Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Notices 6237 

13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Contrary Exercise Advices are also referred to as 

Expiring Exercise Declarations (‘‘EED’’) in the OCC 

rules. 

4The Exchange proposes to reorganize the current 

rule text so that the requirement that exercise 

decisions must be made by 5:30 p.m. Eastern Time 

is specified in paragraph (c), while the requirements 

pertaining to submitting CEA instructions are 

contained in new paragraph (d). The language in 

new paragraph (d) is comprised of language moved 

from paragraph (b)(2) and paragraph (c) of the 

current rule. The Exchange also proposes to 

eliminate Supplementary Material .03 to Rule 1100 

because it is duplicative of the language contained 

in paragraph (c) of the current rule and paragraph 

(d)(iii) in the proposal. 

otherwise further 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–BX–2010–011 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–BX–2010–011. 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–BX–2010–011 and should be 

submitted on or before March 1, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–2585 Filed 2–5–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61458; File No. SR–ISE– 

2010–02] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing of Proposed Rule 

Change To Amend Exchange Rules 

Related to Cutoff Time for Contrary 

Exercise Advice Submissions 

February 1, 2010. 

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 January 

11, 2010, the International Securities 

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

‘‘ISE’’) filed with the Securities and 

Exchange Commission the proposed 

rule change, as described in Items I, II, 

and III below, which items have been 

prepared by the Exchange. 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 International Securities 

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

‘‘ISE’’) proposes to amend Rule 1100 in 

order to extend the cut-off time to 

submit contrary exercise advices. The 

text of the proposed rule change is 

available on the Exchange’s Web site 

http://www.ise.com, at the Exchange’s 

Office of the Secretary, 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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend Rule 1100 to extend 

the cut-off time to submit contrary 

exercise advices (‘‘Contrary Exercise 

Advice’’, or, ‘‘CEA’’) 3 to the Exchange. 

The Exchange also proposes to make 

certain non-substantive changes to 

reorganize the text of Rule 1100 to more 

clearly present the existing 

requirements and to eliminate 

duplicative language.4

The Options Clearing Corporation 

(‘‘OCC’’) has an established procedure, 

under OCC Rule 805, that provides for 

the automatic exercise of certain options 

that are in-the-money by a specified 

amount known as ‘‘Exercise-byException’’ or ‘‘Ex-by-Ex.’’ Under the Exby-Ex process, options holders holding 

option contracts that are in-the-money 

by a requisite amount and who wish to 

have their contracts automatically 

exercised need take no further action. 

However, under OCC Rule 805, option 

holders who do not want their options 

automatically exercised or who want 

their options to be exercised under 

different parameters than that of the Exby-Ex procedures must instruct OCC of 

their ‘‘contrary intention.’’ 

In addition to and separately from the 

OCC requirement, under Exchange Rule 

1100 option holders must file a CEA 

with the Exchange notifying it of the 

contrary intention. Rule 1100 is 

designed, in part, to deter individuals 

from taking improper advantage of late 

breaking news by requiring evidence of 

an option holder’s timely decision to 

exercise or not exercise expiring equity 

options. Members satisfy this 

evidentiary requirement by submitting a 

CEA form directly to the Exchange, or 

by electronically submitting the CEA to 

the Exchange through OCC’s electronic 

communications system. The 

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6238 Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Notices 

5All referenced times are Eastern Time. 

6 If members do not employ an electronic 

submission procedure, they are required to submit 

CEAs for non-customer accounts by the 5:30 p.m. 

deadline. This deadline for manual submission is 

required in order to prevent firms from improperly 

extending the 5:30 p.m. deadline to exercise or not 

exercise an option. This requirement is based on the 

difficulty in monitoring a manual procedure that 

has different times for deciding whether or not to 

exercise the option and for the submission of the 

CEA. 

7See Securities Exchange Act Release Nos. 47885 

(May 16, 2003), 68 FR 28309 (May 23, 2003) (SR– 

Amex–2001–92); 48505 (September 17, 2003), 68 

FR 55680 (September 26, 2003) (SR–ISE–2003–20); 

48640 (October 16, 2003), 68 FR 60757 (October 23, 

2003) (SR–PCX–2003–47); and 48639 (October 16, 

2003), 68 FR 60764 (October 23,2003) (SR–Phlx– 

2003–65). 

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

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

submission of the CEA allows the 

Exchange to satisfy its regulatory 

obligation to verify that the decision to 

make a contrary exercise was made 

timely and in accordance with Rule 

1100. 

Currently under Rule 1100, option 

holders have until 5:30 p.m.5 on the day 

prior to expiration to make a final 

decision to exercise or not exercise an 

expiring option that would otherwise 

either expire or be automatically 

exercised. An Exchange member may 

not accept CEA instructions from its 

customer or non customer accounts after 

5:30 p.m. However, the current rule 

gives Exchange members an additional 

one hour, up to 6:30 p.m., to submit 

these CEA instructions to the Exchange 

where such member uses an electronic 

submission process.6

This current process allowing 

members an additional one hour after 

the decision making cut off time of 5:30 

p.m. to submit a CEA to the various 

options exchanges was approved by the 

Commission in 2003.7 In 2003, the Exby-Ex thresholds were $0.75 for 

customers and $0.25 for broker-dealer 

accounts. In 2009, the Ex-by-Ex 

threshold is $0.01 for all accounts. This 

decrease in the Ex-by-Ex threshold, 

coupled with the dramatic increase in 

option trading volume from 2003 to 

2009, has led to a larger number of CEA 

instructions and has increased the 

burden on firms to process and submit 

instructions timely. 

The Exchange proposes to extend the 

current 6:30 p.m. deadline for 

submitting CEA instructions to the 

Exchange by one additional hour, up to 

7:30 p.m. The Exchange believes that 

this proposed rule change is necessary 

to address concerns expressed by 

members that, given the decrease in the 

Ex-by-Ex threshold and the increase in 

trading, the existing deadline for 

submitting CEAs to the Exchange is 

problematic for timely back-office 

processing. The proposed additional 

one hour will address this concern by 

further enabling firms to more timely 

manage, process, and submit the 

instructions to the Exchange. The 

Exchange also proposes to modify the 

language in paragraph (g) of the current 

rule (new paragraph (h)), which allows 

a member up to 2 hours and 30 minutes 

to submit a CEA to the Exchange in the 

event of a modified close of trading on 

the day of expiration, by removing the 

two hour and thirty minute restriction 

and allowing a member to submit a CEA 

to the Exchange in the event of a 

modified close of trading of up to the 

proposed 7:30 p.m. deadline. This will 

make consistent the submission 

deadline for both regular and modified 

close expiration days. Moreover, this 

will provide uniformity with 

submission deadlines for both regular 

and modified close expiration days 

which will remove any possibility for 

error when determining what the 

submission deadline is on any modified 

close expiration day. 

It is important to note that this 

proposed submission deadline does not 

change the substantive requirement that 

option holders make a final decision by 

5:30 p.m. The Exchange will continue to 

enforce the 5:30 p.m. decision making 

requirement, while also allowing 

additional time to process and submit 

the CEA instructions. This proposal 

seeks to increase that additional 

submission time by one hour, and the 

Exchange believes that this proposal 

will be beneficial to the marketplace, 

particularly as it concerns back-office 

processing. The initiative to address 

Exchange member concerns is industrywide, and the Exchange anticipates that 

other options exchanges will also 

propose a one hour extension for which 

they will accept a CEA. This additional 

processing time and Exchange 

submission deadline will not conflict 

with OCC submission rules or cause any 

OCC processing issues. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the Act,8

in general, and furthers the objectives of 

Section 6(b)(5) of the Act,9 in particular, 

in that it is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, and to protect 

investors and the public interest in that 

it is designed 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. This proposed rule 

change will foster coordination with 

back office personnel engaged in 

processing information and is consistent 

with the facilitating of transactions in 

securities as set forth in Section 6(b)(5) 

in that it, by providing Exchange 

members an additional hour within 

which to complete the necessary 

processing of CEAs, will thereby 

decrease Exchange members’ burden of 

processing an increasing number of 

contrary exercise advices and enable 

them to more easily manage and process 

these instructions. 

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 written 

comments from members or other 

interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) by order approve such proposed 

rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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: 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Notices 6239 

10 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The Penny Pilot was established in March 2008 

and in October 2009 was expanded and extended 

through December 31, 2010. See Securities 

Exchange Act Release Nos. 57579 (March 28, 2008), 

73 FR 18587 (April 4, 2008)(SR–NASDAQ–2008– 

026)(notice of filing and immediate effectiveness 

establishing Penny Pilot); 60874 (October 23, 

2009)(SR–NASDAQ–2009–091)(notice of filing and 

immediate effectiveness expanding and extending 

Penny Pilot); and 60965 (November 9, 2009)(SR– 

NASDAQ–2009–097)(notice of filing and immediate 

effectiveness adding seventy-five classes to Penny 

Pilot). 

4See Chapter VI, Section 5 regarding the Penny 

Pilot. 

5See Securities Exchange Act Release No. 60874 

(October 23, 2009), 74 FR 56682 (November 2, 

2009)(SR–NASDAQ–2009–091)(notice of filing and 

immediate effectiveness). 

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–2010–02 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–2010–02. 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 ISE. 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– 

2010–02 and should be submitted on or 

before March 1, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–2587 Filed 2–5–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61455; File No. SR– 

NASDAQ–2010–013] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Add 

Seventy-Five Options Classes to the 

Penny Pilot Program 

February 1, 2010. 

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 January 

25, 2010, The NASDAQ Stock Market 

LLC (‘‘Nasdaq’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by Nasdaq. 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 

Nasdaq is filing with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) a proposal for the 

NASDAQ Options Market (‘‘NOM’’ or 

‘‘Exchange’’) to designate seventy-five 

options classes to be added to the Penny 

Pilot Program (‘‘Penny Pilot’’ or ‘‘Pilot’’) 

on February 1, 2010.3 The Exchange is 

not proposing to amend any rule text, 

but simply administering or enforcing 

an existing rule.4

The text of the proposed rule change 

is available from Nasdaq’s Web site at 

http://nasdaq.cchwallstreet.com/ 

Filings/, at Nasdaq’s principal office, 

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, 

Nasdaq 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. Nasdaq 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 purpose of this filing is to 

identify the next seventy-five options 

classes to be added to the Penny Pilot 

effective February 1, 2010. 

In the Exchange’s immediately 

effective filing to extend and expand the 

Penny Pilot through December 31, 

2010,5 the Exchange proposed 

expanding the Pilot four times on a 

quarterly basis. Each such quarterly 

expansion would be of the next seventyfive most actively traded multiply listed 

options classes based on the national 

average daily volume (‘‘ADV’’) for the six 

months prior to selection, closing under 

$200 per share on the Expiration Friday 

prior to expansion; however, the month 

immediately preceding the addition of 

options to the Penny Pilot will not be 

used for the purpose of the six month 

analysis. Index option products would 

be included in the quarterly expansions 

if the underlying index levels were 

under 200. 

The Exchange is identifying, in the 

chart below, seventy-five options classes 

that it will add to the Penny Pilot on 

February 1, 2010, based on ADVs for the 

six months ending December 31, 2009. 

Nat’l ranking Symbol Company name Nat’l ranking Symbol Company name 

131 ......................................... ABT Abbott Laboratories 192 ....................................... LEAP Leap Wireless International 

Inc. 

169 ......................................... AEM Agnico-Eagle Mines Ltd 205 ....................................... LLY Eli Lilly & Co. 

151 ......................................... AET Aetna Inc 162 ....................................... LO Lorillard Inc. 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES