Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Position and Exercise Limits for Options on the DIAMONDS Trust, 25070-25072 [E8-9907]

Download as PDF 25070 Federal Register / Vol. 73, No. 88 / Tuesday, May 6, 2008 / Notices Act 16 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 17 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The CHX 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 it will allow the Exchange to implement the changes to the ROC without delay.18 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the proposed 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. 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, 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 CHX. 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–CHX– 2008–05 and should be submitted on or before May 27, 2008. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–9866 Filed 5–5–08; 8:45 am] 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 Number SR–CHX–2008–05 on the subject line. SECURITIES AND EXCHANGE COMMISSION rwilkins on PROD1PC63 with NOTICES 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–CHX–2008–05. 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 16 17 CFR 240.19b–4(f)(6). CFR 240.19b–4(f)(6)(iii). 18 For purposes only of waiving the 30-day operative delay, the Commission has considered the impact of the proposed rule on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 17 17 VerDate Aug<31>2005 17:11 May 05, 2008 Jkt 214001 BILLING CODE 8010–01–P [Release No. 34–57736; File No. SR–ISE– 2008–35] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Position and Exercise Limits for Options on the DIAMONDS Trust April 29, 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 April 17, 2008, the International Securities Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’) 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. 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 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 1 15 PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 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 proposes to amend its rules to increase the position and exercise limits applicable to options on the DIAMONDS Trust, Series 1 (‘‘DIA’’). The text of the proposed rule change is available on the Exchange’s Web site (http://www.ise.com), at the offices 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 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 amend its rules pertaining to position and exercise limits for options on DIA. The Exchange proposes to increase position and exercise limits for options on DIA to 300,000 contracts on the same side of the market. The Commission previously approved a similar proposal of the Chicago Board Options Exchange (‘‘CBOE’’).5 5 See Securities Exchange Act Release No. 47346 (February 11, 2003), 68 FR 8316 (February 20, 2003) (SR–CBOE–2002–26) (approving an increase in the position limits and exercise limits to 300,000 for DIA options). The Commission stated that ‘‘given the surveillance capabilities of the [CBOE] and the depth and liquidity in both the DIA options and the underlying cash market in DIAs, the Commission believes it is permissible to significantly raise position and exercise limits for DIA options without risk of disruption to the options or underlying cash markets.’’ The Commission also stated that ‘‘financial and reporting requirements . . . should allow [CBOE] to detect and deter trading abuses arising from the increased position and exercise limits, and will also allow [CBOE] to monitor large positions in order to identify instances of potential risk and to assess additional margin and/or capital charges, if deemed necessary.’’ E:\FR\FM\06MYN1.SGM 06MYN1 Federal Register / Vol. 73, No. 88 / Tuesday, May 6, 2008 / Notices The Exchange also recently made permanent its increased position and exercise limits for certain equity options on ISE which were in effect on a pilot basis.6 The Exchange stipulated, as part of its proposal for such permanent approval, that ‘‘its surveillance procedures and options reporting procedures, in conjunction with the financial requirements and risk management review procedures generally in place at the clearing firms and the Options Clearing Corporation, will serve to adequately address any concerns the Commission may have with respect to account(s) engaging in any manipulative schemes or assuming too high a level of risk exposure.’’ 7 These representations also apply to the current proposal to increase the position and exercise limits for options on DIA. The Exchange now seeks to increase the position and exercise limits for options on DIA on ISE to the level that such limits are in effect on CBOE (300,000 contracts on the same side of the market). The Exchange asserts that the justifications behind the Commission’s approval of CBOE’s proposal should support the same increased position and exercise limits on options on DIA on ISE. Specifically, the Exchange believes that the ‘‘structure of the DIA options and the considerable liquidity of both the underlying cash and options market for DIA options lessen the opportunity for manipulation of this product and disruption in the underlying market that a lower position limit may protect against.’’ 8 The Exchange believes that the reporting requirements imposed under the Exchange’s rules will help protect against potential manipulation.9 Additionally, the Exchange believes that such an increase in position and exercise limits on options on DIA on ISE is also required for competitive purposes as well as for purposes of consistency and uniformity among the competing options exchanges. This, taken in conjunction with the permanent establishment of other increased position and exercise limits for certain equity options on ISE, supports the Exchange’s proposal related to such increased position and exercise limits applicable to DIA. 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act 10 in general, and Section 6(b)(5) of the Act 11 in particular, in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, 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 Exchange believes that the structure of the DIA options and the considerable liquidity of the market for DIA options diminishes the opportunity for manipulation of this product and disruption in the underlying market that a lower position limit may protect against. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes that 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 The Exchange has designated the proposed rule change as one that: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) does not become operative for 30 days from the date of filing, or such shorter time as the Commission may designate if consistent with the 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 12 and subparagraph (f)(6) of Rule 19b–4 thereunder.13 rwilkins on PROD1PC63 with NOTICES 10 15 6 See Securities Exchange Act Release No. 57416 (March 3, 2008), 73 FR 12489 (March 7, 2008) (SR– ISE–2008–20). 7 Id. 8 See Securities Exchange Act Release No. 47346, supra note 5. 9 See ISE Rule 415. VerDate Aug<31>2005 17:11 May 05, 2008 Jkt 214001 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). 12 15 U.S.C. 78s(b)(3)(A). 13 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 PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 25071 The Exchange notes that the proposed rule change is based on a rule change previously approved by the Commission 14 and does not raise any novel issues. Additionally, the proposed rule change is necessary to eliminate any confusion among members of multiple exchanges regarding position and exercise limits applicable to options on DIA and for purposes of maintaining a fair and orderly market. The Exchange has asked the Commission to waive the operative delay to permit the proposed rule change to become operative prior to the 30th day after filing. The Exchange states that waiving the operative delay will allow the Exchange to immediately increase the position and exercise limits applicable to options on DIA on ISE, for purposes of conformity and uniformity, so as to align such limits with those of other options exchanges. The Commission believes that waiving the 30-day operative delay of the Exchange’s proposal is consistent with the protection of investors and the public interest.15 Therefore, the Commission designates the proposal to be 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–ISE–2008–35 on the subject line. 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. 14 See Securities Exchange Act Release No. 47346, supra note 5. 15 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). E:\FR\FM\06MYN1.SGM 06MYN1 25072 Federal Register / Vol. 73, No. 88 / Tuesday, May 6, 2008 / Notices Paper Comments • 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. 34–57744; File No. SR–ODD– 2008–01] Self-Regulatory Organizations; The Options Clearing Corporation; Order Granting Approval of Accelerated All submissions should refer to File Delivery of Supplement to the Options Number SR–ISE–2008–35. This file Disclosure Document Reflecting number should be included on the subject line if e-mail is used. To help the Changes to Disclosure Regarding Certain Binary Options and Delayed Commission process and review your Start Option Series; and Amendment comments more efficiently, please use to the Options Disclosure Document only one method. The Commission will Front Cover Page To Update the post all comments on the Commission’s Markets in Which Options Are Traded Internet Web site (http://www.sec.gov/ April 30, 2008. rules/sro.shtml). Copies of the On December 21, 2007, The Options submission, all subsequent Clearing Corporation (‘‘OCC’’) submitted amendments, all written statements to the Securities and Exchange with respect to the proposed rule Commission (‘‘Commission’’), pursuant change that are filed with the to Rule 9b–1 under the Securities Commission, and all written Exchange Act of 1934 (‘‘Act’’),1 five communications relating to the preliminary copies of a supplement to proposed rule change between the Commission and any person, other than its options disclosure document (‘‘ODD’’) reflecting changes to those that may be withheld from the disclosure regarding certain binary public in accordance with the options and delayed start option series provisions of 5 U.S.C. 552, will be (‘‘DSOs’’).2 The ODD would also be available for inspection and copying in amended to update its front inside cover the Commission’s Public Reference page so that it contains a current list of Room, 100 F Street, NE., Washington, the U.S. exchanges that trade options DC 20549, on official business days issued by the OCC. On April 25, 2008, between the hours of 10 a.m. and 3 p.m. the OCC submitted to the Commission Copies of such filing also will be five definitive copies of the available for inspection and copying at supplement.3 the principal office of the Exchange. All The ODD currently contains general comments received will be posted disclosures on the characteristics and risks of trading standardized options. without change; the Commission does Recently, the American Stock Exchange, not edit personal identifying LLC amended its rules to permit the information from submissions. You listing and trading of binary options on should submit only information that you wish to make available publicly. All individual stocks and exchange-traded funds, also known as fixed return submissions should refer to File 4 Number SR–ISE–2008–35 and should be options. The Chicago Board Options Exchange, Incorporated amended its submitted on or before May 27, 2008. rules to permit the listing and trading of For the Commission, by the Division of certain DSOs.5 The NASDAQ Stock Trading and Markets, pursuant to delegated Market LLC (‘‘Nasdaq’’) began trading authority.16 options March 31, 2008.6 The proposed Florence E. Harmon, Deputy Secretary. [FR Doc. E8–9907 Filed 5–5–08; 8:45 am] rwilkins on PROD1PC63 with NOTICES BILLING CODE 8010–01–P 16 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 17:11 May 05, 2008 Jkt 214001 1 17 CFR 240.9b–1. letter from Jean M. Cawley, Senior Vice President and Deputy General Counsel, OCC, to Sharon Lawson, Senior Special Counsel, Division of Trading and Markets (‘‘Division’’), Commission, dated December 20, 2007. 3 See letter from Jean M. Cawley, Senior Vice President and Deputy General Counsel, OCC, to Sharon Lawson, Senior Special Counsel, Division, Commission, dated April 25, 2008. 4 See Securities Exchange Act Release No. 56251 (August 14, 2007), 72 FR 46523 (August 20, 2007) (SR–Amex–2004–27). 5 See Securities Exchange Act Release No. 56855 (November 28, 2007), 72 FR 68610 (December 5, 2007) (SR–CBOE–2006–90). CBOE Rule 24.9(d)(1) permits it to trade DSOs on any security index approved for options trading on the CBOE. 6 See Securities Exchange Act Release No. 57478 (March 12, 2008), 73 FR 14521 (March 18, 2008) 2 See PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 supplement amends the ODD to accommodate these changes by providing disclosure regarding certain binary options and DSOs, and to update the front cover page of the ODD. Specifically, the proposed supplement to the ODD adds new disclosure regarding the characteristics of binary options on individual equity securities, which includes fund shares, as well as the special risks of these binary options other than credit default options.7 The proposed supplement to the ODD also adds new disclosure regarding the characteristics of DSOs and the risks associated with their purchase and sale. Finally, the ODD would be amended to add Nasdaq, which currently trades options issued by OCC, and its corporate address to the front cover page of the ODD. This change will ensure that the ODD accurately identifies the markets on which options currently trade. The proposed supplement is intended to be read in conjunction with the more general ODD, which, as described above, discusses the characteristics and risks of options generally.8 Rule 9b–1(b)(2)(i) under the Act 9 provides that an options market must file five copies of an amendment or supplement to the ODD with the Commission at least 30 days prior to the date definitive copies are furnished to customers, unless the Commission determines otherwise, having due regard to the adequacy of information disclosed and the public interest and protection of investors.10 In addition, five copies of the definitive ODD, as amended or supplemented, must be filed with the Commission not later than the date the amendment or supplement, or the amended options disclosure document, is furnished to customers. (order approving File Nos. SR–NASDAQ–2007–004 and SR–NASDAQ–2007–080). 7 As noted above, the proposed supplement provides disclosure that addresses binary options on individual stock options and exchange-traded fund shares. The Commission also notes that disclosure on credit default options, which are also binary options, is currently addressed in the ODD through the previously issued June 2007 supplement. See Securities Exchange Act Release No. 55921 (June 18, 2007), 72 FR 34495 (June 22, 2007) (SR–ODD–2007–03). 8 The Commission notes that the options markets must continue to ensure that the ODD is in compliance with the requirements of Rule 9b– 1(b)(2)(i) under the Act, 17 CFR 240.9b–1(b)(2)(i), including when future changes regarding binary options and/or DSOs are made. Any future changes to the rules of the options markets concerning binary options and/or DSOs would need to be submitted to the Commission under Section 19(b) of the Act. 15 U.S.C. 78s(b). 9 17 CFR 240.9b–1(b)(2)(i). 10 This provision permits the Commission to shorten or lengthen the period of time which must elapse before definitive copies may be furnished to customers. E:\FR\FM\06MYN1.SGM 06MYN1

Agencies

[Federal Register Volume 73, Number 88 (Tuesday, May 6, 2008)]
[Notices]
[Pages 25070-25072]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-9907]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57736; File No. SR-ISE-2008-35]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Regarding Position and Exercise Limits for Options on the 
DIAMONDS Trust

April 29, 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 April 17, 2008, the International Securities Exchange, LLC 
(``Exchange'' or ``ISE'') 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. 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    The Exchange proposes to amend its rules to increase the position 
and exercise limits applicable to options on the DIAMONDS Trust, Series 
1 (``DIA''). The text of the proposed rule change is available on the 
Exchange's Web site (http://www.ise.com), at the offices 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 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 amend its rules pertaining to position 
and exercise limits for options on DIA. The Exchange proposes to 
increase position and exercise limits for options on DIA to 300,000 
contracts on the same side of the market. The Commission previously 
approved a similar proposal of the Chicago Board Options Exchange 
(``CBOE'').\5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 47346 (February 11, 
2003), 68 FR 8316 (February 20, 2003) (SR-CBOE-2002-26) (approving 
an increase in the position limits and exercise limits to 300,000 
for DIA options). The Commission stated that ``given the 
surveillance capabilities of the [CBOE] and the depth and liquidity 
in both the DIA options and the underlying cash market in DIAs, the 
Commission believes it is permissible to significantly raise 
position and exercise limits for DIA options without risk of 
disruption to the options or underlying cash markets.'' The 
Commission also stated that ``financial and reporting requirements . 
. . should allow [CBOE] to detect and deter trading abuses arising 
from the increased position and exercise limits, and will also allow 
[CBOE] to monitor large positions in order to identify instances of 
potential risk and to assess additional margin and/or capital 
charges, if deemed necessary.''

---------------------------------------------------------------------------

[[Page 25071]]

    The Exchange also recently made permanent its increased position 
and exercise limits for certain equity options on ISE which were in 
effect on a pilot basis.\6\ The Exchange stipulated, as part of its 
proposal for such permanent approval, that ``its surveillance 
procedures and options reporting procedures, in conjunction with the 
financial requirements and risk management review procedures generally 
in place at the clearing firms and the Options Clearing Corporation, 
will serve to adequately address any concerns the Commission may have 
with respect to account(s) engaging in any manipulative schemes or 
assuming too high a level of risk exposure.'' \7\ These representations 
also apply to the current proposal to increase the position and 
exercise limits for options on DIA. The Exchange now seeks to increase 
the position and exercise limits for options on DIA on ISE to the level 
that such limits are in effect on CBOE (300,000 contracts on the same 
side of the market).
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 57416 (March 3, 
2008), 73 FR 12489 (March 7, 2008) (SR-ISE-2008-20).
    \7\ Id.
---------------------------------------------------------------------------

    The Exchange asserts that the justifications behind the 
Commission's approval of CBOE's proposal should support the same 
increased position and exercise limits on options on DIA on ISE. 
Specifically, the Exchange believes that the ``structure of the DIA 
options and the considerable liquidity of both the underlying cash and 
options market for DIA options lessen the opportunity for manipulation 
of this product and disruption in the underlying market that a lower 
position limit may protect against.'' \8\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 47346, supra note 5.
---------------------------------------------------------------------------

    The Exchange believes that the reporting requirements imposed under 
the Exchange's rules will help protect against potential 
manipulation.\9\ Additionally, the Exchange believes that such an 
increase in position and exercise limits on options on DIA on ISE is 
also required for competitive purposes as well as for purposes of 
consistency and uniformity among the competing options exchanges. This, 
taken in conjunction with the permanent establishment of other 
increased position and exercise limits for certain equity options on 
ISE, supports the Exchange's proposal related to such increased 
position and exercise limits applicable to DIA.
---------------------------------------------------------------------------

    \9\ See ISE Rule 415.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act \10\ in general, and Section 
6(b)(5) of the Act \11\ in particular, in that it is designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts, 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 Exchange believes that the structure of the DIA options and the 
considerable liquidity of the market for DIA options diminishes the 
opportunity for manipulation of this product and disruption in the 
underlying market that a lower position limit may protect against.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange believes that 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

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the 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 \12\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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.
---------------------------------------------------------------------------

    The Exchange notes that the proposed rule change is based on a rule 
change previously approved by the Commission \14\ and does not raise 
any novel issues. Additionally, the proposed rule change is necessary 
to eliminate any confusion among members of multiple exchanges 
regarding position and exercise limits applicable to options on DIA and 
for purposes of maintaining a fair and orderly market.
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release No. 47346, supra note 
5.
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the operative delay 
to permit the proposed rule change to become operative prior to the 
30th day after filing. The Exchange states that waiving the operative 
delay will allow the Exchange to immediately increase the position and 
exercise limits applicable to options on DIA on ISE, for purposes of 
conformity and uniformity, so as to align such limits with those of 
other options exchanges.
    The Commission believes that waiving the 30-day operative delay of 
the Exchange's proposal is consistent with the protection of investors 
and the public interest.\15\ Therefore, the Commission designates the 
proposal to be operative upon filing.
---------------------------------------------------------------------------

    \15\ 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).
---------------------------------------------------------------------------

    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 rule-comments@sec.gov. Please include 
File No. SR-ISE-2008-35 on the subject line.

[[Page 25072]]

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-2008-35. 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 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-2008-35 and should be 
submitted on or before May 27, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-9907 Filed 5-5-08; 8:45 am]
BILLING CODE 8010-01-P