Document ID: SEC-2007-0637-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: International Securities Exchange, LLC
Posted Date: 2007-05-07T04:00Z

[Federal Register: May 7, 2007 (Volume 72, Number 87)]
[Notices]               
[Page 25823]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07my07-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55683; File No. SR-ISE-2006-77]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Order Granting Approval to Proposed Rule Change, as Modified by 
Amendment No. 1, Relating to Penny Increments for Block Mechanism 
Orders

April 30, 2007.

I. Introduction

    On December 13, 2006, the International Securities Exchange, LLC 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to allow orders to be entered 
into the Block Mechanism in penny increments and to receive executions 
in penny increments. On March 19, 2007, the Exchange filed Amendment 
No. 1 to the proposed rule change. The proposed rule change was 
published for comment in the Federal Register on March 27, 2007.\3\ The 
Commission received no comment letters on the proposal. This order 
approves the proposed rule change as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55493 (March 20, 
2007), 72 FR 14315.
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II. Description of the Proposal

    The Exchange currently offers a Block Mechanism for the execution 
of single-sided, block-sized orders.\4\ The Block Mechanism exposes 
orders of at least 50 contracts to all ISE members for three seconds, 
giving members an opportunity to respond with contra-side trading 
interest for their own account or on behalf of their customers.\5\ 
Currently, orders may be entered and executed using the Block Mechanism 
at the standard 5 and 10 cent increments and at ``split prices'' (2.5 
cents for options trading in 5 cent standard increments and 5 cents for 
options trading in 10 cent standard increments). The Exchange proposes 
to amend ISE Rule 716 to allow these orders to be entered and executed 
in penny increments. Such orders would no longer be permitted to be 
executed at split prices.
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    \4\ See ISE Rule 716(c).
    \5\ Supplementary Material .03 to ISE Rule 716 prohibits members 
from entering Responses for the account of an options market maker 
from another options exchange. This is the only limitation regarding 
who may enter Responses.
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III. Discussion

    After careful review of the proposal, the Commission finds that the 
proposed rule change, as modified by Amendment No. 1, is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\6\ In 
particular, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\7\ which requires, among other things, that 
the rules of an exchange be designed to prevent fraudulent and 
manipulative acts, to promote just and equitable principles of trade, 
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 Commission 
believes that the proposed rule change is consistent with the Act 
because it will provide greater flexibility in the pricing of block-
size orders and enhanced opportunities for block-size orders to receive 
price improvement.
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-ISE-2006-77), as modified by 
Amendment No. 1, be, and hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-8597 Filed 5-4-07; 8:45 am]

BILLING CODE 8010-01-P