[Federal Register Volume 75, Number 85 (Tuesday, May 4, 2010)]
[Notices]
[Pages 23833-23834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10300]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61959; File No. SR-ISE-2010-33]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Establish Strike Price Intervals and Trading Hours for
Options on Index-Linked Securities
April 22, 2010.
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 April 16, 2010, the International Securities Exchange, LLC (the
``Exchange'' or the ``ISE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to establish strike price intervals and
trading hours for options on index-linked securities. The text of the
proposed rule change is as follows (deletions are in [brackets];
additions are in italics):
* * *
Rule 504. Series of Options Contracts Open for Trading
(a)-(h) No change.
Supplementary Material to Rule 504
.01-.05 No change.
.06 Notwithstanding Supplementary Material .01 above, the interval
between strike prices of series of options on Index-Linked Securities,
as defined in Rule 502(k)(1), will be $1 or greater when the strike
price is $200 or less and $5 or greater when the strike price is
greater than $200.
* * *
Rule 700. Days and Hours of Business
No change.
(a)-(c) No change.
(d) Options on Index-Linked Securities, as defined in Rule
502(k)(1), may be traded on the Exchange until 4:15 p.m. each business
day.
[(d)](e) The Exchange shall not be open for business on the
following holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day or Christmas Day. When any holiday observed by
the Exchange falls on a Saturday, the Exchange will not be open for
business on the preceding Friday. When any holiday observed by the
Exchange falls on a Sunday, the Exchange will not be open for business
on the following Monday, unless unusual business conditions exist at
the time.
* * *
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Prior to the commencement of trading options on Index-Linked
Securities, the Exchange is proposing to establish strike price
intervals and trading hours for these new products.
The Securities and Exchange Commission (the ``Commission'') has
approved ISE's and other option exchanges' proposals to enable the
listing and trading of options on Index-Linked Securities.\3\ Options
trading has not commenced to date and is contingent upon the
Commission's approval of The Options Clearing Corporation's (``OCC'')
proposed supplement to the Options Disclosure Document (``ODD'') that
will provide disclosure regarding options on Index-Linked
Securities.\4\
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\3\ See Securities Exchange Act Release Nos. 58985 (November 10
[sic], 2008), 73 FR 72538 (November 28, 2008) (approving SR-ISE-
2008-86); 58204 (July 22, 2008), 73 FR 43807 (July 28, 2008)
(approving SR-CBOE-2008-64); 58203 (July 22, 2008), 73 FR 43812
(July 28, 2008) (approving SR-NYSEArca-2008-57).
\4\ OCC previously received Commission approval to clear options
based on Index-Linked Securities. See Securities Exchange Act
Release No. 60872 (October 23, 2009), 74 FR 55878 (October 29, 2009)
(SR-OCC-2009-14).
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$1 Strikes for Options on Index-Linked Securities
Prior to the commencement of trading options on Index-Linked
Securities, the Exchange is proposing to establish that strike price
intervals of $1 will be permitted where the strike price is less than
$200. Where the strike price is greater than $200, $5 strikes will be
permitted. These proposed changes are reflected by the proposed
addition of new .06 of the Supplementary Material to Rule 504.
Without discounting the differences between exchange-traded funds
(``ETFs'') and Index-Linked Securities, the Exchange seeks to extend
the trading conventions applicable to options on ETFs to options on
Index-Linked Securities. ISE contends that the proposed strike price
intervals for options on Index-Linked Securities are consistent with
the strike price intervals currently permitted for options on ETFs. The
Exchange believes that $1 strike price intervals for options on Index-
Linked Securities will provide investors with greater flexibility by
allowed [sic] them to establish positions that are better tailored to
meet their investment objectives. ISE has analyzed its capacity and
represents that it and the Options Price Reporting Authority have the
necessary systems capacity to handle the additional traffic associated
with the listing and trading of an expanded number of series as
proposed by this filing.
Trading Hours for Options on Index-Linked Securities
Similar to the trading hours for ETF options, the Exchange proposes
to amend Rule 700 by renumbering the current subparagraph (d) to (e)
and adding a new subparagraph (d) to provide that options on Index-
Linked Securities, as defined under .06 of the Supplementary Material
to Rule 504, may be traded on the Exchange until 4:15 p.m. each
business day.
2. Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Act'')
for this proposed rule change is the requirement under Section 6(b)(5)
that an exchange have rules that are designed to promote
[[Page 23834]]
just and equitable principles of trade, and to remove impediments to
and perfect the mechanism for a free and open market and a national
market system, and in general, to protect investors and the public
interest. In particular, the proposal will lessen investor confusion by
having strike price intervals and trading hours established prior to
the commencement of trading in options on Index-Linked Securities.
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to Section 19(b)(3)(A) of the Act \5\ and Rule 19b-4(f)(6)
thereunder.\6\
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change along with a
brief description and text of the proposed rule change, or such
shorted time as designated by the Commission. The Exchange provided
a copy of this rule filing to the Commission at least five business
days prior to the date of this filing.
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The Exchange believes the proposed rule change is non-controversial
in that it is similar to a Chicago Board Options Exchange rule change
recently approved by the Commission.\7\ Further, the Exchange believes
the proposed rule change may eliminate confusion for investors by
establishing strike price intervals and trading hours for options on
Index-Linked Securities prior to the commencement of trading. The
Exchange also believes that the proposed rule change does not raise any
new, unique or substantive issues, and is beneficial for competitive
purposes and to promote a free and open market for the benefit of
investors.
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\7\ See Securities and Exchange Act Release No. 61696 (March 12,
2010), 75 FR 13174 (March 18, 2010) (approving SR-CBOE 2010-005).
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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-2010-33 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2010-33. 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 Web site viewing and
printing 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 the 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 available publicly. All
submissions should refer to File Number SR-ISE-2010-33 and should be
submitted on or before May 25, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-10300 Filed 5-3-10; 8:45 am]
BILLING CODE 8011-01-P