Document ID: SEC-2007-0227-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-02-14T05:00Z

[Federal Register: February 14, 2007 (Volume 72, Number 30)]
[Notices]               
[Page 7099-7100]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14fe07-138]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55247; File No. SR-ISE-2007-03]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to a Complex Order Fee Waiver

February 6, 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 February 1, 2007, the International Securities Exchange, LLC 
(``ISE'' or ``Exchange'') submitted to the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been substantially 
prepared by ISE. ISE has designated this proposal as one establishing 
or changing a due, fee, or other charge imposed by the self-regulatory 
organization under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-
4(f)(2) thereunder,\4\ which renders it effective upon filing with the 
Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend its Schedule of Fees to adopt a 
waiver for customer fees for certain Complex Orders.
    The text of the proposed rule change is available on ISE's Web site 
at http://www.ise.com, at the principal office of ISE, 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, ISE 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. 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 waiver of customer fees for certain Complex 
Orders.\5\ The Commission recently approved an Exchange proposed fee 
for customers that transact in Complex Orders, i.e., customer orders 
that interact with Complex Orders resident on the complex order book 
thereby taking liquidity from the complex order book.\6\ The Exchange 
now proposes to waive this fee for the first 15,000 contracts 
transacted in a month by a member on behalf of its customers. This fee 
will apply once a member transacts more than 15,000 contracts in a 
month (whether on behalf of one or more than one of its customers) that 
take liquidity from the complex order book. As an example, a member who 
collectively transacts 17,500 contracts on behalf of its customers in a 
month will be assessed the complex order fee on 2,500 contracts, not on 
the entire 17,500 contracts.
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    \5\ Complex Orders are defined in ISE Rule 722(a).
    \6\ See Exchange Act Release No. 34-54751 (November 14, 2006), 
71 FR 67667 (November 22, 2006).
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    In the filing that adopted this fee, the Exchange stated its belief 
that the proposed fee is objective in that it is based on the behavior 
of market participants and the type of orders submitted. Since the 
behavior of these customers is similar to the behavior of a broker 
dealer, it is fair for the Exchange to charge for these customer orders 
the same fees as those charged for broker dealer orders. The Exchange

[[Page 7100]]

believes that adopting a waiver for the first 15,000 contracts that a 
member transacts on behalf of its customers in a month is reasonable in 
that it furthers the Exchange's goal of deterring customers from acting 
as broker-dealers. The Exchange believes that customer orders that 
inadvertently interact with Complex Orders resident on the complex 
order book will never exceed 15,000 contracts in a month while customer 
orders of a member that intentionally engage in the business of taking 
liquidity from the complex order book are likely to exceed 15,000 
contracts in a month.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(4) of the Act \7\ that an exchange have 
an equitable allocation of reasonable dues, fees and other charges 
among exchange members and other persons using its facilities.
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    \7\ 15 U.S.C. 78f(b)(4).
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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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-4(f)(2) thereunder,\9\ 
because it establishes or changes a due, fee, or other charge imposed 
by the self-regulatory organization.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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    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 rule-comments@sec.gov. Please include 

File Number SR-ISE-2007-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC, 20549-1090.
    All submissions should refer to File Number SR-ISE-2007-03. 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 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-2007-03 and should be submitted on or before March 
7, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-2530 Filed 2-13-07; 8:45 am]

BILLING CODE 8010-01-P