Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Retire a Pilot Program and To Harmonize ISE's Rules Regarding Listing Expirations With the Existing Rules of Other Exchanges, 63689-63691 [2011-26439]

Download as PDF Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Notices have rules requiring Professional order designations. The designation of Professional orders would not result in any different treatment of such orders for purposes of the Exchange’s Rules concerning order protection or routing to Away Exchanges. That is, all non broker or dealer orders, including those that meet the definition of Professional orders, would continue to be treated as Public Customers for purposes of the Exchange’s Rules regarding order protection and routing to Away Exchanges. As such, the Exchange believes the proposed rule change is consistent with the Act. Electronic Comments B. Self-Regulatory Organization’s Statement on Burden on Competition All submissions should refer to File Number SR–BATS–2011–041. 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 will also 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 No. SR–BATS– 2011–041 and should be submitted on or before November 3, 2011. The Exchange does not believe that the proposed rule change imposes any burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) 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 26 and Rule 19b– 4(f)(6)(iii) thereunder.27 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. sroberts on DSK5SPTVN1PROD with NOTICES 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: 26 15 27 17 16:50 Oct 12, 2011 Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–26437 Filed 10–12–11; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65502; File No. SR–ISE– 2011–63] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Retire a Pilot Program and To Harmonize ISE’s Rules Regarding Listing Expirations With the Existing Rules of Other Exchanges October 6, 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 September 26, 2011, the International Securities Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its rules to retire a pilot program and to harmonize ISE’s rules regarding listing expirations with the existing rules of other exchanges. 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. BILLING CODE 8011–01–P 1 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). VerDate Mar<15>2010 • 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–BATS–2011–041 on the subject line. 28 17 Jkt 226001 PO 00000 CFR 200.30–3(a)(12). Frm 00090 Fmt 4703 Sfmt 4703 63689 2 17 E:\FR\FM\13OCN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 13OCN1 63690 Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Notices 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 retire the Additional Expiration Months Pilot Program (‘‘Pilot Program’’) and to amend ISE’s rules regarding listing expirations. This filing is based on the existing rules of other options exchanges.3 ISE Rules Governing Listing of Expirations sroberts on DSK5SPTVN1PROD with NOTICES Pursuant to ISE Rule 504(e), ISE typically opens four expiration months for each class of options open for trading on the Exchange: the first two being the two nearest months, regardless of the quarterly cycle on which that class trades; the third and fourth being the next two months of the quarterly cycle previously designated by the Exchange for that specific class. Notwithstanding Rules 504(a) and 504(c), which presumably provide ISE with the flexibility to add additional expiration months, ISE has historically interpreted Rule 504(e) conservatively and viewed it to allow a maximum number of expirations that may be listed. In 2010, the Exchange established the Pilot Program pursuant to which ISE could list up to an additional two expiration months, for a total of six expiration months for each class of option open for trading on the Exchange.4 CBOE subsequently established a similar pilot program.5 After ISE and CBOE established their respective pilot programs, ISE submitted a filing in response to a PHLX filing regarding the listing of expirations.6 In the PHLX filing, PHLX amended its rules so that it could open ‘‘at least one expiration month’’ for each class of standard options open for trading on 3 See NASDAQ Options Market (‘‘NOM’’) Chapter IV, Section 6 (Series of Options Contracts Option for Trading), NASDAQ OMX PHLX, LLC (‘‘PHLX’’) Rule 1012 (Series of Options Listed for Trading) and Chicago Board Options Exchange (‘‘CBOE’’) Rule 5.5 (Series of Option Contracts Open for Trading). See also Securities Exchange Act Release Nos. 57478 (March 12, 2008), 73 FR 14521 (March 18, 2008) (SR–NASDAQ–2007–004 and NASDAQ– 2007–080) and 63700 (January 11, 2011) 76 FR 2931 (January 18, 2011) (SR–PHLX–2011–04). The PHLX filing was based on NOM’s existing rules. 4 See Securities Exchange Act Release No. 63104 (October 14, 2010), 75 FR 64773 (October 20, 2010) (SR–ISE–2010–91). 5 See Securities Exchange Act Release No. 63185 (October 27, 2010), 75 FR 67419 (November 2, 2010) (SR–ISE–CBOE–2010–97). 6 See Securities Exchange Act Release No. 64343 (April 26, 2011), 76 FR 24546 (May 2, 2011) (SR– ISE–2011–26). VerDate Mar<15>2010 16:50 Oct 12, 2011 Jkt 226001 PHLX.7 PHLX stated in its filing that this amendment was ‘‘based directly on the recently approved rules of another options exchange, namely Chapter IV, Sections 6 and 8’’ of NOM. Since PHLX’s rules did not hard code an upper limit on the maximum number of expirations that may be listed per class, ISE believed that PHLX (and NOM) had the ability of list expirations that ISE would not be able to list under its rules. As a result, ISE amended its rules by adding Supplementary Material .10 to Rule 504 and Supplementary Material .04 to Rule 2009 to permit ISE to list additional expiration months on options classes opened for trading on ISE if such expiration months are opened for trading on at least one other national securities exchange.8 Retire Additional Expiration Months Pilot and Adopt Amended Rules ISE initially established the Pilot Program because it did not believe it had the ability to list more than four expirations per class when an options class is opened for trading on the Exchange. Now that ISE has the ability to match the expiration listings of other exchanges 9 (that may exceed six expirations and may occur on a regular basis) the Exchange believes that the Pilot Program is no longer necessary and is proposing to retire it. To affect this change, the Exchange is proposing to delete Supplementary Material .08 to Rule 504, which sets forth the terms of the Pilot Program, and which is currently scheduled to expire on October 31, 2011. In addition, ISE’s ability to match the expirations listed by other exchanges is set forth in Supplementary Material .10 to Rule 504. This provision, however, only provides ISE with the ability the match expirations initiated by other options exchanges. To encourage competition and to place ISE on a level playing field, the Exchange should have the same ability as PHLX, NOM and CBOE to initiate expirations. Therefore, ISE is proposing to harmonize its rules with the rules of PHLX, NOM and CBOE by clarifying that ISE will open at least one expiration month and one series for each class opened for trading on the Exchange. To affect this change, the Exchange is proposing to amend the text of Rule 504(b) to track the rule text of NOM Chapter IV, Section 6, PHLX Rule 1012 and CBOE Rule 5.5 and to delete Rule 504(e). Finally, the Exchange is proposing to slightly modify Rule 504 regarding the 7 See id. at 24546–24547. id. at 24547. 9 See Supplementary Material .10 to ISE Rule 504. 8 See PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 opening of additional series. Specifically, the Exchange proposes to amend Rule 504(c) to permit the listing of additional series when (among other reasons) the market price of the underlying stock moves more than five strike prices from the initial exercise price or prices.10 Currently, Rule 504(c) permits the listing of additional series when the market price of the underlying stock moves substantially from the initial exercise price or prices. This proposed rule change again tracks PHLX, NOM and CBOE’s existing rule text. The Exchange believes the proposed rule change is proper, and indeed necessary, in light of the need to have rules that do not put the Exchange at a competitive disadvantage. ISE’s proposal puts the Exchange in the same position as PHLX, NOM and CBOE and provides the Exchange with the same ability to initiate and match identical expirations across exchanges for products that are multiply-listed and fungible with one another. The Exchange believes that the proposed rule change should encourage competition and be beneficial to traders and market participants by providing them with a means to trade on the Exchange securities that are initiated by the Exchange and listed and traded on other exchanges. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) 11 and the rules and regulations thereunder and, in particular, the requirements of Section 6(b) of the Act.12 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 13 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 to 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 will permit the Exchange to accommodate requests made by its Members and other market participants 10 Rule 504(c) also permits ISE to add additional series of options of the same class when the Exchange deems it necessary to maintain an orderly market and to meet customer demand. These ‘‘additional series’’ provisions are similar to existing provisions in NOM Chapter IV, Section 6, PHLX Rule 1012 and CBOE Rule 5.5. 11 15 U.S.C. 78s(b)(1). 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). E:\FR\FM\13OCN1.SGM 13OCN1 Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Notices to list additional expiration months and thus encourages competition without harming investors or the public interest. 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 14 and Rule 19b– 4(f)(6) thereunder.15 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 should promote competition by allowing the Exchange, without undue delay, to incorporate rules that previously have been adopted by other exchanges and thereby to list and trade option series that are trading on those other options exchanges. Therefore, the Commission designates the proposal operative upon filing.16 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if 14 15 U.S.C. 78s(b)(3)(A). 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. 16 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). sroberts on DSK5SPTVN1PROD with NOTICES 15 17 VerDate Mar<15>2010 16:50 Oct 12, 2011 Jkt 226001 63691 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Elizabeth M. Murphy, Secretary. 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: [FR Doc. 2011–26439 Filed 10–12–11; 8:45 am] 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–2011–63 on the subject line. Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by International Securities Exchange, LLC to Expand the Short Term Options Series Program BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65503; File No. SR–ISE– 2011–60] October 6, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Paper Comments notice is hereby given that on • Send paper comments in triplicate September 23, 2011, the International to Elizabeth M. Murphy, Secretary, Securities Exchange, LLC (‘‘ISE’’ or the Securities and Exchange Commission, ‘‘Exchange’’) filed with the Securities 100 F Street, NE., Washington, DC and Exchange Commission (‘‘SEC’’ or 20549–1090. ‘‘Commission’’) the proposed rule All submissions should refer to File change as described in Items I and II Number SR–ISE–2011–63. This file below, which Items have been prepared number should be included on the by the Exchange. The Commission is subject line if e-mail is used. To help the publishing this notice to solicit Commission process and review your comments on the proposed rule change, comments more efficiently, please use from interested persons. only one method. The Commission will 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 Exchange proposes to amend its amendments, all written statements rules to expand the Short Term Option with respect to the proposed rule Series Program. The text of the proposed change that are filed with the rule change is available on the Commission, and all written Exchange’s Web site https://www.ise. communications relating to the com, at the principal office of the proposed rule change between the Exchange, at the Commission’s Public Commission and any person, other than Reference Room, and at the those that may be withheld from the Commission’s Web site at https://www. public in accordance with the sec.gov. provisions of 5 U.S.C. 552, will be II. Self-Regulatory Organization’s available for website viewing and Statement of the Purpose of, and printing in the Commission’s Public Statutory Basis for, the Proposed Rule Reference Room, 100 F Street, NE., Change Washington, DC 20549, on official business days between the hours of 10 In its filing with the Commission, the a.m. and 3 p.m. Copies of the filing also Exchange included statements will be available for inspection and concerning the purpose of, and basis for, copying at the principal office of the the proposed rule change and discussed Exchange. All comments received will any comments it received on the be posted without change; the proposed rule change. The text of these Commission does not edit personal statements may be examined at the identifying information from places specified in Item IV below. The submissions. You should submit only self-regulatory organization has information that you wish to make prepared summaries, set forth in available publicly. All submissions should refer to File Number SR–ISE– 17 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2011–63 and should be submitted on or 2 17 CFR 240.19b–4. before November 3, 2011. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 E:\FR\FM\13OCN1.SGM 13OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 198 (Thursday, October 13, 2011)]
[Notices]
[Pages 63689-63691]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26439]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65502; File No. SR-ISE-2011-63]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Retire a Pilot Program and To Harmonize ISE's Rules Regarding
Listing Expirations With the Existing Rules of Other Exchanges

October 6, 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 September 26, 2011, the International Securities Exchange, LLC
(``ISE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``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.
---------------------------------------------------------------------------

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

The Exchange proposes to amend its rules to retire a pilot program
and to harmonize ISE's rules regarding listing expirations with the
existing rules of other exchanges. 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.

[[Page 63690]]

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 retire the Additional
Expiration Months Pilot Program (``Pilot Program'') and to amend ISE's
rules regarding listing expirations. This filing is based on the
existing rules of other options exchanges.\3\
---------------------------------------------------------------------------

\3\ See NASDAQ Options Market (``NOM'') Chapter IV, Section 6
(Series of Options Contracts Option for Trading), NASDAQ OMX PHLX,
LLC (``PHLX'') Rule 1012 (Series of Options Listed for Trading) and
Chicago Board Options Exchange (``CBOE'') Rule 5.5 (Series of Option
Contracts Open for Trading). See also Securities Exchange Act
Release Nos. 57478 (March 12, 2008), 73 FR 14521 (March 18, 2008)
(SR-NASDAQ-2007-004 and NASDAQ-2007-080) and 63700 (January 11,
2011) 76 FR 2931 (January 18, 2011) (SR-PHLX-2011-04). The PHLX
filing was based on NOM's existing rules.
---------------------------------------------------------------------------

ISE Rules Governing Listing of Expirations
Pursuant to ISE Rule 504(e), ISE typically opens four expiration
months for each class of options open for trading on the Exchange: the
first two being the two nearest months, regardless of the quarterly
cycle on which that class trades; the third and fourth being the next
two months of the quarterly cycle previously designated by the Exchange
for that specific class. Notwithstanding Rules 504(a) and 504(c), which
presumably provide ISE with the flexibility to add additional
expiration months, ISE has historically interpreted Rule 504(e)
conservatively and viewed it to allow a maximum number of expirations
that may be listed.
In 2010, the Exchange established the Pilot Program pursuant to
which ISE could list up to an additional two expiration months, for a
total of six expiration months for each class of option open for
trading on the Exchange.\4\ CBOE subsequently established a similar
pilot program.\5\
---------------------------------------------------------------------------

\4\ See Securities Exchange Act Release No. 63104 (October 14,
2010), 75 FR 64773 (October 20, 2010) (SR-ISE-2010-91).
\5\ See Securities Exchange Act Release No. 63185 (October 27,
2010), 75 FR 67419 (November 2, 2010) (SR-ISE-CBOE-2010-97).
---------------------------------------------------------------------------

After ISE and CBOE established their respective pilot programs, ISE
submitted a filing in response to a PHLX filing regarding the listing
of expirations.\6\ In the PHLX filing, PHLX amended its rules so that
it could open ``at least one expiration month'' for each class of
standard options open for trading on PHLX.\7\ PHLX stated in its filing
that this amendment was ``based directly on the recently approved rules
of another options exchange, namely Chapter IV, Sections 6 and 8'' of
NOM. Since PHLX's rules did not hard code an upper limit on the maximum
number of expirations that may be listed per class, ISE believed that
PHLX (and NOM) had the ability of list expirations that ISE would not
be able to list under its rules. As a result, ISE amended its rules by
adding Supplementary Material .10 to Rule 504 and Supplementary
Material .04 to Rule 2009 to permit ISE to list additional expiration
months on options classes opened for trading on ISE if such expiration
months are opened for trading on at least one other national securities
exchange.\8\
---------------------------------------------------------------------------

\6\ See Securities Exchange Act Release No. 64343 (April 26,
2011), 76 FR 24546 (May 2, 2011) (SR-ISE-2011-26).
\7\ See id. at 24546-24547.
\8\ See id. at 24547.
---------------------------------------------------------------------------

Retire Additional Expiration Months Pilot and Adopt Amended Rules
ISE initially established the Pilot Program because it did not
believe it had the ability to list more than four expirations per class
when an options class is opened for trading on the Exchange. Now that
ISE has the ability to match the expiration listings of other exchanges
\9\ (that may exceed six expirations and may occur on a regular basis)
the Exchange believes that the Pilot Program is no longer necessary and
is proposing to retire it. To affect this change, the Exchange is
proposing to delete Supplementary Material .08 to Rule 504, which sets
forth the terms of the Pilot Program, and which is currently scheduled
to expire on October 31, 2011.
---------------------------------------------------------------------------

\9\ See Supplementary Material .10 to ISE Rule 504.
---------------------------------------------------------------------------

In addition, ISE's ability to match the expirations listed by other
exchanges is set forth in Supplementary Material .10 to Rule 504. This
provision, however, only provides ISE with the ability the match
expirations initiated by other options exchanges. To encourage
competition and to place ISE on a level playing field, the Exchange
should have the same ability as PHLX, NOM and CBOE to initiate
expirations. Therefore, ISE is proposing to harmonize its rules with
the rules of PHLX, NOM and CBOE by clarifying that ISE will open at
least one expiration month and one series for each class opened for
trading on the Exchange. To affect this change, the Exchange is
proposing to amend the text of Rule 504(b) to track the rule text of
NOM Chapter IV, Section 6, PHLX Rule 1012 and CBOE Rule 5.5 and to
delete Rule 504(e).
Finally, the Exchange is proposing to slightly modify Rule 504
regarding the opening of additional series. Specifically, the Exchange
proposes to amend Rule 504(c) to permit the listing of additional
series when (among other reasons) the market price of the underlying
stock moves more than five strike prices from the initial exercise
price or prices.\10\ Currently, Rule 504(c) permits the listing of
additional series when the market price of the underlying stock moves
substantially from the initial exercise price or prices. This proposed
rule change again tracks PHLX, NOM and CBOE's existing rule text.
---------------------------------------------------------------------------

\10\ Rule 504(c) also permits ISE to add additional series of
options of the same class when the Exchange deems it necessary to
maintain an orderly market and to meet customer demand. These
``additional series'' provisions are similar to existing provisions
in NOM Chapter IV, Section 6, PHLX Rule 1012 and CBOE Rule 5.5.
---------------------------------------------------------------------------

The Exchange believes the proposed rule change is proper, and
indeed necessary, in light of the need to have rules that do not put
the Exchange at a competitive disadvantage. ISE's proposal puts the
Exchange in the same position as PHLX, NOM and CBOE and provides the
Exchange with the same ability to initiate and match identical
expirations across exchanges for products that are multiply-listed and
fungible with one another. The Exchange believes that the proposed rule
change should encourage competition and be beneficial to traders and
market participants by providing them with a means to trade on the
Exchange securities that are initiated by the Exchange and listed and
traded on other exchanges.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') \11\ and the rules
and regulations thereunder and, in particular, the requirements of
Section 6(b) of the Act.\12\ Specifically, the Exchange believes the
proposed rule change is consistent with the Section 6(b)(5) \13\
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 to 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 will permit the Exchange to
accommodate requests made by its Members and other market participants

[[Page 63691]]

to list additional expiration months and thus encourages competition
without harming investors or the public interest.
---------------------------------------------------------------------------

\11\ 15 U.S.C. 78s(b)(1).
\12\ 15 U.S.C. 78f(b).
\13\ 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 \14\ and Rule 19b-
4(f)(6) thereunder.\15\
---------------------------------------------------------------------------

\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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 should promote competition by allowing
the Exchange, without undue delay, to incorporate rules that previously
have been adopted by other exchanges and thereby to list and trade
option series that are trading on those other options exchanges.
Therefore, the Commission designates the proposal operative upon
filing.\16\
---------------------------------------------------------------------------

\16\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-ISE-2011-63 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-2011-63. 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 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-2011-63 and should be
submitted on or before November 3, 2011.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-26439 Filed 10-12-11; 8:45 am]
BILLING CODE 8011-01-P

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