[Federal Register Volume 76, Number 143 (Tuesday, July 26, 2011)]
[Notices]
[Pages 44642-44643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-18800]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64931; File No. SR-ISE-2011-41]
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
July 20, 2011.
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 July 13, 2011, 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 ISE. The ISE has
designated the proposed rule change as a ``non-controversial'' rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6) thereunder,\4\ which renders the proposed rule change 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 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, 2012 [July 18, 2011], 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, 2012 [July 18, 2011]. 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.\5\ The current pilot period provided in paragraphs .03 and .05 of
the Supplementary Material to Rule 723 is
[[Page 44643]]
set to expire on July 18, 2011.\6\ 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,
2012, 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.
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\5\ 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); and 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).
\6\ See Securities Exchange Act Release No. 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).
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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. Since the Price
Improvement Mechanism has been operating for a relatively short period
of time, the Exchange 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 \7\ and Rule 19b-4(f)(6) thereunder.\8\
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 \9\ and Rule 19b-4(f)(6)(iii)
thereunder.\10\
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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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.
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The Exchange has requested that the Commission waive the 30-day
operative delay period. The Commission believes that waiver of the 30-
day operative delay period is consistent with the protection of
investors and the public interest because such waiver will allow the
pilot programs to continue without interruption. Accordingly, the
Commission designates the proposed rule change operative upon filing
with the Commission.\11\
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\11\ For purposes only of waiving the operative delay for this
proposal, 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 such proposed rule
change, the Commission summarily 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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 [email protected]. Please include
File Number SR-ISE-2011-41 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-2011-41. 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 Web site viewing and
printing 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 the Exchange. 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-2011-41 and should be
submitted by August 16, 2011.
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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-18800 Filed 7-25-11; 8:45 am]
BILLING CODE 8011-01-P