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SECURITIES AND EXCHANGE COMMISSION

Securities and Exchange Commission

DOCUMENT ID: [Release No. 34-58898; File No. SR-ISE-2008-81]

NOTICE: NOTICES

ACTION: Self-Regulatory Organizations; Proposed Rule Changes:

SUBJECT CATEGORY: Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to its Cancellation Fee

DOCUMENT SUMMARY: November 4, 2008.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b4 thereunder,\2\ notice is hereby given that on October 31, 2008, International Securities Exchange, LLC (the ``ISE'' or the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The ISE filed the proposal pursuant to section 19(b)(3)(A) of the Act \3\ and Rule 19b4(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 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b4(f)(2).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The ISE is proposing to amend its Schedule of Fees regarding its cancellation fee. The text of the proposed rule change is available on the Exchange's Web site (http://www.ise.com), at the principal office of the Exchange, and at the Commission's Public Reference Room. II. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the selfregulatory 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 selfregulatory organization has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
[[Page 67239]]
A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

The purpose of this proposed rule change is to amend the ISE's cancellation fee. The Exchange currently has a cancellation fee of $2.00 that applies to Electronic Access Members (``EAMs'') that cancelled at least 500 orders in a month, for each order cancellation in excess of the total number of orders such member executed that month. Further, all orders from the same clearing EAM executed in the same series on the same side of the market at the same price within a 30 second period are aggregated and counted as one executed order for purposes of this fee. This fee is currently charged only to customer orders; brokerdealer orders, including nonmember market maker (FARMM) orders, are excluded from this fee.

Recognizing that order cancellations often happen in large numbers, the purpose of this fee is to ease system congestion and to fairly allocate costs among members according to system use. Some members recently have sought to circumvent the fee by breaking up their orders into a range of deep out of the money options series in the same underlying name that trade at the same premium; in another [sic] words, executing multiple orders within 30 seconds, but in relatednot the sameseries of options. As noted above, ISE currently aggregates executions only in the same series, not related series. In order to prevent market participants from circumventing this fee, ISE proposes to amend the current executionoffset provision of the cancellation fee. Specifically, in calculating this fee, the Exchange will aggregate together and count as one cancelled order orders that are entered and traded within 30 seconds, at the same price, in the same underlying symbol. The Exchange believes this proposed fee change is justified to counter the level of cancellation activity and its effect on congestion.

This proposed fee change will be operative on November 3, 2008. 2. Statutory Basis

The basis under the Act for this proposed rule change is the requirement under Section 6(b)(4) that an exchange have an equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. In particular, the Exchange believes amending the manner by which its cancellation fees are calculated is necessary to allow the Exchange to target cancellations that do not have a valid justification.
B. SelfRegulatory 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. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The foregoing rule change has become effective pursuant to section 19(b)(3) of the Act \5\ and Rule 19b4(f)(2) \6\ thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 19b4(f)(2) [sic].

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 email to rulecomments@sec.gov. Please include File Number SRISE200881 on the subject line.
    Paper Comments
  • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 205491090. All submissions should refer to File Number SRISE200881. This file number should be included on the subject line if email 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 SRISE200881 and should be submitted on or before December 4, 2008.

    For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\7\
    \7\ 17 CFR 200.303(a)(12).
    Florence E. Harmon,
    Acting Secretary.
    [FR Doc. E826884 Filed 111208; 8:45 am]
    BILLING CODE 801101P

    SUMMARY: International Securities Exchange, LLC,


    DOCUMENT BODY 2: November 4, 2008.

    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b4 thereunder,\2\ notice is hereby given that on October 31, 2008, International Securities Exchange, LLC (the ``ISE'' or the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The ISE filed the proposal pursuant to section 19(b)(3)(A) of the Act \3\ and Rule 19b4(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 240.19b4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b4(f)(2).
    I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

    The ISE is proposing to amend its Schedule of Fees regarding its cancellation fee. The text of the proposed rule change is available on the Exchange's Web site (http://www.ise.com), at the principal office of the Exchange, and at the Commission's Public Reference Room. II. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the selfregulatory 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 selfregulatory organization has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
    [[Page 67239]]
    A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

    1. Purpose

    The purpose of this proposed rule change is to amend the ISE's cancellation fee. The Exchange currently has a cancellation fee of $2.00 that applies to Electronic Access Members (``EAMs'') that cancelled at least 500 orders in a month, for each order cancellation in excess of the total number of orders such member executed that month. Further, all orders from the same clearing EAM executed in the same series on the same side of the market at the same price within a 30 second period are aggregated and counted as one executed order for purposes of this fee. This fee is currently charged only to customer orders; brokerdealer orders, including nonmember market maker (FARMM) orders, are excluded from this fee.

    Recognizing that order cancellations often happen in large numbers, the purpose of this fee is to ease system congestion and to fairly allocate costs among members according to system use. Some members recently have sought to circumvent the fee by breaking up their orders into a range of deep out of the money options series in the same underlying name that trade at the same premium; in another [sic] words, executing multiple orders within 30 seconds, but in relatednot the sameseries of options. As noted above, ISE currently aggregates executions only in the same series, not related series. In order to prevent market participants from circumventing this fee, ISE proposes to amend the current executionoffset provision of the cancellation fee. Specifically, in calculating this fee, the Exchange will aggregate together and count as one cancelled order orders that are entered and traded within 30 seconds, at the same price, in the same underlying symbol. The Exchange believes this proposed fee change is justified to counter the level of cancellation activity and its effect on congestion.

    This proposed fee change will be operative on November 3, 2008. 2. Statutory Basis

    The basis under the Act for this proposed rule change is the requirement under Section 6(b)(4) that an exchange have an equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. In particular, the Exchange believes amending the manner by which its cancellation fees are calculated is necessary to allow the Exchange to target cancellations that do not have a valid justification.
    B. SelfRegulatory 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. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties.
    III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

    The foregoing rule change has become effective pursuant to section 19(b)(3) of the Act \5\ and Rule 19b4(f)(2) \6\ thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 19b4(f)(2) [sic].

    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 email to rulecomments@sec.gov. Please include File Number SRISE200881 on the subject line.
    Paper Comments
  • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 205491090. All submissions should refer to File Number SRISE200881. This file number should be included on the subject line if email 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 SRISE200881 and should be submitted on or before December 4, 2008.

    For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\7\
    \7\ 17 CFR 200.303(a)(12).
    Florence E. Harmon,
    Acting Secretary.
    [FR Doc. E826884 Filed 111208; 8:45 am]
    BILLING CODE 801101P


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