Document ID: SEC-2008-1091-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2008-08-07T04:00Z

[Federal Register: August 7, 2008 (Volume 73, Number 153)]
[Notices]               
[Page 46112-46114]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au08-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58267; File No. SR-ISE-2008-59]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Amend Rule 2009 To Permit the Listing and Trading of 
Additional Index Options Series That Do Not Meet Current Rule 2009 
Requirements, if Such Options Series Are Listed and Traded on at Least 
One Other National Securities Exchange

July 30, 2008.
    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 July 30, 2008, 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 prepared by ISE. ISE filed the proposed 
rule change as a ``non-controversial'' proposed rule change pursuant to 
Section 19(b)(3)(A) of the

[[Page 46113]]

Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it 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).
    \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

    ISE proposes to amend Rule 2009 to permit the listing and trading 
of additional index options series that do not meet current Rule 2009 
requirements, if such options series are listed and traded on at least 
one other national securities exchange. The text of the proposed rule 
change is available at ISE, the Commission's Public Reference Room, and 
http://www.ise.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, ISE included statements 
concerning the purpose of, and basis for, the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. 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 proposes to add new Supplementary Material .03 to Rule 
2009 to permit the listing and trading of additional index options 
series that do not meet current Rule 2009 requirements, if such options 
series are listed on at least one other national securities exchange in 
accordance with the applicable rules of such exchange for the listing 
and trading of index options. For each additional options series listed 
by the Exchange pursuant to proposed Supplementary Material .03, the 
Exchange would submit a proposed rule change with the Commission that 
is effective upon filing within the meaning of Section 19(b)(3)(A) 
under the Act.
    Rule 2009 provides the mechanism for the Exchange to list or open 
options expiration month series on particular index options classes 
approved for listing and trading on the Exchange. In general, up to a 
six expiration month series may be listed at any one time. This 
proposal seeks to permit the Exchange to list additional index options 
expiration month series if another options exchange does so, regardless 
of whether the additional series listing complies with the requirements 
of Rule 2009.
    Rule 2009 permits the Exchange to open options expiration month 
series on approved index options classes as follows: (i) Consecutive 
Month Series; (ii) Cycle Month Series; (iii) Long-Term Options Series; 
(iv) Short-Term (1 week) Options Series; and (v) Quarterly Options 
Series.
Consecutive Month Series
    Under Rule 2009(a)(3), Consecutive Month Series options are a 
series of options, within a particular class of stock index options, 
having up to four consecutive expiration months which can be opened for 
simultaneous trading. The shortest-term series permissible are series 
initially having no more than two months to expiration.
Cycle Month Series
    Under Rule 2009(a)(3), the Exchange may designate one expiration 
cycle for each class of stock index options, consisting of four 
calendar months occurring at three-month intervals. With respect to any 
particular class of stock index options, Cycle Month Series options 
expiring in three of the four cycle months designated by the Exchange 
for that class may be traded simultaneously with the shortest-term 
series initially having approximately three months to expiration.
Long-Term Option Series
    Under Rule 2009(b), the Exchange may list series of options having 
up to sixty months to expiration for any particular class of stock 
index options. These Long-term Options Series may be traded 
simultaneously with Consecutive Month Series options as well as Cycle 
Month Series options.
Short Term (1 week) Option Series
    Under Rule 2009(.01), the Exchange may open for trading, on any 
business Friday, series of options that expire at the close of business 
on the following Friday. The Exchange may select up to five currently 
listed option classes on which Short Term Option Series may be opened. 
Additionally, the Exchange may list Short Term Option Series on any 
option classes that are selected by other options exchanges.
Quarterly Options Series
    Under Rule 2009(.02), the Exchange may list and trade options 
series that expire at the close of business on the last business day of 
a calendar quarter. Quarterly Options Series for up to five currently 
listed stock index options classes or options classes for options on 
ETFs may be listed. The Exchange may also list Quarterly Options Series 
on any options classes that are selected by other options exchanges.
    Consistent with this proposal, the index options class must either 
be specifically reviewed and approved by the Commission under Section 
19(b)(2) of the Act and rules thereunder, or comply with Rule 2009(c), 
for the Exchange to be able to list the additional series.
    The ability of the Exchange to list and trade additional series of 
an index options class that may not meet the requirements of Rule 2009 
if another options exchange lists such expiration month series, is 
appropriate and necessary in order to remain competitive and provide 
customers with the full offering of index option products. Although the 
proposal may result in an incremental increase in message and quote 
traffic for systems of the Exchange and the Options Price Reporting 
Authority (OPRA), the Exchange expects the operational impact of such 
increase in quote traffic to be minimal.
    In order for the Exchange to list any additional expiration month 
series of an index option class pursuant to new Supplementary Material 
.03 to Rule 2009: (1) Such series must be already listed on another 
options exchange; (2) such series must belong to an index options class 
that has been specifically reviewed and approved by the Commission 
under Section 19(b)(2) of the Act or that complies with Rule 2009(c); 
and (3) the Exchange must submit a proposed rule change with the 
Commission that is effective upon filing within the meaning of Section 
19(b)(3)(A) of the Act.\5\ In addition, the proposal would allow the 
Exchange the ability to quickly list and trade additional expiration 
month series of an index options class based on the listing of the 
series by another options exchange.
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    \5\ Rule 2009(c) provides the requirements that must be met 
before those specific options groups may be traded on the Exchange 
pursuant to Rule 19b-4(e) under the Act.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to a 
national securities exchange and, in particular, the requirements of 
Section 6(b) of the Act.\6\ Specifically, the Exchange

[[Page 46114]]

believes the proposed rule change is consistent with the requirement of 
Section 6(b)(5) of the Act \7\ that an exchange have rules that are 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, and, in general, to 
protect investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ISE does not believe that the proposed rule change will 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: (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).
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    A proposed rule change filed under Rule 19b-4(f)(6) under the Act 
normally may not become operative prior to 30 days after the date of 
filing.\10\ However, Rule 19b-4(f)(6)(iii) \11\ 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 
Exchange asserts that this is appropriate and necessary in order to 
remain competitive and provide customers with the full offering of 
index option products. Additionally, this proposed rule change is based 
on an American Stock Exchange rule change previously approved by the 
Commission.\12\ 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 another self-regulatory 
organization recently adopted a substantially similar rule change and 
that this filing raising no new regulatory issues.\13\ The Commission 
hereby grants the Exchange's request and designates the proposal as 
operative upon filing.\14\
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    \10\ In addition, Rule 19b-4(f)(6)(iii) under the Act requires a 
self-regulatory organization to give the Commission written notice 
of its intent to file 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. ISE has 
complied with this requirement.
    \11\ Id.
    \12\ See Securities Exchange Act Release No. 57916 (June 4, 
2008), 73 FR 33125 (June 11, 2008) (Order, and Amendment No. 1 
Thereto, to Amend Rule 903C to Permit the Listing and Trading of 
Additional Index Options Series) (SR-AMEX-2008-14).
    \13\ See supra note 12.
    \14\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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-2008-59 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street, NE., Washington, 
DC 20549-1090.

All submissions should refer to File Number SR-ISE-2008-59. 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 
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-
2008-59 and should be submitted on or before August 28, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-18072 Filed 8-6-08; 8:45 am]

BILLING CODE 8010-01-P