Document ID: SEC-2010-1604-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2010-10-20T04:00Z

[Federal Register: October 20, 2010 (Volume 75, Number 202)]
[Notices]               
[Page 64773]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20oc10-110]                         

[[Page 64773]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63104; File No. SR-ISE-2010-91]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Order Approving Proposed Rule Change To Adopt a Pilot Program To 
List Additional Expiration Months for Each Class of Options Opened for 
Trading on the Exchange

October 14, 2010.

I. Introduction

    On August 25, 2010, the International Securities Exchange, LLC (the 
``Exchange'' or ``ISE'') filed with the Securities and Exchange 
Commission, pursuant to Section 19(b)(1) of the Securities Exchange Act 
of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule 
change to adopt a pilot program to list additional expiration months 
for each class of options opened for trading on the Exchange. The 
proposed rule change was published for comment in the Federal Register 
on September 2, 2010.\3\ The Commission received no comments on the 
proposal. This order approves the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 62772 (August 26, 
2010), 75 FR 53991 (``Notice'').
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II. Description of the Proposal

    Pursuant to ISE Rule 504(e), the Exchange currently opens series 
with four expiration months for each class of options open for trading 
on the Exchange: The first two being the two nearest months, regardless 
of the quarterly cycle on which that class trades; the third and fourth 
being the next two months of the quarterly cycle previously designated 
by the Exchange for that specific class.
    The Exchange believes that there is market demand for series with a 
greater number of expiration months. The Exchange therefore proposes to 
adopt a pilot program pursuant to which it will list series with up to 
an additional two expiration months, for a total of six expiration 
months for each class of options open for trading on the Exchange. The 
proposal will become effective on a pilot basis for twelve months 
commencing on the next full month after approval is received to 
establish the pilot program. Under the proposal, series with the 
additional months listed pursuant to the pilot program will result in 
four consecutive expiration months plus two months from the quarterly 
cycle. The Exchange seeks to limit the pilot to the 20 most actively 
traded options classes.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\4\ 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\5\ in that the proposal has been designed 
to promote just and equitable principles of trade, and to protect 
investors and the public interest.
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    \4\ The Commission has considered the proposed rule change's 
impact on efficiency, competition and capital formation. See 15 
U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that allowing the Exchange to list and 
trade series with up to two additional expiration months, under the 
terms described in the Exchange's proposal, should provide investors 
with additional means of managing their risk exposures and carrying out 
their investment objectives. The Commission notes that the pilot 
program limits the series that may be opened pursuant to the pilot 
program to the 20 most actively traded options classes. The Commission 
believes this restriction should allow the Exchange to offer a wider 
array of investment opportunities, while minimizing the impact on 
quotation message traffic. The Commission also notes that the proposal 
requires the Exchange to closely monitor the trading and quotation 
volume associated with the additional options series created under the 
pilot program and the effect of these additional series on the capacity 
of the Exchange's, OPRA's, and vendors' systems.\6\
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    \6\ If the Exchange were to propose an extension, expansion, or 
permanent approval of the pilot program, the Exchange would be 
required to submit a report on the pilot program to the Commission 
at least 60 days prior to the pilot program expiration date. See 
Notice, supra note 3, at 53991-92.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-ISE-2010-91) is approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-26339 Filed 10-19-10; 8:45 am]
BILLING CODE 8011-01-P