Document ID: SEC-2012-2077-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2012-12-18T05:00Z

[Federal Register Volume 77, Number 243 (Tuesday, December 18, 2012)]
[Notices]
[Pages 74898-74902]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30377]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68413; File No. SR-ISE-2012-91]

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

December 12, 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 December 3, 2012, 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 Substance 
of the Proposed Rule Change

    The ISE proposes to amend 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.

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange currently assesses per contract transaction fees and 
provides rebates to market participants that add or remove liquidity 
from the Exchange (``maker/taker fees and rebates'') in 155 options 
classes (the ``Select Symbols'').\3\ The Exchange's maker/taker fees 
and rebates are applicable to regular and complex orders executed in 
the Select Symbols. The Exchange also currently assesses maker/taker 
fees and rebates for complex orders in symbols that are in the Penny 
Pilot program but are not a Select Symbol (``Non-Select Penny Pilot 
Symbols'') \4\ and in all symbols that are not in the Penny Pilot 
Program (``Non-Penny Pilot Symbols'').\5\
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    \3\ Options classes subject to maker/taker fees and rebates are 
identified by their ticker symbol on the Exchange's Schedule of 
Fees.
    \4\ See Exchange Act Release Nos. 65724 (November 10, 2011), 76 
FR 71413 (November 17, 2011) (SR-ISE-2011-72); 66597 (March 14, 
2012), 77 FR 16295 (March 20, 2012) (SR-ISE-2012-17); 66961 (May 10, 
2012), 77 FR 28914 (May 16, 2012) (SR-ISE-2012-38); and 67628 
(August 9, 2012), 77 FR 49049 (August 15, 2012) (SR-ISE-2012-71).
    \5\ See Exchange Act Release Nos. 66084 (January 3, 2012), 77 FR 
1103 (January 9, 2012) (SR-ISE-2011-84); 66392 (February 14, 2012), 
77 FR 10016 (February 21, 2012) (SR-ISE-2012-06); 66962 (May 10, 
2012), 77 FR 28917 (May 16, 2012) (SR-ISE-2012-35); 67400 (July 11, 
2012), 77 FR 42036 (July 17, 2012) (SR-ISE- 2012-63) and 67628 
(August 9, 2012), 77 FR 49049 (August 15, 2012) (SR-ISE-2012-71).
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    The purpose of this proposed rule change is to amend the list of 
Select Symbols. Specifically, the Exchange proposes to add the 
following 35 symbols to the list of Select Symbols: American Capital 
Ltd. (''ACAS''), Adobe Systems Inc. (``ADBE''), AK Steel Holding Corp. 
(``AKS''), Applied Materials Inc. (``AMAT''), Brocade Communications 
Systems (``BRCD''), Boston Scientific Corp. (``BSX''), CSX Corp. 
(``CSX''), Delcath Systems Inc. (``DCTH''), iShares Japan Index ETF 
(``EWJ''), iShares MSCI Taiwan Index Fund (``EWT''), iShares MSCI South 
Korea Index Fund (``EWY''), Fidelity National Information Services Inc. 
(``FIS''), General Mills Inc. (``GIS''), Genworth Financial Inc. 
(``GNW''), Garmin Ltd. (``GRMN''), Huntington Bancshares Inc. 
(``HBAN''), Honeywell International Inc. (``HON''), Hershey Co. 
(``HSY''), Lowe's Companies Inc. (``LOW''), MetLife Inc. (``MET''), 
Nabors Industries Ltd. (``NBR''), ProShares Ultra QQQ (``QLD''), 
Regions Financial Corp. (``RF''), Rambus Inc. (``RMBS''), RadioShack 
Corp. (``RSH''), Savient Pharmaceuticals Inc. (``SVNT''), Teck 
Resources Limited (``TCK''), TiVo Inc. (``TIVO''), Trina Solar Ltd. 
(``TSL''), Tesoro Corp. (``TSO''), Texas Instruments Inc. (``TXN''), 
PowerShares DB US Dollar Bullish Fund (``UUP''), MEMC Electronic 
Materials (``WFR''), Whirlpool Corp. (``WHR'') and Health Care Select 
Sector SPDR Fund (``XLV'') (``Additional Select Symbols'').

[[Page 74899]]

    With the addition of the Additional Select Symbols to Select 
Symbols, the fees currently applicable to regular and complex orders in 
the Select Symbols will now be applied to regular and complex orders in 
the Additional Select Symbols.
Regular Order Fees and Rebates
    The Exchange currently applies transaction fees to regular orders 
in the Additional Select Symbols, as follows: \6\
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    \6\ Additional Select Symbols are currently subject to the 
standard transaction fee listed in the table titled Non-Select 
Symbols. See Schedule of Fees, Section I, Regular Order Fees and 
Rebates.
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    [rtarr8] For Market Maker \7\ orders, a fee of $0.18 per contract; 
\8\
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    \7\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule 
100(a)(25).
    \8\ The Exchange provides a volume-based discount to fees to ISE 
Market Maker contracts for regular orders in Non-Select Symbols. See 
Schedule of Fees, Section IV, C. ISE Market Maker Discount Tiers.
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    [rtarr8] For Market Maker (for orders sent by Electronic Access 
Members), Firm Proprietary/Broker-Dealer and Professional Customer \9\ 
orders, a fee of $0.20 per contract;
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    \9\ A Professional Customer is a person who is not a broker/
dealer and is not a Priority Customer.
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    [rtarr8] For Non-ISE Market Maker \10\ orders, a fee of $0.45 per 
contract;
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    \10\ A Non-ISE Market Maker, or Far Away Market Maker 
(``FARMM''), is a market maker as defined in Section 3(a)(38) of the 
Securities Exchange Act of 1934 registered in the same options class 
on another options exchange.
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    [rtarr8] For Priority Customer \11\ orders, a fee of $0.00 per 
contract.
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    \11\ A Priority Customer is defined in ISE Rule 100(a)(37A) as 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).
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    The Exchange currently charges a fee of $0.20 per contract to all 
market participants (except for Market Makers, this fee is currently 
$0.18 per contract,\12\ and for Priority Customers, this fee is $0.00 
per contract) for regular Crossing Orders in the Non-Select Penny Pilot 
Symbols (this fee currently applies to the Additional Select Symbols as 
they are a subset of Non-Select Penny Pilot Symbols). The Exchange also 
currently charges a fee of $0.20 per contract to all market 
participants (except for Non-ISE Market Makers, this fee is currently 
$0.45 per contract, and for Market Makers, this fee is $0.18 per 
contract \13\) for regular Responses to Crossing Orders in the Non-
Select Penny Pilot Symbols (this fee currently applies to the 
Additional Select Symbols as they are a subset of Non-Select Penny 
Pilot Symbols).
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    \12\ The volume-based discount to fees to ISE Market Maker 
contracts also applies to regular Crossing Orders. See supra, note 
8.
    \13\ The volume-based discount to fees to ISE Market Maker 
contracts also applies to regular Responses to Crossing Orders. See 
supra, note 8.
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    With this proposed rule change, the Additional Select Symbols will 
now be subject to the maker/taker fees and rebates applicable to 
Regular orders in the Select Symbols.\14\ The Exchange currently 
charges the following maker fees and rebates for Select Symbols: (i) 
For Market Maker, Non-ISE Market Maker, Firm Proprietary/Broker-Dealer 
and Professional Customer orders, $0.10 per contract; (ii) for Priority 
Customer orders, $0.00 per contract; and (iii) for Market Maker Plus 
\15\ orders, a rebate of $0.10 per contract. The Exchange also 
currently charges the following taker fees for Select Symbols: (i) For 
Market Maker and Market Maker Plus orders, $0.32 per contract; (ii) for 
Non-ISE Market Maker orders, $0.36 per contract; (iii) for Firm 
Proprietary/Broker-Dealer and Professional Customer orders, $0.33 per 
contract; and (iv) for Priority Customer orders, $0.25 per contract.
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    \14\ See Schedule of Fees, Section I, Regular Order Fees and 
Rebates.
    \15\ In order to promote and encourage liquidity in the Select 
Symbols, the Exchange currently offers a $0.10 per contract rebate 
to Market Makers if the quotes they sent to the Exchange qualify the 
Market Maker to become a Market Maker Plus.
    A Market Maker Plus is a Market Maker who is on the National 
Best Bid or National Best Offer 80% of the time for series trading 
between $0.03 and $5.00 (for options whose underlying stock's 
previous trading day's last sale price was less than or equal to 
$100) and between $0.10 and $5.00 (for options whose underlying 
stock's previous trading day's last sale price was greater than 
$100) in premium in each of the front two expiration months and 80% 
of the time for series trading between $0.03 and $5.00 (for options 
whose underlying stock's previous trading day's last sale price was 
less than or equal to $100) and between $0.10 and $5.00 (for options 
whose underlying stock's previous trading day's last sale price was 
greater than $100) in premium for all expiration months in that 
symbol during the current trading month. A Market Maker's single 
best and single worst overall quoting days each month, on a per 
symbol basis, is excluded in calculating whether a Market Maker 
qualifies for this rebate, if doing so will qualify a Market Maker 
for the rebate.
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    The Exchange currently charges Market Maker, Non-ISE Market Maker, 
Firm Proprietary/Broker-Dealer and Professional Customers a fee of 
$0.20 per contract ($0.00 per contract for Priority Customers) for 
regular Crossing Orders in the Select Symbols, and a fee of $0.40 per 
contract to all market participants for regular Responses to Crossing 
Orders in the Select Symbols. With this proposed rule change, the fee 
for regular Crossing Orders in the Additional Select Symbols will 
remain at $0.20 per contract for most market participants. For Priority 
Customers, this fee will remain at $0.00 per contract, and for Market 
Makers, this fee will increase, from $0.18 per contract \16\ to $0.20 
per contract. With this proposed rule change, the fee for regular 
Responses to Crossing Orders will increase for most market 
participants, from $0.20 per contract to $0.40 per contract, with the 
exception of Non-ISE Market Makers who will now pay a lower fee of 
$0.40 per contract as opposed to $0.45 per contract.
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    \16\ The volume-based discount to fees to ISE Market Maker 
contracts also applies. See supra, note 8.
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    The Exchange also currently provides a rebate of $0.25 per contract 
for contracts that are submitted to the Price Improvement Mechanism 
that do not trade with their contra order in the Select Symbols, and a 
rebate of $0.15 per contract for contracts that are submitted to the 
Facilitation and Solicited Order Mechanisms that do not trade with 
their contra order in the Select Symbols except when those contracts 
trade against pre-existing orders and quotes on the Exchange's 
orderbooks. With this proposed rule change, market participants trading 
in the Additional Select Symbols will now be eligible for rebates that 
were not previously available for this group of symbols. Specifically, 
market participants will now receive a rebate of $0.25 per contract for 
contracts that are submitted to the Price Improvement Mechanism that do 
not trade with their contra order in the Additional Select Symbols. 
Further, market participants will now also receive a rebate of $0.15 
per contract for contracts that are submitted to the Facilitation and 
Solicited Order Mechanisms that do not trade with their contra order in 
the Additional Select Symbols except when those contracts trade against 
pre-existing orders and quotes on the Exchange's orderbooks.
    Further, the Exchange currently charges Primary Market Makers 
(PMMs) a transaction fee of $0.18 per contract \17\ in the Additional 
Select Symbols when they trade report a Priority Customer or 
Professional Customer order in accordance with their obligation to 
provide away market price protection. PMMs in Select Symbols do not 
receive a maker rebate nor pay a taker fee when trading reporting.\18\ 
With this proposed rule change, PMMs in the Additional Select Symbols 
will also not receive a maker rebate nor pay a taker fee when trade 
reporting.
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    \17\ The volume-based discount to fees to ISE Market Maker 
contracts also applies. See supra, note 8.
    \18\ See Schedule of Fees, Section I, Regular Order Fees and 
Rebates, footnote 9.

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[[Page 74900]]

Complex Order Fees and Rebates
    With this proposed rule change, the maker fee for complex orders in 
the Additional Select Symbols will remain unchanged because the 
Exchange currently charges the same maker fee for complex orders in 
Select Symbols and Penny Pilot Symbols.\19\ Specifically, for Select 
Symbols and Penny Pilot Symbols, the Exchange currently charges a 
complex order maker fee of: (i) $0.10 per contract for Market Maker, 
Firm Proprietary/Broker-Dealer and Professional Customer orders; (ii) 
$0.20 per contract for Non-ISE Market Maker orders; and (iii) $0.00 per 
contract for Priority Customer orders.
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    \19\ Additional Select Symbols are currently subject to the fee 
listed in the column titled Maker Fee for Select Symbols and Penny 
Pilot Symbols. See Schedule of Fees, Section II, Complex Order Fees 
and Rebates.
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    With this proposed rule change, the maker fee for complex orders in 
the Additional Select Symbols when trading against Priority Customers 
will also remain unchanged because, once again, the Exchange currently 
charges the same maker fee for complex orders in Select Symbols when 
trading against Priority Customers (excluding SPY) and Non-Select Penny 
Pilot Symbols when trading against Priority Customers.\20\ 
Specifically, for complex orders in Select Symbols when trading against 
Priority Customer (excluding SPY) and Non-Select Penny Pilot Symbols 
when trading against Priority Customers complex orders, the Exchange 
currently charges a maker fee of: (i) $0.37 per contract for Market 
Maker orders; (ii) $0.39 per contract for Non-ISE Market Maker, Firm 
Proprietary/Broker-Dealer and Professional Customer orders; and (iii) 
$0.00 per contract for Priority Customer orders.
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    \20\ Additional Select Symbols are currently subject to the fee 
listed in the column titled Maker Fee for Non-Select Penny Pilot 
Symbols when trading against Priority Customer. See Schedule of 
Fees, Section II, Complex Order Fees and Rebates.
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    With this proposed rule change, the taker fee for complex orders in 
the Additional Select Symbols will remain unchanged because the 
Exchange currently charges the same taker fee for complex orders in 
Select Symbols and Non-Select Penny Pilot Symbols.\21\ Specifically, 
for complex orders in Select Symbols (excluding SPY) and Non-Select 
Penny Pilot Symbols, the Exchange currently charges a taker fee of: i) 
$0.37 per contract for Market Maker orders; ii) $0.39 per contract for 
Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and Professional 
Customer orders; and iii) $0.00 per contract for Priority Customer 
orders.
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    \21\ Additional Select Symbols are currently subject to the fee 
listed in the column titled Taker Fee for Non-Select Penny Pilot 
Symbols. See Schedule of Fees, Section II, Complex Order Fees and 
Rebates.
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    With this proposed rule change, the Fee for Crossing Orders when 
trading complex orders in the Additional Select Symbols will remain 
unchanged because the Exchange currently charges $0.20 per contract 
(for largest leg only) for complex Crossing Orders in all symbols, 
except for Priority Customers who are currently charged $0.00 per 
contract. Further, the Fee for Responses to Crossing Orders when 
trading complex orders will also remain unchanged because the Exchange 
currently charges $0.40 per contract for Responses to Crossing Orders 
when trading complex orders in Select Symbols and Penny Pilot 
Symbols.\22\
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    \22\ Additional Select Symbols are currently subject to the fee 
listed in the column titled Fee for Responses to Crossing Orders for 
Select Symbols and Penny Pilot Symbols. See Schedule of Fees, 
Section II, Complex Order Fees and Rebates.
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    With this proposed rule change, the rebate levels payable for 
Priority Customer complex orders in the Additional Select Symbols will 
increase because the rebate levels payable for Priority Customer 
complex orders in the Select Symbols are higher than the rebate levels 
currently payable for Priority Customer complex orders in Non-Select 
Penny Pilot Symbols, as described below.
    For the Additional Select Symbols, the Exchange currently provides 
a base rebate of $0.33 per contract, per leg, for Priority Customer 
complex orders when these orders trade with non-Priority Customer 
complex orders in the complex order book.\23\ Additionally, Members who 
achieve a certain level of average daily volume (ADV) of executed 
Priority Customer complex order contracts across all symbols during a 
calendar month are provided a rebate of $0.34 per contract, per leg, in 
these symbols, if a Member achieves an ADV of 40,000 Priority Customer 
complex order contracts; $0.36 per contract, per leg, in these symbols, 
if a Member achieves an ADV of 75,000 Priority Customer complex order 
contracts; $0.37 per contract, per leg, in these symbols, if a Member 
achieves an ADV of 125,000 Priority Customer complex order contracts; 
and $0.38 per contract, per leg, in these symbols, if a Member achieves 
an ADV of 225,000 Priority Customer complex order contracts. The 
highest rebate amount achieved by the Member for the current calendar 
month applies retroactively to all Priority Customer complex order 
contracts that trade with non-Priority Customer complex orders in the 
complex order book executed by the Member during such calendar month.
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    \23\ Additional Select Symbols are currently subject to the 
rebate listed in the column titled Rebate for non-Select Penny Pilot 
Symbols. See Schedule of Fees, Section II, Complex Order Fees and 
Rebates.
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    For Select Symbols (excluding SPY), the Exchange currently provides 
a base rebate of $0.34 per contract, per leg, for Priority Customer 
complex orders when these orders trade with non-Priority Customer 
complex orders in the complex order book. Additionally, Members who 
achieve a certain level of average daily volume (ADV) of executed 
Priority Customer complex order contracts across all symbols during a 
calendar month are provided a rebate of $0.36 per contract, per leg, in 
these symbols, if a Member achieves an ADV of 40,000 Priority Customer 
complex order contracts; $0.37 per contract, per leg, in these symbols, 
if a Member achieves an ADV of 75,000 Priority Customer complex order 
contracts; $0.38 per contract, per leg, in these symbols, if a Member 
achieves an ADV of 125,000 Priority Customer complex order contracts; 
and $0.39 per contract, per leg, in these symbols, if a Member achieves 
an ADV of 225,000 Priority Customer complex order contracts. The 
highest rebate amount achieved by the Member for the current calendar 
month applies retroactively to all Priority Customer complex order 
contracts that trade with non-Priority Customer complex orders in the 
complex order book executed by the Member during such calendar month. 
With this proposed rule change, the increased rebate levels currently 
payable for Priority Customer complex orders in Select Symbols will now 
apply to Priority Customer complex orders in the Additional Select 
Symbols.
    Additionally, the Exchange currently provides Market Makers with a 
two-cent discount when trading against Priority Customer orders that 
are preferenced to them. This discount is applicable when Market Makers 
add or remove liquidity in, among other symbols, Select Symbols and 
Non-Select Penny Pilot Symbols. The Additional Select Symbols are 
currently a part of the Non-Select Penny Pilot Symbols and therefore 
the two-cent discount currently applies to these symbols and will 
continue to apply to these symbols when they become Select Symbols.
    Further, the Exchange currently provides a $0.20 per contract fee 
credit to PMMs for execution of Priority Customer orders in the Non-
Select Penny Pilot Symbols--for classes in which it serves as a PMM--
that send an Intermarket Sweep Order to other exchanges. This credit is 
applied regardless of the transaction fee charged

[[Page 74901]]

by a destination market. For PMMs in the Select Symbols, this credit is 
equal to the fee charged by the destination market. With this proposed 
rule change, PMMs in the Additional Select Symbols will now be provided 
with a credit that is equal to the fee charged by the destination 
market.
    The Exchange also currently provides a $0.20 per contract credit 
for responses to flash orders in the Non-Select Penny Pilot Symbols 
when trading against Professional Customers. For Select Symbols, the 
per contract fee credit for responses to flash orders is (i) $0.10 per 
contract when trading against Priority Customers; (ii) $0.12 per 
contract when trading against Preferenced Priority Customers; and (iii) 
$0.10 per contract when trading against Professional Customers. Market 
participants trading in the Additional Select Symbols will now be 
provided the rebate at levels that are currently in place for Select 
Symbols, as described above.
    With this proposed rule change, the Exchange expects to attract 
additional order flow of regular and complex orders in the Additional 
Select Symbols. The Exchange's maker/taker fees and rebates have been 
effective in attracting order flow of regular and complex orders in the 
Select Symbols and increasing its market share in these symbols. The 
Exchange believes that applying its maker/taker fees and rebates to the 
Additional Select Symbols will result in the Exchange increasing its 
market share for regular and complex orders in these symbols.
    With this proposed rule change, the taker fees and Response to 
Crossing Order fees charged to all market participants for regular 
orders in the Additional Select Symbols will increase, except for Non-
ISE Market Makers whose fee will decrease, while the maker fees for 
regular orders in the Additional Select Symbols will decrease, except 
for Priority Customer maker fees, which will remain the same at $0.00 
per contract. Market Makers will now also be eligible for the Market 
Maker Plus rebate, which was previously not applicable to the 
Additional Select Symbols. This proposed rule change does not proposed 
any change to the maker and taker fees for complex orders in the 
Additional Select Symbols as those fees remain unchanged. The rebate 
levels payable for Priority Customer complex orders in the Additional 
Select Symbols will, however, increase compared to the current rebate 
levels for this group of symbols.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Schedule of 
Fees is consistent with Section 6(b) of the Act \24\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \25\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members and other persons using its 
facilities.
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    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable to add the Additional 
Select Symbols to the current list of Select Symbols. The Exchange 
believes that applying the fees and rebates applicable to Select 
Symbols to the Additional Select Symbols will attract additional order 
flow to the Exchange. Select Symbol pricing has proven beneficial for 
the Exchange and its participants and the Exchange believes that moving 
the Additional Select Symbols to Select Symbols pricing would enhance 
liquidity and participation in those symbols.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to amend its list of Select Symbols to add the 
Additional Select Symbols because the fees and rebates for Select 
Symbols would apply uniformly to all categories of participants in the 
same manner. All market participants who trade options in the Select 
Symbols would be uniformly subject to the fees and rebates applicable 
to those symbols.
    The Exchange believes the proposed rule change is reasonable and 
equitable because it lowers the maker fees applicable to market 
participants and believes that the lower maker fees will attract 
additional maker liquidity and size to the Exchange in the Additional 
Select Symbols. Additionally, while this proposed rule change proposes 
to increase the taker fees applicable to market participants, the 
Exchange believes the benefits of better market quality will outweigh 
the taker fee increases based on the Exchange's experience with trading 
in the Select Symbols.
    Further, the Exchange believes this proposed rule change is 
reasonable and equitable because it will result in market participants 
receiving higher rebates for Priority Customer complex orders when 
these orders trade with non-Priority Customer complex orders in the 
complex order book as the current rebate payable for these orders in 
Select Symbols is higher than the current rebate payable for these 
orders in Additional Select Symbols. The Exchange believes that it is 
reasonable and equitable to provide rebates for Priority Customer 
complex orders when these orders trade with Non-Priority Customer 
complex orders in the complex order book because paying a rebate would 
continue to attract additional order flow to the Exchange and create 
liquidity in the symbols that are subject to the rebate, which the 
Exchange believes ultimately will benefit all market participants who 
trade on ISE. The Exchange already provides these rebates, and is now 
merely proposing to increase the rebate amounts applicable to the 
Additional Select Symbols. With this proposed rule change, Market 
Makers will also now be eligible to receive the Market Maker Plus 
rebate which was not previously applicable to the Additional Select 
Symbols. The Exchange believes that the proposed rebates are 
competitive with rebates provided by other exchanges and are therefore 
reasonable and equitably allocated to those members that direct orders 
to the Exchange rather than to a competing exchange.
    The Exchange believes that it is reasonable and equitable to 
provide a two-cent discount to Market Makers on preferenced orders as 
an incentive for them to quote in the complex order book. ISE notes 
that with this proposed rule change, the Exchange will continue to 
maintain a two cent differential that was previously in place for 
Additional Select Symbols.
    The Exchange believes that the proposed changes are non-
discriminatory because the proposal simply moves the Additional Select 
Symbols from one category of fees into another category thereby 
applying fees currently in effect. Further, the Exchange believes that 
it is equitable and not unfairly discriminatory to amend its list of 
Select Symbols to add the Additional Select Symbols to the Select 
Symbols because the fees applicable to the Select Symbols would apply 
uniformly to all categories of participants in the same manner. All 
market participants who trade the Select Symbols would be uniformly 
subject to the fees and rebates applicable to those symbols.
    Further, the complex order pricing employed by the Exchange has 
proven to be an effective pricing mechanism and attractive to Exchange 
participants and their customers. The Exchange believes that this 
proposed rule change will continue to attract additional complex order 
business in the symbols that are subject of this proposed rule change. 
The Exchange believes that the proposed fees and rebates are fair, 
equitable and not unfairly

[[Page 74902]]

discriminatory because they are consistent with price differentiation 
and fee structures that exists today at other option exchanges. The 
Exchange operates in a highly competitive market in which market 
participants can readily direct order flow to another exchange if they 
deem fee and rebate levels at a particular exchange to be too low or 
too high, as the case may be. With this proposed rule change, the 
Exchange believes it remains an attractive venue for market 
participants to trade regular and complex orders in the Select Symbols 
and the Additional Select Symbols.

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 \26\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\27\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \26\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \27\ 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-2012-91 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-2012-91. 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 20549-1090, 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 ISE's principal office. 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-2012-91, and should be submitted on 
or before January 8, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-30377 Filed 12-17-12; 8:45 am]
BILLING CODE 8011-01-P