[Federal Register: September 15, 2006 (Volume 71, Number 179)]
[Notices]
[Page 54546-54547]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15se06-91]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54414; File No. SR-ISE-2006-49]
Self-Regulatory Organizations; International Securities
Exchange, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change Relating to Fee Changes
September 7, 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 August 29, 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 filed the proposed rule change 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 \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)(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 is proposing to amend its Schedule of Fees to establish
fees for transactions in options on 5 Premium Products.\5\ The text of
the proposed rule change is available on the Exchange's Internet Web
site (http://www.iseoptions.com), at the principal office of the ISE,
and at the Commission's Public Reference Room.
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\5\ The term ``Premium Products'' is defined in the Schedule of
Fees as the products enumerated therein.
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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 the following 5 Premium
Products: iShares S&P SmallCap 600 Value Index Fund (``IJS''), iShares
Russell 1000 Growth Index Fund (``IWF''), iShares Russell MidCap Growth
Index Fund (``IWP''), iShares Russell MidCap Value Index Fund
(``IWS''), and iShares Russell 3000 Index Fund (``IWV'').\6\
Specifically, the Exchange is proposing to adopt an execution fee and a
comparison fee for all transactions in options on IJS, IWF, IWP, IWS
and IWV.\7\ The amount of the execution fee and comparison fee for
products covered by this filing shall be $0.15 and $0.03 per contract,
respectively, for all Public Customer Orders \8\ and Firm Proprietary
orders. The amount of the execution fee and comparison fee for all ISE
Market Maker transactions shall be equal to the execution fee and
comparison fee currently charged by the Exchange for ISE Market Maker
transactions in equity options.\9\ Finally, the amount of the execution
fee and comparison fee for all Non-ISE Market Maker transactions shall
be $0.16 and $0.03 per contract, respectively. All of the applicable
fees covered by this filing are identical to fees charged by the
Exchange for all other Premium Products. 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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\6\ IJS, IWF, IWP, IWS and IWV constitute ``Fund Shares,'' as
defined by ISE Rule 502(h).
\7\ These fees will be charged only to Exchange members. Under a
pilot program that is set to expire on July 31, 2007, these fees
will also be charged to Linkage Orders (as defined in ISE Rule
1900). See Securities Exchange Release No. 54204 (July 25, 2006), 71
FR 43548 (August 1, 2006).
\8\ 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.
\9\ 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.
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The Exchange has entered into a license agreement with Standard &
Poor's and the Frank Russell Company in connection with the listing and
trading of options on IJS and IWF, IWP, IWS and IWV, respectively. As
with certain other licensed options, the Exchange is adopting a fee of
$0.10 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 from this surcharge
fee. Accordingly, this surcharge fee would be charged only to Exchange
members with respect to Non-Public Customer Orders (e.g., ISE Market
Maker, Non-ISE Market Maker & Firm Proprietary orders) and would apply
to Linkage Orders \10\ under a pilot program that is set to expire on
July 31, 2007. Further, since options on IJS, IWF, IWP, IWS and IWV are
multiply-listed, the Payment for Order Flow fee would also apply.
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\10\ See supra note 7.
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2. Statutory Basis
The basis for the proposed rule change is the requirement under
Section 6(b)(4) of the Act \11\ 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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\11\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
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 proposed rule change establishes or changes a
due, fee, or other charge imposed by the Exchange, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(2) \13\ thereunder. At any time within 60 days of the filing of
the proposed rule change the Commission may summarily abrogate such
proposed rule change if it
[[Page 54547]]
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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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 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 No. SR-ISE-2006-49 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 No. SR-ISE-2006-49. 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 the filing
also will be available for inspection and copying at the principal
office of the Exchange. 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 No. SR-
ISE-2006-49 and should be submitted on or before October 6, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-15322 Filed 9-14-06; 8:45 am]
BILLING CODE 8010-01-P