63870 Federal Register / Vol. 75, No. 200 / Monday, October 18, 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). 

4 17 CFR 240.19b–4(f)(6). 

5See Securities Exchange Act Release No. 56970 

(December 14, 2007), 72 FR 72428 (December 20, 

2007) (SR–CBOE–2007–99). The exemption was 

extended to certain customers whose accounts are 

carried by a member. See Securities Exchange Act 

Release No. 60555 (August 21, 2009), 74 FR 43741 

(August 27, 2009) (SR–CBOE–2009–039). 

6The term ‘‘delta neutral’’ is defined in ISE Rule 

413(a)(7)(A) as referring to an equity option position 

that is hedged, in accordance with a permitted 

pricing model, by a position in the underlying 

security or one or more instruments relating to the 

underlying security, for the purpose of offsetting the 

risk that the value of the option position will 

change with incremental changes in the price of the 

security underlying the option position. 

7See Securities Exchange Act Release No. 57360 

(February 20, 2008), 73 FR 11170 (February 29, 

2008) (SR–ISE–2008–06). 

8See Securities Exchange Act Release Nos. 62190 

(May 27, 2010), 75 FR 31826 (June 4, 2010) (SR– 

CBOE–2010–021); and 62504 (July 15, 2010), 75 FR 

42797 (July 22, 2010) (SR–PHLX–2010–93). 

9This proposed rule filing is being done pursuant 

to an industry-wide initiative, under the auspices 

of the Intermarket Surveillance Group (‘‘ISG’’) to 

establish comparable delta hedge exemption rules 

among exchanges. 

10The term ‘‘options contract equivalent of the 

net delta’’ is defined in ISE Rule 413(a)(7)(B) as the 

net delta divided by the number of shares 

underlying the option contract. The term ‘‘net delta’’ 

is also defined in ISE Rule 413(a)(7(B) to mean, at 

any time, the number of shares (either long or short) 

required to offset the risk that the value of an equity 

option position will change with incremental 

changes in the price of the security underlying the 

option position, as determined in accordance with 

a permitted pricing model. 

11However, this would not include baskets of 

securities for purposes of the Exemption. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63077; File No. SR–ISE– 

2010–97] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Delta Hedge 

Exemptions 

October 12, 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 

September 30, 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 ‘‘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 Exchange proposes to (i) expand 

the delta hedging exemption available 

for equity options positions limits, (ii) 

amend the reporting requirements 

applicable to members relying on the 

delta hedging exemption, and (iii) adopt 

a delta hedging exemption from certain 

index options position limits. 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, on the Commission’s Web 

site at http://www.sec.gov, 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 

I. Expansion of Delta-Based Equity 

Hedge Exemption 

On December 14, 2007,5 the 

Commission approved a proposed rule 

change establishing an exemption from 

equity options position and exercise 

limits for positions held by the Chicago 

Board Options Exchange (‘‘CBOE’’) 

members, and certain of their affiliates, 

that are ‘‘delta neutral’’ 6 under a 

‘‘permitted pricing model’’, subject to 

certain conditions (‘‘Exemption’’). ISE 

filed a rule filing to establish an 

exemption similar to CBOE’s filing.7

CBOE, and more recently, NASDAQ 

OMX PHLX (‘‘PHLX’’), expanded its 

exemption from equity options position 

and exercise limits, amended reporting 

requirements and adopted a delta 

hedging exemption from certain index 

options position limits.8 ISE proposes to 

amend Rules 413 and 2006 to make 

similar amendments.9

The ‘‘options contract equivalent of 

the net delta’’ of a hedged equity option 

position is subject to the position limits 

under ISE Rule 412, subject to the 

availability of other exemptions.10

Currently, the Exemption only is 

available for securities that directly 

underlie the applicable option position. 

This means that with respect to options 

on exchange-traded funds (‘‘ETF 

options’’), index options overlying the 

same index on which the ETF is based 

currently cannot be combined with the 

ETF options to calculate a net delta for 

purposes of the Exemption. 

Many ETF options overlie exchangetraded funds that track the performance 

of an index. For example, options on 

Standard & Poor’s Depositary Receipts 

(‘‘SPY’’) track the performance of the 

S&P 500 Index. Market participants 

often hedge SPY options with options 

on the S&P 500 Index (‘‘SPX options’’) or 

with other financial instruments based 

on the S&P 500 Index for risk 

management purposes. The Exchange 

believes that in order for eligible market 

participants to more fully benefit from 

the Exemption as it relates to ETF 

options, securities and other 

instruments that are based on the same 

underlying ETF or the same index on 

which the ETF is based should also be 

included in any determination of an 

ETF option position’s net delta or 

whether the options position is hedged 

delta neutral.11

Accordingly, the Exchange proposes 

to expand the Exemption by amending 

ISE Rule 413 to permit equity option 

positions for which the underlying 

security is an ETF that is based on the 

same index as an index option to be 

combined with an index option position 

for calculation of the delta-based equity 

hedge exemption. The proposed rule 

would allow financial products such as 

securities index options, index futures, 

and options on index futures to be 

included along with the ETF in an 

equity option’s net delta calculation. So 

for example, the proposed rule would 

allow SPY options to be hedged not 

only with SPY shares, but with S&P 500 

options, S&P 500 futures, options on 

S&P 500 futures or any other instrument 

that tracks the performance of or is 

based on the S&P 500 index. This would 

be accomplished by including such 

positions with a related index option 

position in accordance with the DeltaBased Index Hedge Exemption rule 

proposed below. 

Index options and equity options (i.e., 

ETF options) that are eligible to be 

combined for computing a delta-based 

hedge exemption, along with all 

securities and/or other instruments that 

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12 ‘‘Other units of trade’’ would include, for 

example, options or futures contracts hedging the 

relevant option position. When determining 

whether an ETF option hedged with other 

instruments such as ETF or index options is delta 

neutral, the relative size of the ETF option when 

compared to the other product is taken into 

consideration. For example, SPX options are ten 

(10) times larger than SPY options thus 1 SPX delta 

is equivalent to .10 SPY deltas. 

13 ISE Rule 2007 establishes exercise limits for an 

index option at the same level as the index option’s 

position limit under index options position limit 

rules in ISE Rules 2004 and 2005, therefore no 

changes are proposed to ISE Rule 2007. 

14Under proposed ISE Rule 2006(c)(ii), the term 

‘‘options contract equivalent of the net delta’’ is 

defined as the net delta divided by units of trade 

that equate to one option contract on a delta basis, 

and the term ‘‘net delta’’ is defined as, at any time, 

the number of shares and/or other units of trade 

(either long or short) required to offset the risk that 

the value of an index option position will change 

with incremental changes in the value of the 

underlying index, as determined in accordance 

with a permitted pricing model. 

15The pricing model of an FHC or of an affiliate 

of an FHC would have to be consistent with: (i) The 

requirements of the Board of Governors of the 

Federal Reserve System, as amended from time to 

time, in connection with the calculation of riskbased adjustments to capital for market risk under 

capital requirements of the Board of Governors of 

the Federal Reserve System, provided that the 

member or affiliate of a member relying on this 

exemption in connection with the use of such 

model is an entity that is part of such company’s 

consolidated supervised holding company group; or 

(ii) the standards published by the Basel Committee 

on Banking Supervision, as amended from time to 

time and as implemented by such company’s 

principal regulator, in connection with the 

calculation of risk-based deductions or adjustments 

to or allowances for the market risk capital 

requirements of such principal regulator applicable 

to such company—where ‘‘principal regulator’’ 

Continued 

are based on or track the performance of 

the same underlying security or index, 

will be grouped and the net delta and 

options contract equivalent of the net 

delta will be calculated for each 

respective option class based on offsets 

realized from the grouping as a whole. 

The Exchange proposes to amend the 

definition of ‘‘net delta’’ in ISE Rule 

413(a)(7)(B) to mean, at any time, the 

number of shares and/or other units of 

trade 12 (either long or short) required to 

offset the risk that the value of an equity 

option position will change with 

incremental changes in the price of the 

security underlying the option position, 

as determined in accordance with a 

permitted pricing model. The Exchange 

proposes to amend the definition of the 

‘‘option contract equivalent of the net 

delta’’ in ISE Rule 413(a)(7)(B) to mean 

the net delta divided by the number of 

shares that equate to one option contract 

on a delta basis. 

II. Reporting Requirements 

ISE Rule 413(a)(7)(F) sets forth the 

reporting requirements applicable to 

Exchange members who rely on the 

Exemption. The Exchange proposes to 

amend ISE Rule 413(a)(7)(F) to exempt 

from the reporting requirements 

Exchange market-makers relying on the 

Exemption who use the Options 

Clearing Corporation (‘‘OCC’’) pricing 

model, because market-maker positions 

and delta information can be accessed 

through the Exchange’s market 

surveillance systems. This proposed 

exemption is consistent with similar 

exemptions from the reporting 

requirements under ISE Rule 

2006(a)(13) applicable to broad-based 

(market) index options and narrowbased (industry) index options. 

III. Delta-Based Index Hedge Exemption 

Index options traded on the Exchange 

are subject to position and exercise 

limits, as provided under ISE Rules 

2004 (Position Limits for Broad-Based 

Index Options), 2005 (Position Limits 

for Industry Index Options) and 2007 

(Exercise Limits). Position limits are 

imposed, generally, to prevent the 

establishment of options positions that 

can be used or might create incentives 

to manipulate or disrupt the underlying 

market so as to benefit the holder of the 

options position. 

Index options are often used by 

market participants such as institutional 

investors to hedge large portfolios. 

Exchange rules include hedge 

exemptions to allow certain positions in 

index options in excess of the 

applicable standard position limit if 

hedged with an Exchange-approved 

qualified portfolio. Under ISE Rule 

2006, a qualified portfolio must be 

previously established and the options 

must be carried in an account with an 

Exchange member or if not carried by an 

Exchange member, the account must be 

carried by a member of a self-regulatory 

organization participating in the ISG. 

Securities used as a hedge pursuant to 

this provision may not be used to hedge 

other option positions. 

The Exchange believes that any limit 

on the ability of market participants to 

use index options to hedge their 

portfolios exposes market participants 

to unnecessary risk on the unhedged 

portion of their portfolios. The 

Exchange proposes to adopt a deltabased exemption from index option 

position and exercise limits that are 

substantially similar to the delta-based 

equity hedge exemption under ISE Rule 

413. A delta-based index hedge 

exemption would provide market 

participants the ability to accumulate an 

unlimited number of index options 

contracts provided that such contracts 

are properly delta hedged in accordance 

with the requirements of the exemption. 

Proposed Exemption. The Exchange 

proposes to adopt an exemption from 

index options position and exercise 

limits 13 for positions held by Exchange 

members and certain of their affiliates 

that are ‘‘delta neutral’’ (as defined 

below) under a ‘‘permitted pricing 

model’’ (as defined below), subject to 

certain conditions (‘‘Index Exemption’’). 

The term ‘‘delta neutral’’ is defined in 

proposed ISE Rule 2006(c)(i) as referring 

to an index option position that is 

hedged, in accordance with a permitted 

pricing model, by a position in one or 

more correlated instruments for the 

purpose of offsetting the risk that the 

value of the option position will change 

with incremental changes in the value 

of the underlying index. Correlated 

instruments would be defined to mean 

securities and/or other instruments that 

track the performance of or are based on 

the same underlying index as the index 

underlying the option position. These 

definitions would allow financial 

products such as ETF options, index 

futures, options on index futures and 

ETFs that track the performance of or 

are based on the same underlying index 

to be included in an index option’s net 

delta calculation. 

Any index option position that is not 

delta neutral would be subject to 

position and exercise limits, subject to 

the availability of other exemptions. 

Only the ‘‘options contract equivalent of 

the net delta’’ of such position would be 

subject to the appropriate position 

limit.14

In addition, members could not use 

the same positions in correlated 

instruments in connection with more 

than one hedge exemption. Therefore, a 

position in correlated instruments used 

as part of a delta hedging strategy could 

not also serve as the basis for any other 

index hedge exemption. 

Permitted Pricing Model. Under the 

proposed rule, the calculation of the 

delta for any index option position, and 

the determination of whether a 

particular index option position is 

hedged delta neutral, must be made 

using a permitted pricing model. A 

‘‘permitted pricing model’’ is defined in 

proposed ISE Rule 2006(c)(iii) to have 

the same meaning as defined in ISE 

Rule 413(a)(7)(C), namely, the pricing 

model maintained and operated by OCC 

and the pricing models used by (i) a 

member or its affiliate subject to 

consolidated supervision by the SEC 

pursuant to Appendix E of SEC Rule 

15c3–1; (ii) a financial holding company 

(‘‘FHC’’) or a company treated as an FHC 

under the Bank Holding Company Act 

of 1956, or its affiliate subject to 

consolidated holding company group 

supervision; 15 (iii) an SEC registered 

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means a member of the Basel Committee on 

Banking Supervision that is the home country 

consolidated supervisor of such company— 

provided that the member or affiliate of a member 

relying on this exemption in connection with the 

use of such model is an entity that is part of such 

company’s consolidated supervised holding 

company group. See ISE Rule 413(a)(7)(C)(3). 

16The pricing model of an SEC registered OTC 

derivatives dealer would have to be consistent with 

the requirements of Appendix F to SEC Rule 15c3– 

1 and SEC Rule 15c3–4 under the Act, as amended 

from time to time, in connection with the 

calculation of risk-based deductions from capital for 

market risk thereunder. Only an OTC derivatives 

dealer and no other affiliated entity (including a 

member) would be able to rely on this part of the 

Exemption. See ISE Rule 413(a)(7)(C)(4). 

17The pricing model of a national bank would 

have to be consistent with the requirements of the 

Office of the Comptroller of the Currency, as 

amended from time to time, in connection with the 

calculation of risk-based adjustments to capital for 

market risk under capital requirements of the Office 

of the Comptroller of the Currency. Only a national 

bank and no other affiliated entity (including a 

member) would be able to rely on this part of the 

Exemption. See ISE Rule 413(a)(7)(C)(5). 

18See proposed ISE Rule 2006(c)(iv)(2)(B). 

19See proposed ISE Rule 2006(c)(iv)(3). 

20See Regulatory Information Circular 2008–04 

dated March 5, 2008. 

21See proposed ISE Rule 2006(c)(v)(1)(A). 

22See proposed ISE Rule 2006(c)(v)(1)(B). 

23See proposed ISE Rule 2006(c)(v)(2). 

24 In addition, the member would be required to 

obtain from such non-member affiliate a written 

statement confirming that such non-member 

affiliate: (a) Is relying on the Index Exemption; (b) 

will use only a permitted pricing model for 

purposes of calculating the net delta of its option 

positions for purposes of the Index Exemption; (c) 

will promptly notify the member if it ceases to rely 

on the Index Exemption; (d) authorizes the member 

to provide to the Exchange or the OCC such 

information regarding positions of the non-member 

affiliate as the Exchange or OCC may request as part 

of the Exchange’s confirmation or verification of the 

accuracy of any net delta calculation under the 

Index Exemption; and (e) if the non-member 

affiliate is using the OCC Model, has duly executed 

and delivered to the Exchange such documents as 

the Exchange may require to be executed and 

delivered to the Exchange as a condition to reliance 

on the Exemption. See proposed ISE Rule 

2006(c)(v)(3). 

25 ISE Rule 415 requires, among other things, that 

members report to the Exchange aggregate long or 

short positions of 200 or more options contracts of 

any single class of options traded on the Exchange. 

26A member would be authorized to report 

position information of its non-member affiliate 

pursuant to the written statement required under 

proposed ISE Rule 2006(c)(v)(3)(B)(d). 

27 15 U.S.C. 78f(b). 

28 15 U.S.C. 78f(b)(5). 

OTC derivatives dealer; 16 and (iv) a 

national bank.17

Aggregation of Accounts. Members 

and non-member affiliates relying on 

the Index Exemption would be required 

to ensure that the permitted pricing 

model is applied to all positions in 

correlated instruments hedging the 

relevant option position that are owned 

or controlled by the member, or its 

affiliates. 

However, the net delta of an index 

option position held by an entity 

entitled to rely on the Index Exemption, 

or by a separate and distinct trading unit 

of such entity, may be calculated 

without regard to positions in correlated 

instruments held by an affiliated entity 

or by another trading unit within the 

same entity, provided that: (i) The entity 

demonstrates to the Exchange’s 

satisfaction that no control relationship, 

as defined in ISE Rule 412(f), exists 

between such affiliates or trading units, 

and (ii) the entity has provided the 

Exchange written notice in advance that 

it intends to be considered separate and 

distinct from any affiliate, or, as 

applicable, which trading units within 

the entity are to be considered separate 

and distinct from each other for 

purposes of the Index Exemption.18 Any 

member or non-member affiliate relying 

on the Index Exemption must designate, 

by prior written notice to the Exchange, 

each trading unit or entity whose 

options positions are required by 

Exchange rules to be aggregated with the 

options positions of such member or 

non-member affiliate relying on the 

Index Exemption for purposes of 

compliance with Exchange position or 

exercise limits.19

The Exchange previously issued a 

Regulatory Information Circular to 

provide guidance to members regarding 

the use of delta hedge exemption.20

Obligations of Members and 

Affiliates. Any member relying on the 

Index Exemption would be required to 

provide a written certification to the 

Exchange that it is using a permitted 

pricing model as defined in the rule for 

purposes of the Index Exemption.21 In 

addition, by such reliance, such member 

would authorize any other person 

carrying for such member an account 

including, or with whom such member 

has entered into, a position in a 

correlated instrument hedging the 

relevant option position to provide to 

the Exchange or OCC such information 

regarding such account or position as 

the Exchange or OCC may request as 

part of the Exchange’s confirmation or 

verification of the accuracy of any net 

delta calculation under this 

exemption.22

The index option positions of a nonmember affiliate relying on the Index 

Exemption must be carried by a member 

with which it is affiliated.23 A member 

carrying an account that includes an 

index option position for a non-member 

affiliate that intends to rely on the Index 

Exemption would be required to obtain 

from such non-member affiliate a 

written certification that it is using a 

permitted pricing model as defined in 

the rule for purposes of the Index 

Exemption.24

Reporting. Under proposed ISE Rule 

2006(c)(v)(4), each member (other than 

an Exchange market-maker using the 

OCC Model) relying on the Index 

Exemption would be required to report, 

in accordance with Rule 415: 25 (i) All 

index option positions (including those 

that are delta neutral) that are reportable 

thereunder, and (ii) on its own behalf or 

on behalf of a designated aggregation 

unit pursuant to ISE Rule 2006(c)(iv) for 

each such account that holds an index 

option position subject to the Index 

Exemption in excess of the levels 

specified in ISE Rules 2004 and 2005 

the net delta and the options contract 

equivalent of the net delta of such 

position. 

Records. Under proposed ISE Rule 

2006(c)(v)(5), each member relying on 

the Index Exemption would be required 

to (i) retain, and undertake reasonable 

efforts to ensure that any non-member 

affiliate of the member relying on the 

Index Exemption retains, a list of the 

options, securities and other 

instruments underlying each option 

position net delta calculation reported 

to the Exchange hereunder, and (ii) 

produce such information to the 

Exchange upon request.26

Reliance on Federal Oversight. As 

provided under proposed ISE Rule 

2006(c)(iii), a permitted pricing model 

includes proprietary pricing models 

used by members and affiliates that 

have been approved by the SEC, the Fed 

or another Federal financial regulator. In 

adopting the proposed Index 

Exemption, the Exchange would be 

relying upon the rigorous approval 

processes and ongoing oversight of a 

Federal financial regulator. The 

Exchange notes that it would not be 

under any obligation to verify whether 

a member’s or its affiliate’s use of a 

proprietary pricing model is appropriate 

or yielding accurate results. 

The Exchange will issue a regulatory 

circular upon publication of the notice 

of this filing regarding the proposal 

herein. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 27 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 28

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. 

The Exchange believes that allowing 

correlated instruments to be included in 

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29See Securities Exchange Act Release No. 40594 

(October 23, 1998), 63 FR 59362, 59380 (November 

3, 1998) (adopting rules relating to OTC Derivatives 

Dealers). 

30 15 U.S.C. 78s(b)(3)(A). 

31 17 CFR 240.19b–4(f)(6). 

32 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission 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 satisfied this 

requirement. 

33 Id. 

34See Securities Exchange Act Release No. 62190 

(May 27, 2010), 75 FR 31826 (June 4, 2010) (SR– 

CBOE–2010–21). See also Securities Exchange Act 

Release No. 62504 (July 15, 2010), 75 FR 42797 

(July 22, 2010) (SR–PHLX–2010–93). 

35For 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. 78c(f). 

36 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 62830 

(September 2, 2010), 75 FR 54930 (the 

‘‘Commission’s Notice’’). 

the calculation of an equity option’s net 

delta would enable eligible market 

participants to more fully realize the 

benefit of the delta based equity hedge 

exemption. The proposed delta-based 

index hedge exemption would be 

substantially similar to the delta-based 

equity hedge exemption under ISE Rule 

413. Also, the Commission has 

previously stated its support for 

recognizing options positions hedged on 

a delta neutral basis as properly 

exempted from position limits.29

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition 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 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing rule change 

does not: (1) Significantly affect the 

protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for 30 days after the date of 

this filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 30 and Rule 19b– 

4(f)(6) thereunder.31

A proposed rule change filed under 

19b–4(f)(6) normally may not become 

operative prior to 30 days after the date 

of filing.32 However, Rule 19b– 

4(f)(6)(iii) 33 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. The 

Commission notes that it has approved 

a substantially similar proposal filed by 

the Chicago Board Options Exchange, 

Incorporated,34 and therefore believes 

that no significant purpose is served by 

a 30-day operative delay. For these 

reasons, the Commission designates the 

proposed rule change to be operative 

upon filing with the Commission.35

At any time within 60 days of the 

filing of such proposed rule change the 

Commission summarily may 

temporarily suspend 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–2010–97 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–2010–97. 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 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– 

2010–97 and should be submitted on or 

before November 8, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–26108 Filed 10–15–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63073, File No. SR–MSRB– 

2010–07] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Order Granting Approval of 

Proposed Rule Change Relating to 

Rule G–37, on Political Contributions 

and Prohibitions on Municipal 

Securities Business 

October 12, 2010. 

I. Introduction 

On August 25, 2010, the Municipal 

Securities Rulemaking Board (‘‘MSRB’’), 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Exchange Act’’),1

and Rule 19b–4 thereunder,2 a proposed 

rule change which consists of an 

interpretive notice regarding Rule G–37, 

on political contributions and 

prohibitions on municipal securities 

business. The proposed rule change was 

published for comment in the Federal 

Register on September 9, 2010.3 The 

mstockstill on DSKH9S0YB1PROD with NOTICES