Document ID: SEC-2007-1486-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-10-30T04:00Z

[Federal Register: October 30, 2007 (Volume 72, Number 209)]
[Notices]               
[Page 61411]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30oc07-74]                         

[[Page 61411]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56694; File No. SR-ISE-2007-61]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Order Approving a Proposed Rule Change, as Modified by Amendment 
No. 1 Thereto, Relating to Specific Performance Commitments for Primary 
Market Makers

October 24, 2007.
    On July 17, 2007, the International Securities Exchange, LLC 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``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 amend its Rule 802(b)(2) 
regarding specific performance commitments for Primary Market Makers 
(``PMMs''). On September 10, 2007, ISE filed Amendment No. 1 to the 
proposed rule change. The proposed rule change, as modified by 
Amendment No. 1, was published for comment in the Federal Register on 
September 19, 2007.\3\ The Commission received no comments on the 
proposal. This order approves the proposed rule change, as modified by 
Amendment No. 1.
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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. 56383 (September 11, 
2007), 72 FR 53612.
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I. Description of the Proposal

    Currently, ISE Rule 802(b)(2) requires PMMs to submit specific 
performance commitments each time they request an allocation of options 
on indices, foreign currency options and Fund Shares (collectively, 
``Index-Based Products''). The initial rationale behind adopting a 
requirement on PMMs to submit proposed performance commitments for 
allocations of options on new Index-Based Products was to require a 
stronger commitment for certain competitive products like exchange-
traded funds and indices and to assist the Exchange's Allocation 
Committee when choosing between PMMs seeking the same product.
    The Exchange now believes that its rule is overbroad and may 
actually discourage some PMMs from seeking allocations of options on 
Index-Based Products. Therefore, ISE is proposing to amend the rule to 
provide that specific performance commitments need only be submitted in 
response to a request by the Exchange, thereby eliminating their 
submission as a uniform requirement each time a PMM seeks a new 
allocation of options in Index-Based Products.\4\
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    \4\ ISE notes that modifying this requirement will not affect a 
PMM's other obligations as a market maker on the Exchange under 
Chapter 8 of ISE's Rules.
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II. Discussion

    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.\5\ 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\6\ which requires that an exchange have 
rules that are designed to prevent fraudulent and manipulative acts and 
practices, 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. The Commission believes that the proposed amendment of 
ISE Rule 802(b)(2) will encourage PMMs to seek allocations of products 
on the Exchange, and thereby remove impediments to and perfect the 
mechanism for a free and open market. Further, the Exchange will 
continue to evaluate performance standards of its market makers 
pursuant to existing practice. The proposed rule also allows the 
Exchange to require the submission of specific performance commitments 
from a PMM seeking a new allocation as the Exchange in its discretion 
deems appropriate. Accordingly, the Commission finds that the proposal 
promotes just and equitable principles of trade and protects investors 
and the public interest.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-ISE-Phlx-2007-61), as modified by 
Amendment No. 1, be, and hereby is, approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-21285 Filed 10-29-07; 8:45 am]

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