Document ID: SEC-2009-0583-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness by International Securities Exchange, LLC of a Proposed Rule Change To Amend Exchange Rules Related to Confirmations to Customers
Posted Date: 2009-04-28T04:00Z

[Federal Register Volume 74, Number 80 (Tuesday, April 28, 2009)]
[Notices]
[Pages 19254-19256]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-9560]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59806; File No. SR-ISE-2009-19]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness by International 
Securities Exchange, LLC of a Proposed Rule Change To Amend Exchange 
Rules Related to Confirmations to Customers

April 21, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 8, 2009, 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 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.
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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 612--Confirmation to Customers to 
clarify that written confirmations relating to options transactions do 
not need to specify the exchange or exchanges on which an option 
contract is executed.\3\ The text of the proposed

[[Page 19255]]

rule change is available on the Exchange's Web site http://www.ise.com, 
at the Exchange's Office of the Secretary, and at the Commission.
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    \3\ The proposed filing is being done pursuant to an industry-
wide initiative under the auspices of the Options Self-Regulatory 
Council (``OSRC''), which is a committee comprised of 
representatives from each of the options exchanges functioning 
pursuant to the OSRC Plan (the ``Plan''). See Securities Exchange 
Act Release No. 20158 (September 8, 1983), 48 FR 41256 (September 
14, 1983). The Plan is not a National Market System (``NMS'') plan 
under Section 11A of the Act, but rather is a plan to allocate 
regulatory responsibilities under Rule 17d-2 under the Act. 17 CFR 
240.17d-2. As a result of the introduction of multiply listed 
options and the introduction of the Plan for the Purpose of Creating 
and Operating an Intermarket Options Market Linkage (``Options 
Linkage Plan''), the contracts in a customer options order could be 
executed on more than one options exchange, and the significance of 
the options exchange, or exchanges, that execute a particular 
options transaction has diminished significantly. See Securities 
Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 
4, 2000). Furthermore, the OSRC believes that in light of the best 
execution and disclosure requirements, the usefulness of including 
on an options confirmation the name of the options exchange, or 
exchanges, on which the options transaction was effected does not 
outweigh the operational difficulties of capturing the information 
given the multiple trading of options and the application of the 
Options Linkage Plan industry wide.
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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 
(``SRO'') 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend Exchange Rule 
612 to eliminate the requirement that the market on which an options 
transaction is executed be disclosed on a written confirmation 
furnished to a customer of a member. Pursuant to Rule 612, the member 
will continue to be required to furnish a written confirmation that 
contains a description of each transaction in the option contracts 
which shall show: the type of option; the underlying security (e.g., 
stock or exchange traded fund); the expiration month; the exercise 
price; the number of option contracts; the premium and commissions; the 
transaction and settlement dates; whether the transaction was a 
purchase or a sale (writing) transaction; and whether the transaction 
was effected on a principal or agency basis.
    The Exchange believes that with the expansion of multi-listing of 
options and the introduction of new options exchanges, it has become 
operationally inefficient to require the disclosure of the market 
center on which an order was executed on the confirmation. As an 
example, a customer may have a single option order containing numerous 
option contracts executed on multiple exchanges. As such, it would be 
inefficient for the member to be required to identify the exchange 
symbol for each contract executed on that customer's order. This 
proposal would clarify that written confirmations furnished by a member 
to a customer will not need to specify the exchange or exchanges on 
which such option contracts were executed.
    This proposal is similar to rule change proposals that have been 
filed by the American Stock Exchange LLC (``Amex''), the Financial 
Industry Regulatory Authority, Inc. (``FINRA''), and the Chicago Board 
Options Exchange (``CBOE''), and approved by the Commission.\4\ The 
Exchange believes that similar proposals will be filed with the 
Commission by other exchanges, and if adopted, would continue to 
provide a uniform approach with respect to confirmations to customers 
regarding standardized options.
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    \4\ See Securities Exchange Act Release Nos. 58814 (October 20, 
2008), 73 FR 63527 (October 24, 2008) (approval order); 58932 
(November 12, 2008), 73 FR 69696 (November 19, 2008) (approval 
order); and 58980 (November 19, 2008), 73 FR 72091 (November 26, 
2008) (approval order).
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\5\ in general, and furthers 
the objectives of Section 6(b)(5) of the Act,\6\ in particular, in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and to 
protect investors and the public interest in that it is designed to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, and processing information with respect to, and 
facilitating transactions in securities, 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. 
Additionally, this proposed rule change will promote consistency 
between ISE and other SRO rules and clarify the Exchange's options 
confirmation procedure rules to better reflect the realities of the 
modern options market.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing rule change: (1) Does not significantly 
affect the protection of investors or the public interest; (2) does not 
impose any significant burden on competition and (3) by its terms, does 
not 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 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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-
4(f)(6) \8\ thereunder.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
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    The Exchange believes that the proposal to amend the Exchange's 
rule with regard to written confirmations relating to options 
transactions will promote consistency between ISE and other SRO rules. 
The proposed rule change is substantially similar to Amex, FINRA, and 
CBOE rules that provide that written confirmations relating to options 
transactions are not required to specify the options exchange or 
exchanges on which such options were executed.\9\ The Exchange believes 
that this proposed rule change does not raise any new, unique or 
substantive issues from those raised in the approved Amex, FINRA and 
CBOE filings. The Exchange also believes that acceleration of the 
operative date is consistent with the protection of investors and the 
public interest. For the foregoing reasons, this rule filing qualifies 
for immediate effectiveness as a ``noncontroversial'' rule change under 
paragraph (f)(6) of Rule 19b-4.
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    \9\ See supra note 4, and related text.
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ does not 
become operative prior to 30 days after the date of filing or such 
shorter time as the Commission may designate if such action is 
consistent with the protection of investors and the public interest. 
Because the proposed rule change is based on rule changes previously 
approved by the Commission and the proposed rule change does not 
present any novel issues, the Exchange has requested that the 
Commission waive the 30-day operative delay period to

[[Page 19256]]

permit the proposed rule change to be implemented immediately. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the rule change is substantially similar to rule changes by 
other SROs previously approved by the Commission, and will promote 
consistency between the rules of the ISE and other SROs. Thus, the 
Commission, consistent with the protection of investors and the public 
interest, has determined to waive the 30-day operative delay so that 
the proposal may take effect immediately.\11\
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    \10\ 17 CFR 240.19b4(f)(6).
    \11\ For purposes only of waiving the operative date 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-2009-19 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-2009-19. 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 Commissions 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 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-2009-19 and should be submitted on 
or before May 19, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-9560 Filed 4-27-09; 8:45 am]
BILLING CODE 8010-01-P