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###### Securities and Exchange Commission

          - [Release No. 34-55715; File No. SR-ISE-2007-26] 

                    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1]                                          and Rule 19b-4 thereunder,[2]       ( print page 26855)                        notice is hereby given that on April 30, 2007, the International Securities Exchange, LLC (“ISE” or “Exchange”) 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 substantially prepared by ISE. The Exchange has filed the proposal as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act [3]                                          and Rule 19b-4(f)(6) thereunder,[4]                                          which renders it effective upon filing with the Commission. 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 proposes to extend until June 5, 2008, its $1 strike pilot program that allows the listing of strike prices at one-point intervals (“Pilot Program”). The text of the proposed rule change is available at ISE, the Commission's Public Reference Room, and                     *http://www.iseoptions.com*.                 

## II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 

In its filing with the Commission, ISE 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. ISE 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 

                    On June 16, 2003, the Commission approved ISE's Pilot Program, which allows ISE to list series with $1 strike price intervals on equity option classes that overlie up to five individual stocks, provided that the strike prices are $20 or less, but not less than $3.[5]                                          The Pilot Program, after being extended on four prior occasions,[6]                                          is set to expire on June 5, 2007.[7]                                          The Exchange may currently select up to five individual stocks to be included in the Pilot Program. The Exchange, however, is also permitted to list options on other individual stocks at $1 strike price intervals if other options exchanges listed those series pursuant to their respective rules. The Exchange has selected the following five options classes to participate in the Pilot Program: AMR Corp. (AMR), Clapine Corp. (CPN), EMC Corp. (EMC), El Paso Corp. (EP), and Sun Microsystems Inc. (SUNW). ISE believes the Pilot Program has been successful and well received by its members and the investing public. Thus, ISE proposes to extend the Pilot Program until June 5, 2008.                 

In support of this proposed rule change, and as required by the Pilot Program Approval Order and the Pilot Extension Notices, the Exchange is submitting to the Commission a report (“Pilot Program Report”), attached as Exhibit 3 to the proposal, detailing the Exchange's experience with the Pilot Program. Specifically, the Pilot Program Report contains data and written analysis regarding the five options classes included in the Pilot Program for the period between March 2006 through February 2007. 

The Exchange believes there is sufficient investor interest and demand to extend the Pilot Program for another year. The Exchange continues to believe that the Pilot Program has provided investors with greater trading opportunities and flexibility and the ability to more closely tailor their investment strategies and decisions to the movement of the underlying security. Furthermore, the Exchange has not detected any material proliferation of illiquid options series resulting from the narrower strike price intervals. 

#### 2. Statutory Basis 

                    The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder and, in particular, the requirements of Section 6(b) of the Act.[8]                                          Specifically, the Exchange believes the proposed rule change is consistent with the requirements under Section 6(b)(5) of the Act [9]                                          that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that extension of the Pilot Program will result in a continuing benefit to investors by allowing them to more closely tailor their investment decisions, and will allow the Exchange to further study investor interest in $1 strike price intervals.                 

### B. Self-Regulatory Organization's Statement on Burden on Competition 

The Exchange believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in the 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 persons. 

## III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 

                    Because the foregoing rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days from the date of this filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act [10]                                          and Rule 19b-4(f)(6) thereunder.[11] 
      ( print page 26856)    
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 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 rule-comments@sec.gov.                      Please include File No. SR-ISE-2007-26 on the subject line.                 

### Paper Comments

    - Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

                    All submissions should refer to File No. SR-ISE-2007-26. 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 inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of ISE. 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-ISE-2007-26 and should be submitted on or before June 1, 2007.                 

                        For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[12] 

Florence E. Harmon, 

Deputy Secretary.

# Footnotes

1.                             15 U.S.C. 78s(b)(1).                     
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2.                             17 CFR 240.19b-4.                     
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3.                             15 U.S.C. 78s(b)(3)(A).                     
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4.                             17 CFR 240.19b-4(f)(6).                     
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5.                                                     *See*                         Securities Exchange Act Release No. 48033 (June 16, 2003), 68 FR 37036 (June 20, 2003) (SR-ISE-2003-17) (“Pilot Program Approval Order”).                     
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6.                                                     *See*                         Securities Exchange Act Release Nos. 49827 (June 8, 2004), 69 FR 33966 (June 17, 2004) (SR-ISE-2004-21); 50060 (July 22, 2004), 69 FR 45864 (July 30, 2004) (SR-ISE-2004-26); 51769 (May 31, 2005), 70 FR 33232 (June 07, 2005) (SR-ISE-2005-22); and 53806 (May 15, 2006), 71 FR 29694 (May 23, 2006) (SR-ISE-2006-20) (collectively, “Pilot Extension Notices”).                     
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7.                                                     *See*                         Securities Exchange Act Release No. 53806,                         *supra*                         note 6.                     
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8.                             15 U.S.C. 78f(b).                     
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9.                             15 U.S.C. 78f(b)(5).                     
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10.                             15 U.S.C. 78s(b)(3)(A).                     
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11.                             17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6) also requires the self-regulatory organization to give the Commission 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 of the proposed rule change, or such shorter time as designated by the Commission. ISE has satisfied the five-day pre-filing requirement. As set forth in the Commission's initial approval of the Pilot Program, if ISE proposes to: (1) Extend the Pilot Program; (2) expand the number of options eligible for inclusion in the Pilot Program; or (3) seek permanent approval of the Pilot Program, it must submit a Pilot Program report to the Commission along with the filing of its proposal to extend, expand, or seek permanent approval of the Pilot Program. ISE must file any proposal to expand or seek permanent approval of the Pilot Program and the Pilot Program report with the Commission at least 60 days prior to the expiration of the Pilot Program. The Pilot Program report must cover the entire time the Pilot Program was in effect and must include: (1) Data and written analysis on the open interest and trading volume for options (at all strike price intervals) selected for the Pilot                                                 Program; (2) delisted options series (for all strike price intervals) for all options selected for the Pilot Program; (3) an assessment of the appropriateness of $1 strike price intervals for the options ISE selected for the Pilot Program; (4) an assessment of the impact of the Pilot Program on the capacity of ISE's, the Options Price Reporting Authority's, and vendors' automated systems; (5) any capacity problems or other problems that arose during the operation of the Pilot Program and how ISE addressed them; (6) any complaints that ISE received during the operation of the Pilot Program and how ISE addressed them; and (7) any additional information that would help to assess the operation of the Pilot Program.                         *See*                         Pilot Program Approval Order,                         *supra*                         note 5.                     
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12.                                 17 CFR 200.30-3(a)(12).                         
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 [FR Doc. E7-9070 Filed 5-10-07; 8:45 am] 

BILLING CODE 8010-01-P