Document ID: SEC-2006-0355-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, Inc.
Posted Date: 2006-03-16T05:00Z

[Federal Register: March 16, 2006 (Volume 71, Number 51)]
[Notices]               
[Page 13643-13645]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16mr06-89]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53439; File No. SR-ISE-2006-11]

 
Self-Regulatory Organizations; International Securities Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to ISE Rule 1100(g) ``Exercise of Options Contracts''

March 7, 2006.
    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 February 13, 2006, the International Securities Exchange, Inc. 
(``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 the Exchange. 
On March 3, 2006, the ISE filed Amendment No. 1 to the proposed rule 
change.\3\ The ISE filed the proposal as a ``non-controversial'' 
proposed rule change pursuant to section 19(b)(3)(A) of the Act \4\ and 
Rule 19b-4(f)(6) thereunder,\5\ which renders it 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\ Amendment No. 1 clarified that the Exchange is requesting 
that the Commission waive the 5-day pre-filing notice requirement 
and the 30-day operative delay period and made certain other minor 
clarifying changes.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 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 ISE, pursuant to section 19(b)(1) of the Act \6\ and Rule 19b-4 
thereunder,\7\ proposes to amend ISE Rule 1100(g) ``Exercise of Options 
Contracts'' to add two additional minutes within which one may deliver 
a contrary exercise advice (``CEA'') \8\ or an Advice Cancel to the 
Exchange. The proposal is intended to conform ISE Rule 1100(g) to a 
recent change in the closing time for equity options and narrow-based 
index options

[[Page 13644]]

from 4:02 p.m. to 4 p.m. (EST).\9\ The text of the proposed rule change 
is available on the ISE's Web site (http://www.iseoptions.com), at the 

ISE's principal office, and at the Commission's Public Reference Room.
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    \6\ 15 U.S.C. 78s(b)(1).
    \7\ 17 CFR 240.19b-4.
    \8\ A CEA is a communication either to not exercise an option 
that would be automatically exercised pursuant to the Options 
Clearing Corporation's (``OCC'') Exercise-by-Exception (``Ex-by-
Ex'') procedure, or to exercise an option that would not be 
automatically exercised pursuant to the OCC's Ex-by-Ex procedure.
    \9\ See Securities Exchange Act Release No. 53248 (February 7, 
2006), 71 FR 8015 (February 15, 2006) (approving SR-ISE-2005-58, 
which amended ISE Rule 700, so that equity options and narrow-based 
index options may trade until 4 p.m. instead of 4:02 p.m. (EST)).
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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 proposal. 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 purpose of the proposed amendment to ISE Rule 1100(g) is to 
change the time for delivering a CEA or Advice Cancel to conform to the 
new trading hours for equity options and narrow-based index options.
    The Exchange recently submitted a proposed rule change to amend ISE 
Rule 700 to modify the close of the normal trading hours in options on 
individual stocks and options on narrow-based indexes from 4:02 p.m. to 
4 p.m. (EST).\10\ However, that filing did not address the change that 
is the subject of the instant filing. Specifically, the Exchange 
proposes to amend ISE Rule 1100(g) in order for the rule to be 
consistent with respect to the new hours of trading in equity options 
and narrow-based index options. Accordingly, the Exchange is proposing 
to change all references to 28 minutes in ISE Rule 1100(g) to 30 
minutes to reflect the 2 minutes change in the closing time for options 
on individual stocks and options on narrow-based indexes. According to 
the Exchange, the proposed rule change, as amended, is based on a 
proposed rule change submitted by the Pacific Exchange, Inc., which was 
recently approved by the Commission.\11\
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    \10\ See Securities Exchange Act Release No. 53248 (February 7, 
2006), 71 FR 8015 (February 15, 2006) (order granting accelerated 
approval of SR-ISE-2005-58).
    \11\ See Securities Exchange Act Release No. 53249 (February 7, 
2006), 71 FR 8035 (February 15, 2006) (order granting accelerated 
approval of SR-PCX-2005-138).
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2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with section 6(b) of the Act \12\ in general, and furthers 
the objectives of section 6(b)(5) of the Act \13\ in particular, 
because it is designed to promote just and equitable principles of 
trade, 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended, 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 ISE has neither solicited nor received comments on the proposed 
rule change, as amended.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date on which it was filed, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change, as amended, has become effective 
pursuant to section 19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) 
thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30-days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) 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 asked the Commission to 
waive the 30-day operative delay and the 5-day pre-filing requirement. 
The Commission believes that waiving the 30-day operative delay and the 
5-day pre-filing requirement is consistent with the protection of 
investors and the public interest because such waiver will allow the 
ISE to immediately clarify its rule and conform it to the industry-wide 
close of trading times now in effect. Accelerating the operative date 
will allow for a more efficient and effective market operation by 
offering clarity and internal consistency with existing ISE rules. For 
these reasons, the Commission designates the proposed rule change, as 
amended, as effective and operative immediately upon filing with the 
Commission.\17\
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    \16\ Id.
    \17\ For the purposes only of waiving the 30-day operative date 
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 after the filing of the amended 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.\18\
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    \18\ The effective date of the original proposed rule change is 
February 13, 2006 and the effective date of the amendment is March 
3, 2006. For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change, as 
amended, under Section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on March 3, 2006, the date on which 
the Exchange submitted Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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-2006-11 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-2006-11. This file 
number should be included on the

[[Page 13645]]

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-2006-11 and should be 
submitted on or before April 6, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-3788 Filed 3-15-06; 8:45 am]

BILLING CODE 8010-01-P