28314 Federal Register / Vol. 75, No. 97 / Thursday, May 20, 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). 

5For the purposes of Rule 502(k), Equity 

Reference Assets, Commodity Reference Assets, 

Currency Reference Assets, Fixed Income Reference 

Assets, Futures Reference Assets and Multifactor 

Reference Assets, will be collectively referred to as 

‘‘Reference Assets.’’ See Rule 502(k)(2). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62101; File No. SR–ISE– 

2010–40] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Amend ISE Rule 502(k) 

May 13, 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 May 3, 

2010, the International Securities 

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

‘‘ISE’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which items 

have been prepared by the Exchange. 

The Exchange has 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 revise ISE 

Rule 502(k) to amend the definition of 

Futures-Linked Securities for the 

trading of options on Index-Linked 

Securities. 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 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 

ISE Rule 502(k) designates the listing 

and trading of options on equity indexlinked securities (‘‘Equity Index-Linked 

Securities’’), commodity-linked 

securities (‘‘Commodity-Linked 

Securities’’), currency-linked securities 

(‘‘Currency-Linked Securities’’), fixed 

income index-linked securities (‘‘Fixed 

Income Index-Linked Securities’’), 

futures-linked securities (‘‘FuturesLinked Securities’’) and multifactor 

index-linked securities (‘‘Multifactor 

Index-Linked Securities’’), collectively 

known as ‘‘Index-Linked Securities’’ that 

are principally traded on a national 

securities exchange and an ‘‘NMS Stock’’ 

(as defined in Rule 600 of Regulation 

NMS under the Securities and Exchange 

Act of 1934). The Exchange proposes to 

amend the definition of Futures-Linked 

Securities for the trading of options on 

Index-Linked Securities to include 

products linked to CBOE Volatility 

Index (‘‘VIX’’) Futures. Specifically, the 

Exchange proposes to add the VIX 

Futures to the definition of a Futures 

Reference Asset in ISE Rule 502(k)(1)(v). 

Index-Linked Securities are designed 

for investors who desire to participate in 

a specific market segment by providing 

exposure to one or more identifiable 

underlying securities, commodities, 

currencies, derivative instruments or 

market indexes of the foregoing 

(‘‘Underlying Index’’ or ‘‘Underlying 

Indexes’’). Index-Linked Securities are 

the non-convertible debt of an issuer 

that have a term of at least one (1) year 

but not greater than thirty (30) years. 

Despite the fact that Index-Linked 

Securities are linked to an underlying 

index, each trade as a single, exchangelisted security. Accordingly, rules 

pertaining to the listing and trading of 

standard equity options apply to IndexLinked Securities. 

Currently, the Exchange will consider 

listing and trading options on IndexLinked Securities provided the IndexLinked Securities meet the criteria for 

underlying securities set forth in ISE 

Rule 502(a)–(b) or the criteria set forth 

in ISE Rule 502(k)(3)(ii). 

Index-Linked Securities must meet 

the criteria and guidelines for 

underlying securities set forth in ISE 

Rule 502(b); or the Index-Linked 

Securities must be redeemable at the 

option of the holder at least on a weekly 

basis through the issuer at a price 

related to the applicable underlying 

Reference Asset.5 In addition, the 

issuing company is obligated to issue or 

repurchase the securities in aggregation 

units for cash or cash equivalents 

satisfactory to the issuer of IndexLinked Securities which underlie the 

option as described in the Index-Linked 

Securities prospectus. 

Options on Index-Linked Securities 

will continue to be subject to all 

Exchange rules governing the trading of 

equity options. The current continuing 

or maintenance listing standards for 

options traded on ISE will continue to 

apply. 

The VIX 

The information in this filing relating 

to the VIX was taken from the Web site 

of the Chicago Board Options Exchange 

(the ‘‘CBOE’’). 

The VIX was originally developed by 

the CBOE in 1993 and was calculated 

using S&P 100® Index options. The 

current methodology for the VIX was 

introduced by the CBOE in September 

2003 and it is now an index that uses 

the quotes of certain S&P 500® Index 

(‘‘SPX’’) option series to derive a 

measure of the volatility of the U.S. 

equity market. The VIX measures 

market expectations of near term 

volatility conveyed by the prices of 

options on the SPX. It provides 

investors with up-to-the-minute market 

estimates of expected stock market 

volatility over the next 30 calendar days 

by extracting implied volatilities from 

real-time index option bid/ask quotes. 

VIX Futures 

Information regarding VIX Futures 

can be found on the Web site of the 

CBOE Futures Exchange (the ‘‘CFE’’). 

The CFE began listing and trading VIX 

Futures since March 26, 2004 under the 

ticker symbol VX. VIX Futures trade 

between the hours of 8:30 a.m.–3:15 

p.m. Central Time (Chicago Time). 

2. Statutory Basis 

The basis under the Securities 

Exchange Act of 1934 (‘‘Exchange Act’’) 

for this proposed rule change is the 

requirement under Section 6(b)(5) that 

an exchange have rules that are 

designed to promote just and equitable 

principles of trade, and 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. In particular, the 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Federal Register / Vol. 75, No. 97 / Thursday, May 20, 2010 / Notices 28315 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

provide the Commission with written 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. The 

Exchange has fulfilled this requirement. 

8See Securities Exchange Act Release Nos. 60822 

(October 14, 2009), 74 FR 54114 (October 21, 2009) 

(SR–NYSEArca–2009–77); 60823 (October 14, 

2009), 74 FR 54112 (October 21, 2009) (SR– 

NYSEAmex–2009–59); and 60857 (October 21, 

2009), 74 FR 55611 (October 28, 2009) (SR–CBOE– 

2009–74). 

9For purposes only of waiving the operative 

delay of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

10 17 CFR 200.30–3(a)(12). 1CSXT states that once abandonment authority 

has been approved, it intends to reclassify 1.35 

miles of trackage between milepost QST 1.42 and 

milepost QST 2.77 (Helen Avenue) to excepted 

track. Also, CSXT states that it has received 

expressions of interest from the City and County 

about converting the remaining 2.36 miles of 

trackage between mileposts 2.77 and 5.13 into a 

trail. CSXT adds that, if a request for interim trail 

use/rail banking is filed, it plans to agree to 

negotiate. 

Exchange believes that the proposed 

rules applicable to trading pursuant to 

generic listing and trading criteria, 

together with the Exchange’s 

surveillance procedures applicable to 

trading in the securities covered by the 

proposed rules, serve to foster investor 

protection. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does 

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 

Because the foregoing 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 for 30 days after the date of 

filing (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 6 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.7

The Exchange has requested that the 

Commission waive the 30-day operative 

delay and designate the proposed rule 

change as operative upon filing. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. The proposed rule 

change is substantially similar to those 

of other options exchanges that have 

been previously approved by the 

Commission 8 and does not appear to 

present any novel regulatory issues. 

Therefore, the Commission designates 

the proposal operative upon filing to 

enable the Exchange to list and trade 

options on index-linked securities 

without delay.9

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 the 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–2010–40 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–2010–40. 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 Web site viewing and 

printing 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 Number SR–ISE– 

2010–40 and should be submitted on or 

before June 10, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12068 Filed 5–19–10; 8:45 am] 

BILLING CODE 8010–01–P 

DEPARTMENT OF TRANSPORTATION 

Surface Transportation Board 

[Docket No. AB 55 (Sub-No. 701X)] 

CSX Transportation, Inc.— 

Abandonment Exemption—in Vigo 

County, IN 

On April 30, 2010, CSX 

Transportation, Inc. (CSXT) filed with 

the Surface Transportation Board 

(Board) a petition under 49 U.S.C. 10502 

for exemption from the provisions of 49 

U.S.C. 10903 to abandon a 3.71-mile rail 

line on its Southern Region, Nashville 

Division, CE&D Subdivision, between 

milepost QST 1.42 (Park Street) and 

milepost QST 5.13 (Spring Hill), in 

Terre Haute (City), Vigo County 

(County), Ind.1 The line contains the 

International Paper Lead and portions of 

the Graham Grain Lead and the 1st 

Street Lead. The line traverses United 

States Postal Service Zip Code 47802 

and includes no stations. 

The line does not contain federally 

granted rights-of-way. Any 

documentation in CSXT’s possession 

will be made available promptly to 

those requesting it. 


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