
[Federal Register: October 28, 2009 (Volume 74, Number 207)]
[Notices]               
[Page 55613-55614]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc09-131]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60854; File No. SR-ISE-2009-84]

 
 Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the International Securities 
Exchange, LLC To Amend ISE Rules Relating to the Minimum Size 
Requirement for Quotations

October 21, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on October 19, 2009, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') 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 Exchange has filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 pertaining to the minimum 
size requirement for quotations. The text of the proposed rule change 
is available on the Exchange's Web site 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
    This proposed rule change is based on a filing previously submitted 
by the Chicago Board Options Exchange (``CBOE'') that was effective on 
filing.\5\ ISE proposes to amend its rules pertaining to the minimum 
size requirement for quotations. Currently, ISE Rule 804 requires that 
unless the Exchange has declared a fast market pursuant to ISE Rule 
704, a market maker may not initially enter a bid or offer of less than 
ten (10) contracts. ISE now proposes to amend its rules to allow the 
Exchange to set a minimum quotation size requirement on a class by 
class basis, provided the minimum set by the Exchange is at least one 
contract. ISE would not impose a minimum quotation size requirement 
greater than 10 contracts.
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    \5\ See Securities Exchange Act Release No. 58828 (October 21, 
2008), 73 FR 63749 (October 27, 2008) (SR-CBOE-2008-107).
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    ISE recently listed options on Berkshire Hathaway Inc.'s Class B 
securities (``baby Berkshires'') and under the Exchange's current 
rules, ISE market makers are required to quote in this product for at 
least 10 contracts. With the underlying security trading above $3,000, 
the minimum value for a trade in baby Berkshire options is more than 
$30,000, which effectively removes ISE's market makers from competing 
with the other exchanges that do not have a 10 contract minimum 
quotation requirement. Pursuant to this proposed rule change, ISE 
expects to lower the minimum quotation size requirement for baby 
Berkshire options from 10 contracts to one contract. Further, ISE 
believes it should have the flexibility to change the minimum size 
requirement on a class by class basis depending on market conditions 
and the trading and liquidity in a particular option class and its 
underlying security. ISE notes that the minimum quotation size 
requirement for market makers on CBOE, NYSEArca and the Nasdaq Options 
Market is only one contract (see CBOE Rules 6.2B, 8.7, 8.14, 8.15A, 
NYSEArca Rule 6.37B and Nasdaq Options Market Rule Section 6(a)). As a 
result, ISE believes the proposed rule change is based on and similar 
to the rules of other options exchanges.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') \6\ and the rules and 
regulations thereunder and, in particular, the requirements of Section 
6(b) of the Act.\7\ Specifically, the Exchange believes the proposed 
rule change is consistent with the Section 6(b)(5) \8\ 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, because it will permit the Exchange 
to set a minimum quotation size requirement on a class by class basis, 
provided the minimum size is at least one contract. ISE believes that 
this flexibility will enable the Exchange to take into consideration 
market conditions and the trading and liquidity in a particular option 
class and its underlying security.
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    \6\ 15 U.S.C. 78a.
    \7\ 15 U.S.C. 78(f)(b).
    \8\ 15 U.S.C. 78(f)(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

[[Page 55614]]

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms, does not become operative for 30 days after the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest, it 
has become effective pursuant to Section 19(b)(3)(A) \9\ of the Act and 
Rule 19b-4(f)(6) \10\ thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing.\11\ However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requested that the Commission waive 
the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii),\12\ 
which would make the rule change operative immediately.
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    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the 
Commission notice of its 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. ISE has satisfied this requirement.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it would allow the Exchange to immediately begin to set the 
minimum quotation size on a class-by-class basis as is done currently 
on other exchanges.\13\ Accordingly, the Commission designates the 
proposed rule change as operative upon filing with the Commission.\14\
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    \13\ See note 5, supra.
    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.\15\
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    \15\ 15 U.S.C. 78s(b)(3)(C).
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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-2009-84 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-2009-84. 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 change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of 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 available publicly. All 
submissions should refer to File Number SR-ISE-2009-84 and should be 
submitted on or before November 18, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-25828 Filed 10-27-09; 8:45 am]

BILLING CODE 8011-01-P
