Document ID: SEC-2007-1294-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-09-19T04:00Z

[Federal Register: September 19, 2007 (Volume 72, Number 181)]
[Notices]               
[Page 53612-53614]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19se07-130]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56383; File No. SR-ISE-2007-61]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing of a Proposed Rule Change and Amendment No. 1 
Thereto Relating to Specific Performance Commitments for Primary Market 
Makers

September 11, 2007.
    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 17, 2007, 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, II, 
and III below, which Items have been substantially prepared by the 
Exchange. On September 10, 2007, ISE

[[Page 53613]]

filed Amendment No. 1 to the proposed rule change. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    ISE is proposing to amend its rule regarding specific performance 
commitments for the Exchange's Primary Market Makers (``PMM''). The 
text of the proposed rule change is available at the Commission's 
Public Reference Room, at the Exchange, and at 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, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change, and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange 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 is proposing to amend its rule regarding performance 
commitments for the Exchange's PMMs. Specifically, the Exchange is 
proposing to amend its Rule 802(b)(2), which currently requires PMMs to 
submit specific performance commitments when requesting an allocation 
of options on indices, foreign currency options and Fund Shares 
(collectively, ``Index-Based Products''). The initial rationale behind 
adopting commitments 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. With the recent proliferation of ETFs and 
indices in the marketplace, and as ISE's practice under this rule has 
developed, the Exchange believes that the rule is overly broad and a 
deterrent to these products being allocated effectively. For example, 
if a certain Index-Based Product is of interest to a single PMM, a 
performance commitment has no effect because the PMM is not in 
competition with another PMM. As a consequence of the rule, PMMs are 
sometimes submitting the broadest commitments allowed, contrary to the 
intent of the rule. Further, this requirement could discourage some 
PMMs from seeking allocations altogether if they are expected to 
maintain additional performance commitments. The Exchange notes that 
none of the other options exchanges have a similar requirement. ISE 
therefore proposes to amend the rule so that specific performance 
commitments need only be submitted upon a request by the Exchange, 
thereby eliminating their submission as a uniform requirement.\3\
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    \3\ ISE notes that relaxing the requirement proposed in this 
filing does not affect a PMM's other obligations as a market maker 
on the Exchange under Chapter 8 of the Exchange Rules.
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \4\ 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 Exchange believes the proposed rule change will 
strengthen the effectiveness of an existing rule and allow PMMs to seek 
allocations of more products on the Exchange, thus fostering 
competition for the benefit of investors.
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    \4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    This proposed rule change does not 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2007-61 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-2007-61. 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, 100 F Street, NE., 
Washington, DC 20549, 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 the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You

[[Page 53614]]

should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-ISE-2007-61 
and should be submitted on or before October 10, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-18389 Filed 9-18-07; 8:45 am]

BILLING CODE 8010-01-P