Document ID: SEC-2009-0134-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2009-01-30T05:00Z

[Federal Register: January 30, 2009 (Volume 74, Number 19)]
[Notices]               
[Page 5704-5706]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30ja09-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59288; File No. SR-ISE-2009-03]

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

January 23, 2009.
    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 January 15, 2009, 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 4 Premium Products.\3\ The text of 
the proposed rule change is available on the Exchange's Web site 
(http://www.ise.com), at the principal office of the Exchange, and at 
the Commission's Public Reference Room.
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    \3\ 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 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

[[Page 5705]]

to establish fees for transactions in options on the Short QQQ 
ProShares (``PSQ''),\4\ the Short S&P500 ProShares (``SH''),\5\ the 
UltraShort Lehman 20+ Year Treasury ProShares (``TBT''),\6\ and the 
PowerShares DB U.S. Dollar Bearish Fund (``UDN'').\7\ The Exchange 
represents that PSQ, SH, TBT and UDN are eligible for options trading 
because they constitute ``Exchange-Traded Fund Shares,'' as defined by 
ISE Rule 502(h).
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    \4\ ``NASDAQ-100 Index'' is a trademark of the NASDAQ Stock 
Markets, Inc. (``NASDAQ'') and has been licensed for use for certain 
purposes by ProShares Trust. All other trademarks and service marks 
are the property of their respective owners. The Short QQQ ProShares 
(``PSQ'') is not sponsored, endorsed, sold or promoted by NASDAQ. 
NASDAQ 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 PSQ 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 PSQ or with making disclosures concerning options on PSQ 
under any applicable federal or state laws, rules or regulations. 
NASDAQ does not sponsor, endorse, or promote such activity by ISE 
and is not affiliated in any manner with ISE.
    \5\ ``Standard & Poor's,'' ``S&P,'' ``S&P 500,'' ``Standard & 
Poor's 500,'' ``500'' are trademarks of The McGraw-Hill Companies, 
Inc. (``McGraw-Hill'') and have been licensed for use for certain 
purposes by ProShares Trust. All other trademarks and service marks 
are the property of their respective owners. The Short S&P500 
ProShares (``SH'') is not sponsored, endorsed, sold or promoted by 
Standard & Poor's, (``S&P''), a division of McGraw-Hill. S&P 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 SH 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 SH or with 
making disclosures concerning options on SH under any applicable 
federal or state laws, rules or regulations. S&P does not sponsor, 
endorse, or promote such activity by ISE and is not affiliated in 
any manner with ISE.
    \6\ ``Lehman Brothers'' and ``Lehman Brothers Inc.'' are 
trademarks of Lehman Brothers Inc. (``Lehman'') and have been 
licensed for use for certain purposes by ProShares Trust. All other 
trademarks and service marks are the property of their respective 
owners. The UltraShort Lehman 20+ Year Treasury ProShares (``TBT'') 
is not sponsored, endorsed, sold or promoted by Lehman. Lehman 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 TBT 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 TBT or with making disclosures concerning options on TBT 
under any applicable federal or state laws, rules or regulations. 
Lehman 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 Bearish Fund (``UDN'') is 
based on the Deutsche Bank Short U.S. Dollar Index (USDX[reg]) 
Futures Index\TM\ (``DB Short USD Futures Index''). The sponsor of 
the DB Short USD Futures Index is Deutsche Bank AG, London (``DB 
AG''). UDN is managed by DB Commodity Services LLC. U.S. Dollar 
Index[reg] and USDX[reg] are registered service marks of 
IntercontinentalExchange, Inc. PowerShares[reg] is a registered 
service mark of PowerShares Capital Management LLC 
(``PowerShares''). UDN is not sponsored, endorsed, sold or promoted 
by DB AG, and DB AG makes no representation regarding the 
advisability of investing in UDN. 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 UDN 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 UDN or 
with making disclosures concerning options on UDN 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.
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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 PSQ, SH, TBT and UDN.\8\ The amount of 
the execution fee for products covered by this filing shall be $0.18 
per contract for all Public Customer Orders \9\ and $0.20 per contract 
for all 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.\10\ Finally, the amount of the execution fee for all 
non-ISE Market Maker transactions shall be $0.45 per contract.\11\ 
Further, since options on PSQ, SH, TBT and UDN 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.
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    \8\ 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).
    \9\ 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.
    \10\ 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.
    \11\ 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,\12\ in general, 
and furthers the objectives of Section 6(b)(4),\13\ 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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    \12\ 15 U.S.C. 78f.
    \13\ 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 \14\ and Rule 19b-4(f)(2) \15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-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 proposal 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-2009-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-ISE-2009-03. This file 
number should be included on the subject line

[[Page 5706]]

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 No. SR-ISE-2009-03 and should be submitted on or before February 
20, 2009.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2061 Filed 1-29-09; 8:45 am]

BILLING CODE 8011-01-P