81 FR 22673 - 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 81, Issue 74 (April 18, 2016)

[Federal Register Volume 81, Number 74 (Monday, April 18, 2016)]
[Notices]
[Pages 22673-22674]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-08824]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77593; File No. SR-ISE-2016-09]


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

April 12, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder, \2\ 
notice is hereby given that on April 1, 2016, the International 
Securities Exchange, LLC (the ``Exchange'' or ``ISE'') filed with the 
Securities and Exchange Commission (the ``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 this proposed rule change is to amend the Schedule 
of Fees to modify the Regular Order Fee for Responses to Crossing 
Orders in Select \3\ and Non-Select Symbols and Fee for Non-Select 
Symbols.
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    \3\ ``Select Symbols'' are options overlying all symbols listed 
on the ISE that are in the Penny Pilot Program.
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    The Exchange proposes the following two fee changes. First, the 
Exchange proposes to change the Fee for Responses to Crossing Orders in 
Select and Non-Select Symbols for all members from $0.47 per contract 
to $0.50 per contract. Next, the Exchange proposes to change the Fees 
in Non-Select Symbols charged to Non-ISE Market Maker (``FarMM''),\4\ 
Firm Proprietary \5\/Broker-Dealer,\6\ and Professional Customer \7\ 
from $0.50 per contract to $0.72 per contract.
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    \4\ A Non-ISE Mercury Market Maker, or Far Away Market Maker 
(``FARMM''), is a market maker as defined in Section 3(a)(38) of the 
Securities Exchange Act of 1934, as amended (``Exchange Act''), 
registered in the same options class on another options exchange.
    \5\ A Firm Proprietary order is an order submitted by a member 
for its own proprietary account.
    \6\ A Broker-Dealer order is an order submitted by a member for 
a non-member broker-dealer account.
    \7\ A Professional Customer is a person who is not a broker/
dealer and is not a Priority Customer.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\8\ in general, and Section 
6(b)(4) of the Act,\9\ 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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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fee increases are 
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. Moreover, the proposed fees are 
competitive with fees charged by other options exchanges and remain 
attractive to members for this reason. For example, ISE's proposed Fee 
for Responses to Crossing Orders in Select Symbols is the same as ISE 
Mercury's Fee for Responses to Crossing Orders (excluding Market 
Makers) in Penny Symbols.\10\ Further, ISE's proposed Fee for Responses 
to Crossing Orders in Non-Select Symbols is less than ISE Mercury's Fee 
for Responses to Crossing Orders (excluding Market Makers) in Non-Penny 
Symbols.\11\ Additionally, the Regular Order Non-Select Symbol Fee of 
$0.72 is less than the Electronic, Non-Penny Classes fee of $0.75 
charged by the Chicago Board Options Exchange.\12\
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    \10\ See ISE Mercury Fee Schedule, Regular Order Fees and 
Rebates, Table 2 at http://www.ise.com/assets/mercury/documents/OptionsExchange/legal/fee/Mercury_Fee_Schedule.pdf.
    \11\ Id.
    \12\ See CBOE Fee Schedule, Equity Options Rate Table, 
Transaction Fee Per Contract at http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf.
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    The Exchange also notes that the proposed Fees for Responses to 
Crossing Orders are not unfairly discriminatory because they apply 
equally to all members. Additionally, the Exchange further notes that 
for the Non-Select Symbol Fee, Priority Customers will continue to be 
charged no fee, 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

[[Page 22674]]

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. With respect to Market Maker orders, the Exchange 
believes that it is reasonable and equitable to keep their fees the 
same because Market Makers are subject to additional requirements and 
obligations (such as quoting requirements) that other market 
participants are not.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\13\ 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 fees remain competitive with fees charged by 
other options exchanges as discussed above. 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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    \13\ 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,\14\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\15\ because it establishes a due, fee, or other charge 
imposed by ISE.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 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 [email protected]. Please include 
File No. SR-ISE-2016-09 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-2016-09. 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 
10:00 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-2016-09 and should be 
submitted by May 9, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-08824 Filed 4-15-16; 8:45 am]
 BILLING CODE 8011-01-P