Document ID: SEC-2007-0338-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-03-07T05:00Z

[Federal Register: March 7, 2007 (Volume 72, Number 44)]
[Notices]               
[Page 10279-10280]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07mr07-175]                         

[[Page 10279]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55376; File No. SR-ISE-2007-14]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change as Modified by Amendment No. 1 Thereto Relating to Re-Price 
Orders

February 28, 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 February 6, 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. On February 16, 2007, ISE filed Amendment No. 1 to the 
proposed rule change.\3\ The Exchange filed the proposed rule change 
pursuant to Section 19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6) 
thereunder,\5\ which renders the proposal effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange revised the proposed rule 
text to clarify its meaning.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 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 ISE is proposing to add a new order type for the ISE Stock 
Exchange that would prevent orders from being cancelled back to Equity 
Electronic Access Members (``Equity EAMs'') when the order would either 
cause a locked or crossed market if displayed or cause a trade-through 
if executed. 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 ISE Stock Exchange has several order types that may result in 
orders being cancelled back to Equity EAMs when the orders cannot be 
displayed on the ISE Stock Exchange because the order would create a 
violation of ISE Rule 2112 by locking or crossing the Protected 
Quotation \6\ of another Trading Center \7\ or would cause a violation 
of ISE Rule 2107(b) by trading-through the Protected Quotation of 
another Trading Center.\8\
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    \6\ See ISE Rule 2100(c)(16).
    \7\ See ISE Rule 2100(c)(20).
    \8\ For example, Not Routable orders are limit orders that are 
to be executed in whole or in part upon receipt, and if not fully 
executed, displayed on the ISE Stock Exchange if possible. If a Not 
Routable limit order is not fully executed and is not displayable on 
the ISE, the order is cancelled back to the member. See ISE Rule 
2104(i).
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    The purpose of this filing is to add an order type that will give 
Equity EAMs the choice of whether to have orders re-priced instead of 
cancelled. Re-price orders and the unexecuted balance of Re-price 
orders will be automatically re-priced within the minimum price 
variation \9\ for display on the ISE Stock Exchange instead of being 
cancelled. For example, if the National Best Bid and Offer is $4.06 x 
$4.10 and the ISE Best Bid and Offer is $4.05 x $4.10 when an Equity 
EAM enters a Not Routable limit order to sell with a limit price of 
$4.05, the order will be cancelled back to the member unless it is 
marked ``Re-Price.'' If the order is marked ``Re-Price,'' the order 
will be placed on the ISE Stock Exchange's limit order book at $4.07, 
the lowest possible offer price that the ISE can display without 
creating a locked or crossed market.
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    \9\ See ISE Rule 2210.
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2. Statutory Basis
    The ISE believes that the proposed rule change is consistent with 
the Act and the rules and regulations under the Act applicable to a 
national securities exchange and, in particular, the requirements of 
Section 6(b) of the Act.\10\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) \11\ 
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, the Exchange believes that this filing will provide 
investors with more flexibility in entering orders and receiving 
executions of such orders.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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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.\12\
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    \12\ As 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.
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    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.\13\ 
However, Rule 19b-4(f)(6)(iii) \14\ 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 pre-operative period, which would make the 
rule change operative immediately. The

[[Page 10280]]

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 a rule 
previously approved by the Commission.\15\ For this reason, the 
Commission designates that the proposal become operative immediately.
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ Id.
    \15\ See Nasdaq Rule 4751(f)(8).
    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).
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    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.\16\
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    \16\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on February 16, 2007, the date on which ISE filed 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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-2007-14 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-2007-14. 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-2007-14 and should be submitted on or before March 
28, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-4042 Filed 3-6-07; 8:45 am]

BILLING CODE 8010-01-P