Document ID: SEC-2010-0452-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2010-03-24T04:00Z

[Federal Register: March 24, 2010 (Volume 75, Number 56)]
[Notices]               
[Page 14225-14227]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24mr10-133]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61737; File No. SR-ISE-2010-22]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Permit Concurrent Listing of $3.50 and $4 Strikes for Classes 
in the $0.50 Strike and $1 Strike Programs

March 18, 2010.
    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 March 10, 2010, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') 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 prepared by the 
Exchange. 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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[[Page 14226]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to permit the concurrent listing of $3.50 and 
$4 strikes for classes that participate in both the $0.50 Strike and $1 
Strike Programs. 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 those 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 parts of such statements.

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

1. Purpose
    The purpose of this proposed rule change is to permit the 
concurrent listing of $3.50 and $4 strikes for classes that participate 
in both the $0.50 Strike and $1 Strike Programs.
    The Exchange recently implemented a rule change that permits strike 
price intervals of $0.50 for options on stocks trading at or below 
$3.00 (``$0.50 Strike Program'').\5\ As part of the filing to establish 
the $0.50 Strike Program, the Exchange contemplated that a class may be 
selected to participate in both the $0.50 Strike Program and the $1 
Strike Program. Under the $1 Strike Program, new series with $1 
intervals are not permitted to be listed within $0.50 of an existing 
$2.50 strike price in the same series, except that strike prices of $2 
and $3 are permitted to be listed within $0.50 of a $2.50 strike price 
for classes also selected to participate in the $0.50 Strike 
Program.\6\ Under ISE's existing rule, for classes selected to 
participate in both the $0.50 Strike Program and the $1 Strike Program, 
the Exchange may either: (a) List a $3.50 strike but not list a $4 
strike; or (b) list a $4 strike but not list a $3.50 strike. For 
example, if a $3.50 strike for an options class in both the $0.50 and 
$1 Strike Programs was listed, the next highest permissible strike 
price would be $5.00. Alternatively, if a $4 strike was listed, the 
next lowest permissible strike price would be $3.00. The intent of the 
$.50 Strike Program was to expand the ability of investors to hedge 
risks associated with stocks trading at or under $3 and to provide 
finer intervals of $0.50, beginning at $1 up to $3.50. As a result, the 
Exchange believes that the current filing is consistent with the 
purpose of the $0.50 Strike Program and will permit the Exchange to 
fill in any existing gaps resulting from having to choose whether to 
list a $3.50 or $4 strike for options classes in both the $0.50 and $1 
Strike Programs.
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    \5\ See Exchange Act Release No. 60696 (September 18, 2009), 74 
FR 49053 (September 24, 2009) (SR-ISE-2009-65).
    \6\ See Supplementary Material .01(b) to ISE Rule 504.
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    Therefore, the Exchange is submitting the current filing to permit 
the listing of concurrent $3.50 and $4 strikes for classes that are 
selected to participate in both the $0.50 Strike Program and the $1 
Strike Program. To effect this change, the Exchange is proposing to 
amend Supplementary Material .01(b) to ISE Rule 504 by adding $4 to the 
strike prices of $2 and $3 currently permitted if a class participates 
in both the $0.50 Strike Program and the $1 Strike Program.
    The Exchange is also proposing to amend the current rule text to 
delete references to ``$2.50 strike prices'' (and the example utilizing 
$2.50 strike prices) and to replace those references with broader 
language, e.g., ``existing strike prices.''
2. Statutory 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) of the Exchange Act \7\ 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 allow the Exchange to list more granular strikes on options 
overlying lower priced securities, which the Exchange believes will 
provide investors with greater flexibility by allowing them to 
establish positions that ate better tailored to meet their investment 
objectives.
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    \7\ 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

    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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, 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, it has become 
effective pursuant to section 19(b)(3)(A) \8\ of the Act and Rule 19b-
4(f)(6) \9\ thereunder. The Exchange provided 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 the proposed rule 
change.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 C.F.R. 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 30-day 
operative delay to permit the Exchange to compete with other exchanges 
whose rules permit concurrent listing of $3.50 and $4 strikes for 
classes similarly participating in both a $0.50 strike program and a $1 
strike program. The Commission finds that waiver of the operative delay 
is consistent with the protection of investors and the public interest 
because such waiver will encourage fair competition among the 
exchanges. Therefore, the Commission designates the proposal operative 
upon filing.\10\
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    \10\ 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 such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public

[[Page 14227]]

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 Number SR-ISE-2010-22 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-2010-22. 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 the 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-2010-22 and should be 
submitted on or before April 14, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6517 Filed 3-23-10; 8:45 am]
BILLING CODE 8011-01-P