[Federal Register Volume 75, Number 202 (Wednesday, October 20, 2010)]
[Notices]
[Page 64773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26339]
[[Page 64773]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63104; File No. SR-ISE-2010-91]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Order Approving Proposed Rule Change To Adopt a Pilot Program To
List Additional Expiration Months for Each Class of Options Opened for
Trading on the Exchange
October 14, 2010.
I. Introduction
On August 25, 2010, the International Securities Exchange, LLC (the
``Exchange'' or ``ISE'') filed with the Securities and Exchange
Commission, pursuant to Section 19(b)(1) of the Securities Exchange Act
of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to adopt a pilot program to list additional expiration months
for each class of options opened for trading on the Exchange. The
proposed rule change was published for comment in the Federal Register
on September 2, 2010.\3\ The Commission received no comments on the
proposal. This order approves the proposal.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 62772 (August 26,
2010), 75 FR 53991 (``Notice'').
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II. Description of the Proposal
Pursuant to ISE Rule 504(e), the Exchange currently opens series
with four expiration months for each class of options open for trading
on the Exchange: The first two being the two nearest months, regardless
of the quarterly cycle on which that class trades; the third and fourth
being the next two months of the quarterly cycle previously designated
by the Exchange for that specific class.
The Exchange believes that there is market demand for series with a
greater number of expiration months. The Exchange therefore proposes to
adopt a pilot program pursuant to which it will list series with up to
an additional two expiration months, for a total of six expiration
months for each class of options open for trading on the Exchange. The
proposal will become effective on a pilot basis for twelve months
commencing on the next full month after approval is received to
establish the pilot program. Under the proposal, series with the
additional months listed pursuant to the pilot program will result in
four consecutive expiration months plus two months from the quarterly
cycle. The Exchange seeks to limit the pilot to the 20 most actively
traded options classes.
III. Discussion
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\4\
Specifically, the Commission finds that the proposal is consistent with
Section 6(b)(5) of the Act,\5\ in that the proposal has been designed
to promote just and equitable principles of trade, and to protect
investors and the public interest.
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\4\ The Commission has considered the proposed rule change's
impact on efficiency, competition and capital formation. See 15
U.S.C. 78c(f).
\5\ 15 U.S.C. 78f(b)(5).
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The Commission believes that allowing the Exchange to list and
trade series with up to two additional expiration months, under the
terms described in the Exchange's proposal, should provide investors
with additional means of managing their risk exposures and carrying out
their investment objectives. The Commission notes that the pilot
program limits the series that may be opened pursuant to the pilot
program to the 20 most actively traded options classes. The Commission
believes this restriction should allow the Exchange to offer a wider
array of investment opportunities, while minimizing the impact on
quotation message traffic. The Commission also notes that the proposal
requires the Exchange to closely monitor the trading and quotation
volume associated with the additional options series created under the
pilot program and the effect of these additional series on the capacity
of the Exchange's, OPRA's, and vendors' systems.\6\
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\6\ If the Exchange were to propose an extension, expansion, or
permanent approval of the pilot program, the Exchange would be
required to submit a report on the pilot program to the Commission
at least 60 days prior to the pilot program expiration date. See
Notice, supra note 3, at 53991-92.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-ISE-2010-91) is approved.
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\7\ 15 U.S.C. 78s(b)(2).
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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-26339 Filed 10-19-10; 8:45 am]
BILLING CODE 8011-01-P