Self-Regulatory Organizations; International Securities Exchange, LLC; Order Granting Approval of Proposed Rule Change to Expand and Make Permanent the $1 Strike Program, 4654-4655 [E8-1254]

Download as PDF 4654 Federal Register / Vol. 73, No. 17 / Friday, January 25, 2008 / Notices protection of investors and the public interest. Therefore, the foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act 10 and subparagraph (f)(6) of Rule 19b–4 thereunder.11 The Exchange has asked the Commission to waive the operative delay to permit the IWM Option Pilot Program extension to become effective prior to the 30th day after filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow the benefits of the IWM Option Pilot Program to continue without interruption.12 Therefore, the Commission designates the proposal operative upon filing. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the 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 rulecomments@sec.gov. Please include File No. SR–BSE–2008–03 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–BSE–2008–03. 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 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–BSE–2008–03 and should be submitted on or before February 15, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Nancy M. Morris, Secretary. [FR Doc. E8–1266 Filed 1–24–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57169; File No. SR–ISE– 2007–110] Self-Regulatory Organizations; International Securities Exchange, LLC; Order Granting Approval of Proposed Rule Change to Expand and Make Permanent the $1 Strike Program January 18, 2008. jlentini on PROD1PC65 with NOTICES 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to provide 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 of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has fulfilled this requirement. 12 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). VerDate Aug<31>2005 16:59 Jan 24, 2008 Jkt 214001 I. Introduction On November 14, 2007, the International Securities Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 13 17 1 15 PO 00000 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). Frm 00139 Fmt 4703 Sfmt 4703 thereunder,2 a proposal to amend its rules relating to the $1 Strike Pilot Program (‘‘Program’’). The proposed rule change was published for comment in the Federal Register on December 19, 2007.3 The Commission received no comments on the proposal. This order approves the proposed rule change. II. Description of the Proposal The purpose of the proposed rule change is to expand the Program and to request permanent approval of the Program. The Program currently allows ISE to select a total of 5 individual stocks on which an option series may be listed at $1 strike price intervals. To be eligible for selection into the Program, the underlying stock must close below $20 in its primary market on the previous trading day. If selected for the Program, the Exchange may list strike prices at $1 intervals from $3 to $20, but no $1 strike price may be listed that is greater than $5 from the underlying stock’s closing price in its primary market on the previous day. The Exchange also may list $1 strikes on any other option class designated by other securities exchanges that employ a similar Program under their respective rules. The Exchange may not list longterm option series (LEAPS) at $1 strike price intervals for any class selected for the Program. The Exchange also is restricted from listing any series that would result in strike prices being $0.50 apart. The Exchange proposes to expand the Program to allow ISE to select a total of 10 individual stocks on which an option series may be listed at $1 strike price intervals. Additionally, ISE proposes to raise the upper limit of the price range on which it may list $1 strikes from $20 to $50. The existing restrictions on listing $1 strikes will continue, e.g., no $1 strike price may be listed that is greater than $5 from the underlying stock’s closing price in its primary market on the previous day, and ISE is restricted from listing any series that would result in strike prices being $0.50 apart. ISE concluded from its analysis of the Program that the impact on the automated systems of ISE, OPRA, and market data vendors has been minimal.4 ISE has represented that it has sufficient capacity to handle an expansion of the Program, as proposed. In its filing with the Commission, ISE stated its belief that $1 strike price 2 17 CFR 240.19b–4. Securities Exchange Act Release No. 56956 (December 13, 2007), 72 FR 71986 (‘‘Notice’’). 4 See Notice, id., at 71987 (providing ISE’s Program analysis on systems capacity). 3 See E:\FR\FM\25JAN1.SGM 25JAN1 Federal Register / Vol. 73, No. 17 / Friday, January 25, 2008 / Notices jlentini on PROD1PC65 with NOTICES intervals provide investors with greater trading opportunities and flexibility by allowing investors to establish equity options positions that are better tailored to meet their investment objectives and that its member firms representing customers have repeatedly requested that ISE seek to expand the Program, both in terms of the number of classes on which an option series may be listed at $1 strike price intervals and the range in which $1 strikes may be listed. The Exchange further stated that it has not detected any material proliferation of illiquid options series resulting from the narrower strike price intervals. For the foregoing reasons, ISE requested that the Program be approved on a permanent basis. III. Commission’s Findings and Order Granting Approval of the Proposed Rule Change After careful review and based on the Exchange’s representations, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.5 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act 6 in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, 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. Specifically, the Commission believes that the proposed expansion to permit the Exchange to select a total of 10 individual underlying stocks trading at less than $50 on which option series may be listed at $1 strike price intervals, and the request to make the Program permanent, should provide investors with added flexibility in the trading of equity options and further the public interest by allowing investors to establish equity options positions that are better tailored to meet their investment objectives. The Commission also believes that the proposal strikes a reasonable balance between the Exchange’s desire to accommodate market participants by offering a wider array of investment opportunities and the need to avoid unnecessary 5 In approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 6 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:59 Jan 24, 2008 Jkt 214001 proliferation of options series and the corresponding increase in quotes. The Commission notes that the existing restrictions on listing $1 strike price intervals will continue to apply, e.g., no $1 strike price may be listed (a) that is greater than $5 from the underlying stock’s closing price in its primary market on the previous day, or (b) that would result in strike prices being $0.50 apart. The Commission expects the Exchange to continue to monitor for options with little or no open interest and trading activity and to act promptly to delist such options. In addition, the Commission expects that ISE will continue to monitor the trading volume associated with the additional options series listed as a result of this proposal and the effect of these additional series on market fragmentation and on the capacity of the Exchange’s, OPRA’s, and vendors’ automated systems. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,7 that the proposed rule change (SR–ISE–2007– 110) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Nancy M. Morris, Secretary. [FR Doc. E8–1254 Filed 1–24–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Release No. 34–57174; File No. SR– NYSEArca–2008–07] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Pilot Program for Expanded Position Limits for Options on the iShares Russell 2000 Index Fund January 18, 2008. 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 January 14, 2008, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) 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. 7 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 8 17 PO 00000 Frm 00140 Fmt 4703 4655 The Exchange has designated this proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to amend Rule 6.8 in order to extend the pilot program (the ‘‘IWM Pilot Program’’) that allows for increased position and exercise limits on options overlying the iShares Russell 2000 Index Fund (‘‘IWM’’) traded on the Exchange. The text of the proposed rule change is available on the Exchange’s Web site (http://www.nyse.com), at the Exchange’s principal office, 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 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 IWM Pilot Program provides for increased position and exercise limits for IWM options traded on NYSE Arca.5 Specifically, the IWM Pilot Program increases the position and exercise limits for IWM options from 250,000 contracts to 500,000 contracts.6 3 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). 5 The proposal that established the IWM Pilot Program was designated by the Commission to be effective upon filing. See Securities Exchange Act Release No. 55185 (January 29, 2007), 72 FR 5481 (February 6, 2007) (SR–NYSEArca–2007–10). The IWM Pilot Program was subsequently extended and is due to expire on January 18, 2008. See Securities Exchange Act Release No. 56021 (July 6, 2007), 72 FR 38115 (July 12, 2007) (SR–NYSEArca–2007–58). 6 Pursuant to Commentary .03 of NYSE Arca Rule 6.9, the exercise limit established under Rule 6.9 for 4 17 Continued Sfmt 4703 E:\FR\FM\25JAN1.SGM 25JAN1

Agencies

[Federal Register Volume 73, Number 17 (Friday, January 25, 2008)]
[Notices]
[Pages 4654-4655]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-1254]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57169; File No. SR-ISE-2007-110]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Order Granting Approval of Proposed Rule Change to Expand and Make 
Permanent the $1 Strike Program

 January 18, 2008.

I. Introduction

    On November 14, 2007, the International Securities Exchange, LLC 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposal to amend its rules relating to the $1 Strike 
Pilot Program (``Program''). The proposed rule change was published for 
comment in the Federal Register on December 19, 2007.\3\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 56956 (December 13, 
2007), 72 FR 71986 (``Notice'').
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II. Description of the Proposal

    The purpose of the proposed rule change is to expand the Program 
and to request permanent approval of the Program. The Program currently 
allows ISE to select a total of 5 individual stocks on which an option 
series may be listed at $1 strike price intervals. To be eligible for 
selection into the Program, the underlying stock must close below $20 
in its primary market on the previous trading day. If selected for the 
Program, the Exchange may list strike prices at $1 intervals from $3 to 
$20, but no $1 strike price may be listed that is greater than $5 from 
the underlying stock's closing price in its primary market on the 
previous day. The Exchange also may list $1 strikes on any other option 
class designated by other securities exchanges that employ a similar 
Program under their respective rules. The Exchange may not list long-
term option series (LEAPS) at $1 strike price intervals for any class 
selected for the Program. The Exchange also is restricted from listing 
any series that would result in strike prices being $0.50 apart.
    The Exchange proposes to expand the Program to allow ISE to select 
a total of 10 individual stocks on which an option series may be listed 
at $1 strike price intervals. Additionally, ISE proposes to raise the 
upper limit of the price range on which it may list $1 strikes from $20 
to $50. The existing restrictions on listing $1 strikes will continue, 
e.g., no $1 strike price may be listed that is greater than $5 from the 
underlying stock's closing price in its primary market on the previous 
day, and ISE is restricted from listing any series that would result in 
strike prices being $0.50 apart.
    ISE concluded from its analysis of the Program that the impact on 
the automated systems of ISE, OPRA, and market data vendors has been 
minimal.\4\ ISE has represented that it has sufficient capacity to 
handle an expansion of the Program, as proposed.
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    \4\ See Notice, id., at 71987 (providing ISE's Program analysis 
on systems capacity).
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    In its filing with the Commission, ISE stated its belief that $1 
strike price

[[Page 4655]]

intervals provide investors with greater trading opportunities and 
flexibility by allowing investors to establish equity options positions 
that are better tailored to meet their investment objectives and that 
its member firms representing customers have repeatedly requested that 
ISE seek to expand the Program, both in terms of the number of classes 
on which an option series may be listed at $1 strike price intervals 
and the range in which $1 strikes may be listed. The Exchange further 
stated that it has not detected any material proliferation of illiquid 
options series resulting from the narrower strike price intervals. For 
the foregoing reasons, ISE requested that the Program be approved on a 
permanent basis.

III. Commission's Findings and Order Granting Approval of the Proposed 
Rule Change

    After careful review and based on the Exchange's representations, 
the Commission finds that the proposed rule change is consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\5\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act \6\ in that it is designed to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, 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.
---------------------------------------------------------------------------

    \5\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Commission believes that the proposed expansion 
to permit the Exchange to select a total of 10 individual underlying 
stocks trading at less than $50 on which option series may be listed at 
$1 strike price intervals, and the request to make the Program 
permanent, should provide investors with added flexibility in the 
trading of equity options and further the public interest by allowing 
investors to establish equity options positions that are better 
tailored to meet their investment objectives. The Commission also 
believes that the proposal strikes a reasonable balance between the 
Exchange's desire to accommodate market participants by offering a 
wider array of investment opportunities and the need to avoid 
unnecessary proliferation of options series and the corresponding 
increase in quotes. The Commission notes that the existing restrictions 
on listing $1 strike price intervals will continue to apply, e.g., no 
$1 strike price may be listed (a) that is greater than $5 from the 
underlying stock's closing price in its primary market on the previous 
day, or (b) that would result in strike prices being $0.50 apart.
    The Commission expects the Exchange to continue to monitor for 
options with little or no open interest and trading activity and to act 
promptly to delist such options. In addition, the Commission expects 
that ISE will continue to monitor the trading volume associated with 
the additional options series listed as a result of this proposal and 
the effect of these additional series on market fragmentation and on 
the capacity of the Exchange's, OPRA's, and vendors' automated systems.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-ISE-2007-110) be, and it 
hereby is, approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Nancy M. Morris,
Secretary.
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    \8\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E8-1254 Filed 1-24-08; 8:45 am]
BILLING CODE 8011-01-P