15018 Federal Register / Vol. 74, No. 62 / Thursday, April 2, 2009 / Notices 

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). 

5See Securities Exchange Act Release No. 55161 

(January 24, 2007), 72 FR 4754 (February 1, 2007) 

(the ‘‘Initial Filing’’). The Penny Pilot Program was 

subsequently extended for an additional two month 

period, until September 27, 2007. See Securities 

Exchange Act Release No. 56151 (July 26, 2007), 72 

FR 42452 (August 2, 2007). 

6See Securities Exchange Act Release No. 56564 

(September 27, 2007), 72 FR 56412 (October 3, 

2007). 

7See Securities Exchange Act Release No. 57508 

(March 17, 2008), 73 FR 15243 (March 21, 2008). 

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–CBOE–2009–021 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–2009–021. 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, 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–2009–021 and should be 

submitted on or before April 23, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7351 Filed 4–1–09; 8:45 am] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59633; File No. SR–ISE– 

2009–14] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to an Extension of the 

Penny Pilot Program 

March 26, 2009. 

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 24, 

2009, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) 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 self-regulatory organization. The 

Exchange filed 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 ISE is proposing to extend, until 

July 3, 2009, a pilot program to quote 

and to trade certain options in pennies. 

The text of the proposed rule change is 

available at 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 

self-regulatory organization 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 

On January 24, 2007, the Commission 

approved ISE’s rule filing, SR–ISE– 

2006–62, which permits 13 option 

classes to quote in penny increments in 

connection with the implementation of 

an industry wide, six month pilot 

program (the ‘‘Penny Pilot Program’’).5

Under the Penny Pilot Program, the 

minimum price variation for all 13 

option classes, except for the Nasdaq100 Index Tracking Stock (‘‘QQQQ’’), is 

$0.01 for all quotations in option series 

that are quoted at less than $3 per 

contract and $0.05 for all quotations in 

options series that are quoted at $3 per 

contract or greater. The QQQQs are 

quoted in $0.01 increments for all 

options series. 

Subsequent ISE rule filings initiated a 

two-phase expansion of the Penny Pilot 

Program. SR–ISE–2007–74 initiated 

Phase I of the expansion and added 22 

option classes to the Penny Pilot 

Program that are among the most 

actively traded, multiply-listed option 

classes based on national average daily 

volume, and together with the original 

13 option classes, represent 

approximately 35% of the total industry 

volume.6

SR–ISE–2008–27 implemented Phase 

II of the expansion, which added an 

additional 28 option classes to the 

Penny Pilot Program.7 The total number 

of option classes in the Penny Pilot 

Program currently stands at 63. A 

Regulatory Information Circular, 

attached as Exhibit 5 to this proposed 

rule change, identifies all 63 underlying 

securities. Phase II of the Penny Pilot 

Program is set to expire on March 27, 

2009. ISE now proposes to extend the 

current Penny Pilot Program until July 

3, 2009. 

ISE believes extending the Penny 

Pilot Program as proposed by this rule 

filing will allow the Exchange and the 

Commission additional time to continue 

its analysis of the impact of quoting and 

trading option classes in penny 

increments and the impact of the Penny 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 74, No. 62 / Thursday, April 2, 2009 / Notices 15019 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s 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. The Exchange 

has satisfied the pre-filing requirement. 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 

12For the 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. 78(c)(f). 13 17 CFR 200.30–3(a)(12). 

Pilot Program on liquidity, market 

structure and quote traffic. 

As proposed in the Initial Filing, ISE 

represents that options trading in penny 

increments will not be eligible for split 

pricing, as permitted under ISE Rule 

716. In the Initial Filing, the Exchange 

also made references to quote mitigation 

strategies that are currently in place and 

proposed to apply them to the Penny 

Pilot Program. The Exchange proposes 

to continue applying those quote 

mitigation strategies during the 

extension of the Penny Pilot Program, as 

contemplated by this rule filing. 

Specifically, as proposed in Rule 804, 

ISE will continue to utilize a holdback 

timer that delays quotation updates for 

up to, but not longer than, one second. 

The Exchange’s monitoring and 

delisting policies, as proposed in the 

Initial Filing, shall also continue to 

apply. 

Finally, ISE intends to submit an 

additional report to the Commission 

analyzing the Penny Pilot Program for 

the following time period: February 1, 

2009–April 30, 2009. The Exchange 

anticipates its report will analyze the 

impact of penny pricing on market 

quality and options system capacity. 

The Exchange will submit the report 

within one month following the end of 

the period being analyzed. 

2. Statutory Basis 

The basis under the Securities 

Exchange Act of 1934 (the ‘‘Exchange 

Act’’) for this proposed rule change is 

found in Section 6(b)(5), in that the 

proposed rule change is designed to 

promote just and equitable principles of 

trade, remove impediments to and 

perfect the mechanisms of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest. In 

particular, the proposed rule change 

will allow the Exchange to continue the 

Penny Pilot Program uninterrupted. 

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 

Exchange 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 written 

comments from members or other 

interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing rule does not (i) 

significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

for 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 8 and Rule 

19b–4(f)(6) thereunder.9

The Exchange has requested that the 

Commission waive the 30-day operative 

delay so that the proposed rule change 

may become operative upon filing with 

the Commission pursuant to Section 

19(b)(3)(A) of the Act 10 and Rule 19b– 

4(f)(6) 11 thereunder. The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest because such waiver will allow 

the Penny Pilot Program to continue 

without interruption through July 3, 

2009.12 Accordingly, the Commission 

designates the proposed rule change 

operative upon filing with the 

Commission. 

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 Exchange 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 rulecomments@sec.gov. Please include File 

Number SR–ISE–2009–14 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–2009–14. 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, 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–ISE–2009–14 and should be 

submitted on or before April 23, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7352 Filed 4–1–09; 8:45 am] 

BILLING CODE 8010–01–P 

mstockstill on PROD1PC66 with NOTICES