[Federal Register Volume 68, Number 58 (Wednesday, March 26, 2003)]
[Notices]
[Pages 14727-14728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7117]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47536; File No. SR-ISE-2003-12]


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

March 19, 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 March 12, 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 in options on certain Select Sector SPDR 
Funds and exchange traded funds based on indexes developed by the Frank 
Russell Company.

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 is proposing to add to the list of options of Select 
Sector SPDR Funds and exchange traded funds based on indexes developed 
by the Frank Russell Company that will be subject to the $.10 surcharge 
on the Exchange's Schedule of Fees. The Exchange's Schedule of Fees 
currently lists three (3) Select Sector SPDR Funds and five (5) 
exchange traded funds based on indexes developed by the Frank Russell 
Company that are subject to the surcharge.\3\ The Exchange is proposing 
to add options on four (4) more Select Sector SPDR Funds \4\ and five 
(5) more exchange traded funds based on the indexes developed by the 
Frank Russell Company \5\ that will be subject to the surcharge. These 
additional options are listed in the Schedule of Fees.
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    \3\ See Securities Exchange Act Release Nos. 47075 (December 20, 
2002), 67 FR 79673 (December 30, 2002)(SR-ISE-2002-29) and 47243 
(January 23, 2003), 68 FR 5066 (January 31, 2003)(SR-ISE-2003-01).
    \4\ Pursuant to this proposed rule change, the proposed fee will 
apply to options on the Health Care Select Sector SPDR Fund, 
Industrial Select Sector SPDR Fund, Consumer Discretionary Select 
SPDR Fund and Materials Select Sector SPDR Fund.
    \5\ Pursuant to this proposed rule change, the proposed fee will 
apply to options on the following exchange traded funds: Russell 
Midcap Index Fund iShares, Russell 3000 Value Index Fund iShares, 
Russell 3000 Growth Index Fund iShares, Russell Midcap Growth Index 
Fund iShares, and Russell Midcap Value Index Fund iShares.
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    The purpose of the fee for trading in these options is to defray 
the licensing costs. 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.\6\
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    \6\ Under Exchange Rule 100, a ``Public Customer'' is a person 
that is not a broker or dealer in securities, and a ``Public 
Customer Order'' is an order for the account of a Public Customer. 
Accordingly, the execution of orders for the account of a ``non-
broker-dealer'' will not be subject to the proposed $.10 surcharge 
fee. All other orders, i.e., orders for the account of a broker-
dealer, will be subject to the proposed $.10 surcharge fee. 
Telephone conversation between Joseph Ferraro, Assistant General 
Counsel, ISE, and Jennifer Colihan, Special Counsel, Division of 
Market Regulation, Commission, on March 18, 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.\7\
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    \7\ 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

[[Page 14728]]

and, therefore, has become effective immediately pursuant to Section 
19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-4(f)(2) thereunder.\9\ 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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 
ISE. All submissions should refer File No. SR-ISE-2003-12 and should be 
submitted by April 16, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-7117 Filed 3-25-03; 8:45 am]
BILLING CODE 8010-01-P