[Federal Register Volume 75, Number 58 (Friday, March 26, 2010)]
[Notices]
[Pages 14646-14648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6677]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61742; File No. SR-ISE-2010-19]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing of Proposed Rule Change To List and Trade Options
on the ETFS Palladium Trust and the ETFS Platinum Trust
March 19, 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 5, 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 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 amend its rules to enable the listing and
trading on the Exchange of options on the ETFS Palladium Trust and the
ETFS Platinum Trust. 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 Exchange 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
Recently, the U.S. Securities and Exchange Commission (``SEC'' or
``Commission'') authorized ISE to list and trade options on the SPDR
Gold Trust,\3\ the iShares COMEX Gold Trust and the iShares Silver
Trust,\4\ the ETFS Gold Trust and the ETFS Silver Trust.\5\ Now, the
Exchange proposes to list and trade options on the ETFS Palladium Trust
and the ETFS Platinum Trust.
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\3\ See Securities Exchange Act Release No. 57894 (May 30,
2008), 73 FR 32061 (June 5, 2008) (SR-ISE-2008-12).
\4\ See Securities Exchange Act Release No. 59055 (December 4,
2008), 73 FR 75148 (December 10, 2008) (SR-ISE-2008-58).
\5\ See Securities Exchange Act Release No. 61483 (February 3,
2010), 75 FR 6753 (February 10, 2010) (SR-ISE-2009-106).
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Under current Rule 502(h), only Exchange-Traded Fund Shares, or
ETFs, that are traded on a national securities exchange and are defined
as an ``NMS'' stock under Rule 600 of Regulation NMS, and that (i)
represent interests in registered investment companies (or series
thereof) organized as open-end management investment companies, unit
investment trusts or similar entities that hold portfolios of
securities and/or financial instruments, including, but not limited to,
stock index futures contracts, options on futures, options on
securities and indices, equity caps, collars and floors, swap
agreements, forward contracts, repurchase agreements and reverse
repurchase agreements (the ``Financial Instruments''), and money
[[Page 14647]]
market instruments, including, but not limited to, U.S. government
securities and repurchase agreements (the ``Money Market Instruments'')
comprising or otherwise based on or representing investments in broad-
based indexes or portfolios of securities and/or Financial Instruments
and Money Market Instruments (or that hold securities in one or more
other registered investment companies that themselves hold such
portfolios of securities and/or Financial Instruments and Money Market
Instruments) or (ii) represent interests in a trust that holds a
specified non-U.S. currency or currencies deposited with the trust when
aggregated in some specified minimum number may be surrendered to the
trust by the beneficial owner to receive the specified non-U.S.
currency or currencies and pays the beneficial owner interest and other
distributions on the deposited non-U.S. currency or currencies, if any,
declared and paid by the trust (``Funds'') or (iii) represent commodity
pool interests principally engaged, directly or indirectly, in holding
and/or managing portfolios or baskets of securities, commodity futures
contracts, options on commodity futures contracts, swaps, forward
contracts and/or options on physical commodities and/or non-U.S.
currency (``Commodity Pool ETFs'') or (iv) represent interests in the
SPDR[reg] Gold Trust, the iShares COMEX Gold Trust, the iShares Silver
Trust, the ETFS Gold Trust or the ETFS Silver Trust or (v) represents
an interest in a registered investment company (``Investment Company'')
organized as an open-end management company or similar entity, that
invests in a portfolio of securities selected by the Investment
Company's investment adviser consistent with the Investment Company's
investment objectives and policies, which is issued in a specified
aggregate minimum number in return for a deposit of a specified
portfolio of securities and/or a cash amount with a value equal to the
next determined net asset value (``NAV''), and when aggregated in the
same specified minimum number, may be redeemed at a holder's request,
which holder will be paid a specified portfolio of securities and/or
cash with a value equal to the next determined NAV (``Managed Fund
Share'') are eligible as underlying securities for options traded on
the Exchange.\6\ This rule change proposes to expand the types of ETFs
that may be approved for options trading on the Exchange to include the
ETFS Palladium Trust and the ETFS Platinum Trust.
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\6\ See ISE Rule 502(h).
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Apart from allowing the ETFS Palladium Trust and the ETFS Platinum
Trust to be an underlying for options traded on the Exchange as
described above, the listing standards for ETFs will remain unchanged
from those that apply under current Exchange rules. ETFs on which
options may be listed and traded must still be listed and traded on a
national securities exchange and must satisfy the other listing
standards set forth in ISE Rule 502(h).
Specifically, in addition to satisfying the aforementioned listing
requirements, ETFs must meet either (1) the criteria and guidelines
under ISE Rules 502(a) and (b) or (2) they must be available for
creation or redemption each business day from or through the issuing
trust, investment company, commodity pool or other entity in cash or in
kind at a price related to net asset value, and the issuer must be
obligated to issue Exchange-Traded Fund Shares in a specified aggregate
number even if some or all of the investment assets and/or cash
required to be deposited have not been received by the issuer, subject
to the condition that the person obligated to deposit the investment
assets has undertaken to deliver them as soon as possible and such
undertaking is secured by the delivery and maintenance of collateral
consisting of cash or cash equivalents satisfactory to the issuer, as
provided in the respective prospectus.
The Exchange states that the current continued listing standards
for options on ETFs will apply to options on the ETFS Palladium Trust
and the ETFS Platinum Trust. Specifically, under ISE Rule 503(h),
options on Exchange-Traded Fund Shares may be subject to the suspension
of opening transactions as follows: (1) Following the initial twelve-
month period beginning upon the commencement of trading of the
Exchange-Traded Fund Shares, there are fewer than 50 record and/or
beneficial holders of the Exchange-Traded Fund Shares for 30 or more
consecutive trading days; (2) the value of the underlying palladium or
underlying platinum is no longer calculated or available; or (3) such
other event occurs or condition exists that in the opinion of the
Exchange makes further dealing on the Exchange inadvisable.
Additionally, the ETFS Palladium Trust and the ETFS Platinum Trust
shall not be deemed to meet the requirements for continued approval,
and the Exchange shall not open for trading any additional series of
option contracts of the class covering the ETFS Palladium Trust and the
ETFS Platinum Trust, respectively, if the ETFS Palladium Trust and the
ETFS Platinum Trust ceases to be an ``NMS stock'' as provided for in
ISE Rule 503(b)(5) or the ETFS Palladium Trust and the ETFS Platinum
Trust is halted from trading on its primary market.
The addition of the ETFS Palladium Trust and the ETFS Platinum
Trust to ISE Rule 502(h) will not have any effect on the rules
pertaining to position and exercise limits \7\ or margin.\8\
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\7\ See ISE Rules 412 and 414.
\8\ See ISE Rule 1202.
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The Exchange represents that its surveillance procedures applicable
to trading in options on the ETFS Palladium Trust and the ETFS Platinum
Trust will be similar to those applicable to all other options on other
ETFs currently traded on the Exchange. Also, the Exchange may obtain
information from the New York Mercantile Exchange, Inc. (``NYMEX'') (a
member of the Intermarket Surveillance Group) related to any financial
instrument that is based, in whole or in part, upon an interest in or
performance of palladium or platinum.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \9\ of the
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers
the objectives of Section 6(b)(5) \10\ in particular in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, and to remove impediments to and perfect the mechanisms of
a free and open market and a national market system in a manner
consistent with the protection of investors and the public interest. In
particular, the Exchange believes that amending its rules to
accommodate the listing and trading of options on the ETFS Palladium
Trust and the ETFS Platinum Trust will benefit investors by providing
them with valuable risk management tools.
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\9\ 15 U.S.C. 78f(b).
\10\ 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
[[Page 14648]]
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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(a) By order approve such proposed rule change, or
(b) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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-2010-19 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-2010-19. 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-2010-19 and should be
submitted on or before April 16, 2010.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6677 Filed 3-25-10; 8:45 am]
BILLING CODE 8011-01-P