[Federal Register Volume 70, Number 119 (Wednesday, June 22, 2005)]
[Notices]
[Pages 36218-36219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3238]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51858; File No. SR-ISE-2005-26]


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

June 16, 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 May 19, 2005, 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 ISE. 
On June 2, 2005, the ISE filed Amendment No. 1 to the proposed rule 
change and on June 13, 2005, the ISE filed Amendment No. 2 to the 
proposed rule change.\3\ The ISE has designated this proposal as one 
establishing or changing a due, fee, or other charge imposed by the ISE 
under Section 19(b)(3)(A)(ii) of the Act,\4\ and Rule 19b-4(f)(2) 
thereunder,\5\ which renders the proposal effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 made a technical change to the text of 
Exhibit 5 of ISE's Form 19b-4 submission. The correction to Exhibit 
5 does not affect the fees for transactions in options on the 
Russell 1000 Index, the Russell 2000 Index, and the Mini Russell 
2000 Index, but only corrects the text of Exhibit 5 to reflect the 
Schedule of Fees language in effect on May 19, 2005. In Amendment 
No. 2, the ISE provided to the Commission a copy of the corrected 
version of Exhibit 5 that was modified by Amendment No. 1.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 7 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 ISE is proposing to amend its Schedule of Fees to establish 
fees for transactions in options on the Russell 1000 Index, the Russell 
2000 Index, and the Mini Russell 2000 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 principal 
office of the ISE, 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 ISE is proposing to amend its Schedule of Fees to establish 
fees for transactions in options on the Russell 1000 Index (``RUI''), 
the Russell 2000 Index (``RUT''), and the Mini Russell

[[Page 36219]]

2000 Index (``RMN'').\6\ Specifically, the Exchange is proposing to 
adopt an execution fee and a comparison fee for all transactions in 
options on RUI, RUT and RMN.\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. 51619 (Apr. 27, 
2005), 70 FR 22947 (May 3, 2005) (File No. SR-ISE-2005-09) (order 
approving the trading of options on various Russell Indexes). The 
Commission notes that the term ``Mini'' Russell 2000 Index refers to 
options based upon one-tenth values of the Russell 2000 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 represents that it has entered into a license 
agreement with the Frank Russell Company in connection with the listing 
and trading of options on RUI, RUT, and RMN. As with certain other 
licensed options, the Exchange is adopting a surcharge fee of ten (10) 
cents per contract for trading in these options to defray the licensing 
costs. 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 \9\ 
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 \10\ under a pilot program that is set to expire on July 
31, 2005.
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    \9\ Public Customer Order is defined in ISE Rule 100(a)(33) as 
an order for the account of a Public Customer. Public Customer is 
defined in ISE Rule 100(a)(32) as a person that is not a broker or 
dealer in securities.
    \10\ See ISE Rule 1900 (defining Linkage Orders). The Commission 
notes tha the surcharge fee will apply to the following Linkage 
Orders: Principal Acting as Agent (``P/A'') Orders and Principal 
Orders, for a pilot period currently set to expire on July 31, 2005.
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2. Statutory Basis
    Thee Exchange believes that the basis under the Act for this 
proposed rule change is the requirement under Section 6(b)(4) of the 
Act\11\ 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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    \11\ 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

    Because the foregoing rule change, as amended, establishes or 
changes a due, fee, or other charge imposed by the Exchange, it has 
become effective pursuant to Section 19(b)(3)(A)(ii) of the Act\12\ and 
Rule 19b-4(f)(2)\13\ thereunder. At any time within 60 days of the 
filing of the amended 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.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 19b-4(f)(2).
    \14\ The effective date of the original proposed rule change is 
May 19, 2005. The effective date of Amendment No. 1 is June 2, 2005 
and the effective date of Amendment No. 2 is June 13, 2005. For 
purposes of calculating the 60-day period within which the 
Commission may summarily abrogate the proposed rule change, as 
amended, under Section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on June 13, 2005, the date on which 
the ISE submitted Amendment No. 2. See 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, as amended, 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-2005-26 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-ISE-2005-26. 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-2005-26 
and should be submitted by July 13, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-a(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-3238 Filed 6-21-05; 8:45 am]
BILLING CODE 8010-01-P