[Federal Register Volume 65, Number 237 (Friday, December 8, 2000)]
[Notices]
[Pages 77056-77058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31298]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43659; File No. SR-ISE-00-14]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the International Securities 
Exchange LLC, Relating to Listing Procedures

December 4, 2000.

    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 15, 2000, the International Securities Exchange LLC 
(``Exchange'' or ``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 ISE. 
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 ISE is proposing to amend the procedures by which it lists 
options to conform its procedures to those currently in place at the 
other options exchanges. The text of the proposed rule change is 
available at the Commission and the ISE.

[[Page 77057]]

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 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. The 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
    The ISE proposes to amend its listing procedures to conform to the 
procedures employed by the American Stock Exchange LLC, the Chicago 
Board Options Exchange, Incorporated, the Pacific Exchange, Inc., and 
the Philadelphia Stock Exchange, Inc. These exchanges long have 
followed the uniform listing procedures contained in the Joint Exchange 
Options Plan (``Plan''), which the Commission has approved as rules of 
each of those exchanges.\3\ However, the Plan historically focused on 
the listing of new options, not the listing of options already trading 
on another exchange. Among other things, the Plan's procedures require 
an exchange listing an option to inform The Options Clearing 
Corporation (``OCC'') of the proposed listing, as well as to provide 
notice of the listing to all the other markets.
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    \3\ See Securities Exchange Act Release No. 29698 (September 17, 
1991), 56 FR 48594 (September 25, 1991).
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    The ISE adopted the Plan, with certain modifications, prior to its 
launch of trading. The most significant modification in the ISE's 
version of the Plan relates to the listing of options already trading 
on another exchange (``multiple-listing procedures''). While the other 
exchanges have followed informal procedures regarding multiple listings 
(primarily the requirement to provide each other with three days notice 
of proposed multiple listings that have been trading for more than ten 
days), the multiple-listing procedures are not included in the Plan. 
The ISE codified the multiple-listing procedures in its rules, which 
the Commission approved as part of the ISE's registration.\4\
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    \4\ See Securities Exchange Act Release No. 42455 (February 24, 
2000), 65 FR 11388 (March 2, 2000) (at note 144 and accompanying 
text).
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    The four other options exchanges recently settled an enforcement 
action with the Commission and an antitrust action with the Department 
of Justice in which the government claimed, among other things, that 
the Plan contains anticompetitive elements. The Commission mandated 
that the four exchanges work together, and with the ISE, to eliminate 
these anticompetitive provisions.\5\ One anticompetitive provision that 
the Commission identified is the requirement that exchanges provide 
three-days notice of a proposed multiple listing. To address this 
concern, the other exchanges have received no-action letters from 
Commission staff allowing them to list a multiply-traded option with 
one days notice of the intention to list an option class to OCC and the 
other exchanges listing that option. The ISE must amend its rules to 
achieve this same result because it has codified the three days notice 
provision for multiple listings in its rules. The Proposed rule change 
will conform the ISE's listing procedures to those of the other 
exchanges by providing for one days notice to OCC and the other listing 
exchanges of a new multiple listing.
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    \5\ Securities Exchange Act Release No. 43268 (September 11, 
2000).
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    In addition, the ISE is also proposing to eliminate the prohibition 
against any exchange that was not a selecting or joining exchange 
commencing trading the selected option prior to the eighth business day 
following notification by the selecting and/or joining exchanges of the 
intention to certify the option. The Exchange believes that this change 
will conform its listing practices to those of the other options 
exchanges.
2. Basis
    The Exchange believes the basis for the proposed rule change is the 
requirement under section 6(b)(5) of the Act \6\ that an exchange have 
rules that are 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 regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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.
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    \6\ 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 or received comments on the proposed 
rule change.

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

    Because the foregoing rule change: (1) Does not significantly 
affect the protection of investors or the public interest; (2) does not 
impose any significant burden on competition; (3) does not become 
operative for 30 days from the date of filing; and (4) the Exchange 
provided the Commission with notice of its intent to file the proposed 
rule change at least five days prior to the filing date, the proposed 
rule change has become effective pursuant to section 19(b)(3)(A) of the 
act \7\ and Rule 19b-4(f)(6) \8\ thereunder. 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
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    The ISE has requested that the Commission accelerate the operative 
date of the proposed rule change. The Commission believes that it is 
consistent with the protection of investors and the public interest and 
therefore finds good cause to designate the proposal to become 
immediately operative upon filing. Acceleration of the operative date 
will ensure that the ISE's listing procedures for multiply traded 
options conform to the listing procedures of the other options 
exchanges. For these reasons, the Commission finds good cause to 
designate that the proposal become immediately operative upon 
filing.\9\
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    \9\ For purposes only of accelerating the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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[[Page 77058]]

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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
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 the 
ISE. All submissions should refer to the File No. SR-ISE-00-14 and 
should be submitted by December 29, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-31298 Filed 12-7-00; 8:45 am]
BILLING CODE 8010-01-M