Document ID: SEC-2008-1528-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2008-11-13T05:00Z

[Federal Register: November 13, 2008 (Volume 73, Number 220)]
[Notices]               
[Page 67238-67239]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13no08-87]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58898; File No. SR-ISE-2008-81]

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

November 4, 2008.
    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 October 31, 2008, International Securities Exchange, LLC (the 
``ISE'' or the ``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 
Exchange. The ISE filed the proposal pursuant to section 19(b)(3)(A) of 
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the 
proposal 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).
    \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 ISE is proposing to amend its Schedule of Fees regarding its 
cancellation fee. 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.

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 67239]]

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 the ISE's 
cancellation fee. The Exchange currently has a cancellation fee of 
$2.00 that applies to Electronic Access Members (``EAMs'') that 
cancelled at least 500 orders in a month, for each order cancellation 
in excess of the total number of orders such member executed that 
month. Further, all orders from the same clearing EAM executed in the 
same series on the same side of the market at the same price within a 
30 second period are aggregated and counted as one executed order for 
purposes of this fee. This fee is currently charged only to customer 
orders; broker-dealer orders, including non-member market maker (FARMM) 
orders, are excluded from this fee.
    Recognizing that order cancellations often happen in large numbers, 
the purpose of this fee is to ease system congestion and to fairly 
allocate costs among members according to system use. Some members 
recently have sought to circumvent the fee by breaking up their orders 
into a range of deep out of the money options series in the same 
underlying name that trade at the same premium; in another [sic] words, 
executing multiple orders within 30 seconds, but in related--not the 
same--series of options. As noted above, ISE currently aggregates 
executions only in the same series, not related series. In order to 
prevent market participants from circumventing this fee, ISE proposes 
to amend the current execution-offset provision of the cancellation 
fee. Specifically, in calculating this fee, the Exchange will aggregate 
together and count as one cancelled order orders that are entered and 
traded within 30 seconds, at the same price, in the same underlying 
symbol. The Exchange believes this proposed fee change is justified to 
counter the level of cancellation activity and its effect on 
congestion.
    This proposed fee change will be operative on November 3, 2008.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(4) that an exchange have an equitable 
allocation of reasonable dues, fees and other charges among its members 
and other persons using its facilities. In particular, the Exchange 
believes amending the manner by which its cancellation fees are 
calculated is necessary to allow the Exchange to target cancellations 
that do not have a valid justification.

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 \5\ and Rule 19b-4(f)(2) \6\ thereunder. At any 
time within 60 days of the filing of the 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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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 19b-4(f)(2) [sic].
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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 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-2008-81 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2008-81. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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 Number SR-ISE-2008-81 and should be 
submitted on or before December 4, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-26884 Filed 11-12-08; 8:45 am]

BILLING CODE 8011-01-P