[Federal Register Volume 66, Number 142 (Tuesday, July 24, 2001)]
[Notices]
[Pages 38445-38446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18377]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44567; File No. SR-ISE-00-11]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the International Securities Exchange 
LLC, Relating to Membership Qualifications

July 18, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'');\1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on November 28, 2000, the International Securities Exchange 
LLC (``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change as 
described in Items, I, II, and III below, which Items have been 
prepared by the ISE.\3\ 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\ On July 2, 2001, the ISE filed Amendment No. 1 to the 
proposal. Amendment No. 1 eliminated a provision that would have 
amended the text of ISE Rule 302, ``Qualification of Members,'' to 
state that each ISE member must be a member of at least one other 
national securities exchange registered under Section 6 of the Act 
or a national securities association registered under Section 15A of 
the Act that is designated responsibility for examining the member 
for compliance with applicable financial responsibility rules 
pursuant to Exchange Act Rule 17d-1. In addition, the ISE notes in 
Amendment No. 1 that all ISE members currently are required to be a 
member of another self-regulatory organization (``SRO''), and that 
it would be necessary for the ISE to submit a rule change to the 
Commission before permitting any ISE members to be solely a member 
of the ISE.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The ISE proposes to amend ISE Rule 302(b) to debate the requirement 
that ISE members be organized under the laws of one of the states of 
the United States or under other laws as the ISE's Board shall approve. 
In addition, the ISE proposes to amend ISE Rule 302(b) to provide that 
an ISE member that does not maintain an office in the U.S. responsible 
for preparing and maintaining financial and other reports required to 
be filed with the Commission and the ISE must: (1) Prepare all such 
reports, and maintain a general ledger chart of account and any 
description thereof, in English and in U.S. dollars; (2) reimburse the 
ISE for any expense incurred in connection with examinations of the 
member to the extent that such expenses exceed the cost of examining a 
member located within the continental United States; and (3) ensure the 
availability of an individual fluent in English and knowledgeable in 
securities and financial matters to assist representatives of the ISE 
during examinations.
    The text of the proposed rule change is available at the ISE and at 
the Commission.

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 ISE 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 ISE 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 ISE proposes to eliminate the current requirement in paragraph 
(b) of ISE Rule 302 that members be formed under the laws of the United 
States or ``under other laws as the Board shall approve.'' Because all 
ISE members are required to be U.S. registered broker-dealers and 
members of another SRO, the Exchange sees no purpose in requiring its 
Board of Directors to review and approve laws of foreign countries. The 
ISE notes that its rules and membership application contain specific 
qualifications and information requests that are applicable equally to 
domestic and foreign-organized broker-dealers.
    In addition, the ISE proposes to add to ISE Rule 302(b) three 
requirements specific to foreign-based ISE members to minimize any 
additional burden on the Exchange that may be presented by language 
differences or location: (1) Preparation of reports and maintenance of 
a general ledger in English and U.S. dollars; (2) reimbursement to the 
Exchange for examination expenses that exceed the cost of U.S.-based 
examinations; and (3) availability of a person fluent in English and 
knowledgeable in securities and finance to assist the Exchange during 
examinations.
(2) Basis
    The ISE believes that the proposed rule change is consistent with 
the requirement under Section 6(b)(5) of the Act that an exchange have 
rules that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, 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.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The ISE believes that 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 ISE has not solicited, and does not intend to solicit, comments 
on the proposed rule change. The ISE 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

[[Page 38446]]

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change and Amendment No. 1 are consistent with the Act. Persons making 
written submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609. 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. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the ISE. All submissions should refer to file 
number SR-ISE-00-11 and should be submitted by August 14, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-18377 Filed 7-23-01; 8:45 am]
BILLING CODE 8010-01-M