80 FR 56517 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 181 (September 18, 2015)

Page Range		56517-56519
FR Document		2015-23398

Federal Register, Volume 80 Issue 181 (Friday, September 18, 2015)

[Federal Register Volume 80, Number 181 (Friday, September 18, 2015)]
[Notices]
[Pages 56517-56519]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-23398]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75912; File No. SR-ISE-2015-27]

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

September 14, 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 September 1, 2015, 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 the
Substance of the Proposed Rule Change

The ISE proposes to amend the Schedule of Fees to increase certain
complex order fees and rebates as described in more detail below. 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

[[Page 56518]]

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 Exchange currently provides volume-based tiered rebates for
Priority Customer \3\ complex orders when these orders trade with non-
Priority Customer orders in the complex order book, or trade with
quotes and orders on the regular order book. These complex order
rebates are provided to members based on the member's average daily
volume (``ADV'') in Priority Customer complex orders in six volume
tiers as follows: 0 to 29,999 contracts (Tier 1), 30,000 to 59,999
contracts (Tier 2), 60,000 to 99,999 contracts (Tier 3), 100,000 to
149,999 contracts (Tier 4), 150,000 to 199,999 contracts (Tier 5), and
200,000 or more contracts (Tier 6). Currently, Priority Customer
complex orders receive a rebate of $0.30 per contract in Select Symbols
\4\ and $0.63 per contract in Non-Select Symbols \5\ for Tier 1, $0.35
per contract in Select Symbols and $0.71 per contract in Non-Select
Symbols for Tier 2, $0.40 per contract in Select Symbols and $0.78 per
contract in Non-Select Symbols for Tier 3, $0.43 per contract in Select
Symbols and $0.80 per contract in Non-Select Symbols for Tier 4, $0.45
per contract in Select Symbols and $0.82 per contract in Non-Select
Symbols for Tier 5, and $0.46 per contract in Select Symbols and $0.83
per contract in Non-Select Symbols for Tier 6.\6\ The Exchange now
proposes to increase these rebates by $0.01 per contract for members
that achieve Tiers 3, 4, 5, and 6. As proposed, the Priority Customer
complex order rebate in Select Symbols will be increased to $0.41 per
contract for Tier 3, $0.44 per contract for Tier 4, $0.46 per contract
for Tier 5, and $0.47 per contact for Tier 6. For Non-Select Symbols
the rebate will be increased to $0.79 per contract for Tier 3, $0.81
per contract for Tier 4, $0.83 per contract for Tier 5, and $0.84 per
contract for Tier 6. Other rebate amounts will remain unchanged from
their current levels.
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\3\ A ``Priority Customer'' is a person or entity that is to a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on a average during a calendar month for
its own beneficial account(s), as defined in Rule 100(a)(37A).
\4\ ``Select Symbols'' are options overlying all symbols listed
on the ISE that are in the Penny Pilot Program.
\5\ ``Non-Select Symbols'' are options overlying all symbols
excluding Select Symbols.
\6\ These rebates are provided per contract per leg if the order
trades with non-Priority Customer orders in the complex order book,
or trades with quotes and orders on the regular order book.
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In addition, the Exchange charges complex order taker fees and an
equivalent maker fee that applies specifically when trading against
Priority Customer orders. In Select Symbols these fees are $0.46 per
contract for Market Maker \7\ orders (or $0.43 per contract for Market
Makers with total affiliated Priority Customer Complex ADV of 150,000
or more contracts),\8\ and $0.47 per contract for Non-ISE Market
Maker,\9\ Firm Proprietary \10\/Broker-Dealer,\11\ and Professional
Customer \12\ orders. In Non-Select Symbols these fees are $0.85 per
contract for Market Maker orders,\13\ and $0.87 per contract for Non-
ISE Market Maker, Firm Proprietary/Broker-Dealer, and Professional
Customer orders. The Exchange now proposes to increase these fees by
$0.01 per contract. As proposed, the taker fee and equivalent maker fee
for trading against Priority Customer orders in Select Symbols will be
increased to $0.47 per contract for Market Maker orders (or $0.44 per
contract for Market Makers with total affiliated Priority Customer
Complex ADV of 150,000 or more contracts), and $0.48 per contract for
Non-ISE Market Maker, Firm Proprietary/Broker-Dealer, and Professional
Customer orders. In Non-Select Symbols the fee will be increased to
$0.86 per contract for Market Maker orders, and $0.88 per contract for
Non-ISE Market Maker, Firm Proprietary/Broker-Dealer, and Professional
Customer orders. Preferenced Market Makers will continue to receive the
applicable discount of $0.02 per contract when trading against Priority
Customer order preferenced to them in the complex order book.\14\
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\7\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Rule
100(a)(25).
\8\ ISE Market Makers or making or taking liquidity receive a
discount of $0.02 when trading against Priority Customer orders
preferenced to them in the complex order book in equity options that
are able to be listed and traded on more than one options exchange.
This discount does not apply to FX Options Symbols or to option
classes designated by the Exchange to receive a guaranteed
allocation pursuant to ISE Rule 722(b)(3)(i)(B).
\9\ A ``Non-ISE Market Maker'' is a market maker as defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended,
registered in the same options class on another options exchange.
\10\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account.
\11\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
\12\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
\13\ ISE Market Makers making or taking liquidity receive a
discount of $0.02 when trading against Priority Customer orders
preferenced to them in the complex order book in equity options that
are able to be listed and traded on more than one options exchange.
This discount does not apply to FX Options Symbols or to option
classes designated by the Exchange to receive a guaranteed
allocation pursuant to ISE Rule 722(b)(3)(i)(B).
\14\ See notes 6 [sic] and 11 [sic] supra.
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Finally, the Exchange charges a fee for responses to complex
crossing orders that is $0.47 per contract for Market Maker, Non-ISE
Market Maker, Firm Proprietary/Broker-Dealer, Professional Customer,
and Priority Customer orders in Select Symbols. In Non-Select Symbols
this response fee is $0.90 per contract for Market Maker orders, and
$0.95 per contract for Non-ISE Market Maker, Firm Proprietary/Broker-
Dealer, Professional Customer, and Priority Customer orders. The
Exchange now proposes to increase its complex order response fees by
$0.01 per contract. As proposed, the response fee in Select Symbols
will be increased to $0.48 per contract for all market participants,
and the response fee in Non-Select Symbols will be increased to $0.91
per contract for Market Maker orders, and $0.96 per contract for Non-
ISE Market Maker, Firm Proprietary/Broker-Dealer, Professional
Customer, and Priority Customer orders.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\15\ in general, and
Section 6(b)(4) of the Act,\16\ 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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\15\ 15 U.S.C. 78f.
\16\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable and equitable to
increase the rebates provided to Priority Customer complex orders, as
these proposed rebates are designed to attract additional Priority
Customer complex order volume to the Exchange. The Exchange already
provides volume-based tiered rebates for Priority Customer complex
orders, and believes that increasing the rebates will incentivize
members to send additional order flow to the ISE in order to achieve
these rebates for their Priority Customer complex order volume,
creating additional liquidity to

[[Page 56519]]

the benefit of all members that trade complex orders on the Exchange.
The Exchange also believes that the corresponding increase to the
complex order taker fee and complex order maker fee for trading against
Priority Customer orders, as well as the fee for responses to complex
crossing orders, is reasonable and equitable as the proposed fees are
set at levels that the Exchange believes will continue to be attractive
to market participants that trade on ISE, and that are competitive with
fees charged by other options exchanges.
The Exchange notes that Priority Customer orders will continue to
receive complex order rebates,\17\ while other market participants will
continue to pay a fee. The Exchange does not believe that this is
unfairly discriminatory as a Priority Customer is by definition not a
broker or dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s). This limitation does not apply to
participants whose behavior is substantially similar to that of market
professionals, including Professional Customers, who will generally
submit a higher number of orders (many of which do not result in
executions) than Priority Customers. The Exchange also notes that
Market Maker orders will continue to be eligible for lower fees than
other non-Priority Customer orders. The Exchange does not believe that
it is unfairly discriminatory provide lower fees to Market Maker orders
as Market Makers are subject to additional requirements and obligations
(such as quoting requirements) that other market participants are not.
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\17\ With the exception of responses to complex crossing orders
where Priority Customers are charged a fee like other market
participants.
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B. Self-Regulatory Organization's Statement on Burden on Competition

In accordance with Section 6(b)(8) of the Act,\18\ 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 complex order fees and rebates remain
competitive with fees and rebates offered on other options exchanges.
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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\18\ 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 \19\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\20\ because it establishes a due, fee, or other charge
imposed by ISE.
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\19\ 15 U.S.C. 78s(b)(3)(A)(ii).
\20\ 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 Number SR-ISE-2015-27 on the subject line.

Paper Comments

Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2015-27. 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
10:00 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-2015-27, and should be
submitted on or before October 9, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-23398 Filed 9-17-15; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices 56517

implementation began on April 8, 2013 to act as the Chair of the Operating inspection and copying at the
and was completed on May 3, 2013. Committee. Any recommendation for an Participants’ principal offices. All
Implementation of Phase II of the Plan amendment to the Plan from the comments received will be posted
began on August 5, 2013 and was Operating Committee that receives an without change; the Commission does
completed on February 24, 2014. affirmative vote of at least two-thirds of not edit personal identifying
Pursuant to this proposed amendment, the Participants, but is less than information from submissions. You
the Participants propose to extend the unanimous, shall be submitted to the should submit only information that
pilot period so that it is set to end April Commission as a request for an you wish to make available publicly. All
22, 2016. amendment to the Plan initiated by the submissions should refer to File
Commission under Rule 608. Number 4–631 and should be submitted
E. Analysis of Impact on Competition On July 30, 2015, the Operating on or before October 9, 2015.
The proposed amendment to the Plan Committee, duly constituted and By the Commission.
does not impose any burden on chaired by Ms. Karen Lorentz of the Brent J. Fields,
competition that is not necessary or NYSE, on behalf of Committee
Secretary.
appropriate in furtherance of the Chairman Mr. Christopher B. Stone of
[FR Doc. 2015–23415 Filed 9–17–15; 8:45 am]
purposes of the Exchange Act. The FINRA, met and voted unanimously to
BILLING CODE 8011–01–P
Participants do not believe that the amend the Plan as set forth herein in
proposed Plan introduces terms that are accordance with Section III(C) of the
unreasonably discriminatory for the Plan. The Plan Advisory Committee was
SECURITIES AND EXCHANGE
purposes of Section 11A(c)(1)(D) of the notified in connection with the Ninth
COMMISSION
Exchange Act. Amendment and was in favor.
[Release No. 34–75912; File No. SR–ISE–
F. Written Understanding or Agreements III. Solicitation of Comments 2015–27]
Relating to Interpretation of, or Interested persons are invited to
Participation in the Plan submit written data, views, and Self-Regulatory Organizations;
The Participants have no written arguments concerning the foregoing, International Securities Exchange,
understandings or agreements relating including whether the proposed Ninth LLC; Notice of Filing and Immediate
to interpretation of the Plan. Section Amendment is consistent with the Act. Effectiveness of Proposed Rule
II(C) of the Plan sets forth how any Comments may be submitted by any Change To Amend the Schedule of
entity registered as a national securities of the following methods: Fees
exchange or national securities Electronic Comments September 14, 2015.
association may become a Participant. Pursuant to Section 19(b)(1) of the
• Use the Commission’s Internet
G. Approval of Amendment of the Plan comment form (http://www.sec.gov/ Securities Exchange Act of 1934 (the
rules/sro.shtml); or ‘‘Act’’),1 and Rule 19b–4 thereunder,2
Each of the Plan’s Participants has notice is hereby given that on
executed a written amended Plan. • Send an email to rule-comments@
sec.gov. Please include File Number 4– September 1, 2015, the International
H. Terms and Conditions of Access 631 on the subject line. Securities Exchange, LLC (the
‘‘Exchange’’ or the ‘‘ISE’’) filed with the
Section II(C) of the Plan provides that Paper Comments Securities and Exchange Commission
any entity registered as a national
• Send paper comments in triplicate the proposed rule change, as described
securities exchange or national in Items I, II, and III below, which items
to Secretary, Securities and Exchange
securities association under the have been prepared by the self-
Commission, 100 F Street NE.,
Exchange Act may become a Participant regulatory organization. The
Washington, DC 20549–1090.
by: (1) Becoming a participant in the Commission is publishing this notice to
applicable Market Data Plans, as defined All submissions should refer to File
Number 4–631. This file number should solicit comments on the proposed rule
in Section I(F) of the Plan; (2) executing change from interested persons.
a copy of the Plan, as then in effect; (3) be included on the subject line if email
providing each then-current Participant is used. To help the Commission I. Self-Regulatory Organization’s
with a copy of such executed Plan; and process and review your comments Statement of the Terms of the Substance
(4) effecting an amendment to the Plan more efficiently, please use only one of the Proposed Rule Change
as specified in Section III(B) of the Plan. method. The Commission will post all The ISE proposes to amend the
comments on the Commission’s Internet Schedule of Fees to increase certain
I. Method of Determination and Web site (http://www.sec.gov/rules/
Imposition, and Amount of, Fees and complex order fees and rebates as
sro.shtml). Copies of the submission, all described in more detail below. The text
Charges subsequent amendments, all written of the proposed rule change is available
Not applicable. statements with respect to the Plan that on the Exchange’s Web site (http://
are filed with the Commission, and all www.ise.com), at the principal office of
J. Method and Frequency of Processor written communications relating to the
Evaluation the Exchange, and at the Commission’s
Plan between the Commission and any Public Reference Room.
Not applicable. person, other than those that may be
withheld from the public in accordance II. Self-Regulatory Organization’s
K. Dispute Resolution with the provisions of 5 U.S.C. 552, will Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
tkelley on DSK3SPTVN1PROD with NOTICES

Section III(C) of the Plan provides for be available for Web site viewing and
each Participant to designate an printing in the Commission’s Public Change
individual to represent the Participant Reference Room, 100 F Street NE., In its filing with the Commission, the
as a member of an Operating Committee. Washington, DC 20549, on official self-regulatory organization included
No later than the initial date of the Plan, business days between the hours of
the Operating Committee shall designate 10:00 a.m. and 3:00 p.m. Copies of the 1 15 U.S.C. 78s(b)(1).
one member of the Operating Committee filing also will be available for 2 17 CFR 240.19b–4.

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Document Created: 2015-12-15 09:28:03
Document Modified: 2015-12-15 09:28:03

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 56517