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

[Federal Register: November 19, 2001 (Volume 66, Number 223)]

[Notices]

[Page 57995-57996]

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

[DOCID:fr19no01-103]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45049; File No. SR-ISE-2001-28]

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the International Securities Exchange LLC Exempting Complex Orders From Payment-for-Order Flow and Marketing Fees

November 9, 2001.

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 October

[[Page 57996]]

23, 2001, the International Securities Exchange LLC (``Exchange'' or ``ISE'') filedwith 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 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 amend its payment-for-order-flow and marketing fees to exempt transactions involving ``Complex Orders.''

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 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

      1. Purpose

         The purpose of the proposed rule change is to exempt trades in ``Complex Orders'' from the Exchange's payment-for-order-flow and marketing fees. ``Complex Orders'' include, among other things, ``spread'' transactions.\3\ These trades are executed on thin profit margins, and the Exchange believes that imposing the payment-for-order- flow and marketing fees on these trades will adversely affect its ability to attract this type of order flow.

         \3\ The Exchange defines ``Complex Orders'' in ISE Rule 722(a). See Exchange Act Release No. 44955 (October 18, 2001), 66 FR 53819 (October 24, 2001).

      2. Statutory Basis

         The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act \4\ and furthers the objectives of section 6(b)(4) \5\ because it is an equitable allocation of reasonable fees among the Exchange's members.

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

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

   2. 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.

   3. 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.

3. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

   The foregoing rule change has become effective upon filing with the Commission because the Exchange has designated the proposed rule change as a fee change pursuant to section 19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) thereunder.\7\ 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.

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

   \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 such filing will also be available for inspection and copying at the principal office of the ISE. All submissions should refer to File No. SR-ISE-2001-28 and should be submitted by December 10, 2001.

   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. 01-28773Filed11-16-01; 8:45 am]

   BILLING CODE 8010-01-M