Document ID: SEC-2006-1190-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, Inc.
Posted Date: 2006-09-15T04:00Z

[Federal Register: September 15, 2006 (Volume 71, Number 179)]
[Notices]               
[Page 54546-54547]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15se06-91]                         

[[Page 54546]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54414; File No. SR-ISE-2006-49]

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

September 7, 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 August 29, 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 the ISE. 
The ISE has filed the proposed rule change as one establishing or 
changing a due, fee, or other charge imposed by the 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 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

    The ISE is proposing to amend its Schedule of Fees to establish 
fees for transactions in options on 5 Premium Products.\5\ The text of 
the proposed rule change is available on the Exchange's Internet Web 
site (http://www.iseoptions.com), at the principal office of the ISE, 

and at the Commission's Public Reference Room.
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    \5\ The term ``Premium Products'' 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 ISE 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 ISE 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 5 Premium 
Products: iShares S&P SmallCap 600 Value Index Fund (``IJS''), iShares 
Russell 1000 Growth Index Fund (``IWF''), iShares Russell MidCap Growth 
Index Fund (``IWP''), iShares Russell MidCap Value Index Fund 
(``IWS''), and iShares Russell 3000 Index Fund (``IWV'').\6\ 
Specifically, the Exchange is proposing to adopt an execution fee and a 
comparison fee for all transactions in options on IJS, IWF, IWP, IWS 
and IWV.\7\ The amount of the execution fee and comparison fee for 
products covered by this filing shall be $0.15 and $0.03 per contract, 
respectively, for all Public Customer Orders \8\ and Firm Proprietary 
orders. The amount of the execution fee and comparison fee for all ISE 
Market Maker transactions shall be equal to the execution fee and 
comparison fee currently charged by the Exchange for ISE Market Maker 
transactions in equity options.\9\ Finally, the amount of the execution 
fee and comparison fee for all Non-ISE Market Maker transactions shall 
be $0.16 and $0.03 per contract, respectively. All of the applicable 
fees covered by this filing are identical to fees charged by the 
Exchange for all other Premium 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.
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    \6\ IJS, IWF, IWP, IWS and IWV constitute ``Fund Shares,'' as 
defined by ISE Rule 502(h).
    \7\ These fees will be charged only to Exchange members. Under a 
pilot program that is set to expire on July 31, 2007, these fees 
will also be charged to Linkage Orders (as defined in ISE Rule 
1900). See Securities Exchange Release No. 54204 (July 25, 2006), 71 
FR 43548 (August 1, 2006).
    \8\ Public Customer Order is defined in Exchange Rule 100(a)(33) 
as an order for the account of a Public Customer. Public Customer is 
defined in Exchange Rule 100(a)(32) as a person that is not a broker 
or dealer in securities.
    \9\ The execution fee is currently between $.21 and $.12 per 
contract side, depending on the Exchange Average Daily Volume and 
the comparison fee is currently $.03.
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    The Exchange has entered into a license agreement with Standard & 
Poor's and the Frank Russell Company in connection with the listing and 
trading of options on IJS and IWF, IWP, IWS and IWV, respectively. As 
with certain other licensed options, the Exchange is adopting a fee of 
$0.10 per contract for trading in these options to defray the licensing 
costs. The Exchange believes charging the participants that trade this 
instrument is the most equitable means of recovering the costs of the 
license. However, because of competitive pressures in the industry, the 
Exchange proposes to exclude Public Customer Orders from this surcharge 
fee. Accordingly, this surcharge fee would be charged only to Exchange 
members with respect to Non-Public Customer Orders (e.g., ISE Market 
Maker, Non-ISE Market Maker & Firm Proprietary orders) and would apply 
to Linkage Orders \10\ under a pilot program that is set to expire on 
July 31, 2007. Further, since options on IJS, IWF, IWP, IWS and IWV are 
multiply-listed, the Payment for Order Flow fee would also apply.
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    \10\ See supra note 7.
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2. Statutory Basis
    The basis for the proposed rule change is the requirement under 
Section 6(b)(4) of the Act \11\ 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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    \11\ 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

    Because the foregoing proposed rule change establishes or changes a 
due, fee, or other charge imposed by the Exchange, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(2) \13\ thereunder. At any time within 60 days of the filing of 
the proposed rule change the Commission may summarily abrogate such 
proposed rule change if it

[[Page 54547]]

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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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 No. SR-ISE-2006-49 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-ISE-2006-49. 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 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 No. SR-
ISE-2006-49 and should be submitted on or before October 6, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-15322 Filed 9-14-06; 8:45 am]

BILLING CODE 8010-01-P