[Federal Register Volume 73, Number 139 (Friday, July 18, 2008)]
[Notices]
[Pages 41388-41389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-16402]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58143; File No. SR-ISE-2008-52]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Linkage Fees

July 11, 2008.
    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 June 24, 2008, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') filed with the Securities and Exchange 
Commission the proposed rule change as described in Items I, II, and 
III below, which items have been prepared by the self-regulatory 
organization. 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 extend through July 31, 2009 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 self-regulatory organization 
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 self-regulatory organization 
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 the ISE. The fees currently are 
effective for a pilot period scheduled to expire on July 31, 2008.\3\ 
This filing would extend the pilot program for another year, through 
July 31, 2009. The 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'').\4\ These are the same fees that all ISE Members pay 
for non-customer transactions executed on the Exchange.\5\ The ISE does 
not charge for the execution of Satisfaction Orders sent through 
Linkage and is not proposing to charge for such orders.
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    \3\ See Securities Exchange Act Release No. 56128 (July 24, 
2007), 72 FR 42161 (August 1, 2007) (SR-ISE-2007-55) (Notice of 
Filing and Order Granting Accelerated Approval of Proposed Rule 
Change Relating to Linkage Fees).
    \4\ Pursuant to other pilot programs, certain linkage fees may 
not apply during the Linkage pilot program.
    \5\ The 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.
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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 the ISE, they 
never are obligated to send orders to the ISE through Linkage. However, 
if such market makers do seek the ISE's liquidity, whether through 
conventional orders or through the use of P Orders or P/A Orders, ISE 
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. The Exchange is making no substantive changes to the 
way the pilot is currently operating, other than to extend the date of 
operation through July 31, 2009.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(4) 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, 
the 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 not to 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.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-
4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the 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 furtherance of the purposes of the Act.

[[Page 41389]]

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-2008-52 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-ISE-2008-52. 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 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-2008-52 and should be submitted on or before August 
8, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-16402 Filed 7-17-08; 8:45 am]
BILLING CODE 8010-01-P