[Federal Register: March 24, 2006 (Volume 71, Number 57)]
[Notices]
[Page 14975-14976]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24mr06-133]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53522; File No. SR-ISE-2006-09]
Self-Regulatory Organizations; International Securities Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change and Amendment No. 1 Thereto Relating to Session/API Fees
March 20, 2006.
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 February 1, 2006, 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 March 15, 2006, 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 added clarifying language to the purpose
section of the filing and made a technical change to the text of
Exhibit 5 (ISE's Schedule of Fees). The correction to Exhibit 5 does
not affect the fees covered by this filing.
\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 adopt a new
method for charging Session/API Fees. The text of the proposed rule
change, as amended, 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.
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 purpose of this proposed rule change is to establish a new
method for charging Session/API (``login'') fees to members.\6\ ISE
currently charges members a fee for each authorized login that a member
utilizes for quoting or order entry, with a lesser charge for
authorized logins used for the limited purpose of ``listening'' to
system broadcasts.\7\ This proposed rule change seeks to further
differentiate authorized logins in an effort to promote and encourage
more efficient quoting. The Exchange proposes the following three
categories of authorized logins: (1) Quoting, order entry and listening
(allowing the user to enter quotes, orders, and perform all other
miscellaneous functions, such as setting parameters, pulling quotes and
performing linkage functions (e.g., sending and receiving P and P/A
orders, laying off orders, etc.)); (2) order entry and listening
(allowing the user to enter orders and perform all other miscellaneous
functions, such as setting parameters, pulling quotes and performing
linkage functions (but not quote)); and (3) listening (allowing the
user only to query the system and to respond to other broadcasts).\8\
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\6\ ISE represents that the fees proposed in this filing only
apply to ISE members. The ISE Central Exchange System uses an open
Application Programming Interface (API). ISE Members program to
ISE's API in order to develop applications that send trading
commands and/or queries to and receive broadcasts and/or
transactions from the trading system. The ISE Central Exchange
System is the heart of ISE's marketplace, processing quotes from
market makers, receiving orders from Electronic Access Members,
tracking activity in the underlying markets, executing trades in the
matching engine, and broadcasting trade details to the participating
members.
\7\ Prior to this filing, members were charged a fee of $250 to
``listen'' to system broadcasts. This fee as it applied to market
makers, which was previously listed under ``EAM / Trade Review
Terminal,'' now appears under ``Market Makers''--``Listening.''
\8\ The Exchange issued a Market Information Circular and a
Technical Bulletin on February 3, 2006 and February 9, 2006,
respectively, to notify members of the change that is the subject of
this filing. The Exchange further notes that this filing was
considered and approved by the ISE's Market Maker Advisory
Committee. The Exchange believes that the proposed fee changes are
reasonable in that they are closely tailored to ISE's technology
costs.
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[[Page 14976]]
Under the proposed rule change, each ISE market maker will receive
an allocation of 1,000,000 quotes per day per user. If a firm submits
more quotes than those allocated, i.e., 1,000,000 quotes per user as
measured on an average in a single month, the firm will be charged for
additional users depending upon the number of quotes submitted. Each
month, the total number of quotes submitted by a market maker firm
across all bins will be divided by the number of trading days,
resulting in the average quotes per day. This number will then be
divided by 1,000,000 and rounded up to the nearest whole number,
resulting in an implied number of users based on quotes. Members will
be invoiced for the greater of (a) the greatest number of users
authorized to login into the system, or (b) the number of implied users
based on quotes. For example, a firm with 20 users has an allocation of
20 million quotes per day. If that firm submits an average of 18
million quotes per day during a single month then the firm will be
invoiced for all 20 users. If that firm submits an average of 21.3
million quotes per day during a single month, it will be invoiced for
22 users (21.3 users rounded up).
In order to facilitate maximum utilization of a firm's quote
allocation, firms that submit more quotes than the allocated 1,000,000
quotes per day will receive an e-mail on a daily basis informing them
that they will incur additional fees if they continue to submit in
excess of the 1,000,000 daily quote allocation per user.
ISE proposes to charge $950 per month for each quoting session for
up to 1,000,000 quotes per day, on average for a month. Members will be
charged an additional user fee of $950 for each incremental usage of up
to 1,000,000 quotes per day per user. The Exchange further proposes to
charge members a fixed fee of $750 per month for each order entry
session and a fixed fee of $175 per month for each listening session,
regardless of the number of quotes submitted.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b)(4) of the Act,\9\ 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.
In particular, the Exchange believes these fees will encourage and
promote efficient quoting among the Exchange's market making firms.
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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
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(2) \11\ thereunder
because it changes a fee imposed by the Exchange. 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.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 19b-4(f)(2).
\12\ The effective date of the original proposed rule is
February 1, 2006. The effective date of Amendment No. 1 is March 15,
2006. 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 March 15, 2006, 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, as amended, 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-2006-09 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2006-09. 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. 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-2006-09 and should be submitted on or before April
17, 2006.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
Nancy M. Morris,
Secretary.
[FR Doc. E6-4274 Filed 3-23-06; 8:45 am]
BILLING CODE 8010-01-P