Document ID: SEC-2008-1192-0001
Agency: sec
Document Type: Notice
Title: Self-RegulatoryOrganizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2008-08-28T04:00Z

[Federal Register: August 28, 2008 (Volume 73, Number 168)]
[Notices]               
[Page 50848-50850]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28au08-108]                         

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SECURITIES AND EXCHANGE COMMISSION

Release No. 34-58411; File No. SR-ISE-2008-65]

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

August 22, 2008.
    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 August 12, 2008, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange Commission the proposed rule change, as described in Items I, 
II, and III below, which items have been prepared by the self-
regulatory organization. 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.
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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 establish 
fees for transactions in options on 12 Premium Products.\3\ The text of 
the proposed rule change is available at the Exchange.
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    \3\ Premium Product is defined in the Schedule of Fees as the 
products enumerated therein.
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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

[[Page 50849]]

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--The Exchange is proposing to amend its Schedule of Fees 
to establish fees for transactions in options on the iShares DJ U.S. 
Financial Sector Index Fund (``IYF''),\4\ the Market Vectors Coal ETF 
(``KOL''),\5\ the SPDR KBW Regional Banking ETF (``KRE''),\6\ the Ultra 
Oil & Gas ProShares Trust (``DIG''), the UltraShort Real Estate 
ProShares Trust (``SRS''), the UltraShort Basic Materials ProShares 
Trust (``SMN''),\7\ the Vanguard[supreg] Materials ETF (``VAW''), the 
Vanguard[supreg] REIT ETF (``VNQ''), the Vanguard[supreg] Growth ETF 
(``VUG''), the Vanguard[supreg] Europe Pacific ETF (``VEA''), the 
Vanguard[supreg] Emerging Markets ETF (``VWO'') \8\ and the Regional 
Bank HOLDRs Trust (``RKH'').\9\ The Exchange represents that IYF, KOL, 
KRE, DIG, SRS, SMN, VAW, VNQ, VUG, VEA, VWO and RKH are eligible for 
options trading because they constitute ``Exchange-Traded Fund Share,'' 
[sic] as defined by ISE Rule 502(h).
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    \4\ iShares[supreg] 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. Financial Sector Index 
Fund'' are service marks of Dow Jones & Company, Inc. (``Dow 
Jones'') and have been licensed for use for certain purposes by BGI. 
All other trademarks and service marks are the property of their 
respective owners. The Dow Jones U.S. Financial Sector Index Fund 
(``IYF'') is not sponsored, endorsed, issued, sold or promoted by 
Dow Jones. BGI and Dow Jones have not licensed or authorized ISE to 
(i) engage in the creation, listing, provision of a market for 
trading, marketing, and promotion of options on IYF or (ii) to use 
and refer to any of their trademarks or service marks in connection 
with the listing, provision of a market for trading, marketing, and 
promotion of options on IYF or with making disclosures concerning 
options on IYF under any applicable federal or state laws, rules or 
regulations. BGI and Dow Jones do not sponsor, endorse, or promote 
such activity by ISE, and are not affiliated in any manner with ISE.
    \5\ The Market Vectors Coal ETF (``KOL'') is distributed by Van 
Eck Securities Corporation (``VESC'') and tracks the Stowe Coal 
IndexSM, which is published by Stowe Global Indexes LLC 
(``Stowe''). VESC has entered into a licensing agreement with Stowe 
to use the Stowe Coal Index in connection with KOL. Van Eck 
Associates Corporation (``VEAC'') is the investment adviser to KOL. 
Stowe's only relationship with VEAC is the licensing of certain 
service marks and trade names of Stowe and of the Stowe Coal Index. 
Stowe does not sponsor, endorse, or promote KOL and makes no 
representation regarding the advisability of investing in KOL. 
Neither VESC nor VEAC has licensed or authorized ISE to (i) engage 
in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on KOL or (ii) to use and refer 
to any of their trademarks or service marks in connection with the 
listing, provision of a market for trading, marketing, and promotion 
of options on KOL or with making disclosures concerning options on 
KOL under any applicable federal or state laws, rules or 
regulations. Neither VESC nor VEAC sponsors, endorses, or promotes 
such activity by ISE, and are not affiliated in any manner with ISE.
    \6\ ``SPDR[supreg]'' is a trademark of the The McGraw-Hill 
Companies, Inc (``McGraw-Hill''). The ``KBW Regional Bank 
IndexSM'' and ``Keefe, Bruyette & WoodsSM'' 
are service marks and the property of Keefe, Bruyette & Woods, Inc. 
(``KBW''). KBW's only relationship to State Street Bank and Trust 
Company is the licensing of certain trademarks and tradenames of KBW 
and the KBW Regional Banking Index in connection with the listing 
and trading of the KBW Regional Banking ETF (``KRE'') on the 
American Stock Exchange. KRE is not sponsored, sold or endorsed by 
KBW or McGraw-Hill and neither KBW nor McGraw-Hill makes any 
representation regarding the advisability of investing in KRE. 
Neither KBW nor McGraw-Hill has licensed or authorized ISE to (i) 
engage in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on KRE or (ii) to use and refer 
to any of their trademarks or service marks in connection with the 
listing, provision of a market for trading, marketing, and promotion 
of options on KRE or with making disclosures concerning options on 
KRE under any applicable federal or state laws, rules or 
regulations. Neither KBW nor McGraw-Hill sponsors, endorses, or 
promotes such activity by ISE and are not affiliated in any manner 
with ISE.
    \7\ ``Dow Jones'', ``Dow Jones U.S. Oil & GasSM'', 
``Dow Jones U.S. Basic MaterialsSM'', and ``Dow Jones 
U.S. Real EstateSM'' are service marks of Dow Jones & 
Company, Inc. (``Dow Jones'') and have been licensed for use for 
certain purposes by ProFunds Trust. All other trademarks and service 
marks are the property of their respective owners. The Ultra Oil & 
Gas ProShares (``DIG''), the UltraShort Real Estate ProShares 
(``SRS''), and the UltraShort Basic Materials ProShares (``SMN'') 
are not sponsored, endorsed, issued, sold or promoted by Dow Jones. 
Dow Jones has not licensed or authorized ISE to (i) engage in the 
creation, listing, provision of a market for trading, marketing, and 
promotion of options on DIG, SRS and SMN or (ii) to use and refer to 
any of their trademarks or service marks in connection with the 
listing, provision of a market for trading, marketing, and promotion 
of options on DIG, SRS and SMN or with making disclosures concerning 
options on DIG, SRS and SMN under any applicable federal or state 
laws, rules or regulations. Dow Jones does not sponsor, endorse, or 
promote such activity by ISE and is not affiliated in any manner 
with ISE.
    \8\ Vanguard, Vanguard ETFs and Vanguard ETF are trademarks of 
The Vanguard Group, Inc. (``Vanguard''). All other marks are the 
exclusive property of their respective owners. The Vanguard[supreg] 
Materials ETF (``VAW'') tracks the Morgan Stanley Capital 
International[supreg] (MSCI[supreg]) U.S. Investable Market 
Materials Index. The Vanguard[supreg] REIT ETF (``VNQ'') tracks the 
MSCI U.S. REIT Index. The Vanguard[supreg] Growth ETF (``VUG'') 
tracks the MSCI U.S. Prime Market Growth Index. The Vanguard[supreg] 
Europe Pacific ETF (``VEA'') tracks the MSCI Europe, Australasia, 
Far East Index. The Vanguard[supreg] Emerging Markets ETF (``VWO'') 
tracks the MSCI Emerging Markets Index. MSCI does not sponsor, 
endorse, or promote VAW, VNQ, VUG, VEA and VWO and makes no 
representation regarding the advisability of investing in VAW, VNQ, 
VUG, VEA and VWO. Vanguard has not licensed or authorized ISE to (i) 
engage in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on VAW, VNQ, VUG, VEA and VWO or 
(ii) to use and refer to any of their trademarks or service marks in 
connection with the listing, provision of a market for trading, 
marketing, and promotion of options on VAW, VNQ, VUG, VEA and VWO or 
with making disclosures concerning options on VAW, VNQ, VUG, VEA and 
VWO under any applicable federal or state laws, rules or 
regulations. Vanguard does not sponsor, endorse, or promote such 
activity by ISE, and is not affiliated in any manner with ISE.
    \9\ The Regional Bank HOLDRSSM Trust (``RKH'') issues 
Depositary Receipts called Regional bank HOLDRSSM 
representing undivided beneficial ownership in the U.S.-traded 
common stock of a group of specified companies that, among other 
things, are involved in various segments of the regional banking 
industry. ``HOLDRS'' and ``HOLding Company Depositary ReceiptS'' are 
service marks of Merrill Lynch & Co., Inc. (``Merrill Lynch''). All 
other trademarks and service marks are the property of their 
respective owners. Merrill Lynch has not licensed or authorized ISE 
to (i) engage in the creation, listing, provision of a market for 
trading, marketing, and promotion of options on RKH or (ii) to use 
and refer to any of their trademarks or service marks in connection 
with the listing, provision of a market for trading, marketing, and 
promotion of options on RKH or with making disclosures concerning 
options on RKH under any applicable federal or state laws, rules or 
regulations. Merrill Lynch does not sponsor, endorse, or promote 
such activity by ISE, and is not affiliated in any manner with ISE.
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    All of the applicable fees covered by this filing are identical to 
fees charged by the Exchange for all other Premium Products. 
Specifically, the Exchange is proposing to adopt an execution fee for 
all transactions in options on IYF, KOL, KRE, DIG, SRS, SMN, VAW, VNQ, 
VUG, VEA, VWO and RKH.\10\ The amount of the execution fee for products 
covered by this filing shall be $0.18 per contract for all Public 
Customer Orders \11\ and Firm Proprietary orders. The amount of the 
execution fee for all ISE Market Maker transactions shall be equal to 
the execution fee currently charged by the Exchange for ISE Market 
Maker transactions in equity options.\12\ Finally, the amount of the 
execution fee for all non-ISE Market Maker transactions shall be $0.45 
per contract.\13\ Further, since options on IYF, KOL, KRE, DIG, SRS, 
SMN, VAW, VNQ, VUG, VEA, VWO and RKH are multiply-listed, the 
Exchange's Payment for Order Flow fee shall apply to all these 
products. The

[[Page 50850]]

Exchange believes the proposed rule change will further the Exchange's 
goal of introducing new products to the marketplace that are 
competitively priced.
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    \10\ These fees will be charged only to Exchange members. Under 
a pilot program that is set to expire on July 31, 2009, these fees 
will also be charged to Linkage Principal Orders (``Linkage P 
Orders'') and Linkage Principal Acting as Agent Orders (``Linkage P/
A Orders''). The amount of the execution fee charged by the Exchange 
for Linkage P Orders and Linkage P/A Orders is $0.24 per contract 
side and $0.15 per contract side, respectively. See Securities 
Exchange Act Release No. 58143 (July 11, 2008), 73 FR 41388 (July 
18, 2008) (SR-ISE-2008-52).
    \11\ Public Customer Order is defined in Exchange Rule 
100(a)(39) as an order for the account of a Public Customer. Public 
Customer is defined in Exchange Rule 100(a)(38) as a person or 
entity that is not a broker or dealer in securities.
    \12\ The Exchange applies a sliding scale, between $0.01 and 
$0.18 per contract side, based on the number of contracts an ISE 
market maker trades in a month.
    \13\ The amount of the execution fee for non-ISE Market Maker 
transactions executed in the Exchange's Facilitation and 
Solicitation Mechanisms is $0.19 per contract.
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    (b) Basis--The Exchange believes that the proposed rule change is 
consistent with the objectives of section 6 of the Act,\14\ in general, 
and furthers the objectives of section 6(b)(4),\15\ in particular, in 
that it is designed to provide for the equitable allocation of 
reasonable dues, fees and other charges among its members and other 
persons using its facilities.
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    \14\ 15 U.S.C. 78f.
    \15\ 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 rule change has become effective pursuant to section 
19(b)(3) of the Act \16\ and Rule 19b-4(f)(2) \17\ thereunder. 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.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 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-2008-65 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-2008-65. 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, 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 will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-
2008-65 and should be submitted on or before September 18, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-19985 Filed 8-27-08; 8:45 am]

BILLING CODE 8010-01-P