[Federal Register Volume 67, Number 52 (Monday, March 18, 2002)]
[Notices]
[Pages 12071-12072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6457]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45541; File No. SR-ISE-2002-06]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the International Securities Exchange LLC, Relating to 
Minimum Pricing Increments

March 12, 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 February 12, 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 
Exchange. 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 ISE is proposing to reaffirm its current minimum pricing 
increments for quotations as $.05 for options trading at less than 
$3.00 and $.10 for options trading at $3.00 or more.

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

[[Page 12072]]

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
    In a release dated June 8, 2000, the Commission ordered the ISE, 
the other registered national securities exchanges, and the National 
Association of Securities Dealers, Inc. (``NASD'') to submit to the 
Commission, by June 8, 2001, a study regarding the effects of decimal 
trading. \3\ The Decimalization Order also required the exchanges and 
the NASD to submit proposed rule changes establishing minimum pricing 
increments for quotations in the securities they trade.
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    \3\ Securities Exchange Act Release No. 42914 (June 8, 2000), 65 
FR 38010 (June 19, 2000) (``Decimalization Order''). The Commission 
extended the date by which the studies were due to September 10, 
2001. Securities Exchange Act Release No. 44336 (May 22, 2001), 66 
FR 29368 (May 30, 2001)
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    On September 10, 2001, the ISE submitted its decimalization study 
(``Study''). Because the ISE did not have significant empirical data 
regarding the effects of decimalization on its market, the Exchange 
based its study on responses to a questionnaire it had sent to its 
members. The Study concluded that decimalization had little effect on 
the ISE market.
    The ISE also submitted its required rule change establishing 
minimum pricing increments for quotations. \4\ The Exchange established 
minimum increments of $.05 for options trading at less than $3.00 and 
$.10 for options trading at $3.00 or more. Those were the same 
increments the Exchange had applied during its conversion to decimal 
pricing. The purpose of this proposed rule change is to reaffirm the 
pricing increments in the ISE's rule in light of the results of the 
Study. Because the Study indicated that the conversion to decimal 
pricing did not have a significant effect on the ISE's market, the ISE 
does not believe it is necessary or appropriate at this time to change 
its minimum pricing increments.
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    \4\ Securities Exchange Act Release No. 44349 (May 24, 2001), 66 
FR 29617 (May 31, 2001).
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    2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b)(5) of the Act, \5\ in that it fosters cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transaction in 
securities, removes impediments to and perfects the mechanism for a 
free and open market and a national market system, and, in general, 
protects investors and the public interest.
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    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 Exchange has not solicited, and does not intend to solicit, 
comments on the 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

    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.

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 20549-0609. 
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 No. SR-ISE-2002-06 and should 
be submitted by April 8, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-6457 Filed 3-15-02; 8:45 am]
BILLING CODE 8010-01-P