Document ID: SEC-2010-0845-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2010-06-10T04:00Z

[Federal Register: June 10, 2010 (Volume 75, Number 111)]
[Notices]               
[Page 32977-32978]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jn10-78]                         

[[Page 32977]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62216; File No. SR-ISE-2010-51]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Permit Listing Options Series That Are Restricted to Closing 
Transactions if Such Series Are Listed and Restricted to Closing 
Transactions on Another National Securities Exchange and to Permit 
Opening Transactions by Market Makers To Accommodate Closing 
Transactions of Other Market Participants in Option Series Where the 
Underlying Security Does Not Meet the Then Current Requirements for 
Continuance of Such Approval

June 3, 2010.
    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 May 21, 2010, 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 prepared by the self-
regulatory organization. The Exchange has filed the proposal as a 
``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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

    The ISE proposes to amend Rule 503 to permit the Exchange to list 
series that are restricted to closing transactions if such series are 
listed and restricted to closing transactions on another exchange. 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 self-regulatory organization 
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 self-regulatory organization 
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

    (a) Purpose--The purpose of the proposed rule change is to amend 
ISE Rule 503 to permit the Exchange to list option series that are 
restricted to closing transactions if such series are listed and 
restricted to closing transactions on another exchange.
    This filing is based on filings previously submitted by the Chicago 
Board Options Exchange (``CBOE''),\5\ NASDAQ OMX PHLX (``PHLX'') \6\ 
and NASDAQ Options Market (``NOM'').\7\ The impetus for the CBOE 
filing, as CBOE noted, was a customer request for it to list a series 
of options that was previously delisted by the filing exchange but was 
listed on another exchange and restricted to closing transactions, a 
situation that may equally occur on ISE as well as other options 
exchanges.
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    \5\ See Securities Exchange Act Release No. 60625 (September 4, 
2009), 74 FR 46825 (September 11, 2009) (SR-CBOE-2009-066).
    \6\ See Securities Exchange Act Release No. 60879 (October 26, 
2009), 74 FR 56252 (October 30, 2009) (SR-PHLX-2009-90).
    \7\ See Securities Exchange Act Release No. 60880 (October 26, 
2009), 74 FR 56677 (November 2, 2009) (SR-NASDAQ-2009-090).
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    Rule 502 (Criteria for Underlying Securities) sets forth the 
requirements or criteria that underlying securities must meet before 
the Exchange may initially list options on such securities. Rule 503 
sets forth listing maintenance and delisting criteria in respect of 
securities underlying options listed on the Exchange that are used by 
the Exchange to determine whether such listing status should be 
continued. These rules do not have provisions for listing option series 
that are restricted to closing transactions where such series are 
listed on another exchange.
    ISE proposes to add new Supplementary Material .01 Rule 503 to 
provide that if an option series is listed but restricted to closing 
transactions on another national securities exchange, the Exchange may 
list such series (even if such series would not otherwise be eligible 
for listing under the Exchange's rules), which shall also be restricted 
to closing transactions on the Exchange.\8\
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    \8\ The parenthetical text in proposed Rule 503 Supplementary 
.01 is being proposed to eliminate ambiguity about the Exchange's 
ability to list a restricted series in the event other Exchange 
Rules would otherwise prohibit the listing of that series.
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    Similar to series that no longer meet the Exchange's criteria for 
continued listing, opening transactions by market makers executed to 
accommodate closing transactions of other market participants will be 
permitted in any restricted series listed pursuant to proposed 
Supplementary Material .01 Rule 503. No restrictions will be in place 
with respect to the exercise of any restricted series. Additionally, 
the Exchange is making changes in Rule 503 to propose an exception for 
these opening transactions by market makers to accommodate closing 
transactions of other market participants. This proposed change is to 
conform Rule 503 to similar provisions in listing rules of other 
options exchanges.\9\
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    \9\ See Securities Exchange Act Release Nos. 48142 (July 9, 
2003), 68 FR 42150 (July 16, 2003) (SR-CBOE-2002-36); and 60879 
(October 26, 2009), 74 FR 56252 (October 30, 2009) (SR-PHLX-2009-
90).
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    The Exchange believes that the proposed rule change should 
encourage competition and be beneficial to traders and market 
participants by providing them with a means to trade on the Exchange 
securities that are listed and traded on other exchanges.
    (b) Basis--The basis under the Securities Exchange Act of 1934 
(``Exchange Act'') for this proposed rule change is the requirement 
under Section 6(b)(5) that an exchange have rules that are designed to 
promote just and equitable principles of trade, and 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 proposed rule change will permit 
the Exchange to accommodate possible customer requests and allow 
execution of trades on the Exchange and will encourage competition and 
not harm investors or the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    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.

[[Page 32978]]

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, become operative for 30 days 
from 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, provided that the Exchange has given the 
Commission 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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ The Exchange has satisfied the five-day pre-filing notice 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
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 period.
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiver of the 30-day operative delay 
period is consistent with the protection of investors and the public 
interest. In particular, the Exchange would be permitted to list the 
restricted series solely for the purpose of closing transactions as 
long as the restricted series is listed and restricted to closing 
transactions on another national securities exchange. Further, the 
proposal would allow an exception for opening transactions by market 
makers to accommodate closing transactions of other market 
participants. The Commission notes that the proposed rule change is 
substantially similar to the rules of other options exchanges.\14\ The 
Commission therefore designates the proposal operative upon filing.\15\
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    \14\ See CBOE Rule 5.4.12; NOM Chapter IV, Section 4; and Phlx 
Rule 1010.
    \15\ For purposes only of waiving the operative delay for this 
proposal, 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 such proposed 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.\16\
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    \16\ 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-2010-51 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-ISE-2010-51. 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 Web site 
viewing and printing 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 Number SR-ISE-
2010-51 and should be submitted on or before July 1, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13932 Filed 6-9-10; 8:45 am]
BILLING CODE 8010-01-P