ISE international stock exchange DARK LIQUIDITY POOL OFFERED

About the ISE Stock Exchange
The ISE Stock Exchange is a completely electronic marketplace that offers high-speed order execution capabilities, a competitive pricing structure and neutral access rules.

New Pricing Structure

ISE Stock Exchange recently introduced a simplified maker/taker pricing structure of $0.0032/$0.0030 for all tapes. The new pricing structure allows firms quoting on our platform to immediately know the explicit revenue
generated from trading at ISE. Quote and trade revenue rebates will be embedded into the liquidity provider rebate
for displayed market executions.

The taker fee will remain unchanged at $0.0030/share. ISE’s complete fee schedule, including fees for MidPoint
Match, is available at: www.ise.com/fees

Overview

MidPoint Match

Displayed Market

Order Destination

Overview

The ISE Stock Exchange is the only dual structure platform that integrates a dark pool, MidPoint MatchSM, with a fully displayed stock market. Traders have the best of both worlds on one platform – complete order protection and continuous price improvement. See a demo of how it works.

The ISE Stock Exchange offers two primary capabilities on one platform:

* MidPoint MatchSM is the only continuous, exchange-based dark pool in the United States. Members can use MidPoint MatchSM to trade equities instantaneously at the exact midpoint price of the National Best Bid and Offer (NBBO).
* Displayed Market is a fully electronic visible market of the Best Bid and Offer, which trades the common stocks and ETFs listed on the NYSE, NYSEArca, NASDAQ, and Amex.

Our members benefit from the interaction between the two liquidity pools, which provide opportunities for price improvement. Flexible order types allow members to take advantage of the integration of our displayed and non-displayed pools. As a regulated exchange, the ISE Stock Exchange provides equal access for all participants.

The Exchange is Reg NMS compliant and trades approximately 6,000 securities, including most common stocks and ETFs that are listed on the NYSE, NYSEArca, NASDAQ and Amex. Trading activity occurs within normal trading hours from 9:30 a.m. to 4:00 p.m. (EST). Trading is extended to 4:15 p.m. for ETFs that trade for the extended 15-minute time period. The ISE Stock Exchange reports quotes and trades directly to the tape. The letter "I" is used to denote ISE disseminated quotes and trades for all equity securities.

The ISE Stock Exchange is a part of the International Securities Exchange (ISE), a family of innovative securities markets.

MidPoint Match

The ISE Stock Exchange's MidPoint MatchSM (MPMSM) is an exchange-based, fully automated, instantaneous and anonymous platform for trading equity securities at the midpoint price between the National Best Bid and Offer (NBBO). MidPoint MatchSM supports round-lot orders of any size, accommodating both block-sized orders and smaller orders.

MidPoint MatchSM users are able to access the market without leaving a footprint. Traders maintain complete control over their orders, deciding when to enter and when to cancel without affecting the Displayed Market. MPMSM provides traders with the flexibility to float an order at the midpoint or gain midpoint exposure en route to the Displayed Market.

Find out more about types of orders MidPoint MatchSM supports.

Displayed Market

The ISE Stock Exchange's Displayed Market offers high-speed order execution capabilities combined with a competitive pricing structure. By using maker/taker pricing, the ISE Stock Exchange is structured to attract liquidity providers and to ensure a competitive marketplace.

As an exchange, all orders are managed on a completely equitable basis. As a fully electronic system, there is no human intervention to interfere with the timely execution of orders. Further, the Displayed Market will maintain full anonymity throughout the order entry, execution, and clearing process. All participants have equal standing for order placement and execution priority.

The ISE Stock Exchange offers full route-out capabilities, allowing the exchange to be used as your market of choice, with access extended to other market centers. Since the ISE Stock Exchange is fully compliant with Reg NMS, orders benefit from complete trade-through protection.

Find out more about order types.

Order Destination

Market Exposure
Through its unique structure, offering both a displayed and non-displayed pool, the ISE Stock Exchange provides unparalleled flexibility. The ISE Stock Exchange's orders allow you to choose your level of market exposure.

Brokers increasingly are routing algorithmic trading orders to multiple dark pools as they begin building code into all of their algorithms to search dark pools for liquidity.

As buy-side traders increasingly voice concerns about information leakage, many brokers have coded all of their algorithmic strategies to search for liquidity in dark pools. These private networks match trades anonymously without publishing a quote, preventing trades from moving the markets.

Up until about a year ago, brokers provided "pure-play" dark pool algorithms that were specifically designed to source and consolidate liquidity from dark pools. Credit Suisse, for example, offered Guerrilla and Sniper, while Citi offered Scouter and Instinet had Nighthawk.

Because of the success of Guerrilla, however, Credit Suisse Advanced Execution Services (AES) decided to separate out the dark pool aggregation code from Guerrilla and add it to other algorithms and electronic trading strategies. "What we saw is that dark pools became more popular," says Dmitri Galiametidinov, a director at AES.

As a result, in January 2007, Credit Suisse launched CrossFinder+, an algorithm that posts liquidity and takes liquidity from multiple dark pools. While clients can leverage the stand-alone algorithm, all other AES algorithms also use the CrossFinder+ technology. "The whole objective with CrossFinder+ is to maximize liquidity from dark pools, not move the market and get the best prices," explains Galiametdinov.

Similarly, Instinet's success with Nighthawk -- a dark pool algorithm that aggregates liquidity from multiple markets, including NYFIX Millennium, Liquidnet H20, Credit Suisse's CrossFinder, Fidelity's CrossStream, the ISE's MidPoint Match and other ECN/ATS pools -- led the agency broker to integrate dark pool aggregation into all of its algorithms in October 2007, following the completion of its merger with Nomura Securities.

"Dark pool access is clearly a very significant part of algorithmic trading, and we thought our clients should not have to access two separate algorithms to get dark pool access," explains John Comerford, EVP and global head of trading research at Instinet. After Instinet integrated its algorithms with the Nomura algorithmic trading platform last October, it began to systematically roll out this capability, he adds.

"The dark pool aggregation [now] is native to all [of our] algorithms," Comerford continues. "Every single algorithm that [clients] have can interact with dark pools, including our portfolio algorithms."

With the exception of VWAP, for which the client's goal is to obtain the volume weighted average price in a stock across the entire day or part of the day, most electronic trading strategies can be designed to interact with dark pools, according to Comerford. "With implementation shortfall, the challenge is to trade as much [volume] as possible without moving the stock price, and that is what dark pools are excellent for," he notes. "You can trade a tremendous amount of volume and no one sees [it]."

Comerford says Instinet currently executes around 20 percent of its orders purely in dark pools. But the firm also uses hidden order types on ECNs for another 30 percent to 40 percent of its orders, he adds.

Routing to Light and Dark Markets

Searching for liquidity in both displayed markets and dark pools requires complex routing strategies, notes Timothy Reilly, managing director and head of Citi's electronic execution sales. "There is a science in understanding which dark pools are set up consistent with the underlying algorithmic strategy," he explains.

For example, if a client places an aggressive order at 9:45 a.m. to buy Oracle stock, and one of the scheduled dark pool crosses is at 10 a.m., Citi's algorithm is not going to route to that venue, Reilly relates. Instead, it will check venues with continuous crosses, such as ISE Midpoint Match or LEVEL ATS, he notes. "You need to be where the action is," Reilly says.

To find the best price across both light and dark markets, Credit Suisse's CrossFinder+ uses heat map visualization technology to monitor order flows for a particular symbol and determine where best to get fulfillment, according to the firm's Galiametdinov. He notes that the technology uses information from previous orders to make a decision.

There are even commercial products on the market to help brokers aggregate the light and dark order books. For instance, the Apama Division of Progress Software sells a software package called Accelerator that "can help you deploy a smart order router project quickly," says John Bates, founder and general manager of Apama. Apama sells the solution to brokers to help them build superbooks of all the venues. "You're continuously aggregating all the liquidity pools -- either dark or light -- and finding where the best liquidity pools are and routing the order there," explains Bates.

http://www.ise.com/assets/documents/Opt ... hedule.pdf

NEW SCHEDULE OF FEES