regulatory organizations; proposed rule changes: International Securities Exchange LLC,

[Federal Register: April 25, 2002 (Volume 67, Number 80)]

[Notices]

[Page 20563]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr25ap02-103]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45772; File No. SR-ISE-2002-09]

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

April 17, 2002.

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 April 15, 2002, the International Securities Exchange LLC (``ISE'') filedwith the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which the ISE has prepared. 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.

1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

   The ISE is proposing to lower the ceiling from $750,000 to $650,000 for each of the ten payment-for-order-flow funds that it maintains. The text of the proposed rule change is available at the ISE and at the Commission.

2. 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 had 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.

   1. 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 establish a lower ceiling from $750,000 to $650,000 for each of the ten payment-for- order-flow funds that the ISE maintains.\3\ The ISE established this ceiling in November 2001 and has been monitoring the levels of the payment-for-order flow funds.\4\ The ISE continues to pay out of these funds less money than has been collected, and the ISE believes that lowering the cap to $650,000 will provide sufficient money for Primary Market Makers to maintain the payment-for-order-flow program while lessening the economic burden on the market makers that pay the fees.

      \3\ Under ISE Rule 802(b), the ISE has divided the options it trades into ten groups, with one Primary Market Maker assigned to each group. The ISE maintains a payment-for-order-flow fund for each group, consisting of the fees collected from market makers trading options in that group. The Primary Market Maker for the group is responsible for arranging and making all payments to Electronic Access Members for order flow sent to the ISE in options in that group.

      \4\ See Securities Exchange Act Release No. 45128 (December 4, 2001), 66 FR 64325 (December 12, 2001).

      The basis for this proposed rule change is the requirement under Section 6(b)(4) of the Act \5\ that an exchange have an equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities.

      \5\ 15 U.S.C. 78f(b)(4).

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

      The ISE believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.

   3. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others

      The ISE has not solicited, and does not intend to solicit, comments on this proposed rule change. The ISE has not received any unsolicited written comments from members or other interested parties.

3. 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) of the Act \6\ and Rule 19b-4(f)(2) \7\ thereunder. At any time within 60 days after the filing of the proposed rule change, the Commission may summarily abrogate the 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.

   \6\ 15 U.S.C. 78s(b)(3)(A).

   \7\ 17 CFR 19b-4(f)(2).

4. 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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filedwith 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 will also be available for inspection and copying at the principal office of the ISE. All submissions should refer to ISE-2002-09 and should be submitted by May 16, 2002.

   For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\8\

   \8\ 17 CFR 200.30-3(a)(12).

   Margaret H. McFarland, Deputy Secretary.

   [FR Doc. 02-10152Filed4-24-02; 8:45 am]

   BILLING CODE 8010-01-P