[Federal Register: August 20, 2007 (Volume 72, Number 160)]
[Notices]
[Page 46527-46528]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20au07-106]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56240; File No. SR-ISE-2007-49]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Order Approving Proposed Rule Change Relating to Fee Changes on a
Retroactive Basis
August 13, 2007.
I. Introduction
On June 15, 2007, the International Securities Exchange, LLC
(``ISE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend its Schedule of Fees on
a retroactive basis. The proposed rule change was published for comment
in the Federal Register on July 10, 2007.\3\ The Commission received no
comments regarding the proposal. This order approves the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 56005 (July 3,
2007), 72 FR 37555.
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II. Description of the Proposal
ISE proposes 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[reg] Index (``RUI''), the Russell 2000[reg]
Index (``RUT''), and the Mini Russell 2000[reg] Index (``RMN''); and
(2) refund surcharge fees collected for transactions in options on the
iShares Russell 2000[reg] Index Fund (``IWM''), the iShares Russell
2000[reg] Value Index Fund (``IWN''), the iShares Russell 2000[reg]
Growth Index Fund (``IWO''), the iShares Russell 1000[reg] Value Index
Fund (``IWD'') and the iShares Russell 1000[reg] 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.\4\
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\4\ 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),
72 FR 37064 (July 6, 2007) (SR-ISE-2007-48).
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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. 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, 2008.\5\
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\5\ Linkage Orders are defined in ISE Rule 1900(10). Under a
pilot program that was recently extended and is now set to expire on
July 31, 2008, 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. 56128
(July 24, 2007), 72 FR 42161 (August 1, 2007).
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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,\6\ and IWB.\7\ 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 proposes to refund to members the surcharge fee it
has collected during the Retroactive Period.
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\6\ See Securities Exchange Act Release No. 47075 (December 20,
2002), 67 FR 79673 (December 30, 2002) (SR-ISE-2002-29).
\7\ See Securities Exchange Act Release No. 47564 (March 24,
2003), 68 FR 15256 (March 28, 2003) (SR-ISE-2003-13).
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III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\8\
Specifically, the Commission finds that the proposal is consistent with
section 6(b)(4) of the Act,\9\ which requires that the rules of a
national securities exchange provide for the equitable allocation of
reasonable dues, fees, and other charges among its members and issuers
and other persons using its facilities. Specifically, the Commission
believes that application of the amendments to ISE's Schedule of Fees
on a retroactive basis is appropriate
[[Page 46528]]
and aligns revenue collected from members with license costs charged to
ISE under its agreement with Russell.
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\8\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f(b)(4).
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IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change (SR-ISE-2007-49) is approved.
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. E7-16258 Filed 8-17-07; 8:45 am]
BILLING CODE 8010-01-P