Document ID: SEC-2015-2003-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2015-11-30T05:00Z

[Federal Register Volume 80, Number 229 (Monday, November 30, 2015)]
[Notices]
[Pages 74822-74824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30243]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76507; File No. SR-ISE-2015-41]

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

November 23, 2015.
    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 November 10, 2015, the International Securities Exchange, LLC 
(the ``Exchange'' or ``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

    ISE proposes to amend the Schedule of Fees as described in more 
detail below. The text of the proposed rule change is available on the 
Exchange's Internet Web site at 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 Exchange 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 introduce a new set of rebates to the Qualified Contingent 
Cross (``QCC'') and/or other solicited crossing orders, including 
solicited orders executed in the Solicitation, Facilitation or Price 
Improvement Mechanisms, pricing initiative that offers rebates to 
members who execute a specified volume of QCC and other solicited 
crossing orders in a month. This new set of rebates, as proposed, 
offers a lower rebate to members that execute a specified volume of QCC 
and solicited orders between two Priority Customers \3\ (```Customer to 
Customer' Orders''). The Exchange notes that there is no change to how 
volume is calculated for the volume tiers. Thus, members will continue 
to obtain the tier level based on all QCC and/or solicited crossing 
orders' originating side volume. Members will receive the Non-
``Customer to Customer'' Order \4\ rebate for their Non-``Customer to 
Customer'' Orders and the ``Customer to Customer'' Order rebate for 
their ``Customer to Customer'' Orders.
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    \3\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s).
    \4\ ``Non-`Customer to Customer' Orders'' are QCC and/or other 
solicited crossing orders, including solicited orders executed in 
the Solicitation, Facilitation or Price Improvement Mechanisms, and 
excluding ``Customer to Customer'' Orders.
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    Currently, the Exchange offers members rebates in QCC and/or other 
solicited crossing orders (including ``Customer to Customer'' Orders), 
i.e. orders executed in the Solicitation,

[[Page 74823]]

Facilitation, or Price Improvement Mechanisms where the agency order is 
executed against an order solicited from another party. These rebates 
are provided for each originating side of a crossing order, based on a 
member's volume in the crossing mechanisms during a given month. 
Currently, for members that execute 0 to 99,999 originating contract 
sides (``Tier 1'') the rebate is $0.00 per contract, for members that 
execute 100,00 to 199,999 originating contract sides (``Tier 2'') the 
rebate is $0.05 per contract, for members that execute 200,000 to 
499,999 originating contract sides (``Tier 3'') the rebate is $0.07 per 
contract, for members that execute 500,000 to 699,999 originating 
contract sides (``Tier 4'') the rebate is $0.08 per contract, for 
members that execute 700,000 to 999,999 originating contract sides 
(``Tier 5'') the rebate is $0.09 per contract, and for members that 
execute 1,000,000 originating contract sides or more (``Tier 6'') the 
rebate is $0.11 per contract.\5\
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    \5\ The rebate is applied to the originating contract side of 
QCC and solicited crossing orders traded in a given month once a 
member reaches the specified volume threshold/Tier during that 
month.
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    The Exchange now proposes to offer a new set of rebates for 
``Customer to Customer'' Orders. These rebates will be provided to 
members for each originating contract side of a ``Customer to 
Customer'' Order in all symbols traded on the Exchange as follows: For 
Tier 1 the rebate is $0.00, for Tiers 2 through 3 the rebate is $0.01, 
and for Tiers 4 through 6 the rebate is $0.03.
    Finally, the Exchange notes that all originating contract side 
volume will continue to contribute to the member's Tier level. For 
example, if a member has 175,000 originating contract sides for Non-
``Customer to Customer'' Orders and 75,000 originating contract sides 
for ``Customer to Customer'' Orders, the member's aggregated volume 
will be 250,000 placing them in Tier 3 (200,000 to 499,999). As a 
result, the member will receive a rebate of $0.07 per originating 
contract side for its Non-``Customer to Customer'' Orders and a rebate 
of $0.01 per originating contract side for its ``Customer to Customer'' 
Orders.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\6\ in general, and Section 
6(b)(4) of the Act,\7\ 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.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable and equitable to offer 
lower rebates for certain ``Customer to Customer'' Orders because other 
exchanges, including the CBOE for example, offer no rebate (credit) for 
customer to customer executions.\8\ Further, the Exchange believes it 
is reasonable and equitable to continue to provide for the opportunity 
to receive rebates as these proposed rebates are designed to attract 
additional order flow to the Exchange and continue to remain attractive 
to market participants. The Exchange believes that the proposed fees 
are not unfairly discriminatory because these fees would be uniformly 
applied to all ``Customer to Customer'' Orders. Additionally, as fees 
for Priority Customer orders continue to decrease, it has become 
necessary for the Exchange to lower rebates for ``Customer to 
Customer'' Orders in order to balance the decrease in fees for Priority 
Customer orders and the rebates provided for ``Customer to Customer'' 
Orders.
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    \8\ See CBOE Fee Schedule, QCC Rate Table, Notes at https://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\9\ 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 Exchange 
believes that the proposed rebates remain competitive with the many 
rebates (if any) offered by other options exchanges as discussed above. 
Further, the rebates remain attractive to market participants. 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 and rebates 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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    \9\ 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,\10\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\11\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 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-2015-41 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-2015-41. 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

[[Page 74824]]

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-2015-41 and should be submitted by December 21, 
2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-30243 Filed 11-27-15; 8:45 am]
 BILLING CODE 8011-01-P