[Federal Register Volume 76, Number 70 (Tuesday, April 12, 2011)]
[Notices]
[Pages 20431-20433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8683]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64202; File No. SR-ISE-2011-16]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to a Market Maker Incentive Plan for Foreign Currency
Options
April 6, 2011.
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 31, 2011, 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 and II 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 extend an incentive plan for market makers
in a number of foreign currency options (``FX Options'') traded on the
Exchange. 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, on the Commission's Web site at http://www.sec.gov, 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
The purpose of this proposed rule change is to extend an incentive
plan for market makers in options on the New Zealand dollar (``NZD''),
the Mexican peso (``PZO''), the Swedish krona (``SKA''), the Brazilian
real (``BRB''), the Australian dollar (``AUX''), the British pound
(``BPX''), the Canadian dollar (``CDD''), the euro (``EUI''), the
Japanese yen (``YUK'') and the Swiss franc (``SFC'').\3\ On August 3,
2009, the Exchange adopted an incentive plan applicable to market
makers in NZD, PZO and SKA,\4\ and on January 19, 2010, added BRB to
the incentive plan,\5\ and on March 1, 2011, added AUX, BPX, CDD, EUI,
YUK and SFC.\6\ The Exchange has since extended the date
[[Page 20432]]
by which market makers may join the incentive plan \7\ and now proposes
to do so again.
---------------------------------------------------------------------------
\3\ The Commission previously approved the trading of options on
NZD, PZO, SKA, BRB, AUX, BPX, CDD, EUI, YUK and SFC. See Securities
Exchange Act Release No. 55575 (April 3, 2007), 72 FR 17963 (April
10, 2007) (SR-ISE-2006-59).
\4\ See Securities Exchange Act Release No. 60536 (August 19,
2009), 74 FR 43204 (August 26, 2009) (SR-ISE-2009-59).
\5\ See Securities Exchange Act Release No. 61459 (February 1,
2010), 75 FR 6248 (February 8, 2010) (SR-ISE-2010-07).
\6\ See Securities Exchange Act Release No. 64012 (March 2,
2011), 76 FR 12778 (March 8, 2011) (SR-ISE-2011-11).
\7\ See Securities Exchange Act Release Nos. 60810 (October 9,
2009), 74 FR 53527 (October 19, 2009) (SR-ISE-2009-80), 61334
(January 12, 2010), 75 FR 2913 (January 19, 2010) (SR-ISE-2009-115),
61851 (April 6, 2010), 75 FR 18565 (April 12, 2010) (SR-ISE-2010-
27), 62503 (July 15, 2010), 75 FR 42812 (July 22, 2010) (SR-ISE-
2010-71), 36045 (October 5, 2010), 75 FR 62900 (October 13, 2010)
(SR-ISE-2010-100) and 63639 (January 4, 2011), 76 FR 1488 (January
10, 2011) (SR-ISE-2010-121).
---------------------------------------------------------------------------
In order to promote trading in these FX Options, the Exchange has
an incentive plan pursuant to which the Exchange waives the transaction
fees for the Early Adopter \8\ FXPMM \9\ and all Early Adopter FXCMMs
\10\ that make a market in NZD, PZO SKA, BRB, AUX, BPX, CDD, EUI, YUK
and SFC for as long as the incentive plan is in effect. Further,
pursuant to a revenue sharing agreement entered into between an Early
Adopter Market Maker and ISE, the Exchange pays the Early Adopter FXPMM
forty percent (40%) of the transaction fees collected on any customer
trade in NZD, PZO SKA, BRB, AUX, BPX, CDD, EUI, YUK and SFC and pays up
to ten (10) Early Adopter FXCMMs that participate in the incentive plan
twenty percent (20%) of the transaction fees collected for trades
between a customer and that FXCMM. Market makers that do not
participate in the incentive plan are charged regular transaction fees
for trades in these products. In order to participate in the incentive
plan, market makers are currently required to enter into the incentive
plan no later than March 31, 2011. The Exchange now proposes to extend
the date by which market makers may enter into the incentive plan to
June 30, 2011.
---------------------------------------------------------------------------
\8\ Participants in the incentive plan are known on the
Exchange's Schedule of Fees as Early Adopter Market Makers.
\9\ A FXPMM is a primary market maker selected by the Exchange
that trades and quotes in FX Options only. See ISE Rule 2213.
\10\ A FXCMM is a competitive market maker selected by the
Exchange that trades and quotes in FX Options only. See ISE Rule
2213.
---------------------------------------------------------------------------
Additionally, the Exchange proposes to correct an inadvertent
deletion in a recent filing. Specifically, in the filing where the
Exchange added AUX, BPX, CDD, EUI, YUK and SFC to the incentive
plan,\11\ the Exchange inadvertently failed to add these additional FX
options symbols to the Notes for fees applicable ISE Market Maker on
pages 3-4 of the Exchange's Schedule of Fees.
---------------------------------------------------------------------------
\11\ See supra note 6.
---------------------------------------------------------------------------
Finally, the Exchange proposes to make a clarifying change to the
Customer fee noted on page 2 on the Exchange's Schedule of Fees to note
that the $0.18 per contract Customer fee as it relates to FX Options is
applicable to those FX Options that are not part of the incentive plan.
For FX Options that are part of the incentive plan, the Customer fee is
$0.40 per contract, as noted on page 1 of the Exchange's current
Schedule of Fees.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\12\ in general, and
furthers the objectives of Section 6(b)(4),\13\ 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.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes the proposed rule change is equitable as it
will permit all market makers to explore the opportunity to join the
incentive plan for an additional three months. The Exchange believes
the proposed rule change is reasonable because the extension of the
incentive plan for three months will permit additional market makers to
join the incentive plan which in turn will generate additional order
flow to the Exchange by creating incentives to trade these FX Options
as well as defray operational costs for Early Adopter Market Makers.
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)(A)(ii) of the Act.\14\ 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.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal 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 No. SR-ISE-2011-16 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 No. SR-ISE-2011-16. 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, 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 such filing also will be available for
inspection and copying at the principal office of 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 No.
[[Page 20433]]
SR-ISE-2011-16 and should be submitted on or before May 3, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8683 Filed 4-11-11; 8:45 am]
BILLING CODE 8011-01-P