May 28, 2006
To the SEC:
Thank you for the opportunity to respond to the SR-ISE-2006-26 proposal.
I am a retail trader who will be affected by the new SR-ISE-2006-26 proposal. As such, I disagree with the ISE reasoning for the proposed rule change. The ISE proposal states,
In fact, as a public customer, I do not experience the lower margin rates, the lower commission rates, the increased clout given to broker-dealers in floor disputes, the knowledge of large pending transactions in the underlying stock, or any of the other benefits accruing to broker-dealers. I cannot submit automatic option quotations corresponding to moves in the price of the stock. I cannot unilaterally "bust" a completed trade and force the counterparty into a significant economic loss - a procedure enforced on me many times. And I cannot enact a rule change, such as SR-ISE-2006-26, which intends to find and confiscate customer profits wherever they occur.
My order to buy 50 Intel options resting on the order book, is more likely to be ahead of ISE market-makers, not other public accounts which are smaller than my account. Therefore, the ISE proposal will primarily benefit ISE market makers, and not the smallest public accounts mentioned in the ISE proposal. That point cannot be overemphasized. The benefits anticipated by ISE market-makers are the reason for attempting to divide public accounts into different classes which may then be discriminated against. The SR-ISE-2006-26 proposal will further disadvantage my account, which already receives discriminatory treatment because of my status as a public customer.
The SEC should not approve this ISE proposal.
Respectfully,
Mr. B. Thomas Rule
*Page 9 of 25, ISE SR-ISE-2006-26 proposal.