[Federal Register Volume 67, Number 139 (Friday, July 19, 2002)]
[Notices]
[Pages 47587-47588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18222]



[[Page 47587]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46189; File No. SR-ISE-2002-16]


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

July 11, 2002.
    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 June 17, 2002, the International Securities Exchange, Inc. 
(``ISE'') filed with the Securities and Exchange 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 five fee changes: (1) Suspending its marketing 
fee for six months; (2) imposing a $.10 surcharge for non-customer 
transactions in options on the iShares S&P 100 Index Fund; (3) adopting 
a fee for members who connect to the ISE through a high-bandwidth T-3 
line; (4) discounting the fees for multiple connections to the ISE 
Order Routing System (``IORS''); and (5) imposing a ``cancellation 
fee.'' The text of the rule amendment 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 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 the proposed rule change is to adopt the following 
five ISE fee changes:
     Marketing Fee: The ISE currently imposes a $.10 fee to 
fund marketing efforts. There currently is sufficient money in the 
marketing fund to finance these efforts for the foreseeable future. 
Thus, the ISE proposes suspending that fee for six months beginning 
July 1, 2002.
     Licensing Fee: The ISE proposes to adopt a $.10 surcharge 
on non-customer transactions in options on the iShares S&P 100 Index 
Fund. The ISE has entered into a license agreement to use various 
trademarks regarding this index, and this proposed rule change will 
defray the licensing costs. We also propose to correct the name of the 
Nasdaq Biotechnology Index exchange-traded fund in the fee schedule.
     T-3 Connection Fee: ISE Members currently connect to the 
ISE through either a T-1 line or lines with smaller capacities. Some 
members now are requesting to connect through a T-3 line, providing 
very high capacity. The ISE proposes a connectivity charge of $1,250 a 
month per T-3 line to recover its costs in providing this level of 
connectivity.
     Multiple IORS Discount: IORS is the ISE order routing 
system. While most Members have only one IORS connection, some members 
maintain separate connections for each clearing relationship. We 
propose to discount multiple IORS connections to reflect the reduced 
costs on the ISE for supporting such members.
     Cancellation Fee: There are a number of Electronic Access 
Members (``EAMs'') who use a disproportionate amount of communication 
bandwidth by canceling orders immediately following the entry of the 
orders. These order/cancellation messages often happen in large 
numbers, and can cause congestion in IORS. The ISE proposes to impose 
on each EAM an order cancellation fee of $1 for every cancellation 
through IORS in excess of the number of orders that the EAM executes in 
a month. The fee would not apply to any EAM that cancels fewer than 500 
orders through IORS in a month. The ISE believes that this will ease 
congestion in IORS and will fairly allocate costs.\3\
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    \3\ The cancellation fee is similar to fees adopted by the 
Chicago Board Options Exchange, Inc., the American Stock Exchange, 
Inc., and the Pacific Exchange, Inc. See Securities Exchange Act 
Release No. 44607 (July 27, 2001), 66 FR 40757 (August 3, 2001) (SR-
CBOE-2001-40); Securities Exchange Act Release No. 45110 (November 
27, 2001) 66 FR 63080 (December 4, 2001) (SR-Amex-2001-90); and 
Securities Exchange Act Release No. 45262 (January 9, 2002), 67 FR 
2266 (January 16, 2002) (SR-PCX-2001-47).
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2. Basis
    The basis for this proposed rule change is the requirement under 
Section 6(b)(4) of the Act \4\ 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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    \4\ 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 establishes or changes a due, fee, or 
other ISE charge and therefore has become effective pursuant to Section 
19(b)(3)(A) of the Act \5\ and Rule 19b-4(f)(2) thereunder.\6\ 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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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 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

[[Page 47588]]

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-2002-16 and should be submitted by 
August 9, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-18222 Filed 7-18-02; 8:45 am]
BILLING CODE 8010-01-P