Document ID: SEC-2007-0964-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange,  LLC
Posted Date: 2007-07-17T04:00Z

[Federal Register: July 17, 2007 (Volume 72, Number 136)]
[Notices]               
[Page 39106-39108]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jy07-81]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56047; File No. SR-ISE-2007-54]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Extend the Short Term Option Series Pilot Program

July 11, 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 June 27, 2007, the International Securities Exchange, LLC 
(``Exchange'' or ``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 substantially prepared by 
the Exchange. The Exchange has designated this proposal as non-
controversial under section 19(b)(3)(A)(iii) of the Act \3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders the proposed rule change 
effective upon filing with the Commission. 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)(iii).
    \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 amend its rules to extend the Short 
Term Option Series Pilot Program (``Pilot Program'') for an additional 
year. The text of the proposed rule change is

[[Page 39107]]

available on the Exchange's Web site (http://www.ise.com), at the 

Exchange'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, 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 Exchange 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
    On July 12, 2005, the Commission approved the Pilot Program, which 
allows ISE to list and trade Short Term Option Series.\5\ Under the 
terms of the Pilot Program, the Exchange can select up to five options 
classes on which Short Term Option Series may be opened on any Short 
Term Option Opening Date, as that term is defined in ISE Rules 504 and 
2009. The Exchange is also allowed to list Short Term Option Series on 
any option class that is selected by other securities exchanges that 
employ a similar Pilot Program under their respective rules.
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    \5\ See Securities Exchange Act Release No. 52012 (July 12, 
2005), 70 FR 41246 (July 18, 2005) (File No. SR-ISE-2005-17).
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    The Pilot Program is currently set to expire on July 12, 2007.\6\ 
The purpose of this proposed rule change is to extend the Pilot Program 
for an additional year, through July 12, 2008. The Exchange believes 
that Short Term Option Series provides investors with a flexible and 
valuable tool to manage risk exposure, minimize capital outlays, and be 
more responsive to the timing of events affecting the securities that 
underlie option contracts. While ISE has not listed any Short Term 
Option Series during the Pilot Program, there has been investor 
interest in trading short-term options at the Chicago Board Options 
Exchange. For competitive reasons and in order to have the ability to 
respond to customer interest in Short Term Option Series, the Exchange 
proposes the continuation of the Pilot Program at ISE.
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    \6\ See Securities Exchange Act Release No. 54117 (July 10, 
2006), 71 FR 40564 (July 17, 2006) (File No. SR-ISE-2006-37).
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    In the original proposal to establish the Pilot Program, the 
Exchange stated that if it were to propose an extension or an expansion 
of the Pilot Program, the Exchange would submit, along with any filing 
proposing such amendments to the Pilot Program, a report (``Pilot 
Program Report'') that would provide an analysis of the Pilot Program 
covering the entire period during which the Pilot Program was in 
effect. Since the Exchange did not list any Short Term Option Series 
during the preceding year of the Pilot Program, there is no data 
available to compile such a report at this time. Therefore, the 
Exchange is not submitting a Pilot Program Report with this proposal.
    Finally, the Exchange represents that it has the necessary systems 
capacity to support the listing of Short Term Option Series, should it 
determine to do so in the future.
2. Statutory Basis
    The Exchange believes that Short Term Option Series increase the 
variety of listed options available to investors and provide investors 
with a valuable tool to manage risk exposure, minimize capital outlays, 
and be more responsive to the timing of events affecting the securities 
that underlie options contracts. For these reasons, the Exchange 
believes the proposed rule change is consistent with section 6(b) of 
the Act.\7\ Specifically, the Exchange believes the proposed rule 
change is consistent with the requirements of section 6(b)(5) of the 
Act \8\ that the rules of an exchange be designed to promote just and 
equitable principles of trade, 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.
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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 Exchange believes that 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

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
section 19(b)(3)(A) of the Act \9\ and subparagraph (f)(6) of Rule 19b-
4 thereunder.\10\ The Exchange has asked the Commission to waive the 
operative delay to permit the Pilot Program extension to become 
operative prior to the 30th day after filing.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
provided the Commission with written notice of its intent to file 
the proposed rule change at least five business before doing so.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the benefits of the Pilot Program to continue 
without interruption.\12\ Therefore, the Commission designates the 
proposal operative upon filing.\13\
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    \12\ 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).
    \13\ As set forth in the Exchange's original filing proposing 
the Pilot Program, if the Exchange were to propose an extension, an 
expansion, or permanent approval of the Pilot Program, the Exchange 
would submit, along with any filing proposing such amendments to the 
program, a report that would provide an analysis of the Pilot 
Program covering the entire period during which the Pilot Program 
was in effect. The report would include, at a minimum: (1) Data and 
written analysis on the open interest and trading volume in the 
classes for which Short Term Option Series were opened; (2) an 
assessment of the appropriateness of the option classes selected for 
the Pilot Program; (3) an assessment of the impact of the Pilot 
Program on the capacity of the Exchange, OPRA, and market data 
vendors (to the extent data from market data vendors is available); 
(4) any capacity problems or other problems that arose during the 
operation of the Pilot Program and how the Exchange addressed such 
problems; (5) any complaints that the Exchange received during the 
operation of the Pilot Program and how the Exchange addressed them; 
and (6) any additional information that would assist in assessing 
the operation of the Pilot Program. The report must be submitted to 
the Commission at least sixty (60) days prior to the expiration date 
of the Pilot Program. See Form 19b-4 for File No. SR-ISE-2005-17, 
filed March 7, 2005.

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[[Page 39108]]

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the 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-2007-54 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-2007-54. 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 Commissions 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 Number SR-ISE-2007-54 and should be 
submitted on or before August 7, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E7-13810 Filed 7-16-07; 8:45 am]

BILLING CODE 8010-01-P