Document ID: SEC-2010-0042-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make theExchange's Pilot Program To Expose All-Or-None Orders Permanent
Posted Date: 2010-01-11T05:00Z

[Federal Register: January 11, 2010 (Volume 75, Number 6)]
[Notices]               
[Page 1428-1429]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ja10-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61287; File No. SR-ISE-2009-113]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Make the Exchange's Pilot Program To Expose All-Or-None 
Orders Permanent

January 5, 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 December 24, 2009, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') 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 Exchange has filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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 is proposing to make permanent its pilot program 
regarding limitations on orders to include the exposure of all-or-none 
orders. The text of the proposed rule change is as follows, with 
deletions in [brackets] and additions italicized:

Rule 717. Limitations on Orders

* * * * *

Supplementary Material to Rule 717

    .01-.03 No Change.
    .04 A non-marketable all-or-none limit order 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 has been received in the options series. [This provision shall 
be in effect on a pilot basis expiring January 31, 2010.]
* * * * *

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 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

    (a) Purpose--The purpose of the proposed rule change is to make 
permanent the Exchange's pilot program regarding limitations on orders 
to include the exposure of all-or-none orders.
    Pursuant to ISE Rule 717(d) and (e), Electronic Access Members must 
expose agency orders on the Exchange for at least one second before 
entering a contra-side proprietary order or a contra-side order that 
was solicited from a broker-dealer, or utilize one of the Exchange's 
execution mechanisms that have one second exposure periods built into 
the functionality.\5\
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    \5\ See ISE Rule 716(d) (Facilitation Mechanism), Rule 716(e) 
(Solicited Order Mechanism) and Rule 723 (Price Improvement 
Mechanism for Crossing Transactions).
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    The Exchange operates an integrated system that consolidates all 
market maker quotes and orders, and automatically disseminates the best 
bid and offer. If a limit order is designated as all-or-none (``AON''), 
the contingency that the order must be executed in full makes it 
ineligible for display in the best bid or offer. Nevertheless, such 
orders are maintained in the system and remain available for execution 
after all other trading interest at the same price has been 
exhausted.\6\ Upon the receipt

[[Page 1429]]

of a non-marketable all-or-none limit order, the system automatically 
will send a broadcast message to all market participants notifying them 
that an all-or-none order to buy or to sell a specified number of 
contracts at a specified price has been placed on the book. The 
broadcast message, which includes all of the terms of the order, will 
be made available to any market participant, not just members.\7\
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    \6\ Supplementary Material .02 to ISE Rule 713.
    \7\ The AON broadcast message is available through the 
Exchange's application programming interface (``API''). Any member 
or non-member connecting to the API can receive the AON broadcast 
message. The Exchange is not proposing to adopt a fee associated 
with receiving this message, and any future fee would be filed with 
the Commission.
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    On July 9, 2009, the Exchange adopted a proposed rule change on a 
three-month pilot basis to specify that a non-marketable all-or-none 
limit order is deemed ``exposed'' for the purposes of Rule 717(d) and 
(e) one second following a broadcast notifying members that such an 
order to buy or sell a specified number of contracts at a specified 
price has been received in the options series.\8\ The Exchange 
subsequently extended the pilot for an additional month,\9\ and again 
through December 31, 2009.\10\ During the extension through December 
31, 2009, the broadcast message was made available to any market 
participant, not just members. Thus, all of the terms of the order 
continue to be disclosed to all market participants. The pilot was 
subsequently extended for an additional month and is set to expire on 
January 31, 2010. The Exchange now proposes to make the pilot 
permanent, as of February 1, 2010.
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    \8\ See Exchange Act Release No. 60311 (July 15, 2009), 74 FR 
36290 (July 22, 2009).
    \9\ See Exchange Act Release No. 60866 (October 22, 2009), 74 FR 
55879 (October 29, 2009).
    \10\ See Exchange Act Release No. 61016 (November 17, 2009), 74 
FR 61393 (November 24, 2009).
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    (b) Basis--The basis under the Securities Exchange Act of 1934 
(``Exchange 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, under the proposed rule change all-or-
none orders will continue to be exposed to all market participants so 
that there is a greater opportunity for them 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

    This 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 after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest.\11\ 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 as required by Rule 19b-4(f)(6).\12\ The proposed 
rule change will permit the exchange to make the current pilot program 
permanent. For the foregoing reason, this rule filing qualifies for 
immediate effectiveness as a ``non-controversial'' rule change under 
paragraph (f)(6) of Rule 19b-4 of the Act, as it 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.
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    \11\ The Commission notes that the pilot will become permanent 
as of February 1, 2010 (see supra Section II(A)(a)).
    \12\ 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 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 No. SR-ISE-2009-113 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-ISE-2009-113. 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 also will be available for 
inspection and copying at the principal office of 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 No. SR-ISE-2009-113 and should be 
submitted on or before February 1, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-240 Filed 1-8-10; 8:45 am]
BILLING CODE 8011-01-P