[Federal Register Volume 67, Number 241 (Monday, December 16, 2002)]
[Notices]
[Pages 77115-77116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31552]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46959; File No. SR-ISE-2002-27]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the International Securities Exchange, Inc., Relating to the 
Repeal of Limitations on Orders

December 6, 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 November 21, 2002, the International Securities Exchange, Inc. 
(``ISE'' or ``Exchange''), 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 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 is proposing to repeal the provision in Rule 717 that 
prohibits Electronic Access Members (``EAMs'') from sending in more 
than one order every 15 seconds for the same beneficial owner in 
options on the same underlying security. Below is the text of the 
proposed rule change. Proposed deletions are in [brackets].
* * * * *

Rule 717. Limitations on Orders

* * * * *
    [(h) Multiple Orders for the Same Beneficial Account.
    Members shall not cause the entry of more than one order every 
fifteen (15) seconds for the account of the same beneficial owner in 
options on the same underlying security; provided, however that this 
shall not apply to multiple orders in different series of options on 
the same underlying security if such orders are part of a spread.]
* * * * *

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

[[Page 77116]]

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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the rule filing is to repeal the ISE's ``15-second 
speed bump.'' This rule prohibits EAMs from sending in more than one 
order every 15 seconds for the same beneficial owner in options on the 
same underlying security. The ISE adopted this speed bump in 2000 to 
protect ISE market makers from exposure across multiple series of 
options if they receive orders in many series at the same time.\3\ 
However, since adopting this rule, more sophisticated risk management 
tools have been developed, permitting market makers to limit risk on a 
market-wide basis. Accordingly, this rule is no longer necessary. Also, 
eliminating this restriction on trading will provide EAMs and their 
customers with enhanced access to the ISE.
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    \3\ See Securities Exchange Act Release No. 44017 (February 28, 
2001), 66 FR 13820 (March 7, 2001).
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under section 6(b)(5) \4\ 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.
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    \4\ 15 U.S.C. 78f(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 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

    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 self-regulatory organization 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-2002-27 and should 
be submitted by January 6, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-31552 Filed 12-13-02; 8:45 am]
BILLING CODE 8010-01-P