Document ID: SEC-2014-1193-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2014-07-16T04:00Z

[Federal Register Volume 79, Number 136 (Wednesday, July 16, 2014)]
[Notices]
[Pages 41620-41622]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16652]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72588; File No. SR-ISE-2014-36]

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

July 10, 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 July 1, 2014, 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 the 
Substance of the Proposed Rule Change

    The ISE is proposing to amend its Schedule of Fees to increase 
certain network and gateway 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

[[Page 41621]]

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 purpose of the proposed rule change is to amend the Schedule of 
Fees to increase certain network and gateway fees. The Exchange charges 
an Ethernet fee for its four different Ethernet connection options, 
which is $500 per month for a 1 Gigabit (``Gb'') connection, $4,000 per 
month for a 10 Gb connection, $7,000 per month for a 10 Gb low latency 
connection, and $12,500 per month for a 40 Gb low latency connection. 
These Ethernet connectivity options provide access to both the ISE and 
the ISE's sister exchange, ISE Gemini, LLC (``ISE Gemini'').\3\ The 
Exchange proposes to increase the fees charged for the 1 Gb connection 
to $750 per month. In addition, the Exchange offers both shared and 
dedicated gateways to facilitate member access to ISE and ISE Gemini 
for a single fee. The Exchange charges members a monthly gateway fee of 
$250 per gateway for a shared gateway or $2,000 per gateway pair for 
members that elect to use their own dedicated gateways as an 
alternative to using shared gateways. The Exchange proposes to increase 
the shared gateway fee to $500 per month.
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    \3\ See Securities Exchange Act Release No. 71324 (January 16, 
2014), 79 FR 3911 (January 23, 2014) (SR-ISE-2014-01). Market 
participants pay the same fees regardless of whether they choose to 
connect to both exchanges or solely to the ISE.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\4\ in general, and Section 
6(b)(4) of the Act,\5\ 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 increase the 
network and gateway fees described in this filing as the Exchange has 
not increased the fees charged for these network and gateway options 
since each was introduced,\6\ and the new fees are more in line with 
the Exchange's current connectivity costs, including costs for software 
and hardware enhancements, and resources dedicated to development, 
quality assurance, and support. The Exchange also notes that these 
connectivity options now provide access to two exchanges, ISE and ISE 
Gemini, for a single fee and thus believes that the new fees are 
appropriate given the additional benefit that this provides to firms 
that choose to connect to both markets. The new fees are also well 
within the range of fees currently charged by other options exchanges. 
For example, NYSE Arca Options (``Arca'') charges a monthly fee of 
$5,000 per connection for a 1 Gb liquidity center network connection 
with a $6,000 per connection initial charge, which is significantly 
more expensive than the proposed Ethernet fee of $750 per month.\7\ 
Furthermore, the Exchange believes that the new fees are not unfairly 
discriminatory as all market participants that use these connectivity 
options will pay the same fee, and there is no differentiation among 
market participants with regard to the fees charged.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
    \6\ See Securities Exchange Act Release No. 55289 (February 13, 
2007), 72 FR 8218 (February 23, 2007) (SR-ISE-2007-04); 68324 
(November 30, 2012), 77 FR 72901 (December 6, 2012) (SR-ISE-2012-
89).
    \7\ See Arca Fees and Charges, Floor and Equipment and Co-
location Fees. There is no gateway fee listed on Arca's fee 
schedule, but the cost of obtaining a 1 Gb connection to Arca is 
considerably higher than the fees proposed in this filing even with 
the additional $500 gateway fee. There is no similar initial charge 
for setting up connectivity to the ISE.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\8\ 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 proposed 
rule change increases certain network and gateway fees to levels that 
are within the range of fees charged by other options exchanges. These 
fees will be charged to all firms that elect to use the connectivity 
options described in this filing. 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 continually review, and consider adjusting, its fees to 
remain competitive with other exchanges. For the reasons described 
above, the Exchange believes that the proposed fee changes reflect this 
competitive environment.
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    \8\ 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\10\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
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    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-2014-36 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2014-36. 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

[[Page 41622]]

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-2014-36, and should be 
submitted on or before August 6, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16652 Filed 7-15-14; 8:45 am]
BILLING CODE 8011-01-P