[Federal Register Volume 69, Number 57 (Wednesday, March 24, 2004)]
[Notices]
[Pages 13925-13927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6593]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49442; File No. SR-ISE-2004-05]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the International Securities Exchange, Inc., Relating to 
Customized Market Data Reports (``ISEMine'')

March 17, 2004.
    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 March 4, 2004, the International Securities Exchange, Inc. 
(``ISE'' or ``Exchange'')

[[Page 13926]]

filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the Exchange. 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 proposes to amend its Schedule of Fees to establish fees 
for preparing customized market data reports for both members and non-
members. 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 Exchange included statements 
concerning the purpose of and basis for its proposal and discussed any 
comments it received regarding the proposal. 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 establish fees in connection with the 
preparation of customized market data reports for both members and non-
members. The Exchange maintains databases that contain information 
relating to option contracts traded on the Exchange. This information 
is of interest to Exchange members and non-members (including 
academics) who seek statistical information on the options markets. 
Accordingly, the Exchange is proposing to provide members and non-
members with the ability to ``mine'' this data through the use of 
customized market data reports. The Exchange refers to this service as 
``ISEmine.''
    The ISE is proposing to provide both an initial quarterly report 
and updates to those reports. The information included in the report 
will be ``data points'' selected by the subscriber. Data points consist 
of information based on ``sentiment data'' the ISE uses to calculate 
its ISE Sentiment Index and consists of aggregate cleared volume data, 
such as opening to buy, opening to sell, close to buy, close to sell. 
The ISE tracks this data through the information its members provide 
when opening and closing positions. ISEmine is a voluntary, optional 
service provided by the Exchange, meaning members and non-members are 
neither required nor otherwise obligated to purchase this service. 
Neither the data mined nor the reports produced will disclose the 
identity of any parties to any option contracts traded on the Exchange.
    An ISEmine initial report will be a single file consisting of all 
requested data for a calendar quarter. After receiving such a report, a 
subscriber can request updates to the data contained in that report as 
frequently as it desires, such as quarterly, monthly, weekly or even 
daily. The ISE will not provide data more often than a daily basis. 
Accordingly, all ISEmine reports will consist of ``historical'' data 
that will not reflect current transactions in the market; rather, all 
ISEmine reports will be historical records of transactions from earlier 
that day or from previous days. This data service thus will not be 
competitive with real-time market data services a subscriber can 
receive through the Options Price Reporting Authority.
    The Exchange is proposing fees for the use of ISEmine. Since the 
reports are customizable, the amount of the fee in each particular 
instance will be based on the number of data points selected by user, 
with the fees increasing depending on the number of data points 
included in the report. The fee for an initial report that includes 
data for a calendar quarter varies from $5,000 to $11,000, depending on 
the number of data points. For updates of such reports, the price 
varies from $7,500 to $12,000 per calendar quarter, again depending on 
the number of data points. The higher charge for updates reflects the 
fact that the initial report is provided on a one-time basis, while 
subscribers can receive multiple updates during the quarter, as often 
as daily.
    The ISE has structured these fees to recover, in part, the costs of 
collecting, storing, extracting and processing this market data. The 
preparation of these reports will require significant programming 
efforts at the ISE to prepare these customized reports. Moreover, the 
updated reports will require a continuing processing effort by the ISE. 
The Exchange also is proposing to discount all stated fees by 25 
percent for Exchange members. This discount recognizes that Exchange 
members pay transaction fees when trading on the exchange and it is the 
data from these transactions that forms the database from which the ISE 
prepares the ISEmine reports. Thus, the ISE believes that charging 
members the full fee would partially charge them twice for the same 
data. The ISE believes that the 25 percent discount properly avoids the 
double-charging issue. However, both members and non-members would pay 
the ISE's costs of shipping and handling the reports on a non-
discounted basis.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the Act in general, and Section 6(b)(5) \3\ in particular. The 
proposed rule change establishes fees for a voluntary, optional service 
provided by the Exchange. Neither members nor non-members are required 
to purchase this service. The service is intended to provide interested 
parties with statistical information about options transactions on the 
Exchange, thus providing an opportunity for greater transparency of 
options market information.
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    \3\ 15 U.S.C. 78(f)(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 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

    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 ISE consents, the Commission will:
    (A) by order approve the 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

[[Page 13927]]

arguments concerning the foregoing, including whether the proposal 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. Comments 
may also be submitted electronically at the following e-mail address: 
[email protected]. All comment letters should refer to File No. SR-
ISE-2004-05. This file number should be included on the subject line if 
e-mail is used. To help the Commission process and review comments more 
efficiently, comments should be sent in hardcopy or by e-mail but not 
by both methods. 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 at the Commission's Public Reference Room. Copies of such 
filings will also be available for inspection and copying at the 
principal office of the Exchange. All submissions should refer to File 
No. SR-ISE-2004-05 and should be submitted by April 14, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-6593 Filed 3-23-04; 8:45 am]
BILLING CODE 8010-01-P