Document ID: SEC-2010-0373-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2010-03-11T05:00Z

[Federal Register: March 11, 2010 (Volume 75, Number 47)]
[Notices]               
[Page 11608-11610]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11mr10-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61640; File No. SR-ISE-2010-13]

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

March 3, 2010.
    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 February 23, 2010, 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, II, and III below, which items have been prepared 
by the Exchange. The ISE filed this proposal pursuant to Rule 19b-
4(f)(6) under the Act.\3\ 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.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt a minimum quantity order type. The 
text of the proposed rule change is as follows (deletions are in 
[brackets]; additions are underlined):

Rule 715. Types of Orders

    (a) through (k) no change.
    (l) Minimum Quantity Orders. A minimum quantity order is an 
order that is available for partial execution, but each partial 
execution must be for a specified number of contracts or greater. If 
the balance of the order after one or more partial executions is 
less than the minimum, such balance is treated as all-or-none.

Rule 713. Priority of Quotes and Orders

    (a) through (f) no change.

Supplementary Material to Rule 713

    .01 No change.
    .02 All-or none orders, as defined in Rule 715(c), and minimum 
quantity orders, as defined in Rule 715(l), are contingency orders 
that have no priority on the book. Such orders are maintained in the 
system and remain available for execution after all other trading 
interest at the same price has been exhausted.
    .03 through .04 no change.

Rule 717. Limitations on Orders

* * * * *

Supplementary Material to Rule 717

    .01-.03 No Change.
    .04 [A] [n]Non-marketable all-or-none limit orders and non-
marketable minimum quantity orders shall be deemed ``exposed'' for 
the purposes of paragraphs (d) and (e) one second following a 
broadcast notifying market participants that such an order to buy or 
sell a specified number of contracts at a specified price either 
all-or-none or with a specified minimum quantity has been received 
in the options series. For non-marketable minimum quantity orders, 
the broadcast will specify the minimum quantity that can be 
executed.
    .05 No change.

[[Page 11609]]

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 Exchange seeks to allow members to enter minimum quantity 
orders on the Exchange. A minimum quantity order is an order that is 
available for partial execution, but each partial execution must be for 
a specified number of contracts or greater. If the balance of the order 
after one or more partial executions is less than the minimum, such 
balance is treated as all-or-none. This order type currently is 
available on other options exchanges.\4\
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    \4\ See, e.g., Chicago Board Options Exchange (``CBOE'') Rule 
43.2(a)(9)(E) (Types of Orders Handled) and Bats Exchange, Inc. 
(``BATS'') Rule 21.1(d)(3) (Minimum Quantity Orders).
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    Like all-or-none orders, minimum quantity orders are contingency 
orders that are not displayed in the Exchange's best bid or offer. 
However, the Exchange will disseminate to market participants an 
indication that a minimum quantity order has been entered. As is the 
case with all-or-none orders, pursuant to Rule 717(d) and (e), the 
entering member will be required to wait at least one second before 
entering a contra-side proprietary or solicited order that would 
execute against the minimum quantity order. While the Exchange believes 
it is unlikely that this order type would be used for crossing 
purposes, disseminating the arrival of the order in the same manner as 
all-or-none orders will minimize inadvertent violations of Rule 717(d) 
or (e) and increase the opportunity for market participants to provide 
liquidity to the orders.
2. Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
for this proposed rule change is the requirement under Section 6(b)(5) 
that an exchange have rules that are designed to promote just and 
equitable principles of trade, and to remove impediments to and perfect 
the mechanism for a free and open market and a national market system, 
and in general, to protect investors and the public interest. In 
particular, the proposal will provide members with an additional order 
type that they may chose to utilize on the Exchange. Additionally, 
under the proposed rule change minimum quantity orders will be exposed 
to members so that there is a greater opportunity for market 
participants to interact with such orders.

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: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \5\ and Rule 19b-4(f)(6) 
thereunder.\6\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and text of the proposed rule change, or such 
shorted time as designated by the Commission. The Exchange provided 
a copy of this rule filing to the Commission at least five business 
days prior to the date of this filing.
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    The Exchange believes the proposed rule change is non-controversial 
in that it is similar to the rules of the CBOE and BATS. Further, the 
Exchange believes the proposed rule change may assist investors by 
exposing the minimum quantity orders, thus allowing a greater 
opportunity for market participants to interact with such orders. The 
Exchange also believes that the proposed rule change does not raise any 
new, unique or substantive issues, and is beneficial for competitive 
purposes and to promote a free and open market for the benefit of 
investors.
    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 
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 rule-comments@sec.gov. Please include 
File Number SR-ISE-2010-13 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-2010-13. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from

[[Page 11610]]

submissions. You should submit only information that you wish to make 
publicly available. All submissions should refer to File Number SR-ISE-
2010-13 and should be submitted on or before April 1, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5220 Filed 3-10-10; 8:45 am]
BILLING CODE 8011-01-P