Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Execution of Complex Orders, 26154-26155 [E6-6641]
Download as PDF
<![CDATA[
26154
Federal Register / Vol. 71, No. 85 / Wednesday, May 3, 2006 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53729; File No. SR–ISE–
2006–15]
Self-Regulatory Organizations;
International Securities Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Execution of
Complex Orders
April 26, 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 April 13,
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 Exchange.
The ISE has filed this proposal pursuant
to Section 19(b)(3)(A)(iii) of the Act 3
and Rule 19b–4(f)(6) thereunder,4 which
renders the proposal effective upon
filing with the Commission. 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
rules to specify that complex orders may
be executed using the Solicited Order
Mechanism. The text of the rule change
is as follows. Italics indicate additions;
[bracketing] indicates deletions.
*
*
*
*
*
jlentini on PROD1PC65 with NOTICES
Rule 716. Block Trades
(a) through (e) no change.
Supplementary Material to Rule 716
.01 through .07 no change.
.08 Complex Orders. Electronic
Access Members may use the
Facilitation Mechanism and the
Solicited Order Mechanism according to
paragraphs (d) and (e) of this Rule 716
to [facilitate] execute block-size
complex orders (as defined in Rule 722)
at a net price. Members may enter
Indications for complex orders at net
prices, and bids and offers for complex
orders will participate in the execution
of an order being [facilitated] executed
as provided in paragraphs (d) and (e) of
this Rule 716. With respect to bids and
offers for the individual legs of a
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
VerDate Aug<31>2005
15:36 May 02, 2006
Jkt 208001
complex order entered into the
[Facilitation M]mechanisms, the priority
rules for complex orders contained in
Rule 722(b)(2) will continue to be
applicable. If an improved net price for
the complex order being [facilitated]
executed can be achieved from bids and
offers for the individual legs of the
complex order in the Exchange’s
auction market, the order being
[facilitated] executed will receive an
execution at the better net price.
*
*
*
*
*
offers for the individual legs of a
complex order entered into either
mechanism, the priority rules for
complex orders contained in ISE Rule
722(b)(2), ‘‘Complex Order Priority,’’
continue to be applicable. If an
improved net price for the complex
order being executed can be achieved
from bids and offers for the individual
legs of the complex order in the
Exchange’s auction market, the order
being executed will receive an
execution at the better net price.
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.
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 it will serve 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 make an existing service available
to an additional order type.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Supplementary Material .08 to ISE Rule
716, ‘‘Block Trades,’’ to specify that
complex orders may be executed
through the Solicited Order Mechanism.
The Commission previously approved
the execution of complex orders through
the Facilitation Mechanism, and the
Exchange has modified its system to
similarly handle the execution of
complex orders through the Solicited
Order Mechanism.5
The Facilitation and Solicited Order
Mechanisms work in the same basic
manner. An Electronic Access Member
(‘‘EAM’’) enters an order of a minimum
size with a counter side interest, and
other market participants are given an
opportunity to participate in the trade
before it is automatically executed.
Complex orders are entered at a net
price and are handled in the same
manner as any other order under ISE
Rule 716(d), ‘‘Facilitation Mechanism,’’
and ISE Rule 716(e), ‘‘Solicited Order
Mechanism.’’ 6 With respect to bids and
5 See Securities Exchange Act Release No. 52327
(Aug. 24, 2005), 70 FR 51854 (Aug. 31, 2005) (order
approving File No. SR–ISE–2004–33) (‘‘Facilitation
Mechanism Order’’).
6 Each mechanism has different execution
requirements. In particular, the Facilitation
PO 00000
Frm 00137
Fmt 4703
Sfmt 4703
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that 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
The Exchange has designated the
proposed rule change as one that: (i)
Does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) does not become operative for 30
days from the date of filing, or such
shorter time as the Commission may
Mechanism has a minimum order size of 50
contracts, while the Solicited Order Mechanism has
a minimum order size of 500 contracts. Each leg of
a complex order must comply with these minimum
order sizes. In addition, the Solicited Order
Mechanism requires that all orders be entered as
all-or-none orders, while the Facilitation
Mechanism does not have this requirement.
Complex orders would be subject to the all-or-none
requirement when entered into the Solicited Order
Mechanism.
7 15 U.S.C. 78f(b)(5).
E:\FR\FM\03MYN1.SGM
03MYN1
Federal Register / Vol. 71, No. 85 / Wednesday, May 3, 2006 / Notices
designate if consistent with the
protection of investors and the public
interest. In addition, as required under
Rule 19b–4(f)(6)(iii),8 the ISE provided
the Commission with written notice of
its intention to file the proposed rule
change, along with a brief description
and the text of the proposed rule
change, at least five business days prior
to filing the proposal with the
Commission. Therefore, the foregoing
rule change has become effective
pursuant to section 19(b)(3)(A) of the
Act 9 and Rule 19b–4(f)(6) thereunder.10
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
the 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:
jlentini on PROD1PC65 with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–ISE–2006–15 on the subject
line.
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 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 No.
SR–ISE–2006–15 and should be
submitted on or before May 24, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E6–6641 Filed 5–2–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53721; File No. SR–NSX–
2006–03]
Self-Regulatory Organizations;
National Stock ExchangeSM; Notice of
Filing of a Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto
Relating to the Demutualization of the
National Stock Exchange
April 25, 2006.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
Paper Comments
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
• Send paper comments in triplicate
notice is hereby given that on April 5,
to Nancy M. Morris, Secretary,
2006, the National Stock ExchangeSM
Securities and Exchange Commission,
(‘‘NSX’’ or ‘‘Exchange’’) filed with the
100 F Street, NE., Washington, DC
Securities and Exchange Commission
20549–1090.
(‘‘Commission’’) the proposed rule
All submissions should refer to File
change as described in Items I, II, and
Number SR–ISE–2006–15. This file
III below, which Items have been
number should be included on the
prepared by the Exchange. On April 19,
subject line if e-mail is used. To help the 2006, the NSX submitted Amendment
Commission process and review your
No. 1 to the proposed rule change.3 On
comments more efficiently, please use
11 17 CFR 200.30–3(a)(12).
only one method. The Commission will
1 15 U.S.C. 78s(b)(1).
post all comments on the Commission’s
2 17 CFR 240.19b–4.
Internet Web site (https://www.sec.gov/
3 Amendment No. 1 (‘‘Amendment No. 1’’) makes
rules/sro.shtml). Copies of the
revisions to the proposed: Holdings Certificate of
submission, all subsequent
Incorporation, sections (b)(iii)(B) and (C); Holdings
amendments, all written statements
By-Laws, Article III, Sections 3.1 and 3.4; NSX ByLaws, Article III, section 3.2(b); and NSX Rule 2.10.
with respect to the proposed rule
In addition, Amendment No. 1 adds new proposed
change that are filed with the
section 3.6 to Article III of the Holdings By-Laws,
Commission, and all written
requiring Holdings to take reasonable steps
communications relating to the
necessary to cause its officers, directors, and
employees to consent to the applicability to them
proposed rule change between the
of Article III of the Holdings By-Laws. Finally,
Amendment No. 1 makes corresponding changes to
Item 3 of Form 19b–4 and Exhibit 1 to describe the
effect of the foregoing Exhibit 5 revisions and also
add a description of proposed NSX Rule 2.10.
8 17
CFR 240.19b–4(f)(6)(iii).
U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f)(6).
9 15
VerDate Aug<31>2005
15:36 May 02, 2006
Jkt 208001
PO 00000
Frm 00138
Fmt 4703
Sfmt 4703
26155
April 25, 2006, the NSX submitted
Amendment No. 2 to the proposed rule
change.4 The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NSX proposes a series of changes
to its corporate structure and
governance documents to allow for the
demutualization of NSX. NSX is
proposing to ‘‘demutualize’’ by
converting NSX from an Ohio nonstock, nonprofit membership
corporation to a Delaware for-profit
stock corporation. To effect the
demutualization, NSX states that it has
established a Delaware for-profit stock
holding company, NSX Holdings, Inc.
(‘‘Holdings’’) that would become the
parent company and sole stockholder of
NSX after the demutualization. NSX
would become a Delaware for-profit
stock corporation that would continue
to engage in the business of operating a
national securities exchange registered
under Section 6 of the Act.5 NSX states
that it would continue to have selfregulatory responsibilities over its
members, and would have its own
Board of Directors that would manage
NSX’s business and affairs.
The proposed rule change for
implementing the demutualization
includes the Amended and Restated
Certificate of Incorporation of Holdings
(the ‘‘Holdings Certificate of
Incorporation’’), Amended and Restated
By-Laws of Holdings (the ‘‘Holdings ByLaws’’), Amended and Restated
Certificate of Incorporation of National
Stock Exchange, Inc. (the ‘‘NSX
Certificate of Incorporation’’), Amended
and Restated By-Laws of National Stock
Exchange, Inc. (the ‘‘NSX By-Laws), and
revised Rules of National Stock
Exchange, Inc. (the ‘‘NSX Rules’’),
Exhibit 5 of NSX’s proposed rule change
contains the NSX Certificate of
Incorporation, the NSX By-Laws, and
the NSX Rules, each marked to reflect
changes from the current Articles of
Incorporation, By-Laws, and Rules of
the Exchange, as well as the new
Holdings Certificate of Incorporation
and the Holdings Bylaws. A summary of
these documents is provided below. The
full text of Exhibit 5 is available on the
Commission’s Web site at https://
4 Amendment No. 2 (‘‘Amendment No. 2’’) made
changes to Item 3 of Form 19b–4 and Exhibit 1,
which changes have been incorporated into this
notice.
5 15 U.S.C. 78f.
E:\FR\FM\03MYN1.SGM
03MYN1
]]>Agencies
[Federal Register Volume 71, Number 85 (Wednesday, May 3, 2006)]
[Notices]
[Pages 26154-26155]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-6641]
[[Page 26154]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53729; File No. SR-ISE-2006-15]
Self-Regulatory Organizations; International Securities Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Execution of Complex Orders
April 26, 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 April 13, 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 Exchange. The ISE
has filed this proposal pursuant to Section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The ISE is proposing to amend its rules to specify that complex
orders may be executed using the Solicited Order Mechanism. The text of
the rule change is as follows. Italics indicate additions; [bracketing]
indicates deletions.
* * * * *
Rule 716. Block Trades
(a) through (e) no change.
Supplementary Material to Rule 716
.01 through .07 no change.
.08 Complex Orders. Electronic Access Members may use the
Facilitation Mechanism and the Solicited Order Mechanism according to
paragraphs (d) and (e) of this Rule 716 to [facilitate] execute block-
size complex orders (as defined in Rule 722) at a net price. Members
may enter Indications for complex orders at net prices, and bids and
offers for complex orders will participate in the execution of an order
being [facilitated] executed as provided in paragraphs (d) and (e) of
this Rule 716. With respect to bids and offers for the individual legs
of a complex order entered into the [Facilitation M]mechanisms, the
priority rules for complex orders contained in Rule 722(b)(2) will
continue to be applicable. If an improved net price for the complex
order being [facilitated] executed can be achieved from bids and offers
for the individual legs of the complex order in the Exchange's auction
market, the order being [facilitated] executed will receive an
execution at the better net price.
* * * * *
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 Exchange proposes to amend Supplementary Material .08 to ISE
Rule 716, ``Block Trades,'' to specify that complex orders may be
executed through the Solicited Order Mechanism. The Commission
previously approved the execution of complex orders through the
Facilitation Mechanism, and the Exchange has modified its system to
similarly handle the execution of complex orders through the Solicited
Order Mechanism.\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 52327 (Aug. 24,
2005), 70 FR 51854 (Aug. 31, 2005) (order approving File No. SR-ISE-
2004-33) (``Facilitation Mechanism Order'').
---------------------------------------------------------------------------
The Facilitation and Solicited Order Mechanisms work in the same
basic manner. An Electronic Access Member (``EAM'') enters an order of
a minimum size with a counter side interest, and other market
participants are given an opportunity to participate in the trade
before it is automatically executed. Complex orders are entered at a
net price and are handled in the same manner as any other order under
ISE Rule 716(d), ``Facilitation Mechanism,'' and ISE Rule 716(e),
``Solicited Order Mechanism.'' \6\ With respect to bids and offers for
the individual legs of a complex order entered into either mechanism,
the priority rules for complex orders contained in ISE Rule 722(b)(2),
``Complex Order Priority,'' continue to be applicable. If an improved
net price for the complex order being executed can be achieved from
bids and offers for the individual legs of the complex order in the
Exchange's auction market, the order being executed will receive an
execution at the better net price.
---------------------------------------------------------------------------
\6\ Each mechanism has different execution requirements. In
particular, the Facilitation Mechanism has a minimum order size of
50 contracts, while the Solicited Order Mechanism has a minimum
order size of 500 contracts. Each leg of a complex order must comply
with these minimum order sizes. In addition, the Solicited Order
Mechanism requires that all orders be entered as all-or-none orders,
while the Facilitation Mechanism does not have this requirement.
Complex orders would be subject to the all-or-none requirement when
entered into the Solicited Order Mechanism.
---------------------------------------------------------------------------
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 it will
serve 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 make an existing service available to an additional
order type.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that 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
The Exchange has designated the proposed rule change as one that:
(i) Does not significantly affect the protection of investors or the
public interest; (ii) does not impose any significant burden on
competition; and (iii) does not become operative for 30 days from the
date of filing, or such shorter time as the Commission may
[[Page 26155]]
designate if consistent with the protection of investors and the public
interest. In addition, as required under Rule 19b-4(f)(6)(iii),\8\ the
ISE provided the Commission with written notice of its intention to
file the proposed rule change, along with a brief description and the
text of the proposed rule change, at least five business days prior to
filing the proposal with the Commission. Therefore, the foregoing rule
change has become effective pursuant to section 19(b)(3)(A) of the Act
\9\ and Rule 19b-4(f)(6) thereunder.\10\
---------------------------------------------------------------------------
\8\ 17 CFR 240.19b-4(f)(6)(iii).
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate the 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:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-ISE-2006-15 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2006-15. 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 (https://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 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 No. SR-
ISE-2006-15 and should be submitted on or before May 24, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E6-6641 Filed 5-2-06; 8:45 am]
BILLING CODE 8010-01-P
