[Federal Register Volume 67, Number 208 (Monday, October 28, 2002)]
[Notices]
[Pages 65818-65819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27301]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46698; File No. SR-ISE-2002-22]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the International Securities Exchange, 
Inc. Relating to Pilot Fee Waivers

October 21, 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 October 3, 2002, the International Securities Exchange, Inc. 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the Exchange. The ISE filed an amendment to the proposed rule change 
on October 9, 2002.\3\ 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\ See letter from Michael J. Simon, Senior Vice President and 
General Counsel, ISE, to Nancy Sanow, Assistant Director, Division 
of Market Regulation, SEC, dated October 8, 2002, and attachment 
(``Amendment No. 1''). In Amendment No. 1, the ISE proposes to 
correct the rule text of the proposed rule change to clarify that 
the pilot period for the fee waivers would end on May 31, 2003.
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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 waive the following fees through May 31, 
2003: firm proprietary execution fees for trading in the ISE Block 
Mechanism; firm proprietary execution fees for all trades on options on 
the iShares S&P 100 Index Fund; and the $.10 licensing surcharge fee 
for all firm proprietary trades in options on the iShares S&P 100 Index 
Fund.

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 proposes to waive two firm proprietary fees for a 
pilot period expiring on May 31, 2003. Customer fees for these types of 
trades already are waived through June 30, 2003. The fees the ISE 
proposes to waive under this pilot program are:
    [sbull] Firm proprietary fees for all transactions executed in the 
ISE's Block Order Mechanism. This is functionality that the ISE has 
introduced into the market place to effect large trades of 50 or more 
contracts. The ISE's goal is to attract firm proprietary traders to use 
this new type of functionality.
    [sbull] Firm proprietary fees and licensing surcharges for all 
transactions in options on the iShares S&P 100 Index Fund, an exchange-
traded fund based on the S&P 100 Index. The ISE's intent is to make 
trading in this product more attractive, and more competitive with 
options on the S&P 100 Index.
    The ISE will continue to charge these fees to its members for 
trades by both ISE market makers and market makers on other exchanges. 
However, the ISE does not permit non-members to enter orders on the 
ISE, and thus does not impose these fees directly on non-members.
2. Statutory Basis
    The ISE believes that the basis for the 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 Exchange believes that the proposal does not impose any burden 
on competition 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

    Written comments were neither solicited nor received.

[[Page 65819]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 such filing will also be 
available for inspection and copying at the principal office of the 
ISE. All submissions should refer to file number SR-ISE-2002-22 and 
should be submitted by November 18, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-27301 Filed 10-25-02; 8:45 am]
BILLING CODE 8010-01-P