[Federal Register: June 30, 2005 (Volume 70, Number 125)]
[Notices]
[Page 37878-37880]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jn05-127]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51902; File No. SR-ISE-2005-19]
Self-Regulatory Organizations; International Securities Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change and Amendment No. 1 Thereto Relating to Its Membership Dues Fee
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 15, 2005, the International Securities Exchange (``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
[[Page 37879]]
have been prepared by the Exchange. The proposed rule change has been
filed by ISE as establishing or changing a due, fee, or other charge,
pursuant to Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
\4\ thereunder, which renders the proposal effective upon filing with
the Commission. On June 15, 2005, the Exchange filed Amendment No. 1 to
the proposed rule change.\5\ The Commission is publishing this notice
to solicit comments on the proposed rule change, as amended, 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).
\5\ Amendment No. 1 made minor, non-substantive clarifying
changes to the purpose section and Exhibit 5. These changes to the
proposed rule change did not affect the fees originally proposed.
The effective date of the original proposed rule change is April 15,
2005, and the effective date of the amendment is June 15, 2005. For
purposes of calculating the 60-day period within which the
Commission may summarily abrogate the proposed rule change, as
amended, under Section 19(b)(3)(C) of the Act, the Commission
considers the period to commence on June 15, 2005, the date on which
the Exchange submitted Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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1. 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 (i) institute a
monthly percentage fee for computer gateways provided to members
instead of a flat fee, (ii) increase certain computer network fees to
cover associated equipment costs, and (iii) delete references to an
expired ``refresh'' program. The text of the proposed rule change is
available on the ISE's Web site (http://www.iseoptions.com), at the
ISE's Office of the Secretary, 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 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 amend the Exchange's
Schedule of Fees to (i) institute a monthly percentage fee for computer
gateways provided to members instead of a flat fee, (ii) increase
certain computer network fees to cover associated equipment costs, and
(iii) delete references to an expired ``refresh'' program.
Gateway Fees: The Exchange provides its members with
``gateway'' equipment which includes switches, servers and routers that
they use to connect to the ISE. The Exchange finances these gateways
through a lease with a vendor. The Exchange currently charges its
members a flat monthly fee for these gateways. If a member returns
these gateways to ISE early, ISE remains obligated under its lease with
the vendor, which results in additional cost to the Exchange. The
proposed fee schedule will enable ISE to increase the number of
different configurations of gateway equipment available to members. As
a result, members will not be able to obtain gateway equipment that
best suits their needs. Additionally, the proposed fee schedule will
also allow ISE to offset any increased cost that the Exchange may incur
in the event a member returns any gateway equipment early and to cover
the Exchange's administrative costs. Accordingly, ISE proposes charging
members a monthly fee of 4.75 percent of ISE's costs of leasing the
gateway equipment from its vendor.\6\ The Exchange believes that this
proposed change will enable it to maintain control over price
fluctuations, technology changes in equipment, and the costs associated
with early equipment returns. The Exchange also proposes to add a level
of granularity to its equipment installation, change, and removal fees.
Rather than applying the fees to cabinets generally, the Exchange
proposes to charge per piece of equipment. The Exchange expects the
proposed fee change to have minimal impact to its members. For example,
the monthly fee for member that currently leases 2 routers with 2 T-1
lines, 2 switches and 2 gateways will decrease by $29. Whereas, the
monthly fee for a member who leases the same configuration above but
with 4 gateways will increase by $86.\7\
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\6\ The commission notes that in Amendment No. 1, ISE added
language to Exhibit 5 to clarify that the 4.75% fee is based solely
on the cost of the specific equipment leased by such member.
\7\ These are just two examples of fees charged by the Exchange.
Members have many options in the gateway equipment they lease from
the Exchange based on their business model. The fee charged by the
Exchange is entirely dependent on the number and type of gateway
equipment leased by a member.
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Network Fees. The Exchange proposes to increase its line
connection charges for T-1 and T-3 lines to cover the cost of routers
that enable members to link with the Exchange and the Exchange to link
with its telecommunications provider. Until now, the Exchange had not
charged members a fee to cover the cost of these routers. Accordingly,
ISE proposes to change the T-1 line connection fee from $250 to $300,
and the T-3 line connection fee from $1,250 to $1,500. Additionally,
the Exchange proposes to extend the ``megabit fee'' charged to members
who connect via Ethernet to members who connect via all third-party
managed service providers.
Expired ``Refresh'' Program. The Exchange is deleting
references to an expired member ``refresh'' program. That program,
which was approved by the Commission on November 12, 2004,\8\ expired
on November 30, 2004.
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\8\ See Securities Exchange Act Release No. 50658 (November 12,
2004), 69 FR 67768 (November 19, 2004).
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2. Statutory basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Seciton 6(b)(4) of the Act,\10\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees, and
other charges among its members.
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\9\ 15 U.S.C. 78f(b).
\10\ 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.
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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change has become effective upon filing pursuant
to Section 19(b)(3)(A)(ii) of the Act \11\ and subparagraph (f)(2) of
Rule 19b-4 thereunder,\12\ because it establishes or changes a due,
fee, or other charge imposed by the ISE. At any time within 60 days of
the filing of the amended proposed rule change, the Commission may
summarily abrogate such rule
[[Page 37880]]
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.\13\
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\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 17 CFR 240.19b-4(f)(2).
\13\ See supra note 3.
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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, as amended, is consistent with the Act. Comments may be
sumitted 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-2005-19 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-ISE-2005-19. 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 Section, 100 F Street,
NE., Washington, DC 20549. Copies of the filing also will be available
for inspection and copying at the principal offices 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-2005-19 and should be
submitted on or before July 21, 2005.
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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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 05-12886 Filed 6-29-05; 8:45 am]
BILLING CODE 8010-01-M