Document ID: SEC-2006-0732-0001
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 33022-33024]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jn06-144]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53914; File No. SR-ISE-2006-25]

 
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 May 5, 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 23, 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 added clarifying language to the purpose 
section of the filing regarding fees charged to non-ISE Market 
Makers for transactions in options on the Premium Products and made 
a technical change to the text of Exhibit 5 (ISE's Schedule of Fees) 
correcting the symbol for the Mini FTSE 100 Index from UKZ to UKX. 
The correction to Exhibit 5 does 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 Schedule of Fees as the 
products enumerated therein.

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[[Page 33023]]

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: Mini FTSE 100 Index (``UKX'') and Mini FTSE 250 Index 
(``FTZ'').\7\ Specifically, the Exchange is proposing to adopt an 
execution fee and a comparison fee for all transactions in options on 
UKX and FTZ.\8\ 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 \9\ 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.\10\ 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 introducing 
new products to the marketplace that are competitively priced.
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    \7\ See Securities Exchange Act Release No. 53484 (March 14, 
2006), 71 FR 14268 (March 21, 2006) (SR-ISE-2005-25) (order 
approving the trading of options on full and reduced values of the 
FTSE 100 Index and FTSE 250 Index, including Long-Term Options).
    \8\ The Exchange represents that these fees will be only charged 
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).
    \9\ 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.
    \10\ Telephone conversation between Samir Patel, Assistant 
General Counsel, ISE, and Richard Holley, Special Counsel, Division 
of Market Regulation, Commission, on May 31, 2006.
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    Additionally, the Exchange has entered into a license agreement 
with FTSE International Limited in connection with the listing and 
trading of options on UKX and FTZ. As with certain other licensed 
options, the Exchange is adopting a fee of ten (10) cents per contract 
for trading in these options to defray the licensing costs. The 
Exchange believes charging the participants that trade this instrument 
is the most equitable means of recovering the costs of the license. 
However, because of competitive pressures in the industry, the Exchange 
proposes to exclude Public Customer Orders from this surcharge fee. 
Accordingly, this surcharge fee will only be charged to Exchange 
members with respect to non-Public Customer Orders (e.g., ISE Market 
Maker, non-ISE Market Maker & Firm Proprietary orders) and shall apply 
to Linkage Orders \11\ under a pilot program that is set to expire on 
July 31, 2006. Further, since options on UKX and FTZ are not multiply-
listed, the Payment for Order Flow fee shall not apply.
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    \11\ See ISE Rule 1900.
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2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with section 6(b)(4) of the Act,\12\ which requires 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 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)(A) of the Act \13\ and Rule 19b-4(f)(2) \14\ thereunder 
because it changes a fee imposed by the Exchange. 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 May 5, 
2006. The effective date of Amendment No. 1 is May 23, 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 23, 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-2006-25 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-2006-25. 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

[[Page 33024]]

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-
2006-25 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. E6-8807 Filed 6-6-06; 8:45 am]

BILLING CODE 8010-01-P