[Federal Register Volume 69, Number 242 (Friday, December 17, 2004)]
[Notices]
[Pages 75576-75578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3702]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50839; File No. SR-ISE-2004-39]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2 by the 
International Securities Exchange, Inc., Relating to the Hours of 
Trading for Options on Fund Shares, Including the Nasdaq 100 Tracking 
Stock

December 10, 2004.
    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 December 2, 2004, the International Securities Exchange, Inc. 
(``Exchange'' or ``ISE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
On December 6, 2004, the Exchange filed Amendment No. 1 to the proposed 
rule change, and on December 9, 2004, the Exchange filed Amendment No. 
2 to the proposed rule change.\3\ The Exchange filed the proposed rule 
change, as amended, as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act\4\ and Rule 19b-4(f)(6) 
thereunder.\5\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The substance of Amendment Nos. 1 and 2 is incorporated into 
this notice.
    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    ISE proposes to codify its existing policy relating to hours of 
trading for options on certain Fund Shares, including the Nasdaq 100 
Tracking Stock (``QQQ''). The text of the proposed rule change, as 
amended, is set forth below.

[[Page 75577]]

    Proposed new language is in italics. Proposed deletions are in 
brackets.
* * * * *
Rule 700. Days and Hours of Business
    The Board shall determine the days the Exchange shall be open for 
business (referred to as ``business days'') and the hours of such days 
during which transactions may be made on the Exchange. No Member shall 
make any bid, offer, or transaction on the Exchange before or after 
such hours.
    (a) Except for unusual conditions as may be determined by the 
Board, hours during which transactions in options on individual stocks 
may be made on the Exchange shall correspond to the normal business 
days and hours for business set forth in the rules of the primary 
market trading the stocks underlying Exchange options; provided, 
however, that transactions may be effected in an options class on the 
Exchange until two (2) minutes after the primary market on which the 
underlying stock trades closes for trading.
    (b) Options on Fund Shares, as defined in Rule 502(h), may be 
traded on the Exchange until 4:15 p.m. each business day.
    [(b)](c) The Exchange shall not be open for business on the 
following holidays: New Year's Day, Martin Luther King, Jr. Day, 
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor 
Day, Thanksgiving Day or Christmas Day. When any holiday observed by 
the Exchange falls on a Saturday, the Exchange will not be open for 
business on the preceding Friday. When any holiday observed by the 
Exchange falls on a Sunday, the Exchange will not be open for business 
on the following Monday, unless unusual business conditions exist at 
the time.
* * * * *

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

    In its filing with the Commission, ISE included statements 
concerning the purpose of, and statutory 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. 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 purpose of this proposed rule change is to amend ISE Rule 700 
(``Days and Hours of Business'') by adding a new subsection (b) that 
will codify ISE's practice of trading options on certain Fund Shares, 
including the QQQ, until 4:15 p.m. (New York Time). The 4:15 p.m. 
termination coincides with the trading hours termination time for 
options on stock indexes. Recently, the Nasdaq Stock Market, Inc. 
(``Nasdaq'') announced its intention to transfer the listing of the QQQ 
from the American Stock Exchange (``Amex'') to Nasdaq, effective as of 
the opening of trading on December 1, 2004. QQQ previously traded on 
the Amex until 4:15 p.m., but as of December 1, 2004, Nasdaq closes 
trading in the QQQ at 4 p.m., but will allow trading in the QQQ to 
continue in after hours trading until 8 p.m. ISE intends to continue to 
trade options on the QQQ during its regular trading session until 4:15 
p.m., as it does options on certain other Fund Shares and indexes.
    ISE notes that Amex and the Pacific Exchange, Inc. (``PCX'') trade 
options on QQQ until 4:15 p.m. (New York Time) under their respective 
rules.\6\ The new proposed subsection (b) to ISE Rule 700 will codify 
ISE's longstanding practice of trading options on QQQ and certain Fund 
Shares until 4:15 p.m. The ISE submits that this rule change will serve 
to avoid any confusion in the marketplace over the trading hours of QQQ 
options in light of Nasdaq's shift of the listing venue of QQQ and to 
codify the trading hours for options on certain Fund Shares and on QQQ.
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    \6\ See Commentary .02 to Amex Rule 1 and Commentary .02 to PCX 
Rule 7.1.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5) of the Act,\8\ in particular, in that it is 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 of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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

    The Exchange has designated the proposed rule change, as amended, 
as a ``non-controversial'' rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\10\ The Exchange represents that the foregoing rule change: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) by its terms, does not become operative for 30 
days after the date of this filing, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest. The Exchange has requested that the Commission 
waive the five-day pre-filing notice requirement and the 30-day 
operative delay period for ``non-controversial'' proposals and make the 
proposed rule change, as amended, effective and operative upon filing.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
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    The Commission has determined to waive the five-day pre-filing 
notice requirement and the 30-day operative delay period.\11\ The 
Commission notes that accelerating the operative date will allow the 
trading hours for options on the QQQ to remain unchanged and provide 
continuity to the marketplace. Therefore, the foregoing proposed rule 
change has become immediately effective and operative upon filing 
pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \11\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).

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[[Page 75578]]

    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.\14\
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    \14\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers that period 
to commence on December 9, 2004, the date the Exchange filed 
Amendment No. 2 to the proposed rule change. See 15 U.S.C. 
78s(b)(3)(C).
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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 [email protected]. Please include 
File Number SR-ISE-2004-39 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-ISE-2004-39. 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 inspection 
and copying in the Commission's Public Reference Room, 450 Fifth 
Street, NW., Washington, DC 20549. 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 
available publicly. All submissions should refer to File Number SR-ISE-
2004-39 and should be submitted on or before January 7, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-3702 Filed 12-16-04; 8:45 am]
BILLING CODE 8010-01-P