[Federal Register: July 12, 2005 (Volume 70, Number 132)]
[Notices]
[Page 40088-40089]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12jy05-114]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51962; File No. SR-ISE-2005-29]
Self-Regulatory Organizations; International Securities Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change and Amendment No. 1 Thereto Relating to Fee Changes
July 1, 2005.
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 6, 2005, 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.
On June 20, 2005, ISE filed Amendment No. 1 to the proposed rule
change.\3\ 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,\4\ and Rule 19b-4(f)(2) thereunder,\5\
which renders the proposal effective upon filing with the Commission.
The Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 made a technical change to the text of
Exhibit 5 (ISE's Schedule of Fees) and added footnote 6 to this rule
filing. The correction to Exhibit 5 does not affect the fees for
transactions in options on the five narrow-based indexes that are
the subject of this filing, but only corrects Exhibit 5 to remove
asterisks between the Payment for Order Flow section under Execution
Fees and the Comparison Fee section, since no rule text has been
omitted between those two sections.
\4\ 15 U.S.C. 78s(b)(3)(A)(ii).
\5\ 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 five narrow-based indexes: the ISE-
CCM Homeland Security Index, the ISE Oil & Gas Services Index, the ISE
Semiconductors Index, the ISE Gold Index and the ISE Homebuilders
Index.\6\ The text of the proposed rule change is available on the
ISE's Web site (http://www.iseoptions.com/legal/proposed_rule_changes.asp
), at the principal office of the ISE, and at the
Commission's Public Reference Room.
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\6\ The Exchange represents that the following five narrow-based
indexes, ISE-CCM Homeland Security Index, the ISE Oil & Gas Services
Index, the ISE Semiconductors Index, the ISE Gold Index and the ISE
Homebuilders Index, meet the standards of ISE Rule 2002(b), which
allows the ISE to begin trading these products by filing Form 19b-
4(e) at least five business days after commencement of trading these
new products pursuant to Rule 19b-4(e) of the Act. Accordingly, ISE
filed Form 19b-4(e) with the Commission on June 13, 2005.
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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 five narrow-based
indexes: the ISE-CCM Homeland Security Index (``HSX''), the ISE Oil &
Gas Services Index (``OOG''), the ISE Semiconductors Index (``BYT''),
the ISE Gold Index (``HVY''), and the ISE Homebuilders Index (``RUF'').
Specifically, the Exchange is proposing to adopt an execution fee and a
comparison fee for all transactions in options on HSX, OOG, BYT, HVY,
and RUF.\7\ The amount of the execution fee and comparison fee shall be
the same for all order types on the Exchange--that is, orders for
Public Customers, Market Makers, and Firm Proprietary--and shall be
equal to the execution fee and comparison fee currently charged by the
Exchange for Market Maker and Firm Proprietary transactions in equity
options.\8\ 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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\7\ The Exchange represents that these fees will be charged only
to Exchange members.
\8\ 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 per contract side.
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Additionally, the Exchange has entered into a license agreement
with Cronus Capital Markets in connection with the listing and trading
of options on HSX. As with certain other licensed options, the Exchange
is adopting a surcharge per contract for trading in these options to
defray the licensing costs.\9\ The Exchange believes that 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 \10\ from this surcharge fee. Accordingly, this
surcharge fee will only be charged to Exchange members with respect to
non-Public Customer Orders (e.g., Market Maker and Firm Proprietary
orders) and shall apply to Linkage Orders \11\ under a pilot program
that is set to expire on July 31, 2005. Further, since options on HSX,
OOG, BYT, HVY, and RUF are not multiply-listed, the Payment for Order
Flow fee shall not apply.
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\9\ The Commission notes the proposed fee is five (5) cents per
contract/side.
\10\ Public Customer Order is defined in ISE Rule 100(a)(33) as
an order for the account of a Public Customer. Public Customer is
defined in ISE Rule 100(a)(32) as a person that is not a broker or
dealer in securities.
\11\ See ISE Rule 1900(10).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b)(4) of the Act,\12\ which requires 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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[[Page 40089]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that 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 rule change, as amended, establishes or
changes a due, fee, or other charge imposed by the Exchange, it has
become effective pursuant to Section 19(b)(3) of the Act \13\ and Rule
19b-4(f)(2) \14\ thereunder. At any time within 60 days of the filing
of such amended 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.\15\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 19b-4(f)(2).
\15\ The effective date of the original proposed rule is June 6,
2005. The effective date of Amendment No. 1 is June 20, 2005. For
purposes of calculating the 60-day period within which the
Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on June 20, 2005, the date on which the ISE submitted
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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-2005-29 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
All submissions should refer to File Number SR-ISE-2005-29. 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 Commissions 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 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-2005-29 and should be submitted by August 2, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3664 Filed 7-11-05; 8:45 am]
BILLING CODE 8010-01-P