Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), and Rule 19b-4 thereunder, notice is hereby given that on February 23, 2010, the International Securities Exchange, LLC (the “Exchange” or the “ISE”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I, II, and III below, which items have been prepared by the Exchange. The ISE filed this proposal pursuant to Rule 19b-4(f)(6) under the Act. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to adopt a minimum quantity order type. The text of the proposed rule change is as follows (deletions are in [brackets]; additions are underlined):
Rule 715. Types of Orders
(a) through (k) no change.
(l) Minimum Quantity Orders. A minimum quantity order is an order that is available for partial execution, but each partial execution must be for a specified number of contracts or greater. If the balance of the order after one or more partial executions is less than the minimum, such balance is treated as all-or-none.
Rule 713. Priority of Quotes and Orders
(a) through (f) no change.
Supplementary Material to Rule 713
.01 No change.
.02 All-or none orders, as defined in Rule 715(c), and minimum quantity orders, as defined in Rule 715(l), are contingency orders that have no priority on the book. Such orders are maintained in the system and remain available for execution after all other trading interest at the same price has been exhausted.
.03 through .04 no change.
Rule 717. Limitations on Orders
Supplementary Material to Rule 717
.01-.03 No Change.
.04 [A] [n]N on-marketable all-or-none limit order s and non-marketable minimum quantity orders shall be deemed “exposed” for the purposes of paragraphs (d) and (e) one second following a broadcast notifying market participants that such an order to buy or sell a specified number of contracts at a specified price either all-or-none or with a specified minimum quantity has been received in the options series. For non-marketable minimum quantity orders, the broadcast will specify the minimum quantity that can be executed.
.05 No change.Start Printed Page 11609
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
The Exchange seeks to allow members to enter minimum quantity orders on the Exchange. A minimum quantity order is an order that is available for partial execution, but each partial execution must be for a specified number of contracts or greater. If the balance of the order after one or more partial executions is less than the minimum, such balance is treated as all-or-none. This order type currently is available on other options exchanges.
Like all-or-none orders, minimum quantity orders are contingency orders that are not displayed in the Exchange's best bid or offer. However, the Exchange will disseminate to market participants an indication that a minimum quantity order has been entered. As is the case with all-or-none orders, pursuant to Rule 717(d) and (e), the entering member will be required to wait at least one second before entering a contra-side proprietary or solicited order that would execute against the minimum quantity order. While the Exchange believes it is unlikely that this order type would be used for crossing purposes, disseminating the arrival of the order in the same manner as all-or-none orders will minimize inadvertent violations of Rule 717(d) or (e) and increase the opportunity for market participants to provide liquidity to the orders.
The basis under the Securities Exchange Act of 1934 (the “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, the proposal will provide members with an additional order type that they may chose to utilize on the Exchange. Additionally, under the proposed rule change minimum quantity orders will be exposed to members so that there is a greater opportunity for market participants 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 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 after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act  and Rule 19b-4(f)(6) thereunder.
The Exchange believes the proposed rule change is non-controversial in that it is similar to the rules of the CBOE and BATS. Further, the Exchange believes the proposed rule change may assist investors by exposing the minimum quantity orders, thus allowing a greater opportunity for market participants to interact with such orders. The Exchange also believes that the proposed rule change does not raise any new, unique or substantive issues, and is beneficial for competitive purposes and to promote a free and open market for the benefit of investors.
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:
- Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
- Send an e-mail to firstname.lastname@example.org. Please include File Number SR-ISE-2010-13 on the subject line.
- 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-2010-13. 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 Start Printed Page 11610submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR-ISE-2010-13 and should be submitted on or before April 1, 2010.Start Signature
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Florence E. Harmon,
4. See, e.g., Chicago Board Options Exchange (“CBOE”) Rule 43.2(a)(9)(E) (Types of Orders Handled) and Bats Exchange, Inc. (“BATS”) Rule 21.1(d)(3) (Minimum Quantity Orders).Back to Citation
6. 17 CFR 240.19b-4(f)(6). In addition, Rule 19b4(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, or such shorted time as designated by the Commission. The Exchange provided a copy of this rule filing to the Commission at least five business days prior to the date of this filing.Back to Citation
[FR Doc. 2010-5220 Filed 3-10-10; 8:45 am]
BILLING CODE 8011-01-P