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Notice

Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees

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Start Preamble November 23, 2015.

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 November 10, 2015, the International Securities Exchange, LLC (the “Exchange” or “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

ISE proposes to amend the Schedule of Fees as described in more detail below. The text of the proposed rule change is available on the Exchange's Internet Web site at 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 Exchange 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 the proposed rule change is to amend the Schedule of Fees to introduce a new set of rebates to the Qualified Contingent Cross (“QCC”) and/or other solicited crossing orders, including solicited orders executed in the Solicitation, Facilitation or Price Improvement Mechanisms, pricing initiative that offers rebates to members who execute a specified volume of QCC and other solicited crossing orders in a month. This new set of rebates, as proposed, offers a lower rebate to members that execute a specified volume of QCC and solicited orders between two Priority Customers [3] (“`Customer to Customer' Orders”). The Exchange notes that there is no change to how volume is calculated for the volume tiers. Thus, members will continue to obtain the tier level based on all QCC and/or solicited crossing orders' originating side volume. Members will receive the Non-“Customer to Customer” Order [4] rebate for their Non-“Customer to Customer” Orders and the “Customer to Customer” Order rebate for their “Customer to Customer” Orders.

Currently, the Exchange offers members rebates in QCC and/or other solicited crossing orders (including “Customer to Customer” Orders), i.e. orders executed in the Solicitation, Start Printed Page 74823Facilitation, or Price Improvement Mechanisms where the agency order is executed against an order solicited from another party. 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, for members that execute 0 to 99,999 originating contract sides (“Tier 1”) the rebate is $0.00 per contract, for members that execute 100,00 to 199,999 originating contract sides (“Tier 2”) the rebate is $0.05 per contract, for members that execute 200,000 to 499,999 originating contract sides (“Tier 3”) the rebate is $0.07 per contract, for members that execute 500,000 to 699,999 originating contract sides (“Tier 4”) the rebate is $0.08 per contract, for members that execute 700,000 to 999,999 originating contract sides (“Tier 5”) the rebate is $0.09 per contract, and for members that execute 1,000,000 originating contract sides or more (“Tier 6”) the rebate is $0.11 per contract.[5]

The Exchange now proposes to offer a new set of rebates for “Customer to Customer” Orders. These rebates will be provided to members for each originating contract side of a “Customer to Customer” Order in all symbols traded on the Exchange as follows: For Tier 1 the rebate is $0.00, for Tiers 2 through 3 the rebate is $0.01, and for Tiers 4 through 6 the rebate is $0.03.

Finally, the Exchange notes that all originating contract side volume will continue to contribute to the member's Tier level. For example, if a member has 175,000 originating contract sides for Non-“Customer to Customer” Orders and 75,000 originating contract sides for “Customer to Customer” Orders, the member's aggregated volume will be 250,000 placing them in Tier 3 (200,000 to 499,999). As a result, the member will receive a rebate of $0.07 per originating contract side for its Non-“Customer to Customer” Orders and a rebate of $0.01 per originating contract side for its “Customer to Customer” Orders.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,[6] in general, and Section 6(b)(4) of the Act,[7] 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.

The Exchange believes that it is reasonable and equitable to offer lower rebates for certain “Customer to Customer” Orders because other exchanges, including the CBOE for example, offer no rebate (credit) for customer to customer executions.[8] Further, the Exchange believes it is reasonable and equitable to continue to provide for the opportunity to receive rebates as these proposed rebates are designed to attract additional order flow to the Exchange and continue to remain attractive to market participants. The Exchange believes that the proposed fees are not unfairly discriminatory because these fees would be uniformly applied to all “Customer to Customer” Orders. Additionally, as fees for Priority Customer orders continue to decrease, it has become necessary for the Exchange to lower rebates for “Customer to Customer” Orders in order to balance the decrease in fees for Priority Customer orders and the rebates provided for “Customer to Customer” Orders.

B. Self-Regulatory Organization's Statement on Burden on Competition

In accordance with Section 6(b)(8) of the Act,[9] 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. The Exchange believes that the proposed rebates remain competitive with the many rebates (if any) offered by other options exchanges as discussed above. Further, the rebates remain attractive to market participants. 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 and rebates 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,[10] and subparagraph (f)(2) of Rule 19b-4 thereunder,[11] 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:

Electronic Comments

Paper Comments

  • 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-2015-41. 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 Start Printed Page 74824communications 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 10:00 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 Exchange. 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-2015-41 and should be submitted by December 21, 2015.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[12]

Robert W. Errett,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  The term “Priority Customer” means a person or entity that (i) is not a broker or dealer in securities, and (ii) does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s).

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4.  “Non-`Customer to Customer' Orders” are QCC and/or other solicited crossing orders, including solicited orders executed in the Solicitation, Facilitation or Price Improvement Mechanisms, and excluding “Customer to Customer” Orders.

Back to Citation

5.  The rebate is applied to the originating contract side of QCC and solicited crossing orders traded in a given month once a member reaches the specified volume threshold/Tier during that month.

Back to Citation

10.  15 U.S.C. 78s(b)(3)(A)(ii).

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[FR Doc. 2015-30243 Filed 11-27-15; 8:45 am]

BILLING CODE 8011-01-P