Document ID: SEC-2007-0983-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes:  International Securities Exchange, LLC
Posted Date: 2007-07-19T04:00Z

[Federal Register: July 19, 2007 (Volume 72, Number 138)]
[Notices]               
[Page 39648-39650]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19jy07-80]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56055; File No. SR-ISE-2007-52]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change as Modified by Amendment No. 1 Thereto Relating to Fee Waivers

 July 12, 2007.
    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 June 27, 2007, 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 substantially prepared by the 
Exchange. On July 11, 2007, the Exchange filed Amendment No. 1 to the 
proposed rule change. ISE has designated this proposal as one 
establishing or changing a due, fee, or other charge imposed by 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, as amended, 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

    ISE proposes to amend its Schedule of Fees to extend two fee 
waivers. The text of the proposed rule change is available at the 
Commission's Public Reference Room, at the Exchange, and on its Web 
site at http://www.ise.com.

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 Exchange 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 Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of

[[Page 39649]]

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 extend two fee 
waivers. First, ISE currently waives most customer transaction fees, 
with such waiver scheduled to expire on June 30, 2007.\5\ In order to 
remain competitive in the marketplace, the Exchange proposes to extend 
this waiver through June 30, 2008.
    Second, ISE currently has a pilot program that: (1) Caps and waives 
execution and comparison fees for transactions in options on the 
NASDAQ-100 Index Tracking Stock[supreg] (``QQQQ'') \6\ and the iShares 
Russell 2000[supreg] Index Fund (``IWM'') \7\ when a member transacts a 
certain number of QQQQ and IWM option contracts; and (2) reduces and 
waives the facilitation execution and comparison fees when a member 
transacts a certain number of contracts through the Exchange's 
Facilitation Mechanism.
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    \5\ See Securities Exchange Act Release No. 53954 (June 7, 
2006), 71 FR 34651 (June 15, 2006) (SR-ISE-2006-29).
    \6\ The Exchange instituted this pilot program in November 2003 
and has since extended it on numerous occasions. See Securities 
Exchange Act Release Nos. 49147 (January 29, 2004), 69 FR 5629 
(February 5, 2004) (SR-ISE-2003-32); 49853 (June 14, 2004), 69 FR 
35087 (June 23, 2004) (SR-ISE-2004-15); 50900 (December 21, 2004), 
69 FR 78075 (December 29, 2004) (SR-ISE-2004-36); 52934 (December 9, 
2005), 70 FR 74859 (December 16, 2005) (SR-ISE-2005-53); 54841 
(November 30, 2006), 71 FR 71006 (December 6, 2006) (SR-ISE-2006-
69).
    \7\ See Securities Exchange Act Release No. 55973 (June 28, 
2007), 72 FR 37063 (July 6, 2007) (SR-ISE-2007-39).
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    The Exchange's fee discount program applies to ISE Market Maker 
orders and Firm Proprietary orders in QQQQ and IWM options. The 
Exchange's current transaction fees for these order types are as 
follows: for ISE Market Maker orders, the transaction fees range from 
$.21 to $.12 per contract, depending on the Exchange's trading volume, 
plus a comparison fee of $.03 per contract; and for Firm Proprietary 
orders, the transaction fee is $.15 per contract, plus a comparison fee 
of $.03 per contract.
    Under the QQQQ pilot program, when a member's average daily volume 
(``A.D.V.'') in QQQQ options reaches 10,000 contracts, the member's 
execution fee for the next 2,000 QQQQ option contracts is reduced by 
$.10 per contract. Further, when a member's monthly A.D.V. in QQQQ 
options reaches 12,000 contracts, the Exchange waives the entire 
execution fee and the comparison fee for each QQQQ option contract 
traded thereafter. Under the IWM pilot program, when a member's A.D.V. 
in IWM options reaches 8,000 contracts, the member's execution fee for 
the next 2,000 IWM option contracts is reduced by $.10 per contract. 
Further, when a member's monthly A.D.V. in IWM options reaches 12,000 
contracts, the Exchange waives the entire execution fee and the 
comparison fee for each IWM option contract traded thereafter.
    The structure of the reduction and waiver of the facilitation 
execution fee and the comparison fee is based on the structure of the 
reduction and waiver of the QQQQ and IWM execution and comparison fees 
noted above. That is, when a member's monthly A.D.V. in the 
Facilitation Mechanism reaches 15,000 contracts, the member's 
facilitation execution fee for the next 5,000 contracts transacted in 
the Facilitation Mechanism are reduced by $.10 per contract. Further, 
when a member's monthly A.D.V. in the Facilitation Mechanism reaches 
20,000 contracts, the Exchange waives the entire facilitation execution 
fee and the comparison fee for each contract transacted in the 
Facilitation Mechanism thereafter.
    The Exchange notes that the current pilot program is set to expire 
on June 30, 2007. The Exchange now proposes to extend the pilot program 
for another year, until June 30, 2008. ISE seeks to extend this pilot 
program for competitive reasons. This pilot program was initiated and 
extended in an attempt to increase the Exchange's market share in QQQQ 
and IWM options and to also encourage members to use the Exchange's 
Facilitation Mechanism.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(4) of the Act \8\ 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, these fees would extend current waivers, thus effectively 
maintaining low fees.
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    \8\ 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 proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \9\ and Rule 19b-
4(f)(2) \10\ thereunder, because it establishes or changes a due, fee, 
or other charge imposed by the Exchange. Accordingly, the proposal took 
effect upon filing with the Commission. 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
    \11\ 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 July 11, 2007, the date on which ISE filed 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 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 Number SR-ISE-2007-52 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-2007-52. This file 
number should be included on the subject line if e-mail is used. To 
help the

[[Page 39650]]

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 Number SR-ISE-2007-52 and should be submitted on 
or before August 9, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-13959 Filed 7-18-07; 8:45 am]

BILLING CODE 8010-01-P