[Federal Register Volume 69, Number 75 (Monday, April 19, 2004)]
[Notices]
[Pages 20955-20956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8774]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49557; File No. SR-ISE-2004-11]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the International Securities 
Exchange, Inc. To Amend Its Schedule of Fees To Adopt a $.10 Per 
Contract Surcharge for Certain Transactions in Options on Exchange 
Traded Funds Based on the S&P SmallCap 600 Index and the S&P MidCap 400 
Index

April 12, 2004.
    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 April 5, 2004, the International Securities Exchange, Inc. (``ISE'' 
or ``Exchange'') 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 
proposed rule change has been filed by the ISE as establishing or 
changing a due, fee, or other charge, pursuant to Section 
19(b)(3)(A)(ii) \3\ of the Act and Rule 19b-4(f)(2) \4\ thereunder, 
which renders the proposal effective upon filing with the Commission. 
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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Schedule of Fees to adopt a $.10 
per contract surcharge for certain transactions in options on exchange 
traded funds based on the S&P SmallCap 600 Index and the S&P MidCap 400 
Index. 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 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 Exchange is proposing to amend its Schedule of Fees to adopt a 
$.10 per contract surcharge for certain transactions in options on 
exchange traded funds based on the S&P SmallCap 600 Index and the S&P 
MidCap 400 Index. The Exchange's Schedule of Fees currently has in 
place a surcharge fee item that calls for a $.10 per contract fee for 
transactions in certain licensed products. That surcharge fee item 
excludes Public Customer Orders.\5\ The Exchange recently licensed the 
right to list options on exchange traded funds based on the S&P 
SmallCap 600 Index and the S&P MidCap 400 Index. In order to defray the 
licensing costs associated with listing these two new products, the 
Exchange is proposing to add these two new products to the surcharge 
fee item. The Exchange believes that charging participants who trade in 
options on these products is the most equitable means of recovering the 
costs of the license. The Exchange proposes to exclude Public Customer 
Orders from this surcharge fee, because the Exchange believes that 
competitive pressures in the industry have resulted in the waiver of 
all transaction fees for customers. Accordingly, this surcharge fee 
will be charged only with respect to non-Public Customer Orders.
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    \5\ Public Customer Order is defined in Exchange Rule 100(a)(33) 
as an order for the account of a Public Customer. Public Customer is 
defined in Exchange Rule 100(a)(32) as a person that is not a broker 
or dealer in securities.

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[[Page 20956]]

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the provisions of Section 6(b) of the Act,\6\ in general, and Section 
6(b)(4) of the Act,\7\ in particular, in that it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
Exchange members.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 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 proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-4(f)(2) \9\ 
thereunder, because it changes a fee imposed by the Exchange. At any 
time within 60 days of the filing of the 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. 78(s)(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-ISE-2004-11. 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 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 No. SR-ISE-2004-11 and should be 
submitted by May 10, 2004.

    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. 04-8774 Filed 4-16-04; 8:45 am]
BILLING CODE 8010-01-P