Document ID: SEC-2008-1420-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2008-10-14T04:00Z

[Federal Register: October 14, 2008 (Volume 73, Number 199)]
[Notices]               
[Page 60740-60742]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14oc08-99]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58744; File No. SR-ISE-2008-76]

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

October 7, 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 3, 2008, the International Securities Exchange, LLC (``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 self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested parties.
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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 5 Premium Products.\3\ The text of 
the proposed rule change is available at the Exchange.
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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.

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 Dow Jones 
U.S. Oil Equipment & Services Index Fund (``IEZ''),\4\ the 
Vanguard[supreg] Information Technology ETF (``VGT''),\5\ the 
Vanguard[supreg] Mid-Cap ETF (``VO''),\6\ the SPDR[supreg] S&P Biotech 
ETF

[[Page 60741]]

 (``XBI''),\7\ and the SPDR[supreg] S&P Oil & Gas Equipment & Services 
ETF (``XES'').\8\ The Exchange represents that IEZ, VGT, VO, XBI and 
XES 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''), a wholly owned subsidiary of Barclays 
Bank PLC. ``Dow Jones'' and ``Dow Jones U.S. Oil Equipment & 
Services Index'' are trademarks and service marks of Dow Jones & 
Company, Inc. (``Dow Jones'') and have been licensed for use for 
certain purposes by BGI. All other trademarks and service marks are 
the property of their respective owners. The iShares Dow Jones U.S. 
Oil Equipment & Services Index Fund (``IEZ'') is not sponsored, 
endorsed, or promoted by Dow Jones. BGI and Dow Jones 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 IEZ 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 IEZ or 
with making disclosures concerning options on IEZ under any 
applicable federal or state laws, rules or regulations. BGI and Dow 
Jones do not sponsor, endorse, or promote such activity by ISE, and 
are not affiliated in any manner with ISE.
    \5\ Vanguard, Vanguard ETFs and Vanguard ETF are trademarks of 
The Vanguard Group, Inc. (``Vanguard''). All other marks are the 
exclusive property of their respective owners. The Vanguard[supreg] 
Information Technology ETF (``VGT'') tracks the Morgan Stanley 
Capital International[supreg] (MSCI[supreg]) U.S. Investable Market 
Information Technology Index. MSCI does not sponsor, endorse, or 
promote VGT and makes no representation regarding the advisability 
of investing in VGT. Vanguard and MSCI 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 VGT 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 VGT or with making 
disclosures concerning options on VGT under any applicable federal 
or state laws, rules or regulations. Vanguard and MSCI do not 
sponsor, endorse, or promote such activity by ISE, and are not 
affiliated in any manner with ISE.
    \6\ Vanguard, Vanguard ETFs and Vanguard ETF are trademarks of 
The Vanguard Group, Inc. (``Vanguard''). All other marks are the 
exclusive property of their respective owners. The Vanguard[supreg] 
Mid-Cap ETF (``VO'') tracks the Morgan Stanley Capital 
International[supreg] (MSCI[supreg]) U.S. Mid Cap 450 Index. MSCI 
does not sponsor, endorse, or promote VO and makes no representation 
regarding the advisability of investing in VO. Vanguard and MSCI 
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 VO 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 VO or 
with making disclosures concerning options on VO under any 
applicable federal or state laws, rules or regulations. Vanguard and 
MSCI do not sponsor, endorse, or promote such activity by ISE, and 
are not affiliated in any manner with ISE.
    \7\ ``Standard & Poor's[supreg],'' ``S&P[supreg],'' ``S&P 
500[supreg],'' ``Standard & Poor's 500[supreg],'' ``Standard & 
Poor's Depositary Receipts[supreg],'' ``SPDR[supreg],'' and ``the 
S&P[supreg] Biotechnology Select Industry Index'' are trademarks of 
The McGraw-Hill Companies, Inc. (``McGraw-Hill''), and have been 
licensed for use by State Street Bank and Trust (``State Street'') 
in connection with the listing and trading of SPDR[supreg] S&P 
Biotech ETF (``XBI''). State Street and Standard & Poor's (``S&P''), 
a division of McGraw-Hill, do not sponsor, endorse or promote XBI 
and make no representation regarding the advisability of investing 
in XME. State Street, McGraw-Hill 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 XBI 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 XBI or with making 
disclosures concerning options on XBI under any applicable federal 
or state laws, rules or regulations. State Street, McGraw-Hill and 
S&P do not sponsor, endorse, or promote such activity by ISE and are 
not affiliated in any manner with ISE.
    \8\ ``Standard & Poor's[supreg],'' ``S&P[supreg],'' ``S&P 
500[supreg],'' ``Standard & Poor's 500[supreg],'' ``Standard & 
Poor's Depositary Receipts[supreg],'' ``SPDR[supreg],'' and ``the 
S&P[supreg] Oil & Gas Equipment & Services Select Industry Index'' 
are trademarks of The McGraw-Hill Companies, Inc. (``McGraw-Hill''), 
and have been licensed for use by State Street Bank and Trust 
(``State Street'') in connection with the listing and trading of 
SPDR[supreg] S&P Oil & Gas Equipment & Services ETF (``XES''). State 
Street and Standard & Poor's (``S&P''), a division of McGraw-Hill, 
do not sponsor, endorse or promote XES make no representation 
regarding the advisability of investing in XES. State Street, 
McGraw-Hill 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 XES 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 XES or with making disclosures concerning options on 
XES under any applicable federal or state laws, rules or 
regulations. State Street, McGraw-Hill and S&P 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 IEZ, VGT, VO, XBI and XES.\9\ The amount 
of the execution fee for products covered by this filing shall be $0.18 
per contract for all Public Customer Orders \10\ and Firm Proprietary 
orders.\11\ 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.\12\ 
Finally, the amount of the execution fee for all non-ISE Market Maker 
transactions shall be $0.45 per contract.\13\ Further, since options on 
IEZ, VGT, VO, XBI and XES 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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    \9\ 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 $0.24 per contract 
side and $0.15 per contract side, respectively. See Securities 
Exchange Act Release No. 58143 (July 11, 2008), 73 FR 41388 (July 
18, 2008) (SR-ISE-2008-52).
    \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 or 
entity that is not a broker or dealer in securities.
    \11\ The execution fee for firm proprietary orders is $0.20 per 
contract, effective October 1, 2008. See Securities Exchange Act 
Release No. 34-58671 [sic] (September 29, 2008), 73 FR 57722 
(October 3, 2008) (SR-ISE-2008-71).
    \12\ 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.
    \13\ The amount of the execution fee for non-ISE Market Maker 
transactions executed in the Exchange's Facilitation and 
Solicitation Mechanisms is $0.19 per contract.
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    Further, as a matter of housekeeping, the Exchange proposes to 
remove IXX from the list of Premium Products on its Schedule of 
fees.\14\ The Exchange also proposes to remove IXX and IXK \15\ from 
the Payment for Order Flow fee line item on its Schedule of Fees. 
Additionally, the Exchange recently adopted a sliding scale-based fee 
credit applicable to the Exchange's Electronic Access Members (SR-ISE-
2008-71). The Exchange proposes to make a clarifying change to the rule 
text applicable to the sliding scale. Specifically, the Exchange 
proposes to add the word ``Thereafter,'' at the beginning of the last 
bullet under the Firm Proprietary fee line item to clarify, as it was 
stated in the purpose section of that filing, that the credit available 
to member firms under this bullet applies once member firms have 
achieved the criteria under the first three bullets.
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    \14\ This Premium Product was recently delisted and no longer 
trades on the Exchange. Thus, the Exchange proposes to remove it 
from its fee schedule. ISE filed SR-ISE-2008-75 on September 25, 
2008 to, in part, delete IXX from its Schedule of Fees. However, in 
that filing the Exchange inadvertently failed to mark IXX as deleted 
text on its Schedule of Fees. ISE subsequently withdrew SR-ISE-2008-
75 and is submitting the instant filing with the corrected rule text 
to replace that filing. The other fees covered by that filing, which 
took effect on September 25, remain unchanged.
    \15\ The Exchange had previously filed to remove IXK from its 
Schedule of Fees when this product ceased trading on the Exchange. 
See Securities Exchange Act Release No. 57831 (May 16, 2008), 73 FR 
30176 (May 23, 2008) (SR-ISE-2008-39). The Exchange inadvertently 
failed to remove IXK from the Payment for Order Flow fee line item 
in that filing and thus, proposes to do so with the instant filing.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6(b) of the Act,\16\ in general, and 
furthers the objectives of Section 6(b)(4),\17\ 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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    \16\ 15 U.S.C. 78f(b).
    \17\ 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)(A) of the Act \18\ and subparagraph (f)(2) of Rule 19b-4 \19\ 
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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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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 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

[[Page 60742]]

     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-ISE-2008-76 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-2008-76. 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 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 No. SR-ISE-2008-76 and should be 
submitted on or before November 4, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-24237 Filed 10-10-08; 8:45 am]

BILLING CODE 8011-01-P