Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a New Order Type
Federal Register, Volume 77 Issue 57 (Friday, March 23, 2012)
Federal Register Volume 77, Number 57 (Friday, March 23, 2012)
Notices
Pages 17102-17104
From the Federal Register Online via the Government Printing Office www.gpo.gov
FR Doc No: 2012-6987
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SECURITIES AND EXCHANGE COMMISSION
Release No. 34-66617; File No. SR-ISE-2012-20
Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a New Order Type
March 19, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the
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``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on March 7, 2012, 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 and II below, which Items have been prepared by the Exchange. 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.
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Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend Rule 715 (Types of Orders) to adopt a new order type. The text of the proposed rule change is available on the Exchange's Internet Web site at http://www.ise.com, at the principal office of the Exchange, and at the Commission's Public Reference Room.
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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.
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Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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Purpose
The purpose of this proposed rule change is to provide an additional order type that will give market participants greater control over the circumstances in which their orders are executed.
Some investors and market participants wish only to provide liquidity in certain circumstances, such as to receive a maker fee (rebate) upon execution of an order. To accommodate this strategy, the Exchange proposed to adopt a new order type called an add liquidity order (``ALO''). ALOs are limit orders that will only be executed as a ``maker'' on the ISE. Members can choose whether an ALO that is executable on the ISE upon entry (or that locks or crosses an away market upon entry) will be cancelled or re-priced to one minimum price variation above the national best bid or below the national best offer. An Add Liquidity Order will only be re-priced once and will be executed at the re-priced price. While the Exchange expects to implement this new order type on May 14, 2012, this date is not certain and the Exchange will announce the specific operative date via an Information Circular.
This order type is similar to order types available on NYSE Arca.\3\
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\3\ NYSE Arca offers a Liquidity Adding Order that is canceled if executable upon entry and a PNP Plus order that is re-priced if it is marketable upon entry, or would lock or cross an away market. See NYSE Arca Rule 6.62(t) and (y). See also, Securities Exchange Act Release Nos. 59603 (March 19, 2009), 74 FR 13279 (March 26, 2009) (SR-NYSEArca-2009-21) (Notice of immediate effectiveness of the Liquidity Adding Order) and 49942 (June 29, 2004), 69 FR 41005 (July 7, 2004) (SR-PCX-2004-12) (Order approving the PNP Plus order).
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Statutory Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\4\ in general, and with Section 6(b)(5) of the Act,\5\ in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. Specifically, the ALO order is designed to provide market participants with the ability to provide liquidity and have more control over their execution costs. When an ALO would lock or cross an away market price if placed on the ISE limit order book or be executed upon entry, it will either be cancelled or re-priced as designated. In addition, the ALO is designed to assure compliance with the Intermarket Linkage rules related to locked and crossed markets.\6\
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(5).
\6\ Under the Options Order Protection and Locked/Crossed Market Plan (``Plan'') Members are required to reasonably avoid displaying, and shall not engage in a pattern or practice of displaying, any quotations that lock or cross a Protect sic Quotation. The Plan is a national market system plan that was approved by the Commission and by which all options exchanges must comply. See Securities Exchange Act Release Nos. 60405 (July 30, 2009), 74 FR 39362 (August 6, 2009) (order approving the Plan); 60559 (August 21, 2009), 74 FR 44425 (August 28, 2009) (order approving ISE Rules implementing the Plan).
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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.
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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.
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Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) \7\ of the Act and Rule 19b-
4(f)(6) \8\ thereunder. The Exchange provided the Commission with 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 the proposed rule change.
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the 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.
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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 Exchange 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
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Number SR-ISE-2012-20 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-2012-20. 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 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 the 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-2012-20 and should be submitted on or before April 13, 2012.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
FR Doc. 2012-6987 Filed 3-22-12; 8:45 am
BILLING CODE 8011-01-P
