Document ID: SEC-2008-1022-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2008-07-22T04:00Z

[Federal Register: July 22, 2008 (Volume 73, Number 141)]
[Notices]               
[Page 42638-42640]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22jy08-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58164; File No. SR-ISE-2008-56]

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

July 15, 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 July 1, 2008, International Securities Exchange, LLC (the ``ISE'' or 
the ``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 Exchange. The ISE 
filed the proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(2) thereunder,\4\ which renders

[[Page 42639]]

the proposal effective upon filing with the Commission. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change 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).
    \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

    The ISE is proposing to amend its Schedule of Fees by adopting fee 
waivers related to the execution on ISE of public customer orders 
exposed to members before those orders are sent out for execution on 
another exchange through the intermarket linkage (``Linkage''). The 
text of the proposed rule change is available at the Exchange, http://
www.ise.com, and 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 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
    Before a Primary Market Maker (``PMM'') sends a customer order 
through the Linkage when ISE is not at the national best bid or offer 
(``NBBO''), the Exchange exposes these customer orders to all its 
members to give them an opportunity to match the NBBO.\5\
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    \5\ See Securities Exchange Act Release No. 58038 (June 26, 
2008), 73 FR 38261 (July 3, 2008) (SR-ISE-2008-50) (Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
Exposure of Public Customer Orders to all ISE Members).
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    Specifically, before the PMM sends a Linkage Order on behalf of a 
public customer, the public customer order is exposed at the NBBO price 
for a period established by the Exchange not to exceed one second. 
During this exposure period, Exchange members may enter responses up to 
the size of the order being exposed in the regular trading increment 
applicable to the option. If at the end of the exposure period, the 
order is executable at the then-current NBBO and the ISE is not at the 
then-current NBBO, the order is executed against responses that equal 
or better the then-current NBBO. The exposure period is terminated if 
the exposed order becomes executable on the ISE at the prevailing NBBO 
or if the Exchange receives an unrelated order that could trade against 
the exposed order at the prevailing NBBO price. If, after an order is 
exposed, the order is not executed in full on the Exchange at the then-
current NBBO or better, and it is marketable against the then-current 
NBBO, the PMM sends a Linkage Order on the customer's behalf for the 
balance of the order as provided in Rule 803(c)(2)(ii). If the balance 
of the order is not marketable against the then-current NBBO, it is 
placed on the ISE book.
    To encourage ISE members to respond to the exposure of these public 
customer orders, ISE proposes to waive the Firm Proprietary, ISE Market 
Maker and Payment for Order Flow fees incurred by members who step up 
and match or improve the NBBO during the exposure period so these 
public customer orders can be executed on the Exchange.\6\
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    \6\ See e-mail from Samir Patel, Assistant General Counsel, ISE 
to Jennifer Colihan and Christopher Chow, Special Counsels, 
Commission, dated July 11, 2008.
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    The Exchange notes that the proposed rule change will allow ISE to 
retain more flow by giving these customer orders additional opportunity 
to be executed at the NBBO at ISE and will also reduce PMM costs by 
reducing the number of Linkage orders they must send to other 
exchanges.\7\
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    \7\ See id.
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(4) that an exchange have an equitable 
allocation of reasonable dues, fees and other charges among its members 
and other persons using its facilities.

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) of the Act \8\ and Rule 19b-
4(f)(2) thereunder,\9\ because it establishes or changes a due, fee, or 
other charge imposed on members by ISE. Accordingly, the proposal is 
effective upon filing with the Commission. 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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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-ISE-2008-56 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-2008-56. 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 42640]]

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 the 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-2008-56 and should be submitted on 
or before August 12, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Florence E. Harmon,
Acting Secretary.
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    \10\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E8-16686 Filed 7-21-08; 8:45 am]

BILLING CODE 8010-01-P