[Federal Register Volume 71, Number 27 (Thursday, February 9, 2006)]
[Notices]
[Pages 6801-6803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-1752]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53211; File No. SR-ISE-2006-08]


Self-Regulatory Organizations; International Securities Exchange, 
Inc.; Notice of Filing of Proposed Rule Change Establishing Fees for 
Historical Options Tick Market Data for Non-Members

February 2, 2006.
    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 February 1, 2006, 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. 
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 ISE is proposing to amend its Schedule of Fees to establish 
non-member fees for historical options tick market data.\3\ The text of 
the proposed rule change is available at the Exchange, at the 
Commission's Public Reference Room and at the Exchange's Web site: 
http://www.iseoptions.com/legal/proposed_rule_changes.asp.
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    \3\ Historical options tick market data is Options Price 
Reporting Authority (``OPRA'') tick data, a complete file, tick-by-
tick, of all quote and transaction data of all instruments 
disseminated by OPRA during a trading day. OPRA tick data includes 
data from all six options exchanges. On any given trading day, OPRA 
tick data is publicly available and may be stored. The OPRA tick 
data collected and stored by ISE is neither exclusive nor 
proprietary to the Exchange.

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[[Page 6802]]

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 proposal. 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
    Currently, the ISE creates market data that consists of options 
quotes and orders that are generated by ISE members and all trades that 
are executed on the Exchange. The ISE also produces a Best Bid/Offer, 
or ``BBO,'' with the aggregate size from all outstanding quotes and 
orders at the top price level, or the ``top of the book.'' This data is 
formatted according to OPRA specification and sent to OPRA for 
redistribution. OPRA processes ISE data along with the same data sets 
from the other five options exchanges and creates a National BBO, or 
``NBBO,'' from all six options exchanges.
    The ISE also captures the OPRA tick data \4\ and will make it 
available as an ``end of day'' file \5\ or as a ``historical'' file \6\ 
for ISE members and non-ISE members alike. The instant proposed rule 
change proposes to establish a fee for non-ISE members only. The 
Exchange has also filed a separate proposed rule change, SR-ISE-2006-
07,\7\ that established fees for ISE members. The proposed fees for 
both ISE members and non-ISE members are the same.
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    \4\ The Exchange collects this data throughout each trading day, 
and by way of this proposed rule change, intends to market this 
offering to both ISE members and the investing public. At the end of 
each trading day, the Exchange compresses the data collected 
throughout the day and uploads it onto a server. Once the data is 
loaded onto the server, it will then be made available to 
subscribers.
    \5\ An end of day file refers to OPRA tick data for a trading 
day that is distributed prior to the opening of the next trading 
day. An end of day file will be made available to subscribers as 
soon as practicable at the end of each trading day on an on-going 
basis pursuant to an annual subscription or through an ad-hoc 
request.
    \6\ An end of day file that is distributed after the start of 
the next trading day is called a historical file. A historical file 
will be available to customers for a pre-determined date range by 
ad-hoc requests only.
    \7\ Securities Exchange Act Release No. 53212 (February 2, 
2006).
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    The Exchange conducted extensive market research to conclude that 
OPRA tick data is primarily used by market participants in the 
financial services industry for back-testing trading models, post-trade 
analysis, compliance purposes and analyzing time and sales information. 
By this proposed rule change (if approved), and proposed rule change 
SR-ISE-2006-07,\8\ both non-ISE members and ISE members will have the 
choice to subscribe to a service that provides a daily file on an on-
going basis (end of day file), or simply request data on an ad-hoc 
basis for a pre-determined date range (historical file).
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    \8\ See id.
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2. Statutory Basis
    The ISE believes the basis under the Act for this proposed rule 
change is the requirement under section 6(b)(4) \9\ that an exchange 
have an equitable allocation of reasonable dues, fees and other charges 
among its members and other persons using its facilities. The Exchange 
developed and conducted a comprehensive survey of a cross-section of 
participants in the financial services industry regarding their level 
of interest in a number of market data offerings. Based on the results 
of that survey, the Exchange developed a business plan to create and 
offer a number of market data products targeted to potential user 
groups, e.g., individual investors, institutional investors, broker-
dealers, etc. The Exchange also retained a consultant to validate the 
business plan and to provide advice on the structure and amount of fees 
to charge for these products. Based on all of this information, the 
Exchange established a pricing structure for historical options tick 
data that is based on both a subscription and a non-subscription basis. 
With an annual subscription, non-ISE members would pay a flat monthly 
fee to subscribe to a daily file of OPRA tick data. Alternatively, non-
ISE members that want a limited amount of data and do not want an 
annual subscription would have the ability to submit ad-hoc requests 
for the limited amount of data that they require based on daily 
periods. Under the ad-hoc structure, non-ISE members would pay a fixed 
amount per day plus a processing fee for the hardware and shipping 
costs associated with these requests. Further, the Exchange believes 
that these pricing levels for the proposed market data offering would 
provide non-ISE members with an ability to choose a plan that best 
suits their needs. The Exchange believes the proposed rule filing would 
provide market participants with an opportunity to obtain historical 
options tick data in furtherance of their investment decisions.
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    \9\ 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 will 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 neither solicited nor received comments on the 
proposed rule change. The ISE 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

    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.
    The ISE has requested accelerated approval of the proposed rule 
change. While the Commission will not grant accelerated approval at 
this time, the Commission will consider granting accelerated approval 
of the proposal at the close of the abbreviated comment period of 15 
days from the date of publication of the proposal in the Federal 
Register.

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-2006-08 on the subject line.

[[Page 6803]]

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-ISE-2006-08. 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 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-2006-08 
and should be submitted on or before February 24, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-1752 Filed 2-8-06; 8:45 am]
BILLING CODE 8010-01-P