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U.S. Securities and Exchange Commission

August 18, 2006

Michael Simon, Esq.
Chief Regulatory Officer
International Securities Exchange, Inc.
60 Broad Street
New York, NY 10004

Re: Limited Exemption from Exchange Act Rule 10b-10(a)(2)(i)(A) and No-Action Position under Exchange Act Rules 17a-3 and 17a-4

Dear Mr. Simon:

Based on the facts and representations set forth in your letter dated August 18, 2006, we find that it is appropriate in the public interest and consistent with the protection of investors to grant, and hereby grant, to International Securities Exchange, Inc. ("ISE" or "Exchange") Electronic Access Members that are authorized to trade in ISE's equity trading facility ("ISEstock") that execute trades for their customers on ISEstock ("ISEstock EAMs") a limited exemption pursuant to Rule 10b-10(f) under the Securities Exchange Act of 1934 ("Exchange Act") from the requirement in Rule 10b-10(a)(2)(i)(A) to disclose to their customers the name of the person from whom a security was purchased, or to whom it was sold, or the fact that such information will be provided upon a customer's written request. The exemptive relief is limited to trades that ISEstock EAMs execute on ISEstock with other ISEstock EAMs using the post-trade anonymity feature described in a proposed pilot program filed by ISE (PILOT-ISE-2006-01).

In granting the relief, we note in particular that ISEstock will execute trades randomly when there is a match of buying and selling interest and that ISEstock EAMs cannot: alter the execution algorithm; determine or influence the selection of the ISEstock EAM with whom they will trade; or otherwise change execution priorities. In addition, we note that there will be an exception to the post-trade anonymity feature that will inform members when they have executed an order by matching against other trading interest they have submitted to ISEstock. As a result, all ISEstock EAMs that execute trades in ISEstock using the post-trade anonymity feature will have available to them the information necessary to comply with the remaining applicable requirements of Rule 10b-10.

The Office of Financial Responsibility has instructed us to inform you that it will not recommend enforcement action to the Commission if, in lieu of making and preserving a separate record, the ISEstock EAM relies on the Exchange's retention of the identities of ISEstock EAMs that execute anonymous trades on ISEstock, for the period specified in Rule 17a-4(a), to satisfy the requirements of Rules 17a-3(a)(1) and 17a-4(a) under the Exchange Act. The staff notes, however, that an ISEstock EAM has the responsibility to make, keep current, and preserve records of all purchases and sales of securities in accordance with Exchange Act Rules 17a-3 and 17a-4 for trades effected on ISEstock if the ISEstock EAM knows the identity of the contra-party, including those instances where the Exchange discloses the identity of the contra-party to a trade to the ISEstock EAM (e.g., when the ISEstock EAM submits an order that has executed against another order submitted by that same ISEstock EAM).

This exemption from Rule 10b-10 and the staff position under Rules 17a-3 and 17a-4 are based solely upon the representations you have made and are limited strictly to the facts and conditions described in your letter. Any different facts or circumstances, including any change to the operation of ISEstock or the post-trade anonymity feature, may require a different response. We express no view with respect to other questions the proposed activities of ISE or any ISEstock EAM relying on this relief may raise, including the applicability of any other federal or state laws or the applicability of self-regulatory organization rules concerning customer account statements or confirmations.

For the Commission,
by the Division of Market Regulation,
pursuant to delegated authority,1

Brian A. Bussey
Assistant Chief Counsel


Incoming Letter:

The Incoming Letter is in Acrobat format.


Modified: 08/21/2006