Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The ISE proposes to amend ISE rule 1100(c) “Exercise of Options Contracts.” The text of the proposed rule change is set forth below. Proposed new language is
(a)–(b) No Change.
(c) Exercise cut-off time. Option holders have until 5:30 p.m. Eastern Time on the business day immediately prior to the expiration date
(d)–(j) No 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 Exchange has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements.
The ISE proposes to amend its rule regarding exercise cut-off time to revise its application to Quarterly Options Series. Currently, under ISE Rule 1100(c), option holders have until 5:30 p.m. Eastern Time on the business day immediately prior to the expiration date to make a final decision to exercise or not exercise an expiring option. The rule in its current form would require the holder of a quarterly option to decide whether to exercise or not exercise an expiring option on the business day immediately prior to the expiration date. However, since Quarterly Options Series continue to trade on the expiration date, an option holder would have to make the decision whether to exercise an expiring option without the knowledge of what the closing price of the underlying security would be on expiration. Accordingly, the Exchange proposes to amend Rule 1100(c) so that a holder of an expiring quarterly option has until 5:30 p.m. on the expiration date to decide whether to exercise or not exercise an expiring quarterly option.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act
The Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b–4(f)(6)(iii) permits the Commission to waive the operative delay if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the operative delay to permit the proposed rule change to become effective prior to the 30th day after filing.
The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Waiving the operative delay will allow the Exchange to permit exercise of a Quarterly Options Series at any time until the close of business on its expiration date starting with the third quarter 2006 expirations on Friday, September 29, 2006, and consequently will benefit investors. Therefore the Commission has determined to waive the 30-day delay and allow the proposed rule change to become operative immediately.
At any time within sixty (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.
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:
• Use the Commission's Internet comment form (
• Send an e-mail to
• Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–ISE–2006–58. 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
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.