[Federal Register Volume 75, Number 67 (Thursday, April 8, 2010)]
[Notices]
[Pages 17980-17981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7973]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61825; File No. SR-ISE-2010-23]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Amending the Direct Edge ECN Fee Schedule
April 1, 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 March 24, 2010, the International Securities Exchange, LLC (the
``Exchange'' or the ``ISE'') filed with the Securities and Exchange
Commission (``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
The Exchange proposes to amend Direct Edge ECN's (``DECN'') fee
schedule for ISE Members \3\ to (i) reflect pass through charges of
other market centers; and (ii) make typographical and clarifying
changes. All of the changes described herein are applicable to ISE
Members.
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\3\ References to ISE Members in this filing refer to DECN
Subscribers who are ISE Members.
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All of the changes described herein are applicable to 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.\4\
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\4\ This fee filing relates to the trading facility operated by
ISE and not EDGA Exchange, Inc. and EDGX Exchange, Inc. Direct Edge
ECN LLC (EDGA and EDGX) will cease to operate in its capacity as an
electronic communications network following the commencement of
operations of EDGA Exchange, Inc. and EDGX Exchange, Inc. as
national securities exchanges.
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In SR-ISE-2009-57,\5\ the Exchange adopted a fee of $0.0024 per
share for securities priced at or above $1.00 which add liquidity to
LavaFlow ECN (``LavaFlow'') and are routed from either EDGX or EDGA.
Such a strategy is deemed a ROLF routing strategy, which is a
destination specific routing strategy that will first sweep the EDGA or
EDGX order book before being delivered to LavaFlow. A conforming
amendment was made to the fee schedule to yield an ``M'' flag to
account for this fee. Conversely, for liquidity that is routed through
either EDGA or EDGX and removes liquidity from LavaFlow, the Exchange
adopted a fee for ISE members of $0.0029 per share for securities
priced at or above $1.00. Such situation will yield a flag of ``U.''
However, if an ISE member posts an average of 50,000 shares or more
using a ROLF routing strategy, yielding flag M, then such ISE member's
fee, when removing liquidity from LavaFlow, will decrease to $0.0022
per share and yield flag U.
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\5\ See Securities Exchange Act Release No. 60442 (August 5,
2009), 74 FR 40249 (August 11, 2009) (SR-ISE-2009-57).
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First, because the Exchange proposes to pass through to Exchange
members the actual transaction fees assessed by away markets, the
Exchange is proposing to amend its fees schedule to reflect LavaFlow's
increase in fees. Effective March 1, 2010, LavaFlow increased its fees
and thresholds for meeting the above-described tier. Members that
remove liquidity from LavaFlow if the Member's attributable MPID
executes a minimum of 100,000 shares (instead of 50,000 shares
currently) average daily volume using strategy ROLF (yielding Flag M)
will now be charged $0.0023 per share (instead of $0.0022 per share
currently). The Exchange is proposing to pass through this change to
its members by reflecting it in footnote 6 on the fee schedule.
Secondly, effective April 1, 2010, the Nasdaq Stock Market updated
its transaction fee schedule to introduce a unified removal rate
($0.0030 per share executed) for all U.S. equities, across Tapes A, B,
and C.\6\ As a result of this proposed change, the Exchange is
proposing to make a conforming change to delete footnote number 8 on
the ``2'' flag and re-number it as footnote number 7 since the Nasdaq
Stock Market no longer differentiates its removal rate across Tapes A,
B, and C.
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\6\ See Equity Trader Alert 2010-12 (effective April 1, 2010).
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Finally, the Exchange proposes to make the following typographical
and clarifying changes to the schedule: (i) On flag H, for EDGA, 0.001
is proposed to be changed to read ``0.0010'' to conform the numbering
with the other fees on the schedule (emphasis added); (ii) in footnote
number 6, delete an additional parenthesis at the end of the phrase
``(yielding Flag U)''.
The changes discussed in this filing will become operative on April
1, 2010.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\7\ in general, and
furthers the objectives of Section 6(b)(4),\8\ in particular, as 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. ISE notes that DECN operates in a highly competitive market
in which market participants can readily direct order flow to competing
venues if they deem fee levels at a particular venue to be
[[Page 17981]]
excessive. The proposed rule change reflects a competitive pricing
structure designed to incent market participants to direct their order
flow to DECN. Finally, the Exchange believes that the proposed rates
are equitable in that they apply uniformly to all Members and provide
higher rebates for higher volume thresholds, resulting from lower
administrative costs. ISE believes the fees and credits remain
competitive with those charged by other venues and therefore continue
to be reasonable and equitably allocated to those members that opt to
direct orders to DECN rather than competing venues.
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\7\ 15 U.S.C. 78f.
\8\ 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. 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 \9\ and Rule 19b-4(f)(2) \10\ 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.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 19b-4(f)(2).
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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-2010-23 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-2010-23. 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,\11\ 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 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-
2010-23 and should be submitted on or before April 29, 2010.
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\11\ 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.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7973 Filed 4-7-10; 8:45 am]
BILLING CODE 8011-01-P