
[Federal Register Volume 75, Number 11 (Tuesday, January 19, 2010)]
[Notices]
[Pages 2915-2917]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-704]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61317; File No. SR-ISE-2009-103]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Order Approving a Proposed Rule Change Relating to Market Data 
Fees

January 8, 2010.

I. Introduction

    On November 25, 2009, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend its Schedule of Fees. 
Notice of the proposed rule change was published for comment in the 
Federal Register on December 1, 2009.\3\ The Commission received no 
comments on the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61086 (December 8, 
2009), 74 FR 64783 (``Notice'').
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II. Description of Proposal

    The Exchange proposes to amend its Schedule of Fees to (1) increase 
the annual subscription rate for the ISE Open/Close Trade Profile, (2) 
adopt subscription fees for the sale of three

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new market data offerings, all of which are based on the ISE Open/Close 
Trade Profile, and (3) increase the annual subscription and ad-hoc 
request rates for ISE's Historical Options Tick Data.

1. ISE Open/Close Trade Profile

    ISE currently sells a market data offering comprised of the entire 
opening and closing trade data of ISE listed options of both customers 
and firms (``ISE Open/Close Trade Profile'').\4\ The data is compiled 
and formatted by ISE as an end of day file. This market data offering 
is currently available to both members and non-members on an annual 
subscription basis.\5\ ISE represents that it has added additional 
fields to this offering over the last two years and therefore, the 
costs of gathering and storing the data underlying the ISE Open/Close 
Trade Profile have increased. As a result, ISE now proposes to increase 
the subscription rate for both members and non-members to $750 per 
month, effective January 4, 2010.
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    \4\ See Securities Exchange Act Release No. 56254 (August 15, 
2007), 72 FR 47104 (August 22, 2007) (approving SR-ISE-2007-70).
    \5\ The current subscription rate for both members and non-
members is $600 per month.
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2. New Open/Close Market Data Products

    The Exchange proposes to expand its suite of ISE Open/Close Trade 
Profile market data offerings with three new products.
a. ISE Open/Close Trade Profile Intraday
    The ISE Open/Close Trade Profile Intraday offering uses the same 
process as that used for the ISE Open/Close Trade Profile. The ISE 
Open/Close Trade Profile Intraday has the same trade-related fields 
contained in the ISE Open/Close Trade Profile. The ISE Open/Close Trade 
Profile Intraday file contains data that is updated at 10-minute 
intervals throughout the trading day. ISE proposes to charge both 
members and non-members $2,000 per month on an annual subscription 
basis.
b. Historical ISE Open/Close Trade Profile Intraday
    The Historical ISE Open/Close Trade Profile Intraday offering is a 
compilation of the ISE Open/Close Trade Profile Intraday files. ISE 
proposes to sell Historical ISE Open/Close Trade Profile Intraday on an 
ad-hoc basis. An ad-hoc request can be for any number of months, 
quarters or years for which the data is available. Members and non-
members will be able to purchase this data by paying a one-time fee of 
$1,000 per month, $2,000 per quarter or $8,000 per year.\6\
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    \6\ For example, a subscriber that wants to purchase data for 
August 2009 would pay $1,000; a subscriber that wants to purchase 
data for July, August and September of 2009 would pay $2,000; a 
subscriber that wants to purchase data for all twelve months of 2009 
would pay $8,000.
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c. ISE Open/Close Trade Profile and ISE Open/Close Trade Profile 
Intraday
    As noted above, the Exchange already sells the ISE Open/Close Trade 
Profile end of day data. To incentivize current subscribers of ISE 
Open/Close Trade Profile to also subscribe to the ISE Open/Close Trade 
Profile Intraday offering, the Exchange proposes to offer a discounted 
subscription rate. Subscribers to both the ISE Open/Close Trade Profile 
and the ISE Open/Close Trade Profile Intraday will pay an annual 
subscription rate of $2,500 per month.
    All of the ISE Open/Close Trade Profile market data offerings, 
including the new products proposed by the Exchange, are compiled and 
formatted by ISE and sold as a zipped file.

3. Historical Options Tick Data

    ISE currently creates market data that consists of options quotes 
and orders that are generated by its members and all trades that are 
executed on the Exchange. ISE also produces a Best Bid/Offer, or BBO, 
with the aggregate size from all outstanding quotes and orders at the 
top price level, or the ``top of the book.'' This data is formatted 
according to Options Price Reporting Authority (``OPRA'') specification 
and sent to OPRA for redistribution. OPRA processes ISE data along with 
the same data sets from the other six options exchanges and creates a 
National BBO, or ``NBBO,'' from all seven options exchanges.
    ISE also captures the OPRA tick data \7\ and makes it available as 
an ``end of day'' file \8\ or as a ``historical'' file \9\ for ISE 
members and non-ISE members alike. ISE has data available from June 
2005 through the present month. ISE currently charges all subscribers 
of Historical Options Tick Data $1,500 per month per firm on an annual 
subscription basis. For ad-hoc requests, ISE charges $85 per day, with 
a minimum order size of $1,000 plus a processing fee to pay for hard 
drives and shipping. ISE also currently charges a processing fee of 
$499 per order for up to 400 Giga Bytes (GB). An order that exceeds 400 
GB is currently charged an additional $399 for up to another 400 
GB.\10\
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    \7\ The Exchange collects this data throughout each trading day 
and at the end of each trading day, the Exchange compresses the data 
and uploads it onto a server. Once the data is loaded onto the 
server, it is then made available to subscribers.
    \8\ An end of day file refers to OPRA tick data for a trading 
day that is distributed prior to the opening of the next trading 
day. An end of day file is made available to subscribers as soon as 
practicable at the end of each trading day on an on-going basis 
pursuant to an annual subscription or through an ad-hoc request.
    \9\ An end of day file that is distributed after the start of 
the next trading day is called a historical file. A historical file 
is available to customers for a pre-determined date range by ad-hoc 
requests only.
    \10\ See Securities Exchange Act Release Nos. 53212 (February 2, 
2006), 71 FR 6803 (February 9, 2006) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change Establishing Fees for 
Historical Options Tick Market Data) (SR-ISE-2006-07); and 53390 
(February 28, 2006), 71 FR 11457 (March 7, 2006) (Order Granting 
Accelerated Approval of a Proposed Rule Change Establishing Fees for 
Historical Options Tick Market Data for Non-Members) (SR-ISE-2006-
08).
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    The Exchange now proposes to increase the annual subscription rate 
to $2,000 per month per firm. For ad-hoc requests, the Exchange 
proposes to increase the rate to $120 per day. The minimum order size 
of $1,000 will remain unchanged as will the processing fees of $499 and 
$399. As the size of the data has increased since the Exchange first 
introduced this product, the Exchange is also increasing the size 
allowance for ad-hoc requests from 400 Giga Bytes to 1.5 Terabytes 
(TB). Pursuant to this proposed rule change, for ad-hoc requests, the 
Exchange will charge a processing fee of $499 per order for up to 1.5 
TB. An order that exceeds 1.5 TB will be charged an additional $399 for 
up to another 1.5 TB. These fee changes will be made effective by the 
Exchange on January 4, 2010.
    The Exchange's market research indicates that OPRA tick data is 
primarily used by market participants in the financial services 
industry for back-testing trading models, post-trade analysis, 
compliance purposes and analyzing time and sales information. This 
market data offering provides both ISE members and non-members with a 
choice to subscribe to a service that provides a daily file on an on-
going basis (end of day file), or simply request data on an ad-hoc 
basis for a pre-determined date range (historical file).

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\11\ In particular, the

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Commission finds that the proposed rule change is consistent with the 
requirements of Section 6(b)(4) of the Act,\12\ which requires that the 
rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees and other charges among members and 
issuers and other persons using its facilities. The Commission also 
believes that the proposed rule change is consistent with Section 
6(b)(5) of the Act,\13\ which requires, among other things, that the 
rules of an exchange be designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest; and not be designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers. The Commission further believes that the proposed rule change 
is consistent with Section 6(b)(8) of the Act \14\ in that it does not 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
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    \11\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78f(b)(8).
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    Because ISE's instant proposal relates to the distribution of non-
core data, the Commission will apply the market-based approach set 
forth in the Commission's approval of a NYSE Arca market data 
proposal.\15\ The Commission believes that ISE was subject to 
significant competitive forces in setting the terms of its proposal, 
including the level of fees.\16\ Specifically, the Exchange has a 
compelling need to attract order flow to maintain its share of trading 
volume, imposing pressure on the Exchange to act reasonably in 
establishing fees for these data offerings.\17\ Further, ISE is 
constrained in pricing these data offerings because of the availability 
of alternatives to purchasing ISE's market data products.\18\ Finally, 
the Commission does not believe that a substantial countervailing basis 
exists to support a finding that the proposed fees fail to meet the 
requirements of the Act or the rules thereunder. The Commission did not 
receive any comments on the terms of the proposal. Further, the fees 
charged will be the same for all market participants, and therefore do 
not unreasonably discriminate among market participants. In addition, 
ISE represents that it has enhanced its Open/Close Trade Profile and 
Historical Options Ticket Data offerings, and that the increase ``is 
nominal in light of the increased costs borne by the Exchange for the 
enhancements.'' \19\
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    \15\ See Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
    \16\ The Commission has previously made a finding that the 
options industry is subject to significant competitive forces. See 
Securities Exchange Act Release No. 59949 (May 20, 2009), 74 FR 
25593 (May 28, 2009) (SR-ISE-2009-97) (order approving ISE's 
proposal to establish fees for a real-time depth of market data 
offering).
    \17\ ISE states that it has a compelling need to attract order 
flow from market participants in order to maintain its share of 
trading volume. ISE further states that this compelling need to 
attract order flow imposes significant pressure on ISE to act 
reasonably in setting the fees for its market data offerings, 
particularly given that the market participants that will pay such 
fees often will be the same market participants from whom ISE must 
attract order flow. These market participants include broker-dealers 
that control the handling of a large volume of customer and 
proprietary order flow. ISE states that, given the portability of 
order flow from one exchange to another, any exchange that sought to 
charge unreasonably high market data fees would risk alienating many 
of the same customers on whose orders it depends for competitive 
survival. See Notice, supra note 3, at 64785.
    \18\ For example, the Exchange represents that all of the 
information available in the Historical Options Tick Data product is 
available from the core data feed offered by the Options Price 
Reporting Authority. Further, the Exchange represents that CBOE is a 
potential competitor because it also sells an Open/Close market data 
product. See Notice, supra note 3, at 64785.
    \19\ See Notice, supra note 3, at 64784.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-ISE-2009-103), be and hereby is 
approved.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-704 Filed 1-15-10; 8:45 am]
BILLING CODE 8011-01-P


