Order Granting Application for Extension of a Temporary Conditional Exemption Pursuant to Section 36(a) of the Exchange Act by the International Securities Exchange, LLC Relating to the Ownership Interest of International Securities Exchange Holdings, Inc. in an Electronic Communications Network, 34796-34799 [2010-14684]

Download as PDF 34796 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Notices fees that are outside of the ordinary functions that the Network B Administrator performs.9 In addition, the Participants proposed to amend the Plans to reflect changes in the corporate names and street addresses of NASDAQ OMX BX, Inc. (formerly Boston Stock Exchange, Inc.), NASDAQ OMX PHLX, Inc. (formerly Philadelphia Stock Exchange, Inc.) and NYSE Amex, Inc. (formerly American Stock Exchange LLC). They also proposed to conform the language signifying the status of BATS Exchange, Inc. as a national securities exchange to the language used for the other Plan Participants. III. Discussion After careful review, the Commission finds that the Amendments to the Plans are consistent with the requirements of the Act and the rules and regulations thereunder,10 and, in particular, Section 11A(a)(1) of the Act 11 and Rule 608 thereunder 12 in that they are necessary or appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanisms of, a national market system. The Commission believes that paying a flat fee to the Network B Administrator should eliminate the need for the Network B Administrator to account for operating costs and thus make the administration of the Plans more efficient.13 Additionally, the Commission notes that every two years the Network B Administrator is required to provide a report detailing any significant changes to the administrative expenses during the preceding two years to enable the Participants to review and determine by majority vote whether to continue the Annual Fixed Payment at its then current level. srobinson on DSKHWCL6B1PROD with NOTICES IV. Conclusion It is therefore ordered, pursuant to Section 11A of the Act,14 and the rules 9 The Commission notes that the Transmittal Letter accompanying the proposed Amendments included language not voted on by the Participants and thus of no legal consequence: ‘‘Network B Administrator will not incur any extraordinary expense on behalf of the Network B Participants unless the Network B Participants determine by majority vote to approve the incurrence of that extraordinary expense.’’ 10 The Commission has considered the proposed amendments’ impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 11 15 U.S.C. 78k–1(a)(1). 12 17 CFR 240.608. 13 The Commission notes that the Network A Administrator under the CTA Plan and CQ Plan and Nasdaq under the Nasdaq UTP Plan similarly receive a fixed fee for the performance of administrative functions. 14 15 U.S.C. 78k–1. VerDate Mar<15>2010 16:17 Jun 17, 2010 Jkt 220001 thereunder, that the proposed amendments to the CTA and CQ Plans are approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–14740 Filed 6–17–10; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62280] Order Granting Application for Extension of a Temporary Conditional Exemption Pursuant to Section 36(a) of the Exchange Act by the International Securities Exchange, LLC Relating to the Ownership Interest of International Securities Exchange Holdings, Inc. in an Electronic Communications Network June 11, 2010. I. Introduction On December 22, 2008, the Securities and Exchange Commission (‘‘Commission’’) approved a proposal filed by the International Securities Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) in connection with corporate transactions (the ‘‘Transactions’’) in which, among other things, the parent company of ISE, International Securities Exchange Holdings, Inc. (‘‘ISE Holdings’’), purchased a 31.54% ownership interest in Direct Edge Holdings LLC (‘‘Direct Edge’’), the owner and operator of Direct Edge ECN (‘‘DECN’’), a registered brokerdealer and electronic communications network (‘‘ECN’’).1 Following the closing of the Transactions (the ‘‘Closing’’), Direct Edge’s wholly-owned subsidiary, Maple Merger Sub LLC (‘‘Merger Sub’’) began to operate a marketplace for the trading of U.S. cash equity securities by Equity Electronic Access Members of ISE (the ‘‘Facility’’), under ISE’s rules and as a ‘‘facility,’’ as defined in Section 3(a)(2) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’),2 of ISE.3 15 17 CFR 200.30–3(a)(27). Securities Exchange Act Release No. 59135 (December 22, 2008), 73 FR 79954 (December 30, 2008) (order approving File No. SR–ISE–2008–85). 2 15 U.S. C. 78c(a)(2). 3 Under Section 3(a)(2) of the Act, the term ‘‘facility,’’ when used with respect to an exchange, includes ‘‘its premises, tangible or intangible property whether on the premises or not, any right to the use of such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange (including, among other things, any system of communication to or from the exchange, by ticker or otherwise, maintained by or with the consent of the exchange), 1 See PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 DECN, which operates as an ECN and submits its limit orders to the Facility for display and execution, is an affiliate of ISE through ISE Holdings’ equity interest in DE Holdings. DECN also is a facility, as defined in Section 3(a)(2) of the Exchange Act, of ISE because it is an affiliate of ISE used for the purpose of effecting and reporting securities transactions. Because DECN is a facility of ISE, ISE, absent exemptive relief, would be obligated under Section 19(b) of the Exchange Act to file with the Commission proposed rules governing the operation of DECN’s systems and subscriber fees. On December 22, 2008, the Commission exercised its authority under Section 36 of the Exchange Act to grant ISE a temporary exemption, subject to certain conditions, from the requirements under Section 19(b) of the Exchange Act with respect to DECN’s proposed rules.4 On June 19, 2009, the Commission extended this temporary exemption for an additional 180 days, subject to certain conditions.5 On December 16, 2009, the Commission further extended the temporary exemption for an additional 180 days, subject to certain conditions.6 On May 19, 2010, ISE filed with the Commission, pursuant to Rule 0–12 7 under the Exchange Act, an application under Section 36(a)(1) of the Exchange Act 8 to extend the relief granted in the Exemption Order through August 31, 2010.9 This order grants ISE’s request, subject to the satisfaction of certain conditions, which are outlined below. II. Application for an Extension of the Temporary Conditional Exemption From the Section 19(b) Rule Filing Requirements On May 19, 2010, ISE requested that the Commission exercise its authority under Section 36 of the Exchange Act to temporarily extend, subject to certain conditions, the temporary conditional exemption granted in the Exemption Order from the rule filing procedures of Section 19(b) of the Exchange Act in and any right of the exchange to the use of any property or service.’’ 4 See Securities Exchange Act Release No. 59133 (December 22, 2008), 73 FR 79940 (December 30, 2008) (‘‘Exemption Order’’). 5 See Securities Exchange Act Release No. 60152 (June 19, 2009), 74 FR 30334 (June 25, 2009) (‘‘June Extension’’). 6 See Securities Exchange Act Release No. 61174 (December 16, 2009), 74 FR 68294 (December 23, 2009) (‘‘December Extension’’). 7 17 CFR 240.0–12. 8 15 U.S.C. 78mm(a)(1). 9 See letter from Michael J. Simon, General Counsel and Secretary, ISE, to Elizabeth M. Murphy, Secretary, Commission, dated May 19, 2010 (‘‘Extension Request’’). E:\FR\FM\18JNN1.SGM 18JNN1 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Notices connection with ISE Holdings’ equity ownership interest in DE Holdings and the continued operation of DECN as a facility of ISE.10 In May 2009, EDGA Exchange, Inc., and EDGX Exchange, Inc. (together, the ‘‘Exchange Subsidiaries’’), two whollyowned subsidiaries of DE Holdings, filed with the Commission Form 1 applications (the ‘‘Form 1 Applications’’) to register as national securities exchanges under Section 6 of the Exchange Act.11 The Form 1 Applications, which included the proposed rules of the Exchange Subsidiaries, were published for comment on September 17, 2009,12 and the Commission granted the Exchange Subsidiaries’ exchange registration applications on March 12, 2010.13 ISE states that the Exchange Subsidiaries expect to begin operating as national securities exchanges in early July 2010.14 To ensure a smooth transition of trading from DECN to the Exchange Subsidiaries, there will be a two-week pre-launch period during which members will be able to enter mock orders on each Exchange Subsidiary using test symbols.15 Following the launch date, there will be a two-week phase-in period during which securities currently traded on DECN will be moved from DECN to each Exchange Subsidiary.16 ISE believes that this process will help to ensure the functionality of the Exchange Subsidiaries and an orderly transition from DECN to the Exchange Subsidiaries.17 Accordingly, to ensure the launch of the Exchange Subsidiaries, phase-in the trading of all securities on the Exchange Subsidiaries, decommission DECN after the Exchange Subsidiaries are trading all symbols, and incorporate the ability to respond to unanticipated transition issues, ISE requests an additional extension until August 31, 2010, of the relief granted in 10 See Extension Request at 3. Extension Request at 2. 12 Securities Exchange Act Release No. 60651 (September 11, 2009), 74 FR 47827 (‘‘Form 1 Applications Notice’’). See Extension Request at 2 and 3. 13 Securities Exchange Act Release No. 61698 (March 12, 2010), 75 FR 13151 (March 18, 2010) (‘‘Exchange Registration Order’’). See Extension Request at 2. 14 See Extension Request at 2. 15 Id. 16 Id. Once a symbol has migrated from DECN to the Exchange Subsidiaries, it will no longer be available for trading on DECN and will only be available for trading on the Exchange Subsidiaries. See Extension Request at note 6. After all symbols have migrated to the Exchanged Subsidiaries, DECN intends to promptly file a ‘‘Cessation of Operations Report’’ with the Commission and to cease operations as an ECN. See Extension Request at 2. 17 See Extension Request at 2 and 3. srobinson on DSKHWCL6B1PROD with NOTICES 11 See VerDate Mar<15>2010 16:17 Jun 17, 2010 Jkt 220001 the Exemption Order.18 ISE expects that DECN will continue to operate as a facility of ISE for a relatively brief period.19 ISE believes that it would be unduly burdensome and inefficient to require DECN’s operating rules to be separately subject to the Section 19(b) rule filing process because the published rules of the Exchange Subsidiaries ‘‘substantially align with DECN’s operations in practice and DECN is only operating temporarily as a facility of ISE until all symbols are fully migrated to the Exchange Subsidiaries.’’ 20 ISE believes, further, that the publication of the Exchange Subsidiaries’ rules as part of the Form 1 Applications should help to mitigate any concerns regarding the transparency of the rules under which DECN will continue to operate, temporarily, as a facility of ISE.21 ISE has asked the Commission to exercise its authority under Section 36 of the Exchange Act to grant ISE a temporary extension, until August 31, 2010, subject to certain conditions, of the Exemption Order’s relief from the Section 19(b) rule filing requirements that otherwise would apply to DECN as a facility of ISE.22 The extended temporary conditional exemption would commence immediately and would permit the continued operation of DECN until all symbols are fully migrated to the Exchange Subsidiaries, but in no event later than August 31, 2010.23 ISE believes that the extended temporary conditional exemption will help to ensure an orderly transition from DECN to the Exchange Subsidiaries.24 ISE states, in addition, that the extended exemption will not diminish the Commission’s ability to monitor ISE and DECN.25 In this regard, ISE notes that to the extent that ISE makes changes to its systems, including the Facility, during the extended temporary exemption period, or thereafter, it remains subject to Section 19(b) and thus obligated to file proposed rule changes with the Commission.26 Further, in the Extension Request, ISE commits to satisfying certain conditions, as outlined below, which are identical to the conditions in the Exemption Order, the June Extension, and the 18 See Extension Request at 2. ISE states that it would be impracticable for DECN to display its limit orders other than on the Facility. See Extension Request at 4. 20 See Extension Request at 3. 21 Id. 22 Id. 23 Id. 24 Id. 25 Id. 26 Id. 19 Id. PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 34797 December Extension.27 For example, as a condition to the extended temporary exemption, ISE will be required to submit proposed rule changes with respect to any material changes to DECN’s functions during the exemption period.28 ISE notes, however, that neither ISE nor DECN anticipates any material changes to DECN’s functionality during the extended temporary exemption period.29 III. Order Granting Extension of Temporary Conditional Section 36 Exemption In 1996, Congress gave the Commission greater flexibility to regulate trading systems, such as DECN, by granting the Commission broad authority to exempt any person from any of the provisions of the Exchange Act and to impose appropriate conditions on their operation.30 Specifically, NSMIA added Section 36(a)(1) to the Exchange Act, which provides that ‘‘the Commission, by rule, regulation, or order, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of [the Exchange Act] or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.’’ 31 In enacting Section 36, Congress indicated that it expected that ‘‘the Commission will use this authority to promote efficiency, competition and capital formation.’’ 32 It particularly intended to give the Commission sufficient flexibility to respond to changing market and competitive conditions: The Committee recognizes that the rapidly changing marketplace dictates that effective regulation requires a certain amount of flexibility. Accordingly, the bill grants the SEC general exemptive authority under both the Securities Act and the Securities Exchange Act. This exemptive authority will allow the Commission the flexibility to explore and adopt new approaches to 27 See Extension Request at note 9 and accompanying text. ISE also represents that it has complied with the conditions in the Exemption Order, the June Extension, and the December Extension, and that it will continue to comply with these conditions during any extension of the relief granted in the Exemption Order. See Extension Request at 4. 28 See Extension Request at 3. 29 See Extension Request at note 8. 30 15 U.S.C. 78mm(a). Section 36 of the Exchange Act was enacted as part of the National Securities Markets Improvements Act 1996, Pub. L. No. 104– 290 (‘‘NSMIA’’). 31 15 U.S.C. 78mm(a)(1). 32 H.R. Rep. No. 104–622, 104th Cong., 2d Sess. 38 (1996). E:\FR\FM\18JNN1.SGM 18JNN1 34798 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Notices registration and disclosure. It will also enable the Commission to address issues relating to the securities markets more generally. For example, the SEC could deal with the regulatory concerns raised by the recent proliferation of electronic trading systems, which do not fit neatly into the existing regulatory framework.33 srobinson on DSKHWCL6B1PROD with NOTICES As noted above, on December 22, 2008, the Commission exercised its Section 36 exemptive authority to grant ISE a temporary exemption, subject to certain conditions, from the 19(b) rule filing requirements in connection with the Transaction.34 The Commission granted temporary extensions of this exemptive relief, subject to certain conditions, on June 19, 2009,35 and December 16, 2009.36 In addition, the Commission previously granted similar exemptive relief in connection with Nasdaq’s acquisition of Brut, LLC, the operator of the Brut ECN.37 Section 19(b)(1) of the Exchange Act requires a self-regulatory organization (‘‘self-regulatory organization’’ or ‘‘SRO’’), including ISE, to file with the Commission its proposed rule changes accompanied by a concise general statement of the basis and purpose of the proposed rule change. Once a proposed rule change has been filed with the Commission, the Commission is required to publish notice of it and provide an opportunity for public comment. The proposed rule change may not take effect unless approved by the Commission by order, unless the rule change is within the class of rule changes that are effective upon filing pursuant to Section 19(b)(3)(A) of the Act 38 or put into effect summarily pursuant to Section 19(b)(3)(B) of the Act.39 Section 19(b)(1) of the Exchange Act defines the term ‘‘proposed rule change’’ to mean ‘‘any proposed rule or rule change in, addition to, or deletion from the rules of [a] self-regulatory organization.’’ Pursuant to Section 3(a)(27) and 3(a)(28) of the Exchange Act, the term ‘‘rules of a self-regulatory organization’’ means (1) the constitution, articles of incorporation, bylaws and 33 S. Rep. No. 104–293, 104th Cong., 2d Sess. 15 (1996). 34 See Exemption Order, supra note 4. 35 See June Extension, supra note 5. 36 See December Extension, supra note 6. 37 See Securities Exchange Act Release No. 50311 (September 3, 2004), 69 FR 54818 (September 10, 2004). Although granting the ISE’s Extension Request would result in a temporary exemption longer than the exemption granted in connection with Nasdaq’s acquisition of Brut, LLC, the Commission believes that it is appropriate to provide the Exchange Subsidiaries with a further extension to help facilitate an orderly transition from DECN to the Exchange Subsidiaries. 38 15 U.S.C. 78s(b)(3)(A). 39 15 U.S.C. 78s(b)(3)(B). VerDate Mar<15>2010 16:17 Jun 17, 2010 Jkt 220001 rules, or instruments corresponding to the foregoing, of an SRO, and (2) such stated policies, practices and interpretations of an SRO (other than the Municipal Securities Rulemaking Board) as the Commission, by rule, may determine to be necessary or appropriate in the public interest or for the protection of investors to be deemed to be rules. Rule 19b–4(b) under the Exchange Act,40 defines the term ‘‘stated policy, practice, or interpretation’’ to mean generally ‘‘any material aspect of the operation of the facilities of the selfregulatory organization or any statement made available to the membership, participants, or specified persons thereof that establishes or changes any standard, limit, or guideline with respect to rights and obligations of specified persons or the meaning, administration, or enforcement of an existing rule.’’ The term ‘‘facility’’ is defined in Section 3(a)(2) of the Exchange Act, with respect to an exchange, to include ‘‘its premises, tangible or intangible property whether on the premises or not, any right to use such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange (including, among other things, any system of communication to or from the exchange, by ticker or otherwise, maintained by or with the consent of the exchange), and any right of the exchange to the use of any property or service.’’ ISE acknowledges that Merger Sub has operated the Facility as a facility of ISE since the Closing.41 Absent an exemption, Section 19(b) of the Exchange Act and Rule 19b–4 thereunder would require ISE to file proposed rules with the Commission to allow ISE to operate DECN as a facility of ISE. As described more fully above, ISE states that the Exchange Subsidiaries expect to begin operating as national securities exchanges in early July 2010.42 To ensure a smooth transition from DECN to the Exchange Subsidiaries, there will be a two-week pre-launch period during which members will be able to enter mock orders on the Exchange Subsidiaries using test symbols.43 Following the launch date of the Exchange Subsidiaries, there will be a two-week phase-in period during which securities currently trading on DECN will be moved from DECN to each Exchange Subsidiary.44 ISE requests a temporary extension until August 31, 2010, of the relief granted in the Exemption Order, subject to certain conditions, to allow for the pre-launch testing and phase-in of trading on the Exchange Subsidiaries and to provide an orderly transition from DECN to the Exchange Subsidiaries.45 ISE notes that DECN intends to cease operations as an ECN when all symbols are fully migrated to the Exchange Subsidiaries.46 Accordingly, ISE expects that DECN will continue to operate as a facility of ISE for a relatively brief period of time.47 ISE represents that it has complied with the conditions in the Exemption Order, the June Extension, and the December Extension, and that it will continue to comply with these conditions during any extension of the relief granted in the Exemption Order.48 The Commission believes that it is appropriate to grant a temporary extension of the relief provided in the Exemption Order, subject to the conditions described below, to allow DECN to continue to operate as a facility of ISE without being subject to the rule filing requirements of Section 19(b) of the Exchange Act for a temporary period.49 Accordingly, the Commission has determined to grant ISE’s request for an extension of the relief granted in the Exemption Order, subject to certain conditions, through the earlier of (1) the completion of the migration of all symbols from DECN to the Exchange Subsidiaries; or (2) August 31, 2010. The Commission finds that the temporary extended conditional exemption from the provisions of Section 19(b) of the Exchange Act is appropriate in the public interest and is consistent with the protection of investors. In particular, the Commission believes that the temporary extended exemption should help to promote efficiency and competition in the market by allowing DECN to continue to operate as an ECN for a limited period of time while the Exchange Subsidiaries test their systems and phase-in the trading of securities on the Exchange Subsidiaries. The Commission notes ISE’s belief that it would be unduly burdensome and inefficient to require DECN’s operating rules to be separately subjected to the Section 19(b) rule filing 44 Id. 45 See 46 See 40 17 47 Id. 41 See CFR 240.19b–4(b). Extension Request at 1. As discussed above, ISE owns a 31.54% ownership interest in DE Holdings, the sole owner of Merger Sub. 42 See Extension Request at 2. 43 Id. Extension Request at 2 and 3. Extension Request at 2. 48 See PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 Extension Request at 4. granting this relief, the Commission makes no finding regarding whether ISE’s operation of DECN as a facility would be consistent with the Exchange Act. 49 In E:\FR\FM\18JNN1.SGM 18JNN1 srobinson on DSKHWCL6B1PROD with NOTICES Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Notices and approval process because DECN will operate only temporarily as a facility of ISE.50 In addition, the Commission notes that ISE represents that the rules of the Exchange Subsidiaries, which were published for comment as part of the Form 1 Applications, ‘‘substantially align’’ with DECN’s operations in practice.51 Accordingly, the Commission believes that the publication of the Form 1 Applications, coupled with the posting of the rules of the Exchange Subsidiaries on Direct Edge’s Web site, should help to mitigate any concerns regarding transparency with respect to the rules under which DECN will continue to operate, temporarily, as a facility of ISE. To provide the Commission with the opportunity to review and act upon any proposal to change DECN’s fees or to make material changes to DECN’s operations as an ECN during the period covered by the extended temporary exemption, as well as to ensure that the Commission’s ability to monitor ISE and DECN is not diminished by the extended temporary exemption, the Commission is imposing the following conditions while the extended temporary exemption is in effect. The Commission believes such conditions are necessary and appropriate in the public interest for the protection of investors. Therefore, the Commission is granting to ISE an extended temporary exemption, until the earlier of (1) the completion of the migration of all symbols from DECN to the Exchange Subsidiaries; or (2) August 31, 2010, pursuant to Section 36 of the Exchange Act, from the rule filing requirements imposed by Section 19(b) of the Exchange Act as set forth above, provided that ISE and DECN comply with the following conditions: (1) DECN remains a registered brokerdealer under Section 15 of the Exchange Act 52 and continues to operate as an ECN; (2) DECN operates in compliance with the obligations set forth under Regulation ATS; (3) DECN and ISE continue to operate as separate legal entities; (4) ISE files a proposed rule change under Section 19 of the Exchange Act 53 if any material changes are sought to be made to DECN’s operations. A material change would include any changes to a stated policy, practice, or interpretation regarding the operation of DECN or any other event or action relating to DECN that would require the filing of a 50 See Extension Request at 3. 51 See Extension Request at 3. 52 15 U.S.C. 78o. 53 15 U.S.C. 78s. VerDate Mar<15>2010 16:17 Jun 17, 2010 Jkt 220001 34799 proposed rule change by an SRO or an SRO facility; 54 (5) ISE files a proposed rule change under Section 19 of the Exchange Act if DECN’s fee schedule is sought to be modified; and (6) ISE treats DECN the same as other ECNs that participate in the Facility, and, in particular, ISE does not accord DECN preferential treatment in how DECN submits orders to the Facility or in the way its orders are displayed or executed.55 In addition, the Commission notes that the Financial Industry Regulatory Authority is currently the Designated Examining Authority for DECN. For the reasons discussed above, the Commission finds that the extended temporary conditional exemptive relief requested by ISE is appropriate in the public interest and is consistent with the protection of investors. IT IS ORDERED, pursuant to Section 36 of the Exchange Act,56 that the application for an extended temporary conditional exemption is granted through the earlier of (1) the completion of the migration of all symbols from DECN to the Exchange Subsidiaries; or (2) August 31, 2010, effective immediately. 2010, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by CBOE. The Exchange has designated this proposal as one establishing or changing a due, fee, or other charge imposed by CBOE under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. By the Commission. Elizabeth M. Murphy, Secretary. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CBOE 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. CBOE has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements. [FR Doc. 2010–14684 Filed 6–17–10; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62286; File No. SR–CBOE– 2010–051] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to PULSe Fees June 11, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 26, 54 See Section 19(b) of the Exchange Act and Rule 19b–4 thereunder. The Commission notes that a material change would include, among other things, changes to DECN’s operating platform; the types of securities traded on DECN; DECN’s types of subscribers; or the reporting venue for trading that takes place on DECN. The Commission also notes that any rule filings must set forth the operation of the DECN facility sufficiently so that the Commission and the public are able to evaluate the proposed changes. 55 See Extension Request at note 9. 56 15 U.S.C. 78mm. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE is proposing to amend its Fees Schedule to adopt fees for the use of a new front-end order entry workstation, referred to as PULSe, that will be a facility of the Exchange. The text of the proposed rule change is available on the Exchange’s Web site https:// www.cboe.org/legal), at the Exchange’s Office of the Secretary, on the Commission’s Web site at https:// www.sec.gov and at the Commission’s Public Reference Room. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to establish fees relating to the use of the PULSe order entry workstation. The PULSe workstation is a front-end order entry system designed for use with respect to orders that may be sent to the trading systems of CBOE and CBOE Stock Exchange (‘‘CBSX’’).5 In 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 5 The Exchange represents that the PULSe workstation is merely a new front-end system 4 17 E:\FR\FM\18JNN1.SGM Continued 18JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 75, Number 117 (Friday, June 18, 2010)]
[Notices]
[Pages 34796-34799]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-14684]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62280]


Order Granting Application for Extension of a Temporary 
Conditional Exemption Pursuant to Section 36(a) of the Exchange Act by 
the International Securities Exchange, LLC Relating to the Ownership 
Interest of International Securities Exchange Holdings, Inc. in an 
Electronic Communications Network

June 11, 2010.

I. Introduction

    On December 22, 2008, the Securities and Exchange Commission 
(``Commission'') approved a proposal filed by the International 
Securities Exchange, LLC (``ISE'' or ``Exchange'') in connection with 
corporate transactions (the ``Transactions'') in which, among other 
things, the parent company of ISE, International Securities Exchange 
Holdings, Inc. (``ISE Holdings''), purchased a 31.54% ownership 
interest in Direct Edge Holdings LLC (``Direct Edge''), the owner and 
operator of Direct Edge ECN (``DECN''), a registered broker-dealer and 
electronic communications network (``ECN'').\1\ Following the closing 
of the Transactions (the ``Closing''), Direct Edge's wholly-owned 
subsidiary, Maple Merger Sub LLC (``Merger Sub'') began to operate a 
marketplace for the trading of U.S. cash equity securities by Equity 
Electronic Access Members of ISE (the ``Facility''), under ISE's rules 
and as a ``facility,'' as defined in Section 3(a)(2) of the Securities 
Exchange Act of 1934 (``Exchange Act''),\2\ of ISE.\3\
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    \1\ See Securities Exchange Act Release No. 59135 (December 22, 
2008), 73 FR 79954 (December 30, 2008) (order approving File No. SR-
ISE-2008-85).
    \2\ 15 U.S. C. 78c(a)(2).
    \3\ Under Section 3(a)(2) of the Act, the term ``facility,'' 
when used with respect to an exchange, includes ``its premises, 
tangible or intangible property whether on the premises or not, any 
right to the use of such premises or property or any service thereof 
for the purpose of effecting or reporting a transaction on an 
exchange (including, among other things, any system of communication 
to or from the exchange, by ticker or otherwise, maintained by or 
with the consent of the exchange), and any right of the exchange to 
the use of any property or service.''
---------------------------------------------------------------------------

    DECN, which operates as an ECN and submits its limit orders to the 
Facility for display and execution, is an affiliate of ISE through ISE 
Holdings' equity interest in DE Holdings. DECN also is a facility, as 
defined in Section 3(a)(2) of the Exchange Act, of ISE because it is an 
affiliate of ISE used for the purpose of effecting and reporting 
securities transactions. Because DECN is a facility of ISE, ISE, absent 
exemptive relief, would be obligated under Section 19(b) of the 
Exchange Act to file with the Commission proposed rules governing the 
operation of DECN's systems and subscriber fees.
    On December 22, 2008, the Commission exercised its authority under 
Section 36 of the Exchange Act to grant ISE a temporary exemption, 
subject to certain conditions, from the requirements under Section 
19(b) of the Exchange Act with respect to DECN's proposed rules.\4\ On 
June 19, 2009, the Commission extended this temporary exemption for an 
additional 180 days, subject to certain conditions.\5\ On December 16, 
2009, the Commission further extended the temporary exemption for an 
additional 180 days, subject to certain conditions.\6\
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    \4\ See Securities Exchange Act Release No. 59133 (December 22, 
2008), 73 FR 79940 (December 30, 2008) (``Exemption Order'').
    \5\ See Securities Exchange Act Release No. 60152 (June 19, 
2009), 74 FR 30334 (June 25, 2009) (``June Extension'').
    \6\ See Securities Exchange Act Release No. 61174 (December 16, 
2009), 74 FR 68294 (December 23, 2009) (``December Extension'').
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    On May 19, 2010, ISE filed with the Commission, pursuant to Rule 0-
12 \7\ under the Exchange Act, an application under Section 36(a)(1) of 
the Exchange Act \8\ to extend the relief granted in the Exemption 
Order through August 31, 2010.\9\ This order grants ISE's request, 
subject to the satisfaction of certain conditions, which are outlined 
below.
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    \7\ 17 CFR 240.0-12.
    \8\ 15 U.S.C. 78mm(a)(1).
    \9\ See letter from Michael J. Simon, General Counsel and 
Secretary, ISE, to Elizabeth M. Murphy, Secretary, Commission, dated 
May 19, 2010 (``Extension Request'').
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II. Application for an Extension of the Temporary Conditional Exemption 
From the Section 19(b) Rule Filing Requirements

    On May 19, 2010, ISE requested that the Commission exercise its 
authority under Section 36 of the Exchange Act to temporarily extend, 
subject to certain conditions, the temporary conditional exemption 
granted in the Exemption Order from the rule filing procedures of 
Section 19(b) of the Exchange Act in

[[Page 34797]]

connection with ISE Holdings' equity ownership interest in DE Holdings 
and the continued operation of DECN as a facility of ISE.\10\
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    \10\ See Extension Request at 3.
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    In May 2009, EDGA Exchange, Inc., and EDGX Exchange, Inc. 
(together, the ``Exchange Subsidiaries''), two wholly-owned 
subsidiaries of DE Holdings, filed with the Commission Form 1 
applications (the ``Form 1 Applications'') to register as national 
securities exchanges under Section 6 of the Exchange Act.\11\ The Form 
1 Applications, which included the proposed rules of the Exchange 
Subsidiaries, were published for comment on September 17, 2009,\12\ and 
the Commission granted the Exchange Subsidiaries' exchange registration 
applications on March 12, 2010.\13\
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    \11\ See Extension Request at 2.
    \12\ Securities Exchange Act Release No. 60651 (September 11, 
2009), 74 FR 47827 (``Form 1 Applications Notice''). See Extension 
Request at 2 and 3.
    \13\ Securities Exchange Act Release No. 61698 (March 12, 2010), 
75 FR 13151 (March 18, 2010) (``Exchange Registration Order''). See 
Extension Request at 2.
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    ISE states that the Exchange Subsidiaries expect to begin operating 
as national securities exchanges in early July 2010.\14\ To ensure a 
smooth transition of trading from DECN to the Exchange Subsidiaries, 
there will be a two-week pre-launch period during which members will be 
able to enter mock orders on each Exchange Subsidiary using test 
symbols.\15\ Following the launch date, there will be a two-week phase-
in period during which securities currently traded on DECN will be 
moved from DECN to each Exchange Subsidiary.\16\ ISE believes that this 
process will help to ensure the functionality of the Exchange 
Subsidiaries and an orderly transition from DECN to the Exchange 
Subsidiaries.\17\ Accordingly, to ensure the launch of the Exchange 
Subsidiaries, phase-in the trading of all securities on the Exchange 
Subsidiaries, decommission DECN after the Exchange Subsidiaries are 
trading all symbols, and incorporate the ability to respond to 
unanticipated transition issues, ISE requests an additional extension 
until August 31, 2010, of the relief granted in the Exemption 
Order.\18\ ISE expects that DECN will continue to operate as a facility 
of ISE for a relatively brief period.\19\
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    \14\ See Extension Request at 2.
    \15\ Id.
    \16\ Id. Once a symbol has migrated from DECN to the Exchange 
Subsidiaries, it will no longer be available for trading on DECN and 
will only be available for trading on the Exchange Subsidiaries. See 
Extension Request at note 6. After all symbols have migrated to the 
Exchanged Subsidiaries, DECN intends to promptly file a ``Cessation 
of Operations Report'' with the Commission and to cease operations 
as an ECN. See Extension Request at 2.
    \17\ See Extension Request at 2 and 3.
    \18\ See Extension Request at 2.
    \19\ Id. ISE states that it would be impracticable for DECN to 
display its limit orders other than on the Facility. See Extension 
Request at 4.
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    ISE believes that it would be unduly burdensome and inefficient to 
require DECN's operating rules to be separately subject to the Section 
19(b) rule filing process because the published rules of the Exchange 
Subsidiaries ``substantially align with DECN's operations in practice 
and DECN is only operating temporarily as a facility of ISE until all 
symbols are fully migrated to the Exchange Subsidiaries.'' \20\ ISE 
believes, further, that the publication of the Exchange Subsidiaries' 
rules as part of the Form 1 Applications should help to mitigate any 
concerns regarding the transparency of the rules under which DECN will 
continue to operate, temporarily, as a facility of ISE.\21\
---------------------------------------------------------------------------

    \20\ See Extension Request at 3.
    \21\ Id.
---------------------------------------------------------------------------

    ISE has asked the Commission to exercise its authority under 
Section 36 of the Exchange Act to grant ISE a temporary extension, 
until August 31, 2010, subject to certain conditions, of the Exemption 
Order's relief from the Section 19(b) rule filing requirements that 
otherwise would apply to DECN as a facility of ISE.\22\ The extended 
temporary conditional exemption would commence immediately and would 
permit the continued operation of DECN until all symbols are fully 
migrated to the Exchange Subsidiaries, but in no event later than 
August 31, 2010.\23\ ISE believes that the extended temporary 
conditional exemption will help to ensure an orderly transition from 
DECN to the Exchange Subsidiaries.\24\
---------------------------------------------------------------------------

    \22\ Id.
    \23\ Id.
    \24\ Id.
---------------------------------------------------------------------------

    ISE states, in addition, that the extended exemption will not 
diminish the Commission's ability to monitor ISE and DECN.\25\ In this 
regard, ISE notes that to the extent that ISE makes changes to its 
systems, including the Facility, during the extended temporary 
exemption period, or thereafter, it remains subject to Section 19(b) 
and thus obligated to file proposed rule changes with the 
Commission.\26\ Further, in the Extension Request, ISE commits to 
satisfying certain conditions, as outlined below, which are identical 
to the conditions in the Exemption Order, the June Extension, and the 
December Extension.\27\ For example, as a condition to the extended 
temporary exemption, ISE will be required to submit proposed rule 
changes with respect to any material changes to DECN's functions during 
the exemption period.\28\ ISE notes, however, that neither ISE nor DECN 
anticipates any material changes to DECN's functionality during the 
extended temporary exemption period.\29\
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    \25\ Id.
    \26\ Id.
    \27\ See Extension Request at note 9 and accompanying text. ISE 
also represents that it has complied with the conditions in the 
Exemption Order, the June Extension, and the December Extension, and 
that it will continue to comply with these conditions during any 
extension of the relief granted in the Exemption Order. See 
Extension Request at 4.
    \28\ See Extension Request at 3.
    \29\ See Extension Request at note 8.
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III. Order Granting Extension of Temporary Conditional Section 36 
Exemption

    In 1996, Congress gave the Commission greater flexibility to 
regulate trading systems, such as DECN, by granting the Commission 
broad authority to exempt any person from any of the provisions of the 
Exchange Act and to impose appropriate conditions on their 
operation.\30\ Specifically, NSMIA added Section 36(a)(1) to the 
Exchange Act, which provides that ``the Commission, by rule, 
regulation, or order, may conditionally or unconditionally exempt any 
person, security, or transaction, or any class or classes of persons, 
securities, or transactions, from any provision or provisions of [the 
Exchange Act] or of any rule or regulation thereunder, to the extent 
that such exemption is necessary or appropriate in the public interest, 
and is consistent with the protection of investors.'' \31\ In enacting 
Section 36, Congress indicated that it expected that ``the Commission 
will use this authority to promote efficiency, competition and capital 
formation.'' \32\ It particularly intended to give the Commission 
sufficient flexibility to respond to changing market and competitive 
conditions:
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78mm(a). Section 36 of the Exchange Act was 
enacted as part of the National Securities Markets Improvements Act 
1996, Pub. L. No. 104-290 (``NSMIA'').
    \31\ 15 U.S.C. 78mm(a)(1).
    \32\ H.R. Rep. No. 104-622, 104th Cong., 2\d\ Sess. 38 (1996).
---------------------------------------------------------------------------

    The Committee recognizes that the rapidly changing marketplace 
dictates that effective regulation requires a certain amount of 
flexibility. Accordingly, the bill grants the SEC general exemptive 
authority under both the Securities Act and the Securities Exchange 
Act. This exemptive authority will allow the Commission the 
flexibility to explore and adopt new approaches to

[[Page 34798]]

registration and disclosure. It will also enable the Commission to 
address issues relating to the securities markets more generally. 
For example, the SEC could deal with the regulatory concerns raised 
by the recent proliferation of electronic trading systems, which do 
---------------------------------------------------------------------------
not fit neatly into the existing regulatory framework.\33\

    \33\ S. Rep. No. 104-293, 104th Cong., 2\d\ Sess. 15 (1996).
---------------------------------------------------------------------------

    As noted above, on December 22, 2008, the Commission exercised its 
Section 36 exemptive authority to grant ISE a temporary exemption, 
subject to certain conditions, from the 19(b) rule filing requirements 
in connection with the Transaction.\34\ The Commission granted 
temporary extensions of this exemptive relief, subject to certain 
conditions, on June 19, 2009,\35\ and December 16, 2009.\36\ In 
addition, the Commission previously granted similar exemptive relief in 
connection with Nasdaq's acquisition of Brut, LLC, the operator of the 
Brut ECN.\37\
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    \34\ See Exemption Order, supra note 4.
    \35\ See June Extension, supra note 5.
    \36\ See December Extension, supra note 6.
    \37\ See Securities Exchange Act Release No. 50311 (September 3, 
2004), 69 FR 54818 (September 10, 2004). Although granting the ISE's 
Extension Request would result in a temporary exemption longer than 
the exemption granted in connection with Nasdaq's acquisition of 
Brut, LLC, the Commission believes that it is appropriate to provide 
the Exchange Subsidiaries with a further extension to help 
facilitate an orderly transition from DECN to the Exchange 
Subsidiaries.
---------------------------------------------------------------------------

    Section 19(b)(1) of the Exchange Act requires a self-regulatory 
organization (``self-regulatory organization'' or ``SRO''), including 
ISE, to file with the Commission its proposed rule changes accompanied 
by a concise general statement of the basis and purpose of the proposed 
rule change. Once a proposed rule change has been filed with the 
Commission, the Commission is required to publish notice of it and 
provide an opportunity for public comment. The proposed rule change may 
not take effect unless approved by the Commission by order, unless the 
rule change is within the class of rule changes that are effective upon 
filing pursuant to Section 19(b)(3)(A) of the Act \38\ or put into 
effect summarily pursuant to Section 19(b)(3)(B) of the Act.\39\
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(3)(A).
    \39\ 15 U.S.C. 78s(b)(3)(B).
---------------------------------------------------------------------------

    Section 19(b)(1) of the Exchange Act defines the term ``proposed 
rule change'' to mean ``any proposed rule or rule change in, addition 
to, or deletion from the rules of [a] self-regulatory organization.'' 
Pursuant to Section 3(a)(27) and 3(a)(28) of the Exchange Act, the term 
``rules of a self-regulatory organization'' means (1) the constitution, 
articles of incorporation, bylaws and rules, or instruments 
corresponding to the foregoing, of an SRO, and (2) such stated 
policies, practices and interpretations of an SRO (other than the 
Municipal Securities Rulemaking Board) as the Commission, by rule, may 
determine to be necessary or appropriate in the public interest or for 
the protection of investors to be deemed to be rules. Rule 19b-4(b) 
under the Exchange Act,\40\ defines the term ``stated policy, practice, 
or interpretation'' to mean generally ``any material aspect of the 
operation of the facilities of the self-regulatory organization or any 
statement made available to the membership, participants, or specified 
persons thereof that establishes or changes any standard, limit, or 
guideline with respect to rights and obligations of specified persons 
or the meaning, administration, or enforcement of an existing rule.''
---------------------------------------------------------------------------

    \40\ 17 CFR 240.19b-4(b).
---------------------------------------------------------------------------

    The term ``facility'' is defined in Section 3(a)(2) of the Exchange 
Act, with respect to an exchange, to include ``its premises, tangible 
or intangible property whether on the premises or not, any right to use 
such premises or property or any service thereof for the purpose of 
effecting or reporting a transaction on an exchange (including, among 
other things, any system of communication to or from the exchange, by 
ticker or otherwise, maintained by or with the consent of the 
exchange), and any right of the exchange to the use of any property or 
service.''
    ISE acknowledges that Merger Sub has operated the Facility as a 
facility of ISE since the Closing.\41\ Absent an exemption, Section 
19(b) of the Exchange Act and Rule 19b-4 thereunder would require ISE 
to file proposed rules with the Commission to allow ISE to operate DECN 
as a facility of ISE.
---------------------------------------------------------------------------

    \41\ See Extension Request at 1. As discussed above, ISE owns a 
31.54% ownership interest in DE Holdings, the sole owner of Merger 
Sub.
---------------------------------------------------------------------------

    As described more fully above, ISE states that the Exchange 
Subsidiaries expect to begin operating as national securities exchanges 
in early July 2010.\42\ To ensure a smooth transition from DECN to the 
Exchange Subsidiaries, there will be a two-week pre-launch period 
during which members will be able to enter mock orders on the Exchange 
Subsidiaries using test symbols.\43\ Following the launch date of the 
Exchange Subsidiaries, there will be a two-week phase-in period during 
which securities currently trading on DECN will be moved from DECN to 
each Exchange Subsidiary.\44\ ISE requests a temporary extension until 
August 31, 2010, of the relief granted in the Exemption Order, subject 
to certain conditions, to allow for the pre-launch testing and phase-in 
of trading on the Exchange Subsidiaries and to provide an orderly 
transition from DECN to the Exchange Subsidiaries.\45\ ISE notes that 
DECN intends to cease operations as an ECN when all symbols are fully 
migrated to the Exchange Subsidiaries.\46\ Accordingly, ISE expects 
that DECN will continue to operate as a facility of ISE for a 
relatively brief period of time.\47\ ISE represents that it has 
complied with the conditions in the Exemption Order, the June 
Extension, and the December Extension, and that it will continue to 
comply with these conditions during any extension of the relief granted 
in the Exemption Order.\48\
---------------------------------------------------------------------------

    \42\ See Extension Request at 2.
    \43\ Id.
    \44\ Id.
    \45\ See Extension Request at 2 and 3.
    \46\ See Extension Request at 2.
    \47\ Id.
    \48\ See Extension Request at 4.
---------------------------------------------------------------------------

    The Commission believes that it is appropriate to grant a temporary 
extension of the relief provided in the Exemption Order, subject to the 
conditions described below, to allow DECN to continue to operate as a 
facility of ISE without being subject to the rule filing requirements 
of Section 19(b) of the Exchange Act for a temporary period.\49\ 
Accordingly, the Commission has determined to grant ISE's request for 
an extension of the relief granted in the Exemption Order, subject to 
certain conditions, through the earlier of (1) the completion of the 
migration of all symbols from DECN to the Exchange Subsidiaries; or (2) 
August 31, 2010. The Commission finds that the temporary extended 
conditional exemption from the provisions of Section 19(b) of the 
Exchange Act is appropriate in the public interest and is consistent 
with the protection of investors. In particular, the Commission 
believes that the temporary extended exemption should help to promote 
efficiency and competition in the market by allowing DECN to continue 
to operate as an ECN for a limited period of time while the Exchange 
Subsidiaries test their systems and phase-in the trading of securities 
on the Exchange Subsidiaries. The Commission notes ISE's belief that it 
would be unduly burdensome and inefficient to require DECN's operating 
rules to be separately subjected to the Section 19(b) rule filing

[[Page 34799]]

and approval process because DECN will operate only temporarily as a 
facility of ISE.\50\ In addition, the Commission notes that ISE 
represents that the rules of the Exchange Subsidiaries, which were 
published for comment as part of the Form 1 Applications, 
``substantially align'' with DECN's operations in practice.\51\ 
Accordingly, the Commission believes that the publication of the Form 1 
Applications, coupled with the posting of the rules of the Exchange 
Subsidiaries on Direct Edge's Web site, should help to mitigate any 
concerns regarding transparency with respect to the rules under which 
DECN will continue to operate, temporarily, as a facility of ISE.
---------------------------------------------------------------------------

    \49\ In granting this relief, the Commission makes no finding 
regarding whether ISE's operation of DECN as a facility would be 
consistent with the Exchange Act.
    \50\ See Extension Request at 3.
    \51\ See Extension Request at 3.
---------------------------------------------------------------------------

    To provide the Commission with the opportunity to review and act 
upon any proposal to change DECN's fees or to make material changes to 
DECN's operations as an ECN during the period covered by the extended 
temporary exemption, as well as to ensure that the Commission's ability 
to monitor ISE and DECN is not diminished by the extended temporary 
exemption, the Commission is imposing the following conditions while 
the extended temporary exemption is in effect. The Commission believes 
such conditions are necessary and appropriate in the public interest 
for the protection of investors. Therefore, the Commission is granting 
to ISE an extended temporary exemption, until the earlier of (1) the 
completion of the migration of all symbols from DECN to the Exchange 
Subsidiaries; or (2) August 31, 2010, pursuant to Section 36 of the 
Exchange Act, from the rule filing requirements imposed by Section 
19(b) of the Exchange Act as set forth above, provided that ISE and 
DECN comply with the following conditions:
    (1) DECN remains a registered broker-dealer under Section 15 of the 
Exchange Act \52\ and continues to operate as an ECN;
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78o.
---------------------------------------------------------------------------

    (2) DECN operates in compliance with the obligations set forth 
under Regulation ATS;
    (3) DECN and ISE continue to operate as separate legal entities;
    (4) ISE files a proposed rule change under Section 19 of the 
Exchange Act \53\ if any material changes are sought to be made to 
DECN's operations. A material change would include any changes to a 
stated policy, practice, or interpretation regarding the operation of 
DECN or any other event or action relating to DECN that would require 
the filing of a proposed rule change by an SRO or an SRO facility; \54\
---------------------------------------------------------------------------

    \53\ 15 U.S.C. 78s.
    \54\ See Section 19(b) of the Exchange Act and Rule 19b-4 
thereunder. The Commission notes that a material change would 
include, among other things, changes to DECN's operating platform; 
the types of securities traded on DECN; DECN's types of subscribers; 
or the reporting venue for trading that takes place on DECN. The 
Commission also notes that any rule filings must set forth the 
operation of the DECN facility sufficiently so that the Commission 
and the public are able to evaluate the proposed changes.
---------------------------------------------------------------------------

    (5) ISE files a proposed rule change under Section 19 of the 
Exchange Act if DECN's fee schedule is sought to be modified; and
    (6) ISE treats DECN the same as other ECNs that participate in the 
Facility, and, in particular, ISE does not accord DECN preferential 
treatment in how DECN submits orders to the Facility or in the way its 
orders are displayed or executed.\55\
---------------------------------------------------------------------------

    \55\ See Extension Request at note 9.
---------------------------------------------------------------------------

    In addition, the Commission notes that the Financial Industry 
Regulatory Authority is currently the Designated Examining Authority 
for DECN.
    For the reasons discussed above, the Commission finds that the 
extended temporary conditional exemptive relief requested by ISE is 
appropriate in the public interest and is consistent with the 
protection of investors.
    IT IS ORDERED, pursuant to Section 36 of the Exchange Act,\56\ that 
the application for an extended temporary conditional exemption is 
granted through the earlier of (1) the completion of the migration of 
all symbols from DECN to the Exchange Subsidiaries; or (2) August 31, 
2010, effective immediately.
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78mm.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-14684 Filed 6-17-10; 8:45 am]
BILLING CODE 8010-01-P

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