14630 Federal Register / Vol. 72, No. 59 / Wednesday, March 28, 2007 / Notices 

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). 

5See Nasdaq Rules 4751 and 4755. 

6See ISE Rule 2112. 

7 15 U.S.C. 78f(b)(5). 

8As required under Rule 19b–4(f)(6)(iii), ISE 

provided the Commission with notice of its intent 

to file the proposed rule change at least five 

business days prior to the date of filing of the 

proposal. 

9 17 CFR 240.19b–4(f)(6)(iii). 

10 Id. 

11See Nasdaq Rules 4751 and 4755. 

For 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). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55503; File No. SR–ISE–

2007–20] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Intermarket Sweep 

Orders 

March 21, 2007. 

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 March 16, 

2007, the International Securities 

Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been substantially prepared by the ISE. 

The Exchange filed the proposed rule 

change pursuant to Section 19(b)(3)(A) 

of the Act 3 and Rule 19b–4(f)(6) 

thereunder,4 which renders the proposal 

effective upon filing with the 

Commission. 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 ISE is proposing to amend its 

rules governing Intermarket Sweep 

Orders (‘‘ISOs’’) to conform them to the 

rules of The NASDAQ Stock Market 

LLC (‘‘Nasdaq’’). The text of the 

proposed rule change is available at ISE, 

the Commission’s Public Reference 

Room, and http://www.ise.com. 

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 

Exchange 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 purpose of this filing is to amend 

ISE Rules governing ISOs to conform 

them to Nasdaq rules 5 and to remove 

the requirement that ISOs be 

immediately executed or canceled. The 

proposed amendment clarifies the 

requirement that the Equity EAM 

entering an ISO to the ISE Stock 

Exchange must simultaneous route one 

or more additional limit orders, as 

necessary, to execute against the full 

displayed size of any Protected Bid or 

Offer in the case of a limit order to sell 

or buy with a price that is superior to 

the limit price of the limit order 

identified as an ISO (as defined in Rule 

600(b) or Regulation NMS under the 

Act). These additional routed orders 

must be identified as ISOs. The 

Exchange notes that Equity EAMs 

wishing to display on ISE must route to 

protected quotes up to and including 

the price at which they wish to display 

in order to comply with the Locked and 

Crossed Market Rule.6

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is found in 

Section 6(b)(5). Specifically, the 

Exchange believes that the proposed 

rule change is consistent with Section 

6(b)(5) 7 requirements that the rules of 

an exchange be designed to promote just 

and equitable principles of trade, serve 

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, this 

filing will provide investors with more 

flexibility in entering orders and 

receiving executions of such orders. 

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 

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 does not: (1) Significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate if 

consistent with the protection of 

investors and the public interest, 

provided that the Exchange has given 

the Commission written notice of its 

intent to file the proposed rule change 

at least five business days prior to the 

filing date of the proposal.8

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. The 

Exchange has requested that the 

Commission waive the 30-day preoperative period, which would make the 

rule change operative immediately. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest, because the proposed 

rule change is substantially similar to 

rules previously approved by the 

Commission.11 For this reason, the 

Commission designates that the 

proposal become operative immediately. 

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 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 59 / Wednesday, March 28, 2007 / Notices 14631 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 3See Securities Exchange Act Release No. 54615 

(October 17, 2006), 71 FR 62338. 4See Letters from Mary C.M. Kuan, Vice 

President and Assistant General Counsel, Securities 

Industry and Financial Markets Association 

(‘‘SIFMA’’) to Nancy Morris, Secretary, 

Commission, dated November 14, 2006 (‘‘SIFMA 

Letter’’) and from Ron L. Klein, Chairman and CEO, 

General Associates, Inc., dated December 13, 2006 

(‘‘Klein Letter’’). 5For a discussion of Amendment No. 3, see 

Section V, infra. Amendment No. 3 replaced and 

superseded Amendment No. 2 in its entirety. 6See Letter from Mary Yeager, Assistant 

Secretary, NYSE, to Nancy M. Morris, Secretary, 

Commission, dated March 16, 2007 (‘‘NYSE 

Response Letter’’). 

7The NYSE Arca Marketplace is the successor to 

the Archipelago Exchange. See Securities Exchange 

Act Release No. 53615 (April 7, 2006), 71 FR 19226 

(April 13, 2006) (SR–PCX–2006–24). 

8Such debt securities include, but are not limited 

to the following: corporate bonds (including 

convertible bonds), international bank bonds, 

foreign government bonds, U.S. government bonds, 

government agency bonds, municipal bonds, and 

debt-based structured products. Any security that 

would trade on NYSE Bonds is referred to as a 

‘‘bond’’ for the purposes of NYSE rules. 

9 15 U.S.C. 78c(a)(12). 

10See Securities Exchange Act Release No. 54766 

(November 16, 2006), 71 FR 67657 (November 22, 

2006) (File No. S7–06–05) (permitting NYSE 

member organizations to trade bonds on the 

Exchange that are not registered under Section 12(b) 

of the Exchange Act, but are issued by NYSE-listed 

companies or their wholly owned subsidiaries and 

that meet other conditions); Securities Exchange 

Act Release No. 54767 (November 16, 2006), 71 FR 

67680 (November 22, 2006) (SR–NYSE–2004–69) 

(collectively, the ‘‘Unlisted Corporate Bonds 

Orders’’). 

11See proposed NYSE Rule 86(j)(3)(B). 

12See proposed NYSE Rule 86(e). 

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–2007–20 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–ISE–2007–20. 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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the 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 

Number SR–ISE–2007–20 and should be 

submitted on or before April 18, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5588 Filed 3–27–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55496; File No. SR–NYSE–

2006–37] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Amendment No. 3 to and 

Order Granting Accelerated Approval 

of Proposed Rule Change, as 

Amended, Relating to the 

Establishment of NYSE Bonds 

March 20, 2007. 

I. Introduction 

On May 16, 2006, the New York Stock 

Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Exchange 

Act’’) 1 and Rule 19b–4 thereunder,2 to 

establish a new bond trading platform, 

NYSE Bonds, to replace its existing 

bond trading system, the Automated 

Bond System (‘‘ABS’’). The Exchange 

filed Amendments No. 1 and 2 to the 

proposed rule change on August 4, 2006 

and October 10, 2006, respectively. The 

proposed rule change, as amended, was 

published for comment in the Federal 

Register on October 24, 2006.3 The 

Commission received two comments on 

the proposal.4 On March 15, 2007, the 

Exchange filed Amendment No. 3 to the 

proposal.5 On March 16, 2007, the 

NYSE submitted a response to the 

comment letters.6 This order provides 

notice of Amendment No. 3 to the 

proposed rule change and approves the 

proposed rule change as amended on an 

accelerated basis. 

II. Description of the Proposal 

NYSE proposes to amend its Rule 86 

to replace its existing bond trading 

system, ABS, with a bond trading 

platform based on technology used to 

operate the NYSE Arca Marketplace.7

The new name of the NYSE bond 

trading platform would be ‘‘NYSE 

Bonds.’’ NYSE also proposes to amend 

other Exchange rules to conform to 

revised NYSE Rule 86. 

Any security traded on NYSE Bonds 

would have to be listed, or otherwise 

admitted to dealing, on the Exchange. 

NYSE has represented that all debt 

securities currently trading on ABS 

would be transferred to NYSE Bonds.8

Additional debt securities that meet the 

listing standards in NYSE Listed 

Company Manual Sections 102.03, 

103.05, 703.19, or 703.21, or that are 

deemed ‘‘exempted securities’’ under 

Section 3(a)(12) of the Exchange Act,9

could trade on NYSE Bonds. In 

addition, NYSE intends to trade 

unregistered corporate bonds pursuant 

to an exemption from Section 12(a) of 

the Exchange Act and a related rule 

change recently approved by the 

Commission.10

NYSE Bonds would be an electronic 

order-driven matching system. Initially, 

the System would allow limit orders 

and reserve orders. Visible interest 

would be executed on a price/time 

priority basis. However, undisplayed 

reserve interest in NYSE Bonds would 

always yield to displayed interest at a 

particular price.11 Outside of an auction 

(described below), orders marketable at 

the time of entry would be matched and 

executed, except if the price exceeded 

the ‘‘price collar’’ established for the 

bond at the time of entry. An order that 

is priced beyond the price collar 

threshold would be rejected by the 

system; an order that is not marketable 

at the time of entry would post to the 

NYSE Bonds order ‘‘book.’’ 12 If an order 

were entered at a better price than the 

then-best priced contra-side order on 

the NYSE Bonds book, the system 

would match the incoming order against 


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