Document ID: SEC-2006-0395-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, Inc.
Posted Date: 2006-03-24T05:00Z

[Federal Register: March 24, 2006 (Volume 71, Number 57)]
[Notices]               
[Page 14975-14976]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24mr06-133]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53522; File No. SR-ISE-2006-09]

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

March 20, 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 February 1, 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 March 15, 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 and made a technical change to the text of 
Exhibit 5 (ISE's Schedule of Fees). 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 adopt a new 
method for charging Session/API Fees. 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 a new 
method for charging Session/API (``login'') fees to members.\6\ ISE 
currently charges members a fee for each authorized login that a member 
utilizes for quoting or order entry, with a lesser charge for 
authorized logins used for the limited purpose of ``listening'' to 
system broadcasts.\7\ This proposed rule change seeks to further 
differentiate authorized logins in an effort to promote and encourage 
more efficient quoting. The Exchange proposes the following three 
categories of authorized logins: (1) Quoting, order entry and listening 
(allowing the user to enter quotes, orders, and perform all other 
miscellaneous functions, such as setting parameters, pulling quotes and 
performing linkage functions (e.g., sending and receiving P and P/A 
orders, laying off orders, etc.)); (2) order entry and listening 
(allowing the user to enter orders and perform all other miscellaneous 
functions, such as setting parameters, pulling quotes and performing 
linkage functions (but not quote)); and (3) listening (allowing the 
user only to query the system and to respond to other broadcasts).\8\
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    \6\ ISE represents that the fees proposed in this filing only 
apply to ISE members. The ISE Central Exchange System uses an open 
Application Programming Interface (API). ISE Members program to 
ISE's API in order to develop applications that send trading 
commands and/or queries to and receive broadcasts and/or 
transactions from the trading system. The ISE Central Exchange 
System is the heart of ISE's marketplace, processing quotes from 
market makers, receiving orders from Electronic Access Members, 
tracking activity in the underlying markets, executing trades in the 
matching engine, and broadcasting trade details to the participating 
members.
    \7\ Prior to this filing, members were charged a fee of $250 to 
``listen'' to system broadcasts. This fee as it applied to market 
makers, which was previously listed under ``EAM / Trade Review 
Terminal,'' now appears under ``Market Makers''--``Listening.''
    \8\ The Exchange issued a Market Information Circular and a 
Technical Bulletin on February 3, 2006 and February 9, 2006, 
respectively, to notify members of the change that is the subject of 
this filing. The Exchange further notes that this filing was 
considered and approved by the ISE's Market Maker Advisory 
Committee. The Exchange believes that the proposed fee changes are 
reasonable in that they are closely tailored to ISE's technology 
costs.

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[[Page 14976]]

    Under the proposed rule change, each ISE market maker will receive 
an allocation of 1,000,000 quotes per day per user. If a firm submits 
more quotes than those allocated, i.e., 1,000,000 quotes per user as 
measured on an average in a single month, the firm will be charged for 
additional users depending upon the number of quotes submitted. Each 
month, the total number of quotes submitted by a market maker firm 
across all bins will be divided by the number of trading days, 
resulting in the average quotes per day. This number will then be 
divided by 1,000,000 and rounded up to the nearest whole number, 
resulting in an implied number of users based on quotes. Members will 
be invoiced for the greater of (a) the greatest number of users 
authorized to login into the system, or (b) the number of implied users 
based on quotes. For example, a firm with 20 users has an allocation of 
20 million quotes per day. If that firm submits an average of 18 
million quotes per day during a single month then the firm will be 
invoiced for all 20 users. If that firm submits an average of 21.3 
million quotes per day during a single month, it will be invoiced for 
22 users (21.3 users rounded up).
    In order to facilitate maximum utilization of a firm's quote 
allocation, firms that submit more quotes than the allocated 1,000,000 
quotes per day will receive an e-mail on a daily basis informing them 
that they will incur additional fees if they continue to submit in 
excess of the 1,000,000 daily quote allocation per user.
    ISE proposes to charge $950 per month for each quoting session for 
up to 1,000,000 quotes per day, on average for a month. Members will be 
charged an additional user fee of $950 for each incremental usage of up 
to 1,000,000 quotes per day per user. The Exchange further proposes to 
charge members a fixed fee of $750 per month for each order entry 
session and a fixed fee of $175 per month for each listening session, 
regardless of the number of quotes submitted.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6(b)(4) of the Act,\9\ 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. 
In particular, the Exchange believes these fees will encourage and 
promote efficient quoting among the Exchange's market making firms.
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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 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 \10\ and Rule 19b-4(f)(2) \11\ 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.\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 
February 1, 2006. The effective date of Amendment No. 1 is March 15, 
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 March 15, 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-2006-09 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-2006-09. 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 Number SR-ISE-2006-09 and should be submitted on or before April 
17, 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\
Nancy M. Morris,
Secretary.
[FR Doc. E6-4274 Filed 3-23-06; 8:45 am]

BILLING CODE 8010-01-P