Self-Regulatory Organizations; International Securities Exchange, Inc.; Order Approving Proposed Rule Change and Amendment Nos. 1 and 2 Relating to Complex Order Execution, 40567-40568 [E6-11228]

Download as PDF Federal Register / Vol. 71, No. 136 / Monday, July 17, 2006 / Notices Section 19(b)(3)(A) of the Act 9 and Rule 19b–4(f)(2) 10 thereunder. 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. should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ISE–2006–31 and should be submitted on or before August 7, 2006. 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: BILLING CODE 8010–01–P rwilkins on PROD1PC63 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 No. SR–ISE–2006–31 on the subject line. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.11 Jill M. Peterson, Assistant Secretary. [FR Doc. E6–11210 Filed 7–14–06; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54124; File No. SR–ISE– 2005–49] Self-Regulatory Organizations; International Securities Exchange, Inc.; Order Approving Proposed Rule Change and Amendment Nos. 1 and 2 Relating to Complex Order Execution July 11, 2006. I. Introduction On October 4, 2005, the International Securities Exchange, Inc. (‘‘ISE’’ or Paper Comments ‘‘Exchange’’) filed with the Securities • Send paper comments in triplicate and Exchange Commission to Nancy M. Morris, Secretary, (‘‘Commission’’), pursuant to Section Securities and Exchange Commission, 19(b)(1) of the Securities Exchange Act Station Place, 100 F Street, NE., of 1934 (‘‘Act’’) 1 and Rule 19b–4 Washington, DC 20549–1090. thereunder,2 a proposed rule change to All submissions should refer to File amend ISE Rule 722, ‘‘Complex Number SR–ISE–2006–31. This file Orders,’’ to allow the legs of an optionsnumber should be included on the only complex order to be executed in subject line if e-mail is used. To help the penny increments. The ISE filed Commission process and review your Amendment Nos. 1 and 2 to the comments more efficiently, please use proposal on February 1, 2006, and April only one method. The Commission will 20, 2006, respectively.3 The proposed post all comments on the Commission’s rule change, as amended by Internet Web site (https://www.sec.gov/ Amendment Nos. 1 and 2, was rules/sro.shtml). Copies of the published for comment in the Federal submission, all subsequent Register on June 6, 2006.4 The amendments, all written statements Commission received no comments with respect to the proposed rule regarding the proposal, as amended. change that are filed with the This order approves the proposed rule Commission, and all written change, as amended. communications relating to the II. Description of the Proposal proposed rule change between the Commission and any person, other than ISE Rule 722(b)(1) currently allows those that may be withheld from the the options leg(s) of a stock-option order public in accordance with the to be executed in one-cent increments, provisions of 5 U.S.C. 552, will be regardless of the minimum increment available for inspection and copying in otherwise applicable to the individual the Commission’s Public Reference options leg(s) of the order.5 The ISE Room. Copies of such filing also will be 11 17 CFR 200.30–3(a)(12). available for inspection and copying at 1 15 U.S.C. 78s(b)(1). the principal office of the ISE. 2 17 CFR 240.19b–4. All comments received will be posted 3 Amendment No. 2 replaced the initial filing and without change; the Commission does Amendment No. 1 in their entirety. not edit personal identifying 4 See Securities Exchange Act Release No. 53909 information from submissions. You (May 31, 2006), 71 FR 32617. 5 Under ISE Rule 710, ‘‘Minimum Trading Increments,’’ the minimum trading increment is $.05 for an options contract trading at less than 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 19b–4(f)(2). VerDate Aug<31>2005 17:41 Jul 14, 2006 Jkt 208001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 40567 proposes to amend ISE Rule 722(b)(1) to allow options-only complex orders, as well as stock-option orders, to be executed in one-cent increments. The proposal retains the existing requirement under the ISE’s rules that allows a complex order to take priority over established Public Customer interest in the marketplace only if at least one leg of the complex order trades at a price that is better than the corresponding bid or offer in the marketplace by at least one minimum trading increment, as provided in ISE Rule 710.6 III. Discussion After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange and, in particular, with Section 6(b)(5) of the Act,7 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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.8 Specifically, the Commission believes that by allowing options-only complex orders to be executed in one-cent increments, the proposal may facilitate the execution of options-only complex orders by providing a greater number of price points at which such orders may be executed. As noted above, the ISE’s rules will continue to require that at least one leg of a complex order trade at a price that is better than the corresponding bid or offer in the marketplace by at least one minimum trading increment, as provided in ISE Rule 710, when any of the established bids or offers in the marketplace consists of a Public Customer limit order.9 IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,10 that the proposed rule change (SR–ISE–2005– 49), as amended, is approved. $3.00 per option and $.10 for an options contract trading at $3.00 per option or higher. 6 See ISE Rule 722(b)(2). 7 15 U.S.C. 78f(b)(5). 8 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 9 See ISE Rule 722(b)(2). 10 15 U.S.C. 78s(b)(2). E:\FR\FM\17JYN1.SGM 17JYN1 40568 Federal Register / Vol. 71, No. 136 / Monday, July 17, 2006 / Notices For the Commission, by the Division of Market Regulation, pursuant to delegated authority.11 Jill M. Peterson, Assistant Secretary. [FR Doc. E6–11228 Filed 7–14–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54119; File No. SR– Nasdaq–2006–014] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Modify the Description of the ACES Communications Service July 10, 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 July 7, 2006, The NASDAQ Stock Market LLC (‘‘Exchange’’ or ‘‘Nasdaq’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange.3 Nasdaq has designated this proposal as noncontroversial under section 19(b)(3)(A)(iii) of the Act 4 and Rule 19b–4(f)(6) thereunder,5 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Nasdaq Rule 6210 to allow nonmembers to use the ACES communications service. The text of the proposed rule change is set forth below. Additions are in italics and deletions are in [brackets]. * * * * * 6210. Definitions (a) and (b) No change 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Subsequent to filing the proposal, the Exchange clarified that Item 8 of the Form 19b–4 should state that the proposed rule change is not based on rules of another self-regulatory organization or of the Commission. Telephone conversation between Alex Kogan, Associate General Counsel, Nasdaq, and Nathan Saunders, Special Counsel, Division of Market Regulation, Commission, on July 10, 2006. 4 15 U.S.C. 78s(b)(3)(A)(iii). 5 17 CFR 240.19b–4(f)(6). rwilkins on PROD1PC63 with NOTICES 1 15 VerDate Aug<31>2005 17:41 Jul 14, 2006 Jkt 208001 (c) The term ‘‘Receiving Subscriber’’ means any [Nasdaq member that is registered as a Nasdaq market maker or ITS/CAES Market Maker and] person that has executed an agreement with Nasdaq authorizing its use of ACES to receive ACES Orders from Routing Subscribers. (d) The term ‘‘Routing Subscriber’’ means any [Nasdaq member] person that has executed an agreement with Nasdaq authorizing its use of ACES to route orders to Receiving Subscribers’ order management systems. * * * * * 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 ACES is a neutral communications service that allows market participants to route orders to one another. ACES does not effect trade executions, and it does not report executed trades to ‘‘the tape.’’ Moreover, market participants receiving orders through ACES may execute them in any manner that they deem consistent with duties of best execution and other applicable industry obligations. As the ACES service can be of value to all market participants, both members and non-members of the NASD have historically been permitted to use it. Thus, today, there are a number of non-members who actually send their orders using the ACES system. The rule set under which Nasdaq will shortly begin to operate as an exchange has for the first time included a description of ACES.6 However, as this description is currently worded, it would require that all ACES users be Nasdaq members, which would be a departure from the existing practice. Nasdaq proposes to adjust the applicable language in order to PO 00000 6 See Nasdaq Rules 6200–6250. Frm 00100 Fmt 4703 Sfmt 4703 eliminate this restriction entirely before Nasdaq begins operating as an exchange and to avoid denying access to ACES to non-members that wish to use it for either routing or receiving orders. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act 7 in general and furthers the objectives of section 6(b)(5) of the Act 8 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will 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 No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act 9 and Rule 19b– 4(f)(6) 10 thereunder because it (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 on which it was filed, or such shorter time as the Commission may designate, provided that the self-regulatory organization has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the filing date of the proposed rule change.11 The Exchange has requested that the Commission waive the 30-day operative delay of Rule 19b–4(f)(6)(iii) so that the proposed rule change may become 7 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b–4(f)(6). 11 As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change at least five days prior to the filing date. 8 15 E:\FR\FM\17JYN1.SGM 17JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 136 (Monday, July 17, 2006)]
[Notices]
[Pages 40567-40568]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-11228]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54124; File No. SR-ISE-2005-49]


Self-Regulatory Organizations; International Securities Exchange, 
Inc.; Order Approving Proposed Rule Change and Amendment Nos. 1 and 2 
Relating to Complex Order Execution

July 11, 2006.

I. Introduction

    On October 4, 2005, the International Securities Exchange, Inc. 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend ISE Rule 722, ``Complex 
Orders,'' to allow the legs of an options-only complex order to be 
executed in penny increments. The ISE filed Amendment Nos. 1 and 2 to 
the proposal on February 1, 2006, and April 20, 2006, respectively.\3\ 
The proposed rule change, as amended by Amendment Nos. 1 and 2, was 
published for comment in the Federal Register on June 6, 2006.\4\ The 
Commission received no comments regarding the proposal, as amended. 
This order approves the proposed rule change, as amended.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 2 replaced the initial filing and Amendment 
No. 1 in their entirety.
    \4\ See Securities Exchange Act Release No. 53909 (May 31, 
2006), 71 FR 32617.
---------------------------------------------------------------------------

II. Description of the Proposal

    ISE Rule 722(b)(1) currently allows the options leg(s) of a stock-
option order to be executed in one-cent increments, regardless of the 
minimum increment otherwise applicable to the individual options leg(s) 
of the order.\5\ The ISE proposes to amend ISE Rule 722(b)(1) to allow 
options-only complex orders, as well as stock-option orders, to be 
executed in one-cent increments. The proposal retains the existing 
requirement under the ISE's rules that allows a complex order to take 
priority over established Public Customer interest in the marketplace 
only if at least one leg of the complex order trades at a price that is 
better than the corresponding bid or offer in the marketplace by at 
least one minimum trading increment, as provided in ISE Rule 710.\6\
---------------------------------------------------------------------------

    \5\ Under ISE Rule 710, ``Minimum Trading Increments,'' the 
minimum trading increment is $.05 for an options contract trading at 
less than $3.00 per option and $.10 for an options contract trading 
at $3.00 per option or higher.
    \6\ See ISE Rule 722(b)(2).
---------------------------------------------------------------------------

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange 
and, in particular, with Section 6(b)(5) of the Act,\7\ which requires, 
among other things, that the rules of a national securities exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, 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.\8\ Specifically, the Commission believes that by allowing 
options-only complex orders to be executed in one-cent increments, the 
proposal may facilitate the execution of options-only complex orders by 
providing a greater number of price points at which such orders may be 
executed. As noted above, the ISE's rules will continue to require that 
at least one leg of a complex order trade at a price that is better 
than the corresponding bid or offer in the marketplace by at least one 
minimum trading increment, as provided in ISE Rule 710, when any of the 
established bids or offers in the marketplace consists of a Public 
Customer limit order.\9\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b)(5).
    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \9\ See ISE Rule 722(b)(2).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-ISE-2005-49), as amended, is 
approved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).


[[Page 40568]]


---------------------------------------------------------------------------

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-11228 Filed 7-14-06; 8:45 am]
BILLING CODE 8010-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.