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If i list the rules in the chain the first rule seem to be accepting trafic from anywhere to anywhere.
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Well, iptables processes the rules in order and stops with the first rule that matches the packet so that rule (which accepts everything) is the first match and iptables stops processing and moves on to the next packet.
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My question is how can i modify rule 1 to allow traffic to and fro the ISP only
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I don't think you can do this. If I understand TCP/IP correctly, packets only "know" where they came from and their final destination, they don't have any concept of the route they take.
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How can i verify that that the connection were initiated from my network.
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I'm not sure I entirely understand what you are trying to accomplish here. Are you trying to limit http and smtp connections to your LAN?