Document ID: SEC-2014-0445-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2014-03-18T04:00Z

[Federal Register Volume 79, Number 52 (Tuesday, March 18, 2014)]
[Notices]
[Pages 15170-15172]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-05873]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71705; File No. SR-ISE-2014-14]

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

March 12, 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 March 4, 2013, 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 to extend the 
Qualified Contingent Cross (``QCC'') and Solicitation rebate to 
solicited orders executed in the Price Improvement Mechanism (``PIM'') 
and Facilitation Mechanism. 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 the proposed rule change is to amend the Schedule of 
Fees to extend the QCC and Solicitation rebate to solicited orders 
executed in the PIM and in the Facilitation Mechanism. The fee changes 
discussed apply to both Standard Options and Mini Options traded on the 
Exchange. The Exchange's Schedule of Fees has separate tables for fees 
applicable to Standard Options and Mini Options. The Exchange notes 
that while the discussion below relates to fees for Standard Options, 
the fees for Mini Options, which are not discussed

[[Page 15171]]

below, are and shall continue to be 1/10th of the fees for Standard 
Options.
    The Exchange currently provides tiered rebates, in all symbols, for 
each originating side in QCC orders and orders executed in the 
Solicited Order Mechanism, based on a Member's volume in these crossing 
mechanisms during a month.\3\ Currently this rebate is $0.07 per 
contract for Members that execute 200,000 to 499,999 contracts, $0.08 
per contract for Members that execute 500,000 to 699,999 contracts, 
$0.09 per contract for Members that execute 700,000 to 999,999 
contracts, and $0.11 per contract for Members that execute 1,000,000 
contracts or more in a given month. The Exchange now proposes to extend 
this pricing to include solicited orders executed in the PIM and in the 
Facilitation Mechanism, i.e., orders executed in the PIM and in the 
Facilitation Mechanism where the agency order is executed against a 
solicited contra order,\4\ in addition to QCC orders and orders 
executed in the Solicited Order Mechanism. With this proposed change, 
Members will receive a rebate for all solicited Crossing Orders as long 
as they meet the required volume threshold.
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    \3\ Volume in Standard Options and Mini Options will be combined 
to calculate the tier a Member has reached. Based on the tier 
achieved, the Member will be rebated for that tier for all the 
Standard Options traded at the Standard Option rebate amount and for 
all the Mini Options traded at the Mini Option rebate amount.
    \4\ See ISE Rules 723 and 716(d) for rules governing the Price 
Improvement and Facilitation Mechanisms, respectively. An Electronic 
Access Member may either facilitate a Price Improvement or 
Facilitation Order it represents as agent or solicit interest to 
execute against an order it represents as agent.
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2. Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and Section 
6(b)(4) of the Act,\6\ 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, equitable, and not unfairly 
discriminatory to extend the current structure for QCC and Solicitation 
rebates to solicited orders executed in the PIM and in the Facilitation 
Mechanism as the Exchange is attempting to incentivize that order flow. 
Members may enter orders in each of the QCC, Solicited Order, 
Facilitation, and Price Improvement Mechanisms with a contra order that 
has been solicited from another party. Currently, however, only QCC 
orders and orders executed in the Solicited Order Mechanism qualify for 
the rebate. The Exchange believes that it is more equitable to provide 
rebates to all solicited Crossing Orders, regardless of the crossing 
mechanism in which they are executed.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange notes that it has determined to charge fees and 
provide rebates in Mini Options at a rate that is 1/10th the rate of 
fees and rebates the Exchange provides for trading in Standard Options. 
The Exchange believes it is reasonable and equitable and not unfairly 
discriminatory to assess lower fees and rebates to provide market 
participants an incentive to trade Mini Options on the Exchange. The 
Exchange believes the proposed fees are reasonable and equitable in 
light of the fact that Mini Options have a smaller exercise and 
assignment value, specifically 1/10th that of a standard option 
contract, and, as such, is providing fees for Mini Options that are 1/
10th of those applicable to Standard Options.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\7\ 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. To the contrary, 
the Exchange believes that the proposed rule change is pro-competitive 
as it is designed to attract additional order flow to the ISE's Price 
Improvement Mechanism and the Facilitation Mechanism. 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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    \7\ 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 \8\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\9\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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 No. SR-ISE-2014-14 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-2014-14. 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

[[Page 15172]]

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 ISE. 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-2014-14 and should be 
submitted by April 8, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Kevin M. O'Neill,
Deputy Secretary.
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    \10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-05873 Filed 3-17-14; 8:45 am]
BILLING CODE 8011-01-P