[Federal Register Volume 74, Number 225 (Tuesday, November 24, 2009)]
[Notices]
[Pages 61393-61395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28098]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61016; File No. SR-ISE-2009-96]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Extend the Pilot Program To Expose All-Or-None Orders Until
December 31, 2009
November 17, 2009.
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 November 13, 2009, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission the proposed rule change as described in Items I
and II below, which items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend its rules to implement a
broadcast message that will inform market participants when a non-
marketable all-or-none limit order is placed on the limit order book.
The text of the proposed rule change is as follows, with deletions in
[brackets] and additions italicized:
Rule 717. Limitations on Orders
* * * * *
Supplementary Material to Rule 717
.01-.03 No Change.
.04 A non-marketable all-or-none limit order shall be deemed
``exposed'' for the purposes of paragraphs (d) and (e) one second
following a broadcast notifying [members] market participants that
such an order to buy or sell a specified number of contracts at a
specified price has been received in the options series. This
provision shall be in effect on a pilot basis expiring [November 9,
2009] December 31, 2009.
* * * * *
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
[[Page 61394]]
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
(a) Purpose--Pursuant to ISE Rule 717(d) and (e), Electronic Access
Members must expose agency orders on the Exchange for at least one
second before entering a contra-side proprietary order or a contra-side
order that was solicited from a broker-dealer, or utilize one of the
Exchange's execution mechanisms that have one second exposure periods
built into the functionality.\3\
---------------------------------------------------------------------------
\3\ See ISE Rule 716(d) (Facilitation Mechanism), Rule 716(e)
(Solicited Order Mechanism) and Rule 723 (Price Improvement
Mechanism for Crossing Transactions).
---------------------------------------------------------------------------
The Exchange operates an integrated system that consolidates all
market maker quotes and orders, and automatically disseminates the best
bid and offer. If a limit order is designated as all-or-none (``AON''),
the contingency that the order must be executed in full makes it
ineligible for display in the best bid or offer. Nevertheless, such
orders are maintained in the system and remain available for execution
after all other trading interest at the same price has been
exhausted.\4\ Upon the receipt of a non-marketable all-or-none limit
order, the system automatically will send a broadcast message to all
market participants notifying them that an all-or-none order to buy or
to sell a specified number of contracts at a specified price has been
placed on the book.
---------------------------------------------------------------------------
\4\ Supplementary Material .02 to ISE Rule 713.
---------------------------------------------------------------------------
On July 9, 2009, the Exchange adopted a proposed rule change on a
three-month pilot basis to specify that a non-marketable all-or-none
limit order is deemed ``exposed'' for the purposes of Rule 717(d) and
(e) one second following a broadcast notifying members that such an
order to buy or sell a specified number of contracts at a specified
price has been received in the options series. The Exchange
subsequently extended the pilot, which is set to expire on November 9,
2009.\5\ The Exchange now proposes to extend the pilot through the end
of the year, until December 31, 2009. During the extension, the
broadcast message will be made available to any market participant, not
just members.\6\ Thus, all of the terms of the order will be disclosed
to all market participants.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 60866 (October 22,
2009), 74 FR 55879 (October 29, 2009).
\6\ The AON broadcast message is available through the
Exchange's application programming interface (``API''). Any member
or non-member connecting to the API can receive the AON broadcast
message. The Exchange is not proposing to adopt a fee associated
with receiving this message, and any future fee would be filed with
the Commission.
---------------------------------------------------------------------------
(b) Basis--The basis under the Securities Exchange Act of 1934
(``Exchange Act'') for this proposed rule change is the requirement
under Section 6(b)(5) that an exchange have rules that are designed to
promote just and equitable principles of trade, and 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. In particular, under the proposed rule change all-or-
none orders will continue to be exposed to all market participants so
that there is a greater opportunity for them to interact with such
orders.
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 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 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) does not become
operative for 30 days after the date of the 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 \7\ and
Rule 19b-4(f)(6) thereunder.\8\
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.\9\
However, Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. ISE has requested that the
Commission waive the 30-day operative delay. The Commission notes that
waiver of the operative delay will permit the pilot to continue until
December 31, 2009 without further delay, and will provide all market
participants, instead of only ISE members, with the opportunity to
receive ISE's broadcast message with information about the terms of new
AON orders. The Commission also notes that no comments were received to
date on the existing pilot. For these reasons, the Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest, and designates the
proposed rule change to be operative upon filing with the
Commission.\11\
---------------------------------------------------------------------------
\9\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
the Commission 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 satisfied this requirement.
\10\ Id.
\11\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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.
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 No.
SR-ISE-2009-96 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission,
[[Page 61395]]
100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-ISE-2009-96. 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 ISE. 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 No. SR-ISE-2009-96 and should be
submitted on or before December 15, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-28098 Filed 11-23-09; 8:45 am]
BILLING CODE 8011-01-P