Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by International Securities Exchange, LLC Relating to Changes to Rule 312 in Connection With the Purchase of Equity Interests by International Securities Exchange Holdings, Inc. in Optifreeze, LLC, 38068-38070 [E9-18169]

Download as PDF 38068 Federal Register / Vol. 74, No. 145 / Thursday, July 30, 2009 / Notices The CBOE proposes to amend CBOE Rule 6.53C(c)(ii)(3) to require market participants whose quotes or orders are not eligible to rest in the COB to enter only IOC orders and such other order or quote types as the CBOE may determine on a class-by-class basis. Quote types that are not eligible to rest in or trade against the COB will be cancelled automatically.5 According to the CBOE, Market Makers whose quotes are not eligible to rest in or trade against the COB would be able, at a minimum, to submit IOC orders to trade against the COB.6 Finally, the CBOE proposes to amend CBOE Rule 6.53C(c)(i) to clarify that an order entry firm whose complex orders are not eligible to route to the COB could route its orders to the firm’s booth, as well as to PAR. erowe on DSK5CLS3C1PROD with NOTICES III. Discussion and Commission Findings 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.7 In particular, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,8 which requires, in part, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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. CBOE Rule 6.53C(c)(i) currently allows the Exchange to determine the class of entities that may enter orders to rest in the COB. By requiring market participants who are not eligible to rest orders or quotes in the COB to enter only IOC orders and such other order or quote types as the CBOE determines, and by providing for the automatic cancellation of quote types that are not eligible to rest in or trade against the COB, the proposal could help to prevent the entry of ineligible orders and quote types in the COB. The Commission notes that Market Makers that are not eligible to enter quotes to rest in or trade against the COB would be permitted, at a minimum, to enter IOC orders to trade against orders in the COB. Finally, the Commission believes that the 5 See CBOE Rule 6.53C(c)(ii)(3). Market Makers may enter quotes. 7 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 8 15 U.S.C. 78f(b)(5). 6 Only VerDate Nov<24>2008 15:34 Jul 29, 2009 Jkt 217001 amendment to CBOE Rule 6.53C(c)(i) to indicate that an order entry firm may route its orders to the firm’s booth, as well as to PAR, should clarify the operation of CBOE Rule 6.53C. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,9 that the proposed rule change (File No. SR– CBOE–2009–038) is approved. Liability Company (‘‘Optifreeze’’). The text of the proposed rule change is available on the Exchange’s Web site https://www.ise.com, at the principal office 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 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–18168 Filed 7–29–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60382; File No. SR–ISE– 2009–45] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by International Securities Exchange, LLC Relating to Changes to Rule 312 in Connection With the Purchase of Equity Interests by International Securities Exchange Holdings, Inc. in Optifreeze, LLC July 24, 2009. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 23, 2009, the International Securities Exchange, LLC (the ‘‘Exchange’’ or ‘‘ISE’’) filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 submitting this proposed rule change (the ‘‘Proposed Rule Change’’) to the Commission to amend ISE Rule 312 (Limitation on Affiliation between the Exchange and Members) in connection with the capital contribution by its parent company, International Securities Exchange Holdings, Inc. (‘‘ISE Holdings’’), in Optifreeze LLC, a Delaware Limited 9 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. 10 17 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 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 self-regulatory organization 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 On June 5, 2009, ISE Holdings entered into a Membership Purchase Agreement (‘‘Purchase Agreement’’) with Optifreeze. Pursuant to the Purchase Agreement, ISE Holdings contributed cash to the capital of Optifreeze in exchange for membership interests representing on the date of such issuance 8.57% of the aggregate membership interests in Optifreeze (‘‘Purchased Interests’’). ISE Holdings and its subsidiaries and affiliates do not have any voting or other ‘‘control’’ arrangements with any of the other members of Optifreeze relating to its investment in Optifreeze. The purchase by ISE Holdings of the Purchased Interests (the ‘‘Transaction’’) was consummated on June 5, 2009. As a result of such purchase, ISE Holdings became a member of Optifreeze pursuant to the Third Amended and Restated Operating Agreement of Optifreeze dated June 5, 2009, and is entitled to appoint one representative to the Optifreeze Board of Directors. Ballista Securities LLC (‘‘Ballista Securities’’), a wholly-owned subsidiary of Optifreeze, is an electronic access member (‘‘EAM’’) of the Exchange. In connection with the capital contribution by ISE Holdings in Optifreeze, the Exchange proposes to amend ISE Rule 312 (Limitation on Affiliation between the Exchange and Members) to reflect ISE Holdings’ ownership interest in Ballista Securities, and to set forth certain limitations and obligations relating to such relationship. E:\FR\FM\30JYN1.SGM 30JYN1 erowe on DSK5CLS3C1PROD with NOTICES Federal Register / Vol. 74, No. 145 / Thursday, July 30, 2009 / Notices In particular, the Exchange proposes that there be an exemption from Rule 312 of the Exchange with respect to the investment by ISE Holdings in Optifreeze. In relevant part, Rule 312 provides that, without prior SEC approval, the Exchange, or any entity with which the Exchange is affiliated shall not, directly or indirectly, acquire or maintain an ownership interest in a member or non-member owner. In addition, the Rule 312 provides that nothing in that rule shall prohibit a member or non-member owner from being or becoming an affiliate of the Exchange, or an affiliate of an affiliate of the Exchange solely by reason of any officer, director or partner of such member becoming an Exchange Director (as defined in the Amended and Restated Constitution of the ISE). As a result of the Transaction, the Exchange, through ISE Holdings, will maintain an ownership interest in an ISE member, Ballista Securities, which, without Commission approval, would be prohibited by Rule 312. The Commission has also has previously noted its concern regarding (1) the potential for conflicts of interest in instances where an exchange is affiliated with one of its members, and (2) the potential for informational advantages that could place an affiliated member of an exchange at a competitive ` advantage vis-a-vis the other nonaffiliated members. The Commission has also noted its concerns about potential unfair competition and conflicts of interest between an exchange’s self-regulatory obligations and its commercial interest when the exchange is affiliated with one of its members. As such, ISE proposes to amend Rule 312 to permit the proposed relationship subject to several conditions and limitations. Accordingly, the Exchange is proposing to adopt subsection (c) to Rule 312 to require that, for so long as (i) ISE Holdings maintains an ownership interest in Ballista Securities; and (ii) Ballista Securities remains a member of the Exchange: (1) Financial Industry Regulatory Authority (‘‘FINRA’’), a selfregulatory organization unaffiliated with the Exchange or any of its affiliates, will carry out oversight and enforcement responsibilities as the designated examining authority designated by the Commission pursuant to Rule 17d-1 of the Exchange Act with the responsibility for examining Ballista Securities for compliance with applicable financial responsibility rules; (2) the Exchange shall (a) enter into a plan pursuant to Rule 17d-2 under the Exchange Act with a non-affiliated self- VerDate Nov<24>2008 15:34 Jul 29, 2009 Jkt 217001 regulatory organization (‘‘SRO’’) to relieve the Exchange of regulatory responsibilities for Ballista Securities with respect to rules that are common rules between the Exchange and the SRO, and (b) enter into a regulatory services contract with a non-affiliated SRO to perform certain regulatory responsibilities for Ballista Securities for unique Exchange rules; 3 (3) the regulatory services contract shall require the Exchange to provide the nonaffiliated SRO with information, in an easily accessible manner, regarding all exception reports, alerts, complaints, trading errors, cancellations, investigations, and enforcement matters (collectively, ‘‘Exceptions’’) in which Ballista Securities is identified as a participant that has potentially violated Exchange or SEC rules, and shall require that the nonaffiliated SRO provide a report to the Exchange quantifying Exceptions on not less than a quarterly basis; (4) the Exchange shall establish and maintain procedures and internal controls reasonably designed to ensure that Ballista Securities and its affiliates do not have access to nonpublic information obtained as a result of ISE Holdings’ ownership interest in Ballista Securities, until such information is available generally to similarly situated members of the Exchange in connection with the provision of inbound order routing to the Exchange; and (5) the ownership interest of ISE Holdings, Inc. in Ballista Securities is subject to the conditions set forth above and is granted on a temporary basis, for not longer than one year from the date of Commission approval of this filing. In addition, the Exchange notes that ISE Holdings owns less than 9% of the equity in Optifreeze and therefore does not own a controlling interest in Optifreeze or otherwise have any veto or other special voting rights with respect to the management or operation of Optifreeze. The Exchange acknowledges that if the Exchange or any of its affiliates were to directly or indirectly increase the equity ownership of Optifreeze, such increase would require prior Commission approval. The Exchange believes that the foregoing measures and factors minimize the concerns identified by the Commission regarding potential conflicts of interest. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the 3 The non-affiliated SRO will perform certain regulatory responsibilities for Ballista Securities other than market surveillance, including, but not limited to, investigative and disciplinary services. PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 38069 Exchange Act,4 in general, and with Sections 6(b)(1) and (b)(5) of the Exchange Act,5 in particular, in that the proposal enables the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Exchange Act and to comply with and enforce compliance by members and persons associated with members with provisions of the Exchange Act, the rules and regulations thereunder, and SRO rules, and is designed to prevent fraudulent and manipulative acts and practices, 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. In particular, this rule change will address any potential regulatory issues that could arise with ISE Holdings’ investment in, and providing capital to, an innovative brokerage operation. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange 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, participants or others. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (a) By order approve such proposed rule change; or 4 15 5 15 E:\FR\FM\30JYN1.SGM U.S.C. 78f. U.S.C. 78f(b)(3), (5). 30JYN1 38070 Federal Register / Vol. 74, No. 145 / Thursday, July 30, 2009 / Notices (b) institute proceedings to determine whether the proposed rule change should be disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 IV. Solicitation of Comments Florence E. Harmon, Deputy Secretary. [FR Doc. E9–18169 Filed 7–29–09; 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 SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–60376; File No. SR–CBOE– 2009–044] • 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 No. SR–ISE–2009–45 on the subject line. Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Chicago Board Options Exchange Stock Exchange Fees Schedule To Establish Facility Fees Paper Comments July 23, 2009. erowe on DSK5CLS3C1PROD with NOTICES • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–ISE–2009–45. 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 changes 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 ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR–ISE–2009–45 and should be submitted on or before August 20, 2009. VerDate Nov<24>2008 15:34 Jul 29, 2009 Jkt 217001 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 2, 2009, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 CBOE Stock Exchange (‘‘CBSX’’) Fees Schedule to establish facility fees. The text of the proposed rule change is available on the Exchange’s Web site (https://www.cboe.org/legal), at the Exchange’s Office of the Secretary, 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 self-regulatory organization 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 those statements may be examined at the places specified in Item IV below. PO 00000 6 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 Frm 00092 Fmt 4703 Sfmt 4703 The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts 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 proposes to amend the CBSX Fees Schedule to adopt a facility fee for the use of a perimeter booth by CBSX Trading Permit Holders that are not CBSX Market-Makers at a cost of $350 per month.3 This fee is applicable to CBSX Trading Permit Holders seeking perimeter booth space, as opposed to a regular CBOE member (who is eligible to trade on CBSX) who pays for perimeter booth space pursuant to the CBOE fee schedule. The Exchange also proposes to amend the CBSX Fees Schedule to adopt a facility fee for the use of a CBSX Floor Post booth by CBSX Market Makers at a cost of $350 per month. CBSX MarketMakers that are not CBSX DPMs may not use the Floor Post until a change to Rule 51.12 allowing such use is approved. The proposed fee changes will take effect on July 2, 2009. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (‘‘Act’’),4 in general, and furthers the objectives of Section 6(b)(4) 5 of the Act in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among CBOE members and other persons using its facilities. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition 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 No written comments were solicited or received with respect to the proposed rule change. 3 Perimeter booths are located in rows that are situated around the perimeter of the trading floor. These booths are typically utilized by Floor Brokers. 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(4). E:\FR\FM\30JYN1.SGM 30JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 74, Number 145 (Thursday, July 30, 2009)]
[Notices]
[Pages 38068-38070]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18169]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60382; File No. SR-ISE-2009-45]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by International Securities Exchange, LLC Relating to Changes to
Rule 312 in Connection With the Purchase of Equity Interests by
International Securities Exchange Holdings, Inc. in Optifreeze, LLC

July 24, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is
hereby given that on July 23, 2009, the International Securities
Exchange, LLC (the ``Exchange'' or ``ISE'') filed with the Securities
and Exchange Commission (``Commission'' or ``SEC'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange is submitting this proposed rule change (the
``Proposed Rule Change'') to the Commission to amend ISE Rule 312
(Limitation on Affiliation between the Exchange and Members) in
connection with the capital contribution by its parent company,
International Securities Exchange Holdings, Inc. (``ISE Holdings''), in
Optifreeze LLC, a Delaware Limited Liability Company (``Optifreeze'').
The text of the proposed rule change is available on the Exchange's Web
site https://www.ise.com, at the principal office 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 self-regulatory organization 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
On June 5, 2009, ISE Holdings entered into a Membership Purchase
Agreement (``Purchase Agreement'') with Optifreeze. Pursuant to the
Purchase Agreement, ISE Holdings contributed cash to the capital of
Optifreeze in exchange for membership interests representing on the
date of such issuance 8.57% of the aggregate membership interests in
Optifreeze (``Purchased Interests''). ISE Holdings and its subsidiaries
and affiliates do not have any voting or other ``control'' arrangements
with any of the other members of Optifreeze relating to its investment
in Optifreeze. The purchase by ISE Holdings of the Purchased Interests
(the ``Transaction'') was consummated on June 5, 2009. As a result of
such purchase, ISE Holdings became a member of Optifreeze pursuant to
the Third Amended and Restated Operating Agreement of Optifreeze dated
June 5, 2009, and is entitled to appoint one representative to the
Optifreeze Board of Directors. Ballista Securities LLC (``Ballista
Securities''), a wholly-owned subsidiary of Optifreeze, is an
electronic access member (``EAM'') of the Exchange.
In connection with the capital contribution by ISE Holdings in
Optifreeze, the Exchange proposes to amend ISE Rule 312 (Limitation on
Affiliation between the Exchange and Members) to reflect ISE Holdings'
ownership interest in Ballista Securities, and to set forth certain
limitations and obligations relating to such relationship.

[[Page 38069]]

In particular, the Exchange proposes that there be an exemption from
Rule 312 of the Exchange with respect to the investment by ISE Holdings
in Optifreeze. In relevant part, Rule 312 provides that, without prior
SEC approval, the Exchange, or any entity with which the Exchange is
affiliated shall not, directly or indirectly, acquire or maintain an
ownership interest in a member or non-member owner. In addition, the
Rule 312 provides that nothing in that rule shall prohibit a member or
non-member owner from being or becoming an affiliate of the Exchange,
or an affiliate of an affiliate of the Exchange solely by reason of any
officer, director or partner of such member becoming an Exchange
Director (as defined in the Amended and Restated Constitution of the
ISE). As a result of the Transaction, the Exchange, through ISE
Holdings, will maintain an ownership interest in an ISE member,
Ballista Securities, which, without Commission approval, would be
prohibited by Rule 312. The Commission has also has previously noted
its concern regarding (1) the potential for conflicts of interest in
instances where an exchange is affiliated with one of its members, and
(2) the potential for informational advantages that could place an
affiliated member of an exchange at a competitive advantage vis-
[agrave]-vis the other non-affiliated members. The Commission has also
noted its concerns about potential unfair competition and conflicts of
interest between an exchange's self-regulatory obligations and its
commercial interest when the exchange is affiliated with one of its
members. As such, ISE proposes to amend Rule 312 to permit the proposed
relationship subject to several conditions and limitations.
Accordingly, the Exchange is proposing to adopt subsection (c) to
Rule 312 to require that, for so long as (i) ISE Holdings maintains an
ownership interest in Ballista Securities; and (ii) Ballista Securities
remains a member of the Exchange: (1) Financial Industry Regulatory
Authority (``FINRA''), a self-regulatory organization unaffiliated with
the Exchange or any of its affiliates, will carry out oversight and
enforcement responsibilities as the designated examining authority
designated by the Commission pursuant to Rule 17d-1 of the Exchange Act
with the responsibility for examining Ballista Securities for
compliance with applicable financial responsibility rules; (2) the
Exchange shall (a) enter into a plan pursuant to Rule 17d-2 under the
Exchange Act with a non-affiliated self-regulatory organization
(``SRO'') to relieve the Exchange of regulatory responsibilities for
Ballista Securities with respect to rules that are common rules between
the Exchange and the SRO, and (b) enter into a regulatory services
contract with a non-affiliated SRO to perform certain regulatory
responsibilities for Ballista Securities for unique Exchange rules; \3\
(3) the regulatory services contract shall require the Exchange to
provide the non-affiliated SRO with information, in an easily
accessible manner, regarding all exception reports, alerts, complaints,
trading errors, cancellations, investigations, and enforcement matters
(collectively, ``Exceptions'') in which Ballista Securities is
identified as a participant that has potentially violated Exchange or
SEC rules, and shall require that the nonaffiliated SRO provide a
report to the Exchange quantifying Exceptions on not less than a
quarterly basis; (4) the Exchange shall establish and maintain
procedures and internal controls reasonably designed to ensure that
Ballista Securities and its affiliates do not have access to nonpublic
information obtained as a result of ISE Holdings' ownership interest in
Ballista Securities, until such information is available generally to
similarly situated members of the Exchange in connection with the
provision of inbound order routing to the Exchange; and (5) the
ownership interest of ISE Holdings, Inc. in Ballista Securities is
subject to the conditions set forth above and is granted on a temporary
basis, for not longer than one year from the date of Commission
approval of this filing.
---------------------------------------------------------------------------

\3\ The non-affiliated SRO will perform certain regulatory
responsibilities for Ballista Securities other than market
surveillance, including, but not limited to, investigative and
disciplinary services.
---------------------------------------------------------------------------

In addition, the Exchange notes that ISE Holdings owns less than 9%
of the equity in Optifreeze and therefore does not own a controlling
interest in Optifreeze or otherwise have any veto or other special
voting rights with respect to the management or operation of
Optifreeze. The Exchange acknowledges that if the Exchange or any of
its affiliates were to directly or indirectly increase the equity
ownership of Optifreeze, such increase would require prior Commission
approval. The Exchange believes that the foregoing measures and factors
minimize the concerns identified by the Commission regarding potential
conflicts of interest.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Exchange Act,\4\ in general,
and with Sections 6(b)(1) and (b)(5) of the Exchange Act,\5\ in
particular, in that the proposal enables the Exchange to be so
organized as to have the capacity to be able to carry out the purposes
of the Exchange Act and to comply with and enforce compliance by
members and persons associated with members with provisions of the
Exchange Act, the rules and regulations thereunder, and SRO rules, and
is designed to prevent fraudulent and manipulative acts and practices,
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.
In particular, this rule change will address any potential regulatory
issues that could arise with ISE Holdings' investment in, and providing
capital to, an innovative brokerage operation.
---------------------------------------------------------------------------

\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(3), (5).
---------------------------------------------------------------------------

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

The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange 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, participants or others.

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

Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(a) By order approve such proposed rule change; or

[[Page 38070]]

(b) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change 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 No. SR-ISE-2009-45 on the subject line.

Paper Comments

Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File No. SR-ISE-2009-45. 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 changes 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 ISE. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File No. SR-ISE-2009-45 and should be
submitted on or before August 20, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

\6\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18169 Filed 7-29-09; 8:45 am]
BILLING CODE 8010-01-P

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