[Federal Register: January 31, 2006 (Volume 71, Number 20)]
[Notices]
[Page 5096-5097]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31ja06-80]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53173; File No. SR-ISE-2006-03]
Self-Regulatory Organizations; International Securities Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Fee Changes for Transactions in Options on Three
Narrow-Based Indexes
January 24, 2006.
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 January 5, 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.
The ISE has designated this proposal as one establishing or changing a
due, fee, or other charge imposed by a self-regulatory organization
pursuant to Section 19(b)(3)(A)(iii) 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)(iii).
\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 its Schedule of Fees to establish fees
for transactions in options on three narrow-based indexes: the ISE-B&S
Water Index (``HHO''), the ISE-CCM Alternative Energy Index (``POW'')
and the ISE-CCM Nanotechnology Index (``TNY''). The text of the
proposed rule change is available at the Exchange, at the Exchange's
Web site http://www.iseoptions.com/legal/proposed_rule_changes.asp)
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 proposal. The text of these
statements may be examined at the places specified in Item IV below.
The Exchange 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 adopt an execution fee and a
comparison fee for all transactions in options on HHO, POW and TNY.\5\
These fees will be charged only to Exchange members. The amount of the
execution fee and comparison fee for products covered by this filing
shall be $0.15 and $0.03, respectively, for all Public Customer and
Firm Proprietary orders. The amount of the execution fee and comparison
fee for all Market Maker orders shall be equal to the execution fee and
comparison fee currently charged by the Exchange for Market Maker
transactions in equity options.\6\ The Exchange believes the proposed
rule change will further its goal of introducing new products to the
marketplace that are competitively priced.
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\5\ The Exchange states that the HHO, POW and TNY meet the
standards of ISE Rule 2002(b), which allows the Exchange 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, 17 CFR 240.19b-4(e).
\6\ 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 separate development
agreements with Cronus Capital Markets and Boenning & Scattergood,
Inc., in connection with the development, listing and trading of
options on POW and TNY and HHO, respectively. As with certain other
licensed options, the Exchange is adopting a fee of $0.05 per contract
for trading in these options to defray the licensing costs. The
Exchange believes 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 \7\ 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 \8\
under a pilot program that is set to expire on July 31, 2006.\9\
Further, since options on HHO, POW and TNY are not multiply-listed, the
Payment for Order Flow fee shall not apply.
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\7\ Public Customer Order is defined in Exchange Rule 100(a)(33)
as an order for the account of a Public Customer. Public Customer is
defined in Exchange Rule 100(a)(32) as a person that is not a broker
or dealer in securities.
\8\ See Exchange Rule 1900.
\9\ See Securities Exchange Act Release No. 52168 (July 29,
2005), 70 FR 45454-01 (August 5, 2005), SR-ISE-2005-32 (extending
the expiration date for this pilot program from July 31, 2005 to
July 31, 2006).
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2. Statutory Basis
The Exchange states that the basis under the Act for this proposed
rule change is the requirement under Section 6(b)(4) \10\ 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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\10\ 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 will 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 neither solicited nor received comments on the
proposed rule change. The ISE 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 proposed rule change has become effective pursuant to
Section 19(b)(3)(A)(ii) of the Act,\11\ and paragraph (f)(2) of Rule
19b-4 thereunder \12\ because it establishes or changes a due, fee, or
other charge. At any time within 60 days of the filing of the proposed
rule change, the
[[Page 5097]]
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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\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 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 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-2006-03 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 20549-9303.
All submissions should refer to File Number SR-ISE-2006-03. 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 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-2006-03
and should be submitted on or before February 21, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-1176 Filed 1-30-06; 8:45 am]
BILLING CODE 8010-01-P