Federal Register / Vol. 71, No. 199 / Monday, October 16, 2006 / Notices 60781 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 replaced and superseded the 

original filing in its entirety. 

4See Securities Exchange Act Release No. 54340 

(August 21, 2006), 71 FR 51240. 

5Under the proposed rules, members that are 

only EAMs that want to become SMCMMs would 

be required to complete the same market maker 

application and meet the same standards that are 

applied to Competitive Market Makers under the 

Exchange’s existing rules. Members that are only 

EAMs are not eligible to be SMPMMs. 

requiring Stock Exchange members and 

member organizations effecting 

transactions in Shares of such ETF to 

deliver a Product Description to 

purchasers of Shares. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. E6–17060 Filed 10–13–06; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Pub. L. 94–409, that the 

Securities and Exchange Commission 

will hold the following meeting during 

the week of October 16, 2006: 

An Open Meeting will be held on 

Wednesday, October 18, 2006 at 10 a.m. 

in Room L–002, the Auditorium. 

The subject matter of the Open 

Meeting scheduled for Wednesday, 

October 18, 2006, will be: 

The Commission will consider whether to 

adopt amendments to the best-price rule for 

issuer and third-party tender offers under the 

Securities Exchange Act of 1934. The 

amendments would clarify that the best-price 

rule applies only with respect to the 

consideration offered and paid for securities 

tendered in a tender offer and should not 

apply to consideration offered and paid 

according to employment compensation, 

severance or other employee benefit 

arrangements entered into with security 

holders of the issuer or subject company. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: October 11, 2006. 

Nancy M. Morris, 

Secretary. 

[FR Doc. 06–8718 Filed 10–12–06; 10:55 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54580; File No. SR–ISE–

2006–40] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Order Approving Proposed Rule 

Change and Amendment No. 1 Thereto 

Relating to the Establishment of the 

Second Market 

October 6, 2006. 

I. Introduction 

On July 5, 2006, the International 

Securities Exchange, LLC (f/k/a the 

International Securities Exchange, Inc.) 

(‘‘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 establish a 

‘‘Second Market’’ for the listing and 

trading of low-volume option classes. 

On August 16, 2006, ISE filed 

Amendment No. 1 to the proposed rule 

change.3 The proposed rule change, as 

amended, was published for comment 

in the Federal Register on August 29, 

2006.4 The Commission received no 

comments regarding the proposal. This 

order approves the proposed rule 

change, as amended. 

II. Description of the Proposal 

The ISE proposes to adopt rules for 

the listing and trading of low-volume 

option classes that qualify for listing 

under existing Exchange standards in a 

‘‘Second Market.’’ Historically, the 

Exchange has elected to refrain from 

trading many option classes that qualify 

for trading on the ISE, but are 

characterized by low average daily 

trading volumes (‘‘ADVs’’) on the other 

option exchanges. 

A. Listing in the Second Market 

Under the proposal, the Exchange 

would be able to list in the Second 

Market equity option classes (excluding 

options on exchange traded funds) that 

trade on other option exchange(s) that 

are characterized by an ADV below 500 

contracts over the previous six-month 

period. The proposed rules would allow 

the Exchange to list equity option 

classes with an ADV of over 1,500 

contracts only in the existing market 

(the ‘‘First Market’’), and would trade 

such classes pursuant to existing ISE 

rules. The Exchange would be able to 

list option classes with an ADV between 

500 and 1,500 contracts initially in 

either market. Starting one year after the 

Exchange initiates trading in the Second 

Market, the Exchange would review the 

market in which option classes are 

listed every three months, and option 

classes would be moved from the First 

to the Second Market when their ADV 

in the prior six-month period falls 

below 300 contracts, and moved from 

the Second to the First Market when 

their ADV in the prior six-month period 

exceeds 750 contracts. 

B. Participation as Market Makers in the 

Second Market 

Under the proposal, all members 

approved to operate ISE market maker 

memberships would be eligible to be 

Competitive Market Makers in the 

Second Market (‘‘SMCMMs’’). In 

addition, members that are only 

approved as Electronic Access Members 

(‘‘EAMs’’) may also register as 

SMCMMs.5 Only Primary Market 

Makers in the First Market may be 

Primary Market Makers in the Second 

Market (‘‘SMPMMs’’). 

As in the First Market, a primary 

market maker would be appointed for 

each class traded in the Second Market. 

SMPMMs would be subject to all the 

same obligations in their appointed 

options as Primary Market Makers in the 

First Market, including, among other 

things, entering continuous quotations 

in each series of every option class to 

which they are appointed and satisfying 

requirements related to the Plan for 

Creating and Operating an Intermarket 

Option Linkage. Similar to Primary 

Market Makers in the First Market, 

SMPMMs would be permitted to 

execute no more than 10% of their 

volume in Second Market option classes 

to which they are not assigned. 

For purposes of existing Exchange 

rules relating to market maker 

obligations, SMCMMs will be 

considered ‘‘appointed’’ to all option 

classes listed in the Second Market and 

will be able to choose whether to make 

markets in any option class listed in the 

Second Market on a daily basis. Unlike 

Competitive Market Makers in the First 

Market, SMCMMs would not be 

required to enter continuous quotations 

in a minimum number or percentage of 

assigned option classes. An SMCMM 

will be required to continuously quote 


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