[Federal Register Volume 74, Number 225 (Tuesday, November 24, 2009)]
[Notices]
[Pages 61400-61402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28096]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61010; File No. SR-ISE-2009-87]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing of Proposed Rule Change Relating to Foreign
Currency Options
November 16, 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 October 27, 2009, the International Securities Exchange, LLC
(``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
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 Exchange proposes to amend its rules regarding Foreign Currency
Options (``FX Options'').\3\ 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.
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\3\ ISE began trading FX options on April 17, 2007. See
Securities Exchange Act Release No. 55575 (April 3, 2007), 72 FR
17963 (April 10, 2007) (SR-ISE-2006-59) (the ``FX Options Filing'').
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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 self-regulatory organization
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
[[Page 61401]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE proposes to amend its rules regarding FX Options. Specifically,
the Exchange proposes to amend ISE Rule 2205 by adding a provision that
permits the Exchange to list a single strike price of one cent ($0.01)
for each expiration month for FX Options opened for trading on the
Exchange.\4\ The proposed one cent strike would be in addition to the
strike prices listed by the Exchange pursuant to ISE Rule 2205.
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\4\ The Commission notes that the proposed text for ISE Rule
2205 is as follows:
Rule 2205. Series of Foreign Currency Options Open for Trading
(a)-(b) No Change.
(c) For each expiration month opened for trading, in addition to
the strike prices listed by the Exchange pursuant to this Rule 2205,
the Exchange shall also list a single strike price of one cent
($0.01).
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Currently, pursuant to ISE Rule 2205, after a class of options
contracts on any underlying currency pair has been approved for listing
and trading, the Exchange may open for trading series of FX Options
that expire in consecutive monthly intervals (ISE Rule 2205(a)(1)(A)),
in three or ``cycle'' month intervals (ISE Rule 2205(a)(1)(B)), or that
have up to 36 months to expiration (ISE Rule 2205(a)(1)(C)). For
example, pursuant to ISE Rule 2205(a)(1)(A), with respect to each class
of FX Options, the Exchange may open for trading series of options
having up to four consecutive expiration months, with the shortest term
series having no more than two months to expiration. The Exchange may
also open additional consecutive month series of the same class for
trading at or about the time a prior consecutive month series expires,
and the expiration month of each such new series shall normally be the
month immediately succeeding the expiration month of the then
outstanding consecutive month series of the same class of options
having the longest remaining time to expiration. Under this proposed
rule change, for each such month opened for trading, the Exchange would
list an additional strike price of one cent.
The Exchange notes that adding a one cent strike for FX Options
will result in a single deep in the money call option to provide
investors with exposure similar to that of spot. The Exchange believes
creating such exposure provides an opportunity to attract a broader
range of market participants by offering a product that, in particular,
accommodates retail spot foreign currency traders.
The Exchange also believes that a $0.01 strike price would enable
certain trading strategies that were previously unavailable to
investors. Specifically, investors would be able to engage in
strategies that offer similar exposure to a tied-to-spot trade, such as
a buy-write trade. The proposed new strike would also appeal to
securities brokers that do not currently offer spot foreign currency
trading. Many online securities brokers have not offered spot foreign
currency trading to their customers because it is not a listed and
centrally-cleared product. ISE's proposed rule change offers such
brokers an opportunity to expand their offering beyond equities and
retain customer assets that may otherwise go to spot foreign currency
trading venues that operate outside of U.S. regulatory jurisdiction.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations under the Act applicable to a national securities exchange
and, in particular, the requirements of Section 6(b) of the Act.\5\
Specifically, the Exchange believes the proposed rule change is
consistent with Section 6(b)(5) of the Act's \6\ requirements that the
rules of a national securities exchange be designed to promote just and
equitable principles of trade, to prevent fraudulent and manipulative
acts and, in general, to protect investors and the public interest. In
particular, the proposed rule change will allow the Exchange to list a
single one cent strike for each expiration month of FX Options opened
for trading and thereby provide investors with the ability to engage in
previously unavailable spot foreign currency trading strategies.
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\5\ 15 U.S.C. 78f(b).
\6\ 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
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 the 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. 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-2009-87 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2009-87. 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, on official business
days between
[[Page 61402]]
the hours of 10 a.m. and 3 p.m. 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-
2009-87 and should be submitted on or before December 15, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-28096 Filed 11-23-09; 8:45 am]
BILLING CODE 8011-01-P