Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Access to the Exchange by Sponsored Customers, 18701-18703 [E7-6961]
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Federal Register / Vol. 72, No. 71 / Friday, April 13, 2007 / Notices
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CHX–2007–14 on the
subject line.
Paper Comments
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• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE, Washington, DC
20549–1090.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55586; File No. SR–ISE–
2007–19]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Access to the
Exchange by Sponsored Customers
April 5, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
All submissions should refer to File
notice is hereby given that on March 13,
Number SR–CHX–2007–14. This file
2007, the International Securities
number should be included on the
Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’)
subject line if e-mail is used. To help the filed with the Securities and Exchange
Commission process and review your
Commission (‘‘Commission’’) the
comments more efficiently, please use
proposed rule change as described in
only one method. The Commission will Items I and II below, which Items have
post all comments on the Commission’s been substantially prepared by ISE. The
Internet Web site (https://www.sec.gov/
Exchange has filed the proposal as a
rules/sro.shtml). Copies of the
‘‘non-controversial’’ rule change
submission, all subsequent
pursuant to Section 19(b)(3)(A) of the
amendments, all written statements
Act 3 and Rule 19b–4(f)(6) thereunder,4
with respect to the proposed rule
which renders it effective upon filing
change that are filed with the
with the Commission. The Commission
Commission, and all written
is publishing this notice to solicit
communications relating to the
comments on the proposed rule change
proposed rule change between the
from interested persons.
Commission and any person, other than
I. Self-Regulatory Organization’s
those that may be withheld from the
Statement of the Terms of Substance of
public in accordance with the
the Proposed Rule Change
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
ISE proposes to amend ISE Rule 706
the Commission’s Public Reference
to permit Sponsored Customers of a
Room. Copies of the filing also will be
Member to access the Exchange. The
available for inspection and copying at
text of the proposed rule change is
the principal office of CHX. All
available at ISE, the Commission’s
comments received will be posted
Public Reference Room, and
without change; the Commission does
www.iseoptions.com.
not edit personal identifying
II. Self-Regulatory Organization’s
information from submissions. You
Statement of the Purpose of, and
should submit only information that
you wish to make available publicly. All Statutory Basis for, the Proposed Rule
Change
submissions should refer to File
Number SR–CHX–2007–14 and should
In its filing with the Commission, ISE
be submitted on or before May 4, 2007.
included statements concerning the
For the Commission, by the Division of
purpose of and basis for the proposed
Market Regulation, pursuant to delegated
rule change and discussed any
authority.10
comments it received on the proposed
Florence E. Harmon,
rule change. The text of these statements
may be examined at the places specified
Deputy Secretary.
in Item IV below. ISE has prepared
[FR Doc. E7–6963 Filed 4–12–07; 8:45 am]
summaries, set forth in Sections A, B,
BILLING CODE 8010–01–P
and C below, of the most significant
aspects of such statements.
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
2 17
CFR 200.30–3(a)(12).
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
This proposed rule change seeks to
permit Sponsored Customers of
Members to access the Exchange
provided that a Sponsored Customer
Agreement has been entered into with
the Exchange by the Sponsored
Customer, and provided certain other
conditions are satisfied. The proposed
revisions to Rule 706 outlines the
requirements that Sponsoring Members
and Sponsored Customers would be
required to meet prior to engaging in a
Sponsoring Member/Sponsored
Customer relationship.5
A ‘‘Sponsored Customer’’ is a nonMember of the Exchange, such as an
institutional investor, that trades under
a Sponsoring Member’s execution and
clearing identity pursuant to a
sponsorship arrangement between such
non-Member and a Member. The
Sponsoring Member must have
documentation acknowledging it has
full and complete responsibility for all
trading activity conducted by its
Sponsored Customer. A Sponsoring
Member that provides access to a
Sponsored Customer also has a
continuing obligation to comply with all
ISE rules and procedures and the federal
securities laws and regulations. A
Sponsoring Member must also continue
to satisfy any agency obligations that
may exist between itself and its
Sponsored Customer.
A Sponsored Customer’s access to the
Exchange is conditioned on the
following requirements being met:
Sponsored Customers would be
required to enter into a sponsorship
arrangement with a ‘‘Sponsoring
Member,’’ which is defined as an ISE
Member that has been designated by a
Sponsored Customer to execute, clear
and settle transactions on ISE. The
sponsorship arrangement consists of
three separate components.
First, the Sponsored Customer would
have to enter into and maintain a
customer agreement with its Sponsoring
Member, establishing a proper
relationship and account through which
the Sponsored Customer would be
permitted to trade on ISE.
Second, the Sponsored Customer and
its Sponsoring Member would have to
enter into a written agreement that
5 ISE notes that this proposed rule change will
enable Sponsored Customers of Members to access
both its Options Exchange, as per Rule 706, and its
Stock Exchange, as per Rule 2100, which
incorporates Rule 706 by cross-reference.
1 15
10 17
18701
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Federal Register / Vol. 72, No. 71 / Friday, April 13, 2007 / Notices
incorporates the following Sponsorship
Provisions:
(1) The Sponsoring Member
acknowledges and agrees that: (i) All
orders entered by its Sponsored
Customer and any person acting on
behalf of or in the name of such
Sponsored Customer and any
executions occurring as a result of such
orders are binding in all respects on the
Sponsoring Member; and (ii) the
Sponsoring Member is responsible for
any and all actions taken by such
Sponsored Customer and any person
acting on behalf of or in the name of
such Sponsored Customer.
(2) The Sponsored Customer agrees
that it would comply with the ISE
Certificate of Formation, Constitution,
Rules and procedures with regard to its
activity on the Exchange as if the
Sponsored Customer were an ISE
Member.
(3) The Sponsored Customer agrees
that it would maintain, keep current and
provide to the Sponsoring Member a list
of its Authorized Traders 6 who would
be permitted to obtain access to the
Exchange on behalf of the Sponsored
Customer(s).
(4) The Sponsored Customer agrees
that it would familiarize its Authorized
Traders with all of the Sponsored
Customer’s obligations under ISE Rules
and would assure that they receive
appropriate training prior to any use of
or access to the Exchange.
(5) The Sponsored Customer agrees
that it would not permit anyone other
than Authorized Traders to use or
obtain access to the Exchange.
(6) The Sponsored Customer agrees
that it would take reasonable security
precautions to prevent unauthorized use
or access to the Exchange, including
unauthorized entry of information into
the System, or the information and data
made available therein. The Sponsored
Customer understands and agrees that it
is responsible for any and all orders,
trades and other messages and
instructions entered, transmitted or
received under identifiers, passwords
and security codes of Authorized
Traders, and for the trading and other
consequences thereof.
(7) The Sponsored Customer
acknowledges its responsibility for
establishing adequate procedures and
controls that permit it to effectively
monitor its employees, agents and
customers’ use of and access to the
Exchange for compliance with the terms
of the Sponsorship Provisions.
(8) The Sponsored Customer agrees
that it would pay when due all amounts,
6 See proposed ISE Rule 706, Supplementary
Material .01(b)(2)(iv).
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17:52 Apr 12, 2007
Jkt 211001
if any, payable to the Sponsoring
Member, ISE or any other third parties
that arise from the Sponsored
Customer’s access to and use of the
Exchange. Such amounts would
include, but would not be limited to,
applicable exchange and regulatory fees.
Third, the Sponsoring Member would
have to provide ISE with an express
acknowledgement of the Sponsoring
Member’s responsibility for the orders,
executions and actions of its Sponsored
Customer.
As a further condition to access to the
Exchange, each Member would be
required to maintain an up-to-date list
of persons who could obtain access to
the Exchange on behalf of the
Sponsoring Member or the Sponsoring
Member’s Sponsored Customers, i.e.,
Authorized Traders, and provide the list
to ISE upon request. In addition, each
Member would have to have reasonable
procedures to ensure that all of its
Authorized Traders maintain the
physical security of ISE and otherwise
comply with ISE Rules. If ISE
determines that an Authorized Trader
has caused a Member to violate ISE
Rules, ISE could direct the Member to
suspend or withdraw the person’s status
as an Authorized Trader.
The Sponsoring Member/Sponsored
Customer relationship would allow a
Member to grant access to ISE to their
customers while confirming that those
customers who do have access to ISE
have appropriate procedures in place to
comply with ISE rules. Furthermore, the
identity of all individuals with access
(i.e., Authorized Traders) would have to
be disclosed to the Exchange, giving the
Exchange better information in the
event that the Exchange determines to
take action because its systems have
been used inappropriately.
2. Statutory Basis
ISE believes that the proposed rule
change is consistent with the provisions
of Section 6 of the Act,7 in general, and
with Section 6(b)(5) of the Act,8 in
particular, in that the proposal is
designed to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
ISE does not believe that the proposed
rule change will result in any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
7 15
8 15
PO 00000
U.S.C. 78f.
U.S.C. 78f(b)(5).
Frm 00083
Fmt 4703
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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 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 9 and Rule 19b–
4(f)(6) thereunder.10
A proposed rule change filed under
19b–4(f)(6) normally may not become
operative prior to 30 days after the date
of filing.11 However, Rule 19b–
4(f)(6)(iii) 12 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 the public interest
because such waiver would permit ISE
Members to immediately provide its
Sponsored Customers access to ISE’s
markets.13 For this reason, the
Commission designates the proposed
rule change to be operative upon filing
with the Commission.14
At any time within 60 days of the
filing of such proposed rule change the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
11 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. The Commission has decided to waive
the five-day pre-filing notice requirement.
12 Id.
13 The Commission notes that proposed ISE Rule
706, Supplementary Material .01 is substantially
similar to NYSE Arca, Inc. Rule 7.29.
14 For the 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).
10 17
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Federal Register / Vol. 72, No. 71 / Friday, April 13, 2007 / Notices
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
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.15
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–6961 Filed 4–12–07; 8:45 am]
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:
BILLING CODE 8010–01–P
Electronic Comments
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto
Relating to Representation of Parties
in Arbitration and Mediation
pwalker on PROD1PC71 with NOTICES
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–ISE–2007–19 on the subject
line.
17:52 Apr 12, 2007
Jkt 211001
(‘‘Code’’) to address representation of
parties in arbitration and mediation.5
Below is the text of the proposed rule
change. Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
Customer Code
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55604; File No. SR–NASD–
2006–109]
April 9, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
Paper Comments
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that the National
• Send paper comments in triplicate
Association of Securities Dealers, Inc.
to Nancy M. Morris, Secretary,
(‘‘NASD’’), through its wholly owned
Securities and Exchange Commission,
subsidiary, NASD Dispute Resolution,
100 F Street, NE, Washington, DC
Inc. (‘‘NASD Dispute Resolution’’) filed
20549–1090.
with the Securities and Exchange
All submissions should refer to File
Commission (‘‘SEC’’ or ‘‘Commission’’)
Number SR–ISE–2007–19. This file
on September 14, 2006, and amended
number should be included on the
on November 9, 2006 (Amendment No.
subject line if e-mail is used. To help the 1) 3 and February 23, 2007 (Amendment
Commission process and review your
No. 2),4 the proposed rule change as
comments more efficiently, please use
described in Items I, II, and III below,
only one method. The Commission will which Items have been prepared by
post all comments on the Commission’s NASD Dispute Resolution. The
Commission is publishing this notice to
Internet Web site (https://www.sec.gov/
solicit comments on the proposed rule
rules/sro.shtml). Copies of the
change, as amended, from interested
submission, all subsequent
persons.
amendments, all written statements
with respect to the proposed rule
I. Self-Regulatory Organization’s
change that are filed with the
Statement of the Terms of Substance of
Commission, and all written
the Proposed Rule Change
communications relating to the
NASD Dispute Resolution is
proposed rule change between the
proposing to amend the Code of
Commission and any person, other than
Arbitration Procedure for Customer
those that may be withheld from the
Disputes (‘‘Customer Code’’), the Code
public in accordance with the
of Arbitration Procedure for Industry
provisions of 5 U.S.C. 552, will be
Disputes (‘‘Industry Code’’), and the
available for inspection and copying in
NASD Code of Arbitration Procedure
the Commission’s Public Reference
Room. Copies of the filing also will be
15 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
available for inspection and copying at
2 17 CFR 240.19b–4.
the principal office of ISE. All
3 Amendment No. 1 makes clarifying changes to
comments received will be posted
the rule text emphasizing that attorneys may
without change; the Commission does
represent parties in NASD’s forum, unless state law
not edit personal identifying
prohibits such representation. Amendment No. 1
also makes several clarifying and technical changes
information from submissions. You
to the proposed rule filing.
should submit only information that
4 Amendment No. 2 makes clarifying changes to
you wish to make available publicly. All the rule text concerning restrictions on non-attorney
submissions should refer to File
representation. Amendment No. 2 also includes
Number SR–ISE–2007–19 and should be minor organizational changes to a paragraph and
footnotes describing the American Bar Association
submitted on or before May 4, 2007.
Model Rule of Professional Conduct 5.5.
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12208. Representation of Parties
(a) Representation by a Party
Parties may represent themselves in
an arbitration held in a United States
hearing location. A member of a
partnership may represent the
partnership; and a bona fide officer of
a corporation, trust, or association may
represent the corporation, trust, or
association.
(b) Representation by an Attorney
At any stage of an arbitration
proceeding held in a United States
hearing location, [All] all parties shall
have the right to be represented by
[counsel during any stage of an
arbitration] an attorney at law in good
standing and admitted to practice
before the Supreme Court of the United
States or the highest court of any state
of the United States, the District of
Columbia, or any commonwealth,
territory, or possession of the United
States, unless state law prohibits such
representation.
(c) Representation by Others
Parties may be represented in an
arbitration by a person who is not an
attorney, unless:
• state law prohibits such
representation, or
• the person is currently suspended
or barred from the securities industry in
any capacity, or
• the person is currently suspended
from the practice of law or disbarred.
5 The proposed rule change contemplates changes
to Rules 12208 and 13208 of the Customer and
Industry Codes, which restate old Rule 10316. See
Securities Exchange Act Release No. 55158 (Jan. 24,
2007); 72 FR 4574 (Jan. 31, 2007) (File Nos. SR–
NASD–2003–158 and SR–NASD–2004–011) (Order
Approving Proposed Rule Change and Amendments
1, 2, 3, and 4 to Amend NASD Arbitration Rules
for Customer Disputes and Notice of Filing and
Order Granting Accelerated Approval of
Amendments 5, 6, and 7 Thereto; Order Approving
Proposed Rule Change and Amendments 1, 2, 3,
and 4 to Amend NASD Arbitration Rules for
Industry Disputes and Notice of Filing and Order
Granting Accelerated Approval of Amendments 5,
6, and 7 Thereto). The changes to Proposed Rule
10407 reflect changes to the new NASD Code of
Mediation Procedure. See Securities Exchange Act
Rel. No. 52705 (Oct. 31, 2005); 70 FR 67525 (Nov.
7, 2005) (SR–NASD–2004–013). The new NASD
Code of Mediation Procedure is currently included
in the Code, but will be removed and renumbered
as a separate Code now that the Customer and
Industry Codes have been approved.
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]]>Agencies
[Federal Register Volume 72, Number 71 (Friday, April 13, 2007)]
[Notices]
[Pages 18701-18703]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-6961]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55586; File No. SR-ISE-2007-19]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Access to the Exchange by Sponsored Customers
April 5, 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 March 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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
ISE proposes to amend ISE Rule 706 to permit Sponsored Customers of
a Member to access the Exchange. The text of the proposed rule change
is available at ISE, the Commission's Public Reference Room, and
www.iseoptions.com.
II. 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. ISE 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
This proposed rule change seeks to permit Sponsored Customers of
Members to access the Exchange provided that a Sponsored Customer
Agreement has been entered into with the Exchange by the Sponsored
Customer, and provided certain other conditions are satisfied. The
proposed revisions to Rule 706 outlines the requirements that
Sponsoring Members and Sponsored Customers would be required to meet
prior to engaging in a Sponsoring Member/Sponsored Customer
relationship.\5\
---------------------------------------------------------------------------
\5\ ISE notes that this proposed rule change will enable
Sponsored Customers of Members to access both its Options Exchange,
as per Rule 706, and its Stock Exchange, as per Rule 2100, which
incorporates Rule 706 by cross-reference.
---------------------------------------------------------------------------
A ``Sponsored Customer'' is a non-Member of the Exchange, such as
an institutional investor, that trades under a Sponsoring Member's
execution and clearing identity pursuant to a sponsorship arrangement
between such non-Member and a Member. The Sponsoring Member must have
documentation acknowledging it has full and complete responsibility for
all trading activity conducted by its Sponsored Customer. A Sponsoring
Member that provides access to a Sponsored Customer also has a
continuing obligation to comply with all ISE rules and procedures and
the federal securities laws and regulations. A Sponsoring Member must
also continue to satisfy any agency obligations that may exist between
itself and its Sponsored Customer.
A Sponsored Customer's access to the Exchange is conditioned on the
following requirements being met: Sponsored Customers would be required
to enter into a sponsorship arrangement with a ``Sponsoring Member,''
which is defined as an ISE Member that has been designated by a
Sponsored Customer to execute, clear and settle transactions on ISE.
The sponsorship arrangement consists of three separate components.
First, the Sponsored Customer would have to enter into and maintain
a customer agreement with its Sponsoring Member, establishing a proper
relationship and account through which the Sponsored Customer would be
permitted to trade on ISE.
Second, the Sponsored Customer and its Sponsoring Member would have
to enter into a written agreement that
[[Page 18702]]
incorporates the following Sponsorship Provisions:
(1) The Sponsoring Member acknowledges and agrees that: (i) All
orders entered by its Sponsored Customer and any person acting on
behalf of or in the name of such Sponsored Customer and any executions
occurring as a result of such orders are binding in all respects on the
Sponsoring Member; and (ii) the Sponsoring Member is responsible for
any and all actions taken by such Sponsored Customer and any person
acting on behalf of or in the name of such Sponsored Customer.
(2) The Sponsored Customer agrees that it would comply with the ISE
Certificate of Formation, Constitution, Rules and procedures with
regard to its activity on the Exchange as if the Sponsored Customer
were an ISE Member.
(3) The Sponsored Customer agrees that it would maintain, keep
current and provide to the Sponsoring Member a list of its Authorized
Traders \6\ who would be permitted to obtain access to the Exchange on
behalf of the Sponsored Customer(s).
---------------------------------------------------------------------------
\6\ See proposed ISE Rule 706, Supplementary Material
.01(b)(2)(iv).
---------------------------------------------------------------------------
(4) The Sponsored Customer agrees that it would familiarize its
Authorized Traders with all of the Sponsored Customer's obligations
under ISE Rules and would assure that they receive appropriate training
prior to any use of or access to the Exchange.
(5) The Sponsored Customer agrees that it would not permit anyone
other than Authorized Traders to use or obtain access to the Exchange.
(6) The Sponsored Customer agrees that it would take reasonable
security precautions to prevent unauthorized use or access to the
Exchange, including unauthorized entry of information into the System,
or the information and data made available therein. The Sponsored
Customer understands and agrees that it is responsible for any and all
orders, trades and other messages and instructions entered, transmitted
or received under identifiers, passwords and security codes of
Authorized Traders, and for the trading and other consequences thereof.
(7) The Sponsored Customer acknowledges its responsibility for
establishing adequate procedures and controls that permit it to
effectively monitor its employees, agents and customers' use of and
access to the Exchange for compliance with the terms of the Sponsorship
Provisions.
(8) The Sponsored Customer agrees that it would pay when due all
amounts, if any, payable to the Sponsoring Member, ISE or any other
third parties that arise from the Sponsored Customer's access to and
use of the Exchange. Such amounts would include, but would not be
limited to, applicable exchange and regulatory fees.
Third, the Sponsoring Member would have to provide ISE with an
express acknowledgement of the Sponsoring Member's responsibility for
the orders, executions and actions of its Sponsored Customer.
As a further condition to access to the Exchange, each Member would
be required to maintain an up-to-date list of persons who could obtain
access to the Exchange on behalf of the Sponsoring Member or the
Sponsoring Member's Sponsored Customers, i.e., Authorized Traders, and
provide the list to ISE upon request. In addition, each Member would
have to have reasonable procedures to ensure that all of its Authorized
Traders maintain the physical security of ISE and otherwise comply with
ISE Rules. If ISE determines that an Authorized Trader has caused a
Member to violate ISE Rules, ISE could direct the Member to suspend or
withdraw the person's status as an Authorized Trader.
The Sponsoring Member/Sponsored Customer relationship would allow a
Member to grant access to ISE to their customers while confirming that
those customers who do have access to ISE have appropriate procedures
in place to comply with ISE rules. Furthermore, the identity of all
individuals with access (i.e., Authorized Traders) would have to be
disclosed to the Exchange, giving the Exchange better information in
the event that the Exchange determines to take action because its
systems have been used inappropriately.
2. Statutory Basis
ISE believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\7\ in general, and with Section
6(b)(5) of the Act,\8\ in particular, in that the proposal is designed
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
ISE does not believe that the proposed rule change will result in
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 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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under 19b-4(f)(6) normally may not
become operative prior to 30 days after the date of filing.\11\
However, Rule 19b-4(f)(6)(iii) \12\ 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 the public interest because such waiver
would permit ISE Members to immediately provide its Sponsored Customers
access to ISE's markets.\13\ For this reason, the Commission designates
the proposed rule change to be operative upon filing with the
Commission.\14\
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\11\ 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. The Commission has decided to waive the five-day
pre-filing notice requirement.
\12\ Id.
\13\ The Commission notes that proposed ISE Rule 706,
Supplementary Material .01 is substantially similar to NYSE Arca,
Inc. Rule 7.29.
\14\ For the 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 such proposed rule
change the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is
[[Page 18703]]
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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-ISE-2007-19 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-2007-19. 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 Commission's Internet Web site (https://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. Copies of the filing
also will 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 Number SR-ISE-
2007-19 and should be submitted on or before May 4, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-6961 Filed 4-12-07; 8:45 am]
BILLING CODE 8010-01-P
