Document ID: SEC-2007-0254-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-02-20T05:00Z

[Federal Register: February 20, 2007 (Volume 72, Number 33)]
[Notices]               
[Page 7784-7785]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20fe07-30]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55279; File No. SR-ISE-2007-02]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change and Amendment No. 1 Thereto Relating to Position and Exercise 
Limits on the KBW Bank Index

February 12, 2007.
    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 8, 2007, the International Securities Exchange, LLC (``ISE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the ISE. On 
February 5, 2007, the ISE filed Amendment No. 1 to the proposed rule 
change. The ISE filed the proposed rule change as a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change, as 
amended, from interested persons.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to increase the position and exercise 
limits for options on the KBW Bank Index. The text of the proposed rule 
change is available at the ISE, the Commission's Public Reference Room, 
and http://www.iseoptions.com.

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 ISE 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 ISE 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 Exchange recently listed for trading options on the KBW Bank 
Index (``BKX'') pursuant to the Exchange's generic listing standards 
found in its Rule 2002(b). Under ISE Rule 2005, a narrow-based index 
option cannot have position and exercise limits that exceed 31,500 
contracts.\5\ The Exchange notes that the Philadelphia Stock Exchange 
(``Phlx'') also currently lists options on BKX. However, pursuant to a 
Rule 19b-4 filing, the position and exercise limit for options on BKX 
traded by Phlx is currently 44,000 contracts.\6\ Accordingly, the 
Exchange proposes to increase the position and exercise limit for 
options on BKX traded at ISE to 44,000 contracts also. The Exchange 
believes it is important for a product traded at multiple exchanges to 
have a uniform position and exercise limit in order to eliminate any 
confusion among investors and other market participants.
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    \5\ ISE Rule 2007 generally states that exercise limits for an 
index option shall be equivalent to the position limit prescribed to 
that index option.
    \6\ See Securities Exchange Act Release No. 49312 (February 24, 
2004), 69 FR 9672 (March 1, 2004) (SR-Phlx-2004-13).
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2. Statutory Basis
    The basis under the Act for this proposed rule change is found in 
Section 6(b)(5),\7\ in that the adoption of uniform position and 
exercise limits for BKX will serve 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.
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    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition.

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

    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 from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). When filing a proposed rule change 
pursuant to Rule 19b-4(f)(6) under the Act, an exchange is required 
to give 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 requested that the 
Commission waive the 5-day pre-filing notice requirement. The 
Commission has determined to waive this requirement.
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    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.\10\
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    \10\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on February 5, 2007, the date on which the ISE submitted 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after

[[Page 7785]]

the date of filing.\11\ However, Rule 19b-4(f)(6)(iii) \12\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The ISE 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 
because the proposed rule change will make the ISE's position and 
exercise limits for options on BKX consistent with the Phlx's position 
and exercise limits for such options.\13\ Further, the Commission notes 
that the increased position and exercise limits for Phlx were 
previously noticed for comment and no comments were received. For this 
reason, the Commission designates the proposal to be effective and 
operative upon filing with the Commission.\14\
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    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ Id.
    \13\ See supra note 6.
    \14\ For 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).
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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 rule-comments@sec.gov. Please include 

File Number SR-ISE-2007-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-ISE-2007-02. 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. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the 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-2007-02 and should be submitted on or before March 
13, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-2842 Filed 2-16-07; 8:45 am]

BILLING CODE 8010-01-P