[Federal Register: March 28, 2003 (Volume 68, Number 60)]
[Notices]
[Page 15256-15257]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28mr03-113]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47564; File No. SR-ISE-2003-13]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by International Securities
Exchange, Inc., Relating to Fee Changes
March 24, 2003.
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 March 13, 2003, the International Securities Exchange, Inc.
(``Exchange'' or ``ISE'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in items I, II, and III below, which items have been prepared
by the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to add to the list of options on Select
Sector SPDR Funds and exchange traded funds (``ETFs'') based on indexes
developed by the Frank Russell Company (``Russell'') that will be
subject to the $.10 surcharge for non-public customer transactions on
the Exchange's Schedule of Fees. The text of the proposed rule change
is available from the Office of the Secretary of the ISE or the
Commission.
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 Exchange 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 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 has entered into a license agreement to use various
indexes and trademarks of Russell in connection with the listing and
trading of options on certain ETFs based on Russell indexes. The
Exchange has entered into a license agreement to use various indexes
and trademarks of Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. (``S&P''), in connection with the listing and trading
of options on certain Select Sector SPDR Funds. The purpose of this
proposed rule change is to add to the list of options on Select Sector
SPDR Funds and ETFs based on indexes developed by Russell that will be
subject to the $.10 surcharge fee for non-public customer transactions
on the Exchange's Schedule of Fees. The Exchange's Schedule of Fees
currently lists seven (7) Select Sector SPDR Funds and ten (10)
exchange-traded funds based on indexes developed by Russell that are
subject to the surcharge.\3\ The Exchange is proposing to add options
on two (2) more Select Sector SPDR Funds and two (2) more exchange-
traded funds based on indexes developed by Russell that will be subject
to the surcharge.\4\ These additional options are listed in the
Schedule of Fees. The purpose of the fee for trading in these options
is to defray the licensing costs.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release Nos. 47075 (December 20,
2002), 67 FR 79673 (December 30, 2002) (SR-ISE-2002-29); 47243
(January 24, 2003), 68 FR 5066 (January 31, 2003) (SR-ISE-2003-01);
and 47536 (March 19, 2003) (SR-ISE-2003-12).
\4\ Pursuant to this proposed rule change, the proposed fee will
apply to options on the Energy Select Sector SPDR Fund, Consumer
Staples Select Sector SPDR Fund, Russell 1000 Index Fund iShares and
Russell 3000 Index Fund iShares.
---------------------------------------------------------------------------
The Exchange believes that charging the participants that trade in
options on these instruments is the most equitable means of recovering
the costs of the license. However, because competitive pressures in the
industry have resulted in the waiver of all transaction fees for
customers, we propose to exclude Public Customer Orders (as defined in
Exchange Rule 100) from this additional fee. This additional fee will
only be charged with respect to Non-Public Customer Orders.\5\
---------------------------------------------------------------------------
\5\ Under Exchange Rule 100, a ``Public Customer'' is a person
that is not a broker or dealer in securities, and a ``Public
Customer Order'' is an order for the account of a Public Customer.
Accordingly the execution of orders for the account of a ``non-
broker-dealer'' will not be subject to the proposed $.10 surcharge
fee. All other orders, i.e., orders for the account of a broker-
dealer, will be subject to the proposed $.10 surcharge fee.
Telephone call between Joseph Ferraro, Assistant General Counsel,
ISE, and Jennifer Colihan, Special Counsel, Division of Market
Regulation (``Division''), Commission, March 19, 2003.
---------------------------------------------------------------------------
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under section 6(b)(4) of the Act that an exchange have an
equitable allocation of reasonable dues, fees and other charges among
its members and other persons using its facilities.\6\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
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.
[[Page 15257]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change, which establishes or changes a due, fee
or other charge imposed by the Exchange, has become effective pursuant
to section 19(b)(3) of the Act \7\ and rule 19b-4(f)(2) \8\ thereunder.
At any time within 60 days of the filing of such 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 19b-4(f)(2).
---------------------------------------------------------------------------
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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
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 Section. Copies of such filing will also
be available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No. SR-ISE-2003-13 and
should be submitted by April 18, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-7397 Filed 3-27-03; 8:45 am]
BILLING CODE 8010-01-P