Document ID: SEC-2008-1337-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2008-10-01T04:00Z

[Federal Register: October 1, 2008 (Volume 73, Number 191)]
[Notices]               
[Page 57179-57181]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01oc08-136]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58635; File No. SR-ISE-2008-68]

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

September 24, 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 September 16, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 8 Premium Products.\3\ The text of 
the proposed rule change is available at the Exchange.
---------------------------------------------------------------------------

    \3\ Premium Product [sic] is defined in the Schedule of Fees as 
the products enumerated therein.

---------------------------------------------------------------------------

[[Page 57180]]

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--The Exchange is proposing to amend its Schedule of Fees 
to establish fees for transactions in options on the PowerShares DB 
Commodity Index Tracking Fund (``DBC''),\4\ the PowerShares DB Base 
Metals Fund (``DBB''),\5\ the Vanguard[supreg] Total Stock Market ETF 
(``VTI''),\6\ the PowerShares DB U.S. Dollar Bullish Fund (``UUP''),\7\ 
the iShares Lehman TIPS Bond Fund (``TIP''),\8\ the iShares MSCI 
Pacific Ex-Japan Index Fund (``EPP''),\9\ the Ultra Real Estate 
ProShares (``URE'') and the UltraShort MSCI EAFE ProShares 
(``EFU'').\10\ The Exchange represents that DBC, DBB, VTI, UUP, TIP, 
EPP, URE, and EFU are eligible for options trading because they 
constitute ``Exchange-Traded Fund Share,'' as defined by ISE Rule 
502(h).
---------------------------------------------------------------------------

    \4\ The PowerShares DB Commodity Index Tracking Fund (``DBC'') 
is based on the Deutsche Bank Liquid Commodity Index--Optimum Yield 
Excess Return TM. DBC is managed by DB Commodity Services 
LLC. DBLCI TM and Deutsche Bank Liquid Commodity Index 
TM are trademarks of Deutsche Bank AG, London (``DB 
AG''). PowerShares[supreg] is a registered service mark of 
PowerShares Capital Management LLC (``PowerShares''). DBC is not 
sponsored, endorsed, sold or promoted by DB AG, and DB AG makes no 
representation regarding the advisability of investing in DBC. 
Neither DB AG nor PowerShares has licensed or authorized ISE to (i) 
engage in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on DBC 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 DBC or with making disclosures concerning options on 
DBC under any applicable federal or state laws, rules or 
regulations. DB AG and PowerShares do not sponsor, endorse, or 
promote such activity by ISE and are not affiliated in any manner 
with ISE.
    \5\ The PowerShares DB Base Metals Fund (``DBB'') is based on 
the Deutsche Bank Liquid Commodity Index--Optimum Yield Industrial 
Metals Excess Return TM. DBB is managed by DB Commodity 
Services LLC. DBLCI TM and Deutsche Bank Liquid Commodity 
Index TM are trademarks of Deutsche Bank AG, London (``DB 
AG''). PowerShares[supreg] is a registered service mark of 
PowerShares Capital Management LLC (``PowerShares''). DBB is not 
sponsored, endorsed, sold or promoted by DB AG, and DB AG makes no 
representation regarding the advisability of investing in DBB. 
Neither DB AG nor PowerShares has licensed or authorized ISE to (i) 
engage in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on DBB 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 DBB or with making disclosures concerning options on 
DBB under any applicable federal or state laws, rules or 
regulations. DB AG and PowerShares do not sponsor, endorse, or 
promote such activity by ISE and are not affiliated in any manner 
with ISE.
    \6\ 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] 
Total Stock Market ETF (``VTI'') tracks the Morgan Stanley Capital 
International[supreg] (MSCI[supreg]) U.S. Broad Market Index. MSCI 
does not sponsor, endorse, or promote VTI and makes no 
representation regarding the advisability of investing in VTI. 
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 VTI 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 VTI or with making disclosures concerning options on VTI 
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.
    \7\ The PowerShares DB U.S. Dollar Bullish Fund (``UUP'') is 
based on the Deutsche Bank Long U.S. Dollar Index (USDX[supreg]) 
Futures Index TM (``DB Long USD Futures Index''). The 
sponsor of the DB Long USD Futures Index is Deutsche Bank AG, London 
(``DB AG''). UUP is managed by DB Commodity Services LLC. U.S. 
Dollar Index[supreg] and USDX[supreg] are registered service marks 
of IntercontinentalExchange, Inc. PowerShares[supreg] is a 
registered service mark of PowerShares Capital Management LLC 
(``PowerShares''). UUP is not sponsored, endorsed, sold or promoted 
by DB AG, and DB AG makes no representation regarding the 
advisability of investing in UUP. Neither DB AG nor PowerShares has 
licensed or authorized ISE to (i) engage in the creation, listing, 
provision of a market for trading, marketing, and promotion of 
options on UUP 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 UUP or 
with making disclosures concerning options on UUP under any 
applicable federal or state laws, rules or regulations. DB AG and 
PowerShares do not sponsor, endorse, or promote such activity by ISE 
and are not affiliated in any manner with ISE.
    \8\ iShares[supreg] is a registered trademark of Barclays Global 
Investors, N.A. (``BGI''), a majority owned subsidiary of Barclays 
Bank PLC. ``Lehman Brothers U.S. Treasury TIPS Index'' is a 
trademark of Lehman Brothers and has been licensed for use for 
certain purposes by BGI. All other trademarks and service marks are 
the property of their respective owners. iShares Lehman TIPS Bond 
Fund (``TIP'') is not sponsored, endorsed, issued, sold or promoted 
by Lehman. BGI and Lehman 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 TIP 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 TIP or with making disclosures concerning options on 
TIP under any applicable federal or state laws, rules or 
regulations. BGI and Lehman do not sponsor, endorse, or promote such 
activity by ISE, and are not affiliated in any manner with ISE.
    \9\ iShares[supreg] is a registered trademark of Barclays Global 
Investors, N.A. (``BGI''), a majority owned subsidiary of Barclays 
Bank PLC. ``MSCI Pacific Ex-Japan Index'' is a service mark of 
Morgan Stanley Capital International (``MSCI'') and has been 
licensed for use for certain purposes by BGI. All other trademarks 
and service marks are the property of their respective owners. 
iShares MSCI Pacific Ex-Japan Index Fund (``EPP'') is not sponsored, 
endorsed, issued, sold or promoted by MSCI. BGI and MSCI 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 EPP 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 EPP or 
with making disclosures concerning options on EPP under any 
applicable federal or state laws, rules or regulations. BGI and MSCI 
do not sponsor, endorse, or promote such activity by ISE, and are 
not affiliated in any manner with ISE.
    \10\ ``Dow Jones'' and ``Dow Jones U.S. Real Estate 
SM'' are service marks of Dow Jones & Company, Inc. 
(``Dow Jones'') and have been licensed for use for certain purposes 
by ProShares. MSCI, Morgan Stanley Capital International and EAFE 
are service marks of MSCI and have been licensed for use for certain 
purposes by ProShares. All other trademarks and service marks are 
the property of their respective owners. The Ultra Real Estate 
ProShares (``URE'') and the UltraShort MSCI EAFE ProShares (``EFU'') 
are not sponsored, endorsed, issued, sold or promoted by Dow Jones 
or MSCI. Dow Jones and MSCI 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 URE and EFU 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 URE and EFU or with making 
disclosures concerning options on URE and EFU under any applicable 
federal or state laws, rules or regulations. Dow Jones and MSCI do 
not sponsor, endorse, or promote such activity by ISE and is not 
affiliated in any manner with ISE.
---------------------------------------------------------------------------

    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 DBC, DBB, VTI, UUP, TIP, EPP, URE, and 
EFU.\11\ The amount of the execution fee for products covered by this 
filing shall be $0.18 per contract for all Public Customer Orders \12\ 
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

[[Page 57181]]

transactions in equity options.\13\ Finally, the amount of the 
execution fee for all non-ISE Market Maker transactions shall be $0.45 
per contract.\14\ Further, since options on DBC, DBB, VTI, UUP, TIP, 
EPP, URE, and EFU are multiply-listed, the Exchange's Payment for Order 
Flow fee shall apply to all these products. The Exchange believes the 
proposed rule change will further the Exchange's goal of introducing 
new products to the marketplace that are competitively priced.
---------------------------------------------------------------------------

    \11\ 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)
    \12\ 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.
    \13\ 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.
    \14\ 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.
---------------------------------------------------------------------------

    (b) Basis--The Exchange believes that the proposed rule change is 
consistent with the objectives of Section 6 of the Act,\15\ in general, 
and furthers the objectives of Section 6(b)(4),\16\ 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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 \17\ and Rule 19b-4(f)(2) \18\ 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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 19b-4(f)(2).
---------------------------------------------------------------------------

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-2008-68 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-2008-68. 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-
2008-68 and should be submitted on or before October 22, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Florence E. Harmon,
Acting Secretary.
---------------------------------------------------------------------------

    \19\ 17CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. E8-22967 Filed 9-30-08; 8:45 am]

BILLING CODE 8011-01-P