Self-Regulatory Organizations; International Securities Exchange Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No. 2 Thereto To Extend the Linkage Fee Pilot Program, 45454-45455 [E5-4195]

Download as PDF 45454 Federal Register / Vol. 70, No. 150 / Friday, August 5, 2005 / Notices 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 the filing also will be available for inspection and copying at the principal office of the CBOE. 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–CBOE–2005–51 and should be submitted on or before August 26, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 Jill M. Peterson, Assistant Secretary. [FR Doc. E5–4228 Filed 8–4–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52168; File No. SR–ISE– 2005–32] Self-Regulatory Organizations; International Securities Exchange Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No. 2 Thereto To Extend the Linkage Fee Pilot Program July 29, 2005. 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 7, 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 and II below, which items have been prepared by the Exchange. The Exchange filed Amendment No. 1 to the proposed rule change on July 26, 2005, and withdrew Amendment No. 1 on July 28, 2005. The Exchange filed Amendment No. 2 to proposed rule 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate jul<14>2003 15:34 Aug 04, 2005 Jkt 205001 change on July 28, 2005.3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons and is approving the proposal, as amended, on an accelerated basis for a pilot period through July 31, 2006. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend until July 31, 2006, the current pilot program regarding transaction fees charged for trades executed through the intermarket option linkage (‘‘Linkage’’). Currently pending before the Commission is a filing to make such fees permanent.4 The text of the proposed fee schedule is available on the Exchange’s Web site (https:// www.iseoptions.com), at the Exchange’s principal office, 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 Exchange 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 III below. The Exchange 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 the Exchange, which range from $.12 to $.21 depending on average daily trading volume on the Exchange; a surcharge of between $.05 and $.15 for trading certain licensed products; and a $.03 comparison fee (collectively ‘‘linkage fees’’).6 These are the same fees that all Exchange Members pay for noncustomer transactions executed on the Exchange.7 The Exchange does not charge for the execution of Satisfaction Orders sent through Linkage and is not proposing to charge for such orders. In the Permanent Fee Filing, the Exchange discusses in detail the reasoning why it believes it is appropriate to charge fees for Principal and P/A Orders sent through Linkage and executed on the Exchange. Basically, market makers on competing exchanges always can match a better price on the Exchange; they never are obligated to send orders to the Exchange through Linkage. However, if such market makers do seek the Exchange’s liquidity, whether through conventional orders or through the use of Principal Orders or P/A Orders, the Exchange believes it is appropriate to charge its Members the same fees levied on other non-customer orders. The Exchange 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 one year while the Commission considers the Permanent Fee Filing. 2. Statutory Basis 1. Purpose The purpose of the proposed rule change is to extend for one year the pilot program establishing Exchange fees for Principal Orders and Principal Acting as Agent (‘‘P/A’’) Orders sent through Linkage and executed on the Exchange. The fees currently are effective for a pilot program scheduled to expire on July 31, 2005,5 and the proposed rule change would extend the fees through July 31, 2006. The three fees the Exchange charges for these orders are: The Market Maker and Firm Proprietary execution fees for trading on The Exchange believes that the basis under the Act for this proposed rule change is the requirement under section 6(b)(4) 8 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 in more detail above, the Exchange believes that this proposed rule change will equitably allocate fees by having all non-customer users of Exchange transaction services pay the same fees. If the Exchange were not to charge Linkage fees, the Exchange’s fee would not be equitable in that Exchange Members would be subsidizing the trading of their 3 Amendment No. 2 makes technical corrections to the proposed rule text and clarifies the purpose of the proposed rule change. 4 See SR–ISE–2003–30 (‘‘Permanent Fee Filing’’). 5 See Securities Exchange Act Release No. 50010 (July 13, 2004); 69 FR 43649 (July 21, 2004) (Order extending the Linkage fee pilot program to July 31, 2005). 6 Pursuant to other pilot programs, certain linkage fees may not apply during the Linkage pilot program. 7 The Exchange charges these fees only to its Members, generally firms who clear Principal and P/A Orders for market makers on the other linked exchanges. 8 15 U.S.C. 78f(b)(4). PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\05AUN1.SGM 05AUN1 Federal Register / Vol. 70, No. 150 / Friday, August 5, 2005 / Notices competitors, all of whom access the same trading services. 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. Moreover, the Exchange believes that failing to adopt the proposed rule change would impose a burden on competition by requiring the Exchange 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. 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 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–2005–32 and should be submitted on or before August 26, 2005. IV. Commission’s Findings and Order Granting Accelerated Approval of the Proposed Rule Change After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange,9 and, in III. Solicitation of Comments particular, the requirements of section 6(b) of the Act 10 and the rules and Interested persons are invited to regulations thereunder. The submit written data, views, and Commission finds that the proposed arguments concerning the foregoing, rule change is consistent with section including whether the proposed rule 6(b)(4) of the Act,11 which requires that change, as amended, is consistent with the Act. Comments may be submitted by the rules of the Exchange provide for the equitable allocation of reasonable dues, any of the following methods: fees and other charges among its Electronic Comments members and other persons using its • Use the Commission’s Internet facilities. The Commission believes that comment form (https://www.sec.gov/ the extension of the Linkage fee pilot rules/sro.shtml); or until July 31, 2006, will give the • Send an e-mail to ruleExchange and the Commission further comments@sec.gov. Please include File opportunity to evaluate whether such Number SR–ISE–2005–32 on the subject fees are appropriate. line. The Commission finds good cause pursuant to section 19(b)(2) of the Act,12 Paper Comments for approving the proposed rule change • Send paper comments in triplicate prior to the 30th day after publication of to Jonathan G. Katz, Secretary, notice thereof in the Federal Register. Securities and Exchange Commission, The Commission believes that granting 100 F Street, NE., Washington, DC accelerated approval of the proposed 20549–9303. rule change will preserve the All submissions should refer to File Exchange’s existing pilot program for Number SR–ISE–2005–32. This file Linkage fees without interruption as the number should be included on the Exchange and the Commission further subject line if e-mail is used. To help the consider the appropriateness of Linkage Commission process and review your fees. comments more efficiently, please use only one method. The Commission will V. Conclusion post all comments on the Commission’s It is therefore ordered, pursuant to Internet Web site (https://www.sec.gov/ section 19(b)(2) of the Act,13 that the rules/sro.shtml). Copies of the 9 In approving this proposal, the Commission has submission, all subsequent considered the proposed rule’s impact on amendments, all written statements efficiency, competition, and capital formation. 15 with respect to the proposed rule U.S.C. 78c(f). change that are filed with the 10 15.U.S.C. 78f(b). Commission, and all written 11 15 U.S.C. 78f(b)(4). 12 15 U.S.C. 78s(b)(2). communications relating to the 13 Id. proposed rule change between the VerDate jul<14>2003 15:34 Aug 04, 2005 Jkt 205001 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 45455 proposed rule change (SR–ISE–2005– 32), as amended, is hereby approved on an accelerated basis for a pilot period to expire on July 31, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Jill M. Peterson, Assistant Secretary. [FR Doc. E5–4195 Filed 8–4–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52174; File No. SR–ISE– 2005–33] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing of Proposed Rule Change Relating to Amendments to the Exchange’s Trade-Through and Locked Markets Rules July 29, 2005. 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 8, 2005, the International Securities Exchange, Inc. (‘‘ISE’’) 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. The Commission is publishing this notice to solicit comments on the proposed rule change 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 rules governing the operation of the intermarket option linkage (‘‘Linkage’’). Specifically, the ISE is proposing to amend the trade-through and locked markets rules to allow a member to ‘‘trade and ship’’ or ‘‘book and ship’’ an order. The text of the proposed rule change is available on the ISE’s Web site (https://www.iseoptions.com), at the ISE’s Office of the Secretary, 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 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\05AUN1.SGM 05AUN1

Agencies

[Federal Register Volume 70, Number 150 (Friday, August 5, 2005)]
[Notices]
[Pages 45454-45455]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4195]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52168; File No. SR-ISE-2005-32]


Self-Regulatory Organizations; International Securities Exchange 
Inc.; Notice of Filing and Order Granting Accelerated Approval of a 
Proposed Rule Change and Amendment No. 2 Thereto To Extend the Linkage 
Fee Pilot Program

July 29, 2005.
    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 7, 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 and 
II below, which items have been prepared by the Exchange. The Exchange 
filed Amendment No. 1 to the proposed rule change on July 26, 2005, and 
withdrew Amendment No. 1 on July 28, 2005. The Exchange filed Amendment 
No. 2 to proposed rule change on July 28, 2005.\3\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons and is approving the proposal, as 
amended, on an accelerated basis for a pilot period through July 31, 
2006.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 2 makes technical corrections to the proposed 
rule text and clarifies the purpose of the proposed rule change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend until July 31, 2006, the current 
pilot program regarding transaction fees charged for trades executed 
through the intermarket option linkage (``Linkage''). Currently pending 
before the Commission is a filing to make such fees permanent.\4\ The 
text of the proposed fee schedule is available on the Exchange's Web 
site (https://www.iseoptions.com), at the Exchange's principal office, 
and at the Commission's Public Reference Room.
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    \4\ See SR-ISE-2003-30 (``Permanent Fee Filing'').
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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 Exchange 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 III below. The Exchange 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 the proposed rule change is to extend for one year 
the pilot program establishing Exchange fees for Principal Orders and 
Principal Acting as Agent (``P/A'') Orders sent through Linkage and 
executed on the Exchange. The fees currently are effective for a pilot 
program scheduled to expire on July 31, 2005,\5\ and the proposed rule 
change would extend the fees through July 31, 2006. The three fees the 
Exchange charges for these orders are: The Market Maker and Firm 
Proprietary execution fees for trading on the Exchange, which range 
from $.12 to $.21 depending on average daily trading volume on the 
Exchange; a surcharge of between $.05 and $.15 for trading certain 
licensed products; and a $.03 comparison fee (collectively ``linkage 
fees'').\6\ These are the same fees that all Exchange Members pay for 
non-customer transactions executed on the Exchange.\7\ The Exchange 
does not charge for the execution of Satisfaction Orders sent through 
Linkage and is not proposing to charge for such orders.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 50010 (July 13, 
2004); 69 FR 43649 (July 21, 2004) (Order extending the Linkage fee 
pilot program to July 31, 2005).
    \6\ Pursuant to other pilot programs, certain linkage fees may 
not apply during the Linkage pilot program.
    \7\ The Exchange charges these fees only to its Members, 
generally firms who clear Principal and P/A Orders for market makers 
on the other linked exchanges.
---------------------------------------------------------------------------

    In the Permanent Fee Filing, the Exchange discusses in detail the 
reasoning why it believes it is appropriate to charge fees for 
Principal and P/A Orders sent through Linkage and executed on the 
Exchange. Basically, market makers on competing exchanges always can 
match a better price on the Exchange; they never are obligated to send 
orders to the Exchange through Linkage. However, if such market makers 
do seek the Exchange's liquidity, whether through conventional orders 
or through the use of Principal Orders or P/A Orders, the Exchange 
believes it is appropriate to charge its Members the same fees levied 
on other non-customer orders. The Exchange 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 one year while the Commission considers the Permanent 
Fee Filing.
2. Statutory Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is the requirement under section 6(b)(4) \8\ 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 in more detail above, the Exchange believes that this 
proposed rule change will equitably allocate fees by having all non-
customer users of Exchange transaction services pay the same fees. If 
the Exchange were not to charge Linkage fees, the Exchange's fee would 
not be equitable in that Exchange Members would be subsidizing the 
trading of their

[[Page 45455]]

competitors, all of whom access the same trading services.
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    \8\ 15 U.S.C. 78f(b)(4).
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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. Moreover, the Exchange believes 
that failing to adopt the proposed rule change would impose a burden on 
competition by requiring the Exchange 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. 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

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-ISE-2005-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-ISE-2005-32. 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 (https://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 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-2005-32 and should be submitted on or before August 
26, 2005.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange,\9\ and, in particular, the requirements of section 6(b) of 
the Act \10\ and the rules and regulations thereunder. The Commission 
finds that the proposed rule change is consistent with section 6(b)(4) 
of the Act,\11\ which requires that the rules of the Exchange provide 
for the equitable allocation of reasonable dues, fees and other charges 
among its members and other persons using its facilities. The 
Commission believes that the extension of the Linkage fee pilot until 
July 31, 2006, will give the Exchange and the Commission further 
opportunity to evaluate whether such fees are appropriate.
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    \9\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \10\ 15.U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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    The Commission finds good cause pursuant to section 19(b)(2) of the 
Act,\12\ for approving the proposed rule change prior to the 30th day 
after publication of notice thereof in the Federal Register. The 
Commission believes that granting accelerated approval of the proposed 
rule change will preserve the Exchange's existing pilot program for 
Linkage fees without interruption as the Exchange and the Commission 
further consider the appropriateness of Linkage fees.
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    \12\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\13\ that the proposed rule change (SR-ISE-2005-32), as amended, is 
hereby approved on an accelerated basis for a pilot period to expire on 
July 31, 2006.
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    \13\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-4195 Filed 8-4-05; 8:45 am]
BILLING CODE 8010-01-P
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