[Federal Register Volume 73, Number 147 (Wednesday, July 30, 2008)]
[Notices]
[Pages 44302-44303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17411]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58216; File No. SR-ISE-2008-57]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Fee Waivers
July 23, 2008.
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 July 17, 2008, International Securities Exchange, LLC (the ``ISE''
or the ``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. The ISE filed the proposal pursuant to Section 19(b)(3)(A) of
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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
The ISE is proposing to amend its Schedule of Fees by adopting
additional fee waivers related to the execution on ISE of public
customer orders exposed to members before those orders are sent out for
execution on another exchange through the intermarket linkage
(``Linkage''). The text of the proposed rule change is available at the
Exchange, http://www.ise.com, and 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 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
Before a Primary Market Maker (``PMM'') sends a customer order
through the Linkage when ISE is not at the national best bid or offer
(``NBBO''), the Exchange exposes these customer orders to all its
members to give them an opportunity to match the NBBO.\5\ This exposure
is intended to allow ISE to retain more flow by giving these customer
orders additional opportunity to be executed at the NBBO at ISE, which
also reduces PMM costs by reducing the number of Linkage orders they
must send to other exchanges on behalf of customer orders.
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\5\ See Securities Exchange Act Release No. 58038 (June 26,
2008), 73 FR 38261 (July 3, 2008) (SR-ISE-2008-50) (Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to the
Exposure of Public Customer Orders to all ISE Members).
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Specifically, before the PMM sends a Linkage Order on behalf of a
public customer, the public customer order is exposed at the NBBO price
for a period established by the Exchange not to exceed one second.
During this exposure period, Exchange members may enter responses up to
the size of the order being exposed in the regular trading increment
applicable to the option. If at the end of the exposure period, the
order is executable at the then-current NBBO and the ISE is not at the
then-current NBBO, the order is executed against responses that equal
or better the then-current NBBO. The exposure period is terminated if
the exposed order becomes executable on the ISE at the prevailing NBBO
or if the Exchange receives an unrelated order that could trade against
the exposed order at the prevailing NBBO price. If, after an order is
exposed, the order is not executed in full on the Exchange at the then-
current NBBO or better, and it
[[Page 44303]]
is marketable against the then-current NBBO, the PMM sends a Linkage
Order on the customer's behalf for the balance of the order as provided
in Rule 803(c)(2)(ii). If the balance of the order is not marketable
against the then-current NBBO, it is placed on the ISE book.
ISE currently charges a customer fee in options on Premium Products
\6\ and in Second Market \7\ options; customer fees on all other
options are currently waived by the Exchange. To encourage ISE members
to respond to the exposure of these public customer orders, the
Exchange proposes to waive customer fees in options on Premium Products
and in Second Market options incurred by members who step up and match
or improve the NBBO during the exposure period so these public customer
orders can be executed on the Exchange.\8\ With this filing, the
Exchange is also proposing to clarify on its Schedule of Fees that the
fee waiver is applicable to orders exposed pursuant to Supplementary
Material .02 to ISE Rule 803 rather than to Linkage Orders.
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\6\ Premium Products is defined in the Schedule of Fees as the
products enumerated therein.
\7\ See ISE Rule 900.
\8\ ISE recently adopted fee waivers for Firm Proprietary, ISE
Market Maker and Payment for Order Flow fees incurred by members who
step up and match or improve the NBBO during the exposure period.
See Securities Exchange Act Release No. 58164 (July 15, 2008), 73 FR
42638 (July 22, 2008) (SR-ISE-2008-56). This filing extends that
waiver to apply to customer orders in Premium Products and in Second
Market options. The Exchange represents that, since July 1, 2008,
the date SR-ISE-2008-56 was filed and became operative, no customer
orders have responded during the exposure period and thus, no
customer orders were deprived of the proposed fee waiver.
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2. Statutory Basis
The basis under the 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. In particular, the proposed
rule change will allow ISE to retain more flow by giving these customer
orders additional opportunity to be executed at the NBBO at ISE and
will also reduce PMM costs by reducing the number of Linkage orders
they must send to other exchanges.
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
The foregoing proposed rule change has been designated as a fee
change pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(2) thereunder,\10\ because it establishes or changes a due, fee,
or other charge imposed on members by ISE. Accordingly, the proposal is
effective upon filing with the Commission. 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.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(2).
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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-2008-57 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-2008-57. 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 the 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-2008-57 and should be
submitted on or before August 20, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-17411 Filed 7-29-08; 8:45 am]
BILLING CODE 8010-01-P