03-17588. Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the International Securities Exchange, Inc., Relating to Fee Changes

July 3, 2003.

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 June 4, 2003, the International Securities Exchange, Inc. (“ISE” or “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 ISE. 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 Exchange is proposing changes to its Schedule of Fees in order to extend the term of certain existing fee waivers, to remove language to a fee waiver that has expired, and to eliminate the fee for the Rule 11Ac1-6 Order Report.

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 Exchange 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 and is set forth in Sections A, B, and C below.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

The Exchange is proposing changes to its Schedule of Fees in order to extend the term of certain existing fee waivers, to remove language referring to a certain fee waiver that is not being renewed and to eliminate the fee for the Rule 11Ac1-6 Order Report.

With respect to the fee waivers, the Exchange is proposing to extend the terms, as follows: (i) the waiver of customer Execution Fees is extended through June 30, 2004; ^[3] (ii) the waiver of firm proprietary Execution Fees in the iShares S&P 100 Index Fund is extended through June 30, 2004; ^[4] (iii) the waiver of the firm proprietary Surcharge in the iShares S&P 100 Index Fund is extended through June 30, 2004;^[5] (iv) the waiver of the Marketing Fee is extended until December 31, 2003; ^[6] (v) the waiver of the Comparison Fee for customer trades is extended through June 30, 2004; ^[7] (vi) the waiver of the Click®/Trade Review Terminal Software License & Maintenance Fee for a second and subsequent terminals is extended through June 30, 2004; ^[8] and (vii) the waiver of the EAM/Trade Review Terminal Session/API Fee associated with a second and subsequent Click terminals is extended through June 30, 2004.^[9] The Exchange represents that it is extending the term of the fee waivers for competitive purposes. The Exchange is also removing language in its Schedule of Fees that relates to a fee waiver that expired on May 31, 2003 and has not been renewed—namely, firm proprietary Execution Fees for trades executed in the Block Order Mechanism.

With respect to the fee elimination, the Exchange is proposing to eliminate the fee for preparing a Rule 11Ac1-6 Order Report, or specialized best execution report, that the Exchange currently offers to members who specifically request this report. The Exchange is eliminating the fee since the Exchange has recovered the technical development costs associated with producing the report, as well as for competitive purposes.

2. Statutory Basis

The basis under the Act for this proposed rule change is the requirement under Section 6(b)(4) of the Act that an exchange have an equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities.^[10]

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 proposed rule change has been designated as a fee change pursuant to Section 19(b)(3)(A)(ii) of the Act ^[11] and Rule 19b-4(f)(2) thereunder.^[12] Accordingly, the proposal will take effect upon filing with the Commission. 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.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal 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 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.

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-2003-16 and should be submitted by August 1, 2003.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.^[13]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  Initial fee waiver made in Securities Exchange Act Release No. 42473 (February 29, 2000), 65 FR 11818 (March 6, 2000).

4.  Initial fee waiver made in Securities Exchange Act Release No. 46698 (October 21, 2002), 67 FR 65818 (October 28, 2002).

5.  Id.

6.  Initial fee waiver made in Securities Exchange Act Release No. 46189 (July 11, 2002), 67 FR 47587 (July 17, 2002).

7.  Initial fee waiver made in Securities Exchange Act Release No. 42473 (February 29, 2000), 65 FR 11818 (March 6, 2000).

8.  Initial fee waiver made in Securities Exchange Act Release No. 45840 (April 29, 2002), 67 FR 30408 (May 6, 2002).

9.  Id.

10.  15 U.S.C. 78f(b)(4).

11.  15 U.S.C. 78s(b)(3)(A)(ii).

12.  17 CFR 240.19b-4(f)(2).

13.  17 CFR 200.30-3(a)(12).