82 FR 13908 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Correct a Typographical Error in Section 413 of the Exchange's Rules

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 49 (March 15, 2017)

Page Range		13908-13910
FR Document		2017-05083
Federal Register, Volume 82 Issue 49 (Wednesday, March 15, 2017)
[Federal Register Volume 82, Number 49 (Wednesday, March 15, 2017)]
[Notices]
[Pages 13908-13910]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-05083]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80194; File No. SR-ISE-2017-20]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Correct a Typographical Error in Section 413 of the 
Exchange's Rules

March 9, 2017.
    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 28, 2017, the International Securities Exchange, LLC 
(``ISE'' or ``Exchange'') 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. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 Rule 413 of the Exchange's Rules, as 
described in further detail below.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.ise.com, at the principal office of the 
Exchange, 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
    The purpose of the proposed rule change is to correct a 
typographical error. Rule 413(a) of the Rules of the

[[Page 13909]]

Exchange (the ``Rules''), which provides for exemptions from position 
limits, presently states that ``hedge transactions and positions 
established pursuant to paragraphs eight (8) and nine (9)'' thereunder 
are ``subject to a position limit equal to five (5) times the standard 
limit established under Rule 412(d).'' The reference in this text to 
paragraphs (8) and (9) is incorrect. The Rule text should properly 
reference paragraphs (6) and (8).
    Paragraph (6) of Rule 413(a) provides for a position limit 
exemption for a long call position accompanied by a short put position 
with the same strike price and a short call position accompanied by a 
long put position with a different strike price (a ``box spread''). 
Paragraph (8) provides for a position limit exemption for a listed 
option position hedged on a one-for-one basis with an over-the-counter 
(``OTC'') option position on the same underlying security. Meanwhile, 
paragraph (9) merely states that for strategies described under 
paragraphs (2)-(5) of subsection (a) of the Rule, one component of the 
option strategy can be an OTC option contract guaranteed or endorsed by 
the firm maintaining the proprietary position or carrying the customer 
account.
    The Exchange notes that the position limit exemptions set forth in 
the rules of other options exchanges, including ISE's sister exchange, 
Phlx, as well as CBOE, provide for position limit exemptions for OTC 
and box spread hedges of up to five times the standard limits.\3\
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    \3\ See PHLX Rule 1001(l) (providing that ``[h]edge transactions 
and positions established pursuant to paragraphs (6) [OTC options 
hedges] and (7) [box spread hedges] below are subject to a position 
limit equal to five (5) times the standard limit . . .''); CBOE Rule 
4.11, Interpretation .04(a) (providing that [h]edge transactions and 
positions established pursuant to paragraphs six (6) [box spread 
hedges] and seven (7) [OTC options hedges] are subject to a position 
limit equal to five (5) times the standard limit . . .'').
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\4\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\5\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest. The Exchange 
asserts that the proposed correction will serve the Act's goals by 
ensuring that the Exchange's Rules are accurate.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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 not necessary or appropriate in 
furtherance of the purposes of the Act as it is designed to correct a 
typographical error.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \6\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \8\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \9\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to correct a typographical error 
immediately and therefore reduce confusion in the application of the 
Exchange's rules. Accordingly, the Commission hereby waives the 
operative delay and designates the proposal operative upon filing.\10\
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    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6)(iii).
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or 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. 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 email to [email protected]. Please include 
File Number SR-ISE-2017-20 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2017-20. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of

[[Page 13910]]

10:00 a.m. and 3:00 p.m. Copies of the 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-2017-20 and should be 
submitted on or before April 5, 2017.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05083 Filed 3-14-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 49 / Wednesday, March 15, 2017 / Notices 13909

Exchange (the ‘‘Rules’’), which provides the Act’s goals by ensuring that the operative delay and designates the
for exemptions from position limits, Exchange’s Rules are accurate. proposal operative upon filing.10
presently states that ‘‘hedge transactions At any time within 60 days of the
B. Self-Regulatory Organization’s filing of the proposed rule change, the
and positions established pursuant to
Statement on Burden on Competition Commission summarily may
paragraphs eight (8) and nine (9)’’
thereunder are ‘‘subject to a position The Exchange does not believe that temporarily suspend such rule change if
limit equal to five (5) times the standard the proposed rule change will impose it appears to the Commission that such
limit established under Rule 412(d).’’ any burden on competition not action is: (i) Necessary or appropriate in
The reference in this text to paragraphs necessary or appropriate in furtherance the public interest; (ii) for the protection
(8) and (9) is incorrect. The Rule text of the purposes of the Act as it is of investors; or (iii) otherwise in
should properly reference paragraphs designed to correct a typographical furtherance of the purposes of the Act.
(6) and (8). error. If the Commission takes such action, the
Paragraph (6) of Rule 413(a) provides Commission shall institute proceedings
for a position limit exemption for a long C. Self-Regulatory Organization’s to determine whether the proposed rule
call position accompanied by a short Statement on Comments on the should be approved or disapproved.
put position with the same strike price Proposed Rule Change Received From
Members, Participants, or Others IV. Solicitation of Comments
and a short call position accompanied
by a long put position with a different Interested persons are invited to
strike price (a ‘‘box spread’’). Paragraph No written comments were either submit written data, views, and
(8) provides for a position limit solicited or received. arguments concerning the foregoing,
exemption for a listed option position III. Date of Effectiveness of the including whether the proposed rule
hedged on a one-for-one basis with an Proposed Rule Change and Timing for change is consistent with the Act.
over-the-counter (‘‘OTC’’) option Commission Action Comments may be submitted by any of
position on the same underlying the following methods:
security. Meanwhile, paragraph (9) Because the foregoing proposed rule
Electronic Comments
merely states that for strategies change does not: (i) Significantly affect
described under paragraphs (2)–(5) of the protection of investors or the public • Use the Commission’s Internet
subsection (a) of the Rule, one interest; (ii) impose any significant comment form (http://www.sec.gov/
component of the option strategy can be burden on competition; and (iii) become rules/sro.shtml); or
operative for 30 days from the date on • Send an email to rule-comments@
an OTC option contract guaranteed or
which it was filed, or such shorter time sec.gov. Please include File Number SR–
endorsed by the firm maintaining the
as the Commission may designate, it has ISE–2017–20 on the subject line.
proprietary position or carrying the
customer account. become effective pursuant to Section Paper Comments
The Exchange notes that the position 19(b)(3)(A)(iii) of the Act 6 and
• Send paper comments in triplicate
limit exemptions set forth in the rules subparagraph (f)(6) of Rule 19b–4
to Secretary, Securities and Exchange
of other options exchanges, including thereunder.7
Commission, 100 F Street NE.,
ISE’s sister exchange, Phlx, as well as A proposed rule change filed Washington, DC 20549–1090.
CBOE, provide for position limit pursuant to Rule 19b–4(f)(6) under the All submissions should refer to File
exemptions for OTC and box spread Act 8 normally does not become Number SR–ISE–2017–20. This file
hedges of up to five times the standard operative for 30 days after the date of its number should be included on the
limits.3 filing. However, Rule 19b–4(f)(6)(iii) 9 subject line if email is used. To help the
2. Statutory Basis permits the Commission to designate a Commission process and review your
shorter time if such action is consistent comments more efficiently, please use
The Exchange believes that its with the protection of investors and the
proposal is consistent with Section 6(b) only one method. The Commission will
public interest. The Exchange has asked post all comments on the Commission’s
of the Act,4 in general, and furthers the the Commission to waive the 30-day
objectives of Section 6(b)(5) of the Act,5 Internet Web site (http://www.sec.gov/
operative delay so that the proposal may rules/sro.shtml). Copies of the
in particular, in that it is designed to become operative immediately upon
prevent fraudulent and manipulative submission, all subsequent
filing. The Commission believes that amendments, all written statements
acts and practices, to promote just and waiving the 30-day operative delay is
equitable principles of trade, to remove with respect to the proposed rule
consistent with the protection of change that are filed with the
impediments to and perfect the investors and the public interest
mechanisms of a free and open market Commission, and all written
because it will allow the Exchange to communications relating to the
and a national market system and, in correct a typographical error
general, to protect investors and the proposed rule change between the
immediately and therefore reduce Commission and any person, other than
public interest. The Exchange asserts confusion in the application of the
that the proposed correction will serve those that may be withheld from the
Exchange’s rules. Accordingly, the public in accordance with the
3 See PHLX Rule 1001(l) (providing that ‘‘[h]edge
Commission hereby waives the provisions of 5 U.S.C. 552, will be
transactions and positions established pursuant to available for Web site viewing and
asabaliauskas on DSK3SPTVN1PROD with NOTICES2

6 15 U.S.C. 78s(b)(3)(A)(iii).
paragraphs (6) [OTC options hedges] and (7) [box printing in the Commission’s Public
spread hedges] below are subject to a position limit 7 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– Reference Room, 100 F Street NE.,
equal to five (5) times the standard limit . . .’’); 4(f)(6) requires a self-regulatory organization to give
CBOE Rule 4.11, Interpretation .04(a) (providing the Commission written notice of its intent to file Washington, DC 20549, on official
that [h]edge transactions and positions established the proposed rule change at least five business days business days between the hours of
pursuant to paragraphs six (6) [box spread hedges] prior to the date of filing of the proposed rule
and seven (7) [OTC options hedges] are subject to change, or such shorter time as designated by the 10 For purposes only of waiving the 30-day
a position limit equal to five (5) times the standard Commission. The Exchange has satisfied this operative delay, the Commission has also
limit . . .’’). requirement. considered the proposed rule’s impact on
4 15 U.S.C. 78f(b). 8 17 CFR 240.19b–4(f)(6).
efficiency, competition, and capital formation. See
5 15 U.S.C. 78f(b)(5). 9 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f).

VerDate Sep<11>2014 18:19 Mar 14, 2017 Jkt 241001 PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 E:\FR\FM\15MRN1.SGM 15MRN1
Document Created: 2017-03-15 06:04:13
Document Modified: 2017-03-15 06:04:13
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 13908