Document ID: SEC-2009-1319-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Exposure of Reserve Orders
Posted Date: 2009-09-16T04:00Z

[Federal Register: September 16, 2009 (Volume 74, Number 178)]
[Notices]               
[Page 47631-47633]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16se09-99]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60642; File No. SR-ISE-2009-61]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Regarding Exposure of Reserve Orders

September 9, 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 August 27, 2009, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange Commission the proposed rule change as described in Items I, 
II, and III below, which items have been prepared by the self-
regulatory organization. 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 is proposing to amend its rules to adopt an 
interpretation to its rules related to the exposure of reserve orders. 
The text of the proposed rule change is as follows, with additions in 
italics:
Rule 717. Limitations on Orders
    (a) through (g) no change.
Supplementary Material to Rule 717
    .01-.04 no change.
    .05 With respect to the non-displayed reserve portion of a reserve 
order, the exposure requirement of paragraphs (d) and (e) are satisfied 
if the displayable

[[Page 47632]]

portion of the reserve order is displayed at its displayable price for 
one second.
* * * * *

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

    (a) Purpose--The purpose of the proposal is to adopt an 
interpretation to ISE Rule 717(d) and (e) to specify that the exposure 
requirement contained in these paragraphs is satisfied with respect to 
the non-displayed reserve portion of a reserve order if the displayable 
portion is displayed at its displayable price for one second. A reserve 
order is an order where only a portion of the full size is included in 
the Exchange's disseminated quotation.\3\ The displayed size is 
executed according to the Exchange's regular priority rules, and is 
refreshed with additional volume from the non-displayed portion of the 
order. The non-displayed portion of the reserve order is available for 
execution only after the exchange's displayed quote is fully exhausted.
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    \3\ ISE Rule 715(g).
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    Under the proposed interpretation, after entering a reserve order, 
a member may enter a contra-side order for its own account or a contra-
side order that was solicited from another broker-dealer that would 
execute against the displayable and non-displayed portions of the order 
so long as the displayable portion of the order was displayed on the 
ISE (i.e., the price of the order is at the ISE BBO) for at least one 
second. This proposed interpretation is the same as an existing 
interpretation to the rule of the Nasdaq Options Market that contains 
the same exposure requirements as ISE Rule 717(d) and (e).\4\ 
Accordingly, the Commission has previously determined that display of 
the displayable portion of a reserve order is sufficient to satisfy the 
exposure requirements of ISE Rule 717(d) and (e).
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    \4\ Nasdaq Rules, Chapter VII, Sec. 12 (Order Exposure 
Requirements), Commentary .03.
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    (b) Basis--The basis under 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 is the 
same as an existing rule of another exchange,\5\ and will provide 
members with certainty with respect to the applicable exposure 
requirements for reserve orders.
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    \5\ Id.
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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

    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. 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).\6\ The proposed 
rule change is the same as a rule that the Commission has previously 
approved for another self-regulatory organization.\7\ 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.
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    \6\ 17 CFR 240.19b-4(f)(6).
    \7\ Supra note 4.
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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 proposal 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-2009-61 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-2009-61. 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

[[Page 47633]]

should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-ISE-2009-61 
and should be submitted on or before October 7, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-22245 Filed 9-15-09; 8:45 am]

BILLING CODE 8010-01-P