2050 Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 

9Certain issues have higher fixed fees relative to 

other issues. Accordingly, the new trading model 

rollout schedule has economic consequences for 

CHX specialist firms, because specialist fixed fees 

are eliminated entirely once an issue transitions to 

the CHX new trading model and is no longer traded 

by a specialist. Absent the credit described in this 

submission, therefore, a specialist firm likely would 

request immediate transition of issues with the 

highest fixed fees to the new trading model, 

whereas the CHX might prefer to delay transition 

of such issues until later in the overall new trading 

model implementation process, in order to better 

manage the overall implementation plan. 

10 15 U.S.C. 78f(b)(4). 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(2). 

13For purposes of calculating the 60-day period 

within which the Commission may summarily 

abrogate the proposed rule change under Section 

19(b)(3)(C) of the Act, the Commission considers 

the period to commence on December 21, 2006, the 

date on which the CHX filed Amendment No. 1. See 

15 U.S.C. 78s(b)(3)(C). 14 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5The Exchange has asked the Commission to 

waive the 30-day operative delay required by Rule 

19b–4(f)(6)(iii), 17 CFR 240.19b–4(f)(6)(iii). See 

discussion infra Section III. 

of the rollout schedule.9 Moreover, the 

proposed credit would provide 

specialist firms with a specified 

reduction in their fixed fees during the 

transition period, permitting them to 

budget accordingly. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b)(4) of the 

Act 10 in that it provides for the 

equitable allocation of reasonable dues, 

fees and other charges among its 

members. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change establishes or changes a member 

due, fee or other charge imposed by the 

Exchange, it has become effective 

pursuant to Section 19(b)(3)(A) of the 

Act 11 and subparagraph (f)(2) of Rule 

19b–4 thereunder.12 At any time within 

60 days of the filing of such proposed 

rule change, the Commission may 

summarily abrogate 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.13

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 rulecomments@sec.gov. Please include File 

Number SR–CHX–2006–37 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CHX–2006–37. 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 inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the CHX. 

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–CHX–2006–37 and should 

be submitted on or before February 7, 

2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–536 Filed 1–16–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55060; File No. SR–ISE–

2006–72] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Special Order Fees 

January 8, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

1, 2006, the International Securities 

Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’ or ‘‘SEC’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been substantially prepared by ISE. 

The Exchange filed the proposal as a 

‘‘non-controversial’’ proposed rule 

change pursuant to Section 

19(b)(3)(A)(iii) of the Act 3 and Rule 

19b–4(f)(6) thereunder,4 which renders 

it effective upon filing with the 

Commission.5 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 adopt a customer 

fee for special orders. The text of the 

proposed rule change is available at ISE, 

the Commission’s Public Reference 

Room, and http://www.iseoptions.com. 

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 

ISE included statements concerning the 

purpose of, and basis for, the proposed 

rule change and discussed any 

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Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 2051 

6Premium Products is defined in the Schedule of 

Fees as the products enumerated therein. 

7 15 U.S.C. 78f(b)(5). 

8The staff of the SEC revised this language to 

correct an error in the statutory basis proposed rule 

change. Telephone Conference between Samir 

Patel, Assistant General Counsel, ISE, and Ronesha 

A. Butler, Special Counsel, Division of Market 

Regulation, Commission, on January 5, 2007. 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). 

11Pursuant to Rule 19b–4(f)(6)(iii), the Exchange 

has given the Commission written notice of its 

intent to file the proposed rule change, along with 

a brief description and text of the proposed rule 

change, at least five business days prior to the date 

on which the Exchange filed the proposed rule 

change. See 17 CFR 240.19b–4(f)(6)(iii). 

12 17 CFR 240.19b–4(f)(6). 

13See Securities Exchange Act Release No. 54328 

(August 16, 2006), 71 FR 49493 (August 23, 2006). 

14For the purposes only of waiving the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 

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 ISE 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 amend ISE’s Schedule of 

Fees to adopt a customer fee for special 

orders. The Exchange currently waives 

transaction fees for customers, except 

for when those transactions occur in 

Premium Products.6 The Exchange has 

noted an increase in volume in certain 

customer order transactions, 

particularly in transactions that result 

from customer orders that are entered as 

responses to special order broadcasts. 

These special order broadcasts are sent 

to Exchange members when certain 

types of orders are entered, such as 

facilitations, solicitations, block orders, 

and orders entered in the Exchange’s 

Price Improvement Mechanism. 

Customers, who have access to highly 

developed trading systems enter orders 

in response to these special order 

broadcasts, much like a broker or dealer 

would. Customers that possess this 

advanced trading technology are able to 

quickly receive and process substantial 

amounts of market-wide and ISE data, 

thereby allowing them to selectively 

respond to special order broadcasts. 

The advanced trading systems 

utilized by these customers provide 

them with the ability to rapidly respond 

to updates to the special order 

broadcasts and market-wide data (such 

as changes to the NBBO and the 

underlying market) by aggressively 

submitting orders within the 3 second 

exposure period. The Exchange thus 

proposes to charge an execution and 

comparison fee of $0.15 and $0.03 per 

contract, respectively, for these 

customer orders to put theses customers 

on more equal footing with ISE 

members who currently pay a fee for 

this functionality. The proposed fee will 

only apply to responses sent by 

customers during the 3 second exposure 

period that all special orders are subject 

to. 

The Exchange believes that the 

proposed fee is necessary to equitably 

allocate the associated costs amongst 

ISE market participants that fully utilize 

the special order broadcasts, a 

functionality that is available only to 

ISE members and customers who 

possess highly developed technology. 

The development and ongoing 

maintenance associated with the 

broadcasts of, and updates to, special 

orders, is a costly expenditure of ISE 

resources. ISE believes that the 

proposed fee is objective in that it is 

based on the behavior of market 

participants and the type of orders 

submitted. As noted above, since the 

behavior of these public customers is 

similar to the behavior of an ISE 

member, it is fair for the Exchange to 

charge these customers the same fees as 

those charged to ISE members. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,7 in that it is designed 

to promote just and equitable principles 

of trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, protect 

investors and the public interest.8

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 written 

comments from members or other 

interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not (1) significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for thirty days from the date 

on which it was filed, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 9 and Rule 19b–

4(f)(6) 10 thereunder.11

A proposed rule change filed under 

Commission Rule 19b–4(f)(6) 12

normally does not become operative 

prior to thirty days after the date of 

filing. The Exchange requests that the 

Commission waive the 30-day operative 

delay, as specified in Rule 19b–

4(f)(6)(iii), and designate the proposed 

rule change to become operative 

immediately because this proposal is 

substantially similar to a Boston 

Options Exchange proposed rule change 

that was recently approved by the 

Commission.13 The Commission hereby 

grants the request. The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest because such waiver will allow 

the Exchange to allocate reasonable 

dues, fees, and other charges among its 

members and other persons using its 

facilities. For these reasons, the 

Commission designates the proposed 

rule change as effective and operative 

upon filing.14

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission may summarily abrogate 

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 rulecomments@sec.gov. Please include File 

mstockstill on PROD1PC61 with NOTICES

2052 Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 

15 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3). 

4 17 CFR 240.19b-4.(f)(6). 

No. SR–ISE–2006–72 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File No. 

SR–ISE–2006–72. 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 inspection and copying in 

the Commission’s Public Reference 

Room. Copies of the 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 

No. SR–ISE–2006–72 and should be 

submitted on or before February 7, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–478 Filed 1–16–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55061; File No. SR–

NASDAQ–2006–061] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by the 

NASDAQ Stock Market LLC To Codify 

Sponsored Access Rule 

January 8, 2007. 

Pursuant to the provisions of Section 

19(b)(1) under the Securities Exchange 

Act of 1934 (‘‘Act’’),1 and Rule 19b–4 

thereunder,2 The NASDAQ Stock 

Market LLC (‘‘Nasdaq’’) is filing with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by Nasdaq. 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 the Substance 

of the Proposed Rule Change 

Nasdaq is filing with the Commission 

a proposed rule change to update and 

clarify the requirements for members 

that provide electronic access to 

Nasdaq’s execution services, and to 

codify these requirements in Nasdaq’s 

rules. 

Nasdaq has designated this proposal 

as one effecting 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. 

Nasdaq has provided the Commission 

with written notice of its intent to file 

this proposed rule change, along with a 

brief description and text of the 

proposed rule change, at least five 

business days prior to the date of filing 

of the proposed rule change pursuant to 

Section 19(b)(3)3 and Rule 19b–4(f)(6) 

thereunder.4 The proposed rule change 

will become operative 30 days after the 

date of the filing. 

The text of the proposed rule change 

is below. The proposed new language is 

italicized. 

* * * * * 

4611. Nasdaq Market Center Participant 

Registration 

(a)–(c) No change. 

(d) Members may provide sponsored 

access in accordance with the 

provisions below: 

(1) Definition. Sponsored Access is 

the practice by a member firm 

(‘‘Sponsoring Member’’) of providing 

access to the Nasdaq Execution System 

(‘‘Nasdaq’’) on an agency basis to 

another firm or customer (‘‘Sponsored 

Firm’’). Sponsored access can be of two 

forms: (a) pass-through access, whereby 

a Sponsored Firm enters orders that 

pass through the Sponsoring Member’s 

systems and then into Nasdaq (‘‘Passthrough Sponsored Access’’), and (b) 

direct access, whereby the Sponsored 

Firm enters orders directly into Nasdaq 

(‘‘Direct Sponsored Access’’). 

(2) Sponsoring Members that provide 

Sponsored Access to Nasdaq shall be 

responsible for complying with the 

obligations in Rule 4611 with respect to 

any activity conducted by a Sponsored 

Firm using a market participant 

identifier (‘‘MPID’’) assigned to the 

Sponsoring Member. 

(3) A Sponsoring Member that 

provides Direct Sponsored Access to 

Nasdaq shall execute and file with 

Nasdaq the Addendum to the Nasdaq 

Services Agreement for Sponsored 

Access to Nasdaq (‘‘Sponsored Access 

Agreement’’) and any other such 

agreements as specified by Nasdaq. 

Sponsored Firms shall also execute and 

file with Nasdaq a Sponsored Access 

Agreement and any other such 

agreements as specified by Nasdaq. 

Interpretive Material 4611–1—

Sponsored Access 

(1) Compliance with Nasdaq 

Supervision and Customer Protection 

Requirements 

Sponsoring Members have 

responsibility for the conduct of their 

Sponsored Firms as if the conduct were 

their own. Sponsoring Members that 

provide Sponsored Access, whether 

Pass-through or Direct, have a 

continuing obligation to comply with all 

Nasdaq rules and procedures and the 

federal securities laws and rules, and 

must, in accordance with Rule 3010, 

have supervisory systems and written 

procedures reasonably designed to 

achieve compliance with these 

obligations. For example, Sponsoring 

Members must have systems and written 

procedures to supervise the activity of 

Sponsored Firms, including obligations 

with respect to the Nasdaq and SEC 

short sale rules (Rule 3350 and SEC 

Rule 10a–1 and Regulation SHO), and 

the requirements articulated in Rule 

3370. Further, Sponsoring Members 

must satisfy their obligations under IM–

2110–2 or Rule 6440 to not trade ahead 

of customers. Similarly, a limit order 

from a Sponsored Firm is subject to the 

SEC limit order display rule (Rule 604 

under Regulation NMS) and the order 

must be handled in compliance with the 

rule. Sponsoring Members also must 

possess sufficient information about 

their Sponsored Firms to satisfy the 

‘‘know your customer’’ obligation that is 

embedded in the Nasdaq Conduct 

Rules. 

(2) Compliance With Other Nasdaq 

Requirements 

(a) Rule 8210. Sponsoring Members 

are responsible for complying with all 

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