27224 Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The November 7th filing was Amendment No. 

3 to the Plan. The ISE initially filed the Plan on 

September 12, 2007, filed Amendment No. 1 on 

December 10, 2007, and filed Amendment No. 2 on 

April 16, 2008. 

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 

No. SR–BATS–2009–018 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 No. 

SR–BATS–2009–018. 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 will also 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–BATS–2009–018 and should be 

submitted on or before June 29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13208 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60014; File No. SR–ISE– 

2009–27] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing of Proposed Rule 

Change To Adopt Rules To Implement 

the Options Order Protection and 

Locked/Crossed Market Plan 

June 1, 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 May 11, 

2009, 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, II, and III below, which Items 

have been prepared by the Exchange. 

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 proposes to adopt rules to 

implement the Options Order Protection 

and Locked/Crossed Market Plan (the 

‘‘Plan’’). The text of the proposed rule 

change is available on the ISE’s Web site 

(http://www.ise.com), at the principal 

office of the ISE, 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 

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 those 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 parts 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 proposes to adopt rules 

to implement the Plan. These rules will 

replace current Chapter 19 of the ISE’s 

rules in their entirety. The proposed 

rules also will amend various other 

rules to accommodate the Plan. 

Background to the Plan and the 

Implementing Rules 

The ISE filed the current version of 

the Plan on November 7, 2008.3 The 

Plan would replace the current Plan for 

the Purpose of Creating and Operating 

an Intermarket Option Linkage (‘‘Old 

Plan’’). The Old Plan requires its 

participant exchanges to operate a 

stand-alone system or ‘‘Linkage’’ for 

sending order-flow between exchanges 

to limit trade-throughs. The Options 

Clearing Corporation (‘‘OCC’’) operates 

the Linkage system. The Linkage rules 

provide for unique types of Linkage 

orders, with a complicated set of 

requirements as to who may send such 

orders and under what conditions. 

While the Linkage largely has 

operated satisfactorily, it is under 

significant strain. When the 

Commission approved the Linkage Plan 

in 2000, average daily volume (‘‘ADV’’) 

in the options market was 

approximately 2.6 million contracts 

across all exchanges. Now the ADV has 

increased to more than 10 million 

contracts, putting added strain on the 

ability of market makers to comply with 

the complex Linkage rules. At the same 

time, the options markets have been 

moving towards quoting in pennies, and 

are quoting in pennies options 

representing over half the total industry 

volume. This greatly increases the 

number of price changes in an option, 

giving rise to greater chances of tradethroughs and missing markets as market 

makers send Linkage orders and have to 

wait for a response. 

Experience in the equities markets 

shows that there is a more efficient way 

to provide price protection in options. 

When first implemented, the Linkage 

represented a vast improvement over 

the then-current equities priceprotection system, which depended on 

the operation of the Intermarket Trading 

System (‘‘ITS’’). The plan governing ITS 

imposed long waiting times for filling 

ITS commitments and a cumbersome 

method for satisfying trade-throughs. 

Learning from the shortcomings of ITS, 

the options Linkage has shorter waiting 

periods and more efficient trade-through 

protections. 

The equity price-protection 

mechanisms have now leapfrogged the 

options Linkage. By adopting Regulation 

NMS in 2005 the Commission 


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4Release No. 34–51808 (June 9, 2005), 70 FR 

37496 (June 29, 2005). 

5Regulation NMS Rule 611(a). 

6Regulation NMS Rule 600(b)(30). 

7Sections 5(a)(i) and 5(b)(iv) of the Plan. 

8Section 2(9) of the Plan. 

9Regulation NMS Rule 611(c) and Section 5(c) of 

the Plan. 

10Section 6 of the Plan. 

11 Id. 

12See, e.g., the definitions of ‘‘Broker-Dealer’’ in 

Rule 1900(c), NBBO in Rule 1900(j), Non-Firm in 

Rule 1900(k), OPRA Plan in Rule 1900(l), and 

Participant in Rule 1900(m). 

13See, e.g., the definitions of ‘‘Best Bid’’/‘‘Best 

Offer’’ in Rule 1900(a), ‘‘Bid’’/‘‘Offer’’ in Rule 

1900(b), ‘‘Intermarket Sweep Order’’ (‘‘ISO’’) in 

Rule 1900(h), and ‘‘Quotation’’ in Rule 1900(p). 

14See Regulation NMS Rule 611(b)(1). 

15See Old Plan Section 8(c)(iii)(E). 16See Regulation NMS Rule 611(b)(3) under the 

Securities Exchange Act of 1934, as amended 

(‘‘Act’’). 17Supplementary Material .01 to Rule 1901 

specifies that all ISOs routed to the ISE from other 

exchanges on behalf of public customers will be 

represented as Priority Customer Orders. Priority 

Customer Orders are executed prior to Professional 

Orders on the ISE. ISE Rule 100(37A) defines 

Priority Customer Orders as orders for persons who 

do not place more than 390 orders in listed options 

per day on average during a calendar month. The 

other options exchanges have not adopted this 

distinction between Priority Customer and 

Professional Orders. Thus, we do not believe it is 

practical or appropriate to require ISOs sent to us 

from other exchanges, representing customer orders 

from such exchanges, to be marked as Professional 

Orders. 

18See Regulation NMS Rules 611(b)(5) and (6). 

19See Regulation NMS Rule 611(b)(8). 

effectively terminated ITS, replacing it 

with a rules-based price-protection 

system.4 The key to Regulation NMS’s 

price-protection provisions is the 

Intermarket Sweep Order, or ISO. Each 

equity exchange must adopt rules 

‘‘reasonably designed to prevent tradethroughs.’’ 5 Exempted from tradethrough liability is an ISO, which is an 

order a member sends to an exchange 

displaying a price inferior to the 

national best bid and offer (‘‘NBBO’’), 

while simultaneously sending orders to 

trade against the full size of any other 

exchange that is displaying the NBBO.6

The Regulation NMS rules-based 

price-protection system is working well. 

It requires neither a central linkage 

mechanism nor a complex set of 

operating rules. It also has eliminated 

the need for achieving unanimity to 

change even the most minor aspects of 

a linkage mechanism. A simple 

prohibition against most trade-throughs, 

coupled with the ISO mechanism, has 

given the equities markets a straightforward system to provide customers 

with price protection in a fast-moving, 

high-volume market that is quoted in 

pennies. The ISE and the other options 

exchange participants in the Plan intend 

for the Plan, and the implementing 

rules, to bring the efficiencies of 

Regulation NMS to the options market. 

Operation of the Plan 

The Plan effectively would apply the 

Regulation NMS price-protection 

provisions to the options markets. 

Similar to Regulation NMS, the Plan 

would require participants to adopt 

rules ‘‘reasonably designed to prevent 

Trade-Throughs,’’ while exempting ISOs 

from that prohibition.7 The definition of 

an ISO is essentially the same as under 

Regulation NMS,8 and there are a 

number of additional exceptions to the 

trade-through prohibition. Like 

Regulation NMS,9 the Plan requires 

participating exchanges to take 

reasonable steps to establish that ISOs 

meet the requirements of the Plan. 

With respect to locked and crossed 

markets, similar to Regulation NMS, the 

Plan requires its participants to adopt, 

maintain and enforce rules requiring 

members: To avoid displaying locked 

and crossed markets; to reconcile such 

markets; and to prohibit members from 

engaging in a pattern or practice of 

displaying locked and crossed 

markets.10 With respect to locked 

markets, the Plan differs from 

Regulation NMS in that it specifically 

permits exceptions to the locked market 

prohibitions ‘‘as contained in the rules 

of a Participant approved by the 

Commission.’’ 11

Description of the Implementing Rules 

This proposed rule change would 

delete the ISE’s current Linkage rules in 

Chapter 19 of the ISE’s rule book and 

replace those rules with a new Chapter 

19 entitled ‘‘Order Protection; Locked 

and Crossed Markets.’’ New Chapter 19 

contains the following rules: 

Rule 1900—Definitions 

This proposed rule incorporates all 

the operative definitions from the Plan 

into the ISE’s rulebook. With one 

exception, the parties to the Plan 

derived all such definitions either from 

the Old Plan 12 or Regulation NMS.13

The one exception is the definition of 

‘‘complex trade’’ in Rule 1900(d). A 

‘‘complex trade’’ is exempt from tradethrough liability. The exemption in the 

Old Plan simply refers to complex 

trades ‘‘as that term may be defined by 

the Operating Committee from time to 

time.’’ Based on that provision, the ISE 

adopted current Rule 1900(3), which is 

substantially identical among all the 

options exchanges. We propose to carry 

that definition into new Chapter 19 

unchanged. 

Rule 1901—Order Protection 

Paragraph (a) of Rule 1901 provides 

that, subject to specified exceptions, ISE 

Members shall not effect trade-throughs. 

Paragraph (b) provides for the following 

trade-through exceptions: 

• System Issues: Rule 1901(b)(1) 

implements Section 5(b)(i) of the Plan 

by establishing an exception for tradethroughs due to system-failures. This is 

akin to the exception in Regulation 

NMS for equity securities and permits 

trading through an Eligible Exchange 

that is experiencing system problems.14

The ISE is proposing ‘‘self-help’’ rules 

similar to its equity Rule 2107(c)(1), 

adopted pursuant to Regulation NMS. 

• Trading Rotations: Rule 1901(b)(2) 

implements Section 5(b)(ii) of the Plan 

and carries forward the current tradethrough exception in the Old Plan 15 and 

current Rule 1902(b)(5) related to the 

opening of markets. It is the options 

equivalent to the single price opening 

exception in Regulation NMS for equity 

securities.16 We use a trading rotation to 

open an option for trading, or to reopen 

an option after a trading halt. The 

rotation is effectively a single price 

auction to price the option and there are 

no practical means to include prices on 

other exchanges in that auction. 

• Crossed Markets: Rule 1901(b)(3) 

implements Section 5(b)(iii) of the Plan 

and is the functional equivalent to ISE 

Rule 2107(c)(3) for equity securities. If 

the best intermarket bid is higher than 

the best intermarket offer, it indicates 

that there is some form of market 

dislocation or inaccurate quoting. 

Permitting transactions to be executed 

without regard to trade-throughs in a 

Crossed Market will allow the market to 

quickly return to equilibrium. 

• Intermarket Sweep Orders (‘‘ISOs’’): 

Rule 1901(b)(4) is the ISO exemption 

and implements Sections 5(b)(iv) and 

(v) of the Plan. Section 5(b)(iv) of the 

Plan permits a Participant to execute 

orders it receives from other 

Participants or members that are marked 

as ISO even when it is not at the 

NBBO.17 Section 5(b)(v) of the Plan 

allows a Participant to execute inbound 

orders when it is not at the NBBO, 

provided it simultaneously ‘‘sweeps’’ all 

better-priced interest displayed by 

Eligible Exchanges. These provisions are 

the options equivalents of the 

corresponding Regulation NMS equity 

rules.18

• Quote Flickering: Rule 1901(b)(5) 

implements Section 5(b)(vi) of the Plan 

and corresponds to the flickering quote 

exception in Regulation NMS for equity 

securities.19 Options quotations change 

as rapidly, if not more rapidly, than 

equity quotations. Indeed, they track the 

price of the underlying security and 

thus change when the price of the 


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20See Old Plan Section 8(c)(iii)(C). 

21See Old Plan Section 8(c)(iii)(G). 

22See ISE Rule 722. 

23See Regulation NMS Rule 611(b)(9). 

24See ISE Rule 723. 

25See Regulation NMS Rule 611(b)(7). 

26See e-mail from Michael Simon, General 

Counsel, ISE, to David Liu, Assistant Director, 

Division of Trading and Markets, Commission, 

dated May 29, 2009. 

27See id. 

28See id. 

29We can envision a customer authorizing a lock 

when the fees associating with trading against the 

locked market make the execution price 

uneconomical to the customer. 

underlying security changes. This 

exception provides a form of ‘‘safe 

harbor’’ to market participants to allow 

them to trade through prices that have 

changed within a second of the 

transaction, causing a nominal tradethrough. 

• Non-Firm Quotes: Rule 1901(b)(6) 

implements Section 5(b)(vii) of the Plan 

and carries forward the current non-firm 

quote trade-through exception in the 

Old Plan.20 By definition, an exchange’s 

quotations may not be firm for 

automatic execution during this trading 

state and thus should not be protected 

from trade-throughs. In effect, these 

quotations are akin to ‘‘manual 

quotations’’ under Regulation NMS. 

• Complex Trades: Rule 1901(b)(7) 

implements Section 5(b)(viii) of the Plan 

and carries forward the current complex 

trade exception in the Old Plan.21

Complex trades consist of multiple 

transactions (‘‘legs’’) effected at a net 

price, and it is not practical to price 

each leg at a price that does not 

constitute a trade-through. This 

exemption will apply to executions in 

the Exchange’s Complex Order 

Mechanism.22

• Customer Stopped Orders: Rule 

1901(b)(8) implements Section 5(b)(ix) 

of the Plan and corresponds to the 

customer stopped order exception in 

Regulation NMS for equity securities.23

It permits broker-dealers to execute 

large orders over time at a price agreed 

upon by a customer, even though the 

price of the option may change before 

the order is executed in its entirety. 

• Stopped Orders and Price 

Improvement: Rule 1901(b)(9) 

implements Section 5(b)(x) of the Plan 

and would apply if an order is stopped 

at price that did not constitute a tradethrough at the time of the stop. This 

exception will facilitate the use of the 

ISE’s ‘‘Price Improvement Mechanism,’’ 

by which members could seek price 

improvement for that order, even if the 

market moves in the interim, and the 

transaction ultimately is effected at a 

price that would trade through the then 

currently-displayed market.24

• Benchmark Trades: Rule 

1901(b)(10) implements Section 5(b)(xi) 

of the Plan and would cover trades 

executed at a price not tied to the price 

of an option at the time of execution, 

and for which the material terms were 

not reasonably determinable at the time 

of the commitment to make the trade. 

An example would be a volumeweighted average price trade, or 

‘‘VWAP.’’ This corresponds to a tradethrough exemption in Regulation NMS 

for equity trades.25 The ISE does not 

currently permit these types of options 

trades, and any transaction-type relying 

on this exemption would require the ISE 

to adopt implementing rules, subject to 

Commission review and approval. 

Rule 1902—Locked and Crossed 

Markets 

Proposed Rule 1902 implements 

Section 6 of the Plan, which requires 

Plan participants to establish, maintain 

and enforce rules that: require their 

members reasonably to avoid displaying 

locked and crossed markets; are 

reasonably deigned to assure 

reconciliation of locked and crossed 

markets; and prohibit their members 

from engaging in a pattern or practice of 

displaying locked and crossed markets. 

Section 6 of the Plan further allows an 

exchange to provide exceptions to these 

limitations as ‘‘contained in the rules of 

a Participant approved by the 

Commission.’’ 

Proposed Rule 1902(a) contains the 

general prohibition that ISE members 

shall reasonably avoid displaying, and 

shall not engage in a pattern or practice 

of displaying, any quotations that lock 

or cross the best bid or offer of another 

exchange. We propose four exceptions 

to this general prohibition.26

The first exception would apply when 

we are experiencing system issues, and 

is similar to the systems issues 

exception to the trade-through rule. The 

second exception applies when there is 

a crossed market, and also is similar to 

the corresponding trade-through 

exception. Also similar to the tradethrough exception, the third exception 

applies when a member simultaneously 

routes an ISO to execute against the full 

displayed size of any locked or crossed 

protected bid or offer. The fourth 

proposed exception applies to locked 

markets in the following circumstances: 

• Neither the locking or locked quote 

represents, in whole or in part, a 

customer order; or 

• A customer enters a bid or offer that 

locks a non-customer quotation on 

another market, and the customer, on a 

case-by-case basis, authorizes the 

locking of the other market’s 

quotation.27

This fourth exemption recognizes an 

important distinction between the 

equities and options markets. Options 

market makers compete for order flow 

by disseminating quotations in multiple 

series with respect to each underlying 

security, distributing liquidity over a 

much greater universe of products than 

in the equity markets. As a result, the 

options markets are more reliant on 

market maker quotations to provide 

liquidity, with fewer customer orders in 

each series than in each underlying 

security, where liquidity is concentrated 

in one product.28

With market makers on multiple 

exchanges constantly updating their 

quotations in all these series based on 

mathematical formulae there is a greater 

likelihood of market maker quotations 

locking. We believe that in most cases 

locked market maker quotations are 

good for the investing public. Effectively 

locked markets provide a ‘‘zero spread,’’ 

allowing market participants to buy and 

sell an option at the same price. On the 

ISE these quotations are firm, and are 

fully executable on an automated basis. 

We recognize that locked markets are 

more complicated where one or both of 

the locking quotations represents a 

customer order. Where there is contraside market interest willing to trade 

with a customer, the customer order 

should be filled. Thus, we would not 

exempt from the locked market 

prohibition situations involving 

customer orders unless the customer 

entering the locking order specifically 

authorizes the lock on a case-by-case 

basis.29

As proposed, the ISE will not permit 

a member to lock another exchange’s 

quotation unless the ISE can establish 

that the quotation on the other exchange 

is not for the account of a customer. The 

options exchanges currently are working 

on a method to so identify customer 

quotations through the Options Price 

Reporting Authority. Absent the ability 

to identify a customer quote as part of 

an exchange’s BBO, the ISE will assume 

that the quote represents, in whole or in 

part, a customer order. That is, the ISE 

will not permit its members to avail 

themselves of this exemption unless 

another exchange has informed the ISE 

that it will designate all customer orders 

as such in OPRA, and such exchange’s 

quotation does not contain such 

designation. If an exchange opts not to 

identify its customer quotations, the ISE 

will treat all of that exchange’s 

quotations as customer orders and, 

absent application of another exception, 

will not permit locks of such quotations. 


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30Section 5(a) of the Plan. 

31The routing of Public Customer orders to 

another exchange when the ISE is not at the best 

price is, in effect, voluntary. A customer can avoid 

such route-outs by entering an Immediate or Cancel 

(‘‘IOC,’’ see ISE Rule 715(b)(3)) or Fill or Kill 

(‘‘FOK,’’ see ISE Rule 715(b)(2)) order. If the 

Exchange cannot immediately execute such orders, 

it will cancel all of the order (FOK orders) or the 

unexecuted portion of the order (IOC orders) 

without routing such orders to another exchange. 32 15 U.S.C. 78f(b)(5). 

Temporary Rule 1903—Phase Out of 

Intermarket Linkage Rules 

When the Plan and implementing 

rules become operative it is possible 

that not all the options exchanges will 

be functionally able to operate pursuant 

to the Plan. Thus, in order to ensure 

there is full intermarket trade-through 

protection during this interim period, 

we propose to retain certain minimum 

trade-through rules governing the 

operation of the Linkage until all the 

options exchanges are operating 

pursuant to the Plan. When that occurs 

we will file a rule change with the 

Commission to delete Temporary Rule 

1903. 

Temporary Rule 1903 provides that 

the ISE will continue to accept Principal 

Acting as Agent (‘‘P/A’’) and Principal 

Orders from options exchanges that use 

such orders to address trade-throughs. 

The handling of these orders will be 

subject to rules that parallel the 

operation of the Linkage under the Old 

Plan. 

Amendment of Other ISE Rules To 

Accommodate the Plan 

We propose to amend six ISE rules 

outside of Chapter 19: 

• First, Rule 701, entitled ‘‘Trading 

Rotations,’’ describes the initiation of 

trading in an options series. That rule 

currently permits an ISE Primary Market 

Maker (‘‘PMM’’) to send various Linkage 

orders prior to the opening of trading on 

the Exchange. With the termination of 

the Linkage such provision no longer 

will be necessary and we thus propose 

to delete this provision. 

• Second, Rule 714 governs when we 

provide automatic execution for orders 

we receive. We propose to amend that 

rule to reflect the terminology in the 

Plan and the implementing rules. We 

propose no substantive changes to that 

rule. 

• Third, we propose to amend the 

Supplementary Material Rule 716, 

entitled ‘‘Block Trades,’’ to delete 

Supplementary Material .07 which 

implements the block exception in the 

Old Plan, which no longer will be in 

effect. 

• Fourth, Rule 803(c) and the 

Supplementary Material govern the 

obligations of PMMs, including the 

PMMs’ obligation to address customer 

orders when there is a better market 

displayed on another exchange. We 

propose to amend this rule to specify 

that ISE will discharge its obligations 

under the Plan to ‘‘establish, maintain 

and enforce written policies and 

procedures * * * reasonably designed 

to prevent Trade-Throughs’’ 30 by 

requiring PMMs to address customer 

orders when there is a better market 

away. This is similar to PMMs’ 

obligations under the Old Plan. 

However, PMMs would meet this 

obligation via the use of ISOs rather 

than Linkage orders.31 ISE will conduct 

surveillance of PMMs’ trading activities 

to ensure that they comply with this 

obligation. 

PMMs will comply with their 

obligation (i) by executing a customer 

order at a price that at least matches the 

best price displayed or (ii) by sending 

ISO(s) as agent for the customer to any 

other exchange(s) displaying a superior 

price and, with respect to any remaining 

portion of the customer order, either (a) 

releasing the remaining portion of the 

order for execution in the Exchange’s 

auction market or (b) executing the 

remaining portion of the order at a price 

superior to the best price in the 

Exchange’s auction market. 

The amended rule further specifies 

that: (i) In addressing customer orders 

that are not automatically executed 

because there is a displayed bid or offer 

on another exchange trading the same 

options contract that is better than the 

best bid or offer on the Exchange, the 

Exchange will act in compliance with 

its rules and with the provisions of the 

Act and the rules thereunder, including, 

but not limited to, the requirements in 

Section (6)(b)(4) and (5) of the Act that 

the rules of national securities exchange 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among its members and issuers and 

other persons using its facilities, and not 

be designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers; and (ii) all 

orders entered on the Exchange and 

routed to another exchange via an ISO 

pursuant to the Rule, and that result in 

an execution, are binding. 

• Fifth, Rule 810 governs 

‘‘informational barriers’’ that ISE market 

makers must maintain within their 

firms. These barriers restrict the flow of 

information between personnel 

handling market making activities, on 

the one hand, and personnel performing 

other functions, including the acting as 

agency [sic] for customer orders, on the 

other hand. Under the Old Plan, when 

there is a better market on another 

exchange, a PMM can send a 

P/A Order to that exchange in an 

attempt to access that better price for the 

customer. This is consistent with Rule 

810 because a P/A Order is a principal 

order, and a firm is permitted to send 

such an order from the market-making 

side of the information barrier. 

Under the Plan and these proposed 

rules, PMMs will send ISOs 

representing the underlying customer 

orders, rather than P/A Orders, when 

there is a better market away. Because 

these ISOs technically will be orders on 

behalf of a Public Customer current Rule 

810 would prohibit a PMM from 

sending such an order. We propose a 

narrow carve-out to Rule 810 that would 

permit a PMM to send ISOs solely to 

comply with its obligation under Rule 

803 to address Public Customer orders 

when there is a better market on another 

exchange. PMMs will act as agent in 

these circumstances, and will send the 

ISOs from the market making side of the 

information barrier. In all other respects 

PMMs will be subject to Rule 810. 

• Sixth, Rule 811(b) governs Directed 

Orders and currently states that ISE 

market makers may act as agent for 

customer orders only when handling 

directed orders. We propose to amend 

that rule to reflect the ability of Primary 

Market Makers to act as agent when 

sending ISOs under Rule 803. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is found in 

Section 6(b)(5),32 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. In particular, the 

Exchange believes that adopting rules 

that implement the Plan will facilitate 

the trading of options in a national 

market system by establishing more 

efficient protection against tradethroughs and locked and crossed 

markets. 

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 


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27228 Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 

33 17 CFR 200.30–3(a)(12). 

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 

Within 35 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 Exchange consents, 

the Commission will: 

(A) By order approve the 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 

No. SR–ISE–2009–27 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–ISE–2009–27. 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, 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– 

2009–27 and should be submitted on or 

before June 29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13205 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

DEPARTMENT OF STATE 

[Public Notice 6655] 

30-Day Notice of Proposed Information 

Collection: DS–5506, Local American 

Citizen Skills/Resources Survey, 

New—OMB No. 1405–XXXX 

ACTION: Notice of request for public 

comment and submission to OMB of 

proposed collection of information. 

SUMMARY: The Department of State has 

submitted the following information 

collection request to the Office of 

Management and Budget (OMB) for 

approval in accordance with the 

Paperwork Reduction Act of 1995. 

• Title of Information Collection: 

Local American Citizen Skills/ 

Resources Survey. 

• OMB Control Number: New—OMB 

No. 1405–XXXX. 

• Type of Request: New Collection. 

• Originating Office: Bureau of 

Consular Affairs, Overseas Citizens 

Services (CA/OCS). 

• Form Number: DS–5506. 

• Respondents: United States 

Citizens. 

• Estimated Number of Respondents: 

2,000. 

• Estimated Number of Responses: 

2,000. 

• Average Hours per Response: 15 

minutes. 

• Total Estimated Burden: 500 hours. 

• Frequency: On Occasion. 

• Obligation to Respond: Voluntary. 

DATE(S): Submit comments to the Office 

of Management and Budget (OMB) for 

up to 30 days from June 8, 2009. 

ADDRESSES: Direct comments and 

questions to Katherine Astrich, the 

Department of State Desk Officer in the 

Office of Information and Regulatory 

Affairs at the Office of Management and 

Budget (OMB), who may be reached at 

202–395–4718. You may submit 

comments by any of the following 

methods: 

• E-mail: kastrich@omb.eop.gov. You 

must include the DS form number, 

information collection title, and OMB 

control number in the subject line of 

your message. 

• Mail (paper, disk, or CD–ROM 

submissions): Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, 725 17th 

Street, NW., Washington, DC 20503. 

• Fax: 202–395–5806. 

FOR FURTHER INFORMATION CONTACT: You 

may obtain copies of the proposed 

information collection and supporting 

documents from Derek A. Rivers, 

Bureau of Consular Affairs, Overseas 

Citizens Services (CA/OCS/PRI), U.S. 

Department of State, SA–29, 4th Floor, 

Washington, DC 20520, who may be 

reached on (202) 736–9082 or 

ASKPRI@state.gov. 

SUPPLEMENTARY INFORMATION: We are 

soliciting public comments to permit 

the Department to: 

• Evaluate whether the proposed 

information collection is necessary for 

the proper performance of our 

functions. 

• Evaluate the accuracy of our 

estimate of the burden of the proposed 

collection, including the validity of the 

methodology and assumptions used. 

• Enhance the quality, utility, and 

clarity of the information to be 

collected. 

• Minimize the reporting burden on 

those who are to respond. 

Abstract of proposed collection: The 

Local American Citizen Skills/ 

Resources Survey is a systematic 

method of gathering information about 

skills and resources from U.S. citizens 

that will assist in improving the wellbeing of other U.S. citizens affected or 

potentially affected by a crisis. 

Methodology: The information is 

collected in person, by fax, or via mail. 

The Bureau of Consular Affairs is 

currently exploring options to make this 

information collection available 

electronically. 

Dated: May 5, 2009. 

Mary Ellen Hickey, 

Managing Director, Bureau of Consular 

Affairs, Department of State. 

[FR Doc. E9–13334 Filed 6–5–09; 8:45 am] 

BILLING CODE 4710–06–P 


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