Document ID: SEC-2008-0690-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2008-05-13T04:00Z

[Federal Register: May 13, 2008 (Volume 73, Number 93)]
[Notices]               
[Page 27588-27590]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13my08-100]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57790; File No. SR-ISE-2008-33]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Regarding the Block, Facilitation and Solicited Order Mechanisms

May 6, 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 April 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 substantially by ISE. ISE 
filed the proposed rule change as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the 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 Supplementary Material .07 to ISE Rule 716 to 
make it consistent with the definition of a Block Trade under the 
Exchange's Intermarket Option Linkage (``options linkage'') rules. The 
text of the proposed rule amendment is as follows, with deletions in 
[brackets] and additions italicized:
Rule 716. Block Trades
    (a) through (e) no change.
Supplementary Material to Rule 716
    .01 through .06 no change.
    .07 Away Market Prices. Orders of 50 to 499 contracts and orders 
with a premium value below $150,000 executed through the Block, [and] 
Facilitation and Solicited Order Mechanisms will not be executed at a 
price inferior to the national best bid or offer at the time of 
execution. Orders of 500 or more contracts with a premium value of at 
least $150,000 executed through the Block, Facilitation and

[[Page 27589]]

Solicited Order Mechanisms will be executed without consideration of 
any prices that might be available on other exchanges trading the same 
options contract.
* * * * *

 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's Block and Facilitation Mechanisms under ISE Rule 716 
provide a way for members to execute block-sized orders, defined as 
orders of at least 50 contracts. The Solicited Order Mechanism also 
allows for the execution of block-sized solicited orders, but is 
limited to orders of at least 500 contracts. The Exchange's rule for 
the Block and Facilitation Mechanisms specify that orders under 500 
contracts may not be executed at prices that would trade through the 
national best bid or offer (``NBBO'') and that orders of 500 contracts 
or more may be executed in the Block, Facilitation and Solicited Order 
Mechanisms without consideration of any prices that might be available 
on other exchanges trading the same options contract.
    Under the options linkage rules, Block Trades, which may be 
executed at prices that are inferior to the NBBO,\5\ are defined as 
orders of at least 500 contracts and a premium value of at least 
$150,000.\6\ Accordingly, the Exchange proposes to amend Supplementary 
Material .07 to ISE Rule 716 so that it is consistent with the 
definition of a Block Trade under the options linkage rules by adding a 
minimum premium requirement of $150,000 for orders that may be traded 
at prices inferior to the NBBO.\7\
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    \5\ ISE Rule 1902(d)(2) provides that th eExchange will not 
consider there to have been a trade-through if a member executes a 
block Trade at a price inferior to the NBBO if such member satisfies 
all aggrived parties following the execution of the Block Trade.
    \6\ ISe Rule 1900(2).
    \7\ The Solicited Order Mechanism will continue to be limited to 
orders of at least 500 contracts. Reference to the Solicited Order 
Mechanism is being added to the first sentence of Supplementary 
Material .07 because such orders could have a premium value that is 
less than $150,000.
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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.\8\ Specifically, the Exchange believes the 
proposed rule change is consistent with the requirement of Section 
6(b)(5) of the Act \9\ 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. In 
particular, the proposal will assure that the execution of orders 
through the Block, Facilitation and Solicited Order Mechanism is 
consistent with the requirements of the options linkage rules.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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

    No written comments were solicited or received with respect to the 
proposed rule change.

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 \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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.\12\ However, Rule 19b-4(f)(6)(iii) \13\ 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 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposed rule change seeks to conform the definition of 
Block Trades to the Exchange's existing options linkage rules.\14\ The 
Commission hereby grants the Exchange's request and designates the 
proposal as operative upon filing.
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    \12\ 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.
    \13\ Id.
    \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-2008-33 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2008-33. This file 
number should be included on the subject line if e-mail is used. To 
help the

[[Page 27590]]

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-2008-33 
and should be submitted on or before June 3, 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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Nancy M. Morris,
Secretary.
[FR Doc. E8-10619 Filed 5-12-08; 8:45 am]

BILLING CODE 8010-01-P