Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Cancellation Fee Changes, 31244-31246 [E6-8434]

Download as PDF 31244 Federal Register / Vol. 71, No. 105 / Thursday, June 1, 2006 / Notices 06 and should be submitted on or before June 22, 2006. 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. FICC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.4 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. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to modify Rules 1 and 4(b)(ii) of FICC’s Government Securities Division’s (‘‘GSD’’) rulebook to clarify that an entity that is neither a bank nor a trust company but does have direct access to a Federal Reserve Bank and the National Settlement System of the Federal Reserve is eligible to become a GSD funds-only settling bank member.5 FICC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 6 and the rules thereunder because it makes a necessary technical change to the membership provisions for fundsonly settling banks. 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: BILLING CODE 8010–01–P Electronic Comments Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Cancellation Fee Changes B. Self-Regulatory Organization’s Statement on Burden on Competition FICC does not believe that the proposed rule change will have any impact or impose any burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. FICC will notify the Commission of any written comments it receives. wwhite on PROD1PC61 with NOTICES 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)(A)(i) 7 of the Act and Rule 19b– 4(f)(1) 8 thereunder because it constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule. At any time within 60 days of the filing of the proposed rule change, the Commission 4 The Commission has modified the text of the summaries prepared by FICC. 5 As of the date of this rule filing, this situation applies to one GSD member that plans to act as a settling bank for itself. 6 15 U.S.C. 78q–1. 7 15 U.S.C. 78s(b)(3)(A)(i). 8 17 CFR 240.19b–4(f)(1). VerDate Aug<31>2005 19:10 May 31, 2006 Jkt 208001 IV. Solicitation of Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File No. SR–FICC–2006–06 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–FICC–2006–06. 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 Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at FICC’s principal office and on FICC’s Web site at http://www.ficc.com/gov/ gov.docs.jsp?NS-query=. 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 submission should refer to File No. SR–FICC–2006– PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.9 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–8439 Filed 5–31–06; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53862; File No. SR–ISE– 2006–23] May 24, 2006. 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 May 1, 2006, the International Securities Exchange, Inc. (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change concerning the Exchange’s cancellation fee as described in Items I, II, and II below, which Items have been prepared by the ISE. On May 18, 2006, the ISE submitted an amendment to the proposed rule change (‘‘Amendment No. 1’’).3 The ISE has filed the proposed rule change 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 from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to amend its Schedule of Fees regarding its 9 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The purpose of Amendment No. 1 was to clarify the application of the proposed cancellation fee in the Notes section of the Exchange’s Schedule of Fees and to include in that section an exception for the cancellation of orders that improved the Exchange’s disseminated quotes at the time the orders were entered. This exception, described below, was discussed in the purpose section of the filing, but was not set forth in the text of the Schedule of Fees. 4 15 U.S.C. 78s(b)(3)(A)(ii). 5 17 CFR 240.19b–4(f)(2). 1 15 E:\FR\FM\01JNN1.SGM 01JNN1 Federal Register / Vol. 71, No. 105 / Thursday, June 1, 2006 / Notices cancellation fee. The text of the proposed rule change is available on the Exchange’s Internet 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. wwhite on PROD1PC61 with NOTICES 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. Through June 2005, the Exchange charged Electronic Access Members (‘‘EAMs’’) $1 per order canceled in excess of the number of orders executed. In File No. SR–ISE– 2005–31 (‘‘Fee Amendment’’), the Exchange amended that fee in a rule change effective on filing pursuant to Section 19(b)(3)(A) of the Act.6 To address problems the Exchange encountered in applying the cancellation fee, the Fee Amendment applied the fee: (1) On the cancellation activity of each of an EAM’s customers (including itself when it self-clears), rather than the aggregate activity of all of an EAM’s customers; and (2) on a percontract, rather than a per-order basis. Upon the Exchange’s filing of the Fee Amendment, the Commission received a number of comment letters raising objections to the proposal. According to the Exchange, based on those comment letters, the Commission staff informed the ISE that it believed that the proposed fee should be subject to formal comment pursuant to Section 19(b)(2) of the Act. Accordingly, the Exchange submitted File No. SR–ISE–2005–36, which reinstated the cancellation fee as it was in effect prior to the submission of the Fee Amendment. The Exchange thereafter submitted File No. SR–ISE– 2005–37 (the ‘‘19(b)(2) Fee 6 See Securities Exchange Act Release No. 52177 (July 29, 2005), 70 FR 45457 (August 5, 2005) (File No. SR–ISE–2005–31). VerDate Aug<31>2005 19:10 May 31, 2006 Jkt 208001 Amendment’’), a proposed rule change pursuant to Section 19(b)(2) of the Act to implement the same change that had previously been adopted in the Fee Amendment. The Exchange is withdrawing the 19(b)(2) Fee Amendment filing and submitting the instant filing. Since the inception of the cancellation fee (except during the month of July 2005), the Exchange has charged EAMs $1 per order canceled in excess of the number of orders executed.7 Recognizing that order cancellations often happen in large numbers, the purpose of the fee was to ease congestion in the ISE Order Routing System (‘‘IORS’’) and to fairly allocate costs among members according to system use. According to the Exchange, experience shows that two limitations are preventing the fee from fully achieving its intended effect. First, the ISE applies the fee to the aggregate number of orders a clearing EAM cancels on behalf of itself and its customers, which tends to mask the activity of the EAM’s particular customers who are responsible for the cancellations. Second, because the Exchange applies the fee on a per order basis, firms have adjusted trading activity solely to avoid this fee by executing small orders to offset the cancellation of larger orders. ISE states that, if anything, this increases message traffic as firms enter more small orders to mask their order cancellations. To address these concerns, the ISE first proposes to charge a clearing EAM based on the cancellation activity of each of its customers (including itself when it self-clears). The Exchange has enhanced its systems so that it now can identify the specific broker-dealer customers of a clearing EAM who enters and cancels orders. This will allow the Exchange to identify and charge for cancellation activity beyond aggregate numbers. The ISE similarly will be able to provide clearing EAMs with the information necessary for them to pass through resulting cancellation charges to their customers.8 Further, for purposes of calculating the number of trades that may offset cancellations, the Exchange proposes to consider all orders executed by the same firm in the same series on the same side of the market at the same price within 30 seconds as only one execution. The 7 See Securities Exchange Act Release No. 46189 (July 11, 2002), 67 FR 47587 (July 19, 2002) (File No. SR–ISE–2002–16). 8 The Exchange notes that this is similar to how the NYSE Arca, Inc. now imposes its cancellation fee. See Securities Exchange Act Release No. 49802 (June 3, 2004), 69 FR 32391 (June 9, 2004) (File No. SR–PCX–2004–31). PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 31245 Exchange believes that this will remove the incentive for an EAM to enter multiple orders in rapid succession. To ensure that the Exchange covers only activity that is truly excessive and inappropriately uses bandwidth and system capacity, the Exchange proposes to exclude from the cancellation fee orders that improve ISE’s disseminated quotation at the time the orders were entered. 2. Statutory Basis The basis for the proposed rule change is the requirement under Section 6(b)(4) of the Act 9 that an exchange have an equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities. The ISE states that, in particular, these fees would permit the Exchange to recover capacity costs more equitably from among its members. 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 proposed 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) of the Act 10 and Rule 19b–4(f)(2) 11 thereunder. At any time within 60 days of the filing of the proposed rule change the Commission may summarily abrogate such proposed 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.12 9 15 U.S.C. 78f(b)(4). U.S.C. 78s(b)(3)(A). 11 17 CFR 19b–4(f)(2). 12 For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposed rule change under Section 19(b)(3)(C) of Act, the Commission considers the 10 15 E:\FR\FM\01JNN1.SGM Continued 01JNN1 31246 Federal Register / Vol. 71, No. 105 / Thursday, June 1, 2006 / Notices 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 rulecomments@sec.gov. Please include File No. SR–ISE–2006–23 on the subject line. wwhite on PROD1PC61 with NOTICES Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–ISE–2006–23. 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. 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 No. SR–ISE–2006–23 and should be submitted on or before June 22, 2006. period to commence on May 18, 2006, the date on which the ISE submitted Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C). 13 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 19:10 May 31, 2006 Jkt 208001 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–8434 Filed 5–31–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53857; File No. SR–ISE– 2006–24] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto To Permit the Listing and Trading of Quarterly Options Series May 24, 2006. 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 May 2, 2006, 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 substantially prepared by the Exchange. The Exchange filed Amendment No. 1 to the proposed rule change on May 17, 2006.3 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 proposes to amend its rules in order to list option series that expire at the close of business on the last business day of a calendar quarter. This rule change is being proposed on a pilot basis for one year. The text of the proposed rule change, as amended, is set forth below. Proposed new language is in italics; deletions are in [brackets]. * * * * * Rule 100. Definitions (a) The following terms, when used in these Rules, shall have the meanings specified in this Chapter 1, unless the context indicates otherwise. Any term defined in Article I of the Constitution and not otherwise defined in this Chapter shall have the meaning assigned in Article I of the Constitution. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 In Amendment No. 1, a partial amendment, the Exchange made minor modifications to the proposed rule text. 2 17 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 (1) through (34) No change. (35) The term ‘‘Quarterly Options Series’’ means a series in an options class that is approved for listing and trading on the Exchange in which the series is opened for trading on any business day and that expires at the close of business on the last business day of a calendar quarter. (35) through (44) Renumbered as (36) through (45). * * * * * Rule 504. Series of Options Contracts Open for Trading (a) After a particular class of options has been approved for listing and trading on the Exchange, the Exchange from time to time may open for trading series of options in that class. Only options contracts in series of options currently open for trading may be purchased or written on the Exchange. Prior to the opening of trading in a given series, the Exchange will fix the expiration month, year and exercise price of that series. For Short Term Option Series, the Exchange will fix a specific expiration date and exercise price, as provided in Supplementary Material .02. For Quarterly Options Series, the Exchange will fix a specific expiration date and exercise price, as provided in Supplementary Material .03. (b) through (h) No change. Supplementary Material to Rule 504 .01 No change. .02 No change. .03 Quarterly Options Series Pilot Program: For a one-year pilot period, the Exchange may list and trade options series that expire at the close of business on the last business day of a calendar quarter (‘‘Quarterly Options Series’’). The Exchange may list Quarterly Options Series for up to five (5) currently listed options classes that are either index options or options on exchange traded funds. In addition, the Exchange may also list Quarterly Options Series on any options classes that are selected by other securities exchanges that employ a similar pilot program under their respective rules. The one-year pilot will commence the day the Exchange first initiates trading in a Quarterly Options Series, which shall be no later than July 24, 2006. (a) The Exchange will list series that expire at the end of the next consecutive four (4) calendar quarters, as well as the fourth quarter of the next calendar year. For example, if the Exchange is trading Quarterly Options Series in the month of May 2006, it will list series that expire at the end of the second, third and fourth quarters of 2006, as well as the E:\FR\FM\01JNN1.SGM 01JNN1

Agencies

[Federal Register Volume 71, Number 105 (Thursday, June 1, 2006)]
[Notices]
[Pages 31244-31246]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-8434]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53862; File No. SR-ISE-2006-23]


Self-Regulatory Organizations; International Securities Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change and Amendment No. 1 Thereto Relating to Cancellation Fee Changes

May 24, 2006.
    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 May 1, 2006, the International Securities Exchange, Inc. (``ISE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change concerning the Exchange's 
cancellation fee as described in Items I, II, and II below, which Items 
have been prepared by the ISE. On May 18, 2006, the ISE submitted an 
amendment to the proposed rule change (``Amendment No. 1'').\3\ The ISE 
has filed the proposed rule change 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 from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The purpose of Amendment No. 1 was to clarify the 
application of the proposed cancellation fee in the Notes section of 
the Exchange's Schedule of Fees and to include in that section an 
exception for the cancellation of orders that improved the 
Exchange's disseminated quotes at the time the orders were entered. 
This exception, described below, was discussed in the purpose 
section of the filing, but was not set forth in the text of the 
Schedule of Fees.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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 proposes to amend its Schedule of Fees regarding its

[[Page 31245]]

cancellation fee. The text of the proposed rule change is available on 
the Exchange's Internet 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 purpose of this proposed rule change is to amend the ISE's 
cancellation fee. Through June 2005, the Exchange charged Electronic 
Access Members (``EAMs'') $1 per order canceled in excess of the number 
of orders executed. In File No. SR-ISE-2005-31 (``Fee Amendment''), the 
Exchange amended that fee in a rule change effective on filing pursuant 
to Section 19(b)(3)(A) of the Act.\6\ To address problems the Exchange 
encountered in applying the cancellation fee, the Fee Amendment applied 
the fee: (1) On the cancellation activity of each of an EAM's customers 
(including itself when it self-clears), rather than the aggregate 
activity of all of an EAM's customers; and (2) on a per-contract, 
rather than a per-order basis.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 52177 (July 29, 
2005), 70 FR 45457 (August 5, 2005) (File No. SR-ISE-2005-31).
---------------------------------------------------------------------------

    Upon the Exchange's filing of the Fee Amendment, the Commission 
received a number of comment letters raising objections to the 
proposal. According to the Exchange, based on those comment letters, 
the Commission staff informed the ISE that it believed that the 
proposed fee should be subject to formal comment pursuant to Section 
19(b)(2) of the Act. Accordingly, the Exchange submitted File No. SR-
ISE-2005-36, which reinstated the cancellation fee as it was in effect 
prior to the submission of the Fee Amendment. The Exchange thereafter 
submitted File No. SR-ISE-2005-37 (the ``19(b)(2) Fee Amendment''), a 
proposed rule change pursuant to Section 19(b)(2) of the Act to 
implement the same change that had previously been adopted in the Fee 
Amendment. The Exchange is withdrawing the 19(b)(2) Fee Amendment 
filing and submitting the instant filing.
    Since the inception of the cancellation fee (except during the 
month of July 2005), the Exchange has charged EAMs $1 per order 
canceled in excess of the number of orders executed.\7\ Recognizing 
that order cancellations often happen in large numbers, the purpose of 
the fee was to ease congestion in the ISE Order Routing System 
(``IORS'') and to fairly allocate costs among members according to 
system use. According to the Exchange, experience shows that two 
limitations are preventing the fee from fully achieving its intended 
effect. First, the ISE applies the fee to the aggregate number of 
orders a clearing EAM cancels on behalf of itself and its customers, 
which tends to mask the activity of the EAM's particular customers who 
are responsible for the cancellations. Second, because the Exchange 
applies the fee on a per order basis, firms have adjusted trading 
activity solely to avoid this fee by executing small orders to offset 
the cancellation of larger orders. ISE states that, if anything, this 
increases message traffic as firms enter more small orders to mask 
their order cancellations.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 46189 (July 11, 
2002), 67 FR 47587 (July 19, 2002) (File No. SR-ISE-2002-16).
---------------------------------------------------------------------------

    To address these concerns, the ISE first proposes to charge a 
clearing EAM based on the cancellation activity of each of its 
customers (including itself when it self-clears). The Exchange has 
enhanced its systems so that it now can identify the specific broker-
dealer customers of a clearing EAM who enters and cancels orders. This 
will allow the Exchange to identify and charge for cancellation 
activity beyond aggregate numbers. The ISE similarly will be able to 
provide clearing EAMs with the information necessary for them to pass 
through resulting cancellation charges to their customers.\8\
---------------------------------------------------------------------------

    \8\ The Exchange notes that this is similar to how the NYSE 
Arca, Inc. now imposes its cancellation fee. See Securities Exchange 
Act Release No. 49802 (June 3, 2004), 69 FR 32391 (June 9, 2004) 
(File No. SR-PCX-2004-31).
---------------------------------------------------------------------------

    Further, for purposes of calculating the number of trades that may 
offset cancellations, the Exchange proposes to consider all orders 
executed by the same firm in the same series on the same side of the 
market at the same price within 30 seconds as only one execution. The 
Exchange believes that this will remove the incentive for an EAM to 
enter multiple orders in rapid succession. To ensure that the Exchange 
covers only activity that is truly excessive and inappropriately uses 
bandwidth and system capacity, the Exchange proposes to exclude from 
the cancellation fee orders that improve ISE's disseminated quotation 
at the time the orders were entered.
2. Statutory Basis
    The basis for the proposed rule change is the requirement under 
Section 6(b)(4) of the Act \9\ that an exchange have an equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. The ISE states that, in 
particular, these fees would permit the Exchange to recover capacity 
costs more equitably from among its members.
---------------------------------------------------------------------------

    \9\ 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 proposed 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) of the Act \10\ and 
Rule 19b-4(f)(2) \11\ thereunder. At any time within 60 days of the 
filing of the proposed rule change the Commission may summarily 
abrogate such proposed 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.\12\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 19b-4(f)(2).
    \12\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of Act, the Commission considers the period to 
commence on May 18, 2006, the date on which the ISE submitted 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).

---------------------------------------------------------------------------

[[Page 31246]]

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-2006-23 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File No. SR-ISE-2006-23. 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. 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 No. SR-
ISE-2006-23 and should be submitted on or before June 22, 2006.
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-8434 Filed 5-31-06; 8:45 am]
BILLING CODE 8010-01-P