[Federal Register Volume 67, Number 89 (Wednesday, May 8, 2002)]
[Notices]
[Pages 30988-30989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11339]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45857; File No. SR-ISE-2002-12]


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

May 1, 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 April 23, 2002, the International Securities Exchange LLC (``ISE'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
the ISE has prepared. 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 clarify the manner in which the ceiling on 
its payment-for-order-flow program will operate. The ceiling for each 
fund is set at $650,000. The payment for order flow fee would be 
suspended for a group of options when the fund balance for the group 
exceeds $650,000, but would be reinstated when any such fund balance 
falls below $650,000. The text of the proposed rule change is available 
at the ISE and at 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 ISE included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it had 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

    The purpose of the proposed rule change is to clarify the manner in 
which the ceiling on the ISE's payment for order flow program will 
operate. In SR-ISE-2002-09,\3\ the ISE lowered the ceiling from 
$750,000 to $650,000 for each of the ten payment-for-order-flow funds 
that it maintains.\4\ The ISE did not specify in that filing that the 
fee would be reinstated if a fund balance falls below the ceiling. This 
proposed rule change provides that clarification.
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    \3\ See Securities Exchange Act Release No. 45772 (April 17, 
2002), 67 FR 20563 (April 25, 2002). See also Securities Exchange 
Act Release No. 45128 (December 4, 2001), 66 FR 64325 (December 12, 
2001) (establishing the original $750,000 ceiling).
    \4\ Under ISE Rule 802(b), the ISE has divided the options it 
trades into ten groups, with one Primary Market Maker assigned to 
each group. The ISE maintains a payment-for-order-flow fund for each 
group, consisting of the fees collected from market makers trading 
options in that group. The Primary Market Maker for the group is 
responsible for arranging and making all payments to Electronic 
Access Members for order flow sent to the ISE in options in that 
group.
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    The basis for this 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 proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(2) \7\ because it changes 
an ISE fee. At any time within 60 days after 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 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

[[Page 30989]]

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 ISE-2002-12 and should be 
submitted by May 29, 2002.

    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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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 02-11339 Filed 5-7-02; 8:45 am]
BILLING CODE 8010-01-P