[Federal Register Volume 70, Number 57 (Friday, March 25, 2005)]
[Notices]
[Pages 15372-15373]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1305]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51397; File No. SR-ISE-2005-13]


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

March 18, 2005.
    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 7, 2005, the International Securities Exchange, Inc. (the 
``Exchange'' or the ``ISE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the ISE. The 
Exchange has filed the proposal as a ``non-controversial'' rule change 
pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission.\5\ 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)(6).
    \5\ The Exchange asked the Commission to waive the 30-day 
operative delay. See 17 CFR 240.19b-4(f)(6)(iii) (Rule 19b-
4(f)(6)(iii)).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The ISE is proposing to amend its Schedule of Fees to establish 
fees for transactions in options on the Nasdaq-100[supreg] Stock Index. 
The text of the proposed rule change is available on the ISE's Web site 
[http://www.iseoptions.com/legal/proposed_rule_changes.asp], at the 
ISE's Office of the Secretary, and at the Commission's Public Reference 
Room.

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 
establish fees for transactions in options on the Nasdaq-100 Stock 
Index, both full value (``NDX'') and 1/10 value (``MNX'').\6\ 
Specifically, the Exchange is proposing to adopt an execution fee and a 
comparison fee for all transactions in options on NDX and MNX.\7\ The 
amount of the execution fee and comparison fee shall be the same for 
all order types on the Exchange--that is, orders for Public Customers, 
Market Makers, and Firm Proprietary--and shall be equal to the 
execution fee and comparison fee currently charged by the Exchange for 
Market Maker and Firm Proprietary transactions in equity options.\8\ 
The Exchange believes the proposed rule change will further the 
Exchange's goal of introducing new products to the marketplace that are 
competitively priced.
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    \6\ See Securities Exchange Act Release No. 51121 (Feb. 1, 
2005), 70 FR 6476 (Feb. 7, 2005) (File No. SR-ISE-2005-01) (order 
approving the trading of options on full and reduced values of the 
Nasdaq-100 Stock Index).
    \7\ The Exchange represents that these fees will be charged only 
to Exchange members.
    \8\ The execution fee is currently between $.21 and $.12 per 
contract side, depending on the Exchange Average Daily Volume, and 
the comparison fee is currently $.03 per contract side.
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    The Exchange has entered into a license agreement with The Nasdaq 
Stock Market, Inc. in connection with the listing and trading of index 
options on the Nasdaq-100 Stock Index. As with licensed equity options, 
the Exchange is adopting a per contract fee for trading in these 
options to defray the licensing

[[Page 15373]]

costs.\9\ The Exchange believes that charging the participants that 
trade these instruments is the most equitable means of recovering the 
costs of the license. However, because of competitive pressures in the 
industry, the Exchange proposes to exclude Public Customer Orders \10\ 
from this surcharge fee. Accordingly, this surcharge fee will only be 
charged to Exchange members with respect to non-Public Customer Orders 
(e.g., Market Maker and Firm Proprietary orders) and shall apply to 
Linkage Orders \11\ under a pilot program that is set to expire on July 
31, 2005.
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    \9\ The Commission notes, however, that the proposed surcharge 
fee of $0.15 per contract for NDX and MDX is higher than the current 
surcharge fee level of $0.10 per contract on other products listed 
in the ISE's Schedule of Fees.
    \10\ 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.
    \11\ See ISE Rule 1900(10) (defining Linkage Orders). The 
surcharge fee will apply to the following Linkage Orders: Principal 
Acting as Agent (``P/A'') Orders and Principal Orders.
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2. Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b)(4) of the Act,\12\ which requires that an exchange 
have an equitable allocation of reasonable dues, fees and other charges 
among its members and other persons using its facilities.
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    \12\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
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

    Because the foregoing rule change: (1) Does not significantly 
affect the protection of investors or the public interest; (2) does not 
impose any significant burden on competition; and (3) does not become 
operative for 30 days from the date on which it was filed, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\13\ and Rule 19b-4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) does not become 
operative prior to 30 days after the date of filing. However, Rule 19b-
4(f)(6)(iii) \15\ permits the Commission to designate a shorter time if 
such action is consistent with the protection of investors and the 
public interest. The Exchange has requested that the Commission waive 
the 30-day operative delay and accelerate the implementation of the 
proposed rule change so that it may take effect prior to the 30 days 
specified in Rule 19b-4(f)(6)(iii). Since the proposed rule change does 
not raise any novel issues and the Exchange customarily charges fees 
for options traded on the Exchange, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest.\16\ In designating the proposal 
immediately operative, the Commission does not believe that the 
proposed rule change raises any new issues of regulatory concern. 
Accordingly, the Commission has waived the 30-day operative delay 
requirement for this proposed rule change, and has determined to 
designate the proposed rule change operative as of March 7, 2005, the 
date of filing of the proposed rule change.
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    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such proposed 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.\17\
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    \17\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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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 No. SR-ISE-2005-13 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-2005-13. 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 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-2005-13 and should be submitted by April 15, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1305 Filed 3-24-05; 8:45 am]
BILLING CODE 8010-01-P