Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC,

 
CONTENT

[Federal Register: August 22, 2007 (Volume 72, Number 162)]

[Notices]

[Page 47105-47107]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr22au07-164]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56263; File No. SR-ISE-2007-69]

Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Extension of a Pilot Period To Increase Position Limits and Exercise Limits for Equity Options and Options on the Nasdaq-100 Tracking Stock

August 15, 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 August 13, 2007, the International Securities Exchange, LLC (``ISE'' or ``Exchange'') 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 ISE. The Exchange has filed the proposal as a ``non-controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

\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).

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

    ISE proposes to extend the time period for Exchange Rule 412 and Rule 414 position and exercise limits pilot program for equity option contracts and options on the Nasdaq-100 Index Tracking Stock (``QQQQ'') (``Pilot Program''). The text of the proposed rule change is available at ISE, the Commission's Public Reference Room, and http://www.ise.com.

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

    In its filing with the Commission, ISE 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.

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

      1. Purpose

        The Pilot Program provides for an increase to the standard position and exercise limits for equity option contracts and for options on QQQQs.\5\ The Pilot Program, after being extended on prior occasions,\6\ is set to expire on September 1, 2007.\7\ Specifically, the Pilot Program increased the applicable position and exercise limits for equity options and options on the QQQQ to the following levels:

        Current equity option contract

        Pilot program equity option limit \8\

        contract limit

        13,500

        25,000 22,500

        50,000 31,500

        75,000 60,000

        200,000 75,000

        250,000

        Current QQQQ option contract limit Pilot program QQQQ option contract limit

        300,000

        900,000

        The purpose of the proposed rule change is to extend the Pilot Program for an additional six-month period, until March 1, 2008. The Exchange believes that extending the Pilot Program for this additional period is warranted due to the positive feedback from members and for the reasons cited in the original rule filing that proposed the adoption of the Pilot Program.\9\ Additionally, the Exchange represents that it has not experienced any problems or difficulties relating to the Pilot Program since its inception. For these reasons, the Exchange requests that the Commission extend the Pilot Program until March 1, 2008.

        \5\ See Securities Exchange Act Release No. 51295 (March 2, 2005), 70 FR 11292 (March 8, 2005) (SR-ISE-2005-14) (``Pilot Program Notice'').

        \6\ See Securities Exchange Act Release Nos. 54335 (August 18, 2006), 71 FR 50954 (August 28, 2006) (SR-ISE-2006-47); 53345 (February 22, 2006), 71 FR 10579 (March 1, 2006) (SR-ISE-2006-10); and 52265 (August 15, 2005), 70 FR 48996 (August 22, 2005) (SR-ISE- 2005-39).

        \7\ See Securities Exchange Act Release No. 55311 (February 16, 2007), 72 FR 8408 (February 26, 2007) (SR-ISE-2007-15).

        \8\ Except when the Pilot Program is in effect.

        \9\ See Pilot Program Notice, supra note 5.

      2. Statutory Basis

        The Exchange believes that its proposal is consistent with Section 6(b) of the Act \10\ in general, and furthers the objective of Section 6(b)(5) of the Act \11\ in particular, in that it is designed to promote just and equitable principles of trade and to protect investors and the public interest.

        \10\ 15 U.S.C. 78f(b).

        \11\ 15 U.S.C. 78f(b)(5).

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

      The proposed rule change does not impose any burden on competition.

    3. 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.

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

    Because the forgoing rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\

    \12\ 15 U.S.C. 78s(b)(3)(A).

    \13\ 17 CFR 240.19b-4(f)(6).

    A proposed rule change filed under 19b-4(f)(6) normally may not become operative prior to 30 days after the date of filing.\14\ However, Rule 19b-4(f)(6)(iii) \15\ 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. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and in the public interest because it will allow the Pilot Program to continue uninterrupted. For this reason, the Commission designates that the proposed rule change become operative immediately.\16\

    \14\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b- 4(f)(6)(iii) requires that a self-regulatory organization submit to the Commission 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. ISE has satisfied the five-day pre-filing requirement.

    \15\ Id.

    \16\ For the purposes only of waiving the operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).

    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 Act.

  4. 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:

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    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-2007-69 on the subject line.

    Paper Comments

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

    All submissions should refer to File No. SR-ISE-2007-69. 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 will also be available for inspection and copying at the principal office of 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 No. SR-ISE-2007-69 and should be submitted on or before September 12, 2007.

    For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\17\

    \17\ 17 CFR 200.30-3(a)(12).

    Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16527 Filed 8-21-07; 8:45 am]

    BILLING CODE 8010-01-P