[Federal Register: December 30, 2002 (Volume 67, Number 250)]
[Notices]
[Page 79673-79674]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30de02-127]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47075; File No. SR-ISE-2002-29]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by International Securities
Exchange, Inc., Relating to Fee Changes
December 20, 2002.
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 December 16, 2002, 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 self-regulatory organization. On December 20, 2002, the Exchange
submitted Amendment No. 1 to the proposal.\3\ 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\ See letter from Michael J. Simon, Senior Vice President and
General Counsel, ISE, to Nancy J. Sanow, Assistant Direction,
Division of Market Regulation, Commission, dated December 20, 2002
(``Amendment No. 1''). In Amendment No. 1, the Exchange amended the
schedule of fees to list the specific ETFs based on indexes
developed by the Frank Russell Company that ISE either has listed or
have been allocated to a Primary Market Maker and will soon be
listed for trading. The Exchange also clarified the fee schedule by
stating that public customer orders are exempted from the proposed
fee. The Commission notes that this is consistent with the manner in
which the fee has been imposed with respect to options on the Nasdaq
100 Index Tracking Stock and the Nasdaq Biotechnology Index, and
represents only a change in terminology.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to establish a $.10 surcharge for non-
Public Customer transactions in options on certain exchange traded
funds (``ETFs'') based on indexes developed by the Frank Russell
Company (``Russell'').
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
purpose of this proposed rule change is to adopt a fee for trading in
five of these options that the ISE either has listed or have been
allocated to a Primary Market Maker and will soon be listed for
trading.\4\ The ISE 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 customer transactions, we do not propose to charge
this additional fee with respect to customer transactions.
Specifically, Public Customer Orders will be exempted from the proposed
surcharge.\5\
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\4\ The proposed fee will apply to options on the following
ETFs: Russell 2000 iShares, Russell 2000 Value iShares, Russell 2000
Growth iShares, Russell 1000 Growth iShares, and Russell 1000 Value
iShares.
\5\ Under ISE 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 fee. All other orders, i.e., orders
for the account of a broker-dealer, will be subject to the proposed
fee.
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This fee would be charged to the executing member of the ISE if the
order is for the account of a broker-dealer. For example, if broker A
has a Public Customer Order that broker A gives to broker B (an ISE
electronic access member) to execute on the ISE, broker B will not be
charged the proposed $.10 fee. On the other hand, if broker A gives
broker B (an ISE electronic access
[[Page 79674]]
member) an order for the account of broker A (or another broker-
dealer), broker B will be charged the $.10 fee.
2. 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\
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\6\ 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
The foregoing amended rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(2)\8\ thereunder.
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.
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 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. 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
ISE. All submissions should refer to File No. SR-ISE-2002-29 and should
be submitted by January 21, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-32917 Filed 12-27-02; 8:45 am]
BILLING CODE 8010-01-P