
[Federal Register Volume 76, Number 151 (Friday, August 5, 2011)]
[Notices]
[Pages 47627-47630]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19854]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65000; File No. SR-ISE-2011-44]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Two Market Data Feeds

August 1, 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 August 1, 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 Exchange. 
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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[[Page 47628]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt two new market data offerings, the 
ISE Top Quote Feed and the ISE Spread Book Feed. 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 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
    ISE proposes to adopt two new market data offerings, the ISE Top 
Quote Feed and the ISE Spread Book Feed. These two new data feeds were 
created as part of the Exchange's transition to its new trading 
platform called Optimise. The Exchange expects to fully transition to 
the Optimise trading platform by the end of July 2011. Thus, the 
Exchange proposes to implement both new market data offerings on August 
1, 2011.
ISE Top Quote Feed
    ISE currently produces a real-time data feed with the Best Bid/
Offer, or BBO, that includes the aggregate size from all outstanding 
quotes and orders at the top price level, or the ``top of book'' and 
all trades that are executed on the Exchange. This ``core'' \3\ data is 
formatted according to Options Price Reporting Authority (``OPRA'') 
specification and sent to OPRA for redistribution to the public.
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    \3\ ``Core'' data refers to the best-priced quotations and 
comprehensive last sale reports of all markets that the Commission 
requires a central processor to consolidate and distribute to the 
public pursuant to joint-SRO plans. ``Non-core'' data refers to 
products other than the consolidated products that markets offer 
collectively under joint industry plans.
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    The Exchange now proposes to offer a non-core data feed, called the 
ISE Top Quote Feed (``Top Quote''). Top Quote is a real-time feed that 
aggregates all quotes and orders at the top price level on the 
Exchange, on both the bid and offer side of the market. Top Quote 
provides subscribers with a consolidated view of tradable prices at the 
BBO, the same data that is displayed on the OPRA feed. Top Quote shows 
bid/ask quote size for Customer and Professional Customer option orders 
for ISE traded options that are not currently distinguishable through 
the OPRA feed.\4\ The identification of Customer orders is useful for 
market makers and market participants generally since Customer orders 
take precedence over all other order types on the ISE. The Exchange 
believes it is not discriminatory or a burden on competition for these 
orders to be identified because doing so increases the likelihood that 
these orders will be executed as they have priority on the ISE while 
Professional Customers, i.e., persons or entities that (i) are not a 
broker or dealer in securities, and (ii) place more than 390 orders in 
listed options per day on average during a calendar month for its own 
beneficial account(s), do not have priority on the Exchange.
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    \4\ Customer and Professional Customer orders are identified in 
a number of market data offerings currently sold by other options 
exchanges. See Securities Exchange Act Release No. 63351 (November 
10, 2010), 75 FR 73140 (November 29, 2010) (SR-PHLX-2010-154) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Fees for the PHOTO Historical Data Product). See 
also Securities Exchange Act Release No. 63997 (March 1, 2011), 76 
FR 12388 (March 7, 2011) (SR-CBOE-2011-014) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Codify a Fee 
Schedule for the Sale by Market Data Express, LLC, of a BBO Data 
Feed for CBOE Listed Options).
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    Top Quote is currently imbedded in the Exchange's Depth of Market 
data feed offering and is available to subscribers of the Depth of 
Market data feed offering. With this proposal, the Exchange is offering 
Top Quote as a separate data feed. Top Quote will be available to 
members and non-members, and to both professionals and non-
professionals.
ISE Spread Book Feed
    The Exchange also proposes to offer another non-core data feed, 
called the ISE Spread Book Feed (``Spread Feed''). The Spread Feed is a 
real-time feed that consists of options quotes and orders for all 
complex orders (i.e., spreads, buy-writes, delta neutral strategies, 
etc.) aggregated at the top price level on both the bid and offer side 
of the market as well as all aggregated quotes and orders for complex 
orders at the top five price levels on both the bid and offer side of 
the market. In addition, the Spread Feed provides real-time updates 
every time a new complex limit order that is not immediately executable 
at the BBO is placed on the ISE complex order book. The Spread Feed 
shows bid/ask quote size for Customer and Professional Customer option 
orders for ISE traded options. As noted above, since Customer orders 
take precedence over all other order types, the identification of these 
orders in the Spread Feed is useful information for market makers and 
market participants generally. Again, the Exchange believes it is not 
discriminatory or a burden on competition for these orders to be 
identified because doing so increases the likelihood that these orders 
will be executed as they have priority on the ISE while Professional 
Customers, i.e., persons or entities that (i) are not a broker or 
dealer in securities, and (ii) place more than 390 orders in listed 
options per day on average during a calendar month for its own 
beneficial account(s), do not have priority on the Exchange.
    The Exchange further notes that ISE Market Makers currently receive 
a spread book data feed as part of their membership. The Spread Feed 
will be available to members and non-members and to both professionals 
and non-professionals.
2. Basis
    ISE believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Securities Exchange Act of 1934 (the 
``Act''),\5\ in general and with Section 6(b)(5) of the Act,\6\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, 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.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public. It was believed that 
this authority would expand the amount of data available to consumers, 
and also spur innovation and competition for the provision of market 
data. ISE believes that this proposal is in keeping with those 
principles by promoting increased

[[Page 47629]]

transparency through the dissemination of more useful proprietary data 
and also by clarifying its availability to market participants.
    Additionally, ISE is making a voluntary decision to make this data 
available. ISE is not required by the Act in the first instance to make 
the data available, unlike the best bid and offer which must be made 
available under the Act. ISE chooses to make the data available as 
proposed in order to improve market quality, to attract order flow, and 
to increase transparency.

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. The Exchange believes that Top Quote and Spread Feed will help 
attract new users and new order flow to the Exchange, thereby improving 
the Exchange's ability to compete in the market for options order flow 
and executions.

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

    Pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) 
\8\ thereunder, the Exchange has designated this proposal as one that 
effects a change that: (i) Does not significantly affect the protection 
of investors or the public interest; (ii) does not impose any 
significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest. Rule 19b-4(f)(6) \9\ 
requires a self-regulatory organization to give the Commission written 
notice of its intent to file the proposed rule change at least five 
business days prior to the date of filing of the proposed rule change, 
or such shorter time as designated by the Commission. The Exchange has 
satisfied this requirement.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ Id.
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    Under Rule 19b-4(f)(6) of the Act,\10\ a proposal does not become 
operative for 30 days after the date of its filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange requests that the 
Commission waive the 30 day operative period for this filing so that it 
may become effective and operative upon filing with the Commission 
pursuant to Section 19(b)(3)(A) \11\ of the Act and subparagraph (f)(6) 
thereunder. The Exchange believes waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest as 
the waiver will allow the Exchange to provide equal access to the 
Spread Feed to all market participants on equal and non-discriminatory 
terms. Currently, only market makers receive a spread book data feed 
from the Exchange's legacy trading system; no other market participant 
has access to the legacy trading system's spread book data feed.\12\ In 
the absence of the waiver, only market makers will be able to access 
the Spread Feed, albeit a subset of the feed, i.e., the top of book, 
whereas all other market participants will not have any access to the 
Spread Feed.
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    \10\ Id.
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ The Spread Feed and the spread book data feed are 
essentially the same feed offered on different platforms.
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    Further, the Exchange notes that without access to Top Quote once 
the Exchange has fully transitioned to its new trading system, the 
likelihood that retail orders, who receive priority on the Exchange 
over other orders, being executed will be adversely affected as the 
existence of these orders will not be known to market participants who 
seek to interact with them. While market participants will be able to 
access the data in Top Quote by subscribing to the Exchange's Depth of 
Market data feed, they are unlikely to do so due to the cost of the 
Depth of Market data feed.
    Additionally, waiver of the 30-day operative delay will allow the 
Exchange to compete for order flow with those exchanges that already 
sell market data offerings that compete with Top Quote and Spread 
Feed.\13\
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    \13\ For example, NASDAQ Stock Market (``NASDAQ'') and NASDAQ 
OMX PHLX (``Phlx'') each offer a market data product that is similar 
to Top Quote. NASDAQ's Best of NASDAQ Options (``BONO\SM\) offering 
is a data feed that shows the top of the market. Phlx's Top of Phlx 
Options (``TOPO'') shows orders and quotes at the top of the market, 
as well as trades. Market Data Express, LLC, a subsidiary of the 
Chicago Board Options Exchange, Inc. (``CBOE''), offers a market 
data product that is similar to Spread Feed. The CBOE BBO Data Feed 
includes, among other things, customer versus non-customer contracts 
at the BBO and BBO data and last sale data for complex strategies 
(e.g., spreads, straddles, buy-writes, etc.).
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    For the reasons stated above, the Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest and designates the proposal as 
operative upon filing.\14\
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    \14\ For purposes only of waiving the operative delay of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f). See also 17 CFR 200.30-3(a)(59).
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    At any time within 60 days of the filing of the 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.

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 rule-comments@sec.gov. Please include 
File No. SR-ISE-2011-44 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-2011-44. 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

[[Page 47630]]

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 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-2011-44 and should be 
submitted by August 26, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-19854 Filed 8-4-11; 8:45 am]
BILLING CODE 8011-01-P


