[Federal Register Volume 66, Number 63 (Monday, April 2, 2001)]
[Notices]
[Page 17590]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8027]



[[Page 17590]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44102; File No. SR-ISE-01-06]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the International Securities 
Exchange LLC, Relating to Adoption of a Marketing Fee

March 26, 2001.
    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 February 26, 2001, the International Securities Exchange LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange Commission the proposed rule change as described in Items I, 
II, and III below, which items have been prepared by the ISE. 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.
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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 establish a fee to fund Exchange marketing 
and business development efforts, and to reduce the payment for order 
flow fee by an amount equal to the new fee.

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 ISE operates a payment for order flow program as approved by 
the Commission.\3\ This program is funded through a $.75 fee that ISE 
market makers pay on each customer contract they execute.\4\ According 
to the terms of the ISE's program, the payment for order flow funds may 
be used by the ISE's primary market makers (``PMMs'') only to pay 
Electronic Access Members for order flow sent to the Exchange. The ISE 
administers the disbursement of these funds as instructed by the PMMs. 
By the terms of the program, however, the ISE may not itself utilize 
these funds.
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    \3\ See Securities Exchange Act Release No. 43833 (January 10, 
2001), 66 FR 7822 (January 25, 2001) (SR-ISE-00-10).
    \4\ See Securities Exchange Act Release No. 43919 (February 1, 
2001), 66 FR 9612 (February 8, 2001) (SR-ISE-01-01).
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    The ISE proposes to reduce the $.75 fee to $.65 per contract and to 
adopt a marketing fee of $.10 to be paid by market makers for each 
customer contract they execute. The purpose of this proposed rule 
change is to provide the ISE with a source of funding for marketing 
efforts aimed at increasing order flow from Electronic Access Members 
to the Exchange, while not increasing the total fees that ISE market 
makers pay. The ISE would not use these funds to make cash payments for 
order flow. Rather, the ISE would use the money for general marketing 
and business development activities that would supplement the PMM's 
efforts to attract order flow to the ISE.
2. Basis
    The basis for the proposed rule change is the requirement under 
Section 6(b)(4) of the Act \5\ 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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    \5\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The ISE believes that 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 ISE has not solicited, and does not intend to solicit, comments 
on this proposed rule change. The ISE 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 rule change, which establishes or changes a due, fee, 
or other charge applicable to members of the Exchange, has become 
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-
4(f)(2) thereunder.\7\ At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate the 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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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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. 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 Room. Copies of the filing will also be 
available for inspection and copying at the principal office of the 
ISE. All submissions should refer to SR-ISE-01-06 and should be 
submitted by April 23, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-8027 Filed 3-30-01; 8:45 am]
BILLING CODE 8010-01-M