Document ID: SEC-2006-0636-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, Inc.
Posted Date: 2006-05-17T04:00Z

[Federal Register: May 17, 2006 (Volume 71, Number 95)]
[Notices]               
[Page 28728-28730]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my06-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53788; File No. SR-ISE-2006-19]

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

May 11, 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 3, 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 10, 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 revised the purpose section of the filing to 
clarify that: (i) PrecISE is merely a new front-end system interface 
to the Exchange's existing trading system, which does not require 
changes to ISE's surveillance or communications rules and does not 
impact the Exchange's market structure; (ii) ISE members will 
continue to pay CLICK fees only to the extent that they continue to 
have or use those terminals; (iii) the new away market routing 
functionality is optional for members; and (iv) the $20 monthly fee 
charged to IRDs for the away market routing functionality will be 
charged per PrecISE trade terminal (which conformed the purpose 
section to the text of the Schedule of Fees).
    \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 adopt fees 
for the use of its new, proprietary PrecISE Trade[supreg] order entry 
terminals. 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.

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 purpose of this proposed rule change is to establish fees for 
the use of ISE's new, proprietary PrecISE Trade order entry terminals. 
PrecISE Trade is

[[Page 28729]]

the brand name of ISE's front-end order-entry terminal that, 
ultimately, will replace ISE's current front-end CLICK[supreg] order-
entry terminal licensed to it by OMX Technology that Electronic Access 
Members (``EAMs'') use to send orders to the ISE and view market 
data.\6\ The Exchange currently charges EAMs $500 per CLICK terminal, 
for the first terminal through the fifth terminal. For the sixth 
terminal and all subsequent terminals, the Exchange charges EAMs $250 
per CLICK terminal. However, all CLICK fees for the second and all 
subsequent terminals are waived through June 30, 2006.\7\ The Exchange 
proposes monthly PrecISE Trade terminal fees of $250 per terminal, with 
a $500 minimum and $1500 maximum, per EAM, per month. These new PrecISE 
Trade fees will enable the ISE to recoup the costs of developing, 
maintaining, and supporting the PrecISE Trade terminals. To allow 
members to become familiar with the PrecISE Trade terminals, the 
Exchange proposes to waive the associated fees for a member's first two 
months of PrecISE Trade terminal usage. Members that currently have 
CLICK terminals will continue to pay fees for those terminals during 
this period to the extent they continue to have or use those terminals. 
The Exchange believes this will allow for a smooth transition to the 
new PrecISE Trade terminals.
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    \6\ After the introduction of PrecISE Trade terminals, the ISE 
will begin phasing out CLICK terminals. Upon the completion of such 
phase-out, ISE will submit a proposed rule change to the Commission 
pursuant to which it will remove CLICK fees from its fee schedule. 
The Exchange represents that a PrecISE Trade terminal is merely a 
new front-end system interface to the existing trading system 
operated by the Exchange known as CLICK (i.e., it is a new means of 
connecting to the Exchange's existing trading system), and does not 
require any changes to the Exchange's surveillance or communications 
rules. Further, there is no change to, or impact on, the Exchange's 
market structure as a result of the new PrecISE Trade terminals.
    \7\ See Securities Exchange Act Release No. 51775 (June 2, 
2005), 70 FR 33569 (June 8, 2005).
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    Additionally, PrecISE Trade terminals will have away market routing 
functionality, enabling members to send option orders to other option 
exchanges through the PrecISE Trade terminal, if a member so 
desires.\8\ To accomplish ``away-market routing,'' an EAM must 
establish a relationship with an Intermediate Routing Destination 
(``IRD''). An IRD is an ISE member that has connectivity to, and is a 
member of, other options exchanges. If an EAM sends an order to an IRD 
using the away market routing functionality of a PrecISE Trade 
terminal, the IRD will route that order to the designated away market 
on behalf of the entering EAM. The Exchange proposes to charge IRDs a 
flat monthly fee of $20 per PrecISE Trade terminal that is authorized 
to send orders to that IRD if a member requests the away-market routing 
functionality. This fee will enable the ISE to recoup the costs of 
developing, maintaining, and supporting the away-market routing 
functionality.
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    \8\ The away market routing functionality is an added feature of 
the new PrecISE Trade terminal. This functionality is offered as a 
convenience to ISE members and is not an exclusive means to send 
orders intermarket.
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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 \9\ 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, these fees would permit the Exchange to 
recover the costs of developing, maintaining, and supporting PrecISE 
Trade terminals and away-market routing.
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    \9\ 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 \10\ and Rule 
19b-4(f)(2) \11\ 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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 19b-4(f)(2).
    \12\ The effective date of the original proposed rule is April 
3, 2006. The effective date of Amendment No. 1 is May 10, 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 10, 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-2006-19 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-2006-19. 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

[[Page 28730]]

Number SR-ISE-2006-19 and should be submitted on or before June 7, 
2006.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-7465 Filed 5-16-06; 8:45 am]

BILLING CODE 8010-01-P