Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Clearly Erroneous Executions, 51906-51910 [E9-24250]
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Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60761; File No. SR–ISE–
2009–73]
1. Purpose
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change and Amendment No. 1 Thereto
Relating to Clearly Erroneous
Executions
October 1, 2009.
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
September 28, 2009, the International
Securities Exchange, LLC (‘‘Exchange’’
or ‘‘ISE’’) 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.
On October 1, 2009, the ISE filed
Amendment No. 1 to the proposed rule
change. The ISE has designated the
proposed rule change as constituting a
rule change under Rule 19b–4(f)(6)
under the Act,3 which renders the
proposal effective upon filing with the
Commission. 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 ISE proposes to amend ISE Rule
2128 governing clearly erroneous
executions.
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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 aspects of such statements.
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
18:31 Oct 07, 2009
Definition
The Exchange proposes to adopt a
definition of a clearly erroneous
execution and adopt language
addressing cancelled trades. The
proposed rule text states that a
transaction is ‘‘clearly erroneous’’ when
there is an obvious error in any term,
such as price, number of shares or other
unit of trading, or identification of the
security. The proposed rule text also
states that a transaction made in clearly
erroneous error and agreed to be
canceled by both parties or determined
by the Exchange to be clearly erroneous
will be removed ‘‘from the Consolidated
Tape.’’ 4 A trade will only be removed
from the Consolidated Tape when the
determination is deemed final and any
applicable appeals have been exhausted.
Equity Electronic Access Member
Initiated Review Requests
In ISE Rule 2128(b), the Exchange
proposes procedures for requesting a
review of a clearly erroneous
transaction. First, the proposed rule
would require that requests for review
be made only by electronic mail
(‘‘e-mail’’) or other electronic means
specified from time to time by the
Exchange. Requiring requests for review
to be made via e-mail creates a standard
format that can easily be logged and
tracked. The Exchange will publish the
email address or other electronic means
to be used for all clearly erroneous
filings in a circular distributed to Equity
4 For purposes of this Rule, ‘‘removed from the
Consolidate Tape’’ means that a subsequent
message will be sent to the Consolidated Tape
indicating that a previously executed trade has been
cancelled.
1 15
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The Exchange proposes to amend ISE
Rule 2128 by replacing the current rule
text, in its entirety, with newly
proposed rule text in order to improve
the Exchange’s policies and procedures
regarding clearly erroneous executions.
The newly proposed rule text is part of
a market-wide effort designed to provide
transparency and finality with respect to
clearly erroneous executions. This effort
seeks to achieve consistent results for
participants across U.S. equities
exchanges while maintaining a fair and
orderly market, protecting investors and
protecting the public interest. This
proposed rule change shall be effective
on October 5, 2009. The proposed rule
text is more fully discussed below.
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Electronic Access Members (‘‘Equity
EAMs’’).
The Exchange further proposes that
requests for review must be received by
the Exchange within 30 minutes of the
execution time for orders initially
routed to and executed on the Exchange.
The Exchange proposes that Equity
EAMs submit certain essential
identifying information with the request
including the time of the transaction(s),
security symbol(s), number of shares,
price(s), side (bought or sold), and
factual basis for believing that the trade
is clearly erroneous. The Exchange
believes that 30 minutes is an
appropriate time frame that offers the
requesting party sufficient time to gather
and submit all required information.
The proposed rule also requires the
Exchange to notify the counterparty to
a trade upon receipt of a timely filed
request for review that satisfies the
numerical guidelines set forth within
the Rule. The Exchange proposes to
adopt language allowing an Officer of
the Exchange or such other employee
designee (‘‘Officer’’) of ISE to request
additional information from each party
to a transaction under review. Parties to
the review will have 30 minutes from
the time of the request to provide
additional supporting information.
Routed Executions
The Exchange proposes to give other
market centers an additional 30 minutes
from the receipt of their participant’s
timely filing to request a ruling, but no
longer than 60 minutes from the time of
the execution under review. This
provision accounts for those executions
initially directed to an away market
center and subsequently routed by that
away market center to the Exchange.
For example, assume an order is
initially routed by a participant to
Market Center A and subsequently
routed to ISE where the order is
executed at a price outside of the
Numerical Guidelines. This provision
generally requires Market Center A to
file with the Exchange within 30
minutes from the time it receives its
participant’s timely filed request for
review. This provision caps the filing
deadline for an away market center at 60
minutes from the time of the execution
under review.
Threshold Factors
The Exchange proposes adding
certain numerical thresholds to the Rule
that explicitly state what constitutes a
clearly erroneous execution.
Numerical Guidelines
The proposed numerical guidelines
state that a transaction executed during
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including $25.00 are 10% for the
Regular Market Session and 20% for the
Pre-Market Session and Post-Market
Sessions. The proposed guidelines for
sales greater than $25.00 and up to and
including $50.00 are 5% for the Regular
Market Session and 10% for Pre-Market
Session and Post-Market Sessions. The
proposed guidelines for sales greater
than $50.00 are 3% for the Regular
Market Session and 6% for Pre-Market
Session and Post-Market Sessions. A
filing involving five or more securities
by the same Equity EAM will be
aggregated into a single filing called a
‘‘Multi-Stock Event.’’ In the case of a
Multi-Stock Event, the proposed
guidelines are 10% for the Regular
Market Session and 10% for the PreMarket Session and Post-Market
Sessions. In the case of Leveraged ETF/
ETN securities, the above guidelines are
to be multiplied by the leverage
multiplier of the security. Executions
that do not meet or exceed the
Numerical Guidelines will not be
eligible for review under this section.
The following chart summarizes the
proposed Numerical Guidelines.
Reference price: Consolidated last sale
Regular market session numerical guidelines
(subject transaction’s percent difference from
the consolidated last sale):
Pre-market session and post-market session
numerical guidelines (subject transaction’s
percent difference from the consolidated last
sale):
Greater than $0.00 and up to and including
$25.00.
Greater than $25.00 and up to and including
$50.00.
Greater than $50.00 ..........................................
Multi-Stock Event—Filings involving five or
more securities by the same Equity EAM will
be aggregated into a single filing.
Leveraged ETF/ETN securities .........................
10% ..................................................................
20%.
5% ....................................................................
10%.
3% ....................................................................
10% ..................................................................
6%.
10%.
Regular Market Session Numerical Guidelines
multiplied by the leverage multiplier (i.e. 2x).
Regular Market Session Numerical Guidelines
multiplied by the leverage multiplier (i.e. 2x).
Establishing Numerical Guidelines
within the Rule brings regulatory
transparency and consistency in the
application of the rules of the Exchange.
These Numerical Guidelines represent
the general consensus approach and
were developed based on the collective
experiences of a market-wide group.
The Exchange believes that the
Thresholds established are fair and
appropriate and apply evenly to all
participants.
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the Regular Market Session 5 or the PreMarket Session 6 and Post-Market
Session 7 may be found to be clearly
erroneous only if the price of the
transaction to buy is greater, or less in
the case of a sale, than the reference
price by an amount that equals or
exceeds the numerical guidelines for a
particular transaction category. The
Reference Price shall be equal to the
Consolidated Last Sale immediately
prior to the execution under review,
unless unusual circumstances are
present. The proposed guidelines for
sales greater than $0.00 and up to and
consolidated last sale prior to a series of
executions.
ABC has a consolidated last sale of
$10.00. During the Regular Market
Session Customer A enters a market
order to buy 10,000 shares, although it
had intended a market order for 1,000
shares. The size of the order is such that
the order sweeps the ISE Book, which
reflects 1,000 shares of liquidity offered
at each of following prices. Executions
occur, moving through the depth of
Book, as follows:
Trade #1—1,000 shares @ $10.00 (9,000
remaining)
Trade #2—1,000 shares @ $10.20 (8,000
remaining)
Trade #3—1,000 shares @ $10.40 (7,000
remaining)
Trade #4—1,000 shares @ $10.60 (6,000
remaining)
Trade #5—1,000 shares @ $10.80 (5,000
remaining)
Trade #6—1,000 shares @ $11.00 (4,000
remaining)
Trade #7—1,000 shares @ $11.20 (3,000
remaining)
Trade #8—1,000 shares @ $11.40 (2,000
remaining)
Trade #9—1,000 shares @ $11.60 (1,000
remaining)
Trade #10—1,000 shares @ $11.80
(complete)
Thus, to be eligible for review, a
transaction must be at a price that is at
least 10% higher than the consolidated
last sale prior to the series of executions.
Customer A could request a ruling for
trades #6 through #10, priced at $11.00
and above, but trades #1 through #5
would not be eligible for review.
Under the proposed rule the Exchange
may also use a higher numerical
guideline if, after market participants
have been alerted to erroneous activity,
the price of the security returns toward
its prior trading range but continues to
trade beyond the price it would have
normally been busted.
6 The Pre-Market Session begins at 8 a.m. and
concludes with the Opening Transaction of a
security. See ISE Rule 2102(a).
7 The Post-Market Session begins following the
conclusion of the Regular Market Session and
concludes at 8 p.m. See ISE Rule 2102(d).
Unusual Circumstances
ISE further proposes that in Unusual
Circumstances the Exchange may, in its
discretion and with a view toward
maintaining a fair and orderly market,
use a Reference Price other than the
consolidated last sale. Unusual
Circumstances may include periods of
extreme market volatility, sustained
illiquidity, or widespread system issues.
Other Reference Prices that the
Exchange may use would include the
consolidated inside price, the
consolidated opening price, the
consolidated prior close, or the
consolidated last sale prior to a series of
executions.
The following example explains the
use of a Reference Price equal to the
5 The Regular Market Session begins for each
security with the Opening Transaction, as defined
in Rule 2106, and continues until the primary
listing market closes such security. See ISE Rule
2102(b) and (c).
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Joint Market Rulings
In the interest of achieving
consistency across markets, the
Exchange proposes that, in events that
involve other markets, the Exchange
would have the ability to use a different
Reference Price and/or Numerical
Guideline. In these instances the
Reference Price would be determined
based on a consensus among the
Exchanges where the transactions
occurred. Furthermore, when a ruling is
made across markets, the Exchange may
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determine that the ruling is not eligible
for appeal because immediate finality is
necessary to maintain a fair and orderly
market and to protect investors and the
public interest.
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Additional Factors
The proposed amendments to ISE
Rule 2128 also enumerate some
additional factors that an Officer may
consider when determining whether an
execution is clearly erroneous. These
factors include, but are not limited to,
system malfunctions or disruptions,
volume and volatility for the security,
derivative securities products that
correspond to greater than 100% in the
direction of a tracking index, news
released for the security, whether
trading in the security was recently
halted/resumed, whether the security is
an IPO, whether the security was subject
to a stock-split, reorganization, or other
corporate action, overall market
conditions, Pre-Market and Post-Market
Session executions, validity of the
consolidated tapes trades and quotes,
consideration of primary market
indications, and executions inconsistent
with the trading pattern in the stock.
Each additional factor shall be
considered with a view toward
maintaining a fair and orderly market,
the protection of investors and the
public interest.
Numerical Guidelines Applicable to
Volatile Market Opens
The Exchange proposes to expand the
Numerical Guidelines applicable to
transactions occurring between 9:30
a.m. and 10 a.m. based on the
disseminated value of the S&P 500
Futures at 9:15 a.m. When the S&P
Futures are up or down from 3% to up
to but not including 5% at 9:15 a.m., the
Numerical Guidelines are doubled.
When the S&P Futures are up or down
5% or greater at 9:15 a.m., the
Numerical Guidelines are tripled. The
Exchange believes that the S&P 500
futures contract is an appropriate and
reliable barometer of market activity
prior to the market opening due to its
broad based market coverage and deep
liquidity. By using the S&P 500 Futures
disseminated value at 9:15 a.m. as the
barometer of market activity, the
Exchange is providing a transparent
means of offering adjusted guidelines in
times of volatile market activity.
Outlier Transactions
The proposed amendments to ISE
Rule 2128 provide that an Officer of the
Exchange may consider requests for
review received after thirty minutes, but
not longer than sixty minutes after the
execution in question in the case of an
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Outlier Transaction. An Outlier
Transaction is a transaction where, (1)
The execution price of the security is
greater than three times the current
Numerical Guidelines, or (2) the
execution price of the security breaches
the 52-week high or low, in which case
the Exchange may consider Additional
Factors to determine if the transaction
qualifies for review or if the Exchange
shall decline to act.
Review Procedures
Initial Determination
Under the proposed rule, the Officer
will only have the authority to break the
trades or rule to let the trades stand and
will no longer have the authority to
adjust one or more terms of the
transaction. This limitation attempts to
remove the subjectivity from the rule
that is necessitated by an adjustment.
The Exchange also proposes adding
language stating that a determination
shall be made generally within 30
minutes of receipt of the complaint, but
in no case later than the start of the
Regular Market Session on the following
trading day. Rulings made outside of 30
minutes by an Officer will not fail for
lack of timeliness. The guideline simply
provides participants an appropriate
expectation that a ruling will generally
be made within 30 minutes, and in no
case later than the start of the Regular
Market Session on the following trading
day.
Appeals
The Exchange proposes to amend the
appeals procedure for trades that are
deemed to be clearly erroneous. First,
the Exchange will no longer accept
appeal requests via facsimile. Similar to
the proposed language for an initial
request for a ruling, all appeal requests
must be made via e-mail.
The current rule provides that the
Exchange shall review and render a
decision upon an appeal within a
timeframe provided by the Exchange.
The proposed rule offers more definite
guidelines to ensure the expedient
resolution of appeals. It requires the
Exchange to review appeals as soon as
practicable, but generally on the same
day as the executions under review.
Appeals received between 3 p.m. ET
and the close of trading in the PostMarket Session should be made as soon
as practicable, but in no case later than
the trading day following the date of the
execution under review. Appeals will
not fail for lack of timeliness. This
revised provision provides participants
a reasonable expectation of when a
ruling on appeal will generally be made.
Further, the proposed rule declares
that any determination made by an
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Officer or by the CEE Panel shall be
rendered without prejudice as to the
right of the parties to the transaction to
submit their dispute to arbitration. This
provision simply clarifies the fact that
nothing in the proposed rule limits or
impedes the rights of the parties to
arbitrate their dispute.
System Disruption and Malfunctions
Currently, within the System
Disruptions and Malfunctions section of
the rule, after an Officer determines that
a trade was clearly erroneous he may
declare the transaction null and void or
modify the trade to attempt to achieve
and equitable rectification of the error.
The proposed Rule eliminates the
Exchange’s ability to modify a clearly
erroneous execution. The Exchange
must either uphold or nullify the
execution based upon the findings of
the Officer reviewing the execution.
The proposed Rule provides that, in
the event of a disruption or a
malfunction, an Officer of the Exchange
or other senior level employee designee
will rely on the proposed numerical
guidelines in determining whether an
execution is clearly erroneous.
However, the Officer or senior level
employee may also use a lower
Numerical Guideline if necessary to
maintain a fair and orderly market,
protect investors, and protect the public
interest. The proposed rule also adds
that actions taken under these
circumstances must be taken within 30
minutes of detection of the erroneous
transaction in the ordinary case, and by
no later than the start of the Regular
Market Session on the day following the
date of the execution under review
when extraordinary circumstances exist.
Officers Acting on Their Own Motion
The Exchange proposes to add a
section to the Rule that will grant an
Officer of the Exchange or other senior
level employee designee the ability to
act on their own motion to review
potentially erroneous executions. Under
the current rule, Officers have the
ability to act upon their own motion
only in the event of a system disruption
or malfunction. The proposed rule
would allow an Officer of the Exchange
or other senior level employee designee
to review executions and rely on the
Numerical Guidelines, under any
circumstance. In extraordinary
circumstances an Officer of the
Exchange or other senior level employee
designee may apply a lower Numerical
Guideline if it is determined that such
action is necessary to maintain a fair
and orderly market or protect investors
and the public interest. In some
instances the Exchange may detect a
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single execution that breaches the
Numerical Guidelines but is not the
subject of a ruling request. This
provision gives the Exchange the ability
to review such executions. Additionally,
in practice clearly erroneous executions
commonly involve multiple parties and
multiple executions. In such instances,
all affected parties may not request a
ruling. The Exchange proposes this
provision to permit an Officer of the
Exchange or other senior level employee
designee to rule on a group of
transactions related to the same
occurrence or event as a whole, without
a formal request for a ruling from every
affected party.
Trade Nullification for UTP Securities
that are Subject of Initial Public
Offerings
The proposed rule also modifies ISE’s
policy on trade nullification and for
UTP securities that are subject to initial
public offerings. Under the proposed
rule, an Officer of the Exchange or other
senior level employee designee must
either declare an opening transaction
null and void or decline to take action,
but can no longer be adjusted.
Furthermore, the proposed rule requires
that, in extraordinary circumstances, the
reviewing Officer of the Exchange or
other senior level employee designee
may take action by no later than the
start of the Regular Market Session on
the day following the date of the
execution under review.
2. Statutory Basis
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The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,8
in general, and furthers the objectives of
Section 6(b)(4),9 in particular, in that it
is designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its members and
other persons using its facilities. The
proposed rule change provides
transparency and finality for Equity
EAMs and creates consistent results
across U.S. equities exchanges with
respect to clearly erroneous executions.
This proposed change further promotes
the maintenance of a fair and orderly
market, the protection of investors and
the protection of the public interest.
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.
8 15
9 15
U.S.C. 78f.
U.S.C. 78f(b)(4).
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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
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 10 and Rule 19b–
4(f)(6) thereunder.11
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 12 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6) 13
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange requests
that the Commission waive the 30-day
operative delay so that it may
implement the new rule on October 5,
2009, the same date as the other equities
exchanges. The Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest
because it will allow the Exchange to
begin applying the new rule on the same
date as the other equities exchanges.14
Application of the new rule on this date
should help foster transparency and
consistency among those exchanges that
adopt clearly erroneous execution rules
substantially similar to those previously
approved by the Commission.15 For
these reasons, the Commission
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
12 17 CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6).
14 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposal’s impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
15 See Securities Exchange Act Release No. 60706
(September 22, 2009) 74 FR 49416 (September 28,
2009) (NYSEArca–2009–36).
11 17
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51909
designates that the proposed rule
change, as amended, become operative
on October 5, 2009.
At any time within 60 days of the
filing of the 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.16
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–2009–73 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–2009–73. 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.
16 The Commission considers the 60-day period
within which the Commission may summarily
abrogate the proposal pursuant to Section
19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C), to
commence on October 1, 2009, the date ISE filed
Amendment No. 1 to the proposal.
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Copies of such 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 publicly available. All
submissions should refer to File
Number SR–ISE–2009–73 and should be
submitted on or before October 29,
2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–24250 Filed 10–7–09; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60762; File No. SR–NSX–
2009–05]
Self-Regulatory Organizations;
National Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Amend
NSX Rule 11.19 Governing Clearly
Erroneous Executions
October 1, 2009.
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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
September 30, 2009, the National Stock
Exchange, Inc. (‘‘Exchange’’ or ‘‘NSX’’)
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. NSX
has designated the proposed rule change
as constituting a rule change under Rule
19b–4(f)(6) under the Act,3 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
NSX is proposing to amend NSX Rule
11.19 governing clearly erroneous
executions.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.nsx.com, at the principal
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 parts of such
statements.
1. Purpose
The Exchange proposes to amend
NSX Rule 11.19 in order to improve the
Exchange’s rule regarding clearly
erroneous executions. The proposed
changes are part of a market-wide effort
designed to provide transparency and
finality with respect to clearly erroneous
executions. This effort seeks to achieve
consistent results for participants across
U.S. equities exchanges while
maintaining a fair and orderly market,
protecting investors and protecting the
public interest. The proposed changes
are more fully discussed below.
Definition
The Exchange will maintain the
meaning of the definition of a clearly
erroneous execution, but proposes to
add clarifying language with respect to
cancelled trades. The proposed change
identifies that a transaction made in
clearly erroneous error and agreed to be
canceled by both parties or determined
by the Corporation to be clearly
erroneous will be removed ‘‘from the
Consolidated Tape.’’ 4 A trade will only
be removed from the Consolidated Tape
when the determination is deemed final
and any applicable appeals have been
exhausted.
ETP Holder Initiated Review Requests
The Exchange proposes to amend
NSX Rule 11.19 to update the
procedures for requesting a review of a
clearly erroneous transaction. First, the
proposed rule would require that
4 For purposes of this Rule, ‘‘removed from the
Consolidate Tape’’ means that a subsequent
message will be sent to the Consolidated Tape
indicating that a previously executed trade has been
cancelled.
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
1 15
18:31 Oct 07, 2009
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
VerDate Nov<24>2008
office of the Exchange, and at the
Commission’s Public Reference Room.
Jkt 220001
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
requests for review be made only by
electronic mail (‘‘e-mail’’) or other
electronic means specified from time to
time by the Exchange. Under the current
policy, the Exchange also allows
requests to be made via telephone and
facsimile. Requiring requests for review
to be made via e-mail creates a standard
format that can easily be logged and
tracked. The Exchange will publish the
e-mail address or other electronic means
to be used for all clearly erroneous
filings in a circular distributed to Equity
Trading Permit (‘‘ETP’’) Holders.5
The Exchange further proposes that
requests for review must be received by
the Exchange within 30 minutes of the
execution time for orders initially
routed to and executed on the Exchange.
The Exchange proposes that ETP
Holders submit certain essential
identifying information with the request
including the time of the transaction(s),
security symbol(s), number of shares,
price(s), side (bought or sold), and
factual basis for believing that the trade
is clearly erroneous. The current rule
requires requests for review to be
received within 15 minutes of the
execution and does not specify what
information is required. The Exchange
believes that 30 minutes is an
appropriate time frame that offers the
requesting party sufficient time to gather
and submit all required information.
The proposed rule also requires the
Exchange to notify the counterparty to
a trade upon receipt of a timely filed
request for review that satisfies the
numerical guidelines set forth within
the Rule (‘‘Numerical Guidelines’’). This
proposed language eliminates the
requirement that counterparties be
notified of every request for a ruling and
instead requires notice only when a
request is filed in a timely manner and
satisfies the Numerical Guidelines. This
change alleviates the burden on the
Exchange of notifying the counterparty
when a request for review does not
merit a ruling.
The Exchange proposes to amend
NSX Rule 11.19 to allow an Officer of
the Exchange or such other employee
designee (‘‘Officer’’) to request
additional information from each party
to a transaction under review. Parties to
the review will have 30 minutes from
the time of the request to provide
additional supporting information.
5 NSX Rule 1.5E defines an ‘‘ETP’’ as an Equity
Trading Permit issued by the Exchange for effecting
approved securities transactions on the Exchange’s
trading facilities. An ETP may be issued to a ‘‘sole
proprietorship, partnership, corporation, limited
liability company or other organization which is a
registered broker or dealer pursuant to Section 15
of the Act, and which has been approved by the
Exchange.
E:\FR\FM\08OCN1.SGM
08OCN1
]]>Agencies
[Federal Register Volume 74, Number 194 (Thursday, October 8, 2009)]
[Notices]
[Pages 51906-51910]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-24250]
[[Page 51906]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60761; File No. SR-ISE-2009-73]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change and Amendment No. 1 Thereto Relating to Clearly Erroneous
Executions
October 1, 2009.
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 September 28, 2009, the International Securities Exchange, LLC
(``Exchange'' or ``ISE'') 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.
On October 1, 2009, the ISE filed Amendment No. 1 to the proposed rule
change. The ISE has designated the proposed rule change as constituting
a rule change under Rule 19b-4(f)(6) under the Act,\3\ which renders
the proposal effective upon filing with the Commission. The Commission
is publishing this notice to solicit comments on the proposed rule
change, as amended, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 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 proposes to amend ISE Rule 2128 governing clearly erroneous
executions.
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 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 ISE Rule 2128 by replacing the
current rule text, in its entirety, with newly proposed rule text in
order to improve the Exchange's policies and procedures regarding
clearly erroneous executions. The newly proposed rule text is part of a
market-wide effort designed to provide transparency and finality with
respect to clearly erroneous executions. This effort seeks to achieve
consistent results for participants across U.S. equities exchanges
while maintaining a fair and orderly market, protecting investors and
protecting the public interest. This proposed rule change shall be
effective on October 5, 2009. The proposed rule text is more fully
discussed below.
Definition
The Exchange proposes to adopt a definition of a clearly erroneous
execution and adopt language addressing cancelled trades. The proposed
rule text states that a transaction is ``clearly erroneous'' when there
is an obvious error in any term, such as price, number of shares or
other unit of trading, or identification of the security. The proposed
rule text also states that a transaction made in clearly erroneous
error and agreed to be canceled by both parties or determined by the
Exchange to be clearly erroneous will be removed ``from the
Consolidated Tape.'' \4\ A trade will only be removed from the
Consolidated Tape when the determination is deemed final and any
applicable appeals have been exhausted.
---------------------------------------------------------------------------
\4\ For purposes of this Rule, ``removed from the Consolidate
Tape'' means that a subsequent message will be sent to the
Consolidated Tape indicating that a previously executed trade has
been cancelled.
---------------------------------------------------------------------------
Equity Electronic Access Member Initiated Review Requests
In ISE Rule 2128(b), the Exchange proposes procedures for
requesting a review of a clearly erroneous transaction. First, the
proposed rule would require that requests for review be made only by
electronic mail (``e-mail'') or other electronic means specified from
time to time by the Exchange. Requiring requests for review to be made
via e-mail creates a standard format that can easily be logged and
tracked. The Exchange will publish the email address or other
electronic means to be used for all clearly erroneous filings in a
circular distributed to Equity Electronic Access Members (``Equity
EAMs'').
The Exchange further proposes that requests for review must be
received by the Exchange within 30 minutes of the execution time for
orders initially routed to and executed on the Exchange. The Exchange
proposes that Equity EAMs submit certain essential identifying
information with the request including the time of the transaction(s),
security symbol(s), number of shares, price(s), side (bought or sold),
and factual basis for believing that the trade is clearly erroneous.
The Exchange believes that 30 minutes is an appropriate time frame that
offers the requesting party sufficient time to gather and submit all
required information.
The proposed rule also requires the Exchange to notify the
counterparty to a trade upon receipt of a timely filed request for
review that satisfies the numerical guidelines set forth within the
Rule. The Exchange proposes to adopt language allowing an Officer of
the Exchange or such other employee designee (``Officer'') of ISE to
request additional information from each party to a transaction under
review. Parties to the review will have 30 minutes from the time of the
request to provide additional supporting information.
Routed Executions
The Exchange proposes to give other market centers an additional 30
minutes from the receipt of their participant's timely filing to
request a ruling, but no longer than 60 minutes from the time of the
execution under review. This provision accounts for those executions
initially directed to an away market center and subsequently routed by
that away market center to the Exchange.
For example, assume an order is initially routed by a participant
to Market Center A and subsequently routed to ISE where the order is
executed at a price outside of the Numerical Guidelines. This provision
generally requires Market Center A to file with the Exchange within 30
minutes from the time it receives its participant's timely filed
request for review. This provision caps the filing deadline for an away
market center at 60 minutes from the time of the execution under
review.
Threshold Factors
The Exchange proposes adding certain numerical thresholds to the
Rule that explicitly state what constitutes a clearly erroneous
execution.
Numerical Guidelines
The proposed numerical guidelines state that a transaction executed
during
[[Page 51907]]
the Regular Market Session \5\ or the Pre-Market Session \6\ and Post-
Market Session \7\ may be found to be clearly erroneous only if the
price of the transaction to buy is greater, or less in the case of a
sale, than the reference price by an amount that equals or exceeds the
numerical guidelines for a particular transaction category. The
Reference Price shall be equal to the Consolidated Last Sale
immediately prior to the execution under review, unless unusual
circumstances are present. The proposed guidelines for sales greater
than $0.00 and up to and including $25.00 are 10% for the Regular
Market Session and 20% for the Pre-Market Session and Post-Market
Sessions. The proposed guidelines for sales greater than $25.00 and up
to and including $50.00 are 5% for the Regular Market Session and 10%
for Pre-Market Session and Post-Market Sessions. The proposed
guidelines for sales greater than $50.00 are 3% for the Regular Market
Session and 6% for Pre-Market Session and Post-Market Sessions. A
filing involving five or more securities by the same Equity EAM will be
aggregated into a single filing called a ``Multi-Stock Event.'' In the
case of a Multi-Stock Event, the proposed guidelines are 10% for the
Regular Market Session and 10% for the Pre-Market Session and Post-
Market Sessions. In the case of Leveraged ETF/ETN securities, the above
guidelines are to be multiplied by the leverage multiplier of the
security. Executions that do not meet or exceed the Numerical
Guidelines will not be eligible for review under this section. The
following chart summarizes the proposed Numerical Guidelines.
---------------------------------------------------------------------------
\5\ The Regular Market Session begins for each security with the
Opening Transaction, as defined in Rule 2106, and continues until
the primary listing market closes such security. See ISE Rule
2102(b) and (c).
\6\ The Pre-Market Session begins at 8 a.m. and concludes with
the Opening Transaction of a security. See ISE Rule 2102(a).
\7\ The Post-Market Session begins following the conclusion of
the Regular Market Session and concludes at 8 p.m. See ISE Rule
2102(d).
------------------------------------------------------------------------
Regular market
session numerical Pre-market session
guidelines and post-market
(subject session numerical
Reference price: Consolidated transaction's guidelines (subject
last sale percent transaction's percent
difference from difference from the
the consolidated consolidated last
last sale): sale):
------------------------------------------------------------------------
Greater than $0.00 and up to 10%.............. 20%.
and including $25.00.
Greater than $25.00 and up to 5%............... 10%.
and including $50.00.
Greater than $50.00........... 3%............... 6%.
Multi-Stock Event--Filings 10%.............. 10%.
involving five or more
securities by the same Equity
EAM will be aggregated into a
single filing.
Leveraged ETF/ETN securities.. Regular Market Regular Market
Session Session Numerical
Numerical Guidelines
Guidelines multiplied by the
multiplied by leverage multiplier
the leverage (i.e. 2x).
multiplier (i.e.
2x).
------------------------------------------------------------------------
Establishing Numerical Guidelines within the Rule brings regulatory
transparency and consistency in the application of the rules of the
Exchange. These Numerical Guidelines represent the general consensus
approach and were developed based on the collective experiences of a
market-wide group. The Exchange believes that the Thresholds
established are fair and appropriate and apply evenly to all
participants.
Unusual Circumstances
ISE further proposes that in Unusual Circumstances the Exchange
may, in its discretion and with a view toward maintaining a fair and
orderly market, use a Reference Price other than the consolidated last
sale. Unusual Circumstances may include periods of extreme market
volatility, sustained illiquidity, or widespread system issues. Other
Reference Prices that the Exchange may use would include the
consolidated inside price, the consolidated opening price, the
consolidated prior close, or the consolidated last sale prior to a
series of executions.
The following example explains the use of a Reference Price equal
to the consolidated last sale prior to a series of executions.
ABC has a consolidated last sale of $10.00. During the Regular
Market Session Customer A enters a market order to buy 10,000 shares,
although it had intended a market order for 1,000 shares. The size of
the order is such that the order sweeps the ISE Book, which reflects
1,000 shares of liquidity offered at each of following prices.
Executions occur, moving through the depth of Book, as follows:
Trade 1--1,000 shares @ $10.00 (9,000 remaining)
Trade 2--1,000 shares @ $10.20 (8,000 remaining)
Trade 3--1,000 shares @ $10.40 (7,000 remaining)
Trade 4--1,000 shares @ $10.60 (6,000 remaining)
Trade 5--1,000 shares @ $10.80 (5,000 remaining)
Trade 6--1,000 shares @ $11.00 (4,000 remaining)
Trade 7--1,000 shares @ $11.20 (3,000 remaining)
Trade 8--1,000 shares @ $11.40 (2,000 remaining)
Trade 9--1,000 shares @ $11.60 (1,000 remaining)
Trade 10--1,000 shares @ $11.80 (complete)
Thus, to be eligible for review, a transaction must be at a price
that is at least 10% higher than the consolidated last sale prior to
the series of executions. Customer A could request a ruling for trades
6 through 10, priced at $11.00 and above, but trades
1 through 5 would not be eligible for review.
Under the proposed rule the Exchange may also use a higher
numerical guideline if, after market participants have been alerted to
erroneous activity, the price of the security returns toward its prior
trading range but continues to trade beyond the price it would have
normally been busted.
Joint Market Rulings
In the interest of achieving consistency across markets, the
Exchange proposes that, in events that involve other markets, the
Exchange would have the ability to use a different Reference Price and/
or Numerical Guideline. In these instances the Reference Price would be
determined based on a consensus among the Exchanges where the
transactions occurred. Furthermore, when a ruling is made across
markets, the Exchange may
[[Page 51908]]
determine that the ruling is not eligible for appeal because immediate
finality is necessary to maintain a fair and orderly market and to
protect investors and the public interest.
Additional Factors
The proposed amendments to ISE Rule 2128 also enumerate some
additional factors that an Officer may consider when determining
whether an execution is clearly erroneous. These factors include, but
are not limited to, system malfunctions or disruptions, volume and
volatility for the security, derivative securities products that
correspond to greater than 100% in the direction of a tracking index,
news released for the security, whether trading in the security was
recently halted/resumed, whether the security is an IPO, whether the
security was subject to a stock-split, reorganization, or other
corporate action, overall market conditions, Pre-Market and Post-Market
Session executions, validity of the consolidated tapes trades and
quotes, consideration of primary market indications, and executions
inconsistent with the trading pattern in the stock. Each additional
factor shall be considered with a view toward maintaining a fair and
orderly market, the protection of investors and the public interest.
Numerical Guidelines Applicable to Volatile Market Opens
The Exchange proposes to expand the Numerical Guidelines applicable
to transactions occurring between 9:30 a.m. and 10 a.m. based on the
disseminated value of the S&P 500 Futures at 9:15 a.m. When the S&P
Futures are up or down from 3% to up to but not including 5% at 9:15
a.m., the Numerical Guidelines are doubled. When the S&P Futures are up
or down 5% or greater at 9:15 a.m., the Numerical Guidelines are
tripled. The Exchange believes that the S&P 500 futures contract is an
appropriate and reliable barometer of market activity prior to the
market opening due to its broad based market coverage and deep
liquidity. By using the S&P 500 Futures disseminated value at 9:15 a.m.
as the barometer of market activity, the Exchange is providing a
transparent means of offering adjusted guidelines in times of volatile
market activity.
Outlier Transactions
The proposed amendments to ISE Rule 2128 provide that an Officer of
the Exchange may consider requests for review received after thirty
minutes, but not longer than sixty minutes after the execution in
question in the case of an Outlier Transaction. An Outlier Transaction
is a transaction where, (1) The execution price of the security is
greater than three times the current Numerical Guidelines, or (2) the
execution price of the security breaches the 52-week high or low, in
which case the Exchange may consider Additional Factors to determine if
the transaction qualifies for review or if the Exchange shall decline
to act.
Review Procedures
Initial Determination
Under the proposed rule, the Officer will only have the authority
to break the trades or rule to let the trades stand and will no longer
have the authority to adjust one or more terms of the transaction. This
limitation attempts to remove the subjectivity from the rule that is
necessitated by an adjustment.
The Exchange also proposes adding language stating that a
determination shall be made generally within 30 minutes of receipt of
the complaint, but in no case later than the start of the Regular
Market Session on the following trading day. Rulings made outside of 30
minutes by an Officer will not fail for lack of timeliness. The
guideline simply provides participants an appropriate expectation that
a ruling will generally be made within 30 minutes, and in no case later
than the start of the Regular Market Session on the following trading
day.
Appeals
The Exchange proposes to amend the appeals procedure for trades
that are deemed to be clearly erroneous. First, the Exchange will no
longer accept appeal requests via facsimile. Similar to the proposed
language for an initial request for a ruling, all appeal requests must
be made via e-mail.
The current rule provides that the Exchange shall review and render
a decision upon an appeal within a timeframe provided by the Exchange.
The proposed rule offers more definite guidelines to ensure the
expedient resolution of appeals. It requires the Exchange to review
appeals as soon as practicable, but generally on the same day as the
executions under review. Appeals received between 3 p.m. ET and the
close of trading in the Post-Market Session should be made as soon as
practicable, but in no case later than the trading day following the
date of the execution under review. Appeals will not fail for lack of
timeliness. This revised provision provides participants a reasonable
expectation of when a ruling on appeal will generally be made.
Further, the proposed rule declares that any determination made by
an Officer or by the CEE Panel shall be rendered without prejudice as
to the right of the parties to the transaction to submit their dispute
to arbitration. This provision simply clarifies the fact that nothing
in the proposed rule limits or impedes the rights of the parties to
arbitrate their dispute.
System Disruption and Malfunctions
Currently, within the System Disruptions and Malfunctions section
of the rule, after an Officer determines that a trade was clearly
erroneous he may declare the transaction null and void or modify the
trade to attempt to achieve and equitable rectification of the error.
The proposed Rule eliminates the Exchange's ability to modify a clearly
erroneous execution. The Exchange must either uphold or nullify the
execution based upon the findings of the Officer reviewing the
execution.
The proposed Rule provides that, in the event of a disruption or a
malfunction, an Officer of the Exchange or other senior level employee
designee will rely on the proposed numerical guidelines in determining
whether an execution is clearly erroneous. However, the Officer or
senior level employee may also use a lower Numerical Guideline if
necessary to maintain a fair and orderly market, protect investors, and
protect the public interest. The proposed rule also adds that actions
taken under these circumstances must be taken within 30 minutes of
detection of the erroneous transaction in the ordinary case, and by no
later than the start of the Regular Market Session on the day following
the date of the execution under review when extraordinary circumstances
exist.
Officers Acting on Their Own Motion
The Exchange proposes to add a section to the Rule that will grant
an Officer of the Exchange or other senior level employee designee the
ability to act on their own motion to review potentially erroneous
executions. Under the current rule, Officers have the ability to act
upon their own motion only in the event of a system disruption or
malfunction. The proposed rule would allow an Officer of the Exchange
or other senior level employee designee to review executions and rely
on the Numerical Guidelines, under any circumstance. In extraordinary
circumstances an Officer of the Exchange or other senior level employee
designee may apply a lower Numerical Guideline if it is determined that
such action is necessary to maintain a fair and orderly market or
protect investors and the public interest. In some instances the
Exchange may detect a
[[Page 51909]]
single execution that breaches the Numerical Guidelines but is not the
subject of a ruling request. This provision gives the Exchange the
ability to review such executions. Additionally, in practice clearly
erroneous executions commonly involve multiple parties and multiple
executions. In such instances, all affected parties may not request a
ruling. The Exchange proposes this provision to permit an Officer of
the Exchange or other senior level employee designee to rule on a group
of transactions related to the same occurrence or event as a whole,
without a formal request for a ruling from every affected party.
Trade Nullification for UTP Securities that are Subject of Initial
Public Offerings
The proposed rule also modifies ISE's policy on trade nullification
and for UTP securities that are subject to initial public offerings.
Under the proposed rule, an Officer of the Exchange or other senior
level employee designee must either declare an opening transaction null
and void or decline to take action, but can no longer be adjusted.
Furthermore, the proposed rule requires that, in extraordinary
circumstances, the reviewing Officer of the Exchange or other senior
level employee designee may take action by no later than the start of
the Regular Market Session on the day following the date of the
execution under review.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(4),\9\ in particular, in that
it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its members and other persons using
its facilities. The proposed rule change provides transparency and
finality for Equity EAMs and creates consistent results across U.S.
equities exchanges with respect to clearly erroneous executions. This
proposed change further promotes the maintenance of a fair and orderly
market, the protection of investors and the protection of the public
interest.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \12\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \13\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requests
that the Commission waive the 30-day operative delay so that it may
implement the new rule on October 5, 2009, the same date as the other
equities exchanges. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because it will allow the Exchange to begin applying
the new rule on the same date as the other equities exchanges.\14\
Application of the new rule on this date should help foster
transparency and consistency among those exchanges that adopt clearly
erroneous execution rules substantially similar to those previously
approved by the Commission.\15\ For these reasons, the Commission
designates that the proposed rule change, as amended, become operative
on October 5, 2009.
---------------------------------------------------------------------------
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposal's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
\15\ See Securities Exchange Act Release No. 60706 (September
22, 2009) 74 FR 49416 (September 28, 2009) (NYSEArca-2009-36).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the 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.\16\
---------------------------------------------------------------------------
\16\ The Commission considers the 60-day period within which the
Commission may summarily abrogate the proposal pursuant to Section
19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C), to commence on
October 1, 2009, the date ISE filed Amendment No. 1 to the proposal.
---------------------------------------------------------------------------
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-2009-73 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-2009-73. 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.
[[Page 51910]]
Copies of such 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 publicly available. All submissions
should refer to File Number SR-ISE-2009-73 and should be submitted on
or before October 29, 2009.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-24250 Filed 10-7-09; 8:45 am]
BILLING CODE 8011-01-P
