
[Federal Register: June 17, 2010 (Volume 75, Number 116)]
[Notices]               
[Page 34493-34494]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jn10-118]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62271; File No. SR-ISE-2010-58]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Related to Trading Halts

June 10, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 10, 2010, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') filed with the Securities and Exchange 
Commission (the ``SEC'' or the ``Commission'') the proposed rule change 
as described in Items I, and II below, which items have been prepared 
by the self-regulatory organization. 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.
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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 Rule 702 (Trading Halts) to confirm 
that the Exchange will halt trading in an options class when a trading 
pause in the underlying security is initiated by the primary listing 
exchange. The text of the proposed rule changes is as follows, with 
additions italicized.

Rule 702. Trading Halts

    (a) and (b) no change.
    (c) Trading Pauses. Trading on the Exchange in any option contract 
shall be halted whenever trading in the underlying security has been 
paused by the primary listing market. Trading in such options contracts 
may be resumed upon a determination by the Exchange that the conditions 
that led to the pause are no longer present and that the interests of a 
fair and orderly market are best served by a resumption of trading, 
which in no circumstances will be before the Exchange has received 
notification that the underlying security has resumed trading on at 
least one exchange.
* * * * *

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 primary listing markets for U.S. stocks, as well as all other 
U.S. equity markets, are in the process of amending their rules so that 
they may, from time to time, issue a five-minute ``trading pause'' for 
an individual security if the price of such security moves 10% or more 
from a sale in a preceding five-minute period.\3\ This uniform market-
wide trading pause will initially cover individual securities included 
in the S&P 500[supreg] Index and is being implemented as a pilot 
concluding on December 10, 2010 (``trading pause pilot'').
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    \3\ E.g., Exchange Act Release No. 34-62126 (May 19, 2010), 75 
FR 28831 (May 24, 2010) (Notice for SR-NYSE-2010-39); Exchange Act 
Release No. 34-62129 (May 19, 2010), 75 FR 28839 (May 24, 2010) 
(Notice for SR-NASDAQ-2010-61); Exchange Act Release No. 34-62127 
(May 19, 2010), 75 FR 28837 (May 24, 2010) (Notice for SR-NYSEAmex-
2010-46); Exchange Act Release No. 34-62128 (May 19, 2010), 75 FR 
28830 (May 24, 2010) (Notice for SR-NYSEArca-2010-41); Exchange Act 
Release No. 34-62133 (May 19, 2010), 75 FR 28841 (May 24, 2010) 
(Notice for SR-FINRA-2010-25). See also infra note 4.
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    ISE Rule 702(a)(1) states that an Exchange official may halt 
trading in any stock option in the interests of fair and orderly 
market, taking into consideration factors such as whether trading in 
the underlying security has been halted or suspended in the primary 
market. ISE Rule 702(a)(3) further provides that the Exchange will halt 
trading for a class or classes of options contracts whenever there is a 
halt of trading in an underlying security in the primary market. In 
this respect, the Exchange notes that its trading system automatically 
halts trading upon the receipt of a halt message from the primary 
listing exchange.
    The purpose of this rule change is to confirm that the Exchange 
will automatically halt trading in securities when the primary listing 
exchanges initiate a trading pause. The proposed rule specifies that 
trading in options will resume when the Exchange determines that the 
conditions that led to the pause are no longer present and

[[Page 34494]]

that the interests of a fair and orderly market are best served by a 
resumption of trading. The rule also specifies that the Exchange will 
not resume trading until the underlying security has resumed trading on 
at least one exchange.\4\
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    \4\ The trading pause pilot allows the non-primary trading 
markets to initiate trading 10 minutes following a trading pause 
initiated by a primary listing exchange. E.g., Exchange Act Release 
No. 34-62123 (May 19, 2010), 75 FR 28844 (May 24, 2010) (Notice for 
SR-EDGX-2010-01); Exchange Act Release No. 34-62122 (May 19, 2010), 
75 FR 28833 (May 24, 2010) (Notice for SR-EDGA-2010-01); Exchange 
Act Release No. 34-62121 (May 19, 2010), 75 FR 28834 (May 24, 2010) 
(Notice for SR-BATS-2010-14); Exchange Act Release No. 34-62124 (May 
19, 2010), 75 FR 28828 (May 24, 2010) (Notice for SR-BX-2010-37); 
Exchange Act Release No. 34-62130 (May 19, 2010), 75 FR 28842 (May 
24, 2010) (Notice for SR-CHX-2010-10). If trading is initiated by 
one or more non-primary listing equities exchanges after 10 minutes, 
the Exchange will determine whether to wait until the primary 
listing market has resumed trading as well or whether the interests 
of a fair and orderly market are best served by a resumption of 
trading at that time.
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2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) that an exchange have rules that 
are designed to promote just and equitable principles of trade, and 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 proposal confirms 
that the Exchange will halt trading in options when a trading pause is 
initiated by the primary listing market for the underlying security.

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 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 or other interested 
parties.

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

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, provided that the self-regulatory 
organization has given the Commission written notice of its intent to 
file 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 proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \5\ and Rule 19b-
4(f)(6) thereunder.\6\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6). The Commission notes that the 
Exchange has met this requirement.
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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.\7\ 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 Commission approved filings from the exchanges 
and the Financial Industry Regulatory Authority to institute a single 
stock trading pause for equity securities that experience a 10% change 
in price during a five minute period.\8\ The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest because it will allow ISE to halt 
trading for individual equity options at the same time that the primary 
listing market implements the pilot for eligible underlying stocks.\9\
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    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ See Securities Exchange Act Release Nos. 62251 and 62252 
(June 10, 2010).
    \9\ 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).
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    At any time within 60 days of the filing of such 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.

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-2010-58 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2010-58. 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 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-2010-58 and should be 
submitted on or before July 8, 2010.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14605 Filed 6-16-10; 8:45 am]
BILLING CODE 8010-01-P

