Document ID: SEC-2009-0361-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes:  InternationalSecurities Exchange, LLC
Posted Date: 2009-03-18T04:00Z

[Federal Register: March 18, 2009 (Volume 74, Number 51)]
[Notices]               
[Page 11622-11624]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18mr09-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59567; File No. SR-ISE-2009-12]

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

March 12, 2009.
    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 March 6, 2009, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change, as described 
in Items I, II, and III below, which items have been prepared by the 
self-regulatory organization. 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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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 2 Premium Products.\3\ The text of 
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.
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    \3\ Premium Products is defined in the Schedule of Fees as the 
products enumerated therein.
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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 self-regulatory organization 
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.

[[Page 11623]]

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 iShares U.S. 
Preferred Stock Index Fund (``PFF'') \4\ and the United States 12 Month 
Oil Fund, LP (``USL'').\5\ The Exchange represents that PFF and USL are 
eligible for options trading because they constitute ``Exchange-Traded 
Fund Shares,'' as defined by ISE Rule 502(h).
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    \4\ iShares[supreg] is a registered trademark of Barclays Global 
Investors, N.A. (``BGI''). ``Standard & Poor's[supreg]'' and 
``S&P[supreg]'' are trademarks of The McGraw-Hill Companies, Inc. 
(``McGraw-Hill'') and have been licensed for use for certain 
purposes by BGI. All other trademarks and service marks are the 
property of their respective owners. iShares U.S. Preferred Stock 
Index Fund (``PFF'') is not sponsored, endorsed, issued, sold or 
promoted by Standard & Poor's, (``S&P''), a division of McGraw-Hill, 
and S&P makes no representation regarding the advisability of 
investing in PFF. BGI 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 PFF 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 PFF or with making disclosures concerning 
options on PFF under any applicable federal or state laws, rules or 
regulations. BGI and S&P do not sponsor, endorse, or promote such 
activity by ISE, and are not affiliated in any manner with ISE.
    \5\ The United States 12 Month Oil Fund, LP (``USL'') is 
distributed by ALPS Distributors, Inc. (``ALPS''), administered by 
Brown Brothers Harriman & Co. (``BBH'') and United States Commodity 
Fund, LLC (``USCF'') is the General Partner. ALPS, BBH and USCF 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 USL 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 USL or with making disclosures concerning options on USL 
under any applicable federal or state laws, rules or regulations. 
ALPS, BBH and USCF do not sponsor, endorse, or promote such activity 
by ISE, and are not affiliated in any manner with ISE.
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    All of the applicable fees covered by this filing are identical to 
fees charged by the Exchange for all other Premium Products. 
Specifically, the Exchange is proposing to adopt an execution fee for 
all transactions in options on PFF and USL.\6\ The amount of the 
execution fee for products covered by this filing shall be $0.18 per 
contract for all Public Customer Orders \7\ and $0.20 per contract for 
all Firm Proprietary orders. The amount of the execution fee for all 
ISE Market Maker transactions shall be equal to the execution fee 
currently charged by the Exchange for ISE Market Maker transactions in 
equity options.\8\ Finally, the amount of the execution fee for all 
non-ISE Market Maker transactions shall be $0.45 per contract.\9\ 
Further, since options on PFF and USL are multiply-listed, the 
Exchange's Payment for Order Flow fee shall apply to all these 
products. The Exchange believes the proposed rule change will further 
the Exchange's goal of introducing new products to the marketplace that 
are competitively priced.
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    \6\ These fees will be charged only to Exchange members. Under a 
pilot program that is set to expire on July 31, 2009, these fees 
will also be charged to Linkage Principal Orders (``Linkage P 
Orders'') and Linkage Principal Acting as Agent Orders (``Linkage P/
A Orders''). The amount of the execution fee charged by the Exchange 
for Linkage P Orders and Linkage P/A Orders is $0.27 per contract 
side and $0.18 per contract side, respectively. See Securities 
Exchange Act Release No. 58143 (July 11, 2008), 73 FR 41388 (July 
18, 2008) (SR-ISE-2008-52).
    \7\ Public Customer Order is defined in Exchange Rule 100(a)(39) 
as an order for the account of a Public Customer. Public Customer is 
defined in Exchange Rule 100(a)(38) as a person or entity that is 
not a broker or dealer in securities.
    \8\ The Exchange applies a sliding scale, between $0.01 and 
$0.18 per contract side, based on the number of contracts an ISE 
market maker trades in a month.
    \9\ The amount of the execution fee for non-ISE Market Maker 
transactions executed in the Exchange's Facilitation and 
Solicitation Mechanisms is $0.20 per contract.
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    Further, the Exchange proposes to amend its Schedule of Fees to 
remove the surcharge fee previously adopted for transactions in options 
on the iShares S&P MidCap 400 Index Fund (``IJH''), the iShares S&P 
SmallCap 600 Index Fund (``IJR''),\10\ and the iShares S&P SmallCap 600 
Value Index Fund (``IJS'').\11\ The Exchange is proposing to remove the 
surcharge fee from its Schedule of Fees because it no longer pays a 
license fee to Standard & Poor's in connection with transactions in 
options on IJH, IJR and IJS. Accordingly, there is no longer a need for 
this surcharge fee. The Exchange will, however, continue to charge an 
execution fee for transactions in options on IJH, IJR and IJS.
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    \10\ See Securities Exchange Act Release No. 34-49557 (April 12, 
2004), 69 FR 20955 (April 19, 2004).
    \11\ See Securities Exchange Act Release No. 34-54414 (September 
7, 2006), 71 FR 54546 (September 15, 2006).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ in particular, in that 
it is designed to provide for the 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.
    \13\ 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 unsolicited 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) of the Act \14\ and Rule 19b-4(f)(2) \15\ thereunder. 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.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
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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 proposal 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-2009-12 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 No. SR-ISE-2009-12. 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

[[Page 11624]]

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 changes 
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, 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 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 No. SR-
ISE-2009-12 and should be submitted on or before April 8, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-5779 Filed 3-17-09; 8:45 am]

BILLING CODE 8011-01-P