[Federal Register Volume 69, Number 105 (Tuesday, June 1, 2004)]
[Notices]
[Pages 30970-30971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12254]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49755; File No. SR-ISE-2004-12]


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

May 21, 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 April 27, 2004, 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 amend its Schedule of Fees to adopt a 
$.10 per contract surcharge for certain transactions excluding Public 
Customer Orders in options on exchange traded funds (``ETFs'') based on 
certain licensed indexes.

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 amend its Schedule of Fees to adopt a 
$.10 per contract surcharge for certain transactions in options on 
exchange traded funds based on (i) four indexes developed by Lehman 
Brothers Inc. including the Lehman Brothers 1-3 year Treasury Bond 
Index, the Lehman Brothers 7-10 year Treasury Bond Index, the Lehman 
Brothers 20+ year Treasury Bond Index and the Lehman Brothers U.S. 
Aggregate Index (collectively, the ``Lehman Indexes'') and (ii) one 
index developed by Goldman, Sachs & Co., the GS $ InvesTopTM 
Index (the ``Goldman 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. This 
surcharge fee item excludes Public Customer Orders.\3\
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    \3\ 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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    The Exchange recently licensed the right to list options on ETFs 
based on the Lehman Indexes and the Goldman Index. In order to defray 
the licensing costs associated with listing these new products, the 
Exchange is proposing to add these new products to the surcharge fee 
item in the Exchange's Schedule of Fees. The Exchange believes that 
charging the participants that trade in options on these products is 
the most equitable means of recovering the costs of the licenses. 
Because competitive pressures in the industry have resulted in the 
waiver of all transaction fees for customers, the Exchange proposes to 
exclude Public Customer Orders from this surcharge fee. Accordingly, 
this surcharge fee will only be charged with respect to non-Public 
Customer Orders.
    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.\4\
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    \4\ Telephone conversation between Joseph W. Ferraro, Assistant 
General Counsel, ISE, and Ronesha A. Butler, Attorney, Division of 
Market Regulation, Commission, May 10, 2004.

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[[Page 30971]]

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.\5\
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    \5\ 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 \6\ and Rule 19b-4(f)(2) 
thereunder.\7\ 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-ISE-2004-12 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-ISE-2004-12. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-ISE-
2004-12 and should be submitted on or before June 22, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-12254 Filed 5-28-04; 8:45 am]
BILLING CODE 8010-01-P