Document ID: SEC-2006-0607-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, Inc.
Posted Date: 2006-05-11T04:00Z

[Federal Register: May 11, 2006 (Volume 71, Number 91)]
[Notices]               
[Page 27526-27527]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11my06-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53756; File No. SR-ISE-2005-56]

 
Self-Regulatory Organizations; International Securities Exchange, 
Inc.; Order Granting Approval of a Proposed Rule Change and Amendment 
No. 1 Thereto Establishing Fees for Enhanced Sentiment Market Data

May 3, 2006.
    On December 1, 2005, the International Securities Exchange, Inc. 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend its Schedule of Fees to 
establish fees for enhanced sentiment market data, as described below. 
On March 14, 2006, the Exchange filed Amendment No. 1 to the proposed 
rule change. The proposed rule change, as modified by Amendment No. 1, 
was published for comment in the Federal Register on March 28, 2006.\3\ 
The Commission received no comments on the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 53532 (March 21, 
2006), 71 FR 15501 (``Notice'').
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    By this proposed rule change, the Exchange seeks to establish fees 
for a new product, enhanced sentiment market data, which is based upon 
the ISE Sentiment Index [supreg], or ISEE. The ISEE, which is created 
by the ISE, provides an intra-day picture of how investors view stock 
prices by assessing customers' option trading activity. More 
specifically, the ISEE measures opening long customer transactions on 
the ISE. The ISE updates the current ISEE value hourly during market 
hours and posts it for free on its Web site.\4\
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    \4\ http://www.iseoptions.com/marketplace/statistics/sentiment_index.asp
.

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    The ISEE is a single value for the overall market sentiment. In 
contrast, the enhanced sentiment market data will provide more specific 
information that will allow an end user to retrieve a sentiment value 
for an individual symbol using a query tool. For example, an end user 
interested in the sentiment value for only the Nasdaq 100 Tracking 
Stock (symbol QQQQ) would just enter that symbol into the query tool 
interface to retrieve the sentiment value. Additionally, the enhanced 
sentiment market data will include a sentiment scanning tool that will 
allow a user to comb the market for sentiment levels that meet pre-
defined parameters. Enhanced sentiment market data will be a purely 
optional product; it is not necessary to subscribe to this service to 
trade options on the ISE.\5\
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    \5\ See telephone conversation between Samir Patel, Assistant 
General Counsel, ISE, and Christopher Chow, Special Counsel, 
Commission, on April 28, 2006.
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    The Exchange will offer this product to online investors, on a 
subscription basis, directly and through a Broker Marketing Alliance, 
an arrangement between ISE and a participating U.S. broker-dealer that 
markets the enhanced sentiment offering to its customers. The Exchange 
proposes four subscription levels, based on the number of customer 
queries. Clients of participating brokers will pay less at each of the 
same four subscription levels, and the participating broker-dealers 
will receive a rebate of 35% of the subscription fee collected from 
subscribers. In addition, the Exchange will pay a bonus rebate to 
broker-dealers for achieving

[[Page 27527]]

subscription levels based on the size of their firm and the number of 
clients that subscribe to the service.\6\
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    \6\ See Notice, supra at note 3.
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    The Commission has reviewed carefully the proposed rule change and 
finds that it is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\7\ In particular, the Commission finds that the proposed rule 
change is consistent with section 6(b)(4) of the Act,\8\ 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. The Exchange states that it established the proposed tiered 
pricing structures for enhanced sentiment data based upon a survey of 
financial services industry participants regarding their level of 
interest in proprietary market data offerings, a business plan it 
developed based on the results of that survey, and the advice of a 
consultant retained to opine on the structure and amount of fees to 
charge for the product.
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    \7\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(4).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change as amended be, and hereby is 
approved.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-7201 Filed 5-10-06; 8:45 am]

BILLING CODE 8010-01-P