[Federal Register Volume 69, Number 218 (Friday, November 12, 2004)]
[Notices]
[Pages 65481-65488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3152]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50641; File No. SR-ISE-2004-29]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by International Securities Exchange, Inc., Relating to 
Proposed Amendments to Its Certificate of Incorporation and 
Constitution

November 5, 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 October 22, 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 Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend its Certificate of Incorporation 
and Constitution (also serving as the ``Exchange's bylaws'') in 
connection with its initial public offering (``IPO''). The proposed 
amendments, if approved, will become effective concurrently with the 
closing of the IPO. The proposed rule changes, including the proposed 
Amended and Restated Certificate of Incorporation (``Amended 
Certificate'') and the proposed Amended and Restated Constitution 
(``Amended Constitution''), collectively referred to herein as the 
``proposed rule change,'' are available for viewing on the Commission's 
Web site, http://www.sec.gov/rules/sro.shtml, and at ISE and 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, 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 proposes to amend its Certificate of Incorporation and 
Constitution in connection with its contemplated IPO of the Class A 
common stock, par value $.01 per share (the ``Class A Common Stock''), 
of the Exchange.\3\ The proposed amendments, if approved, will become 
effective concurrently with the IPO.\4\
---------------------------------------------------------------------------

    \3\ Separately, the Exchange is also contemplating a 
reorganization into a holding company structure, the completion of 
which is contingent upon receipt of a favorable tax ruling from the 
Internal Revenue Service and Commission approval. The Exchange will 
separately file a rule change seeking approval of that 
reorganization. The Exchange currently anticipates that the 
reorganization will occur sometime following the IPO.
    \4\ In connection with the proposed IPO, the Exchange filed a 
registration statement on Form S-1 with the Commission on July 2, 
2004 (File No. 333-117145) (as amended from time to time, the 
``Registration Statement'').
---------------------------------------------------------------------------

    Following the IPO, the Exchange will continue to operate as a 
registered ``national securities exchange'' under Section 6 of the 
Act,\5\ and will maintain its current regulatory authority over its 
members. All persons using the Exchange will continue to be subject to 
the Exchange's rules. The Exchange will continue to interpret its rules 
to require that any revenues it receives from regulatory fees or 
regulatory penalties will be segregated and applied to fund the legal, 
regulatory and surveillance operations of the Exchange and will not be 
used to pay dividends to the holders of Class A Common Stock.\6\ Many 
of the proposed changes to the Certificate of Incorporation and 
Constitution are intended to ensure that the IPO of the Exchange will 
not unduly interfere with or restrict the ability of the Exchange or

[[Page 65482]]

the Commission to effectively carry out their respective regulatory 
oversight responsibilities under the Act and generally to enable the 
Exchange to operate in a manner that complies with the federal 
securities laws, including furthering the objectives of Section 6(b)(5) 
of the Act.\7\ However, some of the proposed changes to the Certificate 
of Incorporation and Constitution are intended to facilitate the IPO or 
otherwise relate to the Exchange's status as a public company following 
its IPO.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f.
    \6\ The Exchange adopted this interpretation in connection with 
its demutualization in 2002. See infra, note 8.
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Current Capital Stock and Board Structure \8\
---------------------------------------------------------------------------

    \8\ For a discussion of the Exchange's current capital and board 
structure, see Securities Exchange Act Release No. 45803 (April 23, 
2002), 67 FR 21306 (April 30, 2002) (approving the restructuring of 
the Exchange from a limited liability company to a corporation and 
the demutualization of the Exchange's equity and trading interests 
and rights).
---------------------------------------------------------------------------

    The Exchange currently has two classes of common stock, Class A 
Common Stock and Class B common stock, par value $.01 per share 
(``Class B Common Stock'').\9\ The Class A Common Stock has the 
traditional features of common stock, including voting, dividend and 
liquidation rights.\10\ Subject to certain limitations, holders of 
Class A Common Stock are entitled to vote on all matters submitted to 
stockholders for a vote.\11\
---------------------------------------------------------------------------

    \9\ Some owners of shares of Class A Common Stock also own 
shares of Class B Common Stock. For a list of principal stockholders 
and their ownership of Class A and Class B Common Stock, see the 
Registration Statement, ``Principal and Selling Stockholders.''
    \10\ The Amended Certificate will clarify that, as is currently 
the case, holders of shares of Class A Common Stock are entitled to 
all residual interests in the event of a liquidation, winding up or 
dissolution of the Exchange after payment of or provision for the 
obligations of the Exchange, any preferential amounts payable to 
holders of shares of preferred stock and amounts payable to the 
holders of any outstanding shares of Class B Common Stock.
    \11\ For the provisions relating to the Class A Common Stock, 
see Certificate of Incorporation, Article Fourth, Subdivision II(a). 
The holders of shares of Class A Common Stock are not entitled to 
vote with respect to the Core Rights (as defined in note 13, infra), 
the definition of ``Core Rights'', or the election of Industry 
Directors (as defined herein).
---------------------------------------------------------------------------

    The Exchange has three series of Class B Common Stock, each series 
representing certain trading rights and privileges and limited voting 
rights. Ownership of the Class B Common Stock, Series B-1 (``Series B-1 
Common Stock''), is a predicate to obtaining the trading rights and 
privileges associated with a Primary Market Maker.\12\ Ownership of the 
Class B Common Stock, Series B-2 (``Series B-2 Common Stock''), is a 
predicate to obtaining the trading rights and privileges associated 
with a Competitive Market Maker.\13\ Ownership of the Class B Common 
Stock, Series B-3 (the ``Series B-3 Common Stock''), is a predicate to 
obtaining the trading rights and privileges associated with an 
Electronic Access Member.\14\
---------------------------------------------------------------------------

    \12\ ``Primary Market Makers'' are market makers with 
significant responsibilities, including overseeing the opening of 
trading in their assigned options classes, providing continuous 
quotations in all of their assigned options classes, and handling 
customer orders that are not automatically executed. See Chapter 8 
of the Exchange Rules and the Registration Statement, ``Business,'' 
for a discussion of the role of Primary Market Makers on the 
Exchange.
    \13\ ``Competitive Market Makers'' are market makers that add 
depth and liquidity to the market and are required to provide 
continuous quotations in at least 60% of the options classes in 
their assigned group. See Chapter 8 of the Exchange Rules and the 
Registration Statement, ``Business,'' for a discussion of the role 
of Competitive Market Makers on the Exchange.
    \14\ ``Electronic Access Members'' are broker/dealers that 
represent agency and proprietary orders on the Exchange, and cannot 
enter quotations or otherwise engage in market making activities on 
the Exchange. See Chapter 8 of the Exchange Rules and the 
Registration Statement, ``Business,'' for a discussion of the role 
of Electronic Access Members on the Exchange.
---------------------------------------------------------------------------

    The holders of the Class B Common Stock are not entitled to receive 
dividends; rather, the holders of such stock are only entitled to 
receive an amount equal to the par value of each share of Class B 
Common Stock (i.e., $.01) held upon the liquidation, dissolution or 
winding up of the Exchange.\15\ Also, such holders are entitled to vote 
on the election of directors representing the applicable series of 
Class B Common Stock, with each series of Class B Common Stock being 
entitled to elect two directors to the Board.
---------------------------------------------------------------------------

    \15\ The Amended Certificate will clarify that, as is currently 
the case, such amount will be paid before any proceeds from the 
liquidation, dissolution or winding up of the Exchange are paid to 
the holders of Class A Common Stock.
---------------------------------------------------------------------------

    The owners of Series B-1 Common Stock and Series B-2 Common Stock 
are also entitled to vote on any change in, or amendment or 
modification to, the ``Core Rights'' \16\ or the definition of Core 
Rights. In such a case, the Exchange must obtain the approval of a 
majority of both the of Series B-1 Common Stock and the Series B-2 
Common Stock, each voting as a separate class with respect to such 
action.\17\
---------------------------------------------------------------------------

    \16\ ``Core Rights'' as defined in Article Fourth, Subdivision 
II(a)(i) of the Certificate of Incorporation means any ``increase in 
the number of authorized shares of the Series B-1 Stock or the 
Series B-2 Stock.''
    \17\ For the provisions relating to the Class B Common Stock, 
see Certificate of Incorporation, Article Fourth, Subdivision II(b). 
The Amended Certificate proposes to make certain technical 
amendments to clarify that, as is currently the case, neither the 
holders of Class A Common Stock nor the holders of Series B-3 Common 
Stock are entitled to vote on the Core Rights. Additionally, the 
vote required with respect to the Core Rights would be increased 
from a majority of the votes cast by each of the Series B-1 Stock 
and Series B-2 Stock to a majority of the then outstanding shares of 
each of the Series B-1 Stock and Series B-2 Stock. See Amended 
Certificate, Article Fourth, Subdivision II(a) and (b). Any increase 
or decrease in the overall number of authorized shares of Class B 
Common Stock would require approval of the holders of a majority of 
the outstanding shares of Class A Common Stock, voting as a separate 
class, and Series B-1 Stock and Series B-2 Stock, voting together as 
a separate class, any decrease in the number of authorized shares of 
Series B-1 Stock or Series B-2 Stock would require approval of the 
holders of a majority of the outstanding shares of Class A Common 
Stock, and any increase or decrease in the number of authorized 
shares of Series B-3 Stock would require approval of the holders of 
a majority of the outstanding shares of Class A Common Stock. The 
Exchange also may issue preferred stock in the future, the terms of 
which would be determined by the Board, subject to Commission 
approval. See Certificate of Incorporation, Article Fourth, 
Subdivision I.
    As agreed with ISE, the Commission staff made grammatical 
corrections and conformed the language in this footnote to the 
proposed rule text. Telephone conversation between Janet M. Kissane, 
Milbank, Tweed, Hadley & McCloy LLP, Counsel to ISE, and Jennifer C. 
Dodd, Attorney, Division of Market Regulation (``Division''), 
Commission on November 3, 2004.
---------------------------------------------------------------------------

    The Board consists of 15 members, eight of whom are elected by the 
holders of the Class A Common Stock (the ``Non-Industry 
Directors''),\18\ six of whom are elected by the holders of the Class B 
Common Stock (the ``Industry Directors'') \19\ and the Chief Executive 
Officer of the Exchange. In accordance with the current Certificate of 
Incorporation and Constitution of the Exchange, each director, other 
than the Chief Executive Officer, holds office for a term of two 
years.\20\ The Chief Executive Officer holds office for a term

[[Page 65483]]

of one year, or such earlier time as such person no longer serves as 
Chief Executive Officer. The directors, other than the Chief Executive 
Officer, are divided into two classes, designated as Class I and Class 
II directors.\21\ At each annual meeting of stockholders, the 
successors of the class of directors whose term expires at that meeting 
will be elected to hold office for a term expiring at the annual 
meeting of stockholders held in the second year following the year of 
their election, and until their successors are elected and qualified. 
Directors, other than the Chief Executive Officer, may not hold office 
for more than three consecutive terms.\22\
---------------------------------------------------------------------------

    \18\ Nominees for election to the Board to serve as Non-Industry 
Directors are currently made by the Exchange's Corporate Governance 
Committee, on which all of the Non-Industry Directors serve. 
Stockholders may also nominate Non-Industry Director candidates for 
election to the Board by petition. See Section 3.10 of the 
Constitution.
    \19\ Nominees for election to the Board to serve as Industry 
Directors are currently made by the Exchange's Nominating Committee, 
which is not a committee of the Board, and is comprised of 
representatives of the holders of each series of Class B Common 
Stock. Stockholders may also nominate Industry Director candidates 
for election to the Board by petition. See Section 3.10 of the 
Constitution.
    \20\ The Amended Certificate would clarify that the Board is 
authorized to fill any vacancies on the Board. See Article Fourth, 
Subdivision II(a)(i) and (b)(v)(A). The Amended Certificate would 
also provide that directors may only be removed for cause by the 
stockholders to the extent permitted under applicable law, and not 
by a vote of two-thirds of the directors as is currently the case. 
See Article Fifth, paragraph (b).
    As agreed with ISE, the Commission staff revised this footnote 
to differentiate between ISE's current and proposed rules. Telephone 
conversation between Janet M. Kissane, Milbank, Tweed, Hadley & 
McCloy LLP, Counsel to ISE, and Jennifer C. Dodd, Attorney, 
Division, Commission, on November 3, 2004.
    \21\ For a list of the Exchange's current directors and their 
respective classes, see Registration Statement, ``Management.'' As 
currently and prospectively constructed, each class will be composed 
of half of the Non-Industry Directors and half of each of the Series 
B-1, Series B-2 and Series B-3 directors.
    \22\ For the provisions relating to the Board, see Certificate 
of Incorporation, Article Fifth and Constitution, Section 3.2.
---------------------------------------------------------------------------

    In addition, the Exchange currently has a Finance & Audit 
Committee, a Corporate Governance Committee and a Compensation 
Committee, all of which are governed by charters.\23\
---------------------------------------------------------------------------

    \23\ For a discussion of these committees and their 
responsibilities, see Registration Statement, ``Management.'' The 
Board designated these committees pursuant to its authority under 
Section 5.1 of the Constitution, though the Corporate Governance and 
Compensation Committees are not specifically designated in the 
current Constitution itself.
---------------------------------------------------------------------------

Proposed Amendments to Certificate of Incorporation and Constitution
    The Exchange proposes to amend its current Certificate of 
Incorporation and Constitution to:
     Increase the number of authorized shares of Class A Common 
Stock from 5,000,000 to 150,000,000;
     Remove the term limits of the Non-Industry Directors;
     Adopt certain limitations on the ownership and voting of 
shares of Class A Common Stock and of Class B Common Stock;
     Require the Board to consider applicable requirements of 
the Act in managing the business and affairs of the Exchange;
     Clarify that the Exchange has a Corporate Governance 
Committee and Compensation Committee, and that these committees, as 
well as the Finance & Audit Committee of the Exchange, are governed by 
charters;
     Adopt certain antitakeover provisions, including with 
respect to the nomination of Non-Industry Directors by the holders of 
Class A Common Stock; and
     Reduce the vote of the holders of Class A Common Stock 
required to amend certain provisions of the Amended Constitution from 
two-thirds of the outstanding shares of Class A Common Stock to a 
majority of such shares.\24\
---------------------------------------------------------------------------

    \24\ The Exchange is also proposing to correct certain 
typographical and grammatical errors, eliminate outdated or 
irrelevant references and make certain immaterial changes to the 
Certificate of Incorporation and Constitution. Such changes include, 
among others, the flexibility to provide notice of Board meetings by 
several alternate means (see Section 3.6 of the Amended 
Constitution); the empowerment of the Board (instead of the Chief 
Executive Officer) to appoint and remove officers (see Sections 4.2 
and 4.3 of the Amended Constitution); the consolidation of the 
positions of Chief Executive Officer and President (see Section 4.1 
of the Amended Constitution); and the prohibition on ownership of 
shares of Class B Common Stock by officers of the Exchange (see 
Section 4.5 of the Amended Constitution).
---------------------------------------------------------------------------

(1) Increase in Number of Authorized Shares of Class A Common Stock
    The Exchange proposes that the number of authorized shares of Class 
A Common Stock be increased from 5,000,000 to 150,000,000.\25\ This 
increase will provide the Board with the flexibility to declare a stock 
dividend that, in the opinion of the underwriters of the IPO, will be 
sufficient to result in an appropriate market price per share of the 
Class A Common Stock. The increase in the number of authorized shares 
of Class A Common Stock will also provide shares: (1) To be offered in 
the IPO, as well as additional shares that can be used for future 
acquisitions that may be approved by the Board (and by Class A 
stockholders to the extent required by the rules of the marketplace for 
the shares of Class A Common Stock); and (2) to be used for stock 
options, stock purchase and other equity compensation plans that are 
approved by the Board (and by Class A stockholders to the extent 
required by the rules of the marketplace for the shares of Class A 
Common Stock).
---------------------------------------------------------------------------

    \25\ See Amended Certificate, Article Fourth.
---------------------------------------------------------------------------

(2) Change in the Term Limits of the Board
    In order to maintain continuity with respect to the Non-Industry 
Directors during the transition of the Exchange to a public company, 
the Exchange proposes that the three-term limit (a total of six years 
of service) currently in the Certificate of Incorporation and 
Constitution with respect to all directors, other than the Chief 
Executive Officer, be amended to apply only to Industry Directors.\26\ 
Currently, all Non-Industry Directors face term limits that would 
result in a total turn-over of such directors over a two-year period. 
The Exchange believes that removing term limits for Non-Industry 
Directors will allow the Board to continue to function with experienced 
Non-Industry Directors, thereby facilitating a smooth transition to a 
public company structure. Once it becomes a public company, the 
Exchange will address term limits for Non-Industry Directors through 
amendments to its Corporate Governance Principles.\27\
---------------------------------------------------------------------------

    \26\ See Amended Certificate, Article Fifth, and Amended 
Constitution, Section 3.2.
    \27\ Because the Exchange's Board believes it is important that 
following the Exchange's IPO there be a smooth transition from its 
original Non-Industry Directors to their successors, the Exchange's 
Board has adopted Corporate Governance Principles providing that it 
may be appropriate for up to four of the eight original Non-Industry 
Directors to serve one additional term. This would result in a 
transition to new Non-Industry Directors over a four-year period, 
rather than a two-year period. The Corporate Governance Committee 
will determine whether, and how, to provide for this phased 
transition.
---------------------------------------------------------------------------

(3) Ownership and Voting Limitations with Respect to the Exchange's 
Capital Stock \28\
(a) Ownership Limitations
    Under the proposed Amended Certificate, no ``Person'' \29\ either 
alone

[[Page 65484]]

or together with its ``Related Persons'' \30\ would be permitted to 
own, directly or indirectly, of record or beneficially,\31\ shares of 
capital stock (whether common or preferred stock) of the Exchange (1) 
constituting more than 40 percent of the then outstanding shares of any 
class or series of capital stock (the ``40 percent ownership 
limitation''); or (2) constituting more than 20 percent of the then-
outstanding shares of any class or series of capital stock if such 
holder is also a member of the Exchange (that is, a Primary Market 
Maker, Competitive Market Maker or Electronic Access Member) (the ``20 
percent member ownership limitation'').\32\
---------------------------------------------------------------------------

    \28\ The ISE noted that there was a typographical error 
appearing in Article Fourth, Subdivision III(c)(vii) of the Amended 
Certificate of Incorporation. The word ``prices'' should replace the 
word ``process'' in the definition of the term ``Market Price'' in 
the second paragraph of Article Fourth, Subdivision III(c)(vii) of 
the Amended Certificate. ISE agrees to correct this error in an 
amendment to the rule filing to be filed after ISE's stockholders 
have approved the proposed Amended Certificate. Telephone 
conversation between Janet M. Kissane, Milbank, Tweed, Hadley & 
McCloy LLP, Counsel to ISE, and Jennifer C. Dodd, Attorney, 
Division, Commission, on November 1, 2004.
    Currently, with the exception of certain exemptions for Founders 
(as defined in the Constitution), no holder of Class A Common Stock, 
together with any affiliate (as defined in the Constitution), shall 
vote or give any proxy in relation to a vote with respect to any 
shares owned in excess of 20 percent of the Class A Common Stock, 
and no holder of Class B Common Stock, together with any affiliate 
(as defined in the Constitution) may own more than 20 percent of 
Series B-1 Stock or Series B-2 Stock and no Member (as defined in 
the Constitution), together with any affiliate (as defined in the 
Constitution), may be approved to exercise trading rights associated 
with more than 20 percent of Series B-1 Stock or Series B-2 Stock. 
Certificate of Incorporation, Article Fourth, Subdivision II(a)(iv) 
and Constitution, Article XIV. See supra, note 8.
    As agreed with ISE, the Commission staff revised this footnote 
to clarify ISE's current ownership and voting limitations. Telephone 
conversation between Janet M. Kissane, Milbank, Tweed, Hadley & 
McCloy LLP, Counsel to ISE, and Jennifer C. Dodd, Attorney, 
Division, Commission, on November 3, 2004.
    \29\ ``Person'' as defined in Article Fourth, Subdivision III of 
the Amended Certificate means any ``individual, partnership (general 
or limited), joint stock company, corporation, limited liability 
company, trust or unincorporated organization or any governmental 
entity or agency or political subdivision thereof.''
    \30\ ``Related Person'' as defined in Article Fourth, 
Subdivision III of the Amended Certificate means ``(1) with respect 
to any Person, all `affiliates' and `associates' of such Person (as 
such terms are defined in Rule 12b-2 under the Act); (2) with 
respect to any Person constituting a Member, any broker or dealer 
with which such Member is associated; and (3) any two or more 
Persons that have any agreement, arrangement or understanding 
(whether or not in writing) to act together for the purpose of 
acquiring, voting, holding or disposing of shares of the capital 
stock of the [Exchange].''
    \31\ Beneficial ownership (and derivative or similar words) as 
defined in Article Fourth, Subdivision III of the Amended 
Certificate has the meaning set forth in Regulation 13D-G under the 
Act. The Exchange believes that use of this existing Commission 
definition will aid it in verifying the ownership of its capital 
stock by monitoring filings on Schedules 13D and 13G by its 
stockholders.
    \32\ See Amended Certificate, Article Fourth, Subdivisions 
III(a)(i) and (a)(ii).
---------------------------------------------------------------------------

    Furthermore, any Person, alone or together with its Related 
Persons, who owns more than five percent of the then outstanding shares 
of any class or series of the Exchange's capital stock will be required 
to provide certain information to the Board and will have an ongoing 
obligation to update such information.\33\ The Exchange believes these 
provisions will enable it to obtain information necessary to determine 
whether there has been a violation of the voting or ownership 
limitations described herein.
---------------------------------------------------------------------------

    \33\ Article Fourth, Subdivision III(a)(iii) of the Amended 
Certificate requires that any Person, either alone or together with 
its Related Persons, that at any time owns five percent or more of 
the then outstanding shares of any class or series of capital stock 
of the Corporation, that has the right by its terms to vote in the 
election of members of the Board, must, immediately upon so owning 
five percent or more, give the Board written notice of such 
ownership stating: (1) Such Person's full legal name; (2) such 
Person's title or status and the date on which such title or status 
was acquired; (3) such Person's approximate ownership interest in 
the Exchange; and (4) whether such Person has the power, directly or 
indirectly, to direct the management or policies of the Exchange, 
whether through ownership of securities, by contract or otherwise. 
Each such Person must notify the Board of any changes in ownership 
except when such change is an increase or decrease of less than one 
percent in the ownership percentage so reported (such increase or 
decrease to be measured cumulatively from the amount shown on the 
last such report) unless any increase or decrease of less than 1 
percent results in such Person so owning more or less than 20 
percent or more than 40 percent of the shares of any class or series 
of capital stock then outstanding (at a time when such Person so 
owned less than such percentages), as the case may be. The Exchange 
will also consider, among other things, any filings made with the 
Commission under Section 13(d) and Section 13(g) of the Act by such 
Person and its Related Persons and will aggregate all shares owned 
or voted by such Person and its Related Persons deemed to be 
beneficially owned by them. For information on ISE's current 
principal stockholders, see also the Registration Statement, 
``Principal and Selling Stockholders.''
---------------------------------------------------------------------------

    If any Person, alone or together with its Related Persons, purports 
to sell, transfer, assign or pledge any shares of capital stock in the 
Exchange in violation of the ownership limits, the Exchange would apply 
standard corrective procedures used by public companies with similar 
ownership limits. Specifically, any such sale, transfer, assignment or 
pledge would be void, and that number of shares in excess of the 
ownership limitation would be deemed to have been transferred to the 
Exchange, as special trustee of a charitable trust, for the exclusive 
benefit of a charitable beneficiary to be determined by the 
Exchange.\34\ These corrective procedures would also apply if there is 
any other event causing any holder of capital stock to exceed the 
ownership limits, such as a repurchase of shares by the Exchange.\35\ 
The automatic transfer would be deemed to be effective as of the close 
of business on the business day prior to the date of the violative 
transfer or other event.\36\
---------------------------------------------------------------------------

    \34\ See Article Fourth, Subdivision III(c) of the Amended 
Certificate. The Exchange may also determine to appoint as special 
trustee an entity unaffiliated with the Exchange and any Person or 
its Related Persons owning excess shares. See Article Fourth, 
Subdivision III(c)(ii) of the Amended Certificate.
    \35\ Any holders owning excess shares as a result of any event 
other than a sale, transfer, assignment or pledge would cease to 
have rights in such shares.
    \36\ As agreed with ISE, the Commission staff revised this 
sentence to clarify that the effective date in the case of an 
``other event'' would also be as of the close of business on the 
business day prior to the date of the event. Telephone conversation 
between Janet M. Kissane, Milbank, Tweed, Hadley & McCloy LLP, 
Counsel to ISE, and Jennifer C. Dodd, Attorney, Division, 
Commission, on November 3, 2004.
---------------------------------------------------------------------------

    The special trustee of the trust would be required to sell the 
excess shares to a person whose ownership of shares is not expected to 
violate the ownership limitations. The net proceeds of the sale would 
be distributed first, to the original prohibited transferee or holder, 
who would receive the lesser of (1) the price per share received by the 
Exchange from the transfer of the excess shares (2) the price per share 
the prohibited transferee or holder paid for the shares in the 
violative transfer, or (3) if the prohibited transferee or holder did 
not give value for such excess shares, a price per share equal to the 
market price for the excess shares on the date of the purported 
transfer or other event that resulted in the excess shares, except that 
in the case of a prohibited holder holding excess shares solely as the 
result of an action or event by the Exchange (such as an action 
resulting in a reduction in the number of outstanding shares), such 
prohibited holder would receive the greater of (1) or (3) above for the 
excess shares. After such distribution, any proceeds in excess of the 
amount payable to the prohibited transferee or holder would be payable 
to the charitable beneficiary. Prior to the sale, the special trustee 
would be entitled to receive, in trust for the beneficiary, all 
dividends and other distributions paid by the Exchange with respect to 
the excess shares, and also would be entitled to exercise all voting 
rights with respect to the excess shares.\37\
---------------------------------------------------------------------------

    \37\ Any excess shares held by the special trustee would be 
entitled to vote and deemed outstanding for purposes of determining 
a quorum or minimum vote required for the transaction of any 
business at any stockholders' meeting. Telephone conversation 
between Janet M. Kissane, Milbank, Tweed, Hadley & McCloy LLP, 
Counsel to ISE, and Jennifer C. Dodd, Attorney, Division, 
Commission, on November 4, 2004.
---------------------------------------------------------------------------

    In addition, excess shares (including any shares deemed to be 
excess shares by reason of a reduction in outstanding shares caused by 
a purchase of excess shares by the Exchange) would be deemed to have 
been offered for sale to the Exchange.\38\ The Exchange shall have the 
right to accept such offer until the special trustee has sold the 
shares held in the charitable trust.\39\ If the Exchange accepts such 
offer, it would determine the additional number of shares (if any) that 
become excess shares by reason of the reduction in outstanding shares 
caused by the Exchange's purchase of excess shares (whether any Person, 
either alone or together with its Related Persons, holds such excess 
shares in connection with a purported transfer or is deemed to hold 
such excess shares as a result of the Exchange's purchase of excess 
shares) and take all action reasonably necessary to ensure that such 
additional excess shares are added to the initial number

[[Page 65485]]

of excess shares subject to the Exchange's corrective procedures.\40\
---------------------------------------------------------------------------

    \38\ The excess shares would be deemed to be offered to the 
Exchange at a price per share equal to the lesser of (1) the price 
per share the purported transferee or holder paid for the shares in 
the purported transfer or other event that resulted in excess shares 
(or in the case of an event not involving any payment, the market 
price at the time of the transfer or other event) and (2) the market 
price of the shares on the date the Exchange accepts such offer. The 
Exchange may accept the offer in whole or in part.
    \39\ See Article Fourth, Subdivision III(c)(vi) of the Amended 
Certificate.
    \40\ The Exchange believes that this mechanism will prevent 
repeated violations (i.e., an endless loop) of the ownership 
provisions in connection with repurchases by the Exchange (both 
generally and with respect to excess shares). In practice, the 
Exchange would structure repurchases, if any, in a manner designed 
not to trigger any new violations of the ownership restrictions set 
forth in Article Fourth, Subdivision III, or if triggered, to 
include such new violations in its repurchase. For example, if there 
were 100 shares of Class A Common Stock outstanding and two members 
of the Exchange (Member A and Member B) each currently owned 20% of 
the outstanding shares of Class A Common Stock, and Member A 
purchased 5 shares of Class A Common Stock (increasing his ownership 
to 25%), the Exchange could either (a) repurchase the 5 shares from 
Member A and permit the special trustee to sell one share from 
Member A and one share from Member B to third parties or (b) 
repurchase 9 shares of Class A Common Stock from Member A and 3 
shares of Class A Common Stock from Member B, all of which would be 
deemed excess shares pursuant to the mechanism described above.
---------------------------------------------------------------------------

    As applied to the current outstanding capital stock of the 
Exchange, the 40 percent ownership limitation would apply to any holder 
of Class A Common Stock, other than an Exchange member. The 20 percent 
member ownership limitation would apply to any such member, and would 
limit to that amount such holder's ownership of each of the Class A 
Common Stock and each Series of Class B Common Stock. The Exchange 
represents that currently no Person, either alone or together with its 
Related Persons, owns more than 40 percent of the outstanding shares of 
Class A Common Stock, and no member, either alone or together with its 
Related Persons, owns more than 20 percent of the outstanding shares of 
Class A Common Stock or any series of Class B Common Stock.\41\
---------------------------------------------------------------------------

    \41\ As agreed with ISE, the Commission staff revised this 
sentence to clarify that currently, no Person or member exceeds the 
proposed ownership limitations, including when such Person's or 
member's interest is aggregated with the interests of their Related 
Persons. Telephone conversation between Janet M. Kissane, Milbank, 
Tweed, Hadley & McCloy LLP, Counsel to ISE, and Jennifer C. Dodd, 
Attorney, Division, Commission, on November 3, 2004.
---------------------------------------------------------------------------

(b) Voting Limitations
    The proposed rule change also would prohibit any Person, either 
alone or together with its Related Persons, from voting, or causing the 
voting of, shares of capital stock of the Exchange (or giving a consent 
or proxy with respect to shares) representing more than 20 percent of 
the voting power of any class or series of capital stock (the ``20 
percent voting limitation'').\42\ In the event that a stockholder 
purports to vote, grant any proxy or enter into any other agreement for 
the voting of shares that would violate the 20 percent voting 
limitation, such vote, proxy or agreement would not be honored by the 
Exchange to the extent that the 20 percent voting limitation provision 
would be violated. The 20 percent voting limitation will not apply to 
any solicitation of any revocable proxy from any stockholder of the 
Exchange by the Exchange or by any stockholder of the Exchange pursuant 
to Regulation 14A under the Act.\43\
---------------------------------------------------------------------------

    \42\ The 20 percent voting limitation also would prohibit any 
Person, either alone or together with its Related Persons, from 
entering into any agreement, plan or other arrangement with another 
Person that would result in the shares of any class or series of 
capital stock that are subject to such agreement, plan or 
arrangement not being voted on any matter or matters where the 
effect of such agreement, plan or other arrangement would be to 
enable any Person to vote, possess the right to vote or cause the 
voting of shares of any class or series of capital stock that would, 
as a result thereof, represent more than 20 percent of any class or 
series of capital stock available to be voted. The Amended 
Certificate and the Amended Constitution clarify that only those 
shares entitled to vote would be counted for purposes of determining 
a quorum or a minimum vote required for the transaction of any 
business at any stockholders' meeting, including, without 
limitation, when specified business is to be voted on by a class or 
a series voting as a class. See Article Fourth, Subdivision 
III(b)(iii) of the Amended Certificate and Section 2.4 of the 
Amended Constitution. Telephone conversation between Janet M. 
Kissane, Milbank, Tweed, Hadley & McCloy LLP, Counsel to ISE, and 
Jennifer C. Dodd, Attorney, Division, Commission on November 4, 
2004.
    \43\ See Amended Certificate, Article Fourth, Subdivision 
III(b).
---------------------------------------------------------------------------

(c) Board Notice Regarding Certain Limitations
    The proposed rule change will impose certain requirements on 
Persons to give notice of events regarding ownership that would exceed 
the proposed ownership or voting threshold. Specifically, any Person 
intending to exceed these ownership or voting limitations must provide 
the Board with written notice of the fact at least 45 days (or such 
shorter period to which the Board expressly consents) prior to either 
the proposed acquisition of shares of the proposed exercise of voting 
rights, as the case may be.\44\
---------------------------------------------------------------------------

    \44\ See Amended Certificate, Article Fourth, Subdivisions 
III(a)(i)(B) and (b)(i).
---------------------------------------------------------------------------

(d) Board Waiver of Certain Limitations
    The Board may adopt a resolution specifying that it has determined 
that the 40 percent ownership limitation or the 20 percent voting 
limitation or both should be waived if it finds that such waiver (1) 
will not impair the ability of the Exchange to carry out its functions 
and responsibilities as an ``exchange'' under the Act; (2) is otherwise 
in the best interests of the Exchange and its stockholders; (3) will 
not impair the ability of the Commission to enforce the Act; and (4) 
will apply to a Person and its Related Persons who are not subject to 
any applicable ``statutory disqualification'' (within the meaning of 
Section 3(a)(39) of the Act). In the event of such a finding, the 
waiver would take the form of an amendment to the Constitution, which 
would not be effective until approved by the Commission. The Board may 
not waive the 20 percent member ownership limitation.\45\
---------------------------------------------------------------------------

    \45\ See Amended Certificate, Article Fourth, Subdivisions 
III(a)(i)(B) and (b)(i).
---------------------------------------------------------------------------

(e) Elimination of Founders Exemption
    The Amended Certificate also eliminates the ``founders exemption'' 
that permitted the original founders of the Exchange to own shares of 
Class A Common Stock and Class B Common Stock in excess of the stated 
limits for a certain period of time.\46\ Because all of the founders 
have fallen below the ownership thresholds in place, the exemption is 
no longer necessary.
---------------------------------------------------------------------------

    \46\ The founders exemption, which applied to persons or 
entities that purchased LLC memberships directly from the Exchange 
on or prior to August 1, 1998 and extended to May 26, 2010, was 
approved by the Commission in connection with the Exchange's 
demutualization in 2002. See supra, note 8.
---------------------------------------------------------------------------

(f) Effects of Ownership and Voting Limits
    The Exchange believes that these ownership and voting limitations, 
taken together, will serve to prevent any stockholder, or group of 
stockholders acting together, from exercising undue control over the 
operation of the Exchange. The Exchange believes that these limitations 
will prohibit any Person, either alone or with its Related Persons, 
from having the power to control a substantial number of outstanding 
votes without Commission review. This should limit the ability of any 
such Persons from taking actions that may be adverse to the Exchange's 
or the Commission's regulatory oversight responsibilities. The Exchange 
also believes that these provisions serve to protect the integrity of 
the Exchange's and the Commission's regulatory oversight 
responsibilities and allow the Commission to review, subject to public 
notice and comment, the acquisition of substantial voting power by any 
stockholder or group of stockholders.
(4) Exchange Act Obligations
    The Exchange proposes that the Amended Certificate provide that the 
Board shall, in managing the affairs and business of the Exchange, 
consider requirements applicable to its registration and operation as a 
national securities exchange under the Act,

[[Page 65486]]

including without limitation, the requirements that (a) the rules of 
the Exchange be designed to protect investors and the public interest, 
and (b) the Exchange be so organized and have the capacity to carry out 
the purposes of the Act and (subject to such exceptions as are set 
forth in the Act or the rules and regulations thereunder) to enforce 
compliance by its members and persons associated with its members with 
the provisions of the Act, the rules and regulations thereunder, and 
the rules of the Exchange. These provisions in the Amended Certificate 
shall not be construed to create the basis for any cause of action 
against any director, and no director shall be liable, by virtue of 
these provisions, for such director's consideration or failure to 
consider the matters referred to therein.\47\
---------------------------------------------------------------------------

    \47\ See Amended Certificate, Article Twelfth.
---------------------------------------------------------------------------

(5) Board Committees
    The Exchange proposes that the Amended Constitution include 
provisions relating to specific Board committees in connection with the 
contemplated listing of the Exchange on a national securities exchange 
or national securities association following the IPO. In particular, 
the Exchange proposes to add the Corporate Governance Committee and the 
Compensation Committee to its list of specifically designated Board 
committees in the Amended Constitution, and to require that each of the 
Finance & Audit, Corporate Governance and Compensation Committees be 
governed by charters.\48\
---------------------------------------------------------------------------

    \48\ See Amended Constitution, Sections 5.4, 5.5 and 5.6. The 
Exchange currently has a Corporate Governance and Compensation 
Committee, designated by the Board pursuant to its authority under 
Section 5.1 of the Constitution; the Amended Constitution will 
specifically provide for these committees.
---------------------------------------------------------------------------

(6) Certain Antitakeover Provisions
    The Exchange proposes that the Amended Certificate, along with the 
Amended Constitution, include certain antitakeover provisions for 
protection against certain types of coercive corporate takeover 
practices and inadequate takeover bids. The proposed provisions relate 
to special meetings of stockholders and the required stockholder vote 
with respect to certain actions. In view of the limitations on 
ownership and voting described above, the provisions proposed do not 
include a ``poison pill'' arrangement. The Board does, however, 
maintain the authority under its current organizational documents to 
adopt such an arrangement with Commission approval.
(a) Elimination of a Stockholder's Right To Call a Special Meeting
    The Amended Certificate and Amended Constitution deny the 
Exchange's stockholders the right to call a special meeting of 
stockholders, and provide that only the Chairman of the Board or a 
majority of the Board may call a special meeting of the 
stockholders.\49\
---------------------------------------------------------------------------

    \49\ See Amended Certificate, Article Eighth and Amended 
Constitution, Section 2.2.49
---------------------------------------------------------------------------

(b) Advance Notice Requirement for Stockholder Proposals
    The Amended Constitution establishes advance notice procedures with 
regard to stockholder proposals relating to the nomination of 
candidates for election as Non-Industry Directors or new business to be 
brought before meetings of stockholders. The Exchange's advance notice 
requirement does not apply to nominations of Industry Director nominees 
for election to the Board who are nominated by the Exchange's 
Nominating Committee (which is not a committee of the Board) or 
stockholders pursuant to Sections 3.10(a) and 5.3(c) of the 
Constitution. Following the IPO, pursuant to the Exchange's Corporate 
Governance Committee charter and Section 3.10(b) of the Constitution, 
the Corporate Governance Committee would nominate for election to the 
Board a slate of Non-Industry Directors pursuant to Section 2.7(a) and 
(b). These procedures provide that notice of stockholder proposals must 
be given in writing to the Secretary of the Exchange prior to the 
meeting at which the action is to be taken.\50\ Generally, such notice 
would have to be received at the principal executive offices of the 
Exchange not fewer than 60 days nor more than 90 days prior to the 
meeting. Any such notice must comply with certain additional 
informational and descriptive requirements set out in the Amended 
Constitution.\51\ Additionally, stockholders shall comply with all 
applicable requirements of the Act and the rules and regulations 
thereunder with respect to any proposals submitted pursuant to the 
advance notice procedures.\52\
---------------------------------------------------------------------------

    \50\ With the institution of Section 2.7 of the Amended 
Constitution, Non-Industry Director nominations by Class A 
stockholders will likely be required to be made in advance of the 
selection or announcement of a slate of Non-Industry Director 
candidates by the Corporate Governance Committee. Currently, Non-
Industry Director nominations by Class A stockholders must be made 
in advance of the stockholders' meeting, but generally after the 
Corporate Governance Committee announces its slate.
    \51\ In particular, the notice must set forth (1) as to each 
person whom the stockholder proposes to nominate for election or 
reelection as a director all information relating to such person 
that is required to be disclosed in solicitations of proxies for 
election of directors, or is otherwise required, in each case 
pursuant to Regulation 14A under the Act, including such person's 
written consent to being named in the proxy statement as a nominee 
and to serving as a director if elected and a statement that such 
nominee complies with the requirements set forth in the Amended 
Certificate; (2) as to any other business that the stockholder 
proposes to bring before the meeting, a brief description of the 
business desired to be brought before the meeting, the reasons for 
conducting such business at the meeting and any material interest in 
such business of such stockholder and the beneficial owner, if any, 
on whose behalf the proposal is made; and (3) as to the stockholder 
giving the notice and the beneficial owner, if any, on whose behalf 
the nomination or proposal is made (i) the name and address of such 
stockholder, as they appear on the Corporation's books, and of such 
beneficial owner and (ii) the class and number of shares of the 
Corporation which are owned beneficially and of record by such 
stockholder and such beneficial owner. See Amended Constitution, 
Section 2.7.
    \52\ See Amended Constitution, Section 2.7. Previously, Section 
2.7 of the Constitution addressed stockholder record dates; that 
matter is now proposed to be addressed in Section 7.4 of the Amended 
Constitution.
---------------------------------------------------------------------------

    The Exchange's advance notice requirement will not apply to 
nominations of Industry Director nominees for election to the Board who 
are nominated by the Exchange's Nominating Committee (which is not a 
committee of the Board) or stockholders pursuant to Sections 3.10(a) 
and 5.3(c) of the Constitution. Following the IPO, the Non-Industry 
Directors would be nominated by the Corporate Governance Committee or 
Class A stockholders pursuant to Sections 2.7(a) and (b) and 3.10(b) of 
the Constitution.
(c) Increase in Required Vote for Certain Stockholder Actions
    In addition to other currently required items, the Amended 
Certificate would require a two-thirds vote of stockholders to amend, 
repeal or adopt any provisions inconsistent with (1) the limitations on 
ownership and voting of capital stock contained in the Amended 
Certificate, as described above in Section 3 (``Ownership and Voting 
Limitations With Respect to the Exchange's Capital Stock''), (2) the 
provision in the Amended Certificate providing the Board with the 
authority to create and issue rights under a rights plan, and (3) the 
advance notice provision contained in the proposed Amended 
Constitution.\53\
---------------------------------------------------------------------------

    \53\ See Amended Certificate, Article Seventh.
---------------------------------------------------------------------------

(7) Reduction in Votes Required To Approve Amendments to the Amended 
Constitution
    The Exchange proposes that the current two-thirds vote of all of 
the outstanding shares of Class A Common

[[Page 65487]]

Stock be reduced to a majority vote of such shares in order to amend 
certain provisions of the Amended Constitution that are not subject to 
a required two-thirds vote under the Amended Certificate. Such 
amendments to the current Constitution may be accomplished by a two-
thirds vote of the stockholders or by action of the Board. The two-
thirds vote requirement for an amendment to the current Constitution 
was deemed appropriate for a private securities exchange owned 
primarily by its members, in order to assure substantial agreement as 
to changes in significant aspects of corporate governance. However, the 
Exchange believes that the continuation of such a high vote 
requirement, in the context of a publicly traded company with a widely 
diverse stockholder base and the likelihood of lower voting 
participation, makes it unduly difficult to effect any necessary 
changes by stockholder vote to these corporate governance provisions in 
the future.\54\
---------------------------------------------------------------------------

    \54\ See Amended Certificate, Article Seventh and Amended 
Constitution, Section 11.1.
---------------------------------------------------------------------------

(8) Confidential Information and Books and Records
    Pursuant to the Amended Certificate, all confidential information 
pertaining to the self-regulatory function of the Exchange (including 
but not limited to disciplinary matters, trading data, trading 
practices and audit information) contained in the books and records of 
the Exchange shall: (1) Not be made available to any Persons other than 
to those officers, directors, employees and agents of the Exchange that 
have a reasonable need to know the contents thereof and to the 
Commission; and (2) be retained in confidence by the Exchange and the 
officers, directors, employees and agents of the Exchange; and (3) not 
be used for any commercial purposes.\55\
---------------------------------------------------------------------------

    \55\ See Amended Certificate, Article Thirteenth.
---------------------------------------------------------------------------

    In addition, the ISE's books and records shall be maintained within 
the United States.\56\
---------------------------------------------------------------------------

    \56\ See Amended Constitution, Section 1.3.
---------------------------------------------------------------------------

2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(1) of the Act \57\ that an exchange be 
so organized and have the capacity to be able to carry out the purposes 
of the Act and to comply, and (subject to any rule or order of the 
Commission pursuant to Section 17(d) or 19(g)(2) of the Act \58\) to 
enforce compliance by its members and persons associated with its 
members, with the provisions of the Act, the rules and regulations 
thereunder, and the rules of the exchange, and the requirement under 
Section 6(b)(5) of the Act \59\ that an exchange have rules that, among 
other things, are designed to remove impediments to and perfect the 
mechanism for a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \57\ 15 U.S.C. 78f(b)(1).
    \58\ 15 U.S.C. 78q and 15 U.S.C. 78s.
    \59\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

A. 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.

B. 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, participants or others.

II. 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 Exchange consents, the Commission will:
    (A) By order approve such proposed rule change; or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.
    Certain aspects of this proposed rule change have been approved by 
the Board on July 22, 2004, and by the Exchange's stockholders on 
August 16, 2004. The remaining aspects of this proposed rule change are 
scheduled to be approved by the Board and stockholders as soon as 
practicable. To the extent necessary, the Exchange hereby consents to 
an extension of the time period specified in Section 19(b)(2) of the 
Act until at least thirty-five (35) days after the Exchange has filed 
an appropriate amendment setting forth the completion of all such 
action under the Certificate of Incorporation and Constitution of the 
Exchange with respect to this proposed rule change.

III. 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 No. SR-ISE-2004-29 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-2004-29. 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 Commissions 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 Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the ISE. 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-2004-29 and should be submitted by December 3, 2004.


[[Page 65488]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\60\
---------------------------------------------------------------------------

    \60\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-3152 Filed 11-10-04; 8:45 am]
BILLING CODE 8010-01-P