This PDF is the current document as it appeared on Public Inspection on 10/17/2014 at 08:45 am.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), and Rule 19b-4 thereunder, notice is hereby given that on October 1, 2014, 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.
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 to introduce a new rebate tier for members that execute a specified volume of Qualified Contingent Cross (“QCC”) and/or other solicited crossing orders in a month. 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
The purpose of the proposed rule change is to amend the Schedule of Fees to introduce a new rebate tier for members that execute a specified volume of QCC and/or other solicited crossing orders in a month. The Exchange's Schedule of Fees has separate tables for fees and rebates applicable to Standard Options and Mini Options. The Exchange notes that while the discussion below relates to rebates for Standard Options, the rebates for Mini Options, which are not discussed below, are and shall continue to be 1/10th of the rebates for Standard Options.
The Exchange offers members tiered rebates in QCC and/or other solicited crossing orders, i.e. orders executed in the solicitation, facilitation, or price improvement mechanisms where the agency order is executed against an order solicited from another party (the Start Printed Page 62692“QCC and Solicitation Rebate”). These rebates are provided for each originating side of a crossing order, based on a member's volume in the crossing mechanisms during a given month. Currently, the rebate is $0.07 per contract for members that execute from 200,000 to 499,999 originating contract sides, $0.08 per contract for members that execute from 500,000 to 699,999 originating contract sides, $0.09 per contract for members that execute from 700,000 to 999,999 originating contract sides, and $0.11 per contract for members that execute 1,000,000 originating contract sides or more. The Exchange now proposes to extend this pricing initiative to members that execute from 100,000 to 199,999 originating contract sides in a given month, who will now be eligible to receive a QCC and Solicitation Rebate of $0.05 per contract for their QCC and/or other solicited crossing orders.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, in general, and Section 6(b)(4) of the Act, 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. Currently, members must execute a minimum of 200,000 originating contract sides in QCC and/or other solicited crossing orders, in order to qualify for a QCC and Solicitation Rebate. The Exchange believes that the proposed fee change is reasonable and equitable as members that meet the lower volume threshold established in this filing will now be entitled to receive a rebate for their QCC and/or solicited crossing orders. Moreover, lowering the threshold level at which members are entitled to receive a rebate for their QCC and/or solicited crossing orders will attract more of this order flow to the ISE, to the benefit of all members that trade on the Exchange. The Exchange does not believe that the proposed fee change is unfairly discriminatory as the rebate will be uniformly applied to all members that meet the volume threshold for the new tier. By lowering the volume threshold required to receive a QCC and Solicitation Rebate, the proposed fee change is designed to allow more members to qualify. At the same time, members who execute a higher volume of QCC and/or solicited crossing orders will continue to receive rebates at the current higher rates.
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 rebates 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 and rebates 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, 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. To the contrary, the Exchange believes that the proposed rule change is pro-competitive as it is designed to attract additional crossing order flow by offering attractive rebates to members that bring their QCC and/or solicited crossing orders to the ISE. 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.
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  and subparagraph (f)(2) of Rule 19b-4 thereunder, because it establishes a due, fee, or other charge imposed by ISE.
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:
- Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
- Send an Email to firstname.lastname@example.org. Please include File No. SR-ISE-2014-47 on the subject line.
- 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-2014-47. 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 Start Printed Page 62693provisions 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 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-2014-47 and should be submitted by November 10, 2014.Start Signature
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Kevin M. O'Neill,
3. Volume in Standard Options and Mini Options is combined to calculate the tier a Member has reached. Based on the tier achieved, the member is 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.Back to Citation
4. The rebate is applied on all QCC and solicited crossing order contracts traded in a given month once a member reaches the specified volume threshold during that month.Back to Citation
[FR Doc. 2014-24778 Filed 10-17-14; 8:45 am]
BILLING CODE 8011-01-P