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54546 Federal Register / Vol. 71, No.

179 / Friday, September 15, 2006 / Notices

SECURITIES AND EXCHANGE and C below, of the most significant certain other licensed options, the
COMMISSION aspects of such statements. Exchange is adopting a fee of $0.10 per
contract for trading in these options to
[Release No. 34–54414; File No. SR–ISE– A. Self-Regulatory Organization’s
defray the licensing costs. The Exchange
2006–49] Statement of the Purpose of, and
believes charging the participants that
Statutory Basis for, the Proposed Rule
Self-Regulatory Organizations; Change trade this instrument is the most
International Securities Exchange, Inc.; equitable means of recovering the costs
1. Purpose of the license. However, because of
Notice of Filing and Immediate
Effectiveness of Proposed Rule The Exchange is proposing to amend competitive pressures in the industry,
Change Relating to Fee Changes its Schedule of Fees to establish fees for the Exchange proposes to exclude
transactions in options on the following Public Customer Orders from this
September 7, 2006. 5 Premium Products: iShares S&P surcharge fee. Accordingly, this
Pursuant to Section 19(b)(1) of the SmallCap 600 Value Index Fund (‘‘IJS’’), surcharge fee would be charged only to
Securities Exchange Act of 1934 iShares Russell 1000 Growth Index Exchange members with respect to Non-
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Fund (‘‘IWF’’), iShares Russell MidCap Public Customer Orders (e.g., ISE
notice is hereby given that on Growth Index Fund (‘‘IWP’’), iShares Market Maker, Non-ISE Market Maker &
August 29, 2006, the International Russell MidCap Value Index Fund Firm Proprietary orders) and would
Securities Exchange, Inc. (‘‘ISE’’ or (‘‘IWS’’), and iShares Russell 3000 Index apply to Linkage Orders 10 under a pilot
‘‘Exchange’’) filed with the Securities Fund (‘‘IWV’’).6 Specifically, the program that is set to expire on July 31,
and Exchange Commission Exchange is proposing to adopt an 2007. Further, since options on IJS, IWF,
(‘‘Commission’’) the proposed rule execution fee and a comparison fee for IWP, IWS and IWV are multiply-listed,
change as described in Items I, II, and all transactions in options on IJS, IWF, the Payment for Order Flow fee would
III below, which Items have been IWP, IWS and IWV.7 The amount of the also apply.
prepared by the ISE. The ISE has filed execution fee and comparison fee for 2. Statutory Basis
the proposed rule change as one products covered by this filing shall be
establishing or changing a due, fee, or $0.15 and $0.03 per contract, The basis for the proposed rule
other charge imposed by the ISE under respectively, for all Public Customer change is the requirement under Section
Section 19(b)(3)(A)(ii) of the Act 3 and Orders 8 and Firm Proprietary orders. 6(b)(4) of the Act 11 that an exchange
Rule 19b–4(f)(2) thereunder,4 which The amount of the execution fee and have an equitable allocation of
renders the proposal effective upon comparison fee for all ISE Market Maker reasonable dues, fees, and other charges
filing with the Commission. The transactions shall be equal to the among its members and other persons
Commission is publishing this notice to execution fee and comparison fee using its facilities.
solicit comments on the proposed rule currently charged by the Exchange for B. Self-Regulatory Organization’s
change from interested persons. ISE Market Maker transactions in equity Statement on Burden on Competition
I. Self-Regulatory Organization’s options.9 Finally, the amount of the
execution fee and comparison fee for all The proposed rule change does not
Statement of the Terms of Substance of impose any burden on competition that
the Proposed Rule Change Non-ISE Market Maker transactions
shall be $0.16 and $0.03 per contract, is not necessary or appropriate in
The ISE is proposing to amend its respectively. All of the applicable fees furtherance of the purposes of the Act.
Schedule of Fees to establish fees for covered by this filing are identical to C. Self-Regulatory Organization’s
transactions in options on 5 Premium fees charged by the Exchange for all Statement on Comments on the
Products.5 The text of the proposed rule other Premium Products. The Exchange Proposed Rule Change Received From
change is available on the Exchange’s believes the proposed rule change will Members, Participants or Others
Internet Web site (http:// further the Exchange’s goal of
www.iseoptions.com), at the principal The Exchange has not solicited, and
introducing new products to the
office of the ISE, and at the does not intend to solicit, comments on
marketplace that are competitively
Commission’s Public Reference Room. this proposed rule change. The
priced.
The Exchange has entered into a Exchange has not received any
II. Self-Regulatory Organization’s unsolicited written comments from
Statement of the Purpose of, and license agreement with Standard &
Poor’s and the Frank Russell Company members or other interested parties.
Statutory Basis for, the Proposed Rule
Change in connection with the listing and III. Date of Effectiveness of the
trading of options on IJS and IWF, IWP, Proposed Rule Change and Timing for
In its filing with the Commission, the IWS and IWV, respectively. As with Commission Action
ISE included statements concerning the
purpose of, and basis for, the proposed 6 IJS, IWF, IWP, IWS and IWV constitute ‘‘Fund
Because the foregoing proposed rule
rule change and discussed any Shares,’’ as defined by ISE Rule 502(h). change establishes or changes a due, fee,
comments it received on the proposed 7 These fees will be charged only to Exchange or other charge imposed by the
rule change. The text of these statements members. Under a pilot program that is set to expire Exchange, it has become effective
on July 31, 2007, these fees will also be charged to pursuant to Section 19(b)(3)(A) of the
may be examined at the places specified Linkage Orders (as defined in ISE Rule 1900). See
in Item IV below. The ISE has prepared Securities Exchange Release No. 54204 (July 25,
Act 12 and Rule 19b–4(f)(2) 13
summaries, set forth in Sections A, B, 2006), 71 FR 43548 (August 1, 2006). thereunder. At any time within 60 days
8 Public Customer Order is defined in Exchange of the filing of the proposed rule change
1 15 U.S.C. 78s(b)(1).
Rule 100(a)(33) as an order for the account of a the Commission may summarily
Public Customer. Public Customer is defined in abrogate such proposed rule change if it
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2 17 CFR 240.19b–4. Exchange Rule 100(a)(32) as a person that is not a


3 15 U.S.C. 78s(b)(3)(A)(ii).
broker or dealer in securities.
4 17 CFR 240.19b–4(f)(2). 10 See supra note 7.
9 The execution fee is currently between $.21 and
5 The term ‘‘Premium Products’’ is defined in the 11 15 U.S.C. 78f(b)(4).
$.12 per contract side, depending on the Exchange
12 15 U.S.C. 78s(b)(3)(A).
Schedule of Fees as the products enumerated Average Daily Volume and the comparison fee is
therein. currently $.03. 13 17 CFR 19b–4(f)(2).

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Federal Register / Vol. 71, No. 179 / Friday, September 15, 2006 / Notices 54547

appears to the Commission that such For the Commission, by the Division of II. Self-Regulatory Organization’s
action is necessary or appropriate in the Market Regulation, pursuant to delegated Statement of the Purpose of, and
public interest, for the protection of authority.14 Statutory Basis for, the Proposed Rule
investors, or otherwise in furtherance of Nancy M. Morris, Change
the purposes of the Act. Secretary. In its filing with the Commission, the
IV. Solicitation of Comments [FR Doc. E6–15322 Filed 9–14–06; 8:45 am] Exchange included statements
BILLING CODE 8010–01–P concerning the purpose of, and basis for,
Interested persons are invited to the proposed rule change and discussed
submit written data, views, and any comments it received on the
arguments concerning the foregoing, SECURITIES AND EXCHANGE proposal. The text of these statements
including whether the proposed rule COMMISSION may be examined at the places specified
change is consistent with the Act. in Item IV below. The Exchange has
Comments may be submitted by any of prepared summaries, set forth in
[Release No. 34–54417; File No. SR–
the following methods: Sections A, B, and C below, of the most
NYSEArca–2006–52]
significant aspects of such statements.
Electronic Comments Self-Regulatory Organizations; NYSE A. Self-Regulatory Organization’s
• Use the Commission’s Internet Arca, Inc.; Notice of Filing and Statement of the Purpose of, and
comment form (http://www.sec.gov/ Immediate Effectiveness of a Proposed Statutory Basis for, the Proposed Rule
rules/sro.shtml); or Rule Change Relating to Exchange Change
Fees and Charges
• Send an e-mail to rule- 1. Purpose
comments@sec.gov. Please include File September 8, 2006. The Exchange represents that the
No. SR–ISE–2006–49 on the subject purpose of this proposed rule change is
Pursuant to Section 19(b)(1) of the
line. to extend the Pilot Program that applies
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 to Option Strategy Executions until
Paper Comments
March 1, 2007. The transactions
notice is hereby given that on August
• Send paper comments in triplicate included as part of the Pilot Program
31, 2006, the NYSE Arca, Inc. (‘‘NYSE
to Nancy M. Morris, Secretary, include reversals and conversions,5
Arca’’ or ‘‘Exchange’’) filed with the dividend spreads,6 box spreads,7 short
Securities and Exchange Commission, Securities and Exchange Commission
Station Place, 100 F Street, NE., stock interest spreads,8 and merger
(‘‘Commission’’) the proposed rule spreads.9 Because the referenced
Washington, DC 20549–1090. change as described in Items I, II, and Options Strategy Transactions are
All submissions should refer to File No. III below, which items have been generally executed by professionals
SR–ISE–2006–49. This file number prepared by the Exchange. The whose profit margins are generally
should be included on the subject line Exchange has designated the proposed narrow, the Pilot Program caps the
if e-mail is used. To help the rule change as one establishing or transaction fees associated with such
Commission process and review your changing a due, fee, or other charge, executions at $1,000 per strategy
comments more efficiently, please use pursuant to Section 19(b)(3)(A)(ii) of the execution that are executed on the same
only one method. The Commission will Act 3 and Rule 19b–4(f)(2) thereunder,4 trading day in the same option class. In
post all comments on the Commission’s which renders the proposal effective addition, there is also a monthly cap of
Internet Web site (http://www.sec.gov/ upon filing with the Commission. The $50,000 per initiating firm for all
rules/sro.shtml). Copies of the Commission is publishing this notice to strategy executions. The Exchange
submission, all subsequent solicit comments on the proposed rule believes that by keeping fees low, the
amendments, all written statements change from interested persons.
5 Reversals and conversions are transactions that
with respect to the proposed rule
change that are filed with the I. Self-Regulatory Organization’s employ calls, puts and the underlying stock to lock
Statement of the Terms of Substance of in a nearly risk free profit. Reversals are established
Commission, and all written by combining a short stock position with a short put
communications relating to the the Proposed Rule Change and a long call position that shares the same strike
proposed rule change between the and expiration. Conversions employ long positions
The Exchange proposes to amend its in the underlying stock that accompany long puts
Commission and any person, other than Schedule of Fees and Charges in order and short calls sharing the same strike and
those that may be withheld from the to extend the pilot program (‘‘Pilot expiration.
public in accordance with the Program’’) that applies to Option
6 Dividend spreads are trades involving deep in

provisions of 5 U.S.C. 552, will be the money options that exploit pricing differences
Strategy Executions until March 1, 2007. arising around the time a stock goes ex-dividend.
available for inspection and copying in
The Exchange also proposes at this time 7 Box spreads is a strategy that synthesizes long
the Commission’s Public Reference and short stock positions to create a profit.
to correct a minor typographical error
Room. Copies of the filing also will be Specifically, a long call and short put at one strike
on the schedule. The text of the is combined with a short call and long put at a
available for inspection and copying at
proposed rule change is available on different strike to create synthetic long and
the principal office of the Exchange. All synthetic short stock positions, respectively.
NYSE Arca’s Web site at (http://
comments received will be posted 8 A short stock interest spread is a spread that
www.nysearca.com), at the Office of the
without change; the Commission does uses two deep in the money put options of the same
not edit personal identifying Secretary at NYSE Arca, and at the class followed by the exercise of the resulting long
information from submissions. You Commission’s Public Reference Room. position in order to establish a short stock interest
arbitrage position.
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should submit only information that 9 A merger spread is a transaction executed


14 17 CFR 200.30–3(a)(12).
you wish to make available publicly. All 1 15
pursuant to a strategy involving the simultaneous
U.S.C. 78s(b)(1). purchase and sale of options of the same class and
submissions should refer to File No. 2 17 CFR 240.19b–4.
expiration date, but with different strike prices
SR–ISE–2006–49 and should be 3 15 U.S.C. 78s(b)(3)(A)(ii).
followed by the exercise of the resulting long option
submitted on or before October 6, 2006. 4 17 CFR 240.19b–4(f)(2). position.

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