3508 Federal Register / Vol. 75, No. 13 / Thursday, January 21, 2010 / Notices 

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. 60531 

(August 19, 2009), 74 FR 43173 (August 26, 2009) 

(Order approving Amendment No. 3 to the OLPP, 

which would apply uniform objective standards to 

the range of options series exercise or strike prices 

available for trading on exchanges that are sponsors 

of OLPP). The sponsors of OLPP include ISE, 

Chicago Board Options Exchange, Inc.; NASDAQ 

OMX PHLX, Inc.; NASDAQ OMX BX, Inc.; The 

NASDAQ Stock Market LLC; NYSE Amex, LLC; and 

NYSE Arca, Inc. (together known as the ‘‘Plan 

Sponsor Exchanges’’). The OLPP is a national 

market system plan that, among other things, sets 

forth procedures governing the listing of new 

options series and replaces and supersedes the 

Joint-Exchange Options Plan (‘‘JEOP’’). See 

Securities Exchange Act Release No. 44521 (July 6, 

2009) [sic], 66 FR 36809 (July 13, 2001) (Order 

approving OLPP). See also Securities Exchange Act 

Release No. 29698 (September 17, 1991), 56 FR 

48954 [sic] (September 25, 1991) (Order approving 

JEOP). 

6This restriction would not prohibit the listing of 

at least three options series per expiration month 

in an options class. 

7Application of any of the aforementioned 

exceptions and/or exemptions to the strike price 

range limitations for an underlying security would 

be available to all exchanges listing options on such 

security. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61348: File No. SR–ISE– 

2010–01] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposal To Codify 

Certain Provisions of the Options 

Listing Procedures Plan Into ISE’s 

Rules 

January 14, 2010. 

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 January 4, 

2010, the International Securities 

Exchange, LLC (the ‘‘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 Exchange. 

The Exchange filed the proposal as a 

‘‘non-controversial’’ 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 Exchange proposes to amend its 

Rule 504 and adopt Rule 504A to apply 

uniform objective standards to the range 

of options series exercise (or strike) 

prices available for trading on the 

Exchange. The text of the proposed rule 

change is available on the Exchange’s 

Web site http://www.ise.com, at the 

principal office of 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 

Exchange 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 those 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to implement in ISE rules 

changes that were recently made to the 

Plan for the Purpose of Developing and 

Implementing Procedures Designated to 

Facilitate the Listing and Trading of 

Standardized Options Submitted 

Pursuant to Section 11A(a)(3)(B) of the 

Securities Exchange Act of 1934, also 

known as the Options Listing 

Procedures Plan (‘‘OLPP’’), in 

Amendment No. 3 thereto.5 Proposed 

new ISE Rule 504A incorporates 

uniform objective standards to the range 

of options series exercise (or strike) 

prices available for trading on the 

Exchange, as a quote mitigation strategy 

intended to reduce the overall number 

of option series available for trading, 

which will in turn lessen the rate of 

increase in quote traffic (‘‘range 

limitations’’ or ‘‘range limitation 

strategy’’). 

Rule 504 currently indicates what 

series of option contracts may be open 

for trading after a particular class of 

options has been approved for trading 

on the Exchange. Proposed new Rule 

504A applies certain ‘‘range limitations’’ 

to the addition of new series for options 

classes overlying equity securities, 

Exchange Traded Fund Shares (‘‘ETFs’’), 

or Trust Issued Receipts (‘‘TIRs’’). 

As proposed in Rule 504A, if the price 

of the underlying security is less than or 

equal to $20, the Exchange would not 

list new option series with an exercise 

price more than 100 percent above or 

below the price of the underlying 

security.6 If the price of the underlying 

security is greater than $20, the 

Exchange would not list new options 

series with an exercise price more than 

50 percent above or below the price of 

the underlying security. The proposal 

provides for an objective basis upon 

which the underlying prices for the 

price range limitations described above 

shall be determined, specifically in 

regard to intra-day add-on series and 

next-day series additions, new 

expiration months and for options series 

to be added as a result of pre-market 

trading. 

This proposed rule change also allows 

the Exchange to designate up to five 

underlying securities to which, instead 

of the aforementioned 50 percent 

restriction, a 100 percent restriction 

would apply. These designations would 

be made on an annual basis and cannot 

be removed during the calendar year 

unless the options class is delisted by 

the Exchange, in which case the 

Exchange may designate another class to 

replace the delisted class. If a 

designated class is delisted by the 

Exchange but continues to trade on at 

least one other exchange, any additional 

series for the class which are added 

from that point forward would again be 

subject to the proposed exercise price 

range limitations, unless the class is 

subsequently designated by another 

exchange. The proposal also provides a 

procedure for the Exchange to request, 

if conditions warrant, additional caseby-case exceptions even when it has 

already so designated five underlying 

securities. 

In addition, the Exchange may 

request, on a case-by-case basis, an 

exemption when it desires to list a 

series from the 100 percent range 

limitation. This procedure would enable 

the Exchange to list options series with 

strike prices that are more than 100 

percent above or below the price of an 

underlying security, if unanimously 

agreed upon by all exchanges that list 

options overlying the security.7

The Exchange notes that the proposal 

would not restrict its ability to list 

options series in two situations. First, 

the Exchange would not be restricted 

from listing options series that have 

been properly listed by another 

exchange. And second, the proposal 

expressly eliminates the applicability of 

range limitations with regard to the 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 13 / Thursday, January 21, 2010 / Notices 3509 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

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

11 17 CFR 240.19b–4(f)(6). 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6)(iii). 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 the 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. 

14 17 CFR 200.30–3(a)(12). 

1See SEC Release No. 34–60903 (October 29, 

2009); 74 FR 57357 (November 5, 2009). 

listing of $1 strike prices in option 

classes participating in the $1 Strike 

Program, and the listing of series of 

FLEX options. 

The Exchange believes that the 

proposed rule change implementing 

range limitation strategies for equity, 

ETF, and TIR options should be 

beneficial in reducing quote traffic on 

the Exchange and in the options 

industry. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

under the Act applicable to a national 

securities exchange and, in particular, 

the requirements of Section 6(b) of the 

Act.8 Specifically, the Exchange 

believes the proposed rule change is 

consistent with Section 6(b)(5) of the 

Act’s 9 requirements that the rules of a 

national securities exchange be 

designed to promote just and equitable 

principles of trade, to prevent 

fraudulent and manipulative acts and, 

in general, to protect investors and the 

public interest. In particular, the 

Exchange believes that codifying certain 

range limitation provisions of the OLPP, 

as amended, serves to foster investor 

protection. 

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, 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 parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

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

19b–4(f)(6) thereunder.11 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 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 12 and 

Rule 19b–4(f)(6)(iii) thereunder.13

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 rulecomments@sec.gov. Please include File 

Number SR–ISE–2010–01 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–2010–01. 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 the filing also will be available 

for inspection and copying at the 

principal office of the self-regulatory 

organization. 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 Number SR–ISE– 

2010–01 and should be submitted on or 

before February 11, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–1019 Filed 1–20–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61363; File No. PCAOB– 

2009–02] 

Public Company Accounting Oversight 

Board; Order Approving Proposed 

Rules on Auditing Standard No. 7, 

Engagement Quality Review, and 

Conforming Amendment 

January 15, 2010. 

I. Introduction 

On August 4, 2009, the Public 

Company Accounting Oversight Board 

(the ‘‘Board’’ or the ‘‘PCAOB’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) a 

notice (the ‘‘Notice’’) of proposed rules 

(File No. PCAOB–2009–02) on Auditing 

Standard No. 7, Engagement Quality 

Review, and Conforming Amendment to 

the Board’s Interim Quality Control 

Standards, pursuant to Section 107(b) of 

the Sarbanes-Oxley Act of 2002 (the 

‘‘Act’’). Notice of the proposed rules was 

published in the Federal Register on 

November 5, 2009.1 The Commission 

received nine comment letters relating 

to the proposed rules. For the reasons 

discussed below, the Commission is 

granting approval of the proposed rules. 

As specified by the Board, the rules are 


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