitation and 
Solicitation Mechanisms and for Orders entered into the Price 
Improvement Mechanism by the member initiating the price improvement 
order is $0.20 per contract.
    \7\ Public Customer Order is defined in Exchange Rule 100(a)(39) 
as an order for the account of a Public Customer. Public Customer is 
defined in Exchange Rule 100(a)(38) as a person or entity that is 
not a broker or dealer in securities.
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    Pursuant to a license agreement between the Exchange and the NASDAQ 
OMX Group, Inc., (``NASDAQ''), the Exchange currently charges a 
surcharge fee of $0.16 per contract for trading in options on NDX and 
MNX. The Exchange recently renewed its license agreement with NASDAQ 
pursuant to which the Exchange is now being charged six (6) cents more 
per contract. Accordingly, to defray the increased licensing costs, the 
Exchange proposes to increase the surcharge fee to $0.22 per contract 
for trading in options on NDX and MNX, effective January 1, 2010. The 
Exchange believes charging the participants that trade these 
instruments is the most equitable means of recovering the costs of the 
license. However, because of competitive pressures in the industry, the 
Exchange proposes to continue excluding Public Customer Orders from 
this surcharge fee. Accordingly, this surcharge fee will only be 
charged to Exchange members with respect to non-Public Customer Orders 
(e.g., Market Maker, Non-ISE Market Maker & Firm Proprietary orders).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\8\ in general, and 
furthers the objectives of Section 6(b)(4),\9\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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) of the Act \10\ and Rule 19b-4(f)(2) \11\ thereunder. At any 
time within 60 days of the filing of such proposed rule change, the 
Commission may summarily abrogate 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.
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    \10\ 15 U.S.C. 78s(b)(3).
    \11\ 17 CFR 240.19b-4(f)(2).
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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 Number SR-ISE-2009-114 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-2009-114. 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 Commission's Internet Web site (http://www.sec.gov/rules/sro/
shtml). Copies of the submission,\12\ 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 inspection and 
copying in the Commission's Public Reference Room, on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of such filing will 
also 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 No. SR-ISE-
2009-114 and should be submitted on or before  February 2, 2010.
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    \12\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.
    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-300 Filed 1-11-10; 8:45 am]
BILLING CODE 8011-01-P