Self-Regulatory Organizations; International Securities Exchange, LLC; Order Approving a Proposed Rule Change Relating to Complex Orders, 40758-40760 [2011-17331]

Download as PDF 40758 Federal Register / Vol. 76, No. 132 / Monday, July 11, 2011 / Notices 100 F Street, NE., Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION All submissions should refer to File Number SR–MSRB–2011–07. 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 Web site (http://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 Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m.. Copies of such filing also will be available for inspection and copying at the MSRB’s offices. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–MSRB–2011–07 and should be submitted on or before August 1, 2011. [Release No. 34–64809; File No. SR–NYSE– 2011–20] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–17245 Filed 7–8–11; 8:45 am] erowe on DSK5CLS3C1PROD with NOTICES BILLING CODE 8011–01–P 10 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 15:30 Jul 08, 2011 Jkt 223001 Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change To Add New Section 907.00 to the Listed Company Manual That Sets Forth Certain Complimentary Products and Services That Are Offered to Currently and Newly Listed Issuers July 5, 2011. On May 5, 2011, the New York Stock Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change to amend the NYSE’s Listed Company Manual to set forth certain complimentary products and services, and their commercial value, that are offered by the Exchange to currently and newly listed issuers. The proposed rule change was published for comment in the Federal Register on May 23, 2011.3 The Commission received sixteen comment letters on the proposal.4 The Commission also received a comment letter from NYSE in response to the commenters.5 Section 19(b)(2) of the Act 6 provides that within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 64506 (May 17, 2011), 76 FR 29806 (May 23, 2011). 4 See Letters to the Commission, from Ronald Russo, GLX, Inc., dated May 18, 2011; Bryan Degnan, Taylor Rafferty Associates, dated May 19, 2011; Jennifer Kaminsky, dated May 19, 2011; Anonymous, dated May 19, 2011; Todd Allen, dated May 19, 2011; Brian Rivel, President, Rivel Research Group, dated May 20, 2011; Jerry Falkner, May 22, 2011; Enzo Villani, President, MZ North America, dated June 6, 2011; John Fairir, dated June 7, 2011; Michael Pepe, CEO, PrecisionIR Group, dated June 7, 2011; Michael O’Connell, Director IR Solutions, SNL Financial, dated June 10, 2011; Dominic Jones, President, IR Web Reporting International, Inc., dated June 15, 2011; Darrell Heaps, CEO, Q4 Web System, dated June 16, 2011; Dominic Jones, President, IR Web Reporting International, Inc., dated June 29, 2011; and e-mails to Robert Cook, Director, Division of Trading and Markets and David Shillman, Associate Director, Division of Trading and Markets, from Patrick Healy, CEO, Issuer Advisory Group, LLC, dated June 26, 2011 and June 28, 2011. 5 See Letter to Elizabeth M. Murphy, Secretary, Commission, from Janet L. McGinness, Senior Vice President—Legal and Corporate Secretary, NYSE, dated June 27, 2011. 6 15 U.S.C. 78s(b)(2). PO 00000 1 15 Frm 00082 Fmt 4703 Sfmt 4703 to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day for this filing is July 7, 2011. The Commission is extending the 45day time period for Commission action on the proposed rule change. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the Exchange’s proposal, as described above, and to consider the comment letters that have been submitted in connection with the proposed rule change. Accordingly, pursuant to Section 19(b)(2) of the Act,7 the Commission designates August 21, 2011 as the date by which the Commission should either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change (File Number SR–NYSE–2011–20). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–17305 Filed 7–8–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64805; File No. SR–ISE– 2011–30] Self-Regulatory Organizations; International Securities Exchange, LLC; Order Approving a Proposed Rule Change Relating to Complex Orders July 5, 2011. I. Introduction On May 23, 2011, the International Securities Exchange, LLC (the ‘‘Exchange’’ or ‘‘ISE’’), filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to allow complex orders in options classes traded on the ISE’s Optimise trading platform to be entered into the Price 7 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(31). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 8 17 E:\FR\FM\11JYN1.SGM 11JYN1 Federal Register / Vol. 76, No. 132 / Monday, July 11, 2011 / Notices Improvement Mechanism (‘‘PIM’’). The proposed rule change was published for comment in the Federal Register on May 31, 2011.3 The Commission received no comment letters regarding the proposal. This order approves the proposed rule change. erowe on DSK5CLS3C1PROD with NOTICES II. Description The ISE proposes to amend ISE Rule 723, ‘‘Price Improvement Mechanism for Crossing Transactions’’ to allow complex orders in options classes traded on the ISE’s Optimise trading platform to be entered into the PIM.4 Under ISE Rule 723, an ISE member may enter an agency order (the ‘‘Agency Order’’) in the PIM, together with a counter-side order (the ‘‘Counter-Side Order’’) for the full size of the Agency Order, at a price that is better than the ISE best bid or offer (‘‘ISE BBO’’) and equal to or better than the national best bid or offer (‘‘NBBO’’).5 The Agency Order and the Counter-Side Order (together, the ‘‘Crossing Transaction’’) are exposed to all ISE members for a one-second exposure period.6 During the exposure period, all ISE members may submit Improvement Orders for their own account or for the account of a Public Customer at the same price as the Crossing Transaction or at an improved price.7 At the end of the exposure period, the Agency Order is executed in full at the best prices available, taking into consideration orders and quotes in the Exchange market, Improvement Orders, Customer Participation Orders, and the CounterSide Order.8 Under the proposal, a complex order submitted to the PIM must be entered at a net price that is better than the best net price (i) Available on the complex order book; and (ii) achievable from the ISE best bids and offers for the individual legs of the order (an ‘‘improved net price’’), and complex orders that are not entered at an 3 See Securities Exchange Act Release No. 64538 (May 24, 2011); 76 FR 31385 (‘‘Notice’’). 4 The Optimise platform is the ISE’s enhanced technology trading platform. See Securities Exchange Act Release No. 63117 (October 15, 2010), 75 FR 65042 (October 21, 2010) (notice of filing and immediate effectiveness of File No. SR–ISE–2010– 101); and Securities Exchange Act Release No. 64275 (April 8, 2011), 76 FR 21087 (April 14, 2011) (notice of filing and immediate effectiveness of File No. SR–ISE–2011–24). The Exchange is in the process of migrating options classes from its current trading platform to the Optimise platform. The same options cannot trade on both platforms simultaneously. 5 See ISE Rule 723(b) and (b)(1). 6 See ISE Rule 723(c). 7 See ISE Rule 723(c)(2). Members also may enter Improvement Orders with respect to Customer Participation Orders, as defined in ISE Rule 715(f). See ISE Rule 723, Supplementary Material .06. 8 See ISE Rule 723(d). VerDate Mar<15>2010 15:30 Jul 08, 2011 Jkt 223001 improved net price will be rejected.9 If an improved net price for a complex order being executed in the PIM can be achieved from bids and offers for the individual legs of the complex order in the ISE’s auction market, the complex order being executed will receive an execution at the better net price.10 The priority provisions in ISE Rule 722(b)(2) will continue to apply to complex orders executed in the PIM.11 References to the NBBO in ISE Rule 723 and the Supplementary Material are inapplicable.12 In addition, ISE Rule 723, Supplementary Material .08, is not applicable to complex orders.13 The provisions of ISE Rule 723(c)(5) will apply with respect to the receipt of orders for the same complex order, rather than to the receipt of orders for the individual legs of the complex order.14 Under ISE Rule 723, Supplementary Material .03 and Supplementary Material .05, the Exchange provides the Commission with monthly statistics related to PIM order executions. The ISE represents that these statistics will include complex orders executed through the PIM.15 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.16 In particular, the 9 See ISE Rule 723, Supplementary Material .10. 10 Id. 11 Id. ISE Rule 722(b)(2) states that a complex order may be executed at a total credit or debit price with one other member without giving priority to bids or offers established in the marketplace that are no better than the bids or offers comprising such total credit or debit; provided, however, that if any of the bids or offers established in the marketplace consist of a Priority Customer Order, the price of at least one leg of the complex order must trade at a price that is better than the corresponding bid or offer in the marketplace by at least one minimum trading increment as defined in ISE Rule 710. 12 See ISE Rule 723, Supplementary Material .10. 13 Id. ISE Rule 723, Supplementary Material .08 provides that, when the ISE BBO is equal to the NBBO, a Crossing Transaction may be entered at a price equal to the ISE BBO if the Agency Order is on the opposite side of the market from the ISE BBO. 14 See ISE Rule 723, Supplementary Material .10. Under ISE Rule 723(c)(5)(ii) and (iii), the exposure period will terminate automatically upon the receipt of a market or marketable limit order on the Exchange in the same series, or upon the receipt of a non-marketable limit order in the same series on the same side of the market as the Agency Order that would cause the price of the Crossing Transaction to be outside of the best bid or offer on the Exchange. 15 See Notice, supra note 3, at note 7. 16 In approving this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 40759 Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,17 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. By allowing ISE members to enter complex orders in the PIM, the Commission believes that the proposal could provide an opportunity for complex orders to receive price improvement. Under the proposal, a complex order must be entered in the PIM at a net price that is better than the best net price (i) Available on the complex order book; and (ii) achievable from the ISE best bids and offers for the individual legs of the order (an ‘‘improved net price’’), and complex orders that are not entered at an improved net price will be rejected.18 As noted above, an ISE member enters an Agency Order in the PIM with a Counter-Side Order for the full size of the Agency Order.19 At the conclusion of the PIM exposure period, the Agency Order is executed in full at the best prices available, taking into consideration orders and quotes in the ISE market, Improvement Orders, Customer Participation Orders, and the Counter-Side Order.20 Thus, a complex order entered in the PIM would receive an execution at the best price available at the conclusion of the PIM and, at a minimum, would be executed in full at the improved net price. In addition, if an improved net price for a complex order entered in the PIM could be achieved from bids and offers for the individual legs of the complex order in the ISE’s auction market, the complex order would be executed at the better net price.21 ISE Rule 723, Supplementary Material .08, which allows a Crossing Transaction to be entered at the ISE BBO when the ISE BBO is equal to the NBBO and the Agency Order is on the opposite side of the market from the ISE BBO, will not apply to complex orders entered into the PIM because complex orders entered into the PIM must be entered at a price that is better than the best net price (i) Available on the complex order book; and (ii) achievable 17 15 U.S.C. 78f(b)(5). ISE Rule 723, Supplementary Material .10. 19 See ISE Rule 723(b). 20 See ISE Rule 723(d). 21 See ISE Rule 723, Supplementary Material .10. 18 See E:\FR\FM\11JYN1.SGM 11JYN1 40760 Federal Register / Vol. 76, No. 132 / Monday, July 11, 2011 / Notices from the best ISE bids and offers for the individual legs.22 In addition, for complex orders entered into the PIM, the provisions in ISE Rule 723(c)(5)(ii) and (iii), which provide for the automatic termination of the PIM exposure period following the receipt of certain orders in the same series as the order being exposed for price improvement, will apply only upon the receipt of a complex order that satisfies the conditions in ISE Rule 723(c)(5)(ii) or (iii), rather than upon the receipt of an order for one of the individual legs of the complex order.23 The Commission notes that the priority rules in ISE Rule 722(b)(2) relating to complex orders will continue to apply to complex orders entered into the PIM.24 In addition, the monthly statistics relating to PIM order executions that ISE provides to the Commission pursuant to ISE Rule 723, Supplementary Material .03 and Supplementary Material .05 will include complex orders executed through the PIM.25 IV. Conclusion It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,26 that the proposed rule change (SR–ISE–2011–30) is approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–17331 Filed 7–8–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64803; File No. SR–Phlx– 2011–88] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC To Modify Its Fee Schedule Regarding Co-Location Fees to Establish Fees for Access to Market Data Feeds From the Toronto Stock Exchange and the TSX Venture Exchange erowe on DSK5CLS3C1PROD with NOTICES July 5, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 22 See ISE Rule 723, Supplementary Material .10. 23 Id. 24 Id. (‘‘Act’’) 1, and Rule 19b–4 thereunder,2 notice is hereby given that on June 23, 2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to modify its Fee Schedule regarding co-location fees to establish fees for access to market data feeds from the Toronto Stock Exchange (‘‘TSX’’) and the TSX Venture Exchange (‘‘TSXV’’). The Exchange will implement the proposed change on July 1, 2011. The text of the proposed rule change is available on the Exchange’s Web site at http://nasdaqtrader.com/ micro.aspx?id=PHLXfilings, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to modify the Exchange’s Fee Schedule regarding co-location fees to establish fees for access to market data feeds from TSX and TSXV. The Exchange proposes: (1) A one-time fee of $1,000 for the installation of telecommunications connectivity for selected TSX and TSXV real-time market data feeds, along with (2) a permonth connectivity fee of $300 if a client wishes to receive the TSX and Notice, supra note 3, at note 7. U.S.C. 78s(b)(2). 27 17 CFR 200.30–3(a)(12). TSXV Level 1 Feed; a per-month connectivity fee of $1,000 if a client wishes to receive the TSX and TSVX Level 2 Feed; a per-month connectivity fee of $100 if a client wishes to receive the TSX Quantum Level 1 Feed; and a per-month connectivity fee of $300 if a client wishes to receive the TSX Quantum Level 2 Feed. The Exchange is making the TSX market data feeds available as a convenience to customers and notes that receipt of these feeds is completely voluntary. The Exchange also notes that such feeds may be freely obtained from other vendors for use by customers in the datacenter. These fees are similar to fees already charged by Phlx for receipt of market data from other exchanges in the data center. See also the market data connectivity fees for SIAC, the Chicago Mercantile Exchange, and the BATS Exchange on the Exchange’s Fee Schedule. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,3 in general, and with Section 6(b)(4) of the Act,4 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the Exchange operates or controls. The Exchange operates in a highly competitive market in which exchanges offer co-location services as a means to facilitate the trading activities of those members who believe that co-location enhances the efficiency of their trading. Accordingly, fees charged for colocation services are constrained by the active competition for the order flow of such members. If a particular exchange charges excessive fees for co-location services, affected members will opt to terminate their co-location arrangements with that exchange, and adopt a possible range of alternative strategies, including co-locating with a different exchange, placing their servers in a physically proximate location outside the exchange’s data center, or pursuing trading strategies not dependent upon co-location. Accordingly, the exchange charging excessive fees would stand to lose not only co-location revenues but also revenues associated with the execution of orders routed to it by affected members. The Exchange believes that this competitive dynamic imposes powerful restraints on the ability of any exchange to charge 25 See 26 15 VerDate Mar<15>2010 15:30 Jul 08, 2011 Jkt 223001 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00084 Fmt 4703 3 15 4 15 Sfmt 4703 E:\FR\FM\11JYN1.SGM U.S.C. 78f. U.S.C. 78f(b)(4). 11JYN1

Agencies

[Federal Register Volume 76, Number 132 (Monday, July 11, 2011)]
[Notices]
[Pages 40758-40760]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17331]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64805; File No. SR-ISE-2011-30]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Order Approving a Proposed Rule Change Relating to Complex Orders

July 5, 2011.

I. Introduction

    On May 23, 2011, the International Securities Exchange, LLC (the 
``Exchange'' or ``ISE''), filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to allow complex orders in 
options classes traded on the ISE's Optimise trading platform to be 
entered into the Price

[[Page 40759]]

Improvement Mechanism (``PIM''). The proposed rule change was published 
for comment in the Federal Register on May 31, 2011.\3\ The Commission 
received no comment letters regarding the proposal. This order approves 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 64538 (May 24, 
2011); 76 FR 31385 (``Notice'').
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II. Description

    The ISE proposes to amend ISE Rule 723, ``Price Improvement 
Mechanism for Crossing Transactions'' to allow complex orders in 
options classes traded on the ISE's Optimise trading platform to be 
entered into the PIM.\4\ Under ISE Rule 723, an ISE member may enter an 
agency order (the ``Agency Order'') in the PIM, together with a 
counter-side order (the ``Counter-Side Order'') for the full size of 
the Agency Order, at a price that is better than the ISE best bid or 
offer (``ISE BBO'') and equal to or better than the national best bid 
or offer (``NBBO'').\5\ The Agency Order and the Counter-Side Order 
(together, the ``Crossing Transaction'') are exposed to all ISE members 
for a one-second exposure period.\6\ During the exposure period, all 
ISE members may submit Improvement Orders for their own account or for 
the account of a Public Customer at the same price as the Crossing 
Transaction or at an improved price.\7\ At the end of the exposure 
period, the Agency Order is executed in full at the best prices 
available, taking into consideration orders and quotes in the Exchange 
market, Improvement Orders, Customer Participation Orders, and the 
Counter-Side Order.\8\
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    \4\ The Optimise platform is the ISE's enhanced technology 
trading platform. See Securities Exchange Act Release No. 63117 
(October 15, 2010), 75 FR 65042 (October 21, 2010) (notice of filing 
and immediate effectiveness of File No. SR-ISE-2010-101); and 
Securities Exchange Act Release No. 64275 (April 8, 2011), 76 FR 
21087 (April 14, 2011) (notice of filing and immediate effectiveness 
of File No. SR-ISE-2011-24). The Exchange is in the process of 
migrating options classes from its current trading platform to the 
Optimise platform. The same options cannot trade on both platforms 
simultaneously.
    \5\ See ISE Rule 723(b) and (b)(1).
    \6\ See ISE Rule 723(c).
    \7\ See ISE Rule 723(c)(2). Members also may enter Improvement 
Orders with respect to Customer Participation Orders, as defined in 
ISE Rule 715(f). See ISE Rule 723, Supplementary Material .06.
    \8\ See ISE Rule 723(d).
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    Under the proposal, a complex order submitted to the PIM must be 
entered at a net price that is better than the best net price (i) 
Available on the complex order book; and (ii) achievable from the ISE 
best bids and offers for the individual legs of the order (an 
``improved net price''), and complex orders that are not entered at an 
improved net price will be rejected.\9\ If an improved net price for a 
complex order being executed in the PIM can be achieved from bids and 
offers for the individual legs of the complex order in the ISE's 
auction market, the complex order being executed will receive an 
execution at the better net price.\10\
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    \9\ See ISE Rule 723, Supplementary Material .10.
    \10\ Id.
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    The priority provisions in ISE Rule 722(b)(2) will continue to 
apply to complex orders executed in the PIM.\11\
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    \11\ Id. ISE Rule 722(b)(2) states that a complex order may be 
executed at a total credit or debit price with one other member 
without giving priority to bids or offers established in the 
marketplace that are no better than the bids or offers comprising 
such total credit or debit; provided, however, that if any of the 
bids or offers established in the marketplace consist of a Priority 
Customer Order, the price of at least one leg of the complex order 
must trade at a price that is better than the corresponding bid or 
offer in the marketplace by at least one minimum trading increment 
as defined in ISE Rule 710.
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    References to the NBBO in ISE Rule 723 and the Supplementary 
Material are inapplicable.\12\ In addition, ISE Rule 723, Supplementary 
Material .08, is not applicable to complex orders.\13\ The provisions 
of ISE Rule 723(c)(5) will apply with respect to the receipt of orders 
for the same complex order, rather than to the receipt of orders for 
the individual legs of the complex order.\14\
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    \12\ See ISE Rule 723, Supplementary Material .10.
    \13\ Id. ISE Rule 723, Supplementary Material .08 provides that, 
when the ISE BBO is equal to the NBBO, a Crossing Transaction may be 
entered at a price equal to the ISE BBO if the Agency Order is on 
the opposite side of the market from the ISE BBO.
    \14\ See ISE Rule 723, Supplementary Material .10. Under ISE 
Rule 723(c)(5)(ii) and (iii), the exposure period will terminate 
automatically upon the receipt of a market or marketable limit order 
on the Exchange in the same series, or upon the receipt of a non-
marketable limit order in the same series on the same side of the 
market as the Agency Order that would cause the price of the 
Crossing Transaction to be outside of the best bid or offer on the 
Exchange.
---------------------------------------------------------------------------

    Under ISE Rule 723, Supplementary Material .03 and Supplementary 
Material .05, the Exchange provides the Commission with monthly 
statistics related to PIM order executions. The ISE represents that 
these statistics will include complex orders executed through the 
PIM.\15\
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    \15\ See Notice, supra note 3, at note 7.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\16\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\17\ which 
requires, among other things, that the rules of a national securities 
exchange be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.
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    \16\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \17\ 15 U.S.C. 78f(b)(5).
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    By allowing ISE members to enter complex orders in the PIM, the 
Commission believes that the proposal could provide an opportunity for 
complex orders to receive price improvement. Under the proposal, a 
complex order must be entered in the PIM at a net price that is better 
than the best net price (i) Available on the complex order book; and 
(ii) achievable from the ISE best bids and offers for the individual 
legs of the order (an ``improved net price''), and complex orders that 
are not entered at an improved net price will be rejected.\18\ As noted 
above, an ISE member enters an Agency Order in the PIM with a Counter-
Side Order for the full size of the Agency Order.\19\ At the conclusion 
of the PIM exposure period, the Agency Order is executed in full at the 
best prices available, taking into consideration orders and quotes in 
the ISE market, Improvement Orders, Customer Participation Orders, and 
the Counter-Side Order.\20\ Thus, a complex order entered in the PIM 
would receive an execution at the best price available at the 
conclusion of the PIM and, at a minimum, would be executed in full at 
the improved net price. In addition, if an improved net price for a 
complex order entered in the PIM could be achieved from bids and offers 
for the individual legs of the complex order in the ISE's auction 
market, the complex order would be executed at the better net 
price.\21\
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    \18\ See ISE Rule 723, Supplementary Material .10.
    \19\ See ISE Rule 723(b).
    \20\ See ISE Rule 723(d).
    \21\ See ISE Rule 723, Supplementary Material .10.
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    ISE Rule 723, Supplementary Material .08, which allows a Crossing 
Transaction to be entered at the ISE BBO when the ISE BBO is equal to 
the NBBO and the Agency Order is on the opposite side of the market 
from the ISE BBO, will not apply to complex orders entered into the PIM 
because complex orders entered into the PIM must be entered at a price 
that is better than the best net price (i) Available on the complex 
order book; and (ii) achievable

[[Page 40760]]

from the best ISE bids and offers for the individual legs.\22\ In 
addition, for complex orders entered into the PIM, the provisions in 
ISE Rule 723(c)(5)(ii) and (iii), which provide for the automatic 
termination of the PIM exposure period following the receipt of certain 
orders in the same series as the order being exposed for price 
improvement, will apply only upon the receipt of a complex order that 
satisfies the conditions in ISE Rule 723(c)(5)(ii) or (iii), rather 
than upon the receipt of an order for one of the individual legs of the 
complex order.\23\
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    \22\ See ISE Rule 723, Supplementary Material .10.
    \23\ Id.
---------------------------------------------------------------------------

    The Commission notes that the priority rules in ISE Rule 722(b)(2) 
relating to complex orders will continue to apply to complex orders 
entered into the PIM.\24\ In addition, the monthly statistics relating 
to PIM order executions that ISE provides to the Commission pursuant to 
ISE Rule 723, Supplementary Material .03 and Supplementary Material .05 
will include complex orders executed through the PIM.\25\
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    \24\ Id.
    \25\ See Notice, supra note 3, at note 7.
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IV. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\26\ that the proposed rule change (SR-ISE-2011-30) is approved.
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    \26\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-17331 Filed 7-8-11; 8:45 am]
BILLING CODE 8011-01-P