Document ID: SEC-2012-1646-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2012-10-10T04:00Z

[Federal Register Volume 77, Number 196 (Wednesday, October 10, 2012)]
[Notices]
[Pages 61645-61647]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-24886]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67973; File No. SR-ISE-2012-73]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Make Non-Substantive Clarifications to the Exchange's 
Schedule of Fees

October 3, 2012.
    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 25, 2012, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange Commission (the ``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 make non-substantive clarifications to its 
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.

[[Page 61646]]

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 July 25 of this year, the Exchange submitted a rule filing to 
relocate various fees within the Exchange's Schedule of Fees (the ``old 
fee schedule'') to group fees so that the Exchange's fees would be 
easily located within the fee schedule (the ``re-formatted fee 
schedule'').\3\ The Exchange did not propose to make any substantive 
changes in that filing, and did not change the manner in which it 
assessed the fees as a result of the adoption of the re-formatted fee 
schedule. Nevertheless, some uncertainty as to the application of 
certain fees and rebates was introduced by the re-formatted fee 
schedule. The purpose of this proposed rule change is to make two 
clarifications on the re-formatted fee schedule. The Exchange is not 
proposing any substantive changes to its fees.
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    \3\ See Exchange Act Release No. 67545 (July 31, 2012), 77 FR 
46776 (August 6, 2012) (SR-ISE-2012-65).
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    First, on the old fee schedule, there was a footnote to the 
crossing order execution fees for Select Symbols \4\ stating that a 
rebate of $0.15 per contract for Facilitation and Solicited Orders, and 
$0.25 per contract for PIM orders, applied to contracts that do not 
trade with their contra order. This footnote indicated that the rebate 
would be applied in lieu of the execution fee. On the re-formatted fee 
schedule, separate columns were added to the table of fees for Select 
Symbols to indicate these rebates. As a result, it might not be clear 
that the execution fee for crossing orders is not applied to contracts 
that receive the rebate. Accordingly, the Exchange proposes to add the 
following text in the footnotes to each rebate: ``The fee for Crossing 
Orders is not applied to any contracts for which a rebate is 
provided.''
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    \4\ ``Select Symbols'' are options overlying C, BAC, SPY, IWM, 
XLF, GE, JPM, INTC, RIMM, T, VZ, UNG, FCX, CSCO, DIA, X, AA, AIG, 
AXP, BBY, CAT, CHK, DNDN, EEM, EFA, EWZ, F, FAS, FAZ, FSLR, GDX, 
GLD, IYR, MGM, MS, MSFT, MU, PBR, PG, POT, RIG, SLV, XLE, XOM, ABX, 
BMY, BP, DELL, FXI, HAL, IBM, KO, LVS, MCD, MO, MON, NOK, ORCL, PFE, 
QCOM, SLB, SNDK, TBT, USO, V, VALE, WFT, XLI, XRT, YHOO, AKAM, AMD, 
APC, BA, BRCM, GG, HPQ, LCC, NEM, NFLX, NVDA, QID, TEVA, TLT, UAL, 
WFC, XLB, SBUX, VVUS, MSI, AAPL, BIDU, and VXX.
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    Second, on the old fee schedule, an execution fee of $0.20 per 
contract was specified for Non-Select Symbols \5\ for ``Customer 
(entered in response to special order broadcast).'' This fee was 
adopted in January 2007 and has always been applied to ``response 
messages'' entered with respect to a particular broadcast message, but 
not to orders that are received on the limit order book after an 
auction commences.\6\ The Exchange later adopted a similar response fee 
for Regular Orders in Select Symbols,\7\ for complex orders in Select 
Symbols \8\ and then for Regular Orders in Special Non-Select Penny 
Pilot Symbols \9\ of $0.40 per contract, and more recently, adopted a 
fee for complex orders in Non-Penny Pilot Symbols \10\ of $0.70 per 
contract ($0.75 per contract for Non-ISE Market Makers (FarMM)) for 
responses to special orders,\11\ but specified that a ``response'' is 
any contra-side interest submitted after the commencement of an 
auction. Thus, the fees for Regular Orders in Select Symbols and 
Special Non-Select Penny Pilot Symbols and all complex orders are 
applied to both response messages and to orders received on the limit 
order book after an auction commences, whereas the fees for Regular 
Orders in Non-Select Symbols are applied to response messages.
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    \5\ ``Non-Select Symbols'' are options overlying all symbols 
excluding Select Symbols and Special Non-Select Penny Pilot Symbols.
    \6\ See Exchange Act Release No. 55060 (Jan. 8, 2007), 72 FR 
2050 (Jan. 17, 2007) (SR-ISE-2006-72).
    \7\ See Exchange Act Release No. 63283 (Nov. 9, 2010), 75 FR 
70059 (Nov. 16, 2010) (SR-ISE-2010-106).
    \8\ See Exchange Act Release No. 65550 (October 13, 2011), 76 FR 
64984 (October 19, 2012 [sic]) (SR-ISE-2011-65). In this filing, the 
Exchange also adopted a response fee for complex orders for symbols 
that are in the Penny Pilot Program.
    \9\ See Exchange Act Release No. 67201 (June 14, 2012), 77 FR 
37082 (June 20, 2012) (SR-ISE-2012-49). ``Special Non-Select Penny 
Pilot Symbols'' are options overlying ACI, AGNC, AMLN, AMZN, ANR, 
APA, ARNA, ATPG, AUY, BAX, BTU, CLF, COP, CRM, CVX, DAL, DD, DE, 
DIS, DOW, EBAY, FDX, GLW, GM, GMCR, GS, HD, HGSI, JCP, JOY, KBH, 
KGC, LULU, MA, MBI, MCP, MDT, MMR, MOS, MRK, NKE, PEP, QQQ, S, SD, 
SDS, SHLD, SINA, SIRI, SLW, SSO, TZA, UNP, UPS, USB, UTX, VLO, WAG, 
WDC, WLT, WYNN, XHB, XLK, XLU and ZNGA.
    \10\ See Exchange Act Release No. 66084 (January 3, 2012), 77 FR 
1103 (January 9, 2012) (SR-ISE-2011-84). This fee was later 
increased to $0.75 per contract ($0.78 per contract for Non-ISE 
Market Makers). See Exchange Act Release No. 66962 (May 10, 2012), 
77 FR 28917 (May 16, 2012) (SR-ISE-2012-35).
    \11\ The term ``special order'' was changed to ``crossing 
order'' in the re-formatted fee schedule.
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    When the fee schedule was re-formatted, a single definition of 
``Response to Crossing Orders'' that reflects the definition for 
Regular Orders in Select Symbols and Special Non-Select Penny Pilot 
Symbols and all complex orders was added to the Preface of the fee 
schedule. Because the defined terms in the Preface apply to all 
symbols, including Non-Select Symbols, it appears as though regular 
customer orders received after the commencement of an auction in Non-
Select Symbols are now being charged the $0.20 response fee when that 
is not the case. Accordingly, the Exchange proposes to amend the 
Preface of the fee schedule to clearly indicate that the current 
definition of ``Responses to Crossing Order'' is applicable to Regular 
Orders in Select Symbols and Special Non-Select Penny Pilot Symbols and 
all complex orders and to add the appropriate definition for Non-Select 
Symbols as follows:
    [rtarr8] ``Responses to Crossing Order'' (other than Regular Orders 
in Non-Select Symbols) is any contra-side interest submitted after the 
commencement of an auction in the Exchange's Facilitation Mechanism, 
Solicited Order Mechanism, Block Order Mechanism or PIM.
    [rtarr8] ``Responses to Crossing Order'' (for Regular Orders in 
Non-Select Symbols) is any response message entered with respect to a 
specific auction in the Exchange's Facilitation Mechanism, Solicited 
Order Mechanism, Block Order Mechanism or PIM.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Schedule of 
Fees is consistent with Section 6(b) of the Securities and Exchange Act 
of 1934 (the ``Exchange Act'') \12\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \13\ 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 its proposal to clarify the application of 
certain fees is both reasonable and equitable because members would 
benefit from clear guidance in the fee schedule that describes the 
manner in which the Exchange would assess fees. The

[[Page 61647]]

Exchange believes the proposed rule change is also reasonable because 
it makes clarifying changes to the Preface and to footnotes and thereby 
provides greater transparency to the Exchange's Schedule of Fees.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 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.\14\ 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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    \14\ 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 email to rule-comments@sec.gov. Please include 
File Number SR-ISE-2012-73 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-2012-73. 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 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-2012-73 and should be 
submitted on or before October 31, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-24886 Filed 10-9-12; 8:45 am]
BILLING CODE 8011-01-P