Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 723 to Add a New PIM ISO Order Type, 61920-61922 [2014-24419]
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Federal Register / Vol. 79, No. 199 / Wednesday, October 15, 2014 / Notices
a national securities association.108 In
particular, the Commission finds that
the Amended Current Proposal is
consistent with Section 15A(b)(6) of the
Act,109 which requires, among other
things, that FINRA rules be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest.
The rule will permit arbitrators to
refer to FINRA any matter or conduct
that an arbitrator has reason to believe
poses a serious threat, whether ongoing
or imminent, that is likely to harm
investors unless immediate action is
taken. The Commission believes that
allowing arbitrators to voice a serious
concern under extremely limited
circumstances provides a necessary
means of alerting FINRA senior staff
should an arbitrator have reason to
believe during the pendency of an
arbitration that there is a threat of
serious ongoing or imminent harm. This
notification would provide FINRA with
earlier warning of potentially harmful
conduct than might otherwise occur,
and allow FINRA to better protect
investors by intervening more quickly
under the appropriate circumstances.
As FINRA acknowledges, the rule
may cause delays and increase costs for
a claimant in some instances. However,
the rule is designed in a way that should
make its invocation rare, limiting such
negative effects. First, the standard for
reporting is high. Because the rule limits
mid-case referrals to situations where
the arbitrator has reason to believe that
a matter or conduct poses a serious
threat likely to harm investors unless
immediate action is taken, it should be
rarely invoked. Second, permitting midcase referrals only for matters or
conduct unearthed during the
proceedings—and not on the basis of
allegations in the pleadings—means that
an arbitrator will need to make a midcase referral decision only in cases
when FINRA might not otherwise know
about the potentially harmful conduct.
Third, the proposal allows an arbitrator
to delay making a mid-case referral
when, in the arbitrator’s judgment,
investor protection would not be
materially compromised, further
reducing the number of times the rule
is invoked. Fourth, as amended, the rule
limits recusal requests based on the
referral itself to three days after the
parties are notified of the recusal,
108 In approving this proposed rule change, the
Commission has considered the proposed rule
change’s impact on efficiency, competition, and
capital formation. See 15 U.S.C. 78c(f).
109 15 U.S.C. 78o–3(b)(6).
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limiting the opportunity for recusal
requests and the potential strategic
delay of a recusal request.
Even in those rare instances where the
rule is invoked and there is potential
harm to an investor whose case involves
a referral, such as a delay or additional
costs, FINRA has identified ways that
such harm can be limited. First,
allocation of costs by an arbitrator or
panel can take into account relative
fault of the parties. Second, FINRA will
bear certain costs itself, such as paying
a replacement arbitrator to review the
hearing record and to learn about the
arbitration up to the point where the
case was interrupted. Third, FINRA has
identified ways in which the parties
themselves can help minimize costs and
delays, such as by agreeing to rehear
only key witnesses, or stipulating to
summaries of prior testimony.
While this would not eliminate every
potential cost or dilatory burden on an
investor whose case may be adversely
affected by a referral, we believe FINRA
has identified ways those harms to
parties in arbitration can be mitigated or
minimized while better protecting
investors and the public interest.
Moreover, notifying parties of the fact
of a referral can help to safeguard the
fairness of the arbitration forum by
keeping the parties equally informed,
consistent with current arbitration
practices. Also, having the Director or
President serve as an intake point for
any referrals would result in an efficient
review and assignment process, and
could help direct appropriate resources
toward potentially harmful conduct as
quickly as possible. In addition, by
requiring requests for recusal to be made
within three days of being notified, the
rule will limit the uncertainty
associated with whether a mid-case
referral will result in an eventual
recusal request. The Commission notes
also that a recusal request can still be
made for any reason at any time for
reasons other than the referral request
itself.
In light of the potential gravity of the
misconduct that may be reported, and
because we believe the potential
negative effects will be relatively
limited and partially mitigated by the
operation of other FINRA rules, we
believe the Amended Current Proposal
is consistent with the Act in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest.
We appreciate the concerns of some
commenters that mid-case referrals may
disrupt or delay some arbitration
proceedings. Therefore, as some
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commenters have suggested, and FINRA
has agreed, FINRA will gather statistics
and report to the Commission, for the
period of one year from the effective
date of this rule change and for later
periods upon request, on the number of
cases in which an arbitrator made a
mid-case referral. FINRA will also
monitor the effects of the Amended
Current Proposal to determine whether
further action is necessary.
V. Conclusion
It is therefore ordered pursuant to
Section 19(b)(2) of the Act 110 that the
proposed rule change (SR–FINRA–
2014–0005), as modified by Partial
Amendment No. 1, be and hereby is
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.111
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–24420 Filed 10–14–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73318; File No. SR–ISE–
2014–49]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Rule 723 to Add a
New PIM ISO Order Type
October 8, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
3, 2014 the International Securities
Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’)
filed with the Securities and Exchange
Commission the proposed rule change,
as described in Items I and II below,
which items have been prepared by the
self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE proposes to amend its rules
to add a new PIM ISO order type. The
text of the proposed rule change is
available on the Exchange’s Web site
(https://www.ise.com), at the principal
110 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
111 17
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Federal Register / Vol. 79, No. 199 / Wednesday, October 15, 2014 / Notices
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
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
tkelley on DSK3SPTVN1PROD with NOTICES
1. Purpose
The purpose of this proposed rule
change is to amend the Exchange’s rules
to add a new PIM ISO order type.
The Price Improvement Mechanism
(‘‘PIM’’) is a process that allows
Electronic Access Members (‘‘EAM’’) to
provide price improvement
opportunities for a transaction wherein
the Member seeks to execute an agency
order as principal or execute an agency
order against a solicited order (a
‘‘Crossing Transaction’’). A Crossing
Transaction is comprised of the order
the EAM represents as agent (the
‘‘Agency Order’’) and a counter-side
order for the full size of the Agency
Order (the ‘‘Counter-Side Order’’). The
Counter-Side Order may represent
interest for the Member’s own account,
or interest the Member has solicited
from one or more other parties, or a
combination of both. A Crossing
Transaction must be entered only at a
price that is equal to or better than the
national best bid or offer (‘‘NBBO’’) and
better than the limit order or quote on
the ISE orderbook on the same side of
the Agency Order.
An intermarket sweep order (‘‘ISO’’)
is defined in Rule 1900(h) as a limit
order that is designated as an ISO in the
manner prescribed by the Exchange and
is executed within the system by
Members at multiple price levels
without respect to Protected Quotations
of other Eligible Exchanges as defined in
Rule 1900.3 ISOs are immediately
3 Under Rule 1900, a ‘‘Protected Quotation’’
includes a Protected Bid or Protected Offer. A
‘‘Protected Bid’’ or ‘‘Protected Offer’’ means a Bid
or Offer in an options series, respectively, that: (i)
Is disseminated pursuant to the OPRA Plan; and (ii)
is the Best Bid or Best Offer, respectively, displayed
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executable within the Exchange’s
options trading system or cancelled, and
shall not be eligible for routing as set
out in Rule 1900. Simultaneously with
the routing of an ISO to the Exchange’s
options trading system, one or more
additional limit orders, as necessary, are
routed by the entering party to execute
against the full displayed size of any
Protected Bid or Protected Offer in the
case of a limit order to sell or buy with
a price that is superior to the limit price
of the limit order identified as an ISO.
These additional routed orders must be
identified as ISOs.
The Exchange proposes to implement
a PIM ISO order type (‘‘PIM ISO’’) that
will allow the submission of an ISO into
the PIM. Specifically, a PIM ISO is the
transmission of two orders for crossing
pursuant to Rule 723 without regard for
better priced Protected Bids or Protected
Offers because the Member transmitting
the PIM ISO to the Exchange has,
simultaneously with the routing of the
PIM ISO, routed one or more ISOs, as
necessary, to execute against the full
displayed size of any Protected Bid or
Protected Offer that is superior to the
starting PIM auction price and has
swept all interest in the Exchange’s
book priced better than the proposed
auction starting price. Any execution(s)
resulting from such sweeps shall accrue
to the PIM order, meaning that any
execution(s) obtained from the away
side will be given to the agency side of
the order.
The Exchange will accept a PIM ISO
provided the order adheres to the
current PIM order acceptance
requirements outlined above, but
without regard to the NBBO. The
Exchange will execute the PIM ISO in
the same manner that it currently
executes PIM orders, except that it will
not protect prices away. Instead, order
flow providers will bear the
responsibility to clear all better priced
interest away simultaneously with
by an Eligible Exchange. ‘‘Bid’’ or ‘‘Offer’’ means
the bid price or the offer price communicated by a
member of an Eligible Exchange to any broker or
dealer, or to any customer, at which it is willing to
buy or sell, as either principal or agent, but shall
not include indications of interest. The ‘‘OPRA
Plan’’ means the plan filed with the SEC pursuant
to Section 11Aa(1)(C)(iii) of the Act, approved by
the SEC and declared effective as of January 22,
1976, as from time to time amended. ‘‘Best Bid’’ and
‘‘Best Offer’’ mean the highest priced Bid and the
lowest priced Offer. Finally, ‘‘Eligible Exchange’’
means a national securities exchange registered
with the SEC in accordance with Section 6(a) of the
Act that: (i) Is a Participant Exchange in The
Options Clearing Corporation (‘‘OCC’’) (as that term
is defined in Section VII of the OCC by-laws); (ii)
is a party to the OPRA Plan; and (iii) if the national
securities exchange is not a party to the OPRA Plan,
is a participant in another plan approved by the
Commission providing for comparable tradethrough and locked and crossed market protection.
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61921
submitting the PIM ISO order. There is
no other impact to PIM functionality.
Specifically, liquidity present at the end
of the PIM auction will continue to be
included in the PIM auction as it is with
PIM orders not marked as ISOs.
The Exchange will announce the
implementation of this order type in an
information circular.
2. Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Securities Exchange Act of 1934
(the ‘‘Act’’) 4 in general, and furthers the
objectives of Section 6(b)(5) of the Act 5
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism for a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. The
proposed rule change promotes just and
equitable principles or trade and
removes impediments to a free and open
market in that it promotes competition,
as described below. Specifically, the
proposal allows the Exchange to offer its
members an order type that is already
offered by another exchange.6 In
addition, the proposal benefits traders
and investors because it adds a new
order type for seeking price
improvement through the PIM. Finally,
the proposal does not unfairly
discriminate among members because
all Members are eligible to submit a PIM
ISO order.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange’s proposal to adopt a PIM ISO
order type is pro-competitive because it
will enable the Exchange to provide
market participants with an additional
method of seeking price improvement
through the PIM. The proposed rule
change will also allow the Exchange to
compete with other markets that already
allow an ISO order type in their price
improvement mechanisms.7
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
4 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
6 See NASDAQ OMX PHLX LLC (‘‘PHLX’’) Rule
1080, Commentary .09.
7 Id.
5 15
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Federal Register / Vol. 79, No. 199 / Wednesday, October 15, 2014 / Notices
Paper Comments
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 8 and Rule 19b–4(f)(6) 9
thereunder because the proposal does
not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) by its
terms, become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate if consistent with the
protection of investors and the public
interest.10
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not
become operative prior to 30 days after
the date of filing. However, Rule 19b–
4(f)(6)(iii) 11 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.12
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
ISE–2014–49 on the subject line.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
10 In addition, Rule 19b–4(f)(6)(iii) requires the
Exchange to give the Commission written notice of
the Exchange’s intent to file the proposed rule
change, along with a brief description and text of
the proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
11 17 CFR 240.19b–4(f)(6)(iii).
12 15 U.S.C. 78s(b)(3)(C).
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–ISE–2014–49. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for 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
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–ISE–
2014–49 and should be submitted on or
before November 5, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–24419 Filed 10–14–14; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73321; File No. SR–
NYSEArca–2014–113]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Reflecting Changes in the
Concentration Policies of ARK
Innovation ETF and ARK Genomic
Revolution ETF as Well as a Change in
the Name of the ARK Genomic
Revolution ETF to the ARK Genomic
Revolution Multi-Sector ETF
October 8, 2014.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on
September 25, 2014, NYSE Arca, Inc.
(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. 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 reflect
changes in the concentration policies of
ARK Innovation ETF and ARK Genomic
Revolution ETF, as well as a change in
the name of the ARK Genomic
Revolution ETF to the ARK Genomic
Revolution Multi-Sector ETF. The text
of the proposed rule change is available
on the Exchange’s Web site at
www.nyse.com, 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
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
13 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 79, Number 199 (Wednesday, October 15, 2014)]
[Notices]
[Pages 61920-61922]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24419]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73318; File No. SR-ISE-2014-49]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Amend Rule 723 to Add a New PIM ISO Order Type
October 8, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 3, 2014 the International Securities Exchange, LLC
(``Exchange'' or ``ISE'') filed with the Securities and Exchange
Commission the proposed rule change, as described in Items I and II
below, which items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The ISE proposes to amend its rules to add a new PIM ISO order
type. The text of the proposed rule change is available on the
Exchange's Web site (https://www.ise.com), at the principal
[[Page 61921]]
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 self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in sections A, B and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to amend the Exchange's
rules to add a new PIM ISO order type.
The Price Improvement Mechanism (``PIM'') is a process that allows
Electronic Access Members (``EAM'') to provide price improvement
opportunities for a transaction wherein the Member seeks to execute an
agency order as principal or execute an agency order against a
solicited order (a ``Crossing Transaction''). A Crossing Transaction is
comprised of the order the EAM represents as agent (the ``Agency
Order'') and a counter-side order for the full size of the Agency Order
(the ``Counter-Side Order''). The Counter-Side Order may represent
interest for the Member's own account, or interest the Member has
solicited from one or more other parties, or a combination of both. A
Crossing Transaction must be entered only at a price that is equal to
or better than the national best bid or offer (``NBBO'') and better
than the limit order or quote on the ISE orderbook on the same side of
the Agency Order.
An intermarket sweep order (``ISO'') is defined in Rule 1900(h) as
a limit order that is designated as an ISO in the manner prescribed by
the Exchange and is executed within the system by Members at multiple
price levels without respect to Protected Quotations of other Eligible
Exchanges as defined in Rule 1900.\3\ ISOs are immediately executable
within the Exchange's options trading system or cancelled, and shall
not be eligible for routing as set out in Rule 1900. Simultaneously
with the routing of an ISO to the Exchange's options trading system,
one or more additional limit orders, as necessary, are routed by the
entering party to execute against the full displayed size of any
Protected Bid or Protected Offer in the case of a limit order to sell
or buy with a price that is superior to the limit price of the limit
order identified as an ISO. These additional routed orders must be
identified as ISOs.
---------------------------------------------------------------------------
\3\ Under Rule 1900, a ``Protected Quotation'' includes a
Protected Bid or Protected Offer. A ``Protected Bid'' or ``Protected
Offer'' means a Bid or Offer in an options series, respectively,
that: (i) Is disseminated pursuant to the OPRA Plan; and (ii) is the
Best Bid or Best Offer, respectively, displayed by an Eligible
Exchange. ``Bid'' or ``Offer'' means the bid price or the offer
price communicated by a member of an Eligible Exchange to any broker
or dealer, or to any customer, at which it is willing to buy or
sell, as either principal or agent, but shall not include
indications of interest. The ``OPRA Plan'' means the plan filed with
the SEC pursuant to Section 11Aa(1)(C)(iii) of the Act, approved by
the SEC and declared effective as of January 22, 1976, as from time
to time amended. ``Best Bid'' and ``Best Offer'' mean the highest
priced Bid and the lowest priced Offer. Finally, ``Eligible
Exchange'' means a national securities exchange registered with the
SEC in accordance with Section 6(a) of the Act that: (i) Is a
Participant Exchange in The Options Clearing Corporation (``OCC'')
(as that term is defined in Section VII of the OCC by-laws); (ii) is
a party to the OPRA Plan; and (iii) if the national securities
exchange is not a party to the OPRA Plan, is a participant in
another plan approved by the Commission providing for comparable
trade-through and locked and crossed market protection.
---------------------------------------------------------------------------
The Exchange proposes to implement a PIM ISO order type (``PIM
ISO'') that will allow the submission of an ISO into the PIM.
Specifically, a PIM ISO is the transmission of two orders for crossing
pursuant to Rule 723 without regard for better priced Protected Bids or
Protected Offers because the Member transmitting the PIM ISO to the
Exchange has, simultaneously with the routing of the PIM ISO, routed
one or more ISOs, as necessary, to execute against the full displayed
size of any Protected Bid or Protected Offer that is superior to the
starting PIM auction price and has swept all interest in the Exchange's
book priced better than the proposed auction starting price. Any
execution(s) resulting from such sweeps shall accrue to the PIM order,
meaning that any execution(s) obtained from the away side will be given
to the agency side of the order.
The Exchange will accept a PIM ISO provided the order adheres to
the current PIM order acceptance requirements outlined above, but
without regard to the NBBO. The Exchange will execute the PIM ISO in
the same manner that it currently executes PIM orders, except that it
will not protect prices away. Instead, order flow providers will bear
the responsibility to clear all better priced interest away
simultaneously with submitting the PIM ISO order. There is no other
impact to PIM functionality. Specifically, liquidity present at the end
of the PIM auction will continue to be included in the PIM auction as
it is with PIM orders not marked as ISOs.
The Exchange will announce the implementation of this order type in
an information circular.
2. Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act'') \4\ in
general, and furthers the objectives of Section 6(b)(5) of the Act \5\
in particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
for a free and open market and a national market system, and, in
general, to protect investors and the public interest. The proposed
rule change promotes just and equitable principles or trade and removes
impediments to a free and open market in that it promotes competition,
as described below. Specifically, the proposal allows the Exchange to
offer its members an order type that is already offered by another
exchange.\6\ In addition, the proposal benefits traders and investors
because it adds a new order type for seeking price improvement through
the PIM. Finally, the proposal does not unfairly discriminate among
members because all Members are eligible to submit a PIM ISO order.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ See NASDAQ OMX PHLX LLC (``PHLX'') Rule 1080, Commentary
.09.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange's proposal to
adopt a PIM ISO order type is pro-competitive because it will enable
the Exchange to provide market participants with an additional method
of seeking price improvement through the PIM. The proposed rule change
will also allow the Exchange to compete with other markets that already
allow an ISO order type in their price improvement mechanisms.\7\
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\7\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on
[[Page 61922]]
this proposed rule change. The Exchange has not received any
unsolicited written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) \9\ thereunder because
the proposal does not: (i) Significantly affect the protection of
investors or the public interest; (ii) impose any significant burden on
competition; and (iii) by its terms, become operative for 30 days from
the date on which it was filed, or such shorter time as the Commission
may designate if consistent with the protection of investors and the
public interest.\10\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6).
\10\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to
give the Commission written notice of the Exchange's intent to file
the proposed rule change, along with a brief description and text of
the proposed rule change, at least five business days prior to the
date of filing of the proposed rule change, or such shorter time as
designated by the Commission. The Exchange has satisfied this
requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest.
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\11\ 17 CFR 240.19b-4(f)(6)(iii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.\12\
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\12\ 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-ISE-2014-49 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2014-49. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for 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
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2014-49 and should be
submitted on or before November 5, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24419 Filed 10-14-14; 8:45 am]
BILLING CODE 8011-01-P
