[Federal Register Volume 68, Number 21 (Friday, January 31, 2003)]
[Notices]
[Pages 5066-5067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-2258]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47243; File No. SR-ISE-2003-01]


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

January 24, 2003.
    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 January 9, 2003, the International Securities Exchange, Inc. 
(``Exchange'' or ``ISE'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in items I, II, and III below, which items have been prepared 
by the self-regulatory organization. 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 Exchange is proposing to establish a $.10 surcharge for non-
public customer transactions \3\ in options on Select Sector SPDR 
Funds.
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    \3\ Telephone conversation between Joseph W. Ferraro, Assistant 
General Counsel, ISE, and Jennifer Colihan, Special Counsel, 
Division of Market Regulation (``Division''), Commission, January 
16, 2003.
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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.

[[Page 5067]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange has entered into a license agreement to use various 
indexes and trademarks of Standard & Poor's, a division of The McGraw-
Hill Companies, Inc. (``S&P''), in connection with the listing and 
trading of options on certain Select Sector SPDR Funds. The purpose of 
this proposed rule change is to adopt a fee for trading in three of 
these options that the Exchange has listed.\4\ The ISE believes that 
charging the participants that trade in options on these instruments is 
the most equitable means of recovering the costs of the license. 
However, because competitive pressures in the industry have resulted in 
the waiver of all transaction fees for customers, we propose to exclude 
Public Customer Orders (as defined in Exchange Rule 100) from this 
additional fee. This additional fee will only be charged with respect 
to non-Public Customer Orders.
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    \4\ The proposed fee will apply to options on the Financial 
Select Sector SPDR Fund (``XLF''), Technology Select Sector SPDR 
Fund (``XLK'') and Utilities Select Sector SPDR Fund (``XLU''). 
Telephone conversation between Joseph W. Ferraro, Assistant General 
Counsel, ISE, and Jennifer Colihan, Special Counsel, Division, 
Commission, January 16, 2003.
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    For example, if broker A has a Public Customer Order that broker A 
gives to broker B (an ISE electronic access member) to execute on the 
ISE, broker B will not be charged the proposed $.10 fee. On the other 
hand, if broker A gives broker B (an ISE electronic access member) an 
order for the account of broker A (or another broker-dealer), broker B 
will be charged the $.10 fee.\5\
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    \5\ Telephone conversation between Joseph W. Ferraro, Assistant 
General Counsel, ISE, and Jennifer Colihan, Special Counsel, 
Division, Commission, January 16, 2003.
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under section 6(b)(4) of the Act that an exchange have an 
equitable allocation of reasonable dues, fees and other charges among 
its members and other persons using its facilities.\6\
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    \6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    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 Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange 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 charge and, therefore, has become effective immediately pursuant 
to section 19(b)(3)(A)(ii) of the Act \7\ and rule 19b-4(f)(2) 
thereunder.\8\ At any time within 60 days of the filing of such 
proposed rule change, the Commission may summarily abrogate such 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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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 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 the 
Commission's Public Reference Section. Copies of such filing will also 
be available for inspection and copying at the principal office of the 
above-mentioned self-regulatory organization. All submissions should 
refer to the file number in the caption above and should be submitted 
by February 21, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-2258 Filed 1-30-03; 8:45 am]
BILLING CODE 8010-01-P