Federal Register / Vol. 76, No. 60 / Tuesday, March 29, 2011 / Notices 17463 

11 15 U.S.C. 78s(b)(3)(A)(ii). 

12 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5FLEX Options provide investors with the ability 

to customize basic option features including size, 

expiration date, exercise style, and certain exercise 

prices. FLEX Options can be FLEX Index Options 

or FLEX Equity Options. In addition, other products 

are permitted to be traded pursuant to the FLEX 

trading procedures. For example, credit options are 

eligible for trading as FLEX Options pursuant to the 

FLEX rules in Chapters XXIVA and XXIVB. See 

CBOE Rules 24A.1(e) and (f), 24A.4(b)(1) and (c)(1), 

24B.1(f) and (g), 24B.4(b)(1) and (c)(1), and 28.17. 

The rules governing the trading of FLEX Options on 

the FLEX Request for Quote (‘‘RFQ’’) System 

platform are contained in Chapter XXIVA. The rules 

governing the trading of FLEX Options on the FLEX 

Hybrid Trading System platform are contained in 

Chapter XXIVB. 

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)(ii) of the Act.11 At any time 

within 60 days of the filing of such 

proposed rule change, the Commission 

summarily may temporarily suspend 

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. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or 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 rulecomments@sec.gov. Please include File 

Number SR–ISE–2011–014 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–2011–014. 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 website viewing and 

printing in the Commission’s Public 

Reference Room 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 offices 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–2011–014, and should 

be submitted on or before April 19, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7265 Filed 3–28–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64110; File No. SR–CBOE– 

2011–024] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend Pilot Programs 

Relating to FLEX Exercise Settlement 

Values and Minimum Value Sizes 

March 23, 2011. 

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 14, 

2011, the Chicago Board Options 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) filed with the Securities and 

Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposal as a ‘‘noncontroversial’’ 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to extend 

the operation of its pilot programs 

regarding permissible exercise 

settlement values and the elimination of 

minimum value sizes for Flexible 

Exchange Options (‘‘FLEX Options’’),5

which pilot programs are currently set 

to expire on March 28, 2011, through 

March 30, 2012. The text of the 

proposed rule change is available on the 

Exchange’s Web site (http:// 

www.cboe.org/Legal), at the Exchange’s 

Office of the Secretary 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 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 

On January 28, 2010, the Exchange 

received approval of a rule change that 

established two pilot programs 

regarding permissible exercise 

settlement values and the elimination of 

minimum value sizes for FLEX Options. 


jlentini on DSKJ8SOYB1PROD with NOTICES
17464 Federal Register / Vol. 76, No. 60 / Tuesday, March 29, 2011 / Notices 

6Securities Exchange Act Release Nos. 61439 

(January 28, 2010), 75 FR 5831 (February 4, 2010) 

(SR–CBOE–2009–087) (‘‘Approval Order’’) and 

61676 (March 9, 2010), 75 FR 13191 (March 18, 

2010) (SR–CBOE–2010–026). 

7See Rules 24A.4(b)(3) and 24B.4(b)(3); see also 

Securities Exchange Act Release No. 31920 

(February 24, 1993), 58 FR 12280 (March 3, 1993) 

(SR–CBOE–92–17). The Exchange has determined 

to limit the averaging parameters to three 

alternatives: the average of the opening and closing 

index values; the average of the intra-day high and 

low index values; and the average of the opening, 

closing, and intra-day high and low index values. 

Any changes to the averaging parameters 

established by the Exchange would be announced 

to Trading Permit Holders via circular. 

8For example, prior to the pilot, the exercise 

settlement value of a FLEX Index Option that 

expires on the Tuesday before Expiration Friday 

could have an a.m., p.m. or specified average 

settlement. However, the exercise settlement value 

of a FLEX Index Option that expires on the 

Wednesday before Expiration Friday could only 

have an a.m. settlement. 

9No change was necessary or requested with 

respect to FLEX Equity Options. Regardless of the 

expiration date, FLEX Equity Options are settled by 

physical delivery of the underlying. 

10See Securities Exchange Act Release No. 57249 

(March 4, 2008), 73 FR 13058 (March 11, 2008) (SR– 

CBOE–2006–36) (approval of rule change that, 

among other things, established a one-and-a-half 

year pilot program that reduced the minimum 

number contracts required for a FLEX Equity 

Option opening transaction in a new series). 

11The annual report also contained pilot period 

and pre-pilot period analyses of volume and open 

interest for Expiration Friday, a.m.-settled FLEX 

Index series and Expiration Friday Non-FLEX Index 

series overlying the same index as an Expiration 

Friday, p.m.-settled FLEX Index option. 

The pilot programs are currently set to 

expire on March 28, 2011, unless 

otherwise extended or made 

permanent.6 The purpose of this rule 

change filing is to extend the two pilot 

programs through March 30, 2012. This 

filing does not propose any substantive 

changes to the pilot programs and 

contemplates that all other terms of 

FLEX Options will remain the same. 

Background on the Pilots 

Exercise Settlement Values Pilot for 

FLEX Index Options 

Under Rules 24A.4, Terms of FLEX 

Options, and 24B.4, Terms of FLEX 

Options, FLEX Options may expire on 

any business day specified as to day, 

month and year, not to exceed a 

maximum term of fifteen years. In 

addition, the exercise settlement value 

for FLEX Index Options can be specified 

as the index value determined by 

reference to the reported level of the 

index as derived from the opening or 

closing prices of the component 

securities (‘‘a.m. settlement’’ or ‘‘p.m. 

settlement,’’ respectively) or as a 

specified average, provided that the 

average index value must conform to the 

averaging parameters established by the 

Exchange.7 However, prior to the 

initiation of the exercise settlement 

values pilot, only a.m. settlements were 

permitted if a FLEX Index Option 

expires on, or within two business days 

of, a third-Friday-of-the-month 

expiration (‘‘Expiration Friday’’).8

Under the exercise settlement values 

pilot, this restriction on p.m. and 

specified average price settlements in 

FLEX Index Options was eliminated.9

The exercise settlement values pilot is 

operating for a period of fourteen 

months and is currently set to expire on 

March 28, 2011. 

Minimum Value Size Pilot for All FLEX 

Options 

Prior to the initiation of the pilot 

eliminating the minimum value size 

requirements, the minimum value size 

requirements under Rules 24A.4 and 

24B.4 were as follows: 

• For opening transactions in any 

FLEX series in which there is no open 

interest at the time a FLEX RFQ or FLEX 

Order, as applicable, is submitted, the 

minimum value size was (i) for FLEX 

Equity Options, the lesser of 250 

contracts or the number of contracts 

overlying $1 million in the underlying 

securities; and (ii) for FLEX Index 

Options, $10 million Underlying 

Equivalent Value. Under a prior pilot 

program (which was superseded by the 

minimum value size pilot program), the 

‘‘250 contracts’’ component above had 

been reduced to ‘‘150 contracts.’’ 10

• For a transaction in any currentlyopened FLEX series resulting from an 

RFQ or from trading against the 

electronic book (other than FLEX 

Quotes responsive to a FLEX Request for 

Quotes and FLEX Orders submitted to 

rest in the electronic book), the 

minimum value size was (i) for FLEX 

Equity Options, the lesser of 100 

contracts or the number of contracts 

overlying $1 million in the underlying 

securities in the case of opening 

transactions, and 25 contracts in the 

case of closing transactions; and (ii) for 

FLEX Index Options, $1 million 

Underlying Equivalent Value in the case 

of both opening and closing 

transactions; or (iii) in either case the 

remaining underlying size or 

Underlying Equivalent Value on a 

closing transaction, whichever is less. 

• The minimum value size for FLEX 

Quotes responsive to an RFQ and FLEX 

Orders (undecremented size) submitted 

to rest in the electronic book was 25 

contracts in the case of FLEX Equity 

Options, and $1 million Underlying 

Equivalent Value in the case of FLEX 

Index Options, or in either case the 

remaining underlying size or 

Underlying Equivalent Value on a 

closing transaction, whichever is less. In 

addition, with respect to FLEX Index 

Appointed Market-Makers, FLEX 

Quotes and FLEX Orders 

(undecremented size) must have been 

for at least $10 million Underlying 

Equivalent Value or the dollar amount 

indicated in the Request for Quote (if 

applicable), whichever is less. 

Under the minimum value size pilot, 

these minimum value size requirements 

were eliminated. Like the exercise 

settlement values pilot mentioned 

above, the minimum value size pilot is 

operating for a period of fourteen 

months and is currently set to expire on 

March 28, 2011. 

Proposal 

CBOE is proposing to extend the two 

pilot programs through March 30, 2012. 

CBOE believes the pilot programs have 

been successful and well received by its 

membership and the investing public 

for the period that they have been in 

operation as pilots. 

In support of the proposed extension 

of the pilot programs, and as required by 

the pilot programs’ Approval Order, the 

Exchange has submitted to the 

Commission pilot program reports 

regarding the two pilots, which detail 

the Exchange’s experience with the two 

programs. Specifically, for the 

expiration settlement values pilot, the 

Exchange provided the Commission an 

annual report analyzing volume and 

open interest for each broad-based FLEX 

Index Options class overlying an 

Expiration Friday, p.m.-settled FLEX 

Index Options series.11 The annual 

report also contained information and 

analysis of FLEX Options trading 

patterns. The Exchange also provided 

the Commission, on a periodic basis, 

interim reports of volume and open 

interest. For the minimum value size 

pilot, the Exchange provided the 

Commission an annual report 

containing data and analysis of open 

interest and trading volume, and 

analysis of the types of investors that 

initiated opening FLEX Equity and 

Index Options transactions (i.e., 

institutional, high net worth, or retail). 

The reports were provided to the 

Commission on a confidential basis. 

The Exchange believes there is 

sufficient investor interest and demand 

in the pilot programs to warrant their 

extensions. The Exchange believes that 

the programs have provided investors 

with additional means of managing their 

risk exposures and carrying out their 

investment objectives. Furthermore, the 

Exchange has not experienced any 

adverse market effects with respect to 

the pilot programs. 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 60 / Tuesday, March 29, 2011 / Notices 17465 

12For example, a position in a p.m.-settled FLEX 

Index Option series that expires on Expiration 

Friday in January 2015 could be established during 

the exercise settlement values pilot. If the pilot 

program were not extended (or made permanent), 

then the position could continue to exist. However, 

the Exchange notes that any further trading in the 

series would be restricted to transactions where at 

least one side of the trade is a closing transaction. 

As another example, a 10-contract FLEX Equity 

Option opening position that overlies less than $1 

million in the underlying security and expires in 

January 2015 could be established during the 

minimum value size pilot. If the pilot program were 

not extended (or made permanent), then the 

position could continue to exist and any further 

trading in the series would be subject to the 

minimum value size requirements for continued 

trading in that series. See Approval Order, supra 

note 6, footnotes 9 and 10. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

15 15 U.S.C. 78s(b)(3)(A)(iii). 

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission 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 filing of the proposed rule change, or 

such shorter time as designated by the Commission. 

The Commission notes that the Exchange has 

satisfied this requirement. 

18 17 CFR 240.19b–4(f)(6)(iii). 

19See Securities Exchange Act Release Nos. 

61439 (January 28, 2010), 75 FR 5831 (February 4, 

2010) (SR–CBOE–2009–087) and 61183 (December 

16, 2009), 74 FR 68435 (December 24, 2009) (SR– 

CBOE–2009–087). 

20For 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). 

If, in the future, the Exchange 

proposes an additional extension of the 

pilot programs, or should the Exchange 

propose to make the pilot programs 

permanent (which the Exchange 

currently intends to do), the Exchange 

will submit, along with any filing 

proposing such amendments to the pilot 

programs, additional pilot program 

reports covering the extended period 

during which the pilot programs was in 

effect and including the details 

referenced above and consistent with 

the pilot programs’ Approval Order. In 

addition, with respect to the minimum 

value size pilot report in particular, the 

Exchange will include information on 

the underlying equivalent values. These 

pilot program reports would be 

submitted to the Commission at least 

two months prior to the new expiration 

date of the pilot programs. The 

Exchange will also continue, on a 

periodic basis, to submit interim reports 

of volume and open interest consistent 

with the terms of the exercise settlement 

values pilot program as described in the 

pilot programs’ Approval Order. All 

such pilot reports would continue to be 

provided on a confidential basis. As 

noted in the pilot programs’ Approval 

Order, any positions established under 

the respective pilot programs would not 

be impacted by the expiration of the 

pilot programs.12

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) of the Act,13 in general, and furthers 

the objectives of Section 6(b)(5) of the 

Act,14 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 engaging in facilitating 

transactions in securities, and to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

Specifically, the Exchange believes that 

the proposed extension of the pilot 

programs, which permit additional 

exercise settlement values and eliminate 

minimum value size requirements, 

would provide greater opportunities for 

investors to manage risk through the use 

of FLEX Options. Further, the Exchange 

notes that it has not experienced any 

adverse effects from the operation of the 

pilot programs. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change will 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 neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 15 and Rule 

19b–4(f)(6) thereunder.16 Because the 

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 

prior to 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, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 17 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),18 the 

Commission may 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 to permit the current 

pilot to continue uninterrupted. In 

support of this, CBOE notes, among 

other things, that it is only proposing to 

extend the existing pilots and is not 

proposing any substantive changes to 

the pilot programs. 

The Commission finds that waiver of 

the operative delay is consistent with 

the protection of investors and the 

public interest. The Commission notes 

in waiving the 30-day operative delay 

that CBOE’s original pilot was 

published for comment in the Federal 

Register and the Commission only 

received comments in support of the 

pilots.19 Further, CBOE is proposing to 

extend the existing pilots on the same 

terms and conditions as they were 

originally approved by the Commission. 

This includes, as described in more 

detail above, a representation that CBOE 

will continue to monitor the pilots and 

submit certain interim reports during 

the extended pilot period, as well as a 

final report covering the pilot period 

should the Exchange decide to extend or 

file for permanent approval of the pilots. 

Finally, the Commission notes that the 

Exchange has represented that it has not 

experienced any adverse market effects 

with respect to the pilot programs. 

Based on the above, the Commission 

finds that it is consistent with investor 

protection and the public interest to 

waive the 30-day operative delay in 

accordance with Rule 19b–4(f)(6)(iii) so 

that the pilots can continue on an 

uninterrupted bases, and therefore 

designates the proposal operative upon 

filing.20

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend 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. 


jlentini on DSKJ8SOYB1PROD with NOTICES
17466 Federal Register / Vol. 76, No. 60 / Tuesday, March 29, 2011 / Notices 

21 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 53103 

(January 11, 2006), 71 FR 3144. 

4See letters to Nancy M. Morris, Secretary, 

Commission, from Thomas Peterffy, Chairman, and 

David M. Battan, Vice President, Interactive Brokers 

Group, dated February 10, 2006 (‘‘IB Letter’’) and 

Adam C. Cooper, Senior Managing Director & 

General Counsel, Citadel, dated February 27, 2006 

(‘‘Citadel Letter’’), incorporating by reference a letter 

from Adam C. Cooper, Senior Managing Director & 

General Counsel, Citadel, dated January 11, 2006 

(‘‘Citadel Letter II’’). 

In reviewing this proposed rule change, the 

Commission also considered a comment letter by 

the American Stock Exchange in response to a 

proposed rule change submitted by the ISE to 

amend ISE Rule 811 to allow the identity of a firm 

entering a Directed Order to be disclosed to a DMM 

on a temporary basis, which became immediately 

effective upon filing with the Commission. See 

Securities Exchange Act Release No. 53104 (January 

11, 2006), 71 FR 3142 January 19, 2006 (SR–ISE– 

2006–02). See also letter to Nancy M. Morris, 

Secretary, Commission, from Neal L. Wolkoff, 

Chairman & Chief Executive Officer, American 

Stock Exchange, dated February 3, 2006 (‘‘Amex 

Letter’’) and February 7, 2006 (‘‘Amex Letter II’’). 

5See Securities Exchange Act Release No. 52331 

(August 24, 2005), 70 FR 51856 (August 31, 2005) 

(SR–ISE–2004–16). 6See ISE Rule 723. 7See Securities Exchange Act Release No. 53104 

(January 11, 2006), 71 FR 3142 (January 19, 2006) 

(rule change was effective until June 30, 2006). The 

Commission received three comment letters 

regarding the temporary system change. See IB 

Letter, Amex Letter, and Amex Letter II, supra note 

4. 

8See Securities Exchange Act Release Nos. 53104 

(January 11, 2006), 71 FR 3142 January 19, 2006 

(SR–ISE–2006–02); 54083 (June 30, 2006), 71 FR 

38920 (July 10, 2006) (SR–ISE–2006–35); 54542 

(September 29, 2006), 71 FR 59170 (October 6, 

2006) (SR–ISE–2006–57); 55144 (January 22, 2007), 

72 FR 3890 (January 26, 2007) (SR–ISE–2007–05); 

56155 (July 27, 2007), 72 FR 43306 (August 3, 2007) 

(SR–ISE–2007–67); 59176 (January 24, 2008), 73 FR 

5615 (January 30, 2008) (SR–ISE–2008–08); 59276 

(January 22, 2009), 74 FR 5007 (January 28, 2009) 

(SR–ISE–2009–02); 59943 (May 20, 2009), 74 FR 

25296 (May 27, 2009) (SR–ISE–2009–28); 60956 

(November 6, 2009), 74 FR 58674 (November 13, 

2009) (SR–ISE–2009–93); and 63357 (November 22, 

2010), 75 FR 73144 (November 29, 2010) (SR–ISE– 

2010–110). 

9Citadel argues that this proposal facilitates anticompetitive behavior and therefore violates Section 

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 rulecomments@sec.gov. Please include File 

Number SR–CBOE–2011–024 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–CBOE–2011–024. 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 No. SR–CBOE– 

2011–024 and should be submitted on 

or before April 19, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7264 Filed 3–28–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64115; File No. SR–ISE– 

2006–01] 

Self-Regulatory Organizations; 

International Securities Exchange, Inc. 

(n/k/a the International Securities 

Exchange, LLC); Order Approving a 

Proposed Rule Change To Amend 

Exchange Rule Governing Directed 

Orders 

March 23, 2011. 

I. Introduction 

On January 5, 2006, the International 

Securities Exchange, Inc. (n/k/a the 

International Securities Exchange, LLC) 

(‘‘ISE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposal to amend ISE 

Rule 811 to allow the identity of a firm 

entering a Directed Order to be 

disclosed to a Directed Market Maker 

(‘‘DMM’’). The proposed rule change was 

published for comment in the Federal 

Register on January 19, 2006.3 The 

Commission received comment letters 

from the Interactive Brokers Group 

supporting the proposal, and from 

Citadel opposing the proposal.4 This 

order approves the proposed rule 

change. 

II. Description of the Proposal 

The Exchange currently operates a 

Directed Order system in which 

Electronic Access Members (‘‘EAMs’’) 

can send an order to a DMM for possible 

price improvement.5 If a DMM accepts 

Directed Orders generally, that DMM 

must accept all Directed Orders from all 

EAMs. Once such a DMM receives a 

Directed Order, it either (i) must enter 

the order into the Exchange’s Price 

Improvement Mechanism (‘‘PIM’’) 

auction and guarantee its execution at a 

price better than the ISE best bid or offer 

(‘‘ISE BBO’’) by at least a penny and 

equal to or better than the National Best 

Bid and Offer (‘‘NBBO’’) 6 or (ii) must 

release the order into the Exchange’s 

limit order book, in which case there are 

certain restrictions on the DMM 

interacting with the order. 

On January 5, 2006, ISE filed a 

proposed rule change, which became 

immediately effective upon filing with 

the Commission, to alter its existing 

Directed Order system on a temporary 

basis so that the system would disclose 

the identity of the firm entering a 

Directed Order to a DMM.7 The rule 

permitting the ISE system to identify to 

DMMs the firm from which a Directed 

Order originates continues to operate on 

a pilot basis through May 31, 2011.8 ISE 

proposes in this filing to amend ISE 

Rule 811 to permit the identity of an 

EAM that enters a Directed Order to be 

made available to the DMM and thus to 

make permanent its rule change that has 

been operating on a pilot basis for the 

past five years. 

III. Discussion 

After careful review of the proposal 

and of the comment letters, 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 9 and, in 


jlentini on DSKJ8SOYB1PROD with NOTICES