[Federal Register Volume 68, Number 229 (Friday, November 28, 2003)]
[Notices]
[Pages 66909-66910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29622]



[[Page 66909]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48811; File No. SR-ISE-2003-25]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto by 
the International Stock Exchange, Inc. To Amend Rules 713 and 715 To 
Add Definitions for All-or-None Orders, Stop Orders and Stop Limit 
Orders

November 20, 2003.
    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 October 16, 2003, the International Stock Exchange, Inc. (``ISE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the ISE. The Exchange 
has filed the proposal as a ``non-controversial'' rule change pursuant 
to section 19(b)(3)(A)(iii) of the Act,\3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission.\5\ On November 13, 2003, the ISE filed Amendment No. 1 
to the proposed rule change.\6\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
    \5\ The ISE provided a five-day written notice to the Commission 
of its intent to file the proposal. The ISE has requested the 
Commission to waive the 30-day operative delay. See Rule 19b-
4(f)(6)(iii) under the Act. 17 CFR 240.19b-4(f)(6)(iii).
    \6\ See letter from Katherine Simmons, Vice President and 
Associate General Counsel, ISE, to Theodore Lazo, Senior Special 
Counsel, Division of Market Regulation, Commission, Dated November 
13, 2003 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend Rules 713 and 715 to add 
definitions for all-or-none orders, stop orders and stop limit orders. 
The text of the proposed rule change is set forth below. Proposed new 
language is in italics; proposed deletions are in [brackets].
* * * * *

Rule 715. Types of Orders

    (c) All-Or-None Orders. An all-or-none order is a limit or market 
order that is to be executed in its entirety or not at all.
    (d) Stop Orders. A stop order is an order that becomes a market 
order when the stop price is elected. A stop order to buy is elected 
when the option is bid or trades on the ISE at, or above, the specified 
stop price. A stop order to sell is elected when the option is offered 
or trades on the ISE at, or below, the specified stop price.
    (e) Stop Limit Orders. A stop limit order is an order that becomes 
a limit order when the stop price is elected. A stop limit order to buy 
is elected when the option is bid or trades on the ISE at, or above, 
the specified stop price. A stop limit order to sell becomes a sell 
limit order when the option is offered or trades on the ISE at, or 
below, the specified stop price.

Rule 713. Priority of Quotes and Orders

* * * * *
Supplementary Material to Rule 713
* * * * *
    .02 All-or-none orders, as defined in Rule 715(c), are contingency 
orders that have no priority on the book. Such orders are maintained in 
the system and remain available for execution after all other trading 
interest at the same price has been exhausted.
* * * * *

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 ISE 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 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 Exchange proposes to amend Rules 713 and 715 to add definitions 
for all-or-none orders, stop orders and stop limit orders. The 
definitions of these three order types are consistent with the 
definitions contained in other exchanges' rules.\7\ An all-or-none 
order is a limit or market order that is to be executed in its entirety 
or not at all. All-or-none orders are contingency orders that have no 
priority on the book. Such orders are maintained in the system and 
remain available for execution after all other trading interest at the 
same price has been exhausted.
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    \7\ See, e.g., CBOE Rule 43.2.
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    Stop orders are defined as orders that become market orders when 
the stop price is elected. A stop order to buy is elected when the 
option is bid or trades on the ISE at, or above, the specified stop 
price. A stop order to sell is elected when the option is offered or 
trades on the ISE at, or below, the specified stop price. When the stop 
price is elected, the system releases a market order into the market 
and the order would be handled in the same manner as any other market 
order.
    Stop limit orders are defined as orders that become limit orders 
when the stop price is elected. A stop limit order to buy is elected 
when the option is bid or trades on the ISE at, or above, the specified 
stop price. A stop limit order to sell is elected when option is 
offered or trades on the ISE at, or below, the specified stop price. 
Once the stop price is elected, the limit order is placed on the ISE 
book and would be handled in the same manner as any other limit order 
on the ISE book. In Amendment No. 1, the Exchange has represented that 
stop and stop limit orders will be elected automatically by the system 
without manual intervention by any market participant, and that no 
market participant on the ISE will be able to view pending stop and 
stop limit orders in the system.
2. Statutory Basis
    The ISE believes that the rule change is consistent with section 6 
of the Act in general \8\ and Section 6(b)(5) of the Act in 
particular.\9\ The Exchange believes that the proposed rule change is 
intended to remove impediments to and perfect the mechanism for a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest. The Exchange also believes 
that new order types will offer investors new trading opportunities on 
the Exchange and enhance the Exchange's competitive position.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

[[Page 66910]]

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

    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.

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

    Because the foregoing proposed rule change, as amended, does not: 
(i) significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if the proposal is 
consistent with the protection of investors and the public interest; 
and the Exchange has given the Commission written notice of its 
intention to file the proposed rule change at least five business days 
prior to filing, or such shorter time as designated by the Commission, 
it has become effective pursuant to Section 19(b)(3)(A) of the Act \10\ 
and Rule 19b-4(f)(6)\11\ thereunder. 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 furtherance of the purposes of 
the Act.\12\ The Commission has decided to waive the 30 day operative 
delay and designates that the proposal become operative upon filing 
with the Commission because the proposed rule change permits the 
implementation of all-or-none, stop, and stop limit orders in a manner 
consistent with the protection of investors and the public interest.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the period to have commenced on November 
13, 2003, the date the ISE filed 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 amended 
proposal is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-0609. 
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 will also be 
available for inspection and copying at the principal office of the 
ISE.
    All submissions should refer to File No. SR-ISE-2003-25 and should 
be submitted by December 19, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-29622 Filed 11-26-03; 8:45 am]
BILLING CODE 8010-01-P