Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Listing of Option Series With $1 Strike Prices, 5642-5644 [2011-2118]

Download as PDF 5642 Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63771; File No. SR–ISE– 2011–06] srobinson on DSKHWCL6B1PROD with NOTICES Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate All submissions should refer to File Effectiveness of Proposed Rule Number SR–EDGA–2011–01. This file Change Regarding the Listing of number should be included on the subject line if e-mail is used. To help the Option Series With $1 Strike Prices Commission process and review your January 25, 2011. comments more efficiently, please use Pursuant to Section 19(b)(1) of the only one method. The Commission will Securities Exchange Act of 1934 post all comments on the Commission’s (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that, on January Web site (http://www.sec.gov/rules/ sro.shtml). Copies of the submission, all 14, 2011, the International Securities Exchange, LLC (‘‘ISE’’ or the ‘‘Exchange’’) subsequent amendments, all written statements with respect to the proposed filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) rule change that are filed with the the proposed rule change as described Commission, and all written in Items I and II below, which Items communications relating to the have been prepared by the Exchange. proposed rule change between the Commission and any person, other than The Commission is publishing this notice to solicit comments on the those that may be withheld from the proposed rule change from interested public in accordance with the persons. provisions of 5 U.S.C. 552, will be I. Self-Regulatory Organization’s available for Web site viewing and Statement of the Terms of Substance of printing in the Commission’s Public the Proposed Rule Change Reference Room, 100 F Street, NE., Washington, DC 20549, on official The Exchange proposes to amend its business days between the hours of 10 rules regarding the listing of $1 strike prices. The text of the proposed rule a.m. and 3 p.m. Copies of such filing also will be available for inspection and change is available on the Exchange’s Web site http://www.ise.com, at the copying at the principal office of the principal office of the Exchange, on the Exchange. All comments received will Commission’s Web site at http:// be posted without change; the www.sec.gov, and at the Commission’s Commission does not edit personal Public Reference Room. identifying information from submissions. You should submit only II. Self-Regulatory Organization’s information that you wish to make Statement of the Purpose of, and Statutory Basis for, the Proposed Rule publicly available. All submissions should refer to File Number SR–EDGA– Change 2011–01 and should be submitted on or In its filing with the Commission, the before February 22, 2011. self-regulatory organization included statements concerning the purpose of, For the Commission, by the Division of and basis for, the proposed rule change Trading and Markets, pursuant to delegated and discussed any comments it received authority.12 on the proposed rule change. The text Elizabeth M. Murphy, of these statements may be examined at Secretary. the places specified in Item IV below. [FR Doc. 2011–2131 Filed 1–31–11; 8:45 am] The self-regulatory organization has BILLING CODE 8011–01–P prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Supplementary Material .01 to ISE Rule 1 15 12 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 15:05 Jan 31, 2011 2 17 Jkt 223001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00084 Fmt 4703 Sfmt 4703 504 to improve the operation of the $1 Strike Program. Currently, the $1 Strike Program only allows the listing of new $1 strikes within $5 of the previous day’s closing price. In certain circumstances this has led to situations where there are no at-the-money $1 strikes for a day, despite significant demand. For instance, on November 15, 2010, the underlying shares of Isilon Systems Inc. opened at $33.83. It had closed the previous trading day at $26.29. Options were available in $1 intervals up to $31, but because of the restriction to only listing within $5 of the previous close, the Exchange was not able to add $32, $33, $34, $36, $37 or $38 strikes during the day. The Exchange proposes that $1 interval strike prices be allowed to be added immediately within $5 of the official opening price in the primary listing market. Thus, on any day, $1 Strike Program strikes may be added within $5 of either the opening price or the previous day’s closing price. On occasion, the price movement in the underlying security has been so great that listing within $5 of either the previous day’s closing price or the day’s opening price will leave a gap in the continuity of strike prices. For instance, if an issue closes at $14 one day, and the next day opens above $27, the $21 and $22 strikes will be more than $5 from either benchmark. The Exchange proposes that any such discontinuity be avoided by allowing the listing of all $1 Strike Program strikes between the closing price and the opening price. Additionally, issues that are in the $1 Strike Program may currently have $2.50 interval strike prices added that are more than $5 from the underlying price or are more than a nine months to expiration (long-term options series). In such cases, the listing of a $2.50 interval strike may lead to discontinuities in strike prices and also a lack of parallel strikes in different expiration months of the same issue. For instance, under the current rules, the Exchange may list a $12.50 strike in a $1 Strike Program issue where the underlying price is $24. This allowance was provided to avoid too large of an interval between the standard strike prices of $10 and $15. The unintended consequence, however, is that if the underlying price should decline to $16, the Exchange would not be able to list a $12 or $13 strike. If the underlying stayed near this level at expiration, a new expiration month would have the $12 and $13 strike but not the $12.50, leading to a disparity in strike intervals in different months of the same option class. This has also led to investor confusion, as they regularly request the addition of inappropriate E:\FR\FM\01FEN1.SGM 01FEN1 Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices srobinson on DSKHWCL6B1PROD with NOTICES strikes so as to roll a position from one month to another at the same strike level. To avoid this problem, the Exchange proposes to prohibit $2.50 interval strikes below $50 in all $1 Strike Program issues, including long term option series. At each standard $5 increment strike more than $5 from the price of the underlying security, the Exchange proposes to list the strike $2 above the standard strike for each interval above the price of the underlying security, and $2 below the standard strike, for each interval below the price of the underlying security, provided it meets the Options Listing Procedures Plan (‘‘OLPP’’) Provisions in ISE Rule 504A.3 For instance, if the underlying security was trading at $19, the Exchange could list, for each month, the following strikes: $3, $5, $8, $10, $13, $14, $15, $16, $17, $18, $19, $20, $21, $22, $23, $24, $25, $27, $30, $32, $35, and $37. Instead of $2.50 strikes for long-term options, the Exchange proposes to list one long-term $1 Strike option series strike in the interval between each standard $5 strike, with the $1 Strike being $2 above the standard strike price for each interval above the price of the underlying security, and $2 below the standard strike price, for each interval below the price of the underlying security. In addition, the Exchange may list the long-term $1 strike which is $2 above the standard strike just below the underlying price at the time of listing, and may add additional long-term options series strikes as the price of the underlying security moves, consistent with the OLPP. For instance, if the underlying is trading at $21.25, longterm strikes could be listed at $15, $18, $20, $22, $25, $27, and $30. If the underlying subsequently moved to $22, the $32 strike could be added. If the underlying moved to $19.75, the $13, $10, $8, and $5 strikes could be added. The Exchange also proposes that additional long-term option strikes may not be listed within $1 of an existing strike until less than nine months to expiration. Finally, the Exchange represents that it has the necessary systems capacity to support the small increase in new options series that will result from the changes to the $1 Strike Program. 3 Rule 504A codifies the limitation on strike price ranges outlined in the OLPP, which, except in limited circumstances, prohibits options series with an exercise price more than 100% above or below the price of the underlying security if that price is $20 or less. If the price of the underlying security is greater than $20, the Exchange shall not list new options series with an exercise price more than 50% above or below the price of the underlying security. VerDate Mar<15>2010 15:05 Jan 31, 2011 Jkt 223001 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) 4 and the rules and regulations thereunder and, in particular, the requirements of section 6(b) of the Act.5 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(5) 6 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, 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. In particular, the proposed rule change seeks to reduce investor confusion and address issues that have arisen in the operation of the $1 Strike Program by providing a consistent application of strike price intervals for issues in the $1 Strike Program. 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 unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 7 and Rule 19b– 4(f)(6) thereunder.8 4 15 U.S.C. 78s(b)(1). U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(5). 7 15 U.S.C. 78s(b)(3)(A). 8 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s intent to file the proposed rule change, along with a brief description and text of the proposed rule change, 5 15 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 5643 The Exchange has requested that the Commission waive the 30-day operative delay. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest because the proposal is substantially similar to that of another exchange that has been approved by the Commission.9 Therefore, the Commission designates the proposal operative upon filing.10 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–ISE–2011–06 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–2011–06. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 9 See Securities Exchange Act Release No. 63773 (January 25, 2011) (SR–NYSEAmex–2010–109). See also Securities Exchange Act Release No.63770 (January 25, 2011) (SR–NYSEArca–2010–106). 10 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\01FEN1.SGM 01FEN1 5644 Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices 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 website 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ISE– 2011–06 and should be submitted on or before February 22, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–2118 Filed 1–31–11; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63772; File No. SR–CBOE– 2011–006] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Listing of Option Series With $1 Strike Prices srobinson on DSKHWCL6B1PROD with NOTICES January 25, 2011. 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 12, 2011, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 1 15 VerDate Mar<15>2010 15:05 Jan 31, 2011 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend its rules regarding the listing of $1 strike prices. The text of the rule proposal is available on the Exchange’s Web site (http:// www.cboe.org/legal), at the Exchange’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the 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. 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 BILLING CODE 8011–01–P 11 17 Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1. Purpose The Exchange proposes to amend Interpretation and Policy .01 to Rule 5.5 to improve the operation of the $1 Strike Program. Currently, the $1 Strike Program only allows the listing of new $1 strikes within $5 of the previous day’s closing price. In certain circumstances this has led to situations where there are no atthe-money $1 strikes for a day, despite significant demand. For instance, on November 15, 2010, the underlying shares of Isilon Systems Inc. opened at $33.83. It had closed the previous trading day at $26.29. Options were available in $1 intervals up to $31, but because of the restriction to only listing within $5 of the previous close, the following strikes were not permitted to be added during the day: $32, $33, $34, $36, $37 and $38. The Exchange proposes that $1 interval strike prices be allowed to be added immediately within $5 of the official opening price in the primary listing market. Thus, on any day, $1 Strike Program strikes may be added within $5 of either the opening price or the previous day’s closing price. On 4 17 Jkt 223001 PO 00000 CFR 240.19b–4(f)(6). Frm 00086 Fmt 4703 Sfmt 4703 occasion, the price movement in the underlying security has been so great that listing within $5 of either the previous day’s closing price or the day’s opening price will leave a gap in the continuity of strike prices. For instance, if an issue closes at $14 one day, and the next day opens above $27, the $21 and $22 strikes will be more than $5 from either benchmark. The Exchange proposes that any such discontinuity be avoided by allowing the listing of all $1 Strike Program strikes between the closing price and the opening price. Additionally, issues that are in the $1 Strike Program may currently have $2.50 interval strike prices added that are more than $5 from the underlying price or are more than a nine months to expiration (long-term options series). In such cases, the listing of a $2.50 interval strike may lead to discontinuities in strike prices and also a lack of parallel strikes in different expiration months of the same issue. For instance, under the current rules, the Exchange may list a $12.50 strike in a $1 Strike Program issue where the underlying price is $24. This allowance was provided to avoid too large of an interval between the standard strike prices of $10 and $15. The unintended consequence, however, is that if the underlying price should decline to $16, the Exchange would not be able to list a $12 or $13 strike. If the underlying stayed near this level at expiration, a new expiration month would have the $12 and $13 strike but not the $12.50, leading to a disparity in strike intervals in different months of the same option class. This has also led to investor confusion, as they regularly request the addition of inappropriate strikes so as to roll a position from one month to another at the same strike level. To avoid this problem, the Exchange may not list series with $2.50 intervals (e.g., $12.50, $17.50) below $50 under Interpretation and Policy .05 of Rule 5.5 ($2.50 Strike Price Program) for any issue included within the $1 Strike Program, including long term option series. At each standard $5 increment strike more than $5 from the price of the underlying security, the Exchange proposes to list the strike $2 above the standard strike for each interval above the price of the underlying security, and $2 below the standard strike, for each interval below the price of the underlying security, provided it meets the Options Listing Procedures Plan (‘‘OLPP’’) Provisions in Rule 5.5A.5 For 5 Rule 5.5A codifies the limitation on strike price ranges outlined in the OLPP, which, except in limited circumstances, prohibits options series with an exercise price more than 100% above or below E:\FR\FM\01FEN1.SGM 01FEN1

Agencies

[Federal Register Volume 76, Number 21 (Tuesday, February 1, 2011)]
[Notices]
[Pages 5642-5644]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2118]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63771; File No. SR-ISE-2011-06]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Regarding the Listing of Option Series With $1 Strike Prices

January 25, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on January 14, 2011, the International Securities Exchange, LLC 
(``ISE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules regarding the listing of 
$1 strike prices. The text of the proposed rule change is available on 
the Exchange's Web site http://www.ise.com, at the principal office of 
the Exchange, on the Commission's Web site at http://www.sec.gov, 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, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Supplementary Material .01 to ISE 
Rule 504 to improve the operation of the $1 Strike Program. Currently, 
the $1 Strike Program only allows the listing of new $1 strikes within 
$5 of the previous day's closing price. In certain circumstances this 
has led to situations where there are no at-the-money $1 strikes for a 
day, despite significant demand. For instance, on November 15, 2010, 
the underlying shares of Isilon Systems Inc. opened at $33.83. It had 
closed the previous trading day at $26.29. Options were available in $1 
intervals up to $31, but because of the restriction to only listing 
within $5 of the previous close, the Exchange was not able to add $32, 
$33, $34, $36, $37 or $38 strikes during the day.
    The Exchange proposes that $1 interval strike prices be allowed to 
be added immediately within $5 of the official opening price in the 
primary listing market. Thus, on any day, $1 Strike Program strikes may 
be added within $5 of either the opening price or the previous day's 
closing price.
    On occasion, the price movement in the underlying security has been 
so great that listing within $5 of either the previous day's closing 
price or the day's opening price will leave a gap in the continuity of 
strike prices. For instance, if an issue closes at $14 one day, and the 
next day opens above $27, the $21 and $22 strikes will be more than $5 
from either benchmark. The Exchange proposes that any such 
discontinuity be avoided by allowing the listing of all $1 Strike 
Program strikes between the closing price and the opening price.
    Additionally, issues that are in the $1 Strike Program may 
currently have $2.50 interval strike prices added that are more than $5 
from the underlying price or are more than a nine months to expiration 
(long-term options series). In such cases, the listing of a $2.50 
interval strike may lead to discontinuities in strike prices and also a 
lack of parallel strikes in different expiration months of the same 
issue. For instance, under the current rules, the Exchange may list a 
$12.50 strike in a $1 Strike Program issue where the underlying price 
is $24. This allowance was provided to avoid too large of an interval 
between the standard strike prices of $10 and $15. The unintended 
consequence, however, is that if the underlying price should decline to 
$16, the Exchange would not be able to list a $12 or $13 strike. If the 
underlying stayed near this level at expiration, a new expiration month 
would have the $12 and $13 strike but not the $12.50, leading to a 
disparity in strike intervals in different months of the same option 
class. This has also led to investor confusion, as they regularly 
request the addition of inappropriate

[[Page 5643]]

strikes so as to roll a position from one month to another at the same 
strike level.
    To avoid this problem, the Exchange proposes to prohibit $2.50 
interval strikes below $50 in all $1 Strike Program issues, including 
long term option series. At each standard $5 increment strike more than 
$5 from the price of the underlying security, the Exchange proposes to 
list the strike $2 above the standard strike for each interval above 
the price of the underlying security, and $2 below the standard strike, 
for each interval below the price of the underlying security, provided 
it meets the Options Listing Procedures Plan (``OLPP'') Provisions in 
ISE Rule 504A.\3\ For instance, if the underlying security was trading 
at $19, the Exchange could list, for each month, the following strikes: 
$3, $5, $8, $10, $13, $14, $15, $16, $17, $18, $19, $20, $21, $22, $23, 
$24, $25, $27, $30, $32, $35, and $37.
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    \3\ Rule 504A codifies the limitation on strike price ranges 
outlined in the OLPP, which, except in limited circumstances, 
prohibits options series with an exercise price more than 100% above 
or below the price of the underlying security if that price is $20 
or less. If the price of the underlying security is greater than 
$20, the Exchange shall not list new options series with an exercise 
price more than 50% above or below the price of the underlying 
security.
---------------------------------------------------------------------------

    Instead of $2.50 strikes for long-term options, the Exchange 
proposes to list one long-term $1 Strike option series strike in the 
interval between each standard $5 strike, with the $1 Strike being $2 
above the standard strike price for each interval above the price of 
the underlying security, and $2 below the standard strike price, for 
each interval below the price of the underlying security. In addition, 
the Exchange may list the long-term $1 strike which is $2 above the 
standard strike just below the underlying price at the time of listing, 
and may add additional long-term options series strikes as the price of 
the underlying security moves, consistent with the OLPP. For instance, 
if the underlying is trading at $21.25, long-term strikes could be 
listed at $15, $18, $20, $22, $25, $27, and $30. If the underlying 
subsequently moved to $22, the $32 strike could be added. If the 
underlying moved to $19.75, the $13, $10, $8, and $5 strikes could be 
added.
    The Exchange also proposes that additional long-term option strikes 
may not be listed within $1 of an existing strike until less than nine 
months to expiration.
    Finally, the Exchange represents that it has the necessary systems 
capacity to support the small increase in new options series that will 
result from the changes to the $1 Strike Program.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') \4\ and the rules and 
regulations thereunder and, in particular, the requirements of section 
6(b) of the Act.\5\ Specifically, the Exchange believes the proposed 
rule change is consistent with Section 6(b)(5) \6\ requirements that 
the rules of an exchange be designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, 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. In particular, the proposed rule 
change seeks to reduce investor confusion and address issues that have 
arisen in the operation of the $1 Strike Program by providing a 
consistent application of strike price intervals for issues in the $1 
Strike Program.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 unsolicited written comments from members or other interested 
parties.

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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal is substantially similar to that of 
another exchange that has been approved by the Commission.\9\ 
Therefore, the Commission designates the proposal operative upon 
filing.\10\
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    \9\ See Securities Exchange Act Release No. 63773 (January 25, 
2011) (SR-NYSEAmex-2010-109). See also Securities Exchange Act 
Release No.63770 (January 25, 2011) (SR-NYSEArca-2010-106).
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-ISE-2011-06 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-2011-06. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule

[[Page 5644]]

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 website 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 the 
filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-ISE-2011-06 and should be submitted on or before 
February 22, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-2118 Filed 1-31-11; 8:45 am]
BILLING CODE 8011-01-P