79 FR 52 pgs. 15170-15172 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees
Type: NOTICEVolume: 79Number: 52Pages: 15170 - 15172
Pages: 15170, 15171, 15172Docket number: [Release No. 34-71705; File No. SR-ISE-2014-14]
FR document: [FR Doc. 2014-05873 Filed 3-17-14; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71705; File No. SR-ISE-2014-14]
Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees
March 12, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the "Act"),1and Rule 19b-4 thereunder,2notice is hereby given that on March 4, 2013, 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.
Footnotes:
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The ISE proposes to amend its Schedule of Fees to extend the Qualified Contingent Cross ("QCC") and Solicitation rebate to solicited orders executed in the Price Improvement Mechanism ("PIM") and Facilitation Mechanism. 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
[top] The purpose of the proposed rule change is to amend the Schedule of Fees to extend the QCC and Solicitation rebate to solicited orders executed in the PIM and in the Facilitation Mechanism. The fee changes discussed apply to both Standard Options and Mini Options traded on the Exchange. The Exchange's Schedule of Fees has separate tables for fees applicable to Standard Options and Mini Options. The Exchange notes that while the discussion below relates to fees for Standard Options, the fees for Mini Options, which are not discussed
The Exchange currently provides tiered rebates, in all symbols, for each originating side in QCC orders and orders executed in the Solicited Order Mechanism, based on a Member's volume in these crossing mechanisms during a month.3Currently this rebate is $0.07 per contract for Members that execute 200,000 to 499,999 contracts, $0.08 per contract for Members that execute 500,000 to 699,999 contracts, $0.09 per contract for Members that execute 700,000 to 999,999 contracts, and $0.11 per contract for Members that execute 1,000,000 contracts or more in a given month. The Exchange now proposes to extend this pricing to include solicited orders executed in the PIM and in the Facilitation Mechanism, i.e., orders executed in the PIM and in the Facilitation Mechanism where the agency order is executed against a solicited contra order,4in addition to QCC orders and orders executed in the Solicited Order Mechanism. With this proposed change, Members will receive a rebate for all solicited Crossing Orders as long as they meet the required volume threshold.
Footnotes:
3 Volume in Standard Options and Mini Options will be combined to calculate the tier a Member has reached. Based on the tier achieved, the Member will be rebated for that tier for all the Standard Options traded at the Standard Option rebate amount and for all the Mini Options traded at the Mini Option rebate amount.
4 See ISE Rules 723 and 716(d) for rules governing the Price Improvement and Facilitation Mechanisms, respectively. An Electronic Access Member may either facilitate a Price Improvement or Facilitation Order it represents as agent or solicit interest to execute against an order it represents as agent.
2. Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,5in general, and Section 6(b)(4) of the Act,6in 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. The Exchange believes that it is reasonable, equitable, and not unfairly discriminatory to extend the current structure for QCC and Solicitation rebates to solicited orders executed in the PIM and in the Facilitation Mechanism as the Exchange is attempting to incentivize that order flow. Members may enter orders in each of the QCC, Solicited Order, Facilitation, and Price Improvement Mechanisms with a contra order that has been solicited from another party. Currently, however, only QCC orders and orders executed in the Solicited Order Mechanism qualify for the rebate. The Exchange believes that it is more equitable to provide rebates to all solicited Crossing Orders, regardless of the crossing mechanism in which they are executed.
Footnotes:
5 15 U.S.C. 78f.
6 15 U.S.C. 78f(b)(4).
The Exchange notes that it has determined to charge fees and provide rebates in Mini Options at a rate that is 1/10th the rate of fees and rebates the Exchange provides for trading in Standard Options. The Exchange believes it is reasonable and equitable and not unfairly discriminatory to assess lower fees and rebates to provide market participants an incentive to trade Mini Options on the Exchange. The Exchange believes the proposed fees are reasonable and equitable in light of the fact that Mini Options have a smaller exercise and assignment value, specifically 1/10th that of a standard option contract, and, as such, is providing fees for Mini Options that are 1/10th of those applicable to Standard Options.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,7the 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. To the contrary, the Exchange believes that the proposed rule change is pro-competitive as it is designed to attract additional order flow to the ISE's Price Improvement Mechanism and the Facilitation Mechanism. 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 to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed fee changes reflect this competitive environment.
Footnotes:
7 15 U.S.C. 78f(b)(8).
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 Act8and subparagraph (f)(2) of Rule 19b-4 thereunder,9because it establishes a due, fee, or other charge imposed by ISE.
Footnotes:
8 15 U.S.C. 78s(b)(3)(A)(ii).
9 17 CFR 240.19b-4(f)(2).
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
• 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 No. SR-ISE-2014-14 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.
[top] All submissions should refer to File Number SR-ISE-2014-14. 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
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10
Kevin M. O'Neill,
Deputy Secretary.
Footnotes:
10 17 CFR 200.30-3(a)(12).
[FR Doc. 2014-05873 Filed 3-17-14; 8:45 am]
BILLING CODE 8011-01-P