On October 21, the International Securities Exchange, LLC (ISE) submitted a proposal to the Securities and Exchange Commission to amend ISE Rules 713, 804, and 805 to establish a new quoting obligation for ISE Competitive Market Makers (CMMs). These proposed rule amendments are the result of a pilot program ISE conducted from September 2007 to September 2008.
The ISE currently requires CMMs to participate in the opening rotation and maintain continuous quotations in the lesser of: (i) all of the series of at least 60% of the options classes for the group to which the CMM is appointed, or (ii) 60 options classes in the group.
The ISE now proposes that CMMs be required to maintain continuous quotations for the lesser of: (i) at least 60% (rather than all) of the series of 60% of the options classes for the group to which the CMM is appointed (except for CMMs that receive preferenced order flow, which would be required to maintain continuous quotations for 90% of the options series for which they are making a market), or (ii) 40 (rather than 60) options classes in the group.
The ISE also proposes to restrict the volume of contracts that a CMM may execute per quarter in options classes to which that CMM is not appointed.