Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Payment for Order Flow Fee Changes, 41488-41489 [E6-11570]

Download as PDF 41488 Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices the objectives of section 6(b)(5) of the Act,8 in particular, in that it is designed to allow the Commission additional time to evaluate the AIM pilot programs, remove impediments to and perfect the mechanism of a free and open market and a national market system, and protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposal. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action rwilkins on PROD1PC63 with NOTICES_1 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) by its terms, become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to section 19(b)(3)(A) of the Act 9 and Rule 19b–4(f)(6) thereunder.10 A proposed rule change filed under Rule 19b–4(f)(6) normally may not become operative prior to 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) 11 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay and designate the proposed rule change immediately operative upon filing. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because it would allow the pilots to continue without interruption until July 18, 2007. For this reason, the Commission designates the proposal to be effective and operative upon filing with the Commission.12 U.S.C. 78f(b)(5). U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b–4(f)(6). 11 17 CFR 240.19b–4(f)(6)(iii). 12 For purposes only of waiving the 30-day operative delay, the Commission has considered the 9 15 VerDate Aug<31>2005 17:59 Jul 20, 2006 Jkt 208001 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: For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13 Jill M. Peterson, Assistant Secretary. [FR Doc. E6–11572 Filed 7–20–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 8 15 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 Number SR–CBOE–2006–64 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. [Release No. 34–54152; File No. SR–ISE– 2006–36] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Payment for Order Flow Fee Changes July 14, 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 July 3, 2006, the International Securities All submissions should refer to File Exchange, Inc. (‘‘ISE’’ or ‘‘Exchange’’) Number SR–CBOE–2006–64. This file filed with the Securities and Exchange number should be included on the Commission (‘‘Commission’’) the subject line if e-mail is used. To help the proposed rule change as described in Items I, II, and III below, which Items Commission process and review your have been prepared by the Exchange. comments more efficiently, please use only one method. The Commission will The ISE has designated this proposal as post all comments on the Commission’s one changing a fee imposed by the ISE under Section 19(b)(3)(A)(ii) of the Act 3 Internet Web site (http://www.sec.gov/ and Rule 19b–4(f)(2) thereunder,4 which rules/sro.shtml). Copies of the renders the proposal effective upon submission, all subsequent filing with the Commission. The amendments, all written statements Commission is publishing this notice to with respect to the proposed rule solicit comments on the proposed rule change that are filed with the change from interested persons. Commission, and all written I. Self-Regulatory Organization’s communications relating to the Statement of the Terms of Substance of proposed rule change between the Commission and any person, other than the Proposed Rule Change those that may be withheld from the The ISE proposes to amend its public in accordance with the Schedule of Fees regarding the payment provisions of 5 U.S.C. 552, will be for order flow fees collected by the available for inspection and copying in Exchange. The text of the proposed rule the Commission’s Public Reference change is available on the ISE’s Web site Room. Copies of such filing also will be at http://www.iseoptions.com, at the available for inspection and copying at principal office of the Exchange, and at the principal office of the Exchange. All the Commission’s Public Reference Room. comments received will be posted without change; the Commission does II. Self-Regulatory Organization’s not edit personal identifying Statement of the Purpose of, and information from submissions. You Statutory Basis for, the Proposed Rule should submit only information that Change you wish to make available publicly. All In its filing with the Commission, the submissions should refer to File ISE included statements concerning the Number SR–CBOE–2006–64 and should purpose of and basis for the proposed be submitted on or before August 11, 2006. 13 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 2 17 proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 E:\FR\FM\21JYN1.SGM 21JYN1 Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices 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 rwilkins on PROD1PC63 with NOTICES_1 1. Purpose The ISE is proposing to amend its Schedule of Fees regarding the payment for order flow (‘‘PFOF’’) fees collected by the Exchange. The Exchange states that it currently operates a PFOF program as approved by the Commission.5 The PFOF program is funded through a fee, currently set at $0.55 per contract, paid by Exchange market makers for each customer contract they execute. Currently, all funds collected by the Exchange are administered by specified market makers.6 PFOF fees collected by the Exchange that are not distributed are rebated back to the market makers. The Exchange proposes to increase its PFOF fee to $0.65 per contract to match the fee that the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), under the PFOF program it administers, currently charges its members. Additionally, the Exchange states that Complex Orders 7 are currently exempt from the ISE’s PFOF fee. The Exchange represents that other options exchanges, however, notably CBOE, do not provide a similar exception. Accordingly, and also for competitive reasons, the Exchange proposes to charge a PFOF fee on Complex Orders traded on the ISE. The ISE states that it is committed to matching other exchanges’ PFOF programs in order to maintain its competitive position. The ISE states that its Board has provided management with delegated authority to increase the ISE’s PFOF fee further in the event that increases in the PFOF fee of other 5 See Securities Exchange Act Release No. 43833 (January 10, 2001), 66 FR 7822 (January 25, 2001) (SR–ISE–00–10). 6 The Exchange states that initially only Primary Market Makers administered PFOF pools. However, the Exchange recently amended its PFOF program to allow a Competitive Market Maker (‘‘CMM’’) to administer the PFOF funds collected by the Exchange with respect to orders in a group of options classes preferenced to that CMM. See Securities Exchange Act Release No. 53127 (January 13, 2006), 71 FR 3582 (January 23, 2006) (SR–ISE– 2005–57). 7 See Securities Exchange Act Release No. 46646 (October 11, 2002), 67 FR 64428 (October 18, 2002) (Approving SR–ISE–2002–20, ISE’s Complex Order Rule, on a permanent basis). VerDate Aug<31>2005 17:59 Jul 20, 2006 Jkt 208001 exchanges present competitive challenges to the ISE. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 8 in general, and furthers the objectives of Section 6(b)(4) of the Act 9 in particular, in that it is an equitable allocation of reasonable dues, fees, and other charges among ISE members and other persons using its facilities. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will 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)(ii) of the Act 10 and Rule 19b–4(f)(2) 11 thereunder, because it establishes or changes a due, fee, or other charge imposed by the Exchange. Accordingly, the proposal will take effect upon filing with the Commission. 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. 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: PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(4). 10 15 U.S.C. 78s(b)(3)(A)(ii). 11 17 CFR 240.19b–4(f)(2). 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 Number SR–ISE–2006–36 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 20549–9303. All submissions should refer to File Number SR–ISE–2006–36. 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 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–2006–36 and should be submitted on or before August 11, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Jill M. Peterson, Assistant Secretary. [FR Doc. E6–11570 Filed 7–20–06; 8:45 am] BILLING CODE 8010–01–P 8 15 9 15 Frm 00075 Fmt 4703 Sfmt 4703 41489 12 17 E:\FR\FM\21JYN1.SGM CFR 200.30–3(a)(12). 21JYN1

Agencies

[Federal Register Volume 71, Number 140 (Friday, July 21, 2006)]
[Notices]
[Pages 41488-41489]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-11570]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54152; File No. SR-ISE-2006-36]


Self-Regulatory Organizations; International Securities Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Payment for Order Flow Fee Changes

July 14, 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 July 3, 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 prepared by the Exchange. The ISE 
has designated this proposal as one changing a fee imposed by the ISE 
under Section 19(b)(3)(A)(ii) 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.
---------------------------------------------------------------------------

    \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).
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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 the 
payment for order flow fees collected by the Exchange. The text of the 
proposed rule change is available on the ISE's Web site at http://
www.iseoptions.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 ISE included statements 
concerning the purpose of and basis for the proposed

[[Page 41489]]

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 ISE is proposing to amend its Schedule of Fees regarding the 
payment for order flow (``PFOF'') fees collected by the Exchange. The 
Exchange states that it currently operates a PFOF program as approved 
by the Commission.\5\ The PFOF program is funded through a fee, 
currently set at $0.55 per contract, paid by Exchange market makers for 
each customer contract they execute. Currently, all funds collected by 
the Exchange are administered by specified market makers.\6\ PFOF fees 
collected by the Exchange that are not distributed are rebated back to 
the market makers.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 43833 (January 10, 
2001), 66 FR 7822 (January 25, 2001) (SR-ISE-00-10).
    \6\ The Exchange states that initially only Primary Market 
Makers administered PFOF pools. However, the Exchange recently 
amended its PFOF program to allow a Competitive Market Maker 
(``CMM'') to administer the PFOF funds collected by the Exchange 
with respect to orders in a group of options classes preferenced to 
that CMM. See Securities Exchange Act Release No. 53127 (January 13, 
2006), 71 FR 3582 (January 23, 2006) (SR-ISE-2005-57).
---------------------------------------------------------------------------

    The Exchange proposes to increase its PFOF fee to $0.65 per 
contract to match the fee that the Chicago Board Options Exchange, 
Incorporated (``CBOE''), under the PFOF program it administers, 
currently charges its members. Additionally, the Exchange states that 
Complex Orders \7\ are currently exempt from the ISE's PFOF fee. The 
Exchange represents that other options exchanges, however, notably 
CBOE, do not provide a similar exception. Accordingly, and also for 
competitive reasons, the Exchange proposes to charge a PFOF fee on 
Complex Orders traded on the ISE.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 46646 (October 11, 
2002), 67 FR 64428 (October 18, 2002) (Approving SR-ISE-2002-20, 
ISE's Complex Order Rule, on a permanent basis).
---------------------------------------------------------------------------

    The ISE states that it is committed to matching other exchanges' 
PFOF programs in order to maintain its competitive position. The ISE 
states that its Board has provided management with delegated authority 
to increase the ISE's PFOF fee further in the event that increases in 
the PFOF fee of other exchanges present competitive challenges to the 
ISE.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \8\ in general, and furthers the objectives of Section 
6(b)(4) of the Act \9\ in particular, in that it is an equitable 
allocation of reasonable dues, fees, and other charges among ISE 
members and other persons using its facilities.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
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)(ii) of the Act \10\ and Rule 
19b-4(f)(2) \11\ thereunder, because it establishes or changes a due, 
fee, or other charge imposed by the Exchange. Accordingly, the proposal 
will take effect upon filing with the Commission. 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-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 Number SR-ISE-2006-36 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 20549-9303.

All submissions should refer to File Number SR-ISE-2006-36. 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 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-2006-36 and should be submitted on or before August 
11, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
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 Jill M. Peterson,
 Assistant Secretary.
 [FR Doc. E6-11570 Filed 7-20-06; 8:45 am]
BILLING CODE 8010-01-P