[Federal Register Volume 73, Number 145 (Monday, July 28, 2008)]
[Notices]
[Pages 43810-43811]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17121]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58197; File No. SR-ISE-2008-60]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to the Extension of the Price Improvement Mechanism 
Pilot Program

July 18, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 17, 2008, the International Securities Exchange, LLC (the 
``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 ISE. The 
ISE has designated the proposed rule change as a ``non-controversial'' 
rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders the proposed rule change 
effective upon filing with the Commission. 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).
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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 extend two pilot programs related to 
its Price Improvement Mechanism (``PIM''). The text of the proposed 
rule amendment is as follows, with proposed deletions in [brackets], 
and proposed additions italicized:
* * * * *

Rule 723. Price Improvement Mechanism for Crossing Transactions

* * * * *
Supplementary Material to Rule 723
    .01-.02 No Change.
    .03 Initially, and for at least a Pilot Period expiring on July 18, 
2009 [2008], there will be no minimum size requirements for orders to 
be eligible for the Price Improvement Mechanism. During the Pilot 
Period, the Exchange will submit certain data, periodically as required 
by the Commission, to provide supporting evidence that, among other 
things, there is meaningful competition for all size orders within the 
Price Improvement Mechanism, that there is significant price 
improvement for all orders executed through the Price Improvement 
Mechanism, and that there is an active and liquid market functioning on 
the Exchange outside of the Price Improvement Mechanism. Any data which 
is submitted to the Commission will be provided on a confidential 
basis.
    .04 No Change.
    .05 Paragraphs (c)(5), (d)(5) and (d)(6) will be effective for a 
Pilot Period expiring on July 18, 2009 [2008]. During the Pilot Period, 
the Exchange will submit certain data relating to the frequency with 
which the exposure period is terminated by unrelated orders. Any data 
which is submitted to the Commission will be provided on a confidential 
basis.
    .06-.07 No Change.
* * * * *

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 self-regulatory organization 
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 self-regulatory organization 
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 Exchange currently has two pilot programs related to its 
PIM.\5\ The current pilot period provided in

[[Page 43811]]

paragraphs .03 and .05 of the Supplementary Material to Rule 723 is set 
to expire on July 18, 2008.\6\ Paragraph .03 provides that there is no 
minimum size requirement for orders to be eligible for the Price 
Improvement Mechanism. Paragraph .05 concerns the termination of the 
exposure period by unrelated orders. In accordance with the Approval 
Order, the Exchange recently submitted certain data in support of 
extending the current pilot programs. The Exchange proposes to extend 
these pilot programs in their present form for an additional year, 
through July 18, 2009, to give the Exchange and the Commission 
additional time to evaluate the effects of these pilot programs before 
requesting permanent approval of the rules. To aid the Commission in 
its evaluation of the PIM Functionality, ISE represents that it will 
provide additional PIM-related data as requested.
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    \5\ See Securities Exchange Act Release Nos. 50819 (December 8, 
2004), 69 FR 75093 (December 15, 2004) (approving the PIM Pilot (the 
``Approval Order'')); 52027 (July 13, 2005), 70 FR 41804 (July 20, 
2005) (Extending the PIM Pilot for an Additional Year).
    \6\ See Securities Exchange Act Release No. 56156 (July 27, 
2007), 72 FR 43305 (August 3, 2007) (SR-ISE-2007-66).
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2. Statutory Basis
    The basis under the Act for this proposed rule change is found in 
Section 6(b)(5),\7\ in that the proposed rule change is designed to 
promote just and equitable principles of trade, 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. Since the Price Improvement Mechanism has been operating for 
a relatively short period of time, the Exchange believes it is 
appropriate to extend the pilot periods to provide the Exchange and 
Commission more data upon which to evaluate the rules.
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    \7\ 15 U.S.C. 78f(b).
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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.

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 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: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, it has become effective pursuant to Section 19(b)(3)(A) of 
the Act \8\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
may not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The ISE requests that the Commission 
waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii),\12\ which would make the rule change operative upon 
filing. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest 
because such waiver will allow the pilot periods to continue without 
interruption.\13\ Accordingly, the Commission designates the proposed 
rule change operative upon filing with the Commission.\14\
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    \10\ Id.
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ Id.
    \13\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of 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 fulfilled this requirement.
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    At any time within 60 days of the filing of such 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.

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 [email protected]. Please include 
File Number SR-ISE-2008-60 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-2008-60. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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-2008-60 and should be 
submitted on or before August 18, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-17121 Filed 7-25-08; 8:45 am]
BILLING CODE 8010-01-P