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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by the International Securities Exchange LLC, Relating to Listing Procedures

 

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December 4, 2000.

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 15, 2000, 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 ISE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Back to Top

The ISE is proposing to amend the procedures by which it lists options to conform its procedures to those currently in place at the other options exchanges. The text of the proposed rule change is available at the Commission and the ISE.

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

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, 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 ISE proposes to amend its listing procedures to conform to the procedures employed by the American Stock Exchange LLC, the Chicago Board Options Exchange, Incorporated, the Pacific Exchange, Inc., and the Philadelphia Stock Exchange, Inc. These exchanges long have followed the uniform listing procedures contained in the Joint Exchange Options Plan (“Plan”), which the Commission has approved as rules of each of those exchanges. [3] However, the Plan historically focused on the listing of new options, not the listing of options already trading on another exchange. Among other things, the Plan's procedures require an exchange listing an option to inform The Options Clearing Corporation (“OCC”) of the proposed listing, as well as to provide notice of the listing to all the other markets.

The ISE adopted the Plan, with certain modifications, prior to its launch of trading. The most significant modification in the ISE's version of the Plan relates to the listing of options already trading on another exchange (“multiple-listing procedures”). While the other exchanges have followed informal procedures regarding multiple listings (primarily the requirement to provide each other with three days notice of proposed multiple listings that have been trading for more than ten days), the multiple-listing procedures are not included in the Plan. The ISE codified the multiple-listing procedures in its rules, which the Commission approved as part of the ISE's registration. [4]

The four other options exchanges recently settled an enforcement action with the Commission and an antitrust action with the Department of Justice in which the government claimed, among other things, that the Plan contains anticompetitive elements. The Commission mandated that the four exchanges work together, and with the ISE, to eliminate these anticompetitive provisions. [5] One anticompetitive provision that the Commission identified is the requirement that exchanges provide three-days notice of a proposed multiple listing. To address this concern, the other exchanges have received no-action letters from Commission staff allowing them to list a multiply-traded option with one days notice of the intention to list an option class to OCC and the other exchanges listing that option. The ISE must amend its rules to achieve this same result because it has codified the three days notice provision for multiple listings in its rules. The Proposed rule change will conform the ISE's listing procedures to those of the other exchanges by providing for one days notice to OCC and the other listing exchanges of a new multiple listing.

In addition, the ISE is also proposing to eliminate the prohibition against any exchange that was not a selecting or joining exchange commencing trading the selected option prior to the eighth business day following notification by the selecting and/or joining exchanges of the intention to certify the option. The Exchange believes that this change will conform its listing practices to those of the other options exchanges.

2. Basis

The Exchange believes the basis for the proposed rule change is the requirement under section 6(b)(5) of the Act [6] 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 foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, 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.

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 or received comments on the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Back to Top

Because 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; (3) does not become operative for 30 days from the date of filing; and (4) the Exchange provided the Commission with notice of its intent to file the proposed rule change at least five days prior to the filing date, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the act [7] and Rule 19b-4(f)(6) [8] thereunder. 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.

The ISE has requested that the Commission accelerate the operative date of the proposed rule change. The Commission believes that it is consistent with the protection of investors and the public interest and therefore finds good cause to designate the proposal to become immediately operative upon filing. Acceleration of the operative date will ensure that the ISE's listing procedures for multiply traded options conform to the listing procedures of the other options exchanges. For these reasons, the Commission finds good cause to designate that the proposal become immediately operative upon filing. [9]

IV. Solicitation of Comments Back to Top

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 the File No. SR-ISE-00-14 and should be submitted by December 29, 2000.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority. [10]

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00-31298 Filed 12-7-00; 8:45 am]

BILLING CODE 8010-01-M

Footnotes Back to Top

3. See Securities Exchange Act Release No. 29698 (September 17, 1991), 56 FR 48594 (September 25, 1991).

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4. See Securities Exchange Act Release No. 42455 (February 24, 2000), 65 FR 11388 (March 2, 2000) (at note 144 and accompanying text).

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5. Securities Exchange Act Release No. 43268 (September 11, 2000).

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9. 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).

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