34510 Federal Register / Vol. 65, No. 104 / Tuesday, May 30, 2000 / Notices

1 15 U.S.C. 78l(d).

2 17 CFR 240.12d2–2(d).

3The Common Stock Purchase Rights are

currently attached to, and trade together with, the

Company’s Common Stock.

4 15 U.S.C. 78l(b). 5 17 CFR 200.30–3(a)(1).

Information Technology, Securities and

Exchange Commission, 450 5th Street,

NW Washington, DC 20549.

Dated: May 22, 2000.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–13412 Filed 5–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Issuer Delisting; Notice of Application

To Withdraw From Listing and

Registration; (Boise Cascade

Corporation, Common Stock, $2.50 Par

Value, and Associated Common Stock

Purchase Rights) File No. 1–05057

May 23, 2000.

Boise Cascade Corporation

(‘‘Company’’) has filed an application

with the Securities and Exchange

Commission (‘‘Commission’’), pursuant

to Section 12(d) of the Securities

Exchange Act of 1934 (‘‘Act’’) 1 and Rule

12d2–2(d) thereunder,2 to withdraw its

Common Stock, $2.50 par value, and

associated Common Stock Purchase

Rights (referred to collectively herein as

the ‘‘Securities’’),3 from listing and

registration on the Chicago Stock

Exchange, Incorporated (‘‘CHX’’).

The Company, whose Securities are

additionally listed on the New York

Stock Exchange (‘‘NYSE’’), is seeking to

withdraw the Securities from listing and

registration on the CHX at this time in

order to save the costs associated with

such listing and related compliance.

The Company’s Common Stock has

been listed for trading on the CHX since

1968, but in a recent review of its

business conduct the Company found

that the majority (more than 95%) of its

Common Stock is traded on the NYSE.

The Company’s board of directors has

therefore determined that no significant

business reasons exist for maintaining

the Securities’ listing and registration on

the CHX.

The Company has stated that its

application relates solely to the

withdrawal of the Securities from listing

and registration on the CHX and shall

have no effect upon the Securities’

continued listing and registration on the

NYSE under Section 12(b) of the Act.4

The withdrawal of the Securities from

listing and registration on the CHX was

approved by the Company’s board of

directors at a meeting held on July 31,

1998, and a resolution so stating was

forwarded to the CHX in accordance

with its rules. The Company has

included with its application a copy of

a letter from the CHX confirming that

the Company’s request for withdrawal

complies with the rules of the CHX

governing an issuer’s removal of

securities from listing and registration

on the CHX.

Any interested person may, on or

before June 14, 2000, submit by letter to

the Secretary of the Securities and

Exchange Commission, 450 Fifth Street,

NW, Washington, DC 20549–0609, facts

bearing upon whether the application

has been made in accordance with the

rules of the CHX and what terms, if any,

should be imposed by the Commission

for the protection of investors. The

Commission, based on the information

submitted to it, will issue an order

granting the application after the date

mentioned above, unless the

Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Jonathan G. Katz,

Secretary.

[FR Doc. 00–13411 Filed 5–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–24460; File No. 812–11684]

The Ohio National Life Insurance

Company, et al.

May 19, 2000.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for an

Order under Section 6(c) of the

Investment Company Act of 1940, as

amended (the ‘‘Act’’) granting

exemptions from the provisions of

Sections 2(a)(32), 22(c), and 27(i)(2)(A)

of the Act and Rule 22c-1 thereunder, to

permit the recapture of certain credits

applied to purchase payments made

under certain deferred variable annuity

contracts.

SUMMARY OF APPLICATIONS: Applicants

seek an order under Section 6(c) of the

Act to the extent necessary to permit the

issuance and, under specified

circumstances, the subsequent recapture

of certain credits applied to purchase

payments made under certain deferred

variable annuity contracts, described

herein, that The Ohio National Life

Insurance Company (‘‘Ohio National’’)

will issue through the Ohio National

Variable Account A (the ‘‘Account’’)

(the contracts are collectively referred to

herein as the ‘‘Contracts’’).

Applicants: Ohio National, the

Account, and Ohio National Equities,

Inc. (‘‘ONEQ’’) ( collectively,

‘‘Applicants’’).

Filing Date: The Application was filed

on November 19, 1999 and amended on

March 17, 2000.

Hearing or Notification of Hearing: An

order granting the Application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving Applicants with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 on June 13,

2000 and should be accompanied by

proof of service on Applicants, in the

form of an affidavit or, lawyers, a

certificate of service. Hearing requests

should state the nature of the writer’s

interest, the reason for the request, and

the issues contested. Persons who wish

to be notified of a hearing may request

notification by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 5th

Street, N.W., Washington, DC 20549–

0609. Applicants c/o Ronald L.

Benedict, Esq., Corporate Vice

President, Counsel and Secretary, The

Ohio National Life Insurance Company,

P.O. Box 237, Cincinnati, Ohio 45201.

FOR FURTHER INFORMATION CONTACT:

Rebecca Marquigny, Senior Counsel, or

Keith Carpenter, Branch Chief, Office of

Insurance Products, Division of

Investment Management, at (202) 942–

0670.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

Application. The complete Application

may be obtained for a fee from the SEC’s

Public Reference Branch, 450 Fifth

Street, N.W., Washington, DC 20549–

0102 (tel. (202) 942–8090.).

Applicants’ Representations

1. Ohio National was organized under

the laws of Ohio in 1909. It writes life,

accident and health insurance and

annuities in 47 states, the District of

Columbia and Puerto Rico. Currently,

Ohio National has assets in excess of $7

billion and equity in excess of $710

million. Ohio National is a stock

company ultimately owned by a mutual

insurance holding company (Ohio

National Mutual Holdings, Inc.) with

Ohio Nation’s contract owners having

majority ownership of the latter.

Federal Register / Vol. 65, No. 104 / Tuesday, May 30, 2000 / Notices 34511

1For the 8-year period beginning on the eighth

Contract anniversary, the stepped-up death benefit

will be the greater of (i) the Contract value (minus

any Credit amounts applied during the preceding

year) as of the eighth anniversary or (ii) the net of

purchase payments less withdrawal made on or

before the eight anniversary. At the beginning of

each later 8-year period (until the annuitant attains

age 90), the stepped-up death benefit will be the

greater of (i) The Contract value (minus any credit

amounts applied during the preceding year) on that

date or (ii) the death benefit as of the last day of

the preceding 8-year period. The stepped-up death

benefit amount is increased by purchase payment

and decreased by withdrawals made during each 8-

year period after the eighth anniversary. In those

states where permitted, the Contract owner may

elect an optional annual stepped-up death benefit

at the time the Contract is issued. With that option,

the death benefit will be increased in the manner

indicated above, until the annuitant attains age 80,

on each Contract anniversary on which the Contract

value (minus any Credit amounts applied during

the preceding year) exceeds the death benefit for the

previous year. There is an additional charge

(presently at an annual rate of 0.10% of the optional

death benefit amount, which rate may be increased

to no more than 0.25% on Contracts in the future)

for this optional benefit.

2The surrender value of the Contract equals the

Contract value minus the contingent deferred sales

charge or ‘‘CDSC.’’

2. Variable Account A was established

in 1969 by Ohio National as a separate

account under Ohio law for the purpose

of funding variable annuity contracts

issued by Ohio National. The Account

is a segregated asset account of Ohio

National. The Account and its

component sub-accounts are registered

together with the Commission as a

single unit investment trust under the

Act (File No. 811–1978). The Account

will fund the variable benefits available

under the Contracts. The offering of the

Contracts will be registered under the

Securities Act of 1933 (the ‘‘1933 Act’’).

That portion of the assets of the Account

that is equal to the reserves and other

Contract liabilities with respect to the

Account is not chargeable with

liabilities arising out of any other

business of Ohio National. Any income,

gains or losses, realized or unrealized,

from assets allocated to the Account are,

in accordance with the Contracts,

credited to or charged against the

Account, without regard to other

income, gains or losses of Ohio

National.

3. ONEQ is the principal underwriter

of the Contracts. ONEQ is registered

with the Commission as a broker-dealer

under the Securities Exchange Act of

1934 and is a member of the National

Association of Securities Dealers, Inc.

The Contracts are sold by insurance

agents of Ohio National who are also

registered representatives of registered

broker-dealers that have entered into

distribution agreements with ONEQ.

ONEQ is a wholly-owned subsidiary of

Ohio National.

4. The minimum initial purchase

payment is $5,000 ($2,000 for IRAs). A

Contract owner may make additional

payments of at least $500 at any time

($300 for payroll deduction plans). Ohio

National may limit total purchase

payments to $1,500,000.

5. Ohio National credits extra

amounts to the Contract each time a

Contract owner makes a purchase

payment (the ‘‘Credit’’). The Credit

equals 4% of each purchase payment.

Ohio National allocates Credit amounts

pro rata to the Sub-Accounts (defined

herein) and to Ohio National’s general

account in the same ratio as the

purchase payments. Ohio National will

fund Credit amounts from its general

account assets.

6. The Credit is not part of the amount

a Contract owner will be paid if the 10-

day free look option is exercised. Ohio

National may not offer a Credit on

purchase payments made within one

year of a free partial withdrawal to the

extent those purchase payments are less

than the amount withdrawn. Credit

amounts applied within one year of the

date of death are deducted from

amounts payable for any death benefit

or stepped-up death benefit where the

amount to be paid is based upon

Contract value (as opposed to being

based on payments minus withdrawals).

Credit amounts paid within one year of

a Contract owner’s confinement in a

nursing facility are deducted from any

amounts paid under the nursing facility

confinement benefit.

7. The free look period is the 10-day

period during which an owner may

return a Contract after it has been

delivered and receive a full refund of

the Contract value, less any Credit

amounts. The owner bears the

investment risk from the time of

purchase until he or she returns the

Contract. The refund amount may be

more or less than the purchase payment

the owner made, unless the law requires

that the full amount of the purchase

payment be refunded.

8. The Contract’s death benefit

provision states that a death benefit will

be paid to the Contract owner’s

designated beneficiary if the annuitant

(and any contingent annuitant) dies

before annuity payments begin. This

death benefit will be the greatest of: (i)

The Contract value (minus any Credit

amounts applied within one year of the

date of death); or (ii) the net of purchase

payments less withdrawals; or (iii) the

stepped-up death benefit amount if the

Contract has been in effect for at least

8 years.1 However, if the death benefit

is not claimed within 90 days after the

date of death, Ohio National will pay

the Contract value (minus any Credit

amounts applied within one year of the

date of death) instead of any greater

death benefit. The death benefit is an

optional feature of the Contract that

must be elected by the owner. Ohio

National presently does not assess a

charge for the death benefit but reserves

the right to do so for Contracts issued

in the future in an amount up to 0.25%

of annual premium.

9. The Contract’s nursing facility

confinement benefit provision provides

that, if the annuitant is, or has been,

confined to a state licensed or legally

operated in-patient nursing home

facility for at least 30 consecutive days,

Ohio National will not assess a

surrender charge on partial withdrawals

of up to $5,000 per month. Under the

Contract’s nursing facility confinement

benefit provision, a Contract owner may

withdraw, subject to the $5,000 per

month limit, an aggregate amount equal

to one half of the Contract value as of

the beginning of the confinement

without incurring a surrender charge.

Any Credit amounts applied within one

year before confinement will be

deducted from the proceeds of the first

such withdrawal. This waiver of the

surrender charge may not be available in

all states and it only applies when: (i)

The confinement begins after the first

contract anniversary and before annuity

payments begin; (ii) the Contract was

issued before the annuitant’s 80th

birthday; and (iii) Ohio National

receives the request for withdrawal,

together with proof of the confinement,

at Ohio National’s home office while the

annuitant is confined or within 90 days

after discharge from the facility.

10. The amount the owner receives

upon exercise of free look rescission

rights or payment of the Contract’s

death benefit will always equal or

exceed the surrender value of the

Contract.2 The amount the owner

receives upon payment of a partial

withdrawal in connection with the

Contract’s nursing facility confinement

benefit will always equal or exceed the

amount the owner would have received

had the surrender charge not been

waived.

11. Owners of the Contracts may

allocate their purchase payments among

a number of sub-accounts of the

Account (the ‘‘Sub-Accounts’’). Each

Sub-Account will invest in shares of a

corresponding portfolio of Ohio

National Fund, Inc., The Dow (SM)

Target Variable Fund LLC, Goldman

Sachs Variable Insurance Trust, Janus

Aspen Series, J.P. Morgan Series Trust

II, Lazard Retirement Series, Inc.,

Mitchell Hutchins Series Trust, Morgan

Stanley Dean Witter Universal Funds,

34512 Federal Register / Vol. 65, No. 104 / Tuesday, May 30, 2000 / Notices

3The CDSC Schedule is as follows: 9% in year

1; 8% in year 2; 7% in year 3; 6% in year 4; 5%

in year 5; 4% in year 6; 2% in year 7; 1% in year

8; and 0% in year 9 and thereafter.

Inc., Salomon Brothers Variable Series

Fund Inc., and Strong Variable

Insurance Funds, Inc.

12. Ohio National, at a later date, may

decide to create additional SubAccounts to invest in any additional

funding media as may not or in the

future be available. Ohio National, from

time to time, also may combine or

eliminate Sub-Accounts, or transfer the

assets to and from Sub-Accounts.

13. The Contract provides for various

surrender options, annuity benefits and

annuity payout options, as well as

transfer privileges among Sub-Accounts,

dollar cost averaging, and other features.

The Contract contains the following

charges: (i) A CDSC as a percentage of

the amount withdrawn or surrendered; 3

(ii) a $30 annual administrative charge;

(iii) a mortality and expense risk charge

of 1.15%; (iv) administrative expense

charge of 0.25%; (v) a transfer fee of $10

after the first transfer made during a

calendar month; and (vi) any applicable

state premium tax.

Applicants’ Legal Analysis

1. Section 6(c) of the Act authorizes

the Commission to exempt any person,

security or transaction, or any class or

classes of persons, securities or

transactions from the provisions of the

Act and the rules promulgated

thereunder if and to the extent that such

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act. Applicants

request that the Commission, pursuant

to Section 6(c) of the Act, grant the

exemptions requested below.

Applicants represent that it is not

administratively feasible to track the

Credit amount in the Account after the

Credit is applied. Accordingly, the

asset-based charges applicable to the

Account will be assessed against the

entire amounts held in the Account,

including the Credit amount, during the

free look period and the one year

recapture periods. As a result, during

such periods, the aggregate asset-based

charges assessed against an owner’s

annuity account value will be higher

than those that would be charged if the

owner’s annuity account value did not

include the Credit.

2. Subsection (i) of Section 27 of the

Act provides that Section 27 does not

apply to any registered separate account

funding variable insurance contracts, or

to the sponsoring insurance company

and principal underwriter of such

account, except as provided in

paragraph (2) of the subsection.

Paragraph (2) provides that it shall be

unlawful for such a separate account or

sponsoring insurance company to sell a

contract funded by the registered

separate account unless such contract is

a redeemable security. Section 2(a)(32)

defines ‘‘redeemable security’’ as any

security, other than short-term paper,

under the terms of which the holder,

upon presentation to the issuer, is

entitled to receive approximately his

proportionate share of the issuer’s

current net assets, or the cash equivalent

thereof.

3. Applicants submit that the

recapture of the Credit amount in the

circumstance set forth in the

Application would not deprive an

owner of his or her proportionate share

of the issuer’s current net assets. An

owner’s interest in the Credit amount

allocated to his or her annuity account

value upon receipt of an initial purchase

payment is not vested until the

applicable free look period has expired

without return of the Contract.

Similarly, and owner’s interest in the

Credit amounts allocated to his or her

annuity account within one year of the

date of death or confinement to a

nursing facility also is not vested. Until

the right to recapture has expired and

any Credit amount is vested, Ohio

National retains the right and interest in

the Credit amount, although not in the

earnings attributable to that amount.

Thus, when Ohio National recaptures

any Credit, it is merely retrieving its

own assets, and the owner has not been

deprived of a proportionate share of the

Account’s assets because his or her

interest in the Credit amount has not

vested.

4. In addition, permitting an owner to

retain a Credit amount under a Contract

upon the exercise of the free look would

not only be unfair, but would also

encourage individuals to purchase a

Contract with no intention of keeping it

and returning it for a quick profit.

Furthermore, the recapture of Credit

amounts within one year preceding the

date of death or confinement to a

nursing facility is designed to provide

Ohio National with a measure of

protection against anti-selection. The

risk here is that, rather than spreading

purchase payments over a number of

years, an owner might make very large

purchase payments shortly before death

or confinement, thereby leaving Ohio

National little time to recover the cost

of the Credit amounts. As noted earlier,

the amounts recaptured equal the Credit

amounts provided by Ohio National

from its general account assets, and any

gain would remain a part of the owner’s

Contract value. In addition, with respect

to free look and death benefit recapture

of Credit amounts, the amount the

owner receives will always equal or

exceed the surrender value of the

Contract and, with respect to the

recapture of Credit amount in

connection with a partial withdrawal

made under the nursing facility

confinement benefit, the amount the

owner receives will always equal or

exceed the amount the owner would

have received had the surrender charge

not been waived.

5. Applicants represent that the Credit

will be attractive to and in the interest

of investors because it will permit

owners to put 104% of their purchase

payments to work for them in the

selected Sub-Accounts. In addition, the

owner will retain any earnings

attributable to the Credit, as well as the

principal Credit amount once vested.

6. Applicants submit that the

provisions for recapture of any Credit

under the Contracts do not violate

Sections 2(a)(32) and 27(i)(2)(A) of the

Act. Applicants believe that a contrary

conclusion would be inconsistent with

a stated purpose of the National

Securities Markets Improvement Act of

1996 (‘‘NSMIA’’), which is to amend the

Act to ‘‘provide more effective and less

burdensome regulation.’’ Sections 26(e)

and 27(i) were added to the Act to

implement the purposes of NSMIA and

Congressional intent. The application of

a Credit to purchase payments made

under the Contracts should not raise any

questions as to Ohio National’s

compliance with the provisions of

Section 27(i). However, to avoid any

uncertainty as to full compliance with

the Act, Applicants request an

exemption from Sections 2(a)(32) and

27(i)(2)(A), to the extent deemed

necessary, to permit the recapture of any

Credit under the circumstances

described in the Application, without

the loss of relief from Section 27

provided by Section 27(i).

7. Section 22(c) of the Act authorizes

the Commission to make rules and

regulations applicable to registered

investment companies and to principal

underwriters of, and dealers in, the

redeemable securities of any registered

investment company to accomplish the

same purposes as contemplated by

Section 22(a). Rule 22c–1 thereunder

prohibits a registered investment

company issuing any redeemable

security, a person designated in such

issuer’s prospectus as authorized to

consummate transactions in any such

security, and a principal underwriter of,

or dealer in, such security, from selling,

redeeming, or repurchasing any such

Federal Register / Vol. 65, No. 104 / Tuesday, May 30, 2000 / Notices 34513

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 42473

(February 29, 2000), 65 FR 11818.

4See letters to Jonathan G. Katz, Secretary, SEC,

from Holly H. Smith, Sutherland, Asbill & Brennan

LLP, dated March 24, 2000 (‘‘SA&B Letter’’); Peter

J. Chepucavage, Fulbright 7 Jaworski L.L.P., dated

March 28, 2000 (‘‘Phlx Letter’’); and Charles J.

Henry, President and Chief Operating Officer,

Chicago Board Options Exchange, dated March 31,

2000 ‘‘CBOE Letter’’).

5See letter from Katherine Simmons, Vice

President and Associate General Counsel, ISE, to

Deborah Flynn, Senior Special Counsel, Division of

Market Regulation, SEC, dated May 19, 2000

(‘‘Amendment No. 1’’). In Amendment No. 1, ISE

proposes to delete a reference to ISE Rule 713 to

eliminate a Primary Market Maker’s participation

right with respect to facilitation orders. ISE also

proposes to clarify that members may enter

indications at prices that improve the facilitation

price if such improved price is inferior to the ISE

best bid or offer.

6For purposes of ISE rules only, block-size orders

are orders for fifty contracts or more. See ISE Rule

716(a).

7See Amendment No. 1, supra note 5.

8 ISE Rule 713 sets forth the PMM’s allocation

algorithm. See Securities Exchange Act Release No.

42808.

9See Amendment No. 1, supra note 5.

security except at a price based on the

current net asset value of such security

which is next computed after receipt of

a tender of such security for redemption

or of an order to purchase or sell such

security.

8. Ohio National’s recapture of the

Credit might arguably be viewed as

resulting in the redemption of

redeemable securities for a price other

than one based on the current net asset

value of the Account. Applicants

contend, however, that the recapture of

the Credit does not violate Section 22(c)

and Rule 22c–1. To effect a recapture of

a Credit, Ohio National will redeem

interests in an owner’s Account at a

price determined on the basis of the

current net asset value of that Account.

The amount recaptured will equal the

amount of the Credit that Ohio National

paid out of its general account assets.

Although the owner will be entitled to

retain any investment gain attributable

to the Credit, the amount of that gain

will be determined on the basis of the

current net asset value of the Account.

Thus, no dilution will occur upon the

recapture of the Credit. Applicants also

submit that the second harm that Rule

22c–1 was designed to address, namely

speculative trading practices calculated

to take advantage of backward pricing,

will not occur as a result of the

recapture of the Credit. However, to

avoid any uncertainty as to full

compliance with the Act, Applicants

request an exemption from the

provisions of Section 22(c) and Rule

22c–1 to the extent deemed necessary to

permit them to recapture the Credit

under the Contracts.

Conclusion

Applicants submit, based on the

grounds summarized above, that their

exemptive request meets the standards

set out in Section 6(c) of the Act,

namely, that the exemptions requested

are necessary or appropriate in the

public interest and consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the Act, and that,

therefore, the Commission should grant

the requested order.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–13375 Filed 5–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42807; File No. SR–ISE–

00–03]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Notice of Filing and Order Granting

Accelerated Approval to Amendment

No. 1 by the International Securities

Exchange LLC Relating to Block and

Facilitation Trades

May 22, 2000.

I. Introduction

On February 25, 2000, the

International Securities Exchange LLC

(‘‘ISE’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’), pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’),1 and

Rule 29b–4 thereunder,2 a proposed rule

change relating to its proposed block

order and facilitation mechanisms.

The proposed rule change was

published for comment in the Federal

Register on March 6, 2000.3 The

Commission received three comment

letters regarding the proposal.4 On May

19, 2000, the ISE filed Amendment No.

1 to the proposed rule change.5 This

order approves the proposed rule

change. In addition, the Commission is

publishing this notice to solicit

comments on Amendment No. 1 and is

simultaneously approving Amendment

No. 1 on an accelerated basis.

II. Description of the Proposal

ISE Rule 716(c) establishes a ‘‘block

mechanism’’ through which ISE

members can obtain liquidity for the

execution of block-size orders 6 from

market makers and other ISE members

with orders at the ISE inside bid or offer

(‘‘Crowd Participants’’). Similarly, ISE

Rule 716(d) establishes a ‘‘facilitation

mechanism’’ through which members

can seek to facilitate block-size public

customer orders. Upon the entry of an

order into the block or facilitation

mechanisms, a broadcast message is

sent to the Crowd Participants.

The proposed rule change contains

several proposed revisions to existing

ISE Rule 716. First, the ISE has

proposed commentary to ISE Rules

716(c) and (d) with respect to the block

order mechanism and the facilitation

mechanism, specifying that participants

will be given 30 seconds to respond to

a broadcast message from either the

block or facilitation mechanism.

Second, the ISE proposes to amend

ISE Rule 716(d)(4)(i) to provide that

only public customer bids (offers) on the

Exchange at the time a facilitation order

is executed that are priced higher

(lower) than the facilitation price will be

executed at the facilitation price, unless

there is sufficient size to execute a

facilitation order entirely at a better

price. Higher bids and lower offers from

non-customer orders and quotes will be

executed at their stated price. The

current rule provides non-customer

orders and quotes the benefit of the

facilitation or ‘‘block clean-up’’ price.

Third, ISE is proposing amendments

to ISE Rule 716(d)(4)(ii) 7 to eliminate a

Primary Market Maker’s (‘‘PMM’’)

participation right with respect to the

allocation of orders entered into the

facilitation mechanism by deleting a

reference to ISE Rule 713.8 In other

words, under ISE’s proposed

amendments to ISE Rule 716(d)(4)(ii), if

a PMM is among the Crowd Participants

with interest at the facilitation price, the

PMM will be treated the same as all

other Crowd Participants and not given

a preferential allocation under ISE Rule

713.

Finally, ISE is proposing to amend

ISE Rule 716(d)(2) and (3) 9 to clarify

that a Crowd Participant may enter into

the facilitation mechanism an indication

at a better price than the facilitation

price, but only if such better price is

inferior to the ISE best bid or offer. If a

Crowd Participant wishes to enter an

indication at a price equal to or better

than the ISE best bid or offer, the Crowd

Participant may do so only by changing

its quote or entering an order, so that