Document ID: SEC-2012-0398-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2012-03-13T04:00Z

[Federal Register Volume 77, Number 49 (Tuesday, March 13, 2012)]
[Notices]
[Pages 14847-14848]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5984]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66525; File No. SR-ISE-2012-09]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Network Fees

March 7, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is 
hereby given that on February 22, 2012, the International Securities 
Exchange, LLC (the ``Exchange'' or the ``ISE'') filed with the 
Securities and Exchange Commission (the ``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the Exchange. 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 network 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 amend the Exchange's 
network fees. Specifically, the Exchange proposes to adopt a network 
fee for a new 10 Gigabit (GB) low latency Ethernet connectivity option. 
The Exchange currently offers two Ethernet connection options, a 1 GB 
connection at a cost of $500 per month and a 10 GB connection at a cost 
of $4,000 per month.
    In keeping with changes in technology, the Exchange now proposes to 
provide an enhanced bandwidth option to enable Members a more efficient 
connection to the Exchange. Through the use of new, advanced hardware, 
the proposed new connectivity option will provide a higher speed 
network to access the Exchange's Optimise trading system.
    The Exchange proposes to charge Members $7,000 per month for this 
connection. ISE has expended significant amount of resources in 
developing this infrastructure and the proposed fees will allow the 
Exchange to recoup its investment. The Exchange's new network 
connectivity option will provide Members the option to select the 
bandwidth that is appropriate for their current needs. This new 
connectivity option is voluntary and therefore, the Exchange will 
retain the existing connectivity options for those Members who choose 
not to utilize the new network connection.
    The Exchange has designated this proposal to be operative on March 
1, 2012.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Securities Exchange Act of 1934 
(``Act''),\3\ in general, and with Section 6(b)(4) of the Act,\4\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among Exchange members and 
other persons using its facilities. In particular, the proposed rule 
change will provide greater transparency into the connectivity options 
available to Members.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4).
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    The Exchange's proposal for a low latency 10 GB Ethernet network

[[Page 14848]]

connection will provide Members the ability to increase data 
transmission and reduce latency, thereby enhancing their operations. 
The Exchange believes the proposed fees for this new connection to the 
Exchange are reasonable because the fees charged will allow the 
Exchange to cover the hardware, installation, testing and connection 
costs to maintain and manage the enhanced connection. The proposed fees 
will allow the Exchange to recoup costs associated with providing the 
low latency 10 GB connection and provide the Exchange a profit while 
providing Members the possibility of reducing the number of their 
connections to the Exchange. The Exchange believes the proposed fees 
are reasonable in that they are lower than the fees charged by other 
trading venues for similar connectivity services.\5\
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    \5\ NYSE charges $10,000 per month for 10Gb LCN (Liquidity 
Center Network) Connection. See https://usequities.nyx.com/sites/usequities.nyx.com/files/nyse_arca_marketplace_fees_1.3.2012.pdf, page 13.
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    The Exchange also believes the proposed 10 GB fee for connectivity 
to the Exchange is equitably allocated in that all Exchange Members 
that voluntarily select this service option will be charged the same 
amount to maintain and manage the enhanced connection. All Exchange 
Members have the option to select this voluntary network connection.
    The Exchange also believes the proposed 10 GB fee for connectivity 
to the Exchange is not unfairly discriminatory in that all Exchange 
Members will have the option of selecting the 10 GB connection to the 
Exchange, and there is no differentiation among Members with regard to 
the fees charged for this option.

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 Exchange Act.\6\ 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 Exchange Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 Exchange 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-2012-09 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-2012-09. 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-2012-09 and should be 
submitted on or before April 3, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5984 Filed 3-12-12; 8:45 am]
BILLING CODE 8011-01-P