Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating to Qualified Contingent Cross Orders, 30651-30653 [E9-15025]

Download as PDF Federal Register / Vol. 74, No. 122 / Friday, June 26, 2009 / Notices (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: the Office of the Secretary at (202) 551–5400. James E. Rivera, Acting Associate Administrator for Disaster Assistance. [FR Doc. E9–15100 Filed 6–25–09; 8:45 am] Dated: June 24, 2009. Elizabeth M. Murphy, Secretary. [FR Doc. E9–15252 Filed 6–24–09; 11:45 am] BILLING CODE 8025–01–P BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meeting In the Matter of Paivis Corp., Peabodys Coffee, Inc., Penge Corp., Petrol Industries, Inc. (n/k/a Caddo International, Inc.), Phantom Entertainment, Inc., Phoenix Medical Technology, Inc., Phoenix Metals USA II, Inc. (a/k/a TM Media Group, Inc.), Phymed, Inc., Pico Products, Inc., and Piemonte Foods, Inc.; File No. 500–1; Order of Suspension of Trading The number assigned to this disaster for physical damage is 11783B and for economic injury is 117840. Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, that the Securities and Exchange Commission will hold an Open Meeting on Wednesday, July 1, 2009 at 10 a.m., in the Auditorium, Room L–002. The subject matter of the Open Meeting will be: Item 1: The Commission will consider whether to propose amendments to the proxy rules under the Securities Exchange Act of 1934 to set forth requirements for U.S. registrants that have received financial assistance under the Troubled Asset Relief Program and that are required, pursuant to Section 111(e) of the Emergency Economic Stabilization Act of 2008, to include an advisory shareholder vote on executive compensation. Item 2: The Commission will consider whether to approve the proposed rule change, as modified by Amendment No. 4, filed by the New York Stock Exchange, Inc. to amend NYSE Rule 452 and corresponding Listed Company Manual Section 402.08 to eliminate broker discretionary voting for the election of directors, except for companies registered under the Investment Company Act of 1940, and to codify two previously published interpretations that do not permit broker discretionary voting for material amendments to investment advisory contracts with an investment company. Item 3: The Commission will consider whether to propose amendments to rules under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 to enhance the disclosures that registrants are required to make about compensation and other corporate governance matters, and to clarify certain of the rules governing proxy solicitations. At times, changes in Commission priorities require alterations in the scheduling of meeting items. VerDate Nov<24>2008 16:39 Jun 25, 2009 Jkt 217001 June 24, 2009. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Paivis Corp. because it has not filed any periodic reports since the period ended June 30, 2007. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Peabodys Coffee, Inc. because it has not filed any periodic reports since the period ended December 31, 2004. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Penge Corp. because it has not filed any periodic reports since the period ended March 31, 2007. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Petrol Industries, Inc. (n/k/a Caddo International, Inc.) because it has not filed any periodic reports since the period ended September 30, 2005. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Phantom Entertainment, Inc. because it has not filed any periodic reports since the period ended March 31, 2007. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Phoenix Medical Technology, Inc. because it has PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 30651 not filed any periodic reports since the period ended July 2, 2000. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Phoenix Metals USA II, Inc. (a/k/a TM Media Group, Inc.) because it has not filed any periodic reports since the period ended December 31, 2001. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Phymed, Inc. because it has not filed any periodic reports since the period ended December 31, 1999. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Pico Products, Inc. because it has not filed any periodic reports since the period ended April 30, 1999. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Piemonte Foods, Inc. because it has not filed any periodic reports since the period ended February 27, 1999. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the above-listed companies is suspended for the period from 9:30 a.m. EDT on June 24, 2009, through 11:59 p.m. EDT on July 8, 2009. By the Commission. Jill M. Peterson, Assistant Secretary. [FR Doc. E9–15253 Filed 6–24–09; 11:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60147; File No. SR–ISE– 2009–35] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating to Qualified Contingent Cross Orders June 19, 2009. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 1 15 2 17 E:\FR\FM\26JNN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 26JNN1 30652 Federal Register / Vol. 74, No. 122 / Friday, June 26, 2009 / Notices notice is hereby given that, on June 15, 2009, the International Securities Exchange, LLC (‘‘Exchange’’ or the ‘‘ISE’’) filed with the Securities and Exchange Commission (the ‘‘SEC’’ or the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which items have been prepared by the self-regulatory organization. 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 is proposing a Qualified Contingent Cross Order. This rule would be effective contemporaneously with the effectiveness of the rules implementing the Order Protection and Locked/ Crossed Market Plan (‘‘Plan’’).3 The text of the proposed rule change is available on the Exchange’s Internet Web site at https://www.ise.com, at the Exchange and at the Commission’s Public Reference Room. 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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to provide for Qualified Contingent Cross Orders. The Exchange is proposing such an order type in conjunction with the Linkage Rules. Those rules, together with the underlying Plan, are based on Regulation NMS under the Securities Exchange Act of 1934, as amended (‘‘Act’’), and the rules implementing that regulation. Among other things, the Plan requires that its parties ‘‘establish, maintain and enforce written policies and procedures * * * that are reasonably designed to prevent Trade3 See Filing No. SR–ISE–2009–27 (‘‘Linkage Rules’’). VerDate Nov<24>2008 16:39 Jun 25, 2009 Jkt 217001 Throughs * * *.’’ 4 A Trade-Through is a transaction in an options series at a price that is inferior to the best price available in the market.5 Among other things, the Linkage Rules contain provisions designed to prevent TradeThroughs.6 The Plan will replace the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Old Plan’’), and the Linkage Rules will replace the ISE’s current rules implementing the Old Plan. The Old Plan and the ISE’s current rules provide a limited Trade-Through exemption for ‘‘Block Trades,’’ defined to be trades of 500 or more contracts with a premium value of at least $150,000.7 However, as with Regulation NMS, the Plan does not provide a Block Trade exemption. The Exchange believes that the loss of the Block Trade exemption will adversely affect the ability of its members to effect large trades that are tied to stock.8 Thus, the Exchange is proposing the Qualified Contingent Trade Order as a limited substitute for the Block Trade exemption, to be implemented contemporaneously with the Linkage Rules. While Regulation NMS does not provide a Block Trade exemption from Trade-Through liability, the Commission, by order, has provided Trade-Through relief for ‘‘Qualified Contingent Trades’’ (‘‘QCTs’’).9 The QCT Release provides an exemption from Trade-Through liability in the equity market for multi-component, fully-hedged trades where one order is contingent on the execution of one or more additional orders. Building on this concept, we propose that when an ISE member effects a QCT trade in a Regulation NMS Stock that the member be permitted to cross the options leg of the trade on the ISE immediately upon entry if the order is for at least 500 contracts, is part of a QCT, and is 4 Section 5(a) of the Plan. 2(21) of the Plan. 6 Proposed Rule 1901. 7 Old Plan Sections 2(3) and 8(c)(i)(C); ISE Rule 1902(d)(2). 8 Both the Old Plan and the Plan have a TradeThrough exemption for ‘‘Complex Trades,’’ including options trades tied to stock. See Old Plan section 7(c)(iii)(G), and Plan section 5(b)(viii). However, and while not free from doubt, the common application of that exemption has been to apply it only to trades announced to exchange members as a single trade at a net price. As so interpreted, that exemption would cover only trades executed in the ISE’s ‘‘Complex Order Mechanism.’’ See ISE Rule 722. 9 Release No. 34–57620 (April 4, 2008) (the ‘‘QCT Release’’). That release superseded a release initially granting the Qualified Contingent Trade exemption, Release No. 34–54389 (August 31, 2006). 5 Section PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 executed at a price at least equal to the national best bid or offer (‘‘NBBO’’). We propose to define a QCT trade substantively identical to the Commission’s definition in the QCT release. Thus, the trade would have to meet the following conditions: • At least one component must be an NMS Stock; • All the components must be effected with a product price contingency that either has been agreed to by all the respective counterparties or arranged for by a broker-dealer as principal or agent; • The execution of one component must be contingent upon the execution of all other components at or near the same time; • The specific relationship between the component orders (e.g., the spread between the prices of the component orders) must be determined by the time the contingent order is placed; • The component orders must bear a derivative relationship to one another, represent different classes of shares of the same issuer, or involve the securities of participants in mergers or with intentions to merge that have been announced or cancelled; and • The transaction must be fully hedged (without regard to any prior existing position) as a result of other components of the contingent trade.10 ISE will adopt policies and procedures to ensure that members use the Qualified Contingent Cross Order properly. First, we will require members to properly mark all Qualified Contingent Cross Orders as such. In addition, we will institute surveillance procedures to identify that the member executed the stock leg of the transaction at or near the same time as the options leg. We believe that the Qualified Contingent Cross Order is necessary to facilitate the execution of large stock/ options combination orders. Brokerdealers can execute these orders in various ways, such as on the ISE’s complex order book.11 However, brokerdealers often seek the flexibility to execute the various legs of such orders in different markets, and may seek to execute the options leg alone on the ISE. Under the Plan, and without a Block Trade exemption, it will be extremely difficult for ISE members to effect the execution of the options leg on the ISE. 10 Consistent with the QCT Release we would require that the member demonstrate that the transaction is fully hedged using reasonable riskvaluation methodologies. See the QCT Release at note 9. 11 See ISE Rule 722, Supplementary Material .01 and .02. E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 74, No. 122 / Friday, June 26, 2009 / Notices The Contingent Trade Order will address those concerns by permitting the member to provide its customer a net price for the entire trade, and then allowing the member to execute the options leg of the trade on the ISE at a price at least equal to the NBBO while using the CQT [sic] exemption to effect the trade in the equities leg at a price necessary to achieve the net price. While there is no exposure for price improvement for the options leg of a stock-option order with our proposed Qualified Contingent Cross Order, that order must be executed at the NBBO or better, [sic]. Moreover, since the price of a stock-options order is a net price derived from the price of the options leg and the price of the stock leg, we believe it is reasonable for any potential improvement of the net price to originate from the execution of the stock leg. On balance, we believe that providing members with the certainty that they can execute the options legs of these large complex orders for their customers, coupled with the flexibility members have with respect to the price at which the equity legs are executed, will provide customers with the flexibility needed to achieve their investment objectives. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) that an exchange have rules that are 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 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 facilitate the ability of ISE members to execute large options orders that are tied to stock in an efficient manner, while also protecting the national market system against tradethroughs. 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 VerDate Nov<24>2008 16:39 Jun 25, 2009 Jkt 217001 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 self-regulatory organization consents, the Commission will: (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 (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–ISE–2009–35 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–2009–35. 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 PO 00000 Frm 00154 Fmt 4703 Sfmt 4703 30653 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 will also be available for inspection and copying at the principal office of the self-regulatory organization. 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– 2009–35 and should be submitted on or before July 17, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–15025 Filed 6–25–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60151; File No. SR– NYSEAmex–2009–29] Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Include Floor Broker Agency Interest Containing Pegging and/or Discretionary Instructions, Eligible for Execution in the Closing Transaction, in the NYSE Amex Order Imbalance Information Datafeed Disseminated Prior to the Closing Transaction June 19, 2009. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on June 12, 2009, NYSE Amex LLC (‘‘NYSE Amex’’ or the ‘‘Exchange’’) 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 self-regulatory organization. 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 include Floor Broker agency interest containing pegging and/or discretionary 12 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\26JNN1.SGM 26JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 74, Number 122 (Friday, June 26, 2009)]
[Notices]
[Pages 30651-30653]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-15025]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60147; File No. SR-ISE-2009-35]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing of Proposed Rule Change Relating to Qualified
Contingent Cross Orders

June 19, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\

[[Page 30652]]

notice is hereby given that, on June 15, 2009, the International
Securities Exchange, LLC (``Exchange'' or the ``ISE'') filed with the
Securities and Exchange Commission (the ``SEC'' or the ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which items have been prepared by the self-regulatory organization. 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 Exchange is proposing a Qualified Contingent Cross Order. This
rule would be effective contemporaneously with the effectiveness of the
rules implementing the Order Protection and Locked/Crossed Market Plan
(``Plan'').\3\ The text of the proposed rule change is available on the
Exchange's Internet Web site at https://www.ise.com, at the Exchange and
at the Commission's Public Reference Room.
---------------------------------------------------------------------------

\3\ See Filing No. SR-ISE-2009-27 (``Linkage Rules'').
---------------------------------------------------------------------------

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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The purpose of this filing is to provide for Qualified Contingent
Cross Orders. The Exchange is proposing such an order type in
conjunction with the Linkage Rules. Those rules, together with the
underlying Plan, are based on Regulation NMS under the Securities
Exchange Act of 1934, as amended (``Act''), and the rules implementing
that regulation. Among other things, the Plan requires that its parties
``establish, maintain and enforce written policies and procedures * * *
that are reasonably designed to prevent Trade-Throughs * * *.'' \4\ A
Trade-Through is a transaction in an options series at a price that is
inferior to the best price available in the market.\5\ Among other
things, the Linkage Rules contain provisions designed to prevent Trade-
Throughs.\6\
---------------------------------------------------------------------------

\4\ Section 5(a) of the Plan.
\5\ Section 2(21) of the Plan.
\6\ Proposed Rule 1901.
---------------------------------------------------------------------------

The Plan will replace the Plan for the Purpose of Creating and
Operating an Intermarket Option Linkage (``Old Plan''), and the Linkage
Rules will replace the ISE's current rules implementing the Old Plan.
The Old Plan and the ISE's current rules provide a limited Trade-
Through exemption for ``Block Trades,'' defined to be trades of 500 or
more contracts with a premium value of at least $150,000.\7\ However,
as with Regulation NMS, the Plan does not provide a Block Trade
exemption. The Exchange believes that the loss of the Block Trade
exemption will adversely affect the ability of its members to effect
large trades that are tied to stock.\8\ Thus, the Exchange is proposing
the Qualified Contingent Trade Order as a limited substitute for the
Block Trade exemption, to be implemented contemporaneously with the
Linkage Rules.
---------------------------------------------------------------------------

\7\ Old Plan Sections 2(3) and 8(c)(i)(C); ISE Rule 1902(d)(2).
\8\ Both the Old Plan and the Plan have a Trade-Through
exemption for ``Complex Trades,'' including options trades tied to
stock. See Old Plan section 7(c)(iii)(G), and Plan section
5(b)(viii). However, and while not free from doubt, the common
application of that exemption has been to apply it only to trades
announced to exchange members as a single trade at a net price. As
so interpreted, that exemption would cover only trades executed in
the ISE's ``Complex Order Mechanism.'' See ISE Rule 722.
---------------------------------------------------------------------------

While Regulation NMS does not provide a Block Trade exemption from
Trade-Through liability, the Commission, by order, has provided Trade-
Through relief for ``Qualified Contingent Trades'' (``QCTs'').\9\ The
QCT Release provides an exemption from Trade-Through liability in the
equity market for multi-component, fully-hedged trades where one order
is contingent on the execution of one or more additional orders.
Building on this concept, we propose that when an ISE member effects a
QCT trade in a Regulation NMS Stock that the member be permitted to
cross the options leg of the trade on the ISE immediately upon entry if
the order is for at least 500 contracts, is part of a QCT, and is
executed at a price at least equal to the national best bid or offer
(``NBBO'').
---------------------------------------------------------------------------

\9\ Release No. 34-57620 (April 4, 2008) (the ``QCT Release'').
That release superseded a release initially granting the Qualified
Contingent Trade exemption, Release No. 34-54389 (August 31, 2006).
---------------------------------------------------------------------------

We propose to define a QCT trade substantively identical to the
Commission's definition in the QCT release. Thus, the trade would have
to meet the following conditions:
At least one component must be an NMS Stock;
All the components must be effected with a product price
contingency that either has been agreed to by all the respective
counterparties or arranged for by a broker-dealer as principal or
agent;
The execution of one component must be contingent upon the
execution of all other components at or near the same time;
The specific relationship between the component orders
(e.g., the spread between the prices of the component orders) must be
determined by the time the contingent order is placed;
The component orders must bear a derivative relationship
to one another, represent different classes of shares of the same
issuer, or involve the securities of participants in mergers or with
intentions to merge that have been announced or cancelled; and
The transaction must be fully hedged (without regard to
any prior existing position) as a result of other components of the
contingent trade.\10\
---------------------------------------------------------------------------

\10\ Consistent with the QCT Release we would require that the
member demonstrate that the transaction is fully hedged using
reasonable risk-valuation methodologies. See the QCT Release at note
9.
---------------------------------------------------------------------------

ISE will adopt policies and procedures to ensure that members use
the Qualified Contingent Cross Order properly. First, we will require
members to properly mark all Qualified Contingent Cross Orders as such.
In addition, we will institute surveillance procedures to identify that
the member executed the stock leg of the transaction at or near the
same time as the options leg.
We believe that the Qualified Contingent Cross Order is necessary
to facilitate the execution of large stock/options combination orders.
Broker-dealers can execute these orders in various ways, such as on the
ISE's complex order book.\11\ However, broker-dealers often seek the
flexibility to execute the various legs of such orders in different
markets, and may seek to execute the options leg alone on the ISE.
Under the Plan, and without a Block Trade exemption, it will be
extremely difficult for ISE members to effect the execution of the
options leg on the ISE.
---------------------------------------------------------------------------

\11\ See ISE Rule 722, Supplementary Material .01 and .02.

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[[Page 30653]]

The Contingent Trade Order will address those concerns by
permitting the member to provide its customer a net price for the
entire trade, and then allowing the member to execute the options leg
of the trade on the ISE at a price at least equal to the NBBO while
using the CQT [sic] exemption to effect the trade in the equities leg
at a price necessary to achieve the net price. While there is no
exposure for price improvement for the options leg of a stock-option
order with our proposed Qualified Contingent Cross Order, that order
must be executed at the NBBO or better, [sic]. Moreover, since the
price of a stock-options order is a net price derived from the price of
the options leg and the price of the stock leg, we believe it is
reasonable for any potential improvement of the net price to originate
from the execution of the stock leg. On balance, we believe that
providing members with the certainty that they can execute the options
legs of these large complex orders for their customers, coupled with
the flexibility members have with respect to the price at which the
equity legs are executed, will provide customers with the flexibility
needed to achieve their investment objectives.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) that an exchange have rules that are
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 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 facilitate the ability of
ISE members to execute large options orders that are tied to stock in
an efficient manner, while also protecting the national market system
against trade-throughs.

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 self-regulatory organization consents, the Commission will:
(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 (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-ISE-2009-35 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-2009-35. 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, 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 will also be available for
inspection and copying at the principal office of the self-regulatory
organization. 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-
2009-35 and should be submitted on or before July 17, 2009.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-15025 Filed 6-25-09; 8:45 am]
BILLING CODE 8010-01-P

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