Document ID: SEC-2007-0932-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-07-10T04:00Z

[Federal Register: July 10, 2007 (Volume 72, Number 131)]
[Notices]               
[Page 37555-37557]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jy07-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56005; File No. SR-ISE-2007-49]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing of Proposed Rule Change Relating to Fee Changes 
on a Retroactive Basis

July 3, 2007.
    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 June 15, 2007, the International Securities Exchange, LLC 
(``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 substantially prepared 
by ISE. 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

    ISE is proposing to amend its Schedule of Fees to: (1) Increase the 
per contract surcharge from $0.10 per contract to $0.15 per contract 
for options on the Russell 1000[supreg] Index (``RUI''), the Russell 
2000[supreg] Index (``RUT''), and the Mini Russell 2000 Index 
(``RMN''); and (2) refund surcharge fees collected for transactions in 
options on the iShares Russell 2000[supreg] Index Fund (``IWM''), the 
iShares Russell 2000[supreg] Value Index Fund (``IWN''), the iShares 
Russell 2000[supreg] Growth Index Fund (``IWO''), the iShares Russell 
1000[supreg] Value Index Fund (``IWD'') and the iShares Russell 
1000[supreg] Index Fund (``IWB''), in both cases for the period 
commencing January 1, 2007 and ending June 15, 2007 (the ``Retroactive 
Period''). The Exchange proposes the surcharge increase to become 
effective retroactively, as of January 1, 2007.\3\ The text of the

[[Page 37556]]

proposed rule change is available at ISE, http://www.iseoptions.com, 

and the Commission's Public Reference Room.
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    \3\ On June 15, 2007, the Exchange filed a proposed rule change 
as immediately effective under Section 19(b)(3)(A) of the Exchange 
Act that: (1) Removes the surcharge fee for IWM, IWN, IWO, IWD and 
IWB from its Schedule of Fees and (2) raises the surcharge fee from 
$.10 per contract to $.15 per contract for options on RUI, RUT and 
RMN. See Securities Exchange Act Release No. 55975 (June 28, 2007) 
(SR-ISE-2007-48). Because ISE seeks to apply changes to its Schedule 
of Fees on a retroactive basis, the Exchange is submitting this 
proposal for notice and comment.
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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 Exchange 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 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: (1) 
Increase the per contract surcharge from $0.10 per contract to $0.15 
per contract in connection with the listing and trading of options on 
RUI, RUT, and RMN; and (2) refund surcharge fees collected for 
transactions in connection with the listing and trading in options on 
IWM, IWN, IWO, IWD and IWB during the Retroactive Period. The Exchange 
proposes the surcharge increase to become effective retroactively, as 
of January 1, 2007.
    The Exchange's Schedule of Fees currently has in place a surcharge 
fee item that calls for a $0.10 per contract fee in connection with the 
listing and trading of options on RUI, RUT and RMN.\4\ The Exchange 
revised its license agreement with the Frank Russell Company 
(``Russell''), effective January 1, 2007. Pursuant to the revised 
agreement, the Exchange pays Russell $0.15 per contract to trade 
options on RUI, RUT and RMN. The Exchange thus proposes to increase the 
surcharge fee for options on RUI, RUT and RMN from $0.10 per contract 
to $0.15 per contract retroactive to January 1, 2007 and collect from 
members the applicable fees due to the Exchange for the Retroactive 
Period. The Exchange believes that charging the participants that trade 
these instruments is the most equitable means of recovering the 
increased costs of the license. However, because competitive pressures 
in the industry have resulted in the waiver of transaction fees for 
Public Customers, the Exchange proposes to exclude Public Customer 
Orders \5\ from this surcharge fee. Accordingly, this surcharge fee 
will only be charged to Exchange members with respect to non-Public 
Customer Orders (e.g., ISE Market Maker, non-ISE Market Maker, and Firm 
Proprietary orders) and shall apply to certain Linkage Orders under a 
pilot program that is set to expire on July 31, 2007.\6\
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    \4\ See Securities Exchange Act Release No. 51858 (June 16, 
2005), 70 FR 36218 (June 22, 2005) (SR-ISE-2005-26).
    \5\ 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 that is not a broker 
or dealer in securities.
    \6\ Linkage Orders are defined in ISE Rule 1900(10). Under a 
pilot program that is set to expire on July 31, 2007, these fees 
will also be charged to Principal Acting as Agent Orders and 
Principal Orders (as defined in ISE Rule 1900(10)(i)-(ii)). See 
Securities Exchange Act Release No. 54204 (July 25, 2006), 71 FR 
43548 (August 1, 2006) (SR-ISE-2006-38).
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    Additionally, the Exchange had previously adopted a $0.10 per 
contract surcharge in connection with the listing and trading of 
options on IWM, IWN, IWO, IWD,\7\ and IWB.\8\ However, pursuant to the 
revised license agreement with Russell, the Exchange, as of January 1, 
2007, no longer pays a license fee to Russell in connection with the 
listing and trading of options on IWM, IWN, IWO, IWD and IWB. As a 
result, the Exchange now proposes to refund to members the surcharge 
fee it has collected during the Retroactive Period.
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    \7\ See Securities Exchange Act Release No. 47075 (December 20, 
2002), 67 FR 79673 (December 30, 2002) (SR-ISE-2002-29).
    \8\ See Securities Exchange Act Release No. 47564 (March 24, 
2003), 68 FR 15256 (March 28, 2003) (SR-ISE-2003-13).
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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) \9\ that an exchange 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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    \9\ 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 will result in 
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 interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) As the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2007-49 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-2007-49. 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

[[Page 37557]]

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 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-2007-49 and should be submitted on or before July 
31, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-13308 Filed 7-9-07; 8:45 am]

BILLING CODE 8010-01-P