Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Notices 21087 

5 15 U.S.C. 78f(b). 

6 15 U.S.C. 78f(b)(5). 7 17 CFR 200.30–3(a)(12). 

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). 

offering investors in such securities 

greater transparency and choice with 

respect to secondary market trading. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Securities Exchange Act of 1934 

(the ‘‘Act’’),5 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,6

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 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. The Exchange believes 

the proposed rule changes are consistent 

with these principles in that they seek 

to expand the number of Debt Securities 

that can be traded on the NYSE, thereby 

benefiting investors with increased 

transparency and choice with respect to 

secondary market trading. 

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 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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2011–15 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2011–15. 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 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 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 No. SR–NYSE– 

2011–15 and should be submitted on or 

before May 5, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–9050 Filed 4–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64275; File No. SR–ISE– 

2011–24] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Enhancements to 

the Exchange’s Electronic Trading 

Platform 

April 8, 2011. 

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 April 7, 

2011, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘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 Exchange. 

The Exchange has filed the proposal as 

a ‘‘non-controversial’’ proposed rule 

change pursuant to Section 

19(b)(3)(A)(iii) of the Act 3 and Rule 

19b–4(f)(6) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

certain rules to facilitate enhancements 

to its electronic options trading system 

being implemented as part of the 

Optimise platform. The text of the 

proposed rule change is available on the 

Exchange’s Web site 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 

self-regulatory organization has 

prepared summaries, set forth in 

Sections A, B and C below, of the most 

significant aspects of such statements. 

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21088 Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Notices 

5Options classes will be transferred from the 

current trading platform to the Optimise trading 

platform. The same options cannot trade on both 

systems at the same time. The Exchange has been 

working with its members to assure a smooth 

transition to the Optimise trading platform and will 

continue to do so up to the launch of the new 

technology and during the Transition Period. 

6See Securities Exchange Act Release No. 63117 

(October 15, 2010), 75 FR 65042 (October 21, 2010) 

(SR–ISE–2010–101). 

7 Id. 

8The only functionality that will be phased-in is 

related to cabinet trades pursuant to ISE Rule 718. 

9Exchanges have previously been given the 

ability to choose an allocation methodology on a 

class or series basis. See, e.g., CBOE Rule 6.53C. 

The Exchange will notify Exchange members 

regarding allocation methodology for executions on 

the complex order book via circular. 

10Supplementary Material to Rule 713, 

paragraphs .01(b) and (c) (enhanced participation 

rights for Primary Market Makers). 

11Pursuant to ISE Rule 723(d)(6), when a market 

order or marketable limit order on the same side of 

the market as the Agency Order ends the exposure 

period, it will execute against any unexecuted 

interest in the Price Improvement Mechanism after 

the Agency Order is executed in full. 

12The Price Improvement Period on the Boston 

Options Exchange (‘‘BOX’’) currently contains this 

feature. See Chapter 5, Sec. 18(i) of the BOX Rules. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange has developed an 

enhanced technology trading platform 

(the ‘‘Optimise platform’’). To assure a 

smooth transition, the Exchange will 

migrate option classes from its current 

trading system to the Optimise platform 

over time (the ‘‘Transition Period’’).5 The 

Optimise platform will offer members 

the same trading functionality as the 

current trading system with some minor 

enhancements, several of which were 

previously added to the ISE’s rules.6

Additionally, the Exchange previously 

adopted rule changes to identify certain 

functionality that it anticipated would 

be phased-in during the Transition 

Period.7 However, since the adoption of 

these rule changes, the initial plan for 

the launch of the Optimise platform has 

changed, and the Optimise platform will 

now have most of the current 

functionality available during the 

Transition Period. The purpose of this 

rule filing is to remove language from 

the Exchange’s rules indicating that 

certain functionality is not available on 

the Optimise platform and to identify 

additional minor enhancements that 

will be included on the Optimise 

platform. 

Specifically, the Exchange proposes to 

delete Supplementary Material .10 to 

Rule 716 (Block Trades), Supplementary 

Material .03 to Rule 722 (Complex 

Orders), and Supplementary Material 

.09 to Rule 723 (Price Improvement 

Mechanism for Crossing Transactions), 

which indicate that the Block Order 

Mechanism, Facilitation Mechanism, 

Solicited Order Mechanism, Price 

Improvement Mechanism and complex 

order functionality will not be available 

for options traded on the Optimise 

platform.8 The Optimise platform will 

now include all of this functionality 

during the Transition Period. 

With the Optimise platform, the 

Exchange proposes to add the flexibility 

for the Exchange to determine, on a 

class basis, whether orders on the 

complex order book at the same price 

are executed in time priority, as they are 

currently, or among participants 

pursuant to ISE Rule 713(e) and 

Supplementary Material .01(a) to ISE 

Rule 713(e).9 Under ISE Rule 713(e), 

priority customer orders are given 

priority over Professional Orders and 

market maker quotes at the same price, 

which will also be the case on the 

complex order book. However, because 

there is no obligation for primary market 

makers to enter quotes on the complex 

order book, primary market makers will 

not receive the enhanced participation 

rights to which they are entitled in the 

regular market.10 The Exchange notes 

that this proposed rule change does not 

affect the provisions of paragraph (b)(2) 

of Rule 722 which limits the execution 

of complex orders when there are 

Priority Customer orders on the 

Exchange for the individual series of a 

complex order. 

For options traded on the Optimise 

platform, the Exchange also proposes to 

modify the Price Improvement 

Mechanism so that Counter-Side Orders 

and Improvement Orders only execute 

against the Agency Order that is being 

exposed. Currently, when members 

respond to an order entered into the 

Price Improvement Mechanism, they 

may be executed against certain other, 

unrelated orders.11 While the Exchange 

initially implemented this particular 

feature of the Price Improvement 

Mechanism to differentiate its service 

from those offered by other exchanges 

and to potentially attract additional 

unrelated order flow to the Exchange, 

this feature may discourage market 

participants from responding to Agency 

Orders. Accordingly, the Exchange 

believes that removing this feature 

could increase competition for orders 

entered into the Price Improvement 

Mechanism and thereby result in 

additional price improvement for 

agency orders.12

Finally, the Exchange notes that 

members initially will not be able to 

enter reserve orders, nor complex orders 

with an all-or-none or minimum 

quantity modifier in options classes that 

are traded on the Optimise platform. 

The Exchange will make these order 

types available on the Optimise 

platform as promptly as possible within 

the first month of the Transition Period, 

and assure that members are informed 

of the status of these order types. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b),13 in general, and 

Section 6(b)(5)14 in particular, that an 

exchange have rules that are designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, 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, the 

Exchange believes the Optimise 

platform will improve the efficiency and 

quality of options executions on the 

Exchange. The Exchange further 

believes that liquidity on the complex 

order book may be enhanced by 

executing all interest at the same price 

pro-rata based on size (with Priority 

Customer priority) as it does in its 

regular market. Having the ability to 

determine on a class basis whether 

orders on the complex order book at the 

same price will be executed in time 

priority or pro-rata based on size (with 

Priority Customer priority) will give the 

Exchange greater flexibility to respond 

to market needs and enhance its ability 

to compete more effectively. Finally, the 

Exchange believes that limiting the 

availability of Counter-Side Orders and 

Improvement Orders to execute only 

against the agency order being exposed 

in the Price Improvement Mechanism 

will encourage greater price competition 

with larger size, thereby increasing the 

opportunity for such agency order to 

receive additional price improvement. 

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 

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Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Notices 21089 

15 15 U.S.C. 78s(b)(3)(A). 

16 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. 

17See Securities Exchange Act Release No. 63117 

(October 15, 2010), 75 FR 65042 (October 21, 2010) 

(SR–ISE–2010–101). 

18See id. 

19For 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). 

20The text of the proposed rule change is 

available on the Commission’s Web site at http:// 

www.sec.gov. 

21 17 CFR 200.30–3(a)(12). 

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: (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, the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 15 and 

Rule 19b–4(f)(6) thereunder.16

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative for 30 days after the 

date of filing. However, Rule 19b– 

4(f)(6)(iii) permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. 

The Exchange requests that the 

Commission waive the 30 day period for 

this filing to become operative so that it 

may become effective and operative 

upon filing with the Commission 

pursuant to Section 19(b)(3)(A) of the 

Act and rule 19b–4(f)(6) thereunder. The 

Exchange believes that waiver of the 

operative delay period is consistent 

with the protection of investors and the 

public interest in that it will allow the 

Exchange to effect an orderly launch of 

the Optimise platform on April 11, 

2011. Specifically, the Exchange 

previously adopted rule changes to 

identify certain existing functionality 

that it anticipated would be phase-in 

during the Transition Period.17

However, virtually all of that 

functionality has been fully tested and 

is available for the launch. The 

Exchange believes that it will be less 

disruptive to members for this existing 

functionality to be available on the 

Optimise platform at the launch, as the 

trading environment will be more 

similar to the Exchange’s existing 

market. In this respect, the Exchange 

notes that it has been conducting 

extensive testing with members and that 

it will initially trade only ten securities 

that have very limited trading volume 

on the Optimise platform. The Exchange 

will gradually transition additional 

securities to the Optimise platform to 

assure an orderly implementation of the 

new system. 

The Commission notes that in October 

of 2010, the Exchange filed a proposed 

rule change relating to the 

functionalities that are the subject of the 

current proposal.18 At that time, the 

Exchange identified certain 

functionalities, including the 

functionalities that are the subject of the 

current proposal, which will not be 

immediately available on the Optimise 

platform but would be phased in during 

the Transition Period. However, the 

Exchange now represents that the 

functionalities discussed in this filing 

are fully tested and available for launch 

on April 11. Allowing the 

functionalities to be available on the 

Optimise platform at the launch rather 

than after a delay should contribute to 

a more orderly launch and should 

facilitate implementation of Optimise 

under the Transition Period 

contemplated by the Exchange’s rules. 

Further, as stated above, the Exchange 

has already noted its intent to later 

adopt these functionalities in a previous 

proposal. Therefore, Commission 

believes that waiving the 30-day 

operative delay is appropriate and 

consistent with the protection of 

investors and the public interest 19 and 

designates the proposed rule change as 

operative upon filing. 

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 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 rulecomments@sec.gov. Please include File 

Number SR–ISE–2011–24 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–ISE–2011–24. 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 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 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange.20 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– 

2011–24 and should be submitted on or 

before May 5, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8973 Filed 4–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

mstockstill on DSKH9S0YB1PROD with NOTICES