[Federal Register Volume 73, Number 220 (Thursday, November 13, 2008)]
[Notices]
[Pages 67238-67239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26884]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58898; File No. SR-ISE-2008-81]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to its Cancellation Fee
November 4, 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 October 31, 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 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 regarding its
cancellation fee. The text of the proposed rule change is available on
the Exchange's Web site (http://www.ise.com), at the principal office
of the Exchange, 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 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.
[[Page 67239]]
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 amend the ISE's
cancellation fee. The Exchange currently has a cancellation fee of
$2.00 that applies to Electronic Access Members (``EAMs'') that
cancelled at least 500 orders in a month, for each order cancellation
in excess of the total number of orders such member executed that
month. Further, all orders from the same clearing EAM executed in the
same series on the same side of the market at the same price within a
30 second period are aggregated and counted as one executed order for
purposes of this fee. This fee is currently charged only to customer
orders; broker-dealer orders, including non-member market maker (FARMM)
orders, are excluded from this fee.
Recognizing that order cancellations often happen in large numbers,
the purpose of this fee is to ease system congestion and to fairly
allocate costs among members according to system use. Some members
recently have sought to circumvent the fee by breaking up their orders
into a range of deep out of the money options series in the same
underlying name that trade at the same premium; in another [sic] words,
executing multiple orders within 30 seconds, but in related--not the
same--series of options. As noted above, ISE currently aggregates
executions only in the same series, not related series. In order to
prevent market participants from circumventing this fee, ISE proposes
to amend the current execution-offset provision of the cancellation
fee. Specifically, in calculating this fee, the Exchange will aggregate
together and count as one cancelled order orders that are entered and
traded within 30 seconds, at the same price, in the same underlying
symbol. The Exchange believes this proposed fee change is justified to
counter the level of cancellation activity and its effect on
congestion.
This proposed fee change will be operative on November 3, 2008.
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 Exchange
believes amending the manner by which its cancellation fees are
calculated is necessary to allow the Exchange to target cancellations
that do not have a valid justification.
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 rule change has become effective pursuant to section
19(b)(3) of the Act \5\ and Rule 19b-4(f)(2) \6\ thereunder. 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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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 19b-4(f)(2) [sic].
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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-2008-81 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-2008-81. 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-2008-81 and should be
submitted on or before December 4, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-26884 Filed 11-12-08; 8:45 am]
BILLING CODE 8011-01-P