Document ID: SEC-2007-1278-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-09-14T04:00Z

[Federal Register: September 14, 2007 (Volume 72, Number 178)]
[Notices]               
[Page 52591-52593]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14se07-74]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56379; File No. SR-ISE-2007-79]

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

September 10, 2007.
    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 31, 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 the ISE. 
The ISE has designated this proposal 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 proposes to amend the Schedule of Fees to clarify and amend 
its Trading Application Software Fees with respect to FIX and API 
sessions. The text of the proposed rule change is available on the 
ISE's Web site (http://www.ise.com), at the principal office of the 

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 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 proposes to amend the Schedule of Fees with respect to 
Electronic Access Member (``EAM'') Trading Application Software Fees. A 
member can connect via an Application Programming Interface (``API'') 
session or a Financial Information eXchange (``FIX'') session. The ISE 
uses an open API which members program to in order to develop 
applications that send trading commands and/or queries to and receive 
broadcasts and/or transactions from the trading system. The API 
processes quotes, receives orders from EAMs, tracks activity in the 
underlying markets, when applicable, executes trades in the matching 
engine, and broadcasts trade details to the participating members. The 
ISE pays a licensing fee for the use of the options API, whereas ISE 
owns the proprietary rights to the equity API. Accordingly, fees are 
higher for options API sessions than they are for equity API sessions. 
FIX is an industry-wide messaging standard protocol. While the FIX 
specification is open and free, implementing FIX requires planning, 
software, and network services that ISE provides.
    On December 5, 2006, the Exchange filed to adopt fees related to 
the trading of equity securities on the ISE Stock Exchange, LLC, a 
facility of ISE. In ISE-2006-76, the Exchange proposed to charge a 
Session/API \5\ fee of $250 per month to connect to the ISE Stock 
Exchange, with a waiver until June 30, 2007 for second and subsequent 
connections.\6\ The Exchange allowed this waiver to expire on June 30, 
2007, at which time the fee to connect to the ISE Stock Exchange, on a 
monthly basis, became $250 per session, i.e., for each connection to 
the ISE Stock Exchange, regardless of whether the Equity EAM is 
connected via FIX or API. Subsequent to the fee increase, the Exchange 
analyzed the impact of the fee increase on Equity EAMs and determined 
that the disparity between the increase in fees and the additional work 
required to assist the Equity EAMs in maintaining additional lines to 
the Exchange was not accurately

[[Page 52592]]

correlated. Accordingly, the Exchange has decided to reduce the fee for 
third and subsequent connections to the ISE Stock Exchange.\7\ The 
Exchange proposes to assess the following fees for Equity EAMs: $250 
each for the first and second connection and $50 for each additional 
connection, regardless of whether the Equity EAM is connected via FIX 
or API.\8\
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    \5\ Historically, the Schedule of Fees referred to ``FIX'' as 
``Session.'' However, in this filing the Exchange is proposing to 
clarify this by defining session fees as either FIX or API.
    \6\ See Securities Exchange Act Release No. 54897 (December 8, 
2006), 71 FR 75593 (December 15, 2006) (SR-ISE-2007-76) (Notice of 
filing and immediate effectiveness of proposed rule change relating 
to ISE Stock Exchange fees).
    \7\ Telephone conference between Laura Clare, Assistant General 
Counsel, ISE, and Jan Woo, Special Counsel, Division of Market 
Regulation, Commission, on September 7, 2007 (``Telephone conference 
on September 7, 2007'') (correcting the filing to state that the 
Exchange is proposing to reduce the fee increase for the third and 
subsequent connections (whether they are API or FIX) to the ISE 
Stock Exchange for Equity EAMs).
    \8\ Telephone conference on September 7, 2007 (clarifying that 
the $250 charge will be assessed for each of the first two 
connections made by Equity EAMs that connect via the API or FIX).
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    Historically, the Exchange charged options members the following 
Session/API fee to connect to the Exchange: $250 per month for the 
first five CLICK terminals and $100 per month for six or more 
terminals. Further, under a pilot program previously adopted by the 
Exchange, all Session/API fees associated with a second and any 
subsequent CLICK terminals were waived. As a result, members were only 
charged a $250 per month Session/API fee to connect to the Exchange. 
Earlier this year, once all existing CLICK terminals were 
decommissioned, the Exchange submitted a fee filing that, among other 
things, proposed to remove all references to CLICK terminals from its 
fee schedule.\9\ In doing so, and after conducting an internal analysis 
of the impact of fees to members, the Exchange notes that the CLICK Fee 
Filing actually raised the Session/API fees for members, contrary to 
what the Exchange intended. Thus, this filing seeks to remedy the 
mistake the CLICK Fee Filing has caused.
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    \9\ See Securities Exchange Act Release No. 55960 (June 26, 
2007), 72 FR 36531 (July 3, 2007) (the ``CLICK Fee Filing'').
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    Accordingly, the Exchange proposes to reinstate the tiered session 
fee for EAM Options API, as it was never the intent of the Exchange to 
eliminate this fee reduction on sixth and additional sessions.\10\ For 
Options EAMs that connect via the API the proposed fee is $250 for each 
of the first five connections and $100 for each additional 
connection.\11\ With respect to the FIX fees, the Exchange proposes to 
charge EAMs one fee for FIX sessions, regardless of whether the EAM is 
an Options EAM or an Equity EAM. As discussed above, the Exchange 
proposes a $250 fee for the first FIX connection and an additional $250 
for the second FIX connection and $50 for each additional connection 
thereafter.
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    \10\ Telephone conference between Laura Clare, Assistant General 
Counsel, ISE, and Jan Woo, Special Counsel, Division of Market 
Regulation, Commission, on September 10, 2007 (clarifying that the 
proposed rule change is to reinstate a tiered session fee for EAM 
Options API including a fee reduction for sixth and additional 
sessions).
    \11\ Telephone conference on September 7, 2007 (clarifying that 
the $250 charge will be assessed for each of the first five 
connections made by Options EAMs that connect via the API).
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    Further, the Exchange proposes to rearrange and add clarifying 
language to this section of the Schedule of Fees to delineate 
specifically which fees apply to FIX sessions and which fees apply to 
API sessions, and which fees apply to Options EAMs and which fees apply 
to Equity EAMs.
2. Statutory Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is the requirement under section 6(b)(4) of the 
Act \12\ 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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    \12\ 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)(A) of the Act \13\ and Rule 19b-4(f)(2) \14\ thereunder 
because it changes a fee imposed by the Exchange. 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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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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-2007-79 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-2007-79. 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 such filing also will be available for 
inspection and copying at the principal office of the 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-2007-79 and should be 
submitted on or before October 5, 2007.

[[Page 52593]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-18132 Filed 9-13-07; 8:45 am]

BILLING CODE 8010-01-P