Document ID: SEC-2006-0254-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Stock Exchange, Inc.
Posted Date: 2006-02-28T05:00Z

[Federal Register: February 28, 2006 (Volume 71, Number 39)]
[Notices]               
[Page 10088-10090]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28fe06-131]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53329; File No. SR-ISE-2006-05]

 
Self-Regulatory Organizations; International Stock Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change and Amendment No. 1 Thereto Relating to Fee Changes

February 16, 2006.
    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 January 20, 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 ISE. On 
February 9, 2006, ISE submitted Amendment No. 1 to the proposed rule 
change.\3\ ISE has designated the proposed rule change as one 
establishing or changing a due, fee, or other charge, pursuant to 
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\ In Amendment No. 1, the Exchange revised its Schedule of 
Fees to clarify ambiguities and correct misstatements therein, and 
discussed those changes in the purpose section of the proposal. 
Specifically, in Amendment No. 1, the Exchange removed the 
misstatement that a $0.10 surcharge is applied to all Premium 
Products (as defined herein) and instead provided a list of the 
specific Premium Products that are subject to the surcharge. 
Amendment No. 1 also clarified that the fee pilot program expiring 
on July 31, 2006 applies exclusively to Linkage orders.
    \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

    ISE is proposing to amend its Schedule of Fees to establish fees 
for

[[Page 10089]]

transactions in options on 11 Premium Products\6\. The proposed rule 
change, as amended, also seeks to make certain technical and clarifying 
changes to the original filing as well as to clean up the Schedule of 
Fees to eliminate confusion regarding fees charged by the Exchange.
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    \6\ ``Premium Products'' are defined in the Schedule of Fees as 
the products enumerated therein.
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    The text of the proposed rule change is available on ISE's Web site 
at http://www.iseoptions.com, at the Office of the Secretary at 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 Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change, as 
amended, and discussed any comments it received on the proposal. 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 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 following Premium 
Products: iShares Dow Jones U.S. Real Estate Index Fund (``IYR''),\7\ 
iShares MSCI Japan Index Fund (``EWJ''),\8\ Biotech HOLDRS (``BBH''), 
Internet HOLDRS (``HHH''), Pharmaceutical HOLDRS (``PPH''), Regional 
Bank HOLDRS (``RKH''), Retail HOLDRS (``RTH''), Software HOLDRS 
(``SWH''), Enterra Energy Trust (``EENC''), Fording Canadian Coal Trust 
(``FDG''), and Enerplus Resources Fund (``ERF''). Specifically, the 
Exchange is proposing to adopt an execution fee and a comparison fee 
for all transactions in options on IYR, EWJ, BBH, HHH, PPH, RKH, RTH, 
SWH, EENC, FDG, and ERF.\9\ The amount of the execution fee and 
comparison fee for products covered by this filing would be $0.15 and 
$0.03 per contract, respectively, for all Public Customer Orders\10\ 
and Firm Proprietary orders. The amount of the execution fee and 
comparison fee for all Market Maker transactions would be equal to the 
execution fee and comparison fee currently charged by the Exchange for 
Market Maker transactions in equity options\11\. The Exchange believes 
the proposed rule change will further the Exchange's goal of 
introducing new products to the marketplace that are competitively 
priced. Additionally, the Exchange proposes to remove NYC, NY and XLU 
from the list of Premium Products on the Schedule of Fees. These 
products have been delisted and no longer trade on the Exchange.
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    \7\ iShares[reg] 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. Real Estate Index 
Fund'' are servicemarks of Dow Jones & Company, Inc. (``Dow Jones'') 
and have been licensed for use for certain purposes by BGI. All 
other trademarks and servicemarks are the property of their 
respective owners. The Dow Jones U.S. Real Estate Index Fund 
(``IYR'') is not sponsored, endorsed, issued, sold or promoted by 
Dow Jones. No company has licensed or authorized ISE to (i) engage 
in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on IYR or (ii) to use and refer 
to any trademark of BGI or Dow Jones in connection with the listing, 
provision of a market for trading, marketing, and promotion of 
options on IYR or with making disclosures concerning options on IYR 
under any applicable Federal or state laws, rules or regulations, 
and do not sponsor, endorse, or promote such activity by ISE. ISE is 
not affiliated in any manner with any of the companies above.
    \8\ iShares(r) is a registered trademark of Barclays Global 
Investors, N.A. (``BGI''), a wholly owned subsidiary of Barclays 
Bank PLC. ``MSCI Japan Index'' is a servicemark of Morgan Stanley 
Capital International (``MSCI'') and has been licensed for use for 
certain purposes by BGI. All other trademarks and servicemarks are 
the property of their respective owners. The MSCI Japan Index Fund 
(``EWJ'') is not sponsored, endorsed, issued, sold or promoted by 
MSCI. No company has licensed or authorized ISE to (i) engage in the 
creation, listing, provision of a market for trading, marketing, and 
promotion of options on EWJ or (ii) to use and refer to any 
trademark of BGI or MSCI in connection with the listing, provision 
of a market for trading, marketing, and promotion of options on EWJ 
or with making disclosures concerning options on EWJ under any 
applicable Federal or state laws, rules or regulations, and do not 
sponsor, endorse, or promote such activity by ISE. ISE is not 
affiliated in any manner with any of the companies above.
    \9\ These fees will be charged to Exchange members. Under a 
pilot program that is set to expire on July 31, 2006, these fees 
will also be charged to Linkage Orders (as defined in ISE Rule 
1900).
    \10\ Public Customer Order is defined in ISE Rule 100(a)(33) as 
an order for the account of a Public Customer. Public Customer is 
defined in ISE Rule 100(a)(32) as a person that is not a broker or 
dealer in securities.
    \11\ The execution fee is currently between $0.21 and $0.12 per 
contract side, depending on the Exchange Average Daily Volume, and 
the comparison fee is currently $0.03 per contract side.
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    Furthermore, the proposed rule change makes certain technical and 
clarifying changes to ISE's Schedule of Fees. Specifically, under the 
Execution Fees section of the Schedule of Fees, the Exchange seeks to 
replace the general reference to a surcharge for options on Premium 
Products with a list of the specific Premium Products for which there 
is a surcharge charged by the Exchange.\12\ Also, under the Execution 
Fees section of the Schedule of Fees, for purposes of eliminating 
ambiguity and confusion, the Exchange proposes to move the 
parenthetical regarding the Linkage pilot program under ``Firm 
Proprietary'' to the Notes section.
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    \12\ Prior to this proposed rule change, the Exchange's Schedule 
of Fees improperly reflected that all Premium Products were subject 
to a surcharge of $0.10 per contract/side.
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2. Statutory Basis
    The Exchange believes that the statutory basis for the proposal is 
the requirement under Section 6(b)(4) of the Act\13\ that an exchange 
have an equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities.
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    \13\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ISE does not believe that the proposed rule change, as amended, 
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, as amended. 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, as amended, has become effective 
pursuant to Section 19(b)(3)(A)(ii) of the Act \14\ and subparagraph 
(f)(2) of Rule 19b-4 thereunder \15\ because it establishes or changes 
a due, fee, or other charge. 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.\16\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).
    \16\ The effective date of the original proposed rule change is 
January 20, 2006, the date of the original filing, and the effective 
date of Amendment No. 1 is February 9, 2006, the filing date of the 
amendment. For purposes of calculating the 60-day abrogation period 
within which the Commission may summarily abrogate the proposed rule 
change, as amended, under Section 19(b)(3)(C) of the Act, the 
Commission considers the period to commence on February 9, 2006, the 
date on which the Exchange submitted Amendment No. 1. See 15 U.S.C. 
78s(b)(3)(C).

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[[Page 10090]]

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 Number SR-ISE-2006-05 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-2006-05. 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 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-2006-05 and should be submitted on or before March 21, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
Nancy M. Morris,
Secretary.
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    \17\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E6-2751 Filed 2-27-06; 8:45 am]

BILLING CODE 8010-01-P