Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fee Changes, 79952-79954 [E8-30858]

Download as PDF 79952 Federal Register / Vol. 73, No. 250 / Tuesday, December 30, 2008 / Notices • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–FINRA–2008–060 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–FINRA–2008–060. 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–FINRA–2008–060 and should be submitted on or before January 20, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Florence E. Harmon, Acting Secretary. [FR Doc. E8–30857 Filed 12–29–08; 8:45 am] pwalker on PROD1PC71 with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59127; File No. SR–ISE– 2008–94)] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fee Changes December 19, 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 December 10, 2008, the International Securities Exchange, LLC (the ‘‘Exchange’’ or the ‘‘ISE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change, as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. 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 Schedule of Fees to establish fees for transactions in options on 14 Premium Products.3 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. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Premium Products is defined in the Schedule of Fees as the products enumerated therein. 2 17 14 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 22:55 Dec 29, 2008 Jkt 217001 PO 00000 Frm 00164 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend its Schedule of Fees to establish fees for transactions in options on the Direxion Energy Bear 3x Shares (‘‘ERY’’), the Direxion Energy Bull 3x Shares (‘‘ERX’’), the Direxion Financial Bear 3x Shares (‘‘FAZ’’), the Direxion Financial [Bull] 4 3x Shares (‘‘FAS’’), the Direxion Large Cap Bear 3x Shares (‘‘BGZ’’), the Direxion Large Cap Bull 3x Shares (‘‘BGU’’), the Direxion Small Cap Bear 3x Shares (‘‘TZA’’), the Direxion Small Cap Bull 3x Shares (‘‘TNA’’),5 the Ultra Basic Materials ProShares (‘‘UYM’’),6 the iShares Russell Midcap Value Index 4 See e-mail from Samir Patel, Assistant General Counsel, International Securities Exchange, to Richard Holley, Senior Special Counsel, Division of Trading and Markets, Commission, dated December 18, 2008 (correcting typographical error for product associated with ticker symbol FAS from Bear to Bull). 5 The Russell 1000® Energy Index, Russell 1000® Financial Services Index, Russell 1000® Index and Russell 2000® Index are trademarks of Frank Russell Company (‘‘Russell’’) and have been licensed for use by Direxion Shares ETF Trust. All other trademarks and service marks are the property of their respective owners. The Direxion Energy Bear 3x Shares (‘‘ERY’’), the Direxion Energy Bull 3x Shares (‘‘ERX’’), the Direxion Financial Bear 3x Shares (‘‘FAZ’’), the Direxion Financial [Bull] 3x Shares (‘‘FAS’’), the Direxion Large Cap Bear 3x Shares (‘‘BGZ’’), the Direxion Large Cap Bull 3x Shares (‘‘BGU’’), the Direxion Small Cap Bear 3x Shares (‘‘TZA’’) and the Direxion Small Cap Bull 3x Shares (‘‘TNA’’) are not sponsored, endorsed, issued, sold or promoted by Russell. Russell has not licensed or authorized ISE to (i) engage in the creation, listing, provision of a market for trading, marketing, and promotion of options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA and TNA or (ii) to use and refer to any of their trademarks or service marks in connection with the listing, provision of a market for trading, marketing, and promotion of options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA and TNA or with making disclosures concerning options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA and TNA under any applicable federal or state laws, rules or regulations. Russell does not sponsor, endorse, or promote such activity by ISE and is not affiliated in any manner with ISE. 6 ‘‘Dow Jones’’ and ‘‘Dow Jones U.S. Basic MaterialsSM’’ are service marks of Dow Jones & Company, Inc. (‘‘Dow Jones’’) and have been licensed for use for certain purposes by ProFunds Trust. All other trademarks and service marks are the property of their respective owners. The Ultra Basic Materials ProShares (‘‘UYM’’) is not sponsored, endorsed, issued, sold or promoted by Dow Jones. Dow Jones has not licensed or authorized ISE to (i) engage in the creation, listing, provision of a market for trading, marketing, and promotion of options on UYM or (ii) to use and refer to any of its trademarks or service marks in connection with the listing, provision of a market for trading, marketing, and promotion of options on UYM or with making disclosures concerning options on UYM under any applicable federal or state laws, rules or regulations. Dow Jones does not sponsor, endorse, or promote such activity by ISE and is not affiliated in any manner with ISE. E:\FR\FM\30DEN1.SGM 30DEN1 Federal Register / Vol. 73, No. 250 / Tuesday, December 30, 2008 / Notices pwalker on PROD1PC71 with NOTICES Fund (‘‘IWS’’),7 the Vanguard® Energy ETF (‘‘VDE’’), the Vanguard® Large-Cap ETF (‘‘VV’’), the Vanguard® Small-Cap ETF (‘‘VB’’) and the Vanguard® Value ETF (‘‘VTV’’).8 The Exchange represents that ERY, ERX, FAZ, FAS, BGZ, BGU, TZA, TNA, UYM, IWS, VTV, VV, VB and VDE are eligible for options trading because they constitute ‘‘ExchangeTraded Fund Shares,’’ as defined by ISE Rule 502(h). All of the applicable fees covered by this filing are identical to fees charged by the Exchange for all other Premium Products. Specifically, the Exchange is proposing to adopt an execution fee for all transactions in options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA, TNA, UYM, IWS, VTV, VV, VB and VDE.9 The 7 iShares® is a registered trademark of Barclays Global Investors, N.A. (‘‘BGI’’), a wholly owned subsidiary of Barclays Bank PLC. ‘‘Russell Midcap® Value Index’’ is a trademark of Frank Russell Company (‘‘Russell’’) and has been licensed for use for certain purposes by BGI. All other trademarks and service marks are the property of their respective owners. iShares Russell Midcap Value Index Fund (‘‘IWS’’) is not sponsored, sold or endorsed by Russell. Russell and BGI have not licensed or authorized ISE to (i) engage in the creation, listing, provision of a market for trading, marketing, and promotion of options on IWS or (ii) to use and refer to any of their trademarks or service marks in connection with the listing, provision of a market for trading, marketing, and promotion of options on IWS or with making disclosures concerning options on IWS under any applicable federal or state laws, rules or regulations. Russell and BGI do not sponsor, endorse, or promote such activity by ISE and are not affiliated in any manner with ISE. 8 The Vanguard Group, Vanguard ETF and Vanguard are trademarks of The Vanguard Group, Inc. (‘‘Vanguard’’). The Vanguard® Energy ETF (‘‘VDE’’) tracks the Morgan Stanley Capital International® (MSCI®) U.S. Investable Market Energy Index. The Vanguard® Large-Cap ETF (‘‘VV’’) tracks the MSCI U.S. Prime Market 750 Index. The Vanguard® Small-Cap ETF (‘‘VB’’) tracks the MSCI U.S. Small Cap 1750 Index. The Vanguard® Value ETF (‘‘VTV’’) tracks the MSCI U.S. Prime Market Value Index. The MSCI Indexes are the exclusive property of MSCI. MSCI and the MSCI Index names are service marks of MSCI or its affiliates and have been licensed for use for certain purposes by Vanguard. All other marks are the exclusive property of their respective owners. MSCI does not sponsor, endorse, or promote VDE, VV, VB, and VTV and makes no representation regarding the advisability of investing in VDE, VV, VB, and VTV. Vanguard has not licensed or authorized ISE to (i) engage in the creation, listing, provision of a market for trading, marketing, and promotion of options on VDE, VV, VB, and VTV or (ii) to use and refer to any of their trademarks or service marks in connection with the listing, provision of a market for trading, marketing, and promotion of options on VDE, VV, VB, and VTV or with making disclosures concerning options on VDE, VV, VB, and VTV under any applicable federal or state laws, rules or regulations. Vanguard does not sponsor, endorse, or promote such activity by ISE, and is not affiliated in any manner with ISE. 9 These fees will be charged only to Exchange members. Under a pilot program that is set to expire on July 31, 2009, these fees will also be charged to Linkage Principal Orders (‘‘Linkage P Orders’’) and Linkage Principal Acting as Agent Orders (‘‘Linkage P/A Orders’’). The amount of the execution fee VerDate Aug<31>2005 22:55 Dec 29, 2008 Jkt 217001 amount of the execution fee for products covered by this filing shall be $0.18 per contract for all Public Customer Orders 10 and $0.20 per contract for all Firm Proprietary orders. The amount of the execution fee for all ISE Market Maker transactions shall be equal to the execution fee currently charged by the Exchange for ISE Market Maker transactions in equity options.11 Finally, the amount of the execution fee for all non-ISE Market Maker transactions shall be $0.45 per contract.12 Further, since options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA, TNA, UYM, IWS, VTV, VV, VB and VDE are multiply listed, the Exchange’s Payment for Order Flow fee shall apply to all these products. The Exchange believes the proposed rule change will further the Exchange’s goal of introducing new products to the marketplace that are competitively priced. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,13 in general, and furthers the objectives of Section 6(b)(4),14 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. 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. charged by the Exchange for Linkage P Orders and Linkage P/A Orders is $0.24 per contract side and $0.15 per contract side, respectively. See Securities Exchange Act Release No. 58143 (July 11, 2008), 73 FR 41388 (July 18, 2008) (SR–ISE–2008–52). 10 Public Customer Order is defined in Exchange Rule 100(a)(39) as an order for the account of a Public Customer. Public Customer is defined in Exchange Rule 100(a)(38) as a person or entity that is not a broker or dealer in securities. 11 The Exchange applies a sliding scale, between $0.01 and $0.18 per contract side, based on the number of contracts an ISE market maker trades in a month. 12 The amount of the execution fee for non-ISE Market Maker transactions executed in the Exchange’s Facilitation and Solicitation Mechanisms is $0.19 per contract. 13 15 U.S.C. 78f. 14 15 U.S.C. 78f(b)(4). PO 00000 Frm 00165 Fmt 4703 Sfmt 4703 79953 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 15 and Rule 19b–4(f)(2) 16 thereunder. 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: 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–2008–94 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–2008–94. 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 am and 3 pm. Copies of such filing also will be 15 15 16 17 E:\FR\FM\30DEN1.SGM U.S.C. 78s(b)(3)(A). CFR 19b–4(f)(2) [sic]. 30DEN1 79954 Federal Register / Vol. 73, No. 250 / Tuesday, December 30, 2008 / Notices available for inspection and copying at the principal office of 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 No. SR–ISE–2008–94 and should be submitted on or before January 20, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Florence E. Harmon, Acting Secretary. [FR Doc. E8–30858 Filed 12–29–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59135; File No. SR–ISE– 2008–85] Self-Regulatory Organizations; International Securities Exchange, LLC; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Purchase by International Securities Exchange Holdings, Inc., of an Ownership Interest in Direct Edge Holdings, Inc. December 22, 2008. pwalker on PROD1PC71 with NOTICES I. Introduction On November 7, 2008, the International Securities Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change in connection with corporate transactions (the ‘‘Transactions’’) in which, among other things: (1) The parent company of ISE, International Securities Exchange Holdings, Inc. (‘‘ISE Holdings’’), will purchase an ownership interest in Direct Edge Holdings LLC (‘‘Direct Edge’’) by contributing cash and the marketplace currently operated by ISE Stock Exchange, LLC (‘‘ISE Stock Exchange’’) for the trading of U.S. cash equity securities; and (2) Direct Edge’s wholly-owned subsidiary, Maple Merger Sub LLC (‘‘Merger Sub’’) will operate the marketplace as a facility of ISE. The proposed rule change was published for comment in the Federal Register on 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 22:55 Dec 29, 2008 Jkt 217001 November 17, 2008.3 The Commission received no comments regarding the proposal. On December 17, 2008, ISE filed Amendment No. 1 to the proposal.4 This order approves the proposed rule change, as modified by Amendment No. 1. II. Description of the Proposal Currently, ISE Stock Exchange operates, under the ISE’s rules and as a ‘‘facility,’’ as defined in Section 3(a)(2) of the Act,5 of ISE, a marketplace for the trading of U.S. cash equity securities by Equity Electronic Access Members (‘‘Equity EAMs’’) of ISE (the ‘‘Facility’’).6 Direct Edge wholly owns and operates Direct Edge ECN LLC (‘‘DE ECN’’), a registered broker-dealer, electronic communications network (‘‘ECN’’), and Equity EAM that submits limit orders to the Facility for display and execution. As part of the Transactions to be entered into by ISE, ISE Holdings, Direct Edge, and other parties: (1) ISE Holdings will purchase a 31.54% ownership interest in Direct Edge; and (2) ISE Stock Exchange will merge with and into Merger Sub, a Delaware limited liability company and wholly-owned subsidiary of Direct Edge, with Merger Sub as the surviving entity. Following the closing of the Transactions, ISE Holdings will own 31.54% of Direct Edge, Direct Edge will own all of the equity interests of Merger Sub, Merger Sub will operate the Facility as a facility of ISE, and Direct Edge will continue to own and operate 3 See Securities Exchange Act Release No. 58918 (November 7, 2008), 73 FR 67909 (‘‘Notice’’). 4 Amendment No. 1: (1) Corrects minor errors in the text of the Merger Sub LLC Agreement and the DE Operating Agreement (as defined below); and (2) revises ISE Rule 312(a) to clarify that ISE will enter into a plan with a non-affiliated self-regulatory organization (‘‘SRO’’) pursuant to Rule 17d–2 under the Act to relieve ISE of regulatory responsibilities for Direct Edge ECN with respect to common rules of ISE and the unaffiliated SRO, and ISE will enter into a regulatory services contract with a nonaffiliated SRO to perform regulatory responsibilities for Direct EDGE ECN for unique ISE rules. Because Amendment No. 1 is technical in nature, the Commission is not required to publish Amendment No. 1 for comment. 5 15 U.S.C. 78c(a)(2). Under Section 3(a)(2) of the Act, the term ‘‘facility,’’ when used with respect to an exchange, includes ‘‘its premises, tangible or intangible property whether on the premises or not, any right to the use of such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange (including, among other things, any system of communication to or from the exchange, by ticker or otherwise, maintained by or with the consent of the exchange), and any right of the exchange to the use of any property or service.’’ 6 See Securities Exchange Act Release No. 54399 (September 1, 2006), 71 FR 53728 (September 12, 2006) (File No. SR–ISE–2006–45) (order approving the Facility). An Equity EAM is an Electronic Access Member authorized by ISE to trade on the ISE Stock Exchange. See ISE Rule 2100(c)(6). PO 00000 Frm 00166 Fmt 4703 Sfmt 4703 DE ECN, which intends to continue to submit limit orders to the Facility for display and execution. As limited liability companies, ownership in Direct Edge and in Merger Sub is represented by limited liability membership interests. The holders of such interests are referred to as ‘‘Members.’’7 Following the closing of the Transactions, Direct Edge will be the sole member of Merger Sub. The Members of Direct Edge and their respective ownership interests will be: ISE Holdings (31.54%); Citadel Derivatives Group LLC (19.9%); The Goldman Sachs Group, Inc. (19.9%); Knight/Trimark, Inc. (19.9%); and the ISE Stock Exchange Consortium Members (collectively 8.76%).8 As the self-regulatory organization (‘‘SRO’’) for the Facility, ISE will have regulatory responsibility for the activities of the Facility.9 In the current proposal, ISE seeks the Commission’s approval of: (1) The Limited Liability Company Agreement of Merger Sub (‘‘Merger Sub LLC Agreement’’), which establishes the governance structure of 7 With respect to Merger Sub, ‘‘Member’’ means Direct Edge, which initially will be the sole member of Merger Sub, and any Additional Members admitted pursuant to Section 4.3 of the Merger Sub LLC Agreement. The admission of Additional Members is subject to ISE’s authority under Section 1.6 of the Merger Sub LLC Agreement, and each Additional Member must become a party to the Merger Sub LLC Agreement. See Merger Sub LLC Agreement, Sections 4.3(a) and (c). In addition, no Person, other than Direct Edge, may acquire an ownership interest of more than 20% of Merger Sub without the Commission’s approval. See Merger Sub LLC Agreement, Sections 7.2(a) and (b). With respect to Direct Edge, ‘‘Member’’ means any Person (i) executing the DE Operating Agreement as a Member of DE on the effective date of the Transactions (the ‘‘Effective Date’’); (ii) admitted as a Member as of the Effective Date upon the effectiveness under Delaware law of the merger of ISE Stock Exchange with and into Merger Sub; or (iii) subsequently admitted as an additional or substitute member of Direct Edge. For as long as Direct Edge controls Merger Sub and the Facility is a facility of a national securities exchange, no Person may own more than 40% of Direct Edge and no ISE member (including Equity EAMs) may own more than 20% of Direct Edge without the Commission’s approval. See DE Operating Agreement, Sections 12.1(a) and (b). 8 The ISE Stock Exchange Consortium Members are: Bear Rex, Inc.; DB US Financial Markets Holding Corporation; Canopy Acquisition Corporation; IB Exchange Corp.; LabMorgan Corporation; Merrill Lynch L.P. Holdings, Inc.; Nomura Securities International, Inc.; Sun Partners LLC; and VCM Capital Markets, LLC. 9 ISE represents that it will continue to have adequate funds to discharge all regulatory functions related to the Facility. ISE represents, further, that Merger Sub, the operator of the Facility, will not be entitled to any revenue generated in connection with penalties, fines, and regulatory fees that ISE may assess against ISE Members in connection with trading on the Facility. Rather, all regulatory fines, penalties, and fees assessed against and paid by ISE Members to ISE in connection with trading on the Facility will remain with ISE. See Notice, supra note 3. E:\FR\FM\30DEN1.SGM 30DEN1

Agencies

[Federal Register Volume 73, Number 250 (Tuesday, December 30, 2008)]
[Notices]
[Pages 79952-79954]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-30858]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59127; File No. SR-ISE-2008-94)]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Fee Changes

December 19, 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 December 10, 2008, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change, as described 
in Items I, II, and III below, which Items have been prepared by the 
self-regulatory organization. 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.
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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 to establish 
fees for transactions in options on 14 Premium Products.\3\ 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.
---------------------------------------------------------------------------

    \3\ Premium Products is defined in the Schedule of Fees as the 
products enumerated therein.
---------------------------------------------------------------------------

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
    The Exchange is proposing to amend its Schedule of Fees to 
establish fees for transactions in options on the Direxion Energy Bear 
3x Shares (``ERY''), the Direxion Energy Bull 3x Shares (``ERX''), the 
Direxion Financial Bear 3x Shares (``FAZ''), the Direxion Financial 
[Bull] \4\ 3x Shares (``FAS''), the Direxion Large Cap Bear 3x Shares 
(``BGZ''), the Direxion Large Cap Bull 3x Shares (``BGU''), the 
Direxion Small Cap Bear 3x Shares (``TZA''), the Direxion Small Cap 
Bull 3x Shares (``TNA''),\5\ the Ultra Basic Materials ProShares 
(``UYM''),\6\ the iShares Russell Midcap Value Index

[[Page 79953]]

Fund (``IWS''),\7\ the Vanguard[supreg] Energy ETF (``VDE''), the 
Vanguard[supreg] Large-Cap ETF (``VV''), the Vanguard[supreg] Small-Cap 
ETF (``VB'') and the Vanguard[supreg] Value ETF (``VTV'').\8\ The 
Exchange represents that ERY, ERX, FAZ, FAS, BGZ, BGU, TZA, TNA, UYM, 
IWS, VTV, VV, VB and VDE are eligible for options trading because they 
constitute ``Exchange-Traded Fund Shares,'' as defined by ISE Rule 
502(h).
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    \4\ See e-mail from Samir Patel, Assistant General Counsel, 
International Securities Exchange, to Richard Holley, Senior Special 
Counsel, Division of Trading and Markets, Commission, dated December 
18, 2008 (correcting typographical error for product associated with 
ticker symbol FAS from Bear to Bull).
    \5\ The Russell 1000[reg] Energy Index, Russell 1000[reg] 
Financial Services Index, Russell 1000[reg] Index and Russell 
2000[reg] Index are trademarks of Frank Russell Company 
(``Russell'') and have been licensed for use by Direxion Shares ETF 
Trust. All other trademarks and service marks are the property of 
their respective owners. The Direxion Energy Bear 3x Shares 
(``ERY''), the Direxion Energy Bull 3x Shares (``ERX''), the 
Direxion Financial Bear 3x Shares (``FAZ''), the Direxion Financial 
[Bull] 3x Shares (``FAS''), the Direxion Large Cap Bear 3x Shares 
(``BGZ''), the Direxion Large Cap Bull 3x Shares (``BGU''), the 
Direxion Small Cap Bear 3x Shares (``TZA'') and the Direxion Small 
Cap Bull 3x Shares (``TNA'') are not sponsored, endorsed, issued, 
sold or promoted by Russell. Russell has not licensed or authorized 
ISE to (i) engage in the creation, listing, provision of a market 
for trading, marketing, and promotion of options on ERY, ERX, FAZ, 
FAS, BGZ, BGU, TZA and TNA or (ii) to use and refer to any of their 
trademarks or service marks in connection with the listing, 
provision of a market for trading, marketing, and promotion of 
options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA and TNA or with making 
disclosures concerning options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA 
and TNA under any applicable federal or state laws, rules or 
regulations. Russell does not sponsor, endorse, or promote such 
activity by ISE and is not affiliated in any manner with ISE.
    \6\ ``Dow Jones'' and ``Dow Jones U.S. Basic Materials\SM\'' are 
service marks of Dow Jones & Company, Inc. (``Dow Jones'') and have 
been licensed for use for certain purposes by ProFunds Trust. All 
other trademarks and service marks are the property of their 
respective owners. The Ultra Basic Materials ProShares (``UYM'') is 
not sponsored, endorsed, issued, sold or promoted by Dow Jones. Dow 
Jones has not licensed or authorized ISE to (i) engage in the 
creation, listing, provision of a market for trading, marketing, and 
promotion of options on UYM or (ii) to use and refer to any of its 
trademarks or service marks in connection with the listing, 
provision of a market for trading, marketing, and promotion of 
options on UYM or with making disclosures concerning options on UYM 
under any applicable federal or state laws, rules or regulations. 
Dow Jones does not sponsor, endorse, or promote such activity by ISE 
and is not affiliated in any manner with ISE.
    \7\ iShares[reg] is a registered trademark of Barclays Global 
Investors, N.A. (``BGI''), a wholly owned subsidiary of Barclays 
Bank PLC. ``Russell Midcap[reg] Value Index'' is a trademark of 
Frank Russell Company (``Russell'') and has been licensed for use 
for certain purposes by BGI. All other trademarks and service marks 
are the property of their respective owners. iShares Russell Midcap 
Value Index Fund (``IWS'') is not sponsored, sold or endorsed by 
Russell. Russell and BGI have not licensed or authorized ISE to (i) 
engage in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on IWS or (ii) to use and refer 
to any of their trademarks or service marks in connection with the 
listing, provision of a market for trading, marketing, and promotion 
of options on IWS or with making disclosures concerning options on 
IWS under any applicable federal or state laws, rules or 
regulations. Russell and BGI do not sponsor, endorse, or promote 
such activity by ISE and are not affiliated in any manner with ISE.
    \8\ The Vanguard Group, Vanguard ETF and Vanguard are trademarks 
of The Vanguard Group, Inc. (``Vanguard''). The Vanguard[reg] Energy 
ETF (``VDE'') tracks the Morgan Stanley Capital International[reg] 
(MSCI[reg]) U.S. Investable Market Energy Index. The Vanguard[reg] 
Large-Cap ETF (``VV'') tracks the MSCI U.S. Prime Market 750 Index. 
The Vanguard[reg] Small-Cap ETF (``VB'') tracks the MSCI U.S. Small 
Cap 1750 Index. The Vanguard[reg] Value ETF (``VTV'') tracks the 
MSCI U.S. Prime Market Value Index. The MSCI Indexes are the 
exclusive property of MSCI. MSCI and the MSCI Index names are 
service marks of MSCI or its affiliates and have been licensed for 
use for certain purposes by Vanguard. All other marks are the 
exclusive property of their respective owners. MSCI does not 
sponsor, endorse, or promote VDE, VV, VB, and VTV and makes no 
representation regarding the advisability of investing in VDE, VV, 
VB, and VTV. Vanguard has not licensed or authorized ISE to (i) 
engage in the creation, listing, provision of a market for trading, 
marketing, and promotion of options on VDE, VV, VB, and VTV or (ii) 
to use and refer to any of their trademarks or service marks in 
connection with the listing, provision of a market for trading, 
marketing, and promotion of options on VDE, VV, VB, and VTV or with 
making disclosures concerning options on VDE, VV, VB, and VTV under 
any applicable federal or state laws, rules or regulations. Vanguard 
does not sponsor, endorse, or promote such activity by ISE, and is 
not affiliated in any manner with ISE.
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    All of the applicable fees covered by this filing are identical to 
fees charged by the Exchange for all other Premium Products. 
Specifically, the Exchange is proposing to adopt an execution fee for 
all transactions in options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA, TNA, 
UYM, IWS, VTV, VV, VB and VDE.\9\ The amount of the execution fee for 
products covered by this filing shall be $0.18 per contract for all 
Public Customer Orders \10\ and $0.20 per contract for all Firm 
Proprietary orders. The amount of the execution fee for all ISE Market 
Maker transactions shall be equal to the execution fee currently 
charged by the Exchange for ISE Market Maker transactions in equity 
options.\11\ Finally, the amount of the execution fee for all non-ISE 
Market Maker transactions shall be $0.45 per contract.\12\ Further, 
since options on ERY, ERX, FAZ, FAS, BGZ, BGU, TZA, TNA, UYM, IWS, VTV, 
VV, VB and VDE are multiply listed, the Exchange's Payment for Order 
Flow fee shall apply to all these products. The Exchange believes the 
proposed rule change will further the Exchange's goal of introducing 
new products to the marketplace that are competitively priced.
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    \9\ These fees will be charged only to Exchange members. Under a 
pilot program that is set to expire on July 31, 2009, these fees 
will also be charged to Linkage Principal Orders (``Linkage P 
Orders'') and Linkage Principal Acting as Agent Orders (``Linkage P/
A Orders''). The amount of the execution fee charged by the Exchange 
for Linkage P Orders and Linkage P/A Orders is $0.24 per contract 
side and $0.15 per contract side, respectively. See Securities 
Exchange Act Release No. 58143 (July 11, 2008), 73 FR 41388 (July 
18, 2008) (SR-ISE-2008-52).
    \10\ Public Customer Order is defined in Exchange Rule 
100(a)(39) as an order for the account of a Public Customer. Public 
Customer is defined in Exchange Rule 100(a)(38) as a person or 
entity that is not a broker or dealer in securities.
    \11\ The Exchange applies a sliding scale, between $0.01 and 
$0.18 per contract side, based on the number of contracts an ISE 
market maker trades in a month.
    \12\ The amount of the execution fee for non-ISE Market Maker 
transactions executed in the Exchange's Facilitation and 
Solicitation Mechanisms is $0.19 per contract.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\13\ in general, and 
furthers the objectives of Section 6(b)(4),\14\ in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its members and other persons using 
its facilities.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
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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 \15\ and Rule 19b-4(f)(2) \16\ thereunder. 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.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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 rule-comments@sec.gov. Please include 
File Number SR-ISE-2008-94 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-2008-94. 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 am and 3 pm. Copies of such filing also will be

[[Page 79954]]

available for inspection and copying at the principal office of 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 No. SR-ISE-2008-94 and 
should be submitted on or before January 20, 2009.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-30858 Filed 12-29-08; 8:45 am]
BILLING CODE 8011-01-P