[Federal Register: April 18, 2006 (Volume 71, Number 74)]
[Notices]
[Page 19918-19920]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ap06-105]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53630; File No. SR-ISE-2006-18]
Self-Regulatory Organizations; International Securities Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Fees for Non-ISE Market Maker Orders
April 11, 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 April 3, 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 changing a fee imposed by the ISE under
section 19(b)(3)(A)(ii) 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 parties.
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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)(ii).
\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 adopt a fee for
non-ISE market maker orders. The text of the proposed rule change is
available on the Exchange's Web site (http://www.iseoptions.com/legal/proposed_rule_changes.asp
) and at the Commission's Public Reference
Room. Below is the text of the proposed rule change. Proposed new
language is italicized.
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Electronic market place Amount Billable unit Frequency Notes
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Execution Fees
* * * * * * *
ISE Market Maker............. ........... .................................... ................................... For Complex Orders, fee
charged only for the
leg of the trade
consisting of the most
contracts. For a pilot
period ending November
30, 2006 in
transactions in QQQQ,
this fee (i) is reduced
by $.10 per Member for
monthly A.D.V. above
8,000 contracts/sides
and (ii) is waived
entirely per Member for
monthly A.D.V. above
10,000 contracts/sides.
A.D.V. Less Than 300,000.......... $0.21 Contract/side....................... Transaction........................ Based on Exchange A.D.V.
A.D.V. From 300,001 to 500,000.... $0.17 Contract/side....................... Transaction........................ Based on Exchange A.D.V.
A.D.V. From 500,001 to 1,000,000.. $0.14 Contract/side....................... Transaction........................ Based on Exchange A.D.V.
A.D.V. Over 1,000,000............. $0.12 Contract/side....................... Transaction........................ Based on Exchange A.D.V.
[[Page 19919]]
Non-ISE Market Maker......... $0.16 Contract/side....................... Transaction........................ The term ``Non-ISE
Market Maker'' means a
market maker as defined
in Section 3(a)(38) of
the Securities Exchange
Act of 1934 registered
in the same options
class on another
options exchange.
* * * * * * *
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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 regarding 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 fee for
FARMM orders. FARMM orders are orders that are sent to the Exchange for
execution by an Electronic Access Member, an ISE member, on behalf of a
non-ISE market maker. FARMM orders do not include Linkage Orders. Under
ISE's Schedule of Fees, the Exchange currently treats FARMM orders as
Firm Proprietary orders. As such, both these order types are charged an
execution fee and a comparison fee of $0.15 and $0.03 per contract,
respectively. The ISE represents that non-ISE market makers that trade
on the Exchange do not pay all of the same fees that ISE market makers
pay, such as membership and regulatory fees. Thus, ISE market makers
are subsidizing non-ISE market makers' trading on the Exchange.
Accordingly, for competitive reasons, the Exchange proposes to create a
new fee of $0.19 per contract for all FARMM orders, comprised of an
execution fee and a comparison fee of $0.16 and $0.03 per contract,
respectively. The Exchange notes that other options exchanges currently
assess a per contract surcharge on non-Linkage trades executed for the
account of a non-member market maker. For example, the Exchange
believes that the Chicago Board Options Exchange (``CBOE''), the
American Stock Exchange (``Amex''), and the Philadelphia Stock Exchange
(``Phlx'') currently charge FARMM orders $0.26,\5\ $0.21,\6\ and
$0.24,\7\ per contract, respectively. The Exchange believes that the
proposed increase by the Exchange of $0.01 per contract from the
current fees paid by non-ISE market makers will still leave ISE as the
least expensive venue for executing FARMM orders.
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\5\ See CBOE Fees Schedule, dated March 1, 2006, at http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf
.
\6\ See Amex Price List, dated March 15, 2006, at http://www.amex.com/atamex/constitutionRules/at_feeSched.pdf
.
\7\ See Phlx Fee Schedule, dated February 2006, at http://www.phlx.com/exchange/memservices/feesched.pdf
.
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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 \8\ in that it provides for the
equitable allocation of reasonable dues, fees and other charges among
the ISE's members and other persons using its facilities.
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\8\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
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 proposed rule change has been designated as a fee
change pursuant to section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(2) thereunder,\10\ because it establishes or changes a due, fee or
other charge imposed by the Exchange. Accordingly, the proposal will
take effect upon filing with the Commission. At any time within 60 days
of the filing of the 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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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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-2006-18 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-2006-18. 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
[[Page 19920]]
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-2006-18 and should be submitted on or before May 9,
2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-5708 Filed 4-17-06; 8:45 am]
BILLING CODE 8010-01-P