[Federal Register: March 7, 2007 (Volume 72, Number 44)]
[Notices]
[Page 10279-10280]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07mr07-175]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55376; File No. SR-ISE-2007-14]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change as Modified by Amendment No. 1 Thereto Relating to Re-Price
Orders
February 28, 2007.
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 6, 2007, 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 substantially prepared by
the ISE. On February 16, 2007, ISE filed Amendment No. 1 to the
proposed rule change.\3\ The Exchange filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6)
thereunder,\5\ which renders the proposal effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange revised the proposed rule
text to clarify its meaning.
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 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 add a new order type for the ISE Stock
Exchange that would prevent orders from being cancelled back to Equity
Electronic Access Members (``Equity EAMs'') when the order would either
cause a locked or crossed market if displayed or cause a trade-through
if executed. The text of the proposed rule change is available at ISE,
the Commission's Public Reference Room, and http://www.ise.com.
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 Exchange 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 Exchange 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 ISE Stock Exchange has several order types that may result in
orders being cancelled back to Equity EAMs when the orders cannot be
displayed on the ISE Stock Exchange because the order would create a
violation of ISE Rule 2112 by locking or crossing the Protected
Quotation \6\ of another Trading Center \7\ or would cause a violation
of ISE Rule 2107(b) by trading-through the Protected Quotation of
another Trading Center.\8\
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\6\ See ISE Rule 2100(c)(16).
\7\ See ISE Rule 2100(c)(20).
\8\ For example, Not Routable orders are limit orders that are
to be executed in whole or in part upon receipt, and if not fully
executed, displayed on the ISE Stock Exchange if possible. If a Not
Routable limit order is not fully executed and is not displayable on
the ISE, the order is cancelled back to the member. See ISE Rule
2104(i).
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The purpose of this filing is to add an order type that will give
Equity EAMs the choice of whether to have orders re-priced instead of
cancelled. Re-price orders and the unexecuted balance of Re-price
orders will be automatically re-priced within the minimum price
variation \9\ for display on the ISE Stock Exchange instead of being
cancelled. For example, if the National Best Bid and Offer is $4.06 x
$4.10 and the ISE Best Bid and Offer is $4.05 x $4.10 when an Equity
EAM enters a Not Routable limit order to sell with a limit price of
$4.05, the order will be cancelled back to the member unless it is
marked ``Re-Price.'' If the order is marked ``Re-Price,'' the order
will be placed on the ISE Stock Exchange's limit order book at $4.07,
the lowest possible offer price that the ISE can display without
creating a locked or crossed market.
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\9\ See ISE Rule 2210.
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2. Statutory Basis
The ISE believes that the proposed rule change is consistent with
the Act and the rules and regulations under the Act applicable to a
national securities exchange and, in particular, the requirements of
Section 6(b) of the Act.\10\ Specifically, the Exchange believes the
proposed rule change is consistent with the Section 6(b)(5) \11\
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, the Exchange believes that this filing will provide
investors with more flexibility in entering orders and receiving
executions of such orders.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
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 foregoing proposed rule change does not: (1)
Significantly affect the protection of investors or the public
interest; (2) impose any significant burden on competition; and (3)
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, provided that the
Exchange has given the Commission written notice of its intent to file
the proposed rule change at least five business days prior to the
filing date of the proposal.\12\
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\12\ As required under Rule 19b-4(f)(6)(iii), ISE provided the
Commission with notice of its intent to file the proposed rule
change at least five business days prior to the date of filing of
the proposal.
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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.\13\
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day pre-operative period, which would make the
rule change operative immediately. The
[[Page 10280]]
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest,
because the proposed rule change is substantially similar to a rule
previously approved by the Commission.\15\ For this reason, the
Commission designates that the proposal become operative immediately.
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\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ Id.
\15\ See Nasdaq Rule 4751(f)(8).
For 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.\16\
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\16\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on February 16, 2007, the date on which ISE filed
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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-2007-14 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2007-14. 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. 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-2007-14 and should be submitted on or before March
28, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-4042 Filed 3-6-07; 8:45 am]
BILLING CODE 8010-01-P