Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing of Proposed Rule Change To Amend Exchange Rule Governing Directed Orders, 3144-3145 [E6-521]

Download as PDF 3144 Federal Register / Vol. 71, No. 12 / Thursday, January 19, 2006 / Notices At any time within 60 days of the filing of such 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. 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: sroberts on PROD1PC70 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File No. SR–ISE–2006–02 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 20549–9303. All submissions should refer to File Number SR–ISE–2006–02. 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–2006–02 and should be submitted on or before February 9, 2006. 16:38 Jan 18, 2006 Jkt 208001 BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION IV. Solicitation of Comments VerDate Aug<31>2005 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Nancy M. Morris, Secretary. [FR Doc. E6–518 Filed 1–18–06; 8:45 am] [Release No. 34–53103; File No. SR–ISE– 2006–01] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing of Proposed Rule Change To Amend Exchange Rule Governing Directed Orders January 11, 2006. 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 January 5, 2006, the International Securities Exchange, Inc. (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the ISE. 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 ISE is proposing to amend its ISE Rule 811 with respect to identifying to a Directed Market Maker (‘‘DMM’’) the identity of the firm entering a Directed Order. The text of the proposed rule change is below. Proposed new language is in italics; proposed deletions are in [brackets]. * * * * * Rule 811. Directed Orders * * * * * (b) Exchange market makers may only receive and handle orders on an agency basis if they are Directed Orders and only in the manner prescribed in the Rule 811. A market maker can elect whether or not to accept Directed Orders on a daily basis. If a market maker elects to be a Directed Market Maker, it must accept Directed Orders from all Electronic Access Members[. A Directed market maker] and cannot reject a Directed Order. The identity of the Electronic Access Member that 14 17 CFR 200.30–3(a)(12) U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 entered the Directed Order will be made available to the Directed Market Maker. * * * * * 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 ISE included statements concerning the purpose of and basis for the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The 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 Exchange operates a Directed Order system in which Electronic Access Members (‘‘EAMs’’) can send an order to a DMM for possible price improvement.3 If a DMM accepts Directed Orders generally, that DMM must accept all Directed Orders from all EAMs. Once such a DMM receives a Directed Order, it either must enter the order into the Exchange’s ‘‘Price Improvement Mechanism’’ (‘‘PIM’’) or must release the order into the Exchange’s limit order book, in which case there are certain restrictions on the DMM interacting with the order. The Boston Options Exchange (‘‘BOX’’) operates a system almost identical to ISE’s Directed Order system. Based on BOX’s published rules, the ISE believed that BOX’s system had the same anonymity feature as ISE’s system. However, the Boston Stock Exchange, Inc. (‘‘BSE’’) has filed a proposed rule change that acknowledges that BOX provides its directed market makers with the identity of the order entry firm and seeks to amend the BOX rules to be consistent with the actual operation of the BOX system (the ‘‘BOX Proposal’’).4 The ISE has significant concerns with the BOX Proposal and will be filing a comment letter arguing against its approval. Notwithstanding ISE’s concerns with the BOX Proposal, the ISE believes it needs to remain competitive in the market place if the Commission determines to approve the BOX Proposal and allow exchanges to disclose the identity of order–entry 3 See Securities Exchange Act Release No. 52331 (August 24, 2005), 70 FR 51856 (August 31, 2005) (SR–ISE–2004–16). 4 See Securities Exchange Act Release No. 53015 (December 22, 2005), 70 FR 77207 (December 29, 2005) (SR–BSE–2005–52). E:\FR\FM\19JAN1.SGM 19JAN1 Federal Register / Vol. 71, No. 12 / Thursday, January 19, 2006 / Notices firms in their order routing and execution systems. In this respect, the ISE has modified its system to disclose the identity of order entry firms to DMMs on a temporary basis.5 The purpose of this proposed rule change is to specify in the ISE rules that Directed Orders are not anonymous, which if approved by the Commission, will make the temporary system change permanent.6 2. Statutory Basis The Exchange believes that the basis under the Act for this proposed rule change is found in section 6(b)(5),7 in that the proposed rule change is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to 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. In particular, the proposed rule change will enable the Exchange to remain competitive in the market place. 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 sroberts on PROD1PC70 with NOTICES Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or 5 See Securities Exchange Act Release No. 53104 (January 11, 2006) (File No. SR–ISE–2006–02). This temporary system change was effective upon filing pursuant to Rule 19b–4(f)(5) under the Act. 17 CFR 240.19b–4(f)(5). 6 Currently, the ISE rules do not specify that Directed Orders are sent to a DMM on an anonymous basis. The ISE also enforces anonymity in certain other trading systems, such as its Facilitation Mechanism. The Exchange plans to file a proposed rule change eliminating the anonymity provisions in certain of these areas as well. 7 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:38 Jan 18, 2006 Jkt 208001 (ii) as to which the Exchange consents, the Commission shall: (a) By order approve such proposed rule change, or (b) Institute proceedings to determine whether the proposed rule change should be 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 rulecomments@sec.gov. Please include File No. SR–ISE–2006–01 on the subject line. 3145 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Nancy M. Morris, Secretary. [FR Doc. E6–521 Filed 1–18–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53096; File No. SR–PCX– 2005–141] Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing of Proposed Rule Change Relating to Modifications to Archipelago Exchange’s Closing Auction January 11, 2006. 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 December 21, 2005, the Pacific Exchange, Inc. Paper Comments (‘‘PCX’’ or ‘‘Exchange’’), through its • Send paper comments in triplicate wholly owned subsidiary (‘‘PCXE’’ or to Nancy M. Morris, Secretary, the ‘‘Corporation’’), filed with the Securities and Exchange Commission, Securities and Exchange Commission Station Place, 100 F Street, NE., (‘‘Commission’’) the proposed rule Washington, DC 20549–9303. change as described in Items I, II and III All submissions should refer to File below, which Items have been prepared Number SR–ISE–2006–01. This file by PCX. The Commission is publishing number should be included on the this notice to solicit comment on the subject line if e-mail is used. To help the proposed rule change from interested Commission process and review your persons. comments more efficiently, please use only one method. The Commission will I. Self-Regulatory Organization’s post all comments on the Commission’s Statement of the Terms of Substance of the Proposed Rule Change Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the The Exchange proposes to amend its submission, all subsequent rules governing the Archipelago amendments, all written statements Exchange (‘‘ArcaEx’’), the equity trading with respect to the proposed rule facility of PCXE. With this filing, the change that are filed with the Exchange proposes to clarify the Commission, and all written ArcaEx’s Closing Auction functionality communications relating to the and limit the use of the Closing Auction proposed rule change between the to primary listed securities. The text of Commission and any person, other than the proposed rule change is available on those that may be withheld from the the PCX Web site public in accordance with the (http:/www.pacificex.com), at the PCX’s provisions of 5 U.S.C. 552, will be Office of the Secretary and at the available for inspection and copying in Commission’s Public Reference Room. the Commission’s Public Reference Room. Copies of such filing also will be II. Self-Regulatory Organization’s Statement of the Purpose of, and available for inspection and copying at Statutory Basis for, the Proposed Rule the principal office of the ISE. All comments received will be posted Change without change; the Commission does In its filing with the Commission, the not edit personal identifying Exchange included statements information from submissions. You concerning the purpose of, and basis for, should submit only information that the proposed rule change. The text of you wish to make available publicly. All these statements may be examined at submissions should refer to File the places specified in Item IV below. Number SR–ISE–2006–01 and should be The Exchange has prepared summaries, submitted on or before February 9, 2006. 1 15 8 17 PO 00000 CFR 200.30–3(a)(12). Frm 00097 Fmt 4703 2 17 Sfmt 4703 E:\FR\FM\19JAN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 19JAN1

Agencies

[Federal Register Volume 71, Number 12 (Thursday, January 19, 2006)]
[Notices]
[Pages 3144-3145]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-521]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53103; File No. SR-ISE-2006-01]


Self-Regulatory Organizations; International Securities Exchange, 
Inc.; Notice of Filing of Proposed Rule Change To Amend Exchange Rule 
Governing Directed Orders

January 11, 2006.
    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 January 5, 2006, the International Securities Exchange, Inc. 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the ISE. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The ISE is proposing to amend its ISE Rule 811 with respect to 
identifying to a Directed Market Maker (``DMM'') the identity of the 
firm entering a Directed Order.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in [brackets].
* * * * *

Rule 811. Directed Orders

* * * * *
    (b) Exchange market makers may only receive and handle orders on an 
agency basis if they are Directed Orders and only in the manner 
prescribed in the Rule 811. A market maker can elect whether or not to 
accept Directed Orders on a daily basis. If a market maker elects to be 
a Directed Market Maker, it must accept Directed Orders from all 
Electronic Access Members[. A Directed market maker] and cannot reject 
a Directed Order. The identity of the Electronic Access Member that 
entered the Directed Order will be made available to the Directed 
Market Maker.
* * * * *

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 ISE included statements 
concerning the purpose of and basis for the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The 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 Exchange operates a Directed Order system in which Electronic 
Access Members (``EAMs'') can send an order to a DMM for possible price 
improvement.\3\ If a DMM accepts Directed Orders generally, that DMM 
must accept all Directed Orders from all EAMs. Once such a DMM receives 
a Directed Order, it either must enter the order into the Exchange's 
``Price Improvement Mechanism'' (``PIM'') or must release the order 
into the Exchange's limit order book, in which case there are certain 
restrictions on the DMM interacting with the order.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 52331 (August 24, 
2005), 70 FR 51856 (August 31, 2005) (SR-ISE-2004-16).
---------------------------------------------------------------------------

    The Boston Options Exchange (``BOX'') operates a system almost 
identical to ISE's Directed Order system. Based on BOX's published 
rules, the ISE believed that BOX's system had the same anonymity 
feature as ISE's system. However, the Boston Stock Exchange, Inc. 
(``BSE'') has filed a proposed rule change that acknowledges that BOX 
provides its directed market makers with the identity of the order 
entry firm and seeks to amend the BOX rules to be consistent with the 
actual operation of the BOX system (the ``BOX Proposal'').\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 53015 (December 22, 
2005), 70 FR 77207 (December 29, 2005) (SR-BSE-2005-52).
---------------------------------------------------------------------------

    The ISE has significant concerns with the BOX Proposal and will be 
filing a comment letter arguing against its approval. Notwithstanding 
ISE's concerns with the BOX Proposal, the ISE believes it needs to 
remain competitive in the market place if the Commission determines to 
approve the BOX Proposal and allow exchanges to disclose the identity 
of order-entry

[[Page 3145]]

firms in their order routing and execution systems. In this respect, 
the ISE has modified its system to disclose the identity of order entry 
firms to DMMs on a temporary basis.\5\ The purpose of this proposed 
rule change is to specify in the ISE rules that Directed Orders are not 
anonymous, which if approved by the Commission, will make the temporary 
system change permanent.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 53104 (January 11, 
2006) (File No. SR-ISE-2006-02). This temporary system change was 
effective upon filing pursuant to Rule 19b-4(f)(5) under the Act. 17 
CFR 240.19b-4(f)(5).
    \6\ Currently, the ISE rules do not specify that Directed Orders 
are sent to a DMM on an anonymous basis. The ISE also enforces 
anonymity in certain other trading systems, such as its Facilitation 
Mechanism. The Exchange plans to file a proposed rule change 
eliminating the anonymity provisions in certain of these areas as 
well.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is found in section 6(b)(5),\7\ in that the 
proposed rule change is designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, to 
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. In particular, the proposed rule 
change will enable the Exchange to remain competitive in the market 
place.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall:
    (a) By order approve such proposed rule change, or
    (b) Institute proceedings to determine whether the proposed rule 
change should be 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 rule-comments@sec.gov. Please include 
File No. SR-ISE-2006-01 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 20549-9303.
    All submissions should refer to File Number SR-ISE-2006-01. 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-2006-01 
and should be submitted on or before February 9, 2006.
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
Nancy M. Morris,
Secretary.
[FR Doc. E6-521 Filed 1-18-06; 8:45 am]
BILLING CODE 8010-01-P