[Federal Register Volume 67, Number 22 (Friday, February 1, 2002)]
[Notices]
[Pages 5018-5019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2488]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45337; File No. SR-ISE-2002-02]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the International Securities 
Exchange LLC, Relating to an Extension of the Interim Intermarket 
Linkage Program

January 25, 2002.
    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 16, 2002, the International Securities Exchange LLC 
(``Exchange'' or ``ISE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which items have been prepared by the ISE. 
The Exchange filed this proposal under section 19(b)(3)(A) of the 
Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ CFR 240.19b-4(f)(6). The ISE requested that the Commission 
waive the 30-day operative delay. The ISE provided the Commission 
with notice of its intention to file this proposal on January 14, 
2002.
---------------------------------------------------------------------------

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

    The ISE is proposing to extend the effective date of its rules 
providing for an ``interim linkage'' from January 31, 2001 to the 
earlier of: January 31, 2003; or the complete implementation of the 
permanent intermarket linkage in the options market.\5\
---------------------------------------------------------------------------

    \5\ The Commission approved the Plan for the Purpose of Creating 
and Operating an Intermarket Options Linkage (``Linkage Plan'') in 
July 2000. See Securities Exchange Act Release No. 43086 (July 28, 
2000), 65 FR 48023 (August 4, 2000).
---------------------------------------------------------------------------

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
    On January 30, 2001, the Commission approved rules of the ISE 
permitting the ISE to implement an ``interim linkage'' with the other 
options exchanges.\6\ The interim linkage utilizes existing order types 
to permit market makers on each of the exchanges to send orders to 
their counterparts on the other exchanges. Interim linkage orders are 
treated as ``customer'' orders upon receipt on an exchange and, thus, 
are eligible for automatic execution and similar processing 
efficiencies.
---------------------------------------------------------------------------

    \6\ Securities Exchange Act Release No. 43904 (January 30, 
2001), 66 FR 9112 (February 6, 2001) (File No. SR-ISE-00-15).
---------------------------------------------------------------------------

    The options exchanges implemented the interim linkage pending 
completion of a permanent linkage. That linkage will provide enhanced 
connectivity between the markets and will have additional rules and 
mechanisms to help investors achieve best execution of their orders. 
While work continues on the permanent linkage, the ISE currently does 
not believe that it will be implemented until late this year. At the 
same time, the ISE's interim linkage rules will expire on January 31, 
2002. ISE believes that the interim linkage has worked well and that it 
will benefit investors to continue operation of this linkage pending 
completion of the permanent linkage. The purpose of the proposed rule 
change is to extend the effectiveness of these rules until the full 
implementation of the permanent linkage or January 31, 2003, whichever 
comes first.

[[Page 5019]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\7\ in general, and furthers the 
objectives of section 6(b)(5),\8\ in particular, because it should 
prevent fraudulent and manipulative acts and practices, promote just 
and equitable principles of trade, foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transaction in 
securities, remove impediments to and perfect the mechanism for a free 
and open market and a national market system, and, in general, protect 
investors and the public interest.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will 
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: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
(3) does not become operative for 30 days from the date of filing, or 
such shorter date as the Commission may designate, if consistent with 
the protection of investors and the public interest; and (4) the 
Exchange provided the Commission with notice of its intent to file the 
proposed rule change at least five days prior to the filing date, the 
proposed rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \11\ does not 
become operative prior to 30 days after the date of filing or such 
shorter time as the Commission may designate if such action is 
consistent with the protection of investors and the public interest. 
The ISE has requested, in order to permit the uninterrupted operation 
of the interim linkage, that the Commission accelerate the 
implementation of the proposed rule change so that it may take effect 
prior to the 30 days specified in Rule 19b-4(f)(6)(iii).\12\ The 
Commission finds that the proposed rule change is consistent with the 
protection of investors and the public interest and, therefore, has 
determined to make the proposed rule change operative as of the date of 
this notice.
---------------------------------------------------------------------------

    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    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.

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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0069. 
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 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-2002-02 and should be 
submitted by February 22, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Margaret H. McFarland,
Deputy Secretary.
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 02-2488 Filed 1-31-02; 8:45 am]
BILLING CODE 8010-01-U