Skip to Content

Notice

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

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble 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.

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 Start Printed Page 362192000 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.

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.

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.

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]

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

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.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[15]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

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.

Back to Citation

4.  15 U.S.C. 78s(b)(3)(A)(ii).

Back to Citation

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.

Back to Citation

7.  The Exchange represents that these fees will be charged only to Exchange members.

Back to Citation

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.

Back to Citation

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.

Back to Citation

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.

Back to Citation

12.  15 U.S.C. 78s(b)(3)(A)(ii).

Back to Citation

13.  17 CFR 19b-4(f)(2).

Back to Citation

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).

Back to Citation

[FR Doc. E5-3238 Filed 6-21-05; 8:45 am]

BILLING CODE 8010-01-P