[Federal Register Volume 66, Number 83 (Monday, April 30, 2001)]
[Notices]
[Page 21423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10608]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44208; File No. SR-ISE-01-02]


Self-Regulatory Organizations; International Securities Exchange 
LLC; Order Granting Approval to Proposed Rule Change Relating to 
Anticipatory Hedging Activity

April 20, 2001.
    On January 12, 2001, the International Securities Exchange LLC 
(``ISE'' or ``Exchange'') field 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 proposed rule change relating to anticipatory hedging 
activity.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change would prohibit a member or a person 
associated with a member who has knowledge of all the terms and 
conditions concerning the imminent execution of (1) an order and a 
solicited order, (2) an order being facilitated, or (3) two orders 
being crossed, to enter, based on that knowledge, an order to buy or 
sell an option of the same class, shares in the underlying security, or 
any related instrument, before the same information is disclosed to the 
trading crowd.
    The proposed rule change was published for comment in the 
<CS>Federal Register <RM>on February 27, 2001.\3\ The Commission 
received no comments on the proposal.
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    \3\ <IT>See <RM>Securities Exchange Act Release No. 43983 
(February 20, 2001), 66 FR 12576 (February 27, 2001).
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    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 \4\ and, in 
particular, the requirements of section 6 of the Act \5\ and the rules 
and regulations thereunder. The Commission finds specifically that the 
proposed rule change is consistent with section 6(b)(5) of the Act,\6\ 
because it is designed to maintain the integrity of the ISE's market by 
preventing the misuse of non-public information and affording the 
trading crowd a fair and full opportunity to make informed trading 
decisions. It also conforms to similar rules at other options exchanges 
relating to anticipatory hedging.\7\
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    \4\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ <IT>See, e.g., <RM>American Stock Exchange Rule 950(d), 
Commentary .04., Chicago Board Options Exchange Rule 6.9(e).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-ISE-01-02) be, and 
it hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-10608 Filed 4-27-01; 8:45 am]
BILLING CODE 8010-01-M