Document ID: SEC-2007-0873-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-06-27T04:00Z

[Federal Register: June 27, 2007 (Volume 72, Number 123)]
[Notices]               
[Page 35276-35278]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27jn07-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55936; File No. SR-ISE-2007-32]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1 
Thereto Relating To Removing Certain Rules From Its Rulebook

June 21, 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 May 9, 2007, 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 substantially 
prepared by the Exchange. On June 8, 2007, ISE filed Amendment No. 1 to 
the proposed rule change.\3\ 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.
    \3\ Amendment No. 1 is incorporated in this notice.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to remove certain inconsequential ISE rules 
for which there is no corresponding National Association of Securities 
Dealers (``NASD'') rule. The text of the proposed rule change is below. 
Proposed new language is in italics; proposed deletions are enclosed in 
brackets.
* * * * *
Rule 403. Reserved.[Nominal Employment
    No Member may employ any person in a nominal position on account of 
business obtained by such person.]
Rule 605. Reserved.[Other Affiliations of Registered Persons
    Except with the express written permission of the Exchange, every 
registered person shall devote his entire time during business hours to 
the business of the Member employing him, or to the business of its 
affiliates that are engaged in the transaction of business as a broker 
or dealer in securities or commodities or in such other businesses as 
have been approved by the Member's designated examining authority.]

[[Page 35277]]

Rule 615. Reserved.[Addressing of Communications to Customers
    No Member shall address any communications to a customer in care of 
any other person unless either (i) the customer, within the preceding 
twelve (12) months, has instructed the Member in writing to send 
communications in care of such other persons, or (ii) duplicate copies 
are sent to the customer at some other address designated in writing by 
him.]
* * * * *

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 rescind certain inconsequential ISE 
rules. The Exchange has recently entered into an amended and restated 
17d-2 Agreement with the National Association of Securities Dealers 
(``NASD''), whereby the NASD has assumed regulatory and enforcement 
responsibilities for dual members with respect to common rules 
delineated in the Agreement.\4\ During the course of amending this 
Agreement, the Exchange came across some common rules that the ISE 
needed to amend in order to conform the language to the corresponding 
NASD rule \5\ and a few rules which are not common to the NASD rules 
and are not specific to or necessary for the Exchange's marketplace or 
membership. Accordingly, the Exchange proposes to remove the following 
rules from its rulebook: Rule 403 (Nominal Employment), Rule 605 (Other 
Affiliations of Registered Persons), and 615 (Addressing of 
Communications to Customers).
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    \4\ See Securities Exchange Act Release No. 55367 (February 27, 
2007), 72 FR 9983 (March 6, 2007) (Order approving and declaring 
effective a plan for the allocation of regulatory responsibilities 
between ISE and NASD).
    \5\ See Securities Exchange Act Release No. 55751 (May 11, 
2007), 72 FR 27884 (May 17, 2007) (Proposal to amend ISE rules to 
conform such rules to their corresponding NASD rules).
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    The Exchange seeks to rescind Rule 403 (Nominal Employment) because 
the rule is narrowly drafted to prohibit members from obtaining 
business by employing a person in a nominal position. The Exchange 
believes that Rule 406 (Gratuities) better addresses this issue by 
prohibiting a member from giving any compensation or gratuities in any 
one year in excess of $100 to any employee of any other member or of 
any non-member broker, dealer, bank or institution, without the prior 
consent of the employer and of the Exchange.
    Additionally, the Exchange seeks to rescind Rule 605 (Other 
Affiliations of Registered Persons) because the Exchange believes it is 
an antiquated rule and due to significant changes in market structure, 
the Exchange no longer believes it necessary to limit registered 
persons activities during business hours. Further, the NASD has no 
comparable rule and, as discussed above, the Exchange has entered into 
a 17d-2 Agreement with the NASD to monitor and enforce common rules, 
including, but not limited to, rules governing Registered Persons.
    Lastly, the Exchange seeks to rescind Rule 615 (Addressing of 
Communications to Customers) because the Exchange believes that broker-
dealers that do a public business are better equipped to set their own 
policies and procedures governing communications with customers that 
are applicable to their business. Pursuant to ISE Rule 2114 (Doing 
Business with the Public) ISE members that do business with the public 
are required to also be a member of the NASD. The NASD requires broker-
dealers to have written supervisory procedures covering areas such as, 
communications with the public and customer account statements. 
Additionally, those members must also comply with NASD rules, which the 
Exchange believes sufficiently address this topic.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
found in Section 6(b)(5).\6\ Specifically, the Exchange believes the 
proposed rule change is consistent with Section 6(b)(5) requirements 
that the rules of an exchange be designed to promote just and equitable 
principles of trade, serve 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.
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    \6\ 15 U.S.C. Sec.  78f(b).
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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

    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 Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, as amended, or
    (B) Institute proceedings to determine whether the proposed rule 
change, as amended, 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, as amended, 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-2007-32 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-2007-32. This file 
number should be included in the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use

[[Page 35278]]

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 the File Number SR-ISE-2007-32 and should be submitted 
on or before July 18, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-12390 Filed 6-26-07; 8:45 am]

BILLING CODE 8010-01-P