[Federal Register Volume 72, Number 213 (Monday, November 5, 2007)]
[Notices]
[Pages 62502-62504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-21662]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56721; File No. SR-ISE-2007-91]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change, as Modified by Amendment No. 1, Relating to API Fees

October 30, 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 October 1, 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, II, 
and III below, which Items have been substantially prepared by the 
Exchange. On October 29, 2007, the Exchange filed Amendment No. 1 to 
the proposed rule change.\3\ ISE has designated this proposal as one 
establishing or changing a due, fee, or other charge imposed by the 
Exchange under section 19(b)(3)(A),\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 modified by Amendment No. 1, 
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 clarifying changes to the original 
filing and attached a revised Exhibit 5, to reflect intervening 
changes to the Exchange's Schedule of Fees that were made between 
the filing of the original proposed rule change and the submission 
of Amendment No. 1.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 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

    ISE proposes to amend its Schedule of Fees regarding the Exchange's 
API or login fees. 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, 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. 
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
    ISE charges its market makers a fee for each login that a member 
utilizes for quoting or order entry, with a lesser charge for logins 
used for the limited purpose of ``listening'' to system broadcasts.\6\ 
ISE currently has the following categories of authorized logins: (1) 
Quoting, order entry and listening (allowing the user to enter quotes, 
orders, and perform all other miscellaneous functions, such as setting

[[Page 62503]]

parameters, pulling quotes and performing linkage functions (e.g., 
sending and receiving P and P/A orders, laying off orders, etc.)); (2) 
order entry and listening (allowing the user to enter orders and 
perform all other miscellaneous functions, such as setting parameters, 
pulling quotes and performing linkage functions (but not quote)); and 
(3) listening (allowing the user only to query the system and to 
respond to other broadcasts).\7\
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    \6\ See Securities Exchange Act Release No. 53522 (March 20, 
2006), 71 FR 14975 (March 24, 2006) (SR-ISE-2006-09).
    \7\ Id.
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    An ISE market maker currently receives an allocation of 1,000,000 
quotes per day per user. If a firm submits more quotes than those 
allocated, i.e., 1,000,000 quotes per day per user as measured on an 
average in a single month, the firm is charged for additional users 
depending upon the number of quotes submitted. Each month, the total 
number of quotes submitted by a market maker firm across all bins 
(i.e., group of options to which the market maker is appointed), is 
divided by the number of trading days, resulting in the average quotes 
per day. This number is then divided by 1,000,000 and rounded up to the 
nearest whole number, resulting in an implied number of users based on 
quotes. Members are invoiced on a monthly basis for the greater of a) 
the greatest number of users authorized to login into the system, or b) 
the number of implied users based on quotes.
    The Exchange also previously adopted an additional category, a 
``High Throughput User,'' that permits a market maker to quote up to 
2,000,000 quotes per day in a month.\8\ A High Throughput User is able 
to enter quotes, orders, and perform all other miscellaneous functions, 
such as setting parameters, pulling quotes and performing linkage 
functions (e.g., sending and receiving P and P/A orders, laying-off 
orders, etc.).\9\
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    \8\ See Securities Exchange Act Release No. 55941 (June 21, 
2007), 72 FR 35535 (June 28, 2007) (SR-ISE-2007-36).
    \9\ Id.
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    ISE currently charges market makers $950 per month for each quoting 
session for up to 1,000,000 quotes per day, on average for a month. 
Market makers are charged an additional user fee of $950 for each 
incremental usage of up to 1,000,000 quotes per day per user. For High 
Throughput Users, ISE charges a fee of $1,900 per month. High 
Throughput User market makers are charged an additional user fee of 
$1,900 for each incremental usage of up to 2,000,000 quotes per day per 
user.
    The Exchange now proposes to increase the allocation of quotes per 
day per user from 1,000,000 to 1,300,000 for non-High Throughput Users 
and from 2,000,000 to 2,600,000 for High Throughput Users. As a result, 
under this proposed rule change, market makers will continue to be 
charged $950 per month for each quoting session for up to 1,300,000 
quotes per day, with an additional user fee of $950 for each 
incremental usage of up to 1,300,000 quotes per day per user. For High 
Throughput Users, the fee will continue to be $1,900 per month for each 
quoting session for up to 2,600,000 quotes per day, with an additional 
user fee of $1,900 for each incremental usage of up to 2,600,000 quotes 
per day per user. Finally, ISE represents that the proposed increase in 
the allocation of quotes per day per user will not have an adverse 
effect on capacity on the Exchange.
2. Statutory Basis
    The basis under section 6(b) of the Act \10\ for this proposed rule 
change is the requirement under section 6(b)(4) \11\ 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 
has had numerous conversations with its market makers and believes 
that, in light of the increased number of quotes as a result of the 
penny pilot, an increase in the allocation of quotes per day per user 
is necessary and warranted.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ISE 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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \12\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\13\ since it establishes or changes a due, fee or other 
charge imposed by the Exchange. At any time within 60 days of the 
filing of such proposed 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 the 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 240.19b-4(f)(2).
    \14\ for purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on October 29, 2007, the date on which ISE filed 
Amendment No. 1. 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 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-2007-91 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-2007-91. 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

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available for inspection and copying at the principal office of 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 No. SR-ISE-2007-91 and 
should be submitted on or before November 26, 2007.
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    \15\ 17 CFR 200.30-3(a)(12).
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    For the Commission, by the Division of Market Regulation, 
pursuant to elegated authority.\15\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-21662 Filed 11-2-07; 8:45 am]
BILLING CODE 8011-01-P