Skip to Content

Notice

Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the International Securities Exchange LLC, Relating to Minimum Pricing Increments

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble March 12, 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 February 12, 2002, 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 Exchange. 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

The ISE is proposing to reaffirm its current minimum pricing increments for quotations as $.05 for options trading at less than $3.00 and $.10 for options trading at $3.00 or more.

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 may be examined at the places specified in Item IV below. The ISE has prepared summaries, set forth in sections A, BStart Printed Page 12072and 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

In a release dated June 8, 2000, the Commission ordered the ISE, the other registered national securities exchanges, and the National Association of Securities Dealers, Inc. (“NASD”) to submit to the Commission, by June 8, 2001, a study regarding the effects of decimal trading.[3] The Decimalization Order also required the exchanges and the NASD to submit proposed rule changes establishing minimum pricing increments for quotations in the securities they trade.

On September 10, 2001, the ISE submitted its decimalization study (“Study”). Because the ISE did not have significant empirical data regarding the effects of decimalization on its market, the Exchange based its study on responses to a questionnaire it had sent to its members. The Study concluded that decimalization had little effect on the ISE market.

The ISE also submitted its required rule change establishing minimum pricing increments for quotations.[4] The Exchange established minimum increments of $.05 for options trading at less than $3.00 and $.10 for options trading at $3.00 or more. Those were the same increments the Exchange had applied during its conversion to decimal pricing. The purpose of this proposed rule change is to reaffirm the pricing increments in the ISE's rule in light of the results of the Study. Because the Study indicated that the conversion to decimal pricing did not have a significant effect on the ISE's market, the ISE does not believe it is necessary or appropriate at this time to change its minimum pricing increments.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with section 6(b)(5) of the Act,[5] in that it fosters cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transaction in securities, removes impediments to and perfects the mechanism for a free and open market and a national market system, and, in general, protects investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange believes that 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 the 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 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-2002-06 and should be submitted by April 8, 2002.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[6]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3. Securities Exchange Act Release No. 42914 (June 8, 2000), 65 FR 38010 (June 19, 2000) (“Decimalization Order”). The Commission extended the date by which the studies were due to September 10, 2001. Securities Exchange Act Release No. 44336 (May 22, 2001), 66 FR 29368 (May 30, 2001)

Back to Citation

4. Securities Exchange Act Release No. 44349 (May 24, 2001), 66 FR 29617 (May 31, 2001).

Back to Citation

[FR Doc. 02-6457 Filed 3-15-02; 8:45 am]

BILLING CODE 8010-01-P