Document ID: SEC-2006-0731-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, Inc.
Posted Date: 2006-06-07T04:00Z

[Federal Register: June 7, 2006 (Volume 71, Number 109)]
[Notices]               
[Page 33021-33022]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jn06-143]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53910; File No. SR-ISE-2006-22]

 
Self-Regulatory Organizations; International Securities Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change and Amendment No. 1 Thereto Relating to Fee Changes

May 31, 2006.
    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 April 26, 2006, the International Securities Exchange, Inc. 
(``ISE'' or ``Exchange'') filed 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 the ISE. 
On May 18, 2006, ISE filed Amendment No. 1 to the proposed rule 
change.\3\ The ISE has designated this proposal as one establishing or 
changing a due, fee, or other charge imposed by the ISE under section 
19(b)(3)(A)(ii) of the Act,\4\ and Rule 19b-4(f)(2) thereunder,\5\ 
which renders the proposal effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 made certain clarifying changes to the 
purpose section regarding fees charged to non-ISE market makers for 
transactions in options on the Premium Products that are the subject 
of this filing. These changes did not affect the fees covered by 
this filing.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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 ISE is proposing to amend its Schedule of Fees to establish 
fees for transactions in options on two Premium Products.\6\ The text 
of the proposed rule change, as amended, is available on the ISE's Web 
site (http://www.iseoptions.com/legal/proposed --rule--changes.asp), at 

the principal office of the ISE, and at the Commission's Public 
Reference Room.
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    \6\ ``Premium Products'' is defined in the ISE's Schedule of 
Fees as the products enumerated therein. The Exchange represents 
that the Premium Products that are the subject of this proposed rule 
change, iShares S&P 500 Index Fund and iShares MSCI Hong Kong Index 
Fund, constitute ``Fund Shares,'' as defined by ISE Rule 502(h).
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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 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 Exchange is proposing to amend its Schedule of Fees to 
establish fees for transactions in options on the following two Premium 
Products: iShares S&P 500 Index Fund (``IVV'') \7\ and iShares MSCI 
Hong Kong Index Fund (``EWH'').\8\ Specifically, the Exchange is 
proposing to adopt an execution fee and a comparison fee for all 
transactions in options on IVV and EWH.\9\ The amount of the execution 
fee and comparison fee for products covered by this filing shall be 
$0.15 and $0.03 per contract, respectively, for all Public Customer 
Orders \10\ and Firm Proprietary orders. The amount of the execution 
fee and comparison fee for all ISE Market Maker transactions and all 
non-ISE Market Maker transactions shall be equal to the execution fee 
and comparison fee currently charged by the Exchange for ISE Market 
Maker transactions and non-ISE Market Maker transactions in equity 
options.\11\ All of the applicable fees covered by this filing are 
identical to fees charged by the Exchange for all other Premium 
Products. The Exchange believes the proposed rule change will further 
the Exchange's goal of

[[Page 33022]]

introducing new products to the marketplace that are competitively 
priced.
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    \7\ iShares[supreg] is a registered trademark of Barclays Global 
Investors, N.A. (``BGI''), a wholly owned subsidiary of Barclays 
Bank PLC. ``Standard & Poor's[supreg],'' ``S&P[supreg],'' ``S&P 
500[supreg],'' are trademarks of The McGraw-Hill Companies, Inc. 
(``McGraw-Hill''), and have been licensed for use for certain 
purposes by BGI. IVV is not sponsored, sold or endorsed by Standard 
& Poor's, (``S&P''), a division of McGraw-Hill, and S&P makes no 
representation regarding the advisability of investing in IVV. BGI, 
McGraw-Hill and S&P have not licensed or authorized ISE to (i) 
engage in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on IVV or (ii) to use and refer 
to any of their trademarks or service marks in connection with the 
listing, provision of a market for trading, marketing, and promotion 
of options on IVV or with making disclosures concerning options on 
IVV under any applicable federal or state laws, rules or 
regulations. BGI, McGraw-Hill and S&P do not sponsor, endorse, or 
promote such activity by ISE and are not affiliated in any manner 
with ISE.
    \8\ iShares[supreg] is a registered trademark of BGI, a wholly 
owned subsidiary of Barclays Bank PLC. ``MSCI Hong Kong Index'' is a 
service mark of Morgan Stanley Capital International (``MSCI'') and 
has been licensed for use for certain purposes by BGI. All other 
trademarks and service marks are the property of their respective 
owners. EWH is not sponsored, endorsed, issued, sold or promoted by 
MSCI. BGI and MSCI have not licensed or authorized ISE to (i) engage 
in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on EWH or (ii) to use and refer 
to any of their trademarks or service marks in connection with the 
listing, provision of a market for trading, marketing, and promotion 
of options on EWH or with making disclosures concerning options on 
EWH under any applicable federal or state laws, rules or 
regulations. BGI and MSCI do not sponsor, endorse, or promote such 
activity by ISE, and are not affiliated in any manner with ISE.
    \9\ The Exchange represents that these fees will be charged only 
to Exchange members. Under a pilot program that is set to expire on 
July 31, 2006, these fees will also be charged to Linkage Orders (as 
defined in ISE Rule 1900).
    \10\ Public Customer Order is defined in ISE Rule 100(a)(33) as 
an order for the account of a Public Customer. Public Customer is 
defined in ISE Rule 100(a)(32) as a person that is not a broker or 
dealer in securities.
    \11\ Telephone conversation between Samir Patel, Assistant 
General Counsel, ISE, and Richard Holley III, Special Counsel, 
Division of Market Regulation, Commission, on May 31, 2006.
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    Additionally, the Exchange proposes to remove SWH (Software HOLDRS) 
from the list of Premium Products on the Schedule of Fees. SWH has been 
delisted from ISE and no longer trades on the Exchange.
2. Statutory Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is the requirement under section 6(b)(4) of the 
Act \12\ that an exchange have an equitable allocation of reasonable 
dues, fees and other charges among its members and other persons using 
its facilities.
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    \12\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change, as amended, 
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 unsolicited 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 rule change, as amended, establishes or 
changes a due, fee, or other charge imposed by the Exchange, it has 
become effective pursuant to section 19(b)(3) of the Act \13\ and Rule 
19b-4(f)(2) \14\ thereunder. At any time within 60 days of the filing 
of such amended 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. \15\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 19b-4(f)(2).
    \15\ The effective date of the original proposed rule is April 
26, 2006. The effective date of Amendment No. 1 is May 18, 2006. For 
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 May 18, 2006, the date on which the ISE submitted 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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-2006-22 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-ISE-2006-22. 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-2006-22 and should be submitted on or before June 
28, 2006.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-8806 Filed 6-6-06; 8:45 am]

BILLING CODE 8010-01-P