Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change To Amend Exchange Rules Related to Cutoff Time for Contrary Exercise Advice Submissions, 6237-6239 [2010-2587]
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Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Notices
otherwise further 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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–2585 Filed 2–5–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BX–2010–011 on the
subject line.
[Release No. 34–61458; File No. SR–ISE–
2010–02]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing of Proposed Rule
Change To Amend Exchange Rules
Related to Cutoff Time for Contrary
Exercise Advice Submissions
February 1, 2010.
Paper Comments
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
11, 2010, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
All submissions should refer to File
Exchange Commission the proposed
Number SR–BX–2010–011. This file
rule change, as described in Items I, II,
number should be included on the
and III below, which items have been
subject line if e-mail is used. To help the prepared by the Exchange. The
Commission process and review your
Commission is publishing this notice to
comments more efficiently, please use
solicit comments on the proposed rule
only one method. The Commission will change from interested persons.
post all comments on the Commission’s
I. Self-Regulatory Organization’s
Internet Web site (https://www.sec.gov/
Statement of the Terms of Substance of
rules/sro.shtml). Copies of the
the Proposed Rule Change
submission, all subsequent
The International Securities
amendments, all written statements
Exchange, LLC (the ‘‘Exchange’’ or the
with respect to the proposed rule
‘‘ISE’’) proposes to amend Rule 1100 in
change that are filed with the
order to extend the cut-off time to
Commission, and all written
submit contrary exercise advices. The
communications relating to the
text of the proposed rule change is
proposed rule change between the
Commission and any person, other than available on the Exchange’s Web site
https://www.ise.com, at the Exchange’s
those that may be withheld from the
Office of the Secretary, and at the
public in accordance with the
Commission’s Public Reference Room.
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
II. Self-Regulatory Organization’s
the Commission’s Public Reference
Statement of the Purpose of, and
Room, 100 F Street, NE., Washington,
Statutory Basis for, the Proposed Rule
DC 20549, on official business days
Change
between the hours of 10 a.m. and 3 p.m.
In its filing with the Commission, the
Copies of such filing also will be
self-regulatory organization included
available for inspection and copying at
statements concerning the purpose of
the principal office of the Exchange. All
and basis for the proposed rule change
comments received will be posted
and discussed any comments it received
without change; the Commission does
on the proposed rule change. The text
not edit personal identifying
of these statements may be examined at
information from submissions. You
the places specified in Item IV below.
should submit only information that
The self-regulatory organization has
you wish to make available publicly. All
submissions should refer to File No.
13 17 CFR 200.30–3(a)(12).
SR–BX–2010–011 and should be
1 15 U.S.C. 78s(b)(1).
submitted on or before March 1, 2010.
2 17 CFR 240.19b–4.
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington DC
20549–1090.
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6237
prepared summaries, set forth in
sections A, B and C below.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend Rule 1100 to extend
the cut-off time to submit contrary
exercise advices (‘‘Contrary Exercise
Advice’’, or, ‘‘CEA’’) 3 to the Exchange.
The Exchange also proposes to make
certain non-substantive changes to
reorganize the text of Rule 1100 to more
clearly present the existing
requirements and to eliminate
duplicative language.4
The Options Clearing Corporation
(‘‘OCC’’) has an established procedure,
under OCC Rule 805, that provides for
the automatic exercise of certain options
that are in-the-money by a specified
amount known as ‘‘Exercise-byException’’ or ‘‘Ex-by-Ex.’’ Under the Exby-Ex process, options holders holding
option contracts that are in-the-money
by a requisite amount and who wish to
have their contracts automatically
exercised need take no further action.
However, under OCC Rule 805, option
holders who do not want their options
automatically exercised or who want
their options to be exercised under
different parameters than that of the Exby-Ex procedures must instruct OCC of
their ‘‘contrary intention.’’
In addition to and separately from the
OCC requirement, under Exchange Rule
1100 option holders must file a CEA
with the Exchange notifying it of the
contrary intention. Rule 1100 is
designed, in part, to deter individuals
from taking improper advantage of late
breaking news by requiring evidence of
an option holder’s timely decision to
exercise or not exercise expiring equity
options. Members satisfy this
evidentiary requirement by submitting a
CEA form directly to the Exchange, or
by electronically submitting the CEA to
the Exchange through OCC’s electronic
communications system. The
3 Contrary Exercise Advices are also referred to as
Expiring Exercise Declarations (‘‘EED’’) in the OCC
rules.
4 The Exchange proposes to reorganize the current
rule text so that the requirement that exercise
decisions must be made by 5:30 p.m. Eastern Time
is specified in paragraph (c), while the requirements
pertaining to submitting CEA instructions are
contained in new paragraph (d). The language in
new paragraph (d) is comprised of language moved
from paragraph (b)(2) and paragraph (c) of the
current rule. The Exchange also proposes to
eliminate Supplementary Material .03 to Rule 1100
because it is duplicative of the language contained
in paragraph (c) of the current rule and paragraph
(d)(iii) in the proposal.
E:\FR\FM\08FEN1.SGM
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6238
Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Notices
submission of the CEA allows the
Exchange to satisfy its regulatory
obligation to verify that the decision to
make a contrary exercise was made
timely and in accordance with Rule
1100.
Currently under Rule 1100, option
holders have until 5:30 p.m.5 on the day
prior to expiration to make a final
decision to exercise or not exercise an
expiring option that would otherwise
either expire or be automatically
exercised. An Exchange member may
not accept CEA instructions from its
customer or non customer accounts after
5:30 p.m. However, the current rule
gives Exchange members an additional
one hour, up to 6:30 p.m., to submit
these CEA instructions to the Exchange
where such member uses an electronic
submission process.6
This current process allowing
members an additional one hour after
the decision making cut off time of 5:30
p.m. to submit a CEA to the various
options exchanges was approved by the
Commission in 2003.7 In 2003, the Exby-Ex thresholds were $0.75 for
customers and $0.25 for broker-dealer
accounts. In 2009, the Ex-by-Ex
threshold is $0.01 for all accounts. This
decrease in the Ex-by-Ex threshold,
coupled with the dramatic increase in
option trading volume from 2003 to
2009, has led to a larger number of CEA
instructions and has increased the
burden on firms to process and submit
instructions timely.
The Exchange proposes to extend the
current 6:30 p.m. deadline for
submitting CEA instructions to the
Exchange by one additional hour, up to
7:30 p.m. The Exchange believes that
this proposed rule change is necessary
to address concerns expressed by
members that, given the decrease in the
Ex-by-Ex threshold and the increase in
trading, the existing deadline for
submitting CEAs to the Exchange is
problematic for timely back-office
processing. The proposed additional
5 All
referenced times are Eastern Time.
members do not employ an electronic
submission procedure, they are required to submit
CEAs for non-customer accounts by the 5:30 p.m.
deadline. This deadline for manual submission is
required in order to prevent firms from improperly
extending the 5:30 p.m. deadline to exercise or not
exercise an option. This requirement is based on the
difficulty in monitoring a manual procedure that
has different times for deciding whether or not to
exercise the option and for the submission of the
CEA.
7 See Securities Exchange Act Release Nos. 47885
(May 16, 2003), 68 FR 28309 (May 23, 2003) (SR–
Amex–2001–92); 48505 (September 17, 2003), 68
FR 55680 (September 26, 2003) (SR–ISE–2003–20);
48640 (October 16, 2003), 68 FR 60757 (October 23,
2003) (SR–PCX–2003–47); and 48639 (October 16,
2003), 68 FR 60764 (October 23,2003) (SR–Phlx–
2003–65).
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
6 If
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one hour will address this concern by
further enabling firms to more timely
manage, process, and submit the
instructions to the Exchange. The
Exchange also proposes to modify the
language in paragraph (g) of the current
rule (new paragraph (h)), which allows
a member up to 2 hours and 30 minutes
to submit a CEA to the Exchange in the
event of a modified close of trading on
the day of expiration, by removing the
two hour and thirty minute restriction
and allowing a member to submit a CEA
to the Exchange in the event of a
modified close of trading of up to the
proposed 7:30 p.m. deadline. This will
make consistent the submission
deadline for both regular and modified
close expiration days. Moreover, this
will provide uniformity with
submission deadlines for both regular
and modified close expiration days
which will remove any possibility for
error when determining what the
submission deadline is on any modified
close expiration day.
It is important to note that this
proposed submission deadline does not
change the substantive requirement that
option holders make a final decision by
5:30 p.m. The Exchange will continue to
enforce the 5:30 p.m. decision making
requirement, while also allowing
additional time to process and submit
the CEA instructions. This proposal
seeks to increase that additional
submission time by one hour, and the
Exchange believes that this proposal
will be beneficial to the marketplace,
particularly as it concerns back-office
processing. The initiative to address
Exchange member concerns is industrywide, and the Exchange anticipates that
other options exchanges will also
propose a one hour extension for which
they will accept a CEA. This additional
processing time and Exchange
submission deadline will not conflict
with OCC submission rules or cause any
OCC processing issues.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the Act,8
in general, and furthers the objectives of
Section 6(b)(5) of the Act,9 in particular,
in that it is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, and to protect
investors and the public interest in that
it is designed to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
8 15
9 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00072
Fmt 4703
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facilitating transactions in securities, to
remove impediments to and perfect the
mechanism for a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. This proposed rule
change will foster coordination with
back office personnel engaged in
processing information and is consistent
with the facilitating of transactions in
securities as set forth in Section 6(b)(5)
in that it, by providing Exchange
members an additional hour within
which to complete the necessary
processing of CEAs, will thereby
decrease Exchange members’ burden of
processing an increasing number of
contrary exercise advices and enable
them to more easily manage and process
these instructions.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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 written
comments from members or other
interested parties.
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
(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:
E:\FR\FM\08FEN1.SGM
08FEN1
6239
Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Notices
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–ISE–2010–02 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
Number SR–ISE–2010–02. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, 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 ISE. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–ISE–
2010–02 and should be submitted on or
before March 1, 2010.
Nat’l ranking
Symbol
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–2587 Filed 2–5–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61455; File No. SR–
NASDAQ–2010–013]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Add
Seventy-Five Options Classes to the
Penny Pilot Program
February 1, 2010.
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
25, 2010, The NASDAQ Stock Market
LLC (‘‘Nasdaq’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by Nasdaq. 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
Nasdaq is filing with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) a proposal for the
NASDAQ Options Market (‘‘NOM’’ or
‘‘Exchange’’) to designate seventy-five
options classes to be added to the Penny
Pilot Program (‘‘Penny Pilot’’ or ‘‘Pilot’’)
on February 1, 2010.3 The Exchange is
not proposing to amend any rule text,
but simply administering or enforcing
an existing rule.4
The text of the proposed rule change
is available from Nasdaq’s Web site at
https://nasdaq.cchwallstreet.com/
Filings/, at Nasdaq’s principal office,
Company name
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,
Nasdaq 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. Nasdaq 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 purpose of this filing is to
identify the next seventy-five options
classes to be added to the Penny Pilot
effective February 1, 2010.
In the Exchange’s immediately
effective filing to extend and expand the
Penny Pilot through December 31,
2010,5 the Exchange proposed
expanding the Pilot four times on a
quarterly basis. Each such quarterly
expansion would be of the next seventyfive most actively traded multiply listed
options classes based on the national
average daily volume (‘‘ADV’’) for the six
months prior to selection, closing under
$200 per share on the Expiration Friday
prior to expansion; however, the month
immediately preceding the addition of
options to the Penny Pilot will not be
used for the purpose of the six month
analysis. Index option products would
be included in the quarterly expansions
if the underlying index levels were
under 200.
The Exchange is identifying, in the
chart below, seventy-five options classes
that it will add to the Penny Pilot on
February 1, 2010, based on ADVs for the
six months ending December 31, 2009.
Nat’l ranking
Symbol
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
131 .........................................
ABT
Abbott Laboratories
192 .......................................
LEAP
169 .........................................
151 .........................................
AEM
AET
Agnico-Eagle Mines Ltd
Aetna Inc
205 .......................................
162 .......................................
LLY
LO
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The Penny Pilot was established in March 2008
and in October 2009 was expanded and extended
through December 31, 2010. See Securities
Exchange Act Release Nos. 57579 (March 28, 2008),
73 FR 18587 (April 4, 2008)(SR–NASDAQ–2008–
1 15
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11:51 Feb 05, 2010
Jkt 220001
026)(notice of filing and immediate effectiveness
establishing Penny Pilot); 60874 (October 23,
2009)(SR–NASDAQ–2009–091)(notice of filing and
immediate effectiveness expanding and extending
Penny Pilot); and 60965 (November 9, 2009)(SR–
NASDAQ–2009–097)(notice of filing and immediate
effectiveness adding seventy-five classes to Penny
Pilot).
PO 00000
Frm 00073
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Company name
Leap Wireless International
Inc.
Eli Lilly & Co.
Lorillard Inc.
4 See Chapter VI, Section 5 regarding the Penny
Pilot.
5 See Securities Exchange Act Release No. 60874
(October 23, 2009), 74 FR 56682 (November 2,
2009)(SR–NASDAQ–2009–091)(notice of filing and
immediate effectiveness).
E:\FR\FM\08FEN1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 25 (Monday, February 8, 2010)]
[Notices]
[Pages 6237-6239]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-2587]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61458; File No. SR-ISE-2010-02]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing of Proposed Rule Change To Amend Exchange Rules
Related to Cutoff Time for Contrary Exercise Advice Submissions
February 1, 2010.
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 11, 2010, the International Securities Exchange, LLC (the
``Exchange'' or the ``ISE'') filed with the Securities and Exchange
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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The International Securities Exchange, LLC (the ``Exchange'' or the
``ISE'') proposes to amend Rule 1100 in order to extend the cut-off
time to submit contrary exercise advices. The text of the proposed rule
change is available on the Exchange's Web site https://www.ise.com, 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 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend Rule 1100 to
extend the cut-off time to submit contrary exercise advices (``Contrary
Exercise Advice'', or, ``CEA'') \3\ to the Exchange. The Exchange also
proposes to make certain non-substantive changes to reorganize the text
of Rule 1100 to more clearly present the existing requirements and to
eliminate duplicative language.\4\
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\3\ Contrary Exercise Advices are also referred to as Expiring
Exercise Declarations (``EED'') in the OCC rules.
\4\ The Exchange proposes to reorganize the current rule text so
that the requirement that exercise decisions must be made by 5:30
p.m. Eastern Time is specified in paragraph (c), while the
requirements pertaining to submitting CEA instructions are contained
in new paragraph (d). The language in new paragraph (d) is comprised
of language moved from paragraph (b)(2) and paragraph (c) of the
current rule. The Exchange also proposes to eliminate Supplementary
Material .03 to Rule 1100 because it is duplicative of the language
contained in paragraph (c) of the current rule and paragraph
(d)(iii) in the proposal.
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The Options Clearing Corporation (``OCC'') has an established
procedure, under OCC Rule 805, that provides for the automatic exercise
of certain options that are in-the-money by a specified amount known as
``Exercise-by-Exception'' or ``Ex-by-Ex.'' Under the Ex-by-Ex process,
options holders holding option contracts that are in-the-money by a
requisite amount and who wish to have their contracts automatically
exercised need take no further action. However, under OCC Rule 805,
option holders who do not want their options automatically exercised or
who want their options to be exercised under different parameters than
that of the Ex-by-Ex procedures must instruct OCC of their ``contrary
intention.''
In addition to and separately from the OCC requirement, under
Exchange Rule 1100 option holders must file a CEA with the Exchange
notifying it of the contrary intention. Rule 1100 is designed, in part,
to deter individuals from taking improper advantage of late breaking
news by requiring evidence of an option holder's timely decision to
exercise or not exercise expiring equity options. Members satisfy this
evidentiary requirement by submitting a CEA form directly to the
Exchange, or by electronically submitting the CEA to the Exchange
through OCC's electronic communications system. The
[[Page 6238]]
submission of the CEA allows the Exchange to satisfy its regulatory
obligation to verify that the decision to make a contrary exercise was
made timely and in accordance with Rule 1100.
Currently under Rule 1100, option holders have until 5:30 p.m.\5\
on the day prior to expiration to make a final decision to exercise or
not exercise an expiring option that would otherwise either expire or
be automatically exercised. An Exchange member may not accept CEA
instructions from its customer or non customer accounts after 5:30 p.m.
However, the current rule gives Exchange members an additional one
hour, up to 6:30 p.m., to submit these CEA instructions to the Exchange
where such member uses an electronic submission process.\6\
---------------------------------------------------------------------------
\5\ All referenced times are Eastern Time.
\6\ If members do not employ an electronic submission procedure,
they are required to submit CEAs for non-customer accounts by the
5:30 p.m. deadline. This deadline for manual submission is required
in order to prevent firms from improperly extending the 5:30 p.m.
deadline to exercise or not exercise an option. This requirement is
based on the difficulty in monitoring a manual procedure that has
different times for deciding whether or not to exercise the option
and for the submission of the CEA.
---------------------------------------------------------------------------
This current process allowing members an additional one hour after
the decision making cut off time of 5:30 p.m. to submit a CEA to the
various options exchanges was approved by the Commission in 2003.\7\ In
2003, the Ex-by-Ex thresholds were $0.75 for customers and $0.25 for
broker-dealer accounts. In 2009, the Ex-by-Ex threshold is $0.01 for
all accounts. This decrease in the Ex-by-Ex threshold, coupled with the
dramatic increase in option trading volume from 2003 to 2009, has led
to a larger number of CEA instructions and has increased the burden on
firms to process and submit instructions timely.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release Nos. 47885 (May 16,
2003), 68 FR 28309 (May 23, 2003) (SR-Amex-2001-92); 48505
(September 17, 2003), 68 FR 55680 (September 26, 2003) (SR-ISE-2003-
20); 48640 (October 16, 2003), 68 FR 60757 (October 23, 2003) (SR-
PCX-2003-47); and 48639 (October 16, 2003), 68 FR 60764 (October
23,2003) (SR-Phlx-2003-65).
---------------------------------------------------------------------------
The Exchange proposes to extend the current 6:30 p.m. deadline for
submitting CEA instructions to the Exchange by one additional hour, up
to 7:30 p.m. The Exchange believes that this proposed rule change is
necessary to address concerns expressed by members that, given the
decrease in the Ex-by-Ex threshold and the increase in trading, the
existing deadline for submitting CEAs to the Exchange is problematic
for timely back-office processing. The proposed additional one hour
will address this concern by further enabling firms to more timely
manage, process, and submit the instructions to the Exchange. The
Exchange also proposes to modify the language in paragraph (g) of the
current rule (new paragraph (h)), which allows a member up to 2 hours
and 30 minutes to submit a CEA to the Exchange in the event of a
modified close of trading on the day of expiration, by removing the two
hour and thirty minute restriction and allowing a member to submit a
CEA to the Exchange in the event of a modified close of trading of up
to the proposed 7:30 p.m. deadline. This will make consistent the
submission deadline for both regular and modified close expiration
days. Moreover, this will provide uniformity with submission deadlines
for both regular and modified close expiration days which will remove
any possibility for error when determining what the submission deadline
is on any modified close expiration day.
It is important to note that this proposed submission deadline does
not change the substantive requirement that option holders make a final
decision by 5:30 p.m. The Exchange will continue to enforce the 5:30
p.m. decision making requirement, while also allowing additional time
to process and submit the CEA instructions. This proposal seeks to
increase that additional submission time by one hour, and the Exchange
believes that this proposal will be beneficial to the marketplace,
particularly as it concerns back-office processing. The initiative to
address Exchange member concerns is industry-wide, and the Exchange
anticipates that other options exchanges will also propose a one hour
extension for which they will accept a CEA. This additional processing
time and Exchange submission deadline will not conflict with OCC
submission rules or cause any OCC processing issues.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\8\ in general, and furthers
the objectives of Section 6(b)(5) of the Act,\9\ in particular, in that
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and to
protect investors and the public interest in that it is designed 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 for a free and open market and a national market
system, and, in general, to protect investors and the public interest.
This proposed rule change will foster coordination with back office
personnel engaged in processing information and is consistent with the
facilitating of transactions in securities as set forth in Section
6(b)(5) in that it, by providing Exchange members an additional hour
within which to complete the necessary processing of CEAs, will thereby
decrease Exchange members' burden of processing an increasing number of
contrary exercise advices and enable them to more easily manage and
process these instructions.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
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 written comments from members or other interested parties.
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
(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:
[[Page 6239]]
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-ISE-2010-02 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 Number SR-ISE-2010-02. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, 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 ISE. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2010-02 and should be
submitted on or before March 1, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-2587 Filed 2-5-10; 8:45 am]
BILLING CODE 8011-01-P
