Document ID: SEC-2008-0319-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes:  International Securities Exchange, LLC
Posted Date: 2008-02-29T05:00Z

[Federal Register: February 29, 2008 (Volume 73, Number 41)]
[Notices]               
[Page 11167-11168]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29fe08-126]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57375; File No. SR-ISE-2008-14]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Solicitation of Interest Orders

February 22, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 19, 2008, the International Securities Exchange, LLC 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared substantially by 
ISE. ISE filed the proposed rule change pursuant to Section 19(b)(3)(A) 
of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it 
effective upon filing with the Commission. 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 ISE is proposing to amend the parameters governing Solicitation 
of Interest orders (``SOIs''). The text of the proposed rule change is 
available on the Exchange's Web site (http://www.ise.com), at the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, ISE 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. ISE 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 purpose of this filing is to amend the parameters governing 
SOIs that are entered into MidPoint Match (``MPM'').\5\ When an SOI 
order is entered, the System sends Equity Electronic Access Members 
(``Equity EAMs'') a solicitation notice containing the name of the 
equity security for which the order was entered. Currently, an SOI 
order must be at least 2,000 shares and cannot be canceled or changed 
for five seconds. An immediate-or-cancel (``IOC'') SOI that is not 
executed within the five second no-cancellation period is automatically 
canceled.\6\
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    \5\ See ISE Rule 2129 (MidPoint Match).
    \6\ A regular SOI is converted to a Standard Order in MPM if it 
is not executed or canceled within 10 seconds; see ISE Rule 
2129(d)(2).
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    The Exchange proposes to reduce the no cancellation parameter to 
one second. The no cancellation parameter, currently set at five 
seconds, requires that Equity EAMs using SOIs relinquish the right to 
cancel or change an SOI order for five seconds. In the current market 
environment, many potential SOI users are reluctant to commit to a time 
period of that duration. Instead, Equity EAMs prefer a one second 
timeout, enabling them to cancel or revise the order in a timeframe 
that is more consistent with algorithmic trading patterns. Accordingly, 
an IOC SOI will also time out in one second.
    Additionally, the Exchange proposes to reduce the minimum order 
size to 500 shares. The current minimum order size of 2,000 shares is 
larger than the typical order size generated by algorithms. The 
Exchange proposes to revise the minimum order size to 500 shares, which 
is more consistent with algorithmic trading patterns.
2. Statutory Basis
    The basis under the Act for this proposed rule change is found in 
Section 6(b) of the Act.\7\ Specifically, the Exchange believes the 
proposed rule change is consistent with Section 6(b)(5) of the Act \8\ 
requirements that the rules of an exchange be designed to promote just 
and equitable principles of trade, serve 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, this filing will provide investors with more flexibility 
in

[[Page 11168]]

entering orders and receiving executions of such orders.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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

    Written comments were neither solicited nor received.

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

    Because the foregoing 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) Become operative for 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, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and 
Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). 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 Commission notes that ISE has satisfied the five-day 
pre-filing notice requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) may not 
become operative prior to 30 days after the date of filing unless the 
Commission designates a shorter time if such action is consistent with 
the protection of investors and the public interest.\11\ The Exchange 
has requested that the Commission waive the 30-day operative delay set 
forth in Rule 19b-4(f)(6)(iii) under the Act.\12\ The Commission 
believes that the earlier operative date is consistent with the 
protection of investors and the public interest because it will allow 
the Exchange to implement the changes to the parameters governing SOIs 
without delay. For these reasons, the Commission designates the 
proposal to be operative upon filing with the Commission.\13\
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    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of accelerating the 30-day operative 
delay of this proposal, the Commission has considered the proposed 
rule's impact on efficiency, competition, and capital formation. 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 Number SR-ISE-2008-14 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2008-14. 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 Number SR-ISE-2008-14 and should be 
submitted on or before March 21, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-3841 Filed 2-28-08; 8:45 am]

BILLING CODE 8011-01-P