[Federal Register Volume 72, Number 147 (Wednesday, August 1, 2007)]
[Notices]
[Pages 42161-42163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-14832]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56128; File No. SR-ISE-2007-55]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Order Granting Accelerated Approval of 
Proposed Rule Change Relating to Linkage Fees

July 24, 2007.
    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 June 29, 2007, the International Securities Exchange, LLC (``ISE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the

[[Page 42162]]

Exchange. This order provides notice of the proposed rule change and 
approves the proposed rule change on an accelerated basis.
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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

    ISE proposes to extend until July 31, 2008 the current pilot 
program regarding transaction fees charged for trades executed through 
the intermarket options linkage (``Linkage''). The text of the proposed 
rule change is available at the Exchange, the Commission's Public 
Reference Room, and http://www.ise.com.

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 III 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 purpose of this proposed rule change is to extend for one year 
the pilot program establishing ISE fees for Principal Orders (``P 
Orders'') and Principal Acting as Agent Orders (``P/A Orders'') sent 
through Linkage and executed on ISE. The fees currently are effective 
for a pilot period scheduled to expire on July 31, 2007.\3\ This filing 
would extend the pilot program for another year, through July 31, 2008.
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    \3\ See Securities Exchange Act Release No. 54204 (July 25, 
2006), 71 FR 43548 (August 1, 2006) (SR-ISE-2006-38) (extending the 
Linkage fee pilot program).
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    ISE fees affected by this filing are: The Linkage P Order fee of 
$0.24 per contract; the Linkage P/A Order fee of $0.15 per contract; a 
surcharge fee of between $0.05 and $0.15 for trading certain licensed 
products; and a $0.03 comparison fee (collectively ``linkage fees''). 
These are the same fees that all ISE members pay for non-customer 
transactions executed on the Exchange.\4\ ISE does not charge for the 
execution of Satisfaction Orders \5\ sent through Linkage and is not 
proposing to charge for such orders.
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    \4\ ISE charges these fees only to its members, generally firms 
who clear P Orders and P/A Orders for market makers on the other 
linked exchanges.
    \5\ The term ``Satisfaction Order'' is defined in ISE Rule 
1900(10)(iii).
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    The Exchange believes it is appropriate to charge fees for P Orders 
and P/A Orders executed through Linkage. Notably, while market makers 
on competing exchanges always can match a better price on ISE, they 
never are obligated to send orders to ISE through Linkage. However, if 
such market makers do seek ISE's liquidity, whether through 
conventional orders or through the use of P Orders or P/A Orders, the 
Exchange believes it is appropriate to charge its members the same fees 
levied on other non-customer orders. ISE appreciates that there has 
been limited experience with Linkage and that the Commission is 
continuing to study Linkage in general and the effect of fees on 
Linkage trading. Thus, this filing would extend the status quo with 
Linkage fees for an additional year.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under section 6(b)(4) \6\ that an exchange have an 
equitable allocation of reasonable dues, fees, and other charges among 
its members and other persons using its facilities. As discussed above, 
ISE believes that this proposed rule change will equitably allocate 
fees by having all non-customer users of ISE transaction services pay 
the same fees. The Exchange believes that, if it were to not charge 
linkage fees, the Exchange's fee would not be equitable, in that ISE 
members would be subsidizing the trading of their competitors, all of 
whom access the same trading services.
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    \6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. Moreover, failing to adopt the proposed rule change would 
impose a burden on competition by requiring ISE members to subsidize 
the trading of their competitors.

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. 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-2007-55 on the subject line.

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-2007-55. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ISE-2007-55 and should be 
submitted on or before August 22, 2007.

[[Page 42163]]

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange,\7\ and, in particular, the requirements of section 6(b) of 
the Act \8\ and the rules and regulations thereunder. The Commission 
finds that the proposed rule change is consistent with section 6(b)(4) 
of the Act,\9\ which requires that the rules of the Exchange provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities. The 
Commission believes that the extension of the Linkage fee pilot until 
July 31, 2008 will give the Exchange and the Commission further 
opportunity to evaluate whether such fees are appropriate.
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    \7\ In approving this rule change, the Commission notes that it 
has considered the proposal's impact on efficiency, competition, and 
capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Commission also finds good cause for approving the proposed 
rule change prior to the 30th day after the date of publication of the 
notice of filing thereof in the Federal Register. The Commission 
believes that granting accelerated approval of the proposed rule change 
will preserve the Exchange's existing pilot program for Linkage fees 
without interruption as the Exchange and the Commission continue 
considering the appropriateness of Linkage fees. Therefore, the 
Commission finds good cause, consistent with section 19(b)(2) of the 
Exchange Act,\10\ to approve the proposed rule change on an accelerated 
basis.
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    \10\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-ISE-2007-55), be and it 
hereby is, approved on an accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-14832 Filed 7-31-07; 8:45 am]
BILLING CODE 8010-01-P