[Federal Register: August 10, 2006 (Volume 71, Number 154)]
[Notices]
[Page 45875-45876]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10au06-130]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54270; File No. SR-ISE-2006-34]
Self-Regulatory Organizations; International Securities Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change and Amendment No. 1 Thereto Relating to Rule 1406, Regulatory
Cooperation
August 3, 2006.
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 May 31, 2006, the International Securities Exchange, Inc.
(``Exchange'' or ``ISE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
On July 7, 2006, ISE filed Amendment No. 1 to the proposed rule change.
The Exchange filed the proposed rule change as a ``non-controversial''
rule change under Rule 19b-4(f)(6) under the Act,\3\ which rendered the
proposal effective upon filing with the Commission. The Commission is
publishing this notice to solicit comments on the proposed rule change,
as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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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 ISE Rule 1406, Regulatory
Cooperation, to clarify that the Exchange may contract with another
self-regulatory organization (``SRO'') for the performance of certain
regulatory functions. The text of the proposed rule change is available
on ISE's Web site, http://www.iseoptions.com, at ISE's Office of the
Secretary, and at the Commission's Public Reference Room.
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 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE Rule 1406 allows the Exchange to enter into agreements with
domestic and foreign SROs, associations and contract markets and the
regulators of such markets for the exchange of information and other
regulatory purposes. The Exchange proposes to amend ISE Rule 1406 to
specify that the Exchange may contract with another SRO for the
performance of certain of ISE's regulatory functions.\4\ ISE states
that such regulatory services agreements could enhance ISE's ability to
carry out its regulatory obligations under the Act.
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\4\ The Exchange states that the proposed rule change is
identical to rule changes recently adopted by other options markets.
See, e.g., Securities Exchange Act Release No. 53832 (May 18, 2006),
71 FR 30007 (May 24, 2006) (SR-CBOE-2006-46).
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This rule change would have immediate applicability with respect to
a regulatory services agreement (``RSA'') between ISE, the Chicago
Board Options Exchange, Incorporated (``CBOE''), and other options
markets participating in the Options Regulatory Surveillance Authority
national market system plan (``ORSA''). ISE has determined that to best
discharge its SRO responsibilities, it will contract with CBOE, which
is subject to Commission oversight pursuant to sections 6 and 19 of the
Act,\5\ for CBOE to provide certain regulatory services to ISE, as set
forth in the ORSA RSA. In performing services under the ORSA RSA, CBOE
will be operating pursuant to the statutory SRO responsibilities of ISE
under Sections 6 and 19, as well as performing for itself its own SRO
responsibilities.
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\5\ 15 U.S.C. 78f and 15 U.S.C. 78s.
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According to the proposed rule change, ISE remains an SRO
registered under Section 6 of the Act \6\ under any agreement for
regulatory services with another SRO and, therefore, continues to have
statutory authority and responsibility for enforcing compliance by its
members, and persons associated with its members, with the Act, the
rules thereunder, and the rules of the Exchange. The proposed rule
change specifically states that any action taken by another SRO, or its
employees or authorized agents, operating on behalf of ISE pursuant to
a regulatory services agreement with ISE, will be deemed an action
taken by ISE. Under any agreement for regulatory services with another
SRO, ISE retains ultimate responsibility for performance of its SRO
duties, and the proposed rule change states that ISE shall retain
ultimate legal responsibility for, and control of, its SRO
responsibilities.
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\6\ 15 U.S.C. 78f.
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2. Statutory Basis
The Exchange believes that the proposed rule change furthers the
objectives of section 6(b)(5) of the Act,\7\ in that it is 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 of a
free and open market and a national market system, and, in general, to
protect investors and the public interest. In particular, the proposal
specifies in the Exchange's rules that the Exchange may enter into
regulatory services agreements, which the ISE believes could enhance
the Exchange's regulatory program.
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\7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
[[Page 45876]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) by its terms,
does not become operative for 30 days after the date of filing, or such
shorter time as the Commission may designate, if consistent with the
protection of investors and the public interest, the proposed rule
change has become effective pursuant to section 19(b)(3)(A) of the Act
\8\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\9\ The Exchange
has requested that the Commission waive the 30-day operative delay
period for ``non-controversial'' proposals and make the proposed rule
change effective and operative upon filing. The Commission hereby
grants the request. The Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest. In this regard, the Commission believes that the
proposal should be implemented without delay because of its immediate
applicability with respect to the RSA among ISE, CBOE and the other
ORSA participants.\10\ For this reason, the Commission designates the
proposal to be effective and operative upon filing with the Commission.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6).
\10\ The Commission notes that the proposed rule change is based
on a similar rule of the Boston Stock Exchange, Inc. See Securities
Exchange Act Release No. 53436 (March 7, 2006), 71 FR 13194 (March
14, 2006) (SR-BSE-2006-08).
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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 the furtherance of the purposes of the Act.\11\
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\11\ See 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the
60-day period within which the Commission may summarily abrogate the
proposed rule change, as amended, under Section 19(b)(3)(C) of the
Act, the Commission considers the period to commence on July 7,
2006, the date on which the Exchange submitted Amendment No. 1.
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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 rule-comments@sec.gov. Please include
File Number SR-ISE-2006-34 on the subject line.
Paper Comments
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-2006-34. 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. 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-2006-34 and should be submitted on or before August
31, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-13006 Filed 8-9-06; 8:45 am]
BILLING CODE 8010-01-P