Document ID: SEC-2008-0079-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2008-01-16T05:00Z

[Federal Register: January 16, 2008 (Volume 73, Number 11)]
[Notices]               
[Page 2969-2970]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16ja08-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57128; File No. SR-ISE-2008-02]

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

January 10, 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 January 2, 2008, the International Securities Exchange, LLC 
(``Exchange'' or ``ISE'') 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 substantially 
prepared by the ISE. 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,\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)(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 ISE is proposing to amend its Schedule of Fees to increase the 
surcharge fee for transactions in options on the Nasdaq-100[reg] Stock 
Index. 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 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 increase 
the surcharge fee for transactions in options on the Nasdaq-100 Stock 
Index, both full value (``NDX'') and 1/10 value (``MNX'').\5\ The 
Exchange currently charges an execution fee and a comparison fee for 
all transactions in options on NDX and MNX.\6\ Specifically, the amount 
of the execution fee and comparison fee for transactions in options on 
NDX and MNX is $0.15 and $0.03 per contract, respectively, for all 
Public Customer Orders \7\ and Firm Proprietary orders. The current 
amount of the execution fee and comparison fee for all ISE Market Maker 
transactions in options on NDX and MNX is equal to the execution fee 
and comparison fee currently charged by the Exchange for ISE Market 
Maker

[[Page 2970]]

transactions in equity options.\8\ Finally, the current amount of the 
execution fee and comparison fee for all non-ISE Market Maker 
transactions is $0.37 and $0.03 per contract, respectively.\9\
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    \5\ See Securities Exchange Act Release No. 51121 (February 1, 
2005), 70 FR 6476 (February 7, 2005), (SR-ISE-2005-01) (Order 
approving the trading of options on full and reduced values of the 
Nasdaq-100 Stock Index).
    \6\ See Securities Exchange Act Release No. 51397 (March 18, 
2005), 70 FR 15372 (March 25, 2005), (SR-ISE-2005-13) (Notice of 
Filing and Immediate Effectiveness of proposed fee changes related 
to NDX and MNX options). These fees are charged only to Exchange 
members. Under a pilot program that is set to expire on July 31, 
2008, these fees will also be charged to Linkage Orders (as defined 
in ISE Rule 1900). See Securities Exchange Act Release No. 56128 
(July 24, 2007), 72 FR 42161 (August 1, 2007) (SR-ISE-2007-55).
    \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 that is not a broker 
or dealer in securities.
    \8\ The execution fee is currently between $0.21 and $0.12 per 
contract side, depending on the Exchange Average Daily Volume, and 
the comparison fee is currently $0.03 per contract side.
    \9\ The amount of the execution and comparison fee for non-ISE 
Market Maker transactions executed in the Exchange's Facilitation 
and Solicitation Mechanisms is $0.16 and $0.03 per contract, 
respectively.
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    Pursuant to a license agreement between the Exchange and the Nasdaq 
Stock Market, Inc., (``Nasdaq''), the Exchange currently charges a 
surcharge fee of $0.15 per contract for trading in options on NDX and 
MNX. The Exchange recently renewed its license agreement with Nasdaq 
pursuant to which the Exchange is now being charged a higher license 
fee. Accordingly, to defray the increased licensing costs, the Exchange 
proposes to increase the surcharge fee by $0.01 per contract to $0.16 
per contract for trading in options on NDX and MNX. The Exchange 
believes charging the participants that trade these instruments is the 
most equitable means of recovering the costs of the license. However, 
because of competitive pressures in the industry, the Exchange proposes 
to continue excluding Public Customer Orders \10\ from this surcharge 
fee.
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    \10\ 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 that is 
not a broker or dealer in securities.
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    Accordingly, this surcharge fee will only be charged to Exchange 
members with respect to non-Public Customer Orders (i.e., Market Maker, 
Non-ISE Market Maker and Firm Proprietary orders).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of section 6 of the Act,\11\ in general, and 
furthers the objectives of section 6(b)(4),\12\ 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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    \11\ 15 U.S.C. 78f.
    \12\ 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

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge imposed by the Exchange, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(2) 
\14\ 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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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 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 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 No. SR-ISE-2008-02 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-2008-02. 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 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-2008-02 and should be 
submitted on or before February 6, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-648 Filed 1-15-08; 8:45 am]

BILLING CODE 8011-01-P