Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
ISE is proposing to amend its rule regarding specific performance commitments for the Exchange's Primary Market Makers (“PMM”). The text of the proposed rule change is available at the Commission's Public Reference Room, at the Exchange, and at
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 Exchange is proposing to amend its rule regarding performance commitments for the Exchange's PMMs. Specifically, the Exchange is proposing to amend its Rule 802(b)(2), which currently requires PMMs to submit specific performance commitments when requesting an allocation of options on indices, foreign currency options and Fund Shares (collectively, “Index-Based Products”). The initial rationale behind adopting commitments was to require a stronger commitment for certain competitive products like exchange-traded funds and indices and to assist the Exchange's Allocation Committee when choosing between PMMs seeking the same product. With the recent proliferation of ETFs and indices in the marketplace, and as ISE's practice under this rule has developed, the Exchange believes that the rule is overly broad and a deterrent to these products being allocated effectively. For example, if a certain Index-Based Product is of interest to a single PMM, a performance commitment has no effect because the PMM is not in competition with another PMM. As a consequence of the rule, PMMs are sometimes submitting the broadest commitments allowed, contrary to the intent of the rule. Further, this requirement could discourage some PMMs from seeking allocations altogether if they are expected to maintain additional performance commitments. The Exchange notes that none of the other options exchanges have a similar requirement. ISE therefore proposes to amend the rule so that specific performance commitments need only be submitted upon a request by the Exchange, thereby eliminating their submission as a uniform requirement.
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5)
This proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
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.
Within 35 days of the date of publication of this notice in the
A. By order approve such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule change should be disapproved.
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.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.