[Federal Register Volume 73, Number 168 (Thursday, August 28, 2008)]
[Notices]
[Pages 50847-50848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-19943]
[[Page 50847]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58400; File No. SR-ISE-2008-66]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Retire a Pilot Program To List and Trade Options on the
iShares Emerging Markets Index Fund
August 20, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 14, 2008, the International Securities Exchange, LLC
(``Exchange'' or ``ISE'') filed with the Securities and Exchange
Commission the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange has
filed the proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective
upon filing with the Commission. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange submits this rule filing to retire a pilot program
that permits the Exchange to list options on the iShares MSCI Emerging
Markets Index Fund (``EEM Fund'').\5\ The Exchange is proposing to
retire the pilot program because the EEM Fund now meets all of the
Exchange's generic initial and maintenance listing standards, which
permit the Exchange to list options on the EEM Fund without having to
file for Commission approval. The text of the proposed rule change is
available on the Exchange's Web site http://www.ise.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
---------------------------------------------------------------------------
\5\ The EEM Fund pilot program commenced on August 27, 2007, and
has been renewed one time. The EEM Fund pilot program is scheduled
to expire on August 27, 2008. See Securities Exchange Act Release
No. 56324 (August 27, 2007), 72 FR 50426 (August 31, 2007) (Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change, as
Modified by Amendment No. 1 Thereto, To List and Trade Options on
the iShares Emerging Markets Index Fund for a Six Month Pilot
Program) (SR-ISE-2007-72); See Securities Exchange Act Release No.
57399 (February 28, 2008), 73 FR 12241 (March 6, 2008) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating
to the Extension of a Pilot Program To List and Trade Options on the
iShares Emerging Markets Index Fund) (SR-ISE-2008-10).
---------------------------------------------------------------------------
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 self-regulatory organization
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. The self-regulatory organization
has prepared summaries, set forth in sections A, B and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this rule change is to retire the Pilot that permits
the Exchange to list options on the EEM Fund.\6\ The Exchange is
proposing to retire the Pilot because the EEM Fund now meets all of the
Exchange's generic initial and maintenance standards. Specifically, the
Exchange has in place initial and maintenance listing standards set
forth in Rules 502(h) and 503(h), respectively (``Listing Standards''),
which are designed to allow the Exchange to list funds structured as
investment companies, such as the EEM Fund, without having to file for
Commission approval to list for trading options on these types of
funds.\7\
---------------------------------------------------------------------------
\6\ The EEM Fund is an open-end investment company designed to
hold a portfolio of securities that track the MSCI Emerging Markets
Index (the ``Index''). The Index is a capitalization-weighted index
created and maintained by Morgan Stanley Capital International,
Inc., and is designed to measure equity market performance in the
global emerging markets.
\7\ ISE Rules 502(h) and 503(h) set forth the initial listing
and maintenance standards for registered investment companies (or
series thereof) organized as open-end management investment
companies, unit investment trusts, or other similar entities that
are traded on a national securities exchange or through the
facilities of a national securities exchange.
---------------------------------------------------------------------------
When the Exchange first sought to list options on the EEM Fund, the
Exchange had determined that the EEM Fund met substantially all of the
Exchange's Listing Standards requirements, but did not meet the Listing
Standards requirement that no more than 50% of the weight of the
securities in the EEM Fund be comprised of securities that are not
subject to a comprehensive surveillance sharing agreement
(``CSSA'').\8\ The Exchange had in place CSSAs with foreign exchanges
that covered 45.97% of the securities in the EEM Fund. In order to meet
the 50% threshold, the Exchange requested the Commission's approval to
rely upon a memorandum of understanding that the Commission had entered
into with the CNBV \9\ (the ``MOU'') because the securities traded on
the Bolsa represented 6.53% of the weight of the securities in the EEM
Fund.\10\
---------------------------------------------------------------------------
\8\ See Rule 502(h)(B)(1).
\9\ The National Commission for Banking and Securities, or
``CNBV,'' is Mexico's regulatory body for financial markets and
banking. The CNBV regulates the Bolsa Mexicana de Valores
(``Bolsa'').
\10\ See supra note 5. The Commission permitted the Exchange to
rely on the MOU, and the Exchange agreed to use its best efforts to
obtain a CSSA with the Bolsa during the respective pilot periods,
which to date has not been obtained.
---------------------------------------------------------------------------
The EEM Fund has now become compliant with ISE Rule 502(h)(B)(1)
and more than 50% of the weight of the securities in the EEM Fund are
now subject to a CSSA. Specifically, the Exchange represents that the
Korean Exchange (``KRX'') \11\ recently became a member of the
Intermarket Surveillance Group and, therefore, securities and other
products trading on its markets are now subject to a CSSA. As a result,
the percentage of the weight of the EEM Fund represented by South
Korean securities now renders the EEM Fund compliant with the
Exchange's Listing Standards requirements.
---------------------------------------------------------------------------
\11\ The KRX was created on January 27, 2005, through the
consolidation of three domestic Korean exchanges: Korea Stock
Exchange (KSE), KOSDAQ Market and Korea Futures Market (KOFEX). See
http://neg.krx.co.kr/index.html.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Act of 1934 (the ``Act'') and the rules and regulations
under the Act applicable to a national securities exchange and, in
particular, the requirements of Section 6(b) of the Act.\12\
Specifically, the Exchange believes the proposed rule change is
consistent with Section 6(b)(5) of the Act's \13\ requirements that the
rules of a national securities exchange be designed to promote just and
equitable principles of trade, to prevent fraudulent and manipulative
acts and, in general, to protect investors and the public interest. In
particular, the proposed rule change will enable the Exchange to
continue to provide a competitive marketplace for investors to trade
options on the EEM Fund.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
[[Page 50848]]
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 Exchange has designated the proposed rule change as one that:
(i) Does not significantly affect the protection of investors or the
public interest; (ii) does not impose any significant burden on
competition; and (iii) by its terms, does not become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest. Additionally, the Exchange provided the
Commission with written notice of its intention to file the proposed
rule change at least five business days before its filing. Therefore,
the foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) under the Act
normally may not become operative prior to 30 days after the date of
filing. However, Rule 19b-4(f)(6)(iii) under the Act \16\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay,
which would make the rule change effective and operative upon filing.
The Exchange believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest as
it will allow the Exchange to continue to list options on the EEM Fund.
For this reason, the Commission designates that the proposed rule
change has become effective and operative immediately.\17\
---------------------------------------------------------------------------
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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 proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-ISE-2008-66 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street, NE., Washington,
DC 20549-1090.
All submissions should refer to File Number SR-ISE-2008-66. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make publicly available. All
submissions should refer to File Number SR-ISE-2008-66 and should be
submitted on or before September 18, 2008.
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).\
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-19943 Filed 8-27-08; 8:45 am]
BILLING CODE 8010-01-P