Document ID: SEC-2009-0513-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change, as Modified by Amendment No. 1, Relating to Lowering the Liquidity Rebate Amount That Direct Edge ECN Passes Through to Non-International Securities Exchange, LLC Members
Posted Date: 2009-04-14T04:00Z

[Federal Register: April 14, 2009 (Volume 74, Number 70)]
[Notices]               
[Page 17265-17267]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ap09-123]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59724; File No. SR-ISE-2009-18]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Order Granting Accelerated Approval to a 
Proposed Rule Change, as Modified by Amendment No. 1, Relating to 
Lowering the Liquidity Rebate Amount That Direct Edge ECN Passes 
Through to Non-International Securities Exchange, LLC Members

April 7, 2009.
    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 April 2, 2009, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') filed with the Securities and Exchange 
Commission (``Commission'') a proposed rule change as described in 
Items I, II, and III below, which items have been prepared by the ISE. 
The ISE filed Amendment No. 1 to the proposal

[[Page 17266]]

on April 7, 2009.\3\ The Commission is publishing notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons, and is approving the proposal, as amended, on an accelerated 
basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 supersedes and replaces the original filing 
in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The ISE proposes to lower the liquidity rebate that Direct Edge ECN 
(``DECN''), in its capacity as an introducing broker for non-ISE 
Members, passes through to such non-ISE Members. The text of the 
proposed rule change is available on the Exchange's Internet Web site 
at http://www.ise.com.

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
    DECN, a facility of ISE, operates two trading platforms, EDGX and 
EDGA. On March 27, 2009, the ISE filed for immediate effectiveness a 
proposed rule change to amend DECN's fee schedule for ISE Members to 
lower the rebate that ISE Members receive for orders that add liquidity 
on EDGX in securities priced at or above $1.00 that are reported to 
Tape B.\4\
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    \4\ See SR-ISE-2009-17.
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    DECN is a member of ISE as well as a facility of ISE. In its 
capacity as a member of ISE, DECN currently serves as an introducing 
broker for the non-ISE Member subscribers of DECN to access EDGX. 
Pursuant to SR-ISE-2009-17, DECN, as an ISE Member and introducing 
broker, receives rebates from DECN for transactions it executes on EDGX 
in its capacity as introducing broker for non-ISE Members. Since the 
rebate was lowered, DECN wishes to pass the lowered rebate through to 
non-ISE Member subscribers of DECN. As a result, the per share rebate 
that non-ISE member subscribers receive will be the same as the rebate 
that ISE Members receive pursuant to SR-ISE-2009-17.
    Finally, ISE is seeking accelerated approval of this proposed rule 
change, as well as a retroactive effective date of April 1, 2009. ISE 
represents that this proposal will ensure that both ISE Members and 
non-ISE Members (by virtue of the pass-through described above) will in 
effect receive equivalent amounts and that the imposition of such 
amounts will begin on the same April 1, 2009 start date.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\5\ in general, and 
furthers the objectives of Section 6(b)(4),\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. In particular, this proposal will ensure that both ISE 
Members and Non-ISE Members (by virtue of the pass-through described 
above) will receive equivalent rebates.
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    \5\ 15 U.S.C. 78f.
    \6\ 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.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 No. SR-ISE-2009-18 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-2009-18. 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 Commissions 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 inspection and copying in the 
Commission's Public Reference Room. 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-
2009-18 and should be submitted by May 5, 2009.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change, as Amended

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\7\ 
Specifically, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\8\ which requires that the 
rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees and other charges among members and 
issuers and other persons using its facilities.
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    \7\ In approving the proposal, the Commission has considered the 
proposal's impact on efficiency, competition, and capital formation. 
15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(4).

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[[Page 17267]]

    ISE recently amended DECN's fee schedule to lower the rebate that 
DECN subscribers who also are ISE members receive for orders in Tape B 
securities priced at or above $1 that add liquidity on EDGX.\9\ DECN 
receives this rebate for transactions it executes on EDGX in its 
capacity as an introducing broker for its non-ISE member subscribers.
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    \9\ See Securities Exchange Act Release No. 59592 (April 2, 
2009) (notice of filing and immediate effectiveness of File No. SR-
ISE-2009-17) (the ``Member Fee Filing''). The Member Fee Filing 
reduced the rebate for these orders from $.0035 per share to $.003 
per share.
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    The current proposal, which will apply retroactively to April 1, 
2009, will allow DECN to pass through the lowered rebate to the non-ISE 
member subscribers for which it acts as an introducing broker. The 
Commission finds that the proposal is consistent with the Act because 
it will provide a rebate amount for non-ISE member subscribers that is 
equivalent to the rebate amount established for ISE member subscribers 
in the Member Fee Filing.\10\
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    \10\ See note 9, supra.
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    ISE has requested that the Commission find good cause for approving 
the proposal prior to the thirtieth day after the date of publication 
of notice of filing thereof in the Federal Register. As discussed 
above, the proposal will allow DECN to pass through to non-ISE member 
subscribers the lowered rebate amount established for ISE member 
subscribers in the Member Fee Filing, resulting in equivalent rebate 
amounts for ISE member and non-member subscribers. In addition, because 
the proposal will apply the reduced rebate retroactively to April 1, 
2009, the reduced rebates for ISE member and non-member subscribers 
will have the same effective date, thereby promoting consistency in 
DECN's fee schedule. Accordingly, the Commission finds good cause, 
pursuant to Section 19(b)(2) of the Act, for approving the proposed 
rule change, as amended, prior to the thirtieth day after the date of 
publication of notice of filing thereof in the Federal Register.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (File No. SR-ISE-2009-18), as 
amended, is approved on an accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-8425 Filed 4-13-09; 8:45 am]

BILLING CODE 8010-01-P