Document ID: SEC-2009-1657-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot Program To Expose All-Or-None Orders Until December 31, 2009
Posted Date: 2009-11-24T05:00Z

[Federal Register: November 24, 2009 (Volume 74, Number 225)]
[Notices]               
[Page 61393-61395]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24no09-87]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61016; File No. SR-ISE-2009-96]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Extend the Pilot Program To Expose All-Or-None Orders Until 
December 31, 2009

November 17, 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 November 13, 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 
and II 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 implement a 
broadcast message that will inform market participants when a non-
marketable all-or-none limit order is placed on the limit order book. 
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 [members] 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 [November 9, 
2009] December 31, 2009.
* * * * *

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

[[Page 61394]]

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--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.\3\
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    \3\ 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.\4\ Upon the receipt 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.
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    \4\ Supplementary Material .02 to ISE Rule 713.
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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. The Exchange 
subsequently extended the pilot, which is set to expire on November 9, 
2009.\5\ The Exchange now proposes to extend the pilot through the end 
of the year, until December 31, 2009. During the extension, the 
broadcast message will be made available to any market participant, not 
just members.\6\ Thus, all of the terms of the order will be disclosed 
to all market participants.
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    \5\ See Securities Exchange Act Release No. 60866 (October 22, 
2009), 74 FR 55879 (October 29, 2009).
    \6\ 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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    (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

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) 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 proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \7\ and 
Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
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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.\9\ 
However, Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. ISE has requested that the 
Commission waive the 30-day operative delay. The Commission notes that 
waiver of the operative delay will permit the pilot to continue until 
December 31, 2009 without further delay, and will provide all market 
participants, instead of only ISE members, with the opportunity to 
receive ISE's broadcast message with information about the terms of new 
AON orders. The Commission also notes that no comments were received to 
date on the existing pilot. For these reasons, the Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest, and designates the 
proposed rule change to be operative upon filing with the 
Commission.\11\
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    \9\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
the Commission 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 
of the proposed rule change, or such shorter time as designated by 
the Commission. The Exchange satisfied this requirement.
    \10\ Id.
    \11\ For the 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.

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-2009-96 on the subject line.

Paper Comments

    Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission,

[[Page 61395]]

100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-ISE-2009-96. 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-2009-96 and should be 
submitted on or before December 15, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-28098 Filed 11-23-09; 8:45 am]

BILLING CODE 8011-01-P