Document ID: SEC-2012-1271-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2012-08-06T00:00Z

[Federal Register Volume 77, Number 151 (Monday, August 6, 2012)]
[Notices]
[Pages 46776-46778]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19081]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67545; File No. SR-ISE-2012-65]

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

July 31, 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 July 25, 2012, the International Securities Exchange, LLC (the 
``ISE'' or the ``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 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 is proposing to relocate various fees within the Schedule 
of Fees in order to group fees with other similar types of fees and 
adopt a Table of Contents for 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
    The purpose of this proposed rule change is to relocate various 
fees within the Exchange's Schedule of Fees to group fees so that the 
Exchange's fees may be easily located within the fee schedule. The 
Exchange also proposes to adopt a Table of Contents so that the 
Exchange's fees are easily located within the Schedule of Fees. The 
Exchange is not proposing any substantive changes, but rather proposes 
to merely rearrange text within the Schedule of Fees. The only 
substantive change the Exchange proposes to make is the adoption of a 
Preface wherein the Exchange proposes to adopt definitions of market 
participants, certain order types, and provide a list of symbols for 
certain defined groups of securities. The information proposed in the 
Preface already appears in one form or another on the Exchange's 
current Schedule of Fees.
    Specifically, the Exchange proposes to adopt a Table of Contents 
and therein, adopt Sections I through IX. Proposed Section I contains a 
table for Regular Order Fees and Rebates; Proposed Section II contains 
a table for Complex Order Fees and Rebates; Proposed Section III 
contains FX Options Fees and Rebates; Proposed Section IV contains 
Other Options Fees and Rebates; \3\ Proposed Section V contains Trading 
Application Software fees; \4\ Proposed Section VI contains Access 
Service fees; \5\ Proposed Section VII contains Legal & Regulatory 
fees; \6\ Proposed Section VIII contains Market

[[Page 46777]]

Data fees; \7\ and Proposed Section IX contains Other Services fees.\8\
---------------------------------------------------------------------------

    \3\ Other Options Fees and Rebates include the QCC and 
Solicitation Rebate, Index License Surcharge, Market Maker Tiers, 
Payment for Order Flow, PMM Linkage Credit, Route-Out Fees, Credit 
for Responses to Flash Orders, Firm Fee Cap, Inactive PMM Fee and 
Cancellation Fee. The Exchange notes that by adopting the proposed 
headings, the Exchange is simply proposing to make its Schedule of 
Fees more transparent and easier to navigate. As such, the Exchange 
believes that changes such as the adoption of the term PMM Linkage 
Credit, which is currently identified on the Exchange's Schedule of 
Fees as Intermarket Sweep Order Credit, are not substantive changes 
and are simply name changes to allow market participants to 
understand the Exchange's fees and credits with greater ease.
    \4\ Trading Application Software fees include Installation fees, 
Software License and Maintenance fees and FIX Session/API Session 
fees.
    \5\ Access Service fees include Access Fees, Network Fees and 
Telco Line Charges.
    \6\ Legal & Regulatory fees include Application Fee, 
Administrative Fee, Options Regulatory Fee and Regulatory Fee.
    \7\ Market Data fees include fees for the following market data 
offerings: ISE Open/Close Trade Profile End of Day, ISE Open/Close 
Trade Profile Intraday, ISE Open/Close Trade Profile End of Day and 
ISE Open/Close Trade Profile Intraday, Enhanced Sentiment Market 
Data, Historical Data, Real-time Depth of Market Raw Data Feed, ISE 
Order Feed, ISE Top Quote Feed, ISE Spread Feed and ISE Implied 
Volatility and Greeks Feed.
    \8\ Other Services fees include Training, Testing, Third Party 
Developers and Disaster Recovery Testing & Relocation Services fees.
---------------------------------------------------------------------------

    This proposed rule change also proposes to adopt a Preface which 
contains a list of defined terms that are used by the Exchange in 
assessing its fees for market participants to use as guidance in 
determining the Exchange's fees and rebates. Specifically, the Exchange 
proposes to adopt the following terms and definitions in the proposed 
Preface:
     A ``Priority Customer'' is a person or entity that is not 
a broker/dealer in securities, and does not place more than 390 orders 
in listed options per day on average during a calendar month for its 
own beneficial account(s), as defined in ISE Rule 100(a)(37A).\9\
---------------------------------------------------------------------------

    \9\ Prior to adopting the term ``Priority Customer,'' retail 
customers were identified on the Exchange's Schedule of Fees, and in 
some cases, are still identified on the Exchange's Schedule of Fees, 
by the term ``public customers.'' With this proposed rule change, 
public customers will now be identified as Priority Customers. The 
Exchange is not proposing any substantive change and is simply 
making a name change for the purpose of identifying this category of 
market participant consistently throughout the Schedule of Fees.
---------------------------------------------------------------------------

     A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
     A ``Non-ISE Market Maker'' is a market maker as defined in 
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended, 
registered in the same options class on another options exchange.
     A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
     A ``Broker-Dealer'' order is an order submitted by a 
member for a non-member broker-dealer' account.\10\
---------------------------------------------------------------------------

    \10\ The term ``Broker-Dealer'' does not currently appear in the 
Exchange's Schedule of Fees. Broker-Dealer orders are currently 
charged the same fees as Firm Proprietary orders. However, in 
recognizing that Firm Proprietary orders and Broker-Dealer orders 
are not always synonymous, the Exchange proposes to adopt the term 
``Broker-Dealer'' as a distinct order type.
---------------------------------------------------------------------------

     A ``Flash Order'' is a Priority or Professional Customer 
order that is exposed at the National Best Bid or Offer by the Exchange 
to all members for execution, as provided under Supplementary Material 
.02 to ISE Rule 803.
     A ``Regular Order'' is an order that consists of only a 
single option series and is not submitted with a stock leg.
     A ``Complex Order'' is any order involving the 
simultaneous purchase and/or sale of two or more different options 
series in the same underlying security, as provided in ISE Rule 722, as 
well as Stock-Option Orders and SSF-Option Orders.
     A ``Crossing Order'' is an order executed in the 
Exchange's Facilitation Mechanism, Solicited Order Mechanism, Price 
Improvement Mechanism (PIM) or submitted as a Qualified Contingent 
Cross order. For purposes of this Fee Schedule, orders executed in the 
Block Order Mechanism are also considered Crossing Orders.\11\
---------------------------------------------------------------------------

    \11\ Crossing Order fees currently appear in the column titled 
Facilitation, Solicited Order, Price Improvement and Block Order 
Mechanisms and Qualified Contingent Cross orders on pages 17, 21 and 
23 of the Exchange's current Schedule of Fees. A Crossing Order is 
currently identified on the Exchange's Schedule of Fees as a Special 
Order. With this proposed rule change, Special Orders will now be 
identified as Crossing Orders. The Exchange is not proposing any 
substantive change and is simply making a name change for the 
purpose of identifying these orders consistently throughout the 
Schedule of Fees.
---------------------------------------------------------------------------

     ``Responses to Crossing Order'' 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.\12\
---------------------------------------------------------------------------

    \12\ Responses to Crossing Order fees currently appears as 
footnote 8 on page 18 and in the column titled Responses to Special 
Orders on pages 21 and 23 of the Exchange's current Schedule of 
Fees. A Response to Crossing Order is currently identified on the 
Exchange's Schedule of Fees as a Response to Special Order. With 
this proposed rule change, Responses to Special Orders will now be 
identified as Responses to Crossing Orders. The Exchange is not 
proposing any substantive change and is simply making a name change 
for the purpose of identifying these orders consistently throughout 
the Schedule of Fees.
---------------------------------------------------------------------------

     ``Select Symbols'' are options overlying QQQ, C, BAC, SPY, 
IWM, XLF, GE, JPM, INTC, RIMM, T, VZ, UNG, FCX, CSCO, DIA, AMZN, 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, SDS, SLV, XLE, XOM, 
ABX, BMY, BP, COP, DELL, FXI, HAL, IBM, KO, LVS, MCD, MO, MON, NOK, 
ORCL, PFE, QCOM, S, SLB, SNDK, TBT, USO, V, VALE, WFT, XLI, XRT, YHOO, 
AKAM, AMD, APC, BA, BRCM, GG, HPQ, LCC, NEM, NFLX, NVDA, QID, SSO, 
TEVA, TLT, TZA, UAL, WFC, XLB, SIRI, SBUX, VVUS, MSI, AAPL, BIDU, and 
VXX.
     ``Special Non-Select Penny Pilot Symbols'' are options 
overlying BTU, CLF, CRM, CVX, DE, EBAY, FDX, GLW, GM, GMCR, GS, HD, 
LULU, MCP, MMR, MOS, MRK, SHLD, SINA, SLW, UPS, USB, WYNN, XHB, XLK.
     ``Non-Select Symbols'' are options overlying all symbols 
excluding Select Symbols and Special Non-Select Penny Pilot Symbols.
     ``FX Option Symbols'' are options overlying AUM, GBP, EUU 
and NDO.
     ``Early Adopter FX Option Symbols'' are options overlying 
NZD, PZO, SKA, BRB, AUX, BPX, CDD, EUI, YUK and SFC.\13\
---------------------------------------------------------------------------

    \13\ These ten (10) FX options are currently identified on the 
Exchange's Schedule of Fees as symbols traded pursuant to an 
incentive plan known as the FX Options Incentive Plan. With this 
proposed rule change, these ten (10) FX options will now be known as 
Early Adopter FX Option Symbols. The Exchange is not proposing any 
substantive change and is simply making a name change for the 
purpose of identifying this group of FX options consistently 
throughout the Schedule of Fees.
---------------------------------------------------------------------------

     ``Singly Listed Symbols'' are options overlying DMA, FUM, 
HSX, OOG, BYT, HVY, RUF, JLO, SIN, RND, HHO, PMP, POW, TNY, WMX, IXZ, 
UKX, NXTQ, FXO, QQEW, PLTM, SMDD, and FIW.\14\
---------------------------------------------------------------------------

    \14\ The Exchange notes that DMA, FUM, HSX, OOG, BYT, HVY, RUF, 
JLO, SIN, RND, HHO, PMP, POW, TNY, WMX, IXZ, UKX and NXTQ are 
currently identified on the Exchange's Schedule of Fees as Singly 
Listed Indexes, while FBT, FXO, QQEW, CU, PLTM, SDOW, UDOW, SMDD, 
UMDD, SRTY, URTY, FIW and CQQQ are currently identified on the 
Exchange's Schedule of Fees as Singly Listed ETFs. However, eight 
(8) of the Singly Listed ETFs are now listed on at least one other 
exchange; therefore, ISE proposes to remove these products from its 
list of Singly Listed Symbols. The eight (8) products are FBT, CU, 
SDOQ, UDOW, UMDD, SRTY, URTY and CQQQ. With this proposed rule 
change, all of Singly Listed Indexes and Singly Listed ETFs will 
collectively be identified as Singly Listed Symbols. The Exchange is 
not proposing any substantive change and is simply adopting the term 
Singly Listed Symbol to include all singly listed products.
---------------------------------------------------------------------------

    The goal of this proposed rule change is to reformat the current 
fee schedule by bringing the Exchange's transaction fees and rebates to 
the front of the proposed Schedule of Fees and to present these fees 
and rebates in a more cohesive table as opposed to presenting these 
fees and rebates in multiple tables, as is currently the case. The 
Exchange believes the proposed reformatted Schedule of Fees will allow 
market participants to more easily ascertain and locate fees that are 
applicable to them.
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'') \15\ in general, and furthers the 
objectives of Section 6(b)(5) of the Exchange Act \16\ in particular, 
in

[[Page 46778]]

that it is designed to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest, by organizing its Rules in such a 
way as to make them easy to locate by grouping transaction fees with 
other transaction fees and creating sections for categories that, in 
some cases, already exist on the Exchange's Schedule of Fees, to 
provide market participants an ability to view fees, which may be 
applicable to them, in one section or subsection of the Schedule of 
Fees. The Exchange believes that adopting a Table of Contents will 
provide greater clarity to the Schedule of Fees and allow market 
participants to readily locate fees within the Schedule of Fees.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 Exchange 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.\17\ 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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-2012-65 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-2012-65. 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 
a.m. and 3 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-2012-65 and should be 
submitted on or before August 27, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Kevin M. O'Neill,
Deputy Secretary.
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 2012-19081 Filed 8-3-12; 8:45 am]
BILLING CODE 8011-01-P