Document ID: SEC-2010-0157-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Market Maker Trading Licenses for Foreign Currency Options
Posted Date: 2010-01-29T05:00Z

[Federal Register: January 29, 2010 (Volume 75, Number 19)]
[Notices]               
[Page 4891-4893]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29ja10-123]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61411; File No. SR-ISE-2010-05]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Regarding Market Maker Trading Licenses for Foreign Currency 
Options

January 22, 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 14, 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, II, and III 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.
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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 proposes to amend its Rule 2213 regarding market maker 
trading licenses for the Exchange's foreign currency options. The text 
of the

[[Page 4892]]

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 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, 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 proposes to amend its rules regarding Foreign Currency Options 
(``FX Options'') \5\ traded on the Exchange. Specifically, ISE proposes 
to amend its Rule 2213 regarding market maker trading licenses for the 
Exchange's FX Options.
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    \5\ ISE began trading FX options on April 17, 2007 pursuant to 
Commission approval. See Securities Exchange Act Release No. 55575 
(April 3, 2007), 72 FR 17963 (April 10, 2007) (SR-ISE-2006-59).
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    Under the Exchange's current rules, FX Primary Market Makers 
(``FXPMMs'') are required to purchase, through a sealed bid auction, a 
trading license in order to serve as a market maker in a particular 
foreign currency pair. FXPMMs must also provide market quality 
commitments regarding (i) the average quotation size it will 
disseminate in the foreign currency option, and (ii) the maximum 
quotation spread it will disseminate in such product at least ninety 
percent of the time. At the end of each auction, the Exchange 
determines the winning bidder for an FXPMM trading license based on bid 
amount and market quality commitment. There is only one FXPMM per 
currency pair. The minimum price for a FXPMM trading license is 
currently $5,000.
    The Exchange also sells FX Competitive Marker Maker (``FXCMM'') 
trading licenses. Pursuant to Exchange rules, FXCMM trading licenses 
are sold pursuant to a ``Dutch'' auction.\6\ FXCMMs are not required to 
submit any market quality commitments. The Exchange sells up to 10 
FXCMM trading licenses per currency pair. The minimum price for a FXCMM 
trading license is currently $500.
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    \6\ See ISE Rule 2213(g).
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    The Exchange now proposes to eliminate the minimum bid requirement 
for both FXPMM and FXCMM trading licenses. ISE believes doing so will 
promote competition among market makers by allowing smaller firms to 
compete without the additional burden of a minimum fee. Further, some 
currency pairs are more popular than others so a minimum bid 
requirement for some of the lesser popular currency pairs invites less 
interest from potential market makers. While the minimum bid amounts do 
not amount to a large capital outlay, firms that are contemplating 
entry into the FX options business will be further incentivized to do 
so because their start-up costs will be reduced. FXPMMs will still be 
required to submit a monetary bid and market quality commitments and 
FXCMMs will still be required to submit only a monetary bid, to compete 
for a trading license to serve as a market maker in FX Options listed 
by the Exchange in the future.
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.\7\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(5) of the Act's \8\ 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 proposed rule change will allow smaller firms to 
compete for a trading license without the additional burden of a 
minimum fee.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 
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 significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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) \9\ of the Act and Rule 19b-
4(f)(6) \10\ thereunder. The Exchange provided 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 the proposed rule 
change.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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.

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 No. SR-ISE-2010-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth Murphy, 
Secretary, Securities and Exchange Commission,

[[Page 4893]]

100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2010-05. 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 Section, 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 will also 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-2010-05 and should be 
submitted on or before February 19, 2010.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1853 Filed 1-28-10; 8:45 am]
BILLING CODE 8011-01-P