Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating to the Purchase of Equity Interests by International Securities Exchange Holdings, Inc. in Ballista Holdings LLC, 5225-5227 [2011-1860]

Download as PDF Federal Register / Vol. 76, No. 19 / Friday, January 28, 2011 / Notices B. Governing or Constituent Documents Not applicable. C. Implementation of Amendment The Participants propose to implement the change upon Commission approval of the Amendment. E. Rules and Procedures Addressed to Fraudulent or Manipulative Dissemination Not applicable. D. Development and Implementation Phases See Item I(C) above. E. Analysis of Impact on Competition The proposed amendment does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. The Participants do not believe that the proposed plan amendment introduces terms that are unreasonably discriminatory for the purposes of Section 11A(c)(1)(D) of the Exchange Act. F. Written Understanding or Agreements Relating to Interpretation of, or Participation in, Plan The Participants have no written understandings or agreements relating to interpretation of the Plans as a result of the amendment. G. Approval by Sponsors in Accordance With Plan Each of the Plan’s Participants has executed a written amendment to the Plan. H. Description of Operation of Facility Contemplated by the Proposed Amendment Not applicable. I. Terms and Conditions of Access Not applicable. J. Method of Determination and Imposition, and Amount of, Fees and Charges Not applicable. K. Method and Frequency of Processor Evaluation Not applicable. L. Dispute Resolution Not applicable. WReier-Aviles on DSKGBLS3C1PROD with NOTICES II. Rule 601(a) A. Reporting Requirements Not applicable. B. Manner of Collecting, Processing, Sequencing, Making Available and Disseminating Last Sale Information Not applicable. C. Manner of Consolidation Not applicable. VerDate Mar<15>2010 15:05 Jan 27, 2011 Jkt 223001 D. Standards and Methods Ensuring Promptness, Accuracy and Completeness of Transaction Reports Not applicable. F. Terms of Access to Transaction Reports Not applicable. G. Identification of Marketplace of Execution Not Applicable. III. Solicitation of Comments The Commission seeks general comments on Amendment No. 25. Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposal 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 rulecomments@sec.gov. Please include File Number S7–24–89 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 S7–24–89. 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 Web site (https://www.sec.gov/rules/ sro.shtml). Copies of the submission, all written statements with respect to the proposed Plan amendment that are filed with the Commission, and all written communications relating to the proposed Plan amendment 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 Web site viewing and printing 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 Web site viewing and printing at the Office of the Secretary of the Committee, currently located at the PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 5225 CBOE, 400 S. LaSalle Street, Chicago, IL 60605. 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 S7–24–89 and should be submitted on or before February 18, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.4 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–1859 Filed 1–27–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63758; File No. SR–ISE– 2011–05] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating to the Purchase of Equity Interests by International Securities Exchange Holdings, Inc. in Ballista Holdings LLC January 24, 2011. 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 January 14, 2011, 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 and II 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 Ballista Holdings LLC (formerly Optifreeeze [sic] LLC), a Delaware Limited Liability Company (‘‘Ballista 4 17 CFR 200.30–3(a)(27). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\28JAN1.SGM 28JAN1 5226 Federal Register / Vol. 76, No. 19 / Friday, January 28, 2011 / Notices Holdings’’). 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. WReier-Aviles on DSKGBLS3C1PROD with NOTICES 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 Ballista Holdings. Pursuant to the Purchase Agreement, ISE Holdings contributed cash to the capital of Ballista Holdings in exchange for membership interests representing on the date of such issuance 8.57% of the aggregate membership interests in Ballista Holdings (‘‘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 Ballista Holdings relating to its investment in Ballista Holdings. The purchase by ISE Holdings of the Purchased Interests was consummated on June 5, 2009 (the ‘‘Transaction’’). As a result of such purchase, ISE Holdings became a member of Ballista Holdings pursuant to the Third Amended and Restated Operating Agreement of Ballista Holdings dated June 5, 2009, and has one representative on the Ballista Holdings Board of Directors. Ballista Securities LLC (‘‘Ballista Securities’’), a wholly-owned subsidiary of Ballista Holdings, is an electronic access member of the Exchange. The Exchange, through ISE Holdings, maintains an ownership interest in an ISE member, Ballista Securities, which, without Commission approval, would be prohibited by ISE Rule 312.3 In 2009, 3 In relevant part, ISE Rule 312 provides that, without prior SEC approval, the Exchange, or any entity with which the Exchange is affiliated shall VerDate Mar<15>2010 15:05 Jan 27, 2011 Jkt 223001 recognizing that the Commission has previously expressed 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 ISE submitted a proposed rule change to amend ISE Rule 312 to permit the proposed affiliation subject to several limitations and obligations. Specifically, the limitations and obligations of ISE Rule 312 provide 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 selfregulatory 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; 4 (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 not, directly or indirectly, acquire or maintain an ownership interest in a member or non-member owner. In addition, ISE Rule 312 provides that nothing in that rule shall prohibit a member or nonmember 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). 4 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 00097 Fmt 4703 Sfmt 4703 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; 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 the filing. On September 1, 2009, the Commission approved the amendments to ISE Rule 312 (Limitation on Affiliation between the Exchange and Members) to reflect ISE Holdings’ ownership interest in Ballista Securities and to set forth such limitations and obligations relating to the relationship, and an exemption from ISE Rule 312 of the Exchange with respect to the investment by ISE Holdings in Ballista Holdings for a one (1) year pilot period which ended on September 1, 2010.5 The Exchange now proposes that there be an exemption from Rule 312 of the Exchange with respect to the investment by ISE Holdings in Ballista Holdings for a second one (1) year pilot period subject to the same limitations and obligations as were previously approved by the Commission, and to make certain technical changes to Rule 312 to reflect that the 17d–2 Plan 6 and the Regulatory Services Agreement with a nonaffiliated self-regulatory organization are currently in place, and also to reflect that the Exchange has established and maintains 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 addition, the Exchange notes that ISE Holdings continues to own less than 9% of the equity in Ballista Holdings and therefore does not own a controlling interest or otherwise have any veto or other special voting rights with respect to the management or operation of Ballista Holdings. The Exchange acknowledges that if the Exchange or 5 See Securities and Exchange Act Release No. 34–60598 (September 1, 2009), 74 FR 38068 (July 30, 2009) [sic] (SR–ISE–2009–45). 6 See Securities and Exchange Act Release No. 34–61853 (April 6, 2010), 75 FR 18925 (April 13, 2010). E:\FR\FM\28JAN1.SGM 28JAN1 Federal Register / Vol. 76, No. 19 / Friday, January 28, 2011 / Notices any of its affiliates were to directly or indirectly increase the equity ownership of Ballista Holdings, 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,7 in general, and with Sections 6(b)(1) and (b)(5) of the Exchange Act,8 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 provide for a second one (1) year pilot program designed to prevent any potential regulatory issues that could arise with ISE Holdings’ investment in Ballista Holdings.9 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. WReier-Aviles on DSKGBLS3C1PROD with NOTICES 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 7 15 U.S.C. 78f. U.S.C. 78f(b)(3), (5). 9 See e-mail from Tracy Tang, Assistant General Counsel, ISE, to Michael Gaw, Assistant Director, Division of Trading and Markets, Commission, dated January 20, 2011 (correcting text of the Statutory Basis at the Exchange’s request). 8 15 VerDate Mar<15>2010 15:05 Jan 27, 2011 Jkt 223001 unsolicited written comments from members, participants or others. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate 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 or disapprove the 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: 5227 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 publicly available. All submissions should refer to File Number SR–ISE– 2011–05 and should be submitted on or before February 18, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–1860 Filed 1–27–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63755; File No. S7–24–89] Joint Industry Plan; Notice of Filing and Immediate Effectiveness of Amendment No. 24 to the Joint SelfRegulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis Submitted by the Paper Comments BATS Exchange, Inc., Chicago Board • Send paper comments in triplicate Options Exchange, Incorporated, to Elizabeth M. Murphy, Secretary, Chicago Stock Exchange, Inc., EDGA Securities and Exchange Commission, Exchange, Inc., EDGX Exchange, Inc., 100 F Street, NE., Washington, DC Financial Industry Regulatory 20549–1090. Authority, Inc., International Securities All submissions should refer to File Exchange LLC, NASDAQ OMX BX, Inc., Number SR–ISE–2011–05. This file NASDAQ OMX PHLX, Inc., Nasdaq number should be included on the Stock Market LLC, National Stock subject line if e-mail is used. To help the Exchange, Inc., New York Stock Commission process and review your Exchange LLC, NYSE Amex, Inc., and comments more efficiently, please use NYSE Arca, Inc. only one method. The Commission will post all comments on the Commission’s January 21, 2011. Pursuant to Rule 608 of the Securities Internet Web site (https://www.sec.gov/ Exchange Act of 1934 (the ‘‘Act’’) 1 rules/sro.shtml). Copies of the notice is hereby given that on December submission, all subsequent 20, 2010, the operating committee amendments, all written statements (‘‘Operating Committee’’ or with respect to the proposed rule ‘‘Committee’’) 2 of the Joint Selfchange that are filed with the Commission, and all written 10 17 CFR 200.30–3(a)(12). communications relating to the 1 17 CFR 242.608. proposed rule change between the 2 The Plan Participants (collectively, Commission and any person, other than ‘‘Participants’’) are the: BATS Exchange, Inc. those that may be withheld from the (‘‘BATS’’); Chicago Board Options Exchange, Incorporated (‘‘CBOE’’); Chicago Stock Exchange, public in accordance with the Inc. (‘‘CHX’’); EDGA Exchange, Inc. (‘‘EDGA’’); EDGX provisions of 5 U.S.C. 552, will be Exchange, Inc. (‘‘EDGX’’); Financial Industry available for Web site viewing and Regulatory Authority, Inc. (‘‘FINRA’’); International printing in the Commission’s Public Securities Exchange LLC (‘‘ISE’’); NASDAQ OMX Continued Reference Room, 100 F Street, NE., 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–2011–05 on the subject line. PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\28JAN1.SGM 28JAN1

Agencies

[Federal Register Volume 76, Number 19 (Friday, January 28, 2011)]
[Notices]
[Pages 5225-5227]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1860]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63758; File No. SR-ISE-2011-05]


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

January 24, 2011.
    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 January 14, 2011, 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 and II 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 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 
Ballista Holdings LLC (formerly Optifreeeze [sic] LLC), a Delaware 
Limited Liability Company (``Ballista

[[Page 5226]]

Holdings''). 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 Ballista Holdings. Pursuant to 
the Purchase Agreement, ISE Holdings contributed cash to the capital of 
Ballista Holdings in exchange for membership interests representing on 
the date of such issuance 8.57% of the aggregate membership interests 
in Ballista Holdings (``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 Ballista Holdings 
relating to its investment in Ballista Holdings. The purchase by ISE 
Holdings of the Purchased Interests was consummated on June 5, 2009 
(the ``Transaction''). As a result of such purchase, ISE Holdings 
became a member of Ballista Holdings pursuant to the Third Amended and 
Restated Operating Agreement of Ballista Holdings dated June 5, 2009, 
and has one representative on the Ballista Holdings Board of Directors. 
Ballista Securities LLC (``Ballista Securities''), a wholly-owned 
subsidiary of Ballista Holdings, is an electronic access member of the 
Exchange.
    The Exchange, through ISE Holdings, maintains an ownership interest 
in an ISE member, Ballista Securities, which, without Commission 
approval, would be prohibited by ISE Rule 312.\3\ In 2009, recognizing 
that the Commission has previously expressed 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 ISE submitted a proposed rule change to amend 
ISE Rule 312 to permit the proposed affiliation subject to several 
limitations and obligations. Specifically, the limitations and 
obligations of ISE Rule 312 provide 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; \4\ (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; 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 the filing.
---------------------------------------------------------------------------

    \3\ In relevant part, ISE 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, ISE 
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).
    \4\ 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.
---------------------------------------------------------------------------

    On September 1, 2009, the Commission approved the amendments to ISE 
Rule 312 (Limitation on Affiliation between the Exchange and Members) 
to reflect ISE Holdings' ownership interest in Ballista Securities and 
to set forth such limitations and obligations relating to the 
relationship, and an exemption from ISE Rule 312 of the Exchange with 
respect to the investment by ISE Holdings in Ballista Holdings for a 
one (1) year pilot period which ended on September 1, 2010.\5\ The 
Exchange now proposes that there be an exemption from Rule 312 of the 
Exchange with respect to the investment by ISE Holdings in Ballista 
Holdings for a second one (1) year pilot period subject to the same 
limitations and obligations as were previously approved by the 
Commission, and to make certain technical changes to Rule 312 to 
reflect that the 17d-2 Plan \6\ and the Regulatory Services Agreement 
with a non-affiliated self-regulatory organization are currently in 
place, and also to reflect that the Exchange has established and 
maintains 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.
---------------------------------------------------------------------------

    \5\ See Securities and Exchange Act Release No. 34-60598 
(September 1, 2009), 74 FR 38068 (July 30, 2009) [sic] (SR-ISE-2009-
45).
    \6\ See Securities and Exchange Act Release No. 34-61853 (April 
6, 2010), 75 FR 18925 (April 13, 2010).
---------------------------------------------------------------------------

    In addition, the Exchange notes that ISE Holdings continues to own 
less than 9% of the equity in Ballista Holdings and therefore does not 
own a controlling interest or otherwise have any veto or other special 
voting rights with respect to the management or operation of Ballista 
Holdings. The Exchange acknowledges that if the Exchange or

[[Page 5227]]

any of its affiliates were to directly or indirectly increase the 
equity ownership of Ballista Holdings, 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,\7\ in general, 
and with Sections 6(b)(1) and (b)(5) of the Exchange Act,\8\ 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 provide for a second one (1) year 
pilot program designed to prevent any potential regulatory issues that 
could arise with ISE Holdings' investment in Ballista Holdings.\9\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(3), (5).
    \9\ See e-mail from Tracy Tang, Assistant General Counsel, ISE, 
to Michael Gaw, Assistant Director, Division of Trading and Markets, 
Commission, dated January 20, 2011 (correcting text of the Statutory 
Basis at the Exchange's request).
---------------------------------------------------------------------------

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 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate 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 or disapprove the 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:

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-2011-05 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-2011-05. 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 (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 Web site viewing and 
printing 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 publicly available. All 
submissions should refer to File Number SR-ISE-2011-05 and should be 
submitted on or before February 18, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1860 Filed 1-27-11; 8:45 am]
BILLING CODE 8011-01-P
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