Document ID: SEC-2012-0979-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2012-06-19T04:00Z

[Federal Register Volume 77, Number 118 (Tuesday, June 19, 2012)]
[Notices]
[Pages 36589-36590]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14906]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67202; File No. SR-ISE-2012-54]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to the Extension of the Price Improvement Mechanism 
Pilot Program

June 14, 2012.
    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 June 11, 2012, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to extend two pilot programs related to 
its Price Improvement Mechanism (``PIM''). The text of the proposed 
rule amendment is as follows, with proposed deletions in [brackets], 
and proposed additions in italics:

Rule 723. Price Improvement Mechanism for Crossing Transactions

* * * * *

Supplementary Material to Rule 723

    .01-.02 No Change.
    .03 Initially, and for at least a Pilot Period expiring on July 18, 
2013 [July 18, 2012], there will be no minimum size requirements for 
orders to be eligible for the Price Improvement Mechanism. During the 
Pilot Period, the Exchange will submit certain data, periodically as 
required by the Commission, to provide supporting evidence that, among 
other things, there is meaningful competition for all size orders 
within the Price Improvement Mechanism, that there is significant price 
improvement for all orders executed through the Price Improvement 
Mechanism, and that there is an active and liquid market functioning on 
the Exchange outside of the Price Improvement Mechanism. Any data which 
is submitted to the Commission will be provided on a confidential 
basis.
    .04 No Change.
    .05 Paragraphs (c)(5), (d)(5) and (d)(6) will be effective for a 
Pilot Period expiring on July 18, 2013 [July 18, 2012]. During the 
Pilot Period, the Exchange will submit certain data relating to the 
frequency with which the exposure period is terminated by unrelated 
orders. Any data which is submitted to the Commission will be provided 
on a confidential basis.
    .06-.07 No Change.
* * * * *

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

1. Purpose
    The Exchange currently has two pilot programs related to its 
PIM.\3\ The

[[Page 36590]]

current pilot period provided in paragraphs .03 and .05 of the 
Supplementary Material to Rule 723 is set to expire on July 18, 
2012.\4\ Paragraph .03 provides that there is no minimum size 
requirement for orders to be eligible for the Price Improvement 
Mechanism. Paragraph .05 concerns the termination of the exposure 
period by unrelated orders. In accordance with the Approval Order, the 
Exchange has continually submitted certain data in support of extending 
the current pilot programs. The Exchange proposes to extend these pilot 
programs in their present form, through July 18, 2013, to give the 
Exchange and the Commission additional time to evaluate the effects of 
these pilot programs before requesting permanent approval of the rules. 
To aid the Commission in its evaluation of the PIM Functionality, ISE 
will also continue to provide additional PIM-related data as requested 
by the Commission.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release Nos. 50819 (December 8, 
2004), 69 FR 75093 (December 15, 2004) (Approving the PIM pilot (the 
``Approval Order'')); 52027 (July 13, 2005), 70 FR 41804 (July 20, 
2005) Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to a One-Year Pilot Extension for the Price 
Improvement Mechanism); 54146 (July 14, 2006), 71 FR 41490 (July 21, 
2006) (Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to a One-Year Pilot Extension Until July 18, 2007 
for the Price Improvement Mechanism); 56106 (July 19, 2007), 72 FR 
40914 (July 25, 2007) (Notice of Filing and Immediate Effectiveness 
of Proposed Rule Change Relating to a One-Week Extension for the 
Price Improvement Mechanism Pilot Program); and 56156 (July 27, 
2007), 72 FR 43305 (August 3, 2007) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change Relating to an Extension for 
the Price Improvement Mechanism Pilot Program); 58197 (July 18, 
2008), 73 FR 43810 (July 28, 2008) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change Relating to the Extension of 
the Price Improvement Mechanism Pilot Program); 60333 (July 17, 
2009), 74 FR 36792 (July 24, 2009) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change Relating to the Extension of 
the Price Improvement Mechanism Pilot Program); and 62513 (July 16, 
2010), 75 FR 43221 (July 23, 2010) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change Relating to the Extension of 
the Price Improvement Mechanism Pilot Program).
    \4\ See Securities Exchange Act Release No. 64931 (July 20, 
2011), 76 FR 44642 (July 26, 2011) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change Relating to the Extension of 
the Price Improvement Mechanism Pilot Program).
---------------------------------------------------------------------------

2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Exchange 
Act'') for this proposed rule change is found in Section 6(b)(5), in 
that the proposed rule change is designed to promote just and equitable 
principles of trade, remove impediments to and perfect the mechanisms 
of 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 the pilot programs are consistent with the Exchange 
Act because they provide opportunity for price improvement for all 
orders executed in the Exchange's Price Improvement Mechanism. The 
Exchange further believes it is appropriate to extend the pilot periods 
to provide the Exchange and Commission more data upon which to evaluate 
the rules.

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 written comments from members or other interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \5\ and Rule 19b-4(f)(6) thereunder.\6\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) by its terms, become 
operative prior to 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, the proposed rule 
change has become effective upon filing with the Commission pursuant to 
Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6)(iii) 
thereunder.\8\
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \6\ 17 CFR 240.19b-4(f)(6).
    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the Exchange to give the Commission written 
notice of the Exchange's 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 Commission deems this requirement to have been met.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may temporarily suspend 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 email to rule-comments@sec.gov. Please include 
File Number SR-ISE-2012-54 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-2012-54. This file 
number should be included on the subject line if email 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 Commissions 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 Web site viewing and printing in 
the Commission's Public Reference Room, 100 F 7 Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. 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-2012-54 and should be submitted by 
July 10, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14906 Filed 6-18-12; 8:45 am]
BILLING CODE 8011-01-P