Document ID: SEC-2010-1027-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2010-07-08T04:00Z

[Federal Register: July 8, 2010 (Volume 75, Number 130)]
[Notices]               
[Page 39313-39314]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jy10-138]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62430; File No. SR-ISE-2010-69]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Amending the Direct Edge ECN Fee Schedule

July 1, 2010.
    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 June 30, 2010, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') 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.
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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 Exchange proposes to amend Direct Edge ECN's (``DECN'') fee 
schedule for ISE Members \3\ to (i) eliminate a trading volume 
threshold found in footnote 4 to the fee schedule and (ii) add 
clarifying material to explain how certain volume thresholds will be 
adjusted during the month of July 2010. All of the changes described 
herein are applicable to ISE Members.
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    \3\ References to ISE Members in this filing refer to DECN 
Subscribers who are ISE Members.
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    The text of the proposed rule change is available on the Exchange's 
Internet Web site at http://www.ise.com, on the Commission's Internet 
Web site at http://www.sec.gov, at ISE, and at the Commission's Public 
Reference Room.

I. 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
    DECN, a facility of ISE, operates two trading platforms, EDGX and 
EDGA.\4\
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    \4\ This fee filing relates to the trading facility operated by 
ISE and not EDGA Exchange, Inc. and EDGX Exchange, Inc. Direct Edge 
ECN LLC (EDGA and EDGX) will cease to operate in its capacity as an 
electronic communications network following the commencement of 
operations of EDGA Exchange, Inc. and EDGX Exchange, Inc. as 
national securities exchanges.
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    The EDGA and EDGX Exchanges \5\ expect to begin operating as 
national securities exchanges on July 2, 2010. Following the launch 
date there will be a two-week phase-in period during which securities 
currently trading on DECN will be moved from DECN to EDGA and EDGX 
Exchanges. Once a symbol is migrated from DECN to EDGA and EDGX 
Exchanges, it will no longer be available for trading on DECN and will 
only be available for trading on the EDGA and EDGX Exchanges. Once the 
EDGA and EDGX Exchanges begin trading their first security, they will 
thus operate in conjunction with DECN until all symbols are fully 
migrated.
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    \5\ See SR-EDGA-2010-04 and SR-EDGX-2010-04 for EDGA and EDGX 
Exchange fee schedules.
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    As a result of the phased migration of symbols from DECN to EDGA 
and EDGX Exchanges, three volume thresholds will need to be adjusted 
for the month of July 2010 only to reflect the portion of the volume 
that occurs on DECN during the month. The Exchange is proposing to 
place clarifying language about how these rebates are calculated in 
footnote numbers 1 and 2 to the DECN fee schedule. First, the removal 
rate on EDGA (a rebate of $0.0002 per share) is currently contingent on 
the attributed MPID adding (including hidden) and/or routing a minimum 
average daily share volume, measured monthly, of 50,000 shares on EDGA. 
Any attributed MPID not meeting the aforementioned minimum will be 
charged $0.0030 per share for removing liquidity from EDGA (0.20% of 
dollar value for stocks priced less than $1.00). However, the Exchange 
is proposing that for the month of July 2010 only, the 50,000 average 
daily volume threshold will be multiplied by a fraction, the numerator 
of which shall be the sum of the daily consolidated volumes for each 
DECN-traded symbol for all days that such symbol is traded on the DECN 
during the month of July and the denominator of which shall be the 
monthly consolidated volume for all DECN-traded symbols during the 
month of July.
    Secondly, Members can qualify for a rebate of $0.0032 per share for 
all liquidity posted on EDGX if they add or route at least 5,000,000 
shares of average daily volume prior to 9:30 a.m. or after 4 p.m. 
(includes all flags except 6) AND add a minimum of 50,000,000 shares of 
average daily volume on EDGX in total, including during both market 
hours and pre- and post-trading hours. The Exchange is proposing that 
for the month of July 2010 only, these average daily volume thresholds 
(5,000,000 and 50,000,000), will be multiplied by a fraction, the 
numerator of which shall be the sum of the daily consolidated volumes 
for each DECN-traded symbol for all days that such symbol is traded on 
the DECN during the month of July and the denominator of which shall be 
the monthly consolidated volume for all DECN-traded symbols during the 
month of July.
    Third, the rebate for adding hidden orders is currently contingent 
upon Members adding greater than 1,000,000 shares on a daily basis, 
measured monthly. Members not meeting this minimum will be charged 
$0.0030 per share. For the month of July 2010 only, the 1,000,000 
monthly share volume threshold will be multiplied by a fraction, the 
numerator of which shall be the sum of the daily consolidated volumes 
for each DECN-traded symbol for all days that such symbol is traded on 
the DECN during the month of July and the denominator of which shall be 
the monthly consolidated volume for all DECN-traded symbols during the 
month of July.
    Finally, the Exchange is proposing to eliminate the trading volume 
threshold found in footnote 4 of the DECN fee schedule relating to 
Flags E and 5. Currently, the lower rate of $0.000025 per share is 
contingent upon meeting a 1,000,000 share volume threshold on a daily 
basis, measured monthly. The Exchange proposes to eliminate the 
1,000,000 share threshold in footnote 4 to the fee schedule and add 
``intentionally omitted'' to the footnote

[[Page 39314]]

in order to keep the current footnote numbering intact. The Exchange 
believes that the elimination of such threshold will enable it to avoid 
having to adjust the threshold calculation for the month of July 2010. 
This will result in an administratively easier process for both the 
Exchange and Members during the migration of symbols from DECN to EDGA 
and EDGX Exchanges.
    The changes discussed in this filing will become operative on July 
1, 2010.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\6\ in general, and 
furthers the objectives of Section 6(b)(4),\7\ in particular, as 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. ISE notes that DECN operates in a highly competitive market 
in which market participants can readily direct order flow to competing 
venues if they deem fee levels at a particular venue to be excessive. 
The proposed rule change reflects a competitive pricing structure 
designed to incent market participants to direct their order flow to 
DECN. ISE believes the fees and credits remain competitive with those 
charged by other venues and therefore continue to be reasonable and 
equitably allocated to those members that opt to direct orders to DECN 
rather than competing venues. The ISE also believes that the proposed 
rates are equitable in that they apply uniformly to all Members.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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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.

II. 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) of the Act \8\ and Rule 19b-4(f)(2) \9\ thereunder. At any 
time within 60 days of the filing of such proposed rule change, the 
Commission may summarily abrogate 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A). [sic]
    \9\ 17 CFR 19b-4(f)(2).
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III. 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-ISE-2010-69 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-2010-69. This file 
number should be included on the subject line if e-mail 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 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-2010-69 and should be 
submitted on or before July 29, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-16668 Filed 7-7-10; 8:45 am]
BILLING CODE 8010-01-P