[Federal Register Volume 75, Number 111 (Thursday, June 10, 2010)]
[Notices]
[Pages 32977-32978]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13932]
[[Page 32977]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62216; File No. SR-ISE-2010-51]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Permit Listing Options Series That Are Restricted to Closing
Transactions if Such Series Are Listed and Restricted to Closing
Transactions on Another National Securities Exchange and to Permit
Opening Transactions by Market Makers To Accommodate Closing
Transactions of Other Market Participants in Option Series Where the
Underlying Security Does Not Meet the Then Current Requirements for
Continuance of Such Approval
June 3, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 21, 2010, the International Securities Exchange, LLC
(``Exchange'' or ``ISE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which items have been prepared by the self-
regulatory organization. The Exchange has filed the proposal as a
``non-controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The ISE proposes to amend Rule 503 to permit the Exchange to list
series that are restricted to closing transactions if such series are
listed and restricted to closing transactions on another exchange. 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.
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
(a) Purpose--The purpose of the proposed rule change is to amend
ISE Rule 503 to permit the Exchange to list option series that are
restricted to closing transactions if such series are listed and
restricted to closing transactions on another exchange.
This filing is based on filings previously submitted by the Chicago
Board Options Exchange (``CBOE''),\5\ NASDAQ OMX PHLX (``PHLX'') \6\
and NASDAQ Options Market (``NOM'').\7\ The impetus for the CBOE
filing, as CBOE noted, was a customer request for it to list a series
of options that was previously delisted by the filing exchange but was
listed on another exchange and restricted to closing transactions, a
situation that may equally occur on ISE as well as other options
exchanges.
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\5\ See Securities Exchange Act Release No. 60625 (September 4,
2009), 74 FR 46825 (September 11, 2009) (SR-CBOE-2009-066).
\6\ See Securities Exchange Act Release No. 60879 (October 26,
2009), 74 FR 56252 (October 30, 2009) (SR-PHLX-2009-90).
\7\ See Securities Exchange Act Release No. 60880 (October 26,
2009), 74 FR 56677 (November 2, 2009) (SR-NASDAQ-2009-090).
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Rule 502 (Criteria for Underlying Securities) sets forth the
requirements or criteria that underlying securities must meet before
the Exchange may initially list options on such securities. Rule 503
sets forth listing maintenance and delisting criteria in respect of
securities underlying options listed on the Exchange that are used by
the Exchange to determine whether such listing status should be
continued. These rules do not have provisions for listing option series
that are restricted to closing transactions where such series are
listed on another exchange.
ISE proposes to add new Supplementary Material .01 Rule 503 to
provide that if an option series is listed but restricted to closing
transactions on another national securities exchange, the Exchange may
list such series (even if such series would not otherwise be eligible
for listing under the Exchange's rules), which shall also be restricted
to closing transactions on the Exchange.\8\
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\8\ The parenthetical text in proposed Rule 503 Supplementary
.01 is being proposed to eliminate ambiguity about the Exchange's
ability to list a restricted series in the event other Exchange
Rules would otherwise prohibit the listing of that series.
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Similar to series that no longer meet the Exchange's criteria for
continued listing, opening transactions by market makers executed to
accommodate closing transactions of other market participants will be
permitted in any restricted series listed pursuant to proposed
Supplementary Material .01 Rule 503. No restrictions will be in place
with respect to the exercise of any restricted series. Additionally,
the Exchange is making changes in Rule 503 to propose an exception for
these opening transactions by market makers to accommodate closing
transactions of other market participants. This proposed change is to
conform Rule 503 to similar provisions in listing rules of other
options exchanges.\9\
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\9\ See Securities Exchange Act Release Nos. 48142 (July 9,
2003), 68 FR 42150 (July 16, 2003) (SR-CBOE-2002-36); and 60879
(October 26, 2009), 74 FR 56252 (October 30, 2009) (SR-PHLX-2009-
90).
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The Exchange believes that the proposed rule change should
encourage competition and be beneficial to traders and market
participants by providing them with a means to trade on the Exchange
securities that are listed and traded on other exchanges.
(b) Basis--The basis under the Securities Exchange Act of 1934
(``Exchange Act'') for this proposed rule change is the requirement
under Section 6(b)(5) that an exchange have rules that are designed to
promote 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 proposed rule change will permit
the Exchange to accommodate possible customer requests and allow
execution of trades on the Exchange and will encourage competition and
not harm investors or the public interest.
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.
[[Page 32978]]
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 foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ thereunder
because the proposal does not: (i) Significantly affect the protection
of investors or the public interest; (ii) impose any significant burden
on competition; and (iii) by its terms, 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, provided that the Exchange has given the
Commission notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ The Exchange has satisfied the five-day pre-filing notice
requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \13\ 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 period.
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\13\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiver of the 30-day operative delay
period is consistent with the protection of investors and the public
interest. In particular, the Exchange would be permitted to list the
restricted series solely for the purpose of closing transactions as
long as the restricted series is listed and restricted to closing
transactions on another national securities exchange. Further, the
proposal would allow an exception for opening transactions by market
makers to accommodate closing transactions of other market
participants. The Commission notes that the proposed rule change is
substantially similar to the rules of other options exchanges.\14\ The
Commission therefore designates the proposal operative upon filing.\15\
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\14\ See CBOE Rule 5.4.12; NOM Chapter IV, Section 4; and Phlx
Rule 1010.
\15\ 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).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such proposed 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.\16\
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\16\ 15 U.S.C. 78s(b)(3)(C).
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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-2010-51 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-2010-51. 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 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
available publicly. All submissions should refer to File Number SR-ISE-
2010-51 and should be submitted on or before July 1, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13932 Filed 6-9-10; 8:45 am]
BILLING CODE 8010-01-P