72 FR 126 pgs. 36083-36084 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fee Changes
Type: NOTICEVolume: 72Number: 126Pages: 36083 - 36084
Docket number: [Release No. 34-55959; File No. SR-ISE-2007-50]
FR document: [FR Doc. E7-12741 Filed 6-29-07; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55959; File No. SR-ISE-2007-50]
Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fee Changes
June 26, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the "Act"),1and Rule 19b-4 thereunder,2notice is hereby given that on June 19, 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 ISE. The ISE has designated this proposal as one establishing or changing a due, fee, or other charge applicable only to a member under Section 19(b)(3)(A)(ii) of the Act3and Rule 19b-4(f)(2) thereunder,4which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
Footnotes:
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b-4(f)(2).
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The ISE is proposing to amend its Schedule ofFees to establish fees for transactions in options on four Premium Products.5The text of the proposed rule change is available at the ISE, at the Commission's Public Reference Room, and on the ISE's Web site ( http://www.iseoptions.com/legal/proposed_rule_changes.asp ).
Footnotes:
5 "Premium Products" is defined in the Schedule of Fees as the products enumerated therein.
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 Exchange is proposing to amend its Schedule of Fees to establish fees for transactions in options on the following four Premium Products: First Trust ISE-Revere Natural Gas Index Fund ("FCG"), First Trust ISE Water Index Fund ("FIW"), the SPDR SP Metals Mining ETF ("XME"),6and the KBW Mortgage Finance Index ("MFX"). The Exchange represents that FCG, FIW, and XME are eligible for options trading because they constitute "Fund Shares," as defined by ISE Rule 502(h). The Exchange further represents that MFX meets the standards of ISE Rule 2002(b), which allows the ISE to begin trading this product by filing Form 19b-4(e) at least five business days after commencement of trading this new product pursuant to Rule 19b-4(e) under the Act.7The ISE represents that it submitted Form 19b-4(e) to the Commission on June 19, 2007.
Footnotes:
6 "Standard Poor's®," "SP®," "SP 500®," "Standard Poor's 500®," "Standard Poor's Depositary Receipts®," "SPDR®," and "the SP® Metals Mining Select Industry Index," are trademarks of The McGraw-Hill Companies, Inc. ("McGraw-Hill"), and have been licensed for use by State Street Bank and Trust in connection with the listing and trading of XME. XME is not sponsored, sold or endorsed by Standard Poor's, ("SP"), a division of McGraw-Hill, and SP makes no representation regarding the advisability of investing in XME. McGraw-Hill and SP have not licensed or authorized ISE to: (i) engage in the creation, listing, provision of a market for trading, marketing, and promotion of options on XME; or (ii) use and refer to any of their trademarks or service marks in connection with the listing, provision of a market for trading, marketing, and promotion of options on XME or with making disclosures concerning options on XME under any applicable federal or state laws, rules or regulations. McGraw-Hill and SP do not sponsor, endorse, or promote such activity by ISE and are not affiliated in any manner with ISE.
7 17 CFR 240.19b-4(e).
All of the applicable fees covered by this filing are identical to fees charged by the Exchange for all other Premium Products. Specifically, the Exchange is proposing to adopt an execution fee and a comparison fee for all transactions in options on FCG, FIW, XME and MFX.8The amount of the execution fee and comparison fee for products covered by this filing shall be $0.15 and $0.03 per contract, respectively, for all Public Customer Orders9and Firm Proprietary orders. The amount of the execution fee and comparison fee for all ISE Market Maker transactions shall be equal to the execution fee and comparison fee currently charged by the Exchange for ISE Market Maker transactions in equity options.10Finally, the amount of the execution fee and comparison fee for all non-ISE Market Maker transactions shall be $0.37 and $0.03 per contract, respectively.
Footnotes:
8 These fees will be charged only to Exchangemembers. Under a pilot program that is set to expire on July 31, 2007, these fees will also be charged to Principal Orders and Principal Acting as Agent Orders. See ISE Rule 1900(10). See also Securities Exchange Act Release No. 54204 (July 25, 2006), 71 FR 43548 (August 1, 2006) (SR-ISE-2006-38) ("Linkage Orders Pilot"). Telephone conversation between Samir Patel, Assistant General Counsel, ISE, and Sara Gillis, Attorney, Division of Market Regulation, Commission, on June 26, 2007.
9 "Public Customer Order" is defined in ISE Rule 100(a)(39) as an order for the account of a Public Customer. "Public Customer" is defined in ISE Rule 100(a)(38) as a person that is not a broker or dealer in securities.
10 The execution fee is currently between $0.21 and $0.12 per contract side, depending on the Exchange Average Daily Volume, and the comparison fee is currently $0.03 per contract side.
Additionally, the Exchange has entered into a license agreement with Keefe, Bruyette Woods, Inc. in connection with the listing and trading of options on MFX. As with certain other licensed options, to defray the licensing costs, the Exchange is adopting a surcharge fee of $0.10 per contract for trading in options on MFX. The Exchange believes charging the participants that trade this instrument 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 from this surcharge fee. Accordingly, this surcharge fee will only be charged to Exchange members with respect to non-Public Customer Orders ( e.g. , ISE Market Maker, non-ISE Market Maker Firm Proprietary orders) and shall apply to Principal Orders and Principal Acting as Agent Orders.11
Footnotes:
11 See ISE Rule 1900(10). See also Linkage Orders Pilot, supra note 5.
Further, since options on XME and MFX are multiply-listed, the Payment for Order Flow fee shall apply to these two products. The Exchange believes the proposed rule change will further the Exchange's goal of introducing new products to the marketplace that are competitively priced.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,12in general, and furthers the objectives of Section 6(b)(4),13in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities.
Footnotes:
12 15 U.S.C. 78f.
13 15 U.S.C. 78f(b)(4).
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.
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 establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to section 19(b)(3)(A) of the Act14and Rule 19b-4(f)(2)15thereunder. 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 furtherance of the purposes of the Act.
Footnotes:
14 15 U.S.C. 78s(b)(3)(A).
15 17 CFR 19b-4(f)(2).
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 rule-comments@sec.gov. Please include File No. SR-ISE-2007-50 on the subject line.
Paper Comments
• Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2007-50. 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 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-2007-50 and should be submitted on or before July 23, 2007.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16
Footnotes:
16 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-12741 Filed 6-29-07; 8:45 am]
BILLING CODE 8010-01-P