[Federal Register Volume 74, Number 65 (Tuesday, April 7, 2009)]
[Notices]
[Pages 15788-15789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-7833]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59680; File No. SR-ISE-2009-13]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to the Definition of ``Primary Market''

April 1, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 25, 2009, the International Securities Exchange, LLC (the 
``Exchange'' or the ``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 Exchange has filed the proposal pursuant to 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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

    The Exchange proposes to amend Rule 701 (Trading Rotations) to 
replace references to the ``primary market'' with respect to an 
underlying security with references to ``market for the underlying 
security.'' The text of the proposed rule change is available on the 
Exchange's Web site http://www.ise.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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 Exchange 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 self-regulatory organization 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 the proposed rule change is to amend the current 
definition of ``primary market'' in ISE Rule 701 to allow the Primary 
Market Makers (``PMMs'') more flexibility in opening trading in a 
particular class of options.
    Currently, Exchange Rule 701(b)(2) requires that the PMM open each 
class of options promptly following the opening of the underlying 
security in the primary market where it is traded. An underlying 
security is deemed to be open on the primary market where it is traded 
if such market has (i) reported a transaction in the underlying 
security, or (ii) disseminated opening quotations for the underlying 
security and not given an indication of the delayed opening, whichever 
occurs first.
    The Exchange believes that the current definition of ``primary 
market'' and when a security on such primary market has been ``opened 
for trading'' is insufficient to capture the various marketplaces that 
might be determined to be the ``primary market'' for such underlying 
securities. Because underlying securities trade on multiple exchange 
platforms and various Electronic Communication Networks (``ECNs'') and 
other venues, the term ``primary market'' has become increasingly 
difficult to define in determining the principal market in which the 
underlying security is traded.
    Accordingly, the Exchange proposes to amend Rule 701 to eliminate 
the requirement that PMMs wait to open each class of options until the 
``primary market'' has opened the underlying security, and redefine 
``primary market'' by adopting a definition of ``market for the 
underlying security''. Under this proposal, the term ``market for the 
underlying security'' would mean either the primary listing market, the 
primary volume market (defined as the market with the most liquidity in 
that underlying security for the previous two calendar months), or the 
first market to open the underlying security as determined by the 
Exchange on an issue-by-issue basis and communicated to the members on 
the Exchange's Web site.
    The Exchange believes that the elimination of the term ``primary 
market'' from rule, together with the proposed definition of ``market 
for the underlying security,'' will allow PMMs to open classes of 
options expeditiously and in tandem with the other markets, thus 
allowing for a more orderly opening rotation.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) that an exchange have rules that are 
designed to promote just and equitable principles of trade, and 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. The Exchange believes that the 
proposed rule change will provide PMMs greater flexibility in opening 
trading in options, which should result in options opening across all 
markets in a fair and orderly manner.

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 one that: 
(i) Does not significantly affect the

[[Page 15789]]

protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest. Additionally, the 
Exchange provided the Commission with written notice of its intention 
to file the proposed rule change at least five business days before its 
filing. Therefore, the foregoing rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \5\ and Rule 19b-4(f)(6) 
thereunder.\6\ The Exchange believes that the proposed rule change will 
provide PMMs with greater flexibility in opening trading in options, 
which should result in options opening across all markets in a fair and 
orderly manner. Additionally, this proposed rule change is 
substantially similar to Chicago Board Options Exchange (``CBOE'') Rule 
6.2B(b) \7\ and NASDAQ OMX PHLX, Inc. (``Phlx'') Rule 1017.\8\ For the 
foregoing reasons, this rule filing qualifies for immediate 
effectiveness as a ``non-controversial'' rule change under paragraph 
(f)(6) of Rule 19b-4 of the Act.\9\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
    \7\ See Securities Exchange Act Release No. 56600 (October 2, 
2007), 72 FR 57619 (October 10, 2007)(SR-CBOE-2007-88).
    \8\ See Securities Exchange Act Release No. 58929 (November 12, 
2008), 73 FR 68471 (November 18, 2008)(SR-Phlx-2008-75).
    \9\ 17 CFR 240.19b-4(f)(6).
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    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. 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 No. SR-ISE-2009-13 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2009-13. 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 Commissions 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, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of such filings also will be available for inspection and 
copying at the principal office of the ISE. 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-2009-13 and should be submitted on 
or before April 28, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-7833 Filed 4-6-09; 8:45 am]
BILLING CODE 8010-01-P