[Federal Register Volume 75, Number 103 (Friday, May 28, 2010)]
[Notices]
[Pages 30095-30097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12872]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62152; File No. SR-ISE-2010-41]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Professional Customer Fees
May 21, 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 May 5, 2010, 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.
---------------------------------------------------------------------------
\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 is proposing to amend its Schedule of Fees. 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.
[[Page 30096]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE proposes to amend its Schedule of Fees. Specifically, the
Exchange proposes to adopt a $0.18 per contract execution fee for
``professional customers'' who execute orders as a result of taking
liquidity from ISE's order book.
ISE rules distinguish between Priority Customer Orders and
Professional Orders.\3\ A Priority Customer is defined in ISE Rule
100(a)(37A) as a person or entity that is 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). A Professional Order is defined in ISE Rule 100(a)(37C) as
an order that is for the account of a person or entity that is not a
Priority Customer. For purpose of this discussion, ``professional
customers'' are non-broker/dealer participants who enter at least 390
orders per day on average during a calendar month for their own
beneficial account(s). The level of trading activity by professional
customers more resembles that of market makers and proprietary traders
on the Exchange than it does of other customers.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 59287 (Jan. 23,
2009), 74 FR 5694 (Jan. 30, 2009).
---------------------------------------------------------------------------
Currently, the primary distinction between the two types of
customers is that Priority Customers are given priority on the order
book over professional customers. Professional customers are on parity
with market makers and broker/dealers. However, professional customers,
until recently, did not pay transaction fees and currently do so on a
limited basis. Market makers and broker/dealers on the other hand have
always paid transaction fees to the Exchange. Specifically, for market
makers, the Exchange currently applies a sliding scale, between $0.01
and $0.18 per contract side, based on the number of contracts an ISE
market maker trades in a month. Broker/dealer orders currently pay a
flat execution fee of $0.20 per traded contract.\4\
---------------------------------------------------------------------------
\4\ The Exchange recently adopted a modified maker/taker pricing
program applicable to a select number of options classes under which
professional customer orders and broker/dealer orders are treated
equally. See Securities Exchange Act Release No. 61869 (April 7,
2010), 75 FR 19449 (April 14, 2010).
---------------------------------------------------------------------------
Earlier this year, the Exchange adopted a $0.20 per contract
execution fee for professional customers who execute orders as a result
of posting liquidity to ISE's order book.\5\ This ``maker'' fee applies
only to professional customer orders, i.e., non-broker/dealer customer
orders; it does not apply to market maker and broker/dealer orders who
already pay transaction fees under the Exchange's current fee schedule.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 61434 (January 27,
2010), 75 FR 5826 (February 4, 2010).
---------------------------------------------------------------------------
The Exchange now proposes to adopt a $0.18 per contract execution
fee for professional customers who execute orders as a result of taking
liquidity from ISE's order book.\6\ The Exchange currently has a fee
cap for large-size foreign currency (``FX'') options orders where ISE
waives the transaction fee on incremental volume above 5,000 contracts
for single-sided FX options orders of at least 5,000 contracts. This
fee waiver will also apply to professional customer orders. The
Exchange believes that the proposed fees for professional customers
will allow the Exchange to remain competitive with other options
exchanges who apply fees to professional customers.\7\
---------------------------------------------------------------------------
\6\ Fees charged by the Exchange for professional customer
orders are always equal to or less than those charged for broker/
dealer orders.
\7\ The fees proposed herein do not apply to professional
customer orders in a select number of options classes that are a
part of the modified maker/taker pricing program recently adopted by
the Exchange. See supra note 2.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Exchange Act,\8\ in general,
and furthers the objectives of Section 6(b)(4),\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. In particular, the proposed rule change
will help equalize fees among market makers, proprietary traders and
professional customers on the Exchange.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
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. 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 \10\ and Rule 19b-4(f)(2) \11\ 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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 e-mail to [email protected]. Please include
File Number SR-ISE-2010-41 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-2010-41. 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,\12\ 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
[[Page 30097]]
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-2010-41 and should be
submitted on or before June 18, 2010.
---------------------------------------------------------------------------
\12\ The text of the proposed rule change is available on ISE's
Web site at http://www.ise.com, on the Commission's Web site at
http://www.sec.gov, at ISE, and at the Commission's Public Reference
Room.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-12872 Filed 5-27-10; 8:45 am]
BILLING CODE 8010-01-P