Document ID: SEC-2012-0473-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2012-03-23T04:00Z

[Federal Register Volume 77, Number 57 (Friday, March 23, 2012)]
[Notices]
[Pages 17102-17104]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6987]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66617; File No. SR-ISE-2012-20]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Adopt a New Order Type

March 19, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 17103]]

``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 7, 2012, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 715 (Types of Orders) to adopt 
a new order type. The text of the proposed rule change is available on 
the Exchange's Internet Web site at 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 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 these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in sections A, B and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to provide an 
additional order type that will give market participants greater 
control over the circumstances in which their orders are executed.
    Some investors and market participants wish only to provide 
liquidity in certain circumstances, such as to receive a maker fee 
(rebate) upon execution of an order. To accommodate this strategy, the 
Exchange proposed to adopt a new order type called an add liquidity 
order (``ALO''). ALOs are limit orders that will only be executed as a 
``maker'' on the ISE. Members can choose whether an ALO that is 
executable on the ISE upon entry (or that locks or crosses an away 
market upon entry) will be cancelled or re-priced to one minimum price 
variation above the national best bid or below the national best offer. 
An Add Liquidity Order will only be re-priced once and will be executed 
at the re-priced price. While the Exchange expects to implement this 
new order type on May 14, 2012, this date is not certain and the 
Exchange will announce the specific operative date via an Information 
Circular.
    This order type is similar to order types available on NYSE 
Arca.\3\
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    \3\ NYSE Arca offers a Liquidity Adding Order that is canceled 
if executable upon entry and a PNP Plus order that is re-priced if 
it is marketable upon entry, or would lock or cross an away market. 
See NYSE Arca Rule 6.62(t) and (y). See also, Securities Exchange 
Act Release Nos. 59603 (March 19, 2009), 74 FR 13279 (March 26, 
2009) (SR-NYSEArca-2009-21) (Notice of immediate effectiveness of 
the Liquidity Adding Order) and 49942 (June 29, 2004), 69 FR 41005 
(July 7, 2004) (SR-PCX-2004-12) (Order approving the PNP Plus 
order).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\4\ in general, and with 
Section 6(b)(5) of the Act,\5\ in particular, in that the proposal is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, settling 
processing information with respect to, and facilitating transactions 
in securities, 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. Specifically, the ALO order 
is designed to provide market participants with the ability to provide 
liquidity and have more control over their execution costs. When an ALO 
would lock or cross an away market price if placed on the ISE limit 
order book or be executed upon entry, it will either be cancelled or 
re-priced as designated. In addition, the ALO is designed to assure 
compliance with the Intermarket Linkage rules related to locked and 
crossed markets.\6\
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Under the Options Order Protection and Locked/Crossed Market 
Plan (``Plan'') Members are required to reasonably avoid displaying, 
and shall not engage in a pattern or practice of displaying, any 
quotations that lock or cross a Protect [sic] Quotation. The Plan is 
a national market system plan that was approved by the Commission 
and by which all options exchanges must comply. See Securities 
Exchange Act Release Nos. 60405 (July 30, 2009), 74 FR 39362 (August 
6, 2009) (order approving the Plan); 60559 (August 21, 2009), 74 FR 
44425 (August 28, 2009) (order approving ISE Rules implementing the 
Plan).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) \7\ of the Act and Rule 19b-
4(f)(6) \8\ thereunder. The Exchange provided 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 the proposed rule 
change.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
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    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 Exchange 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 email to rule-comments@sec.gov. Please include 
File

[[Page 17104]]

Number SR-ISE-2012-20 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-2012-20. This file 
number should be included on the subject line if email 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. 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-2012-20 and should be 
submitted on or before April 13, 2012.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6987 Filed 3-22-12; 8:45 am]
BILLING CODE 8011-01-P