Document ID: SEC-2008-0889-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2008-07-02T04:00Z

[Federal Register: July 2, 2008 (Volume 73, Number 128)]
[Notices]               
[Page 38014-38016]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jy08-125]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58019; File No. SR-ISE-2008-49]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Extend the Quarterly Options Series Pilot Program

June 25, 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 June 23, 2008, the International Securities Exchange, LLC 
(``Exchange'' or ``ISE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been substantially prepared by 
the Exchange. The Exchange has designated this proposal as non-
controversial under Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders the proposed rule change 
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)(iii).
    \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

    The Exchange is proposing to extend, until July 10, 2009, its 
quarterly options series pilot program. The text of the proposed rule 
change is available on the Exchange's Web site (http://www.ise.com), at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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,

[[Page 38015]]

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 extend, until July 10, 2009, an ISE 
pilot program (the ``Quarterly Options Series Pilot Program'') to list 
and trade options series that expire at the close of business on the 
last business day of a calendar quarter (``Quarterly Options 
Series'').\5\ The current Quarterly Options Series Pilot Program is set 
to expire on July 10, 2008. Under the Quarterly Options Series Pilot 
Program, the Exchange is allowed to open up to five (5) currently 
listed options classes that are either index options or options on 
exchange-traded funds (ETFs). The Exchange is also allowed to list 
Quarterly Options Series on any options class that is selected by other 
securities exchanges that employ a similar pilot program under their 
respective rules. The Exchange has selected the following five options 
classes to participate in the Quarterly Options Series Pilot Program: 
the Standard & Poor's Depositary Receipts[reg] (SPY), Nasdaq-100[reg] 
Shares (QQQQ), Diamonds[reg] Trust Series 1 (DIA), iShares Russell 
2000[reg] Index Fund (IWM), and Select Sector SPDR[reg]--Energy (XLE). 
The ISE believes the Quarterly Options Series Pilot Program has been 
successful and well received by its members and the investing public. 
Thus, the ISE proposes to extend the Pilot Program until July 10, 2009.
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    \5\ See Exchange Act Release No. 54113 (July 7, 2006); 71 FR 
39694 (July 13, 2006) (SR-ISE 2006-24) (the ``Quarterly Options 
Series Pilot Program Approval Order''). See also Exchange Act 
Release No. 57425 (March 4, 2008); 73 FR 12783 (March 10, 2008) (SR-
ISE 2008-19) (amending the Quarterly Options Series Pilot Program to 
permit the listing of additional series and to implement a delisting 
policy for outlying series with no open interest).
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    In support of this proposed rule change, and as required by the 
Quarterly Options Series Pilot Program Approval Order, the Exchange has 
submitted to the Commission a report (the ``Quarterly Options Series 
Pilot Program Report''), detailing the Exchange's experience with the 
Quarterly Options Series Pilot Program. Specifically, the Quarterly 
Options Series Pilot Program Report contains data and written analysis 
regarding the five options classes included in the Quarterly Options 
Pilot Program for the period from April 1, 2007 through March 31, 2008. 
The Exchange believes there is sufficient investor interest and demand 
to extend the Quarterly Options Series Pilot Program for another year. 
The Exchange further believes that the Quarterly Options Series Pilot 
Program has provided investors with a flexible and valuable tool to 
manage risk exposure, minimize capital outlays, and the ability to more 
closely tailor their investment strategies and decisions to the 
movement of the underlying security. The Exchange notes that it has not 
detected any material proliferation of illiquid options series 
resulting from the introduction of the Quarterly Options Series Pilot 
Program.
    Finally, the Exchange represents that it has the necessary systems 
capacity to support new options series that result from the continued 
listing and trading of Quarterly Options Series.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder. Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(5) of the Act,\6\ which requires that the rules of a national 
securities exchange be designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, 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 that extension 
of the Quarterly Options Pilot Program will result in a continuing 
benefit to investors, by allowing them to more closely tailor their 
investment decisions, and will allow the Exchange to further study 
investor interest in quarterly options.
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    \6\ 15 U.S.C. 78(f)(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the 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

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \7\ and subparagraph (f)(6) of Rule 19b-
4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of 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. The Exchange has fulfilled this requirement.
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    The Exchange has asked the Commission to waive the operative delay 
to permit the proposed rule change to become operative prior to the 
30th day after filing. The Commission has determined that waiving the 
30-day operative delay of the Exchange's proposal is consistent with 
the protection of investors and the public interest and will promote 
competition because such waiver will allow ISE to continue the existing 
Quarterly Options Series Pilot Program without interruption.\9\ 
Therefore, the Commission designates the proposal operative upon 
filing.
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    \9\ For purposes only of waiving the 30-day operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 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 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.

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.

[[Page 38016]]

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-2008-49 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2008-49. 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 should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-ISE-2008-49 and should be 
submitted on or before July 23, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-14926 Filed 7-1-08; 8:45 am]

BILLING CODE 8010-01-P