[Federal Register Volume 75, Number 56 (Wednesday, March 24, 2010)]
[Notices]
[Pages 14225-14227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6517]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61737; File No. SR-ISE-2010-22]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Permit Concurrent Listing of $3.50 and $4 Strikes for Classes
in the $0.50 Strike and $1 Strike Programs
March 18, 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 March 10, 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
Exchange. 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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[[Page 14226]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to permit the concurrent listing of $3.50 and
$4 strikes for classes that participate in both the $0.50 Strike and $1
Strike Programs. 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 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
The purpose of this proposed rule change is to permit the
concurrent listing of $3.50 and $4 strikes for classes that participate
in both the $0.50 Strike and $1 Strike Programs.
The Exchange recently implemented a rule change that permits strike
price intervals of $0.50 for options on stocks trading at or below
$3.00 (``$0.50 Strike Program'').\5\ As part of the filing to establish
the $0.50 Strike Program, the Exchange contemplated that a class may be
selected to participate in both the $0.50 Strike Program and the $1
Strike Program. Under the $1 Strike Program, new series with $1
intervals are not permitted to be listed within $0.50 of an existing
$2.50 strike price in the same series, except that strike prices of $2
and $3 are permitted to be listed within $0.50 of a $2.50 strike price
for classes also selected to participate in the $0.50 Strike
Program.\6\ Under ISE's existing rule, for classes selected to
participate in both the $0.50 Strike Program and the $1 Strike Program,
the Exchange may either: (a) List a $3.50 strike but not list a $4
strike; or (b) list a $4 strike but not list a $3.50 strike. For
example, if a $3.50 strike for an options class in both the $0.50 and
$1 Strike Programs was listed, the next highest permissible strike
price would be $5.00. Alternatively, if a $4 strike was listed, the
next lowest permissible strike price would be $3.00. The intent of the
$.50 Strike Program was to expand the ability of investors to hedge
risks associated with stocks trading at or under $3 and to provide
finer intervals of $0.50, beginning at $1 up to $3.50. As a result, the
Exchange believes that the current filing is consistent with the
purpose of the $0.50 Strike Program and will permit the Exchange to
fill in any existing gaps resulting from having to choose whether to
list a $3.50 or $4 strike for options classes in both the $0.50 and $1
Strike Programs.
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\5\ See Exchange Act Release No. 60696 (September 18, 2009), 74
FR 49053 (September 24, 2009) (SR-ISE-2009-65).
\6\ See Supplementary Material .01(b) to ISE Rule 504.
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Therefore, the Exchange is submitting the current filing to permit
the listing of concurrent $3.50 and $4 strikes for classes that are
selected to participate in both the $0.50 Strike Program and the $1
Strike Program. To effect this change, the Exchange is proposing to
amend Supplementary Material .01(b) to ISE Rule 504 by adding $4 to the
strike prices of $2 and $3 currently permitted if a class participates
in both the $0.50 Strike Program and the $1 Strike Program.
The Exchange is also proposing to amend the current rule text to
delete references to ``$2.50 strike prices'' (and the example utilizing
$2.50 strike prices) and to replace those references with broader
language, e.g., ``existing strike prices.''
2. Statutory 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) of the Exchange Act \7\ 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 allow the Exchange to list more granular strikes on options
overlying lower priced securities, which the Exchange believes will
provide investors with greater flexibility by allowing them to
establish positions that ate better tailored to meet their investment
objectives.
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\7\ 15 U.S.C. 78f(b)(5).
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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 significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, 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, it has become
effective pursuant to section 19(b)(3)(A) \8\ of the Act and Rule 19b-
4(f)(6) \9\ thereunder. The Exchange provided the Commission with
written 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 the proposed rule
change.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 C.F.R. 240.19b-4(f)(6).
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The Exchange has requested that the Commission waive the 30-day
operative delay to permit the Exchange to compete with other exchanges
whose rules permit concurrent listing of $3.50 and $4 strikes for
classes similarly participating in both a $0.50 strike program and a $1
strike program. The Commission finds that waiver of the operative delay
is consistent with the protection of investors and the public interest
because such waiver will encourage fair competition among the
exchanges. Therefore, the Commission designates the proposal operative
upon filing.\10\
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\10\ For purposes only of waiving the 30-day operative delay,
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 rule change if it
appears to the Commission that such action is necessary or appropriate
in the public
[[Page 14227]]
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-2010-22 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-2010-22. 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-2010-22 and should be
submitted on or before April 14, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6517 Filed 3-23-10; 8:45 am]
BILLING CODE 8011-01-P