[Federal Register: April 13, 2009 (Volume 74, Number 69)]
[Rules and Regulations]
[Page 16781-16782]
[DOCID:fr13ap09-8]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 117

[USCG-2009-0231]

Drawbridge Operating Regulations; Black Warrior River, Eutaw, AL

AGENCY: Coast Guard, DHS.

ACTION: Notice of temporary deviation from regulations.

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SUMMARY: The Commander, Eighth Coast Guard District, has issued a
temporary deviation from the regulation governing the operation of the
Norfolk Southern Railroad vertical lift span bridge across the Black
Warrior River, mile 267.8, at Eutaw, Greene County, Alabama. This
deviation provides for the bridge to remain closed to navigation for
twelve hours in order to perform scheduled maintenance.

DATES: This deviation is effective from 8 a.m. until 8 p.m. on Friday,
May 1, 2009.

ADDRESSES: Documents indicated in this preamble as being available in
the docket are part of docket USCG-2009-0231 and are available online
at www.regulations.gov. They are also available for inspection or
copying at two locations: The Docket Management Facility (M-30), U.S.
Department of Transportation, West Building Ground Floor, Room W12-140,
1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays; and the office of
the Eighth Coast Guard District, Bridge Administration Branch, Hale
Boggs Federal Building, Room 1313, 500 Poydras Street, New Orleans,
Louisiana 70130-3310 between 7 a.m. and 3 p.m., Monday through Friday,
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: David Frank, Bridge Administration
Branch, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The Norfolk Southern Corporation has
requested a temporary deviation in order to perform maintenance on the
Norfolk Southern Railroad vertical lift span bridge across the Black
Warrior River, mile 267.8, at Eutaw, Greene County, Alabama. This
maintenance is necessary to make mechanical repairs to the lift towers
of the bridge. This temporary deviation will allow the bridge to remain
closed to navigation from 8 a.m. until 8 p.m. on Friday, May 1, 2009.
During the closure the draw will not be able to open for emergencies.
Currently, the draw opens on signal for the passage of vessels.
    The Norfolk Southern Railroad vertical lift span drawbridge has a
vertical clearance of 18.3 feet above BRENC, elevation 99.2 feet, in
the closed-to-navigation position and 72 feet above BRENC in the open-
to-navigation position. Navigation on the waterway consists primarily
of tugs with tows and occasional recreational craft. The Coast Guard
has coordinated this closure with the Warrior-Tombigbee Waterway
Association (WTWA). The WTWA representative indicated that the vessel
operators will be able to schedule

transits through the bridge such that operations will not significantly
be hindered. Thus, it has been determined that this closure will not
have a significant effect on these vessels. This closure is considered
necessary for maintenance of the bridge.
    In accordance with 33 CFR 117.35(e), the drawbridge must return to
its regular operating schedule immediately at the end of the designated
time period. This deviation from the operating regulations is
authorized under 33 CFR 117.35.

    Dated: March 30, 2009.
David M. Frank,
Bridge Administrator.
[FR Doc. E9-8285 Filed 4-10-09; 8:45 am]

BILLING CODE 4910-15-P


	ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 81

	[EPA-R03-OAR-2008-0109; FRL-         ]

	Determination of Attainment for the Ozone National Ambient Air Quality
Standards for Nonattainment Areas in Delaware, District of Columbia,
Maryland, Pennsylvania, and Virginia

AGENCY:	Environmental Protection Agency (EPA).

ACTION:	Final rule.

SUMMARY:  EPA has determined that two severe 1-hour ozone nonattainment
areas, Philadelphia-Wilmington-Trenton, and the Metropolitan Washington,
DC, attained the 1-hour ozone National Ambient Air Quality Standards
(NAAQS) by the applicable attainment date of November 15, 2005.  EPA has
also determined that these areas are not subject to the imposition of
the penalty fees under section 185 of the Clean Air Act (CAA).  These
determinations of attainment are not a redesignation to attainment for
these severe areas for which air quality monitoring data indicates
attainment of the standard.  EPA is issuing this final action to fulfill
obligations to make such determinations under the CAA.

EFFECTIVE DATE:  This final rule is effective on [insert date 30 days
from date of publication].

ADDRESSES:  EPA has established a docket for this action under Docket ID
Number EPA-R03-OAR-2008-0109.  All documents in the docket are listed in
the www.regulations.gov website.  Although listed in the electronic
docket, some information is not publicly available, i.e., confidential
business information (CBI) or other information whose disclosure is
restricted by statute.  Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form.  Publicly available docket materials are
available either electronically through www.regulations.gov or in hard
copy for public inspection during normal business hours at the Air
Protection Division, U.S. Environmental Protection Agency, Region III,
1650 Arch Street, Philadelphia, Pennsylvania 19103.

FOR FURTHER INFORMATION CONTACT: Christopher Cripps,<PHONE_NUMBER>, or
by e-mail at   HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>.

SUPPLEMENTARY INFORMATION:

Throughout this document, “we,” “us,” and “our” refer to
EPA.

I.	Background

On April 28, 2008, (73 FR 22896), EPA published a notice of proposed
rulemaking (NPR) for these actions.  The NPR proposed to determine that
two severe 1-hour ozone nonattainment areas,
Philadelphia-Wilmington-Trenton, and Metropolitan Washington, DC,
attained the 1-hour ozone NAAQS by the applicable attainment date of
November 15, 2005, and, proposed to find that these areas are not
subject to the imposition of the penalty fees under section 185 of the
CAA.  These proposals were based on three years of complete,
quality-assured ambient air quality monitoring data for 2003 through
2005 ozone seasons.  These proposed determinations of attainment were
not a redesignation to attainment for these severe areas for which air
quality monitoring data indicates attainment of the standard.

We received two letters supporting the proposed actions and received no
adverse public comments on the NPR.  The background for this action, the
requirements of section 185 of the CAA, and the rationale for EPA's
proposed action are explained in the NPR and will not be restated here.

The geographic boundaries of each nonattainment area affected by this
action can be found in the NPR (73 FR 22896 at 22896-22897, April 28,
2008).  See also, the tables entitled “Ozone (1-Hour Standard)” in
the following sections of 40 CFR part 81:  Sections 81.308, 81.309,
81.321, 81.339 and 81.347 for Delaware, the District of Columbia,
Maryland, Pennsylvania, and Virginia, respectively.  Note that for each
State the codification of these determinations in 40 CFR part 52 the
name of the 1-hour severe ozone nonattainment area used is the name of
that area as it appears in the table entitled “Ozone (1-Hour
Standard)” in 40 CFR part 81 for that State.

II.	Final Action

A.  Philadelphia Area

Based upon EPA's review of the air quality data for the 3-year period
2003 to 2005, EPA has determined that the
Philadelphia-Wilmington-Trenton, severe 1-hour ozone nonattainment area
attained the 1-hour ozone NAAQS by the applicable attainment date of
November 15, 2005.  EPA also has determined that this area is not
subject to the imposition of the section 185 penalty fees.

B.  Washington Area

Based upon EPA's review of the air quality data for the 3-year period
2003 to 2005, EPA has determined that the Metropolitan Washington, DC,
severe 1-hour ozone nonattainment area attained the 1-hour ozone NAAQS
by the applicable attainment date of November 15, 2005.  EPA also has
determined that this area is not subject to the imposition of the
section 185 penalty fees.

IV.   Statutory and Executive Order Reviews

A.  General Requirements

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this final
action is not a “significant regulatory action” and therefore is not
subject to review by the Office of Management and Budget.  For this
reason, this action is also not subject to Executive Order 13211,
“Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use” (66 Fed. Reg. 28355 (May 22, 2001)).
This final action determines that two areas have attained a
previously-established NAAQS based on an objective review of measured
air quality data and imposes no additional requirements.  Accordingly,
the Administrator certifies that these final rules will not have a
significant economic impact on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).  Because
these rules do not impose any additional enforceable duties, they do not
contain any unfunded mandate or significantly or uniquely affect small
governments, as described in the Unfunded Mandates Reform Act of 1995
(Public Law 104-4).  These final rules also do not have a substantial
direct effect on one or more Indian tribes, on the relationship between
the Federal Government and Indian tribes, or on the distribution of
power and responsibilities between the Federal Government and Indian
tribes, as specified by Executive Order 13175 (65 FR 67249, November 9,
2000), nor will they have substantial direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government, as specified in Executive Order 13132 (64 FR 43255,
August 10, 1999), because these final actions determine that each of two
areas has attained a Federal standard, and do not alter the relationship
or the distribution of power and responsibilities established in the
CAA.  In addition, these rules do not have tribal implications as
specified by Executive Order 13175 (65 FR 67249, November 9, 2000),
because EPA notes that it will not impose substantial direct costs on
tribal governments or preempt tribal law.  These final rules also are
not subject to Executive Order 13045 (62 FR 19885, April 23, 1997),
because they are not economically significant.

These rules do not involve establishment of technical standards, and
thus, the requirements of section 12(d) of the National Technology
Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply.
As required by section 3 of Executive Order 12988 (61 FR 4729, February
7, 1996), in issuing this proposed rule, EPA has taken the necessary
steps to eliminate drafting errors and ambiguity, minimize potential
litigation, and provide a clear legal standard for affected conduct.
EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988)
by examining the takings implications of the rule in accordance with the
(Attorney General(s Supplemental Guidelines for the Evaluation of Risk
and Avoidance of Unanticipated Takings( issued under the executive
order.  These final rules do not impose an information collection burden
under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.).

B.  Submission to Congress and the Comptroller General

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating the
rule must submit a rule report, which includes a copy of the rule, to
each House of the Congress and to the Comptroller General of the United
States.  EPA will submit a report containing this action and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register.  A major rule cannot
take effect until 60 days after it is published in the Federal Register.
 This action is not a “major rule” as defined by 5 U.S.C. 804(2).

C.  Petitions for Judicial Review

Under section 307(b)(1) of the Clean Air Act, petitions for judicial
review of this action must be filed in the United States Court of
Appeals for the appropriate circuit by [Insert date 60 days from date of
publication of this document in the Federal Register].  Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this action for the purposes of judicial
review nor does it extend the time within which a petition for judicial

review may be filed, and shall not postpone the effectiveness of such
rule or action.  This action that determines that the
Philadelphia-Wilmington-Trenton and Metropolitan Washington, DC, severe
zone nonattainment areas attained the 1-hour ozone NAAQS and are not
required to impose section 185 penalty fees may not be challenged later
in proceedings to enforce its requirements.  (See section 307(b)(2).)

List of Subjects:

40 CFR Part 52

Environmental protection, Air pollution control, Intergovernmental
relations, Incorporation by Reference, Nitrogen dioxide, Ozone, Volatile
organic compounds.

40 CFR Part 81

Air pollution control, National Parks, Wilderness Areas.

                        ___________/s/________________

Dated:     July 8, 2008            				Donald S. Welsh,
               								Regional Administrator,

                                  					Region III.

PART 52--[AMENDED]

1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart I--Delaware

2.  Section 52.426 is amended by adding paragraph (f) to read as
follows:

§ 52.426   	Control strategy plans for attainment and rate-of-progress:
ozone.

*	*	*	*	*

(f)  Based upon EPA's review of the air quality data for the 3-year
period 2003 to 2005, EPA has determined that that the
Philadelphia-Wilmington-Trenton severe 1-hour ozone nonattainment area
attained the 1-hour ozone NAAQS by the applicable attainment date of
November 15, 2005.  EPA also has determined that the
Philadelphia-Wilmington-Trenton severe 1-hour ozone nonattainment area
is not subject to the imposition of the section 185 penalty fees.

Subpart J--District of Columbia

3. Section 52.476 is amended by adding paragraph (d) to read as follows:

§ 52.476 	Control strategy: ozone.

*	*	*	*	*

(d)  Based upon EPA's review of the air quality data for the 3-year
period 2003 to 2005, EPA has determined that that the Washington severe
1-hour ozone nonattainment area attained the 1-hour ozone NAAQS by the
applicable attainment date of November 15, 2005.  EPA also has
determined that the Washington severe 1-hour ozone nonattainment area is
not subject to the imposition of the section 185 penalty fees.

Subpart V--Maryland

4. Section 52.1076 is amended adding paragraphs (o) and (p) to read as
follows:

§ 52.1076   	Control strategy plans for attainment and
rate-of-progress: Ozone.

*	*	*	*	*

(o)  Based upon EPA's review of the air quality data for the 3-year
period 2003 to 2005, EPA has determined that that the Washington, DC
severe 1-hour ozone nonattainment area attained the 1-hour ozone NAAQS
by the applicable attainment date of November 15, 2005.  EPA also has
determined that the Washington, DC severe 1-hour ozone nonattainment
area is not subject to the imposition of the section 185 penalty fees.

(p)  Based upon EPA's review of the air quality data for the 3-year
period 2003 to 2005, EPA has determined that that the
Philadelphia-Wilmington-Trenton severe 1-hour ozone nonattainment area
attained the 1-hour ozone NAAQS by the applicable attainment date of
November 15, 2005.  EPA also has determined that the
Philadelphia-Wilmington-Trenton severe 1-hour ozone nonattainment area
is not subject to the imposition of the section 185 penalty fees.

Subpart NN-Pennsylvania

5.  Section 52.2037 is amended by adding paragraph (n) to read as
follows:

§ 52.2037   	Control strategy plans for attainment and
rate-of-progress: Ozone.

*	*	*	*	*

(n)  Based upon EPA's review of the air quality data for the 3-year
period 2003 to 2005, EPA has determined that that the
Philadelphia-Wilmington-Trenton severe 1-hour ozone nonattainment area
attained the 1-hour ozone NAAQS by the applicable attainment date of
November 15, 2005.  EPA also has determined that the
Philadelphia-Wilmington-Trenton severe 1-hour ozone nonattainment area
is not subject to the imposition of the section 185 penalty fees.

Subpart VV--Virginia

6.  Section 52.2428 is amended by adding paragraph (e) to read as
follows:

§ 52.2428   	Control Strategy: Carbon monoxide and ozone.

*	*	*	*	*

(e)  Based upon EPA's review of the air quality data for the 3-year
period 2003 to 2005, EPA has determined that that the Washington, DC
severe 1-hour ozone nonattainment area attained the 1-hour ozone NAAQS
by the applicable attainment date of November 15, 2005.  EPA also has
determined that the Washington, DC severe 1-hour ozone nonattainment
area is not subject to the imposition of the section 185 penalty fees.

 PAGE

 PAGE  7


[Federal Register Volume 79, Number 21 (Friday, January 31, 2014)]
[Notices]
[Pages 5495-5499]
[FR Doc No: 2014-01966]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71406; File No. SR-ISE-2014-05]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Regarding System Protections

January 27, 2014.
    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 January 17, 2014, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') 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 the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its rules to specify in its rules
certain system protections contained in the trading system. The text of
the proposed rule change is available on the Exchange's Web site
www.ise.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 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 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 the proposal is to specify in the Exchange's rules
certain existing trading system protections that prevent the entry and/
or execution of orders in certain circumstances. These protections are
in addition to the system protection currently described in Rule 714
that prevents orders from being automatically executed at prices that
are inferior to a protected bid or offer on another exchange (``trade
through protection'') pursuant to the requirements of the Intermarket
Linkage Plan (the ``Plan'') and ISE Rules adopted to implement the Plan
(the ``Linkage Rules'').\3\
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    \3\ ISE Rules 1900 through 1902 (Linkage Rules).
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    Specifically, ISE Rule 714 provides that incoming orders will not
be automatically executed at prices that are inferior to the national
best bid or offer (``NBBO''). Thus, the language currently contained in
Rule 714 reflects how the trading system assures compliance with the
prohibition on trading through the NBBO contained in ISE Rule 1901.
Rule 714 also indicates that the prohibition on trade-throughs does not
apply with respect to non-firm quotations as provided in ISE Rule
1900(k). The Exchange proposes to make several non-substantive changes
to the text and format of ISE Rule 714 with respect to these linkage-
related provisions for clarity,\4\ and to add a reference to
intermarket sweep orders (``ISOs''). Pursuant to ISE Rule 1901, ISOs
are eligible to be executed at a price that is inferior to the NBBO.
For clarity, the Exchange believes it is appropriate to specify in Rule
714 that the system does not prevent the automatic execution of an ISO
at a price that is inferior to the NBBO.
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    \4\ The current text of ISE Rule 714 references non-firm
quotations on the Exchange. This language preceded the adoption of
the Linkage Rules and is no longer applicable. Accordingly, the
Exchange proposes to delete this language.
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    The Exchange also is proposing to amend Rule 714 to add additional
circumstances in which the trading system does not provide automatic
executions as follows:
     Price Level Protection. There is a limit on the number of
price levels at which an incoming order to sell (buy) will be executed
automatically when there are no bids (offers) from other exchanges at
any price for the options series. In such a circumstance, incoming
orders are automatically executed at each successive price level until
the maximum number of price levels is reached,\5\ and any balance is
either handled by the primary market maker (``PMM'') (in the case of
Priority Customer Orders)\6\ or canceled (in the case of Professional
Orders).\7\ The number of price levels, which may be between 1 and 10,
is determined by the Exchange from time-to-time on a class-by-class
basis. Currently, this limit is set to three price levels.\8\
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    \5\ For example, assume the parameter is set to three tick
levels, the best bid on the ISE in an options series that is traded
in penny increments is $1.50, and there are no bids in the series
from any other exchanges. If a Priority Customer market order to
sell is received, the system will not automatically execute the
incoming order at a price below $1.48. Therefore, such an order will
execute the full size available at $1.50, $1.49 and $1.48, and any
unexecuted balance will be handled by the PMM. In this respect, the
PMM has the obligation under existing Exchange rules to engage in
dealings for his own account when, among other things, there is a
temporary disparity between the supply of and demand for a
particular options contract, and to act with due diligence in
handling orders. See infra, notes 13 and 14 and accompanying text.
    \6\ Pursuant to ISE Rule 100(a)(37A) and (37B), a Priority
Customer Order is an order for the account of a person or entity
that (i) is not a broker or dealer in securities, and (ii) does not
place more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s).
    \7\ Pursuant to ISE Rule 100(a)(37C), a Professional Order is an
order that is for the account of a person or entity that is not a
Priority Customer.
    \8\ The Exchange will provide at least a two week notice to
members via an exchange circular prior to changing the price level
limit to allow members the opportunity to perform any system
changes. Any change to the price level limit would be subject to
consultations with members.
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     Limit Order Price Protection. There is a limit on the
amount by which incoming limit orders to buy may be priced above the
Exchange's best offer and by which incoming limit orders to sell may be
priced below the Exchange's best bid. Limit orders that exceed the
pricing limit are rejected upon entry. The limit is established by the
Exchange from time-to-time, on a class-by-class basis, as the greater
of: (i) An absolute amount not to exceed $2.00, or (ii) a percentage of
the Exchange's best bid/offer not to exceed 10 percent.\9\ The Exchange
currently has these limits set to $1.00 and 1 percent respectively.\10\
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    \9\ For example, if the ISE best bid is $3.00 and the limits are
set to the greater of $1.00 or 1% (which equals $0.03 in this
example), a limit order to sell that is entered with a limit price
below $2.00 will be rejected.
    \10\ The Exchange will provide at least a two week notice to
members via an exchange circular prior to changing the limit order
price check to allow members the opportunity to perform any system
changes. Any change to the limit order price check would be subject
to consultations with members.
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     Size Limitation. There is a limit on the number of
contracts an incoming order may specify. Orders or quotes that exceed
the maximum number of

contracts are rejected upon entry.\11\ The maximum number of contracts,
which shall not be less than 10,000, is established by the Exchange
from time-to-time on a class-by-class basis. Currently, this limit is
set to 999,999 contracts.\12\
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    \11\ For example, if the limit is set to 800,000 contracts, an
order with a size of 800,001 or greater would be rejected by the
system.
    \12\ The Exchange will provide at least a two week notice to
members via an exchange circular prior to changing the size limit to
allow members the opportunity to perform any system changes. Any
change to the size limit would be subject to consultations with
members.
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    The Exchange further proposes that, in the event of unusual market
conditions and in the interest of a fair and orderly market, the
Exchange may temporarily establish the levels at which the order
protections are triggered as necessary and appropriate.
    When the PMM handles Priority Customer orders that are not
automatically executed or canceled pursuant to the price level
protection described above, they must do so pursuant to their
obligations under ISE Rule 803 and consistent with Rule 400 (Just and
Equitable Principles of Trade). Rule 803 states, among other things,
that market makers have a continuous obligation to engage, to a
reasonable degree under the existing circumstances, in dealings for his
own account when there exists, or it is reasonably anticipated that
there will exist, a lack of price continuity, a temporary disparity
between the supply of and demand for a particular options contract, or
a temporary distortion of the price relationships between options
contracts of the same class.\13\ The Rule also specifies that a PMM
must act with due diligence in handling orders and must accord priority
to such orders over the PMM's principal orders.\14\ In addition to
these existing provisions, the Exchange proposes to specify in Rule
803(c) that PMMs are required to address orders they handle as soon as
practical by either (i) executing all or a portion of the orders at a
price that at least matches the NBBO and that improves upon the
Exchange's best bid (in the case of a sell order) or the Exchange's
best offer (in the case of a buy order); \15\ or (ii) releasing all or
a portion of the order for execution against bids and offers on the
Exchange.
---------------------------------------------------------------------------

    \13\ Rule 803(b).
    \14\ Rule 803, Supplementary Material .01. The Exchange
currently conducts surveillance of PMMs to assure that orders are
handled timely, that such orders are executed at appropriate prices,
and that such orders are afforded priority over the PMM's principal
orders. This surveillance includes all orders handled by the PMM
regardless of whether they are handling them via operation of the
NBBO trade through protection or price level protection.
    \15\ A PMM cannot provide an execution at the same price as the
Exchange's best bid or offer (as applicable) because that would
allow the PMM to by-pass the execution priority rules contained in
Rule 713. The Exchange conducts surveillance to detect instances
when the PMM executes an order it is handling at the same price as
the ISE best bid or offer (as applicable). It is not a violation for
the PMM to execute an order at the same price as the ISE best bid or
offer when the PMM is the only market participant at that price.
---------------------------------------------------------------------------

    The Exchange also proposes to specify in Rule 722 (Complex Orders)
the following pricing limits for complex orders and quotes:
     Trade-through limit: Rule 722 permits the legs of a
complex order to be executed at prices that are inferior to the prices
available on other exchanges trading the same options series.\16\
Notwithstanding, the system will not permit the legs of a complex order
to trade through the best bids and offers from other exchanges by more
than a configurable amount calculated as the lessor of: (i) An absolute
amount not to exceed $0.10; and (ii) a percentage of the NBBO not to
exceed 500 percent, as determined by the Exchange on a class or series
basis. Effectively, the limit currently is an absolute amount of
$0.05,\17\ as the parameters are set to $0.05 and 500 percent
respectively.\18\ A member can also include an instruction on a complex
order entered on the complex order book that the legs of the order are
to be executed only at prices that are equal to or better than the
national best bid or offer for the options series and any stock
component.\19\
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    \16\ ISE Rule 722(b)(3). Under ISE Rule 722, the legs of a
complex order may not be executed at worse prices than are available
on the Exchange for the individual series, but may be executed at
the same price as bids and offers on the Exchange for the individual
series so long as there are no Priority Customer orders on the
Exchange at those prices (provided however that for complex order
with multiple options legs, if one of the options legs improves upon
the best price available on the Exchange then the other leg is
permitted to trade at the same price as a Priority Customer).
    \17\ Since the lowest possible price is $0.01, and 500% of $0.01
equals $0.05, the lessor of the two limits will always equal $0.05
under the current settings (e.g., if the price were $0.02, it would
be the lessor of $0.05 or $0.10, which is $0.05).
    \18\ For example, assume that the national best offer for series
A is $1.00 (ISE offer $1.15) and the national best offer for series
B is $0.95 (ISE offer $1.10). Under ISE Rule 722, away market prices
are not considered, and the highest net price at which a complex
order to buy series A and to buy series B could be executed would be
$2.25 ($1.15 + $1.10) (assuming there are no Priority Customer
orders at the ISE best offer for series A or series B). However,
when the trade through limit is applied, the highest price at which
series A could be executed is $1.05 ($1.00 + $0.05) and the highest
price at which series B could be executed would be $1.00 ($0.95 +
$0.05). As a result, the maximum net price that a complex order to
buy series A and to buy series B can be executed is $2.05 ($1.05 +
$1.00). The Exchange will provide at least a two week notice to
members via an exchange circular prior to changing the trade-through
limit for complex orders to allow members the opportunity to perform
any system changes. Any change to the trade-through limit for
complex orders would be subject to consultations with members.
    \19\ For example, assume that the national best offer for series
A is $1.00 (ISE offer $1.15) and the national best offer for series
B is $0.95 (ISE offer $1.10). If a complex order to buy series A and
to buy series B contains an instruction not to trade through the
NBBO, the highest price at which series A could be executed is $1.00
and the highest price at which series B could be executed would be
$0.95. As a result, the maximum net price at which the complex order
can be executed is $1.95 ($1.00 + $0.95). It is anticipated that
this functionality will be available early next year. The Exchange
will notify members via an exchange circular prior to implementing
this optional functionality.
---------------------------------------------------------------------------

     Minimum net price: The system will reject any complex
order strategy where all legs are to buy if it is entered at a price
that is less than the minimum price, which is calculated as the sum of
the ratio times $0.01 per leg.\20\
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    \20\ For example, an order to buy 2 calls and buy 1 put would
have a minimum price of $0.03. If such an option were entered at a
price of $0.02, it would not be executable, as a price of zero would
have to be assigned to one of the legs of the order.
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     Vertical spread price: The system will reject a vertical
spread order (i.e., an order to buy a call (put) option and to sell
another call (put) option in the same security with the same expiration
but a higher (lower) strike price) when entered with a net price of
less than zero, and will prevent the execution of a vertical spread
order at a price that is less than zero when entered as a market order
to sell.\21\
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    \21\ For example, a market order to sell a complex strategy buy
a Dec 50 call and Sell a Dec 55 call will not leg into the market if
the best bid for the December 50 call is less than the offer for the
Dec 55 call, as the seller would be paying to execute the sell
transaction: the investor who sells a Dec 50 call @ $1.00 and buys a
Dec 55 call @ $1.20, would pay $0.20 to sell the strategy. The
vertical spread price check does not apply to complex orders
executed in the Facilitation Mechanism, Solicited Order Mechanism
and Price Improvement Mechanism. Complex orders executed in these
mechanisms are two-sided orders where the contra-side order is
willing to trade with the agency order at an agreed upon price thus
removing the risk that the order was executed erroneously or at an
erroneous price.
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     Complex Limit Order Price Protection: There is a limit on
the amount by which the net price of an incoming complex limit order to
buy may exceed the net price available from the individual options
series on the Exchange and by which the net price of an incoming
complex limit order to sell may be below the net price available from
the individual options series on the Exchange.\22\ Limit orders that
exceed the pricing limit are rejected. The limit is established by the
Exchange from

time-to-time, on a class-by-class basis, as the greater of: (i) An
absolute amount not to exceed $2.00, or (ii) a percentage of the
Exchange's best bid/offer not to exceed 10%. The Exchange currently has
these limits set to $1.00 and 1 percent respectively.\23\ This limit
order price protection applies only to orders and does not apply to
quotes.
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    \22\ For example, assume the ISE best offer for series A is
$2.00 and the ISE best offer for series B is $0.50, and that the
limits are set to the greater of $1.00 or 1%. A complex limit order
to buy series A and buy series B that is entered with a net limit
price above $3.50 will be rejected (i.e., $2.00 for series A + $0.50
for series B = net price of $2.50; $2.50 + $1.00 = $3.50).
    \23\ The Exchange will provide at least a two week notice to
members via an exchange circular prior to changing the complex limit
order price check to allow members the opportunity to perform any
system changes. Any change to the complex limit order price check
would be subject to consultations with members.
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     Complex Order Size Limitation: There is a limit on the
number of contracts (and shares in the case of a stock-option order)
any single leg of an incoming complex order may specify. Orders that
exceed the maximum number of contracts (or shares as applicable) are
rejected.\24\ The maximum number of contracts (or shares), which shall
not be less than 10,000 contracts (or 100,000 shares), is established
by the Exchange from time-to-time on a class-by-class basis. Currently,
this limit is set to the maximum value of 999,999 contracts and
9,999,999 shares.\25\
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    \24\ For example, if the limit is set to 800,000 contracts, a
complex order with a size of 800,001 or greater for any single
options leg would be rejected by the system.
    \25\ The Exchange will provide at least a two week notice to
members via an exchange circular prior to changing the complex order
size limit to allow members the opportunity to perform any system
changes. Any change to the complex order size limit would be subject
to consultations with members.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act'') \26\ in
general, and furthers the objectives of Section 6(b)(5) of the Act \27\
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 system
protections described above were implemented in the interest of
protecting investors and to assure fair and orderly markets on the
Exchange.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange operates an electronic marketplace in
which orders are processed and executed in less than one second.
Without any safeguards, orders that outsize the liquidity available at
the displayed best bid or offer on the Exchange could potentially trade
at prices far below the best bid and far above the best offer, creating
extreme volatility in the marketplace and poor executions for
investors. The primary safeguard in the national market system that
protects against such occurrences is the prohibition against trading
through protected bids and offers on other options exchanges, as this
links the liquidity available across markets and in most circumstances,
provides a stop-gap on each individual exchange. However, not all
products are multiply traded, and even in multiply-traded options
series, it is possible that ISE could be the only exchange
disseminating a protected bid and/or offer in a particular options
series at any given sub-second during the trading day.
    Accordingly, the Exchange designed its system to provide the price
level protection described above when there are no other protected bids
and offers in the national market system. The Exchange believes that
limiting the number of price levels at which an incoming order will
execute in these circumstances appropriately balances the interests of
investors seeking execution of their orders and the Exchange's
obligations to provide a fair and orderly market. While Professional
Orders are canceled in these circumstances, the Exchange seeks to
provide a higher level of service for Priority Customer orders by
having them handled by the PMM, which has an affirmative obligation to
provide liquidity and price continuity. This procedure also provides an
opportunity for liquidity to refresh in the market, further providing
better execution potential for Priority Customer orders. The Exchange
believes that providing this service for Priority Customer orders is
appropriate and consistent with feedback from members that enter
Priority Customer orders on the Exchange, who prefer that Priority
Customer orders not be canceled in this circumstance.
    Similarly, the Exchange's experience and member feedback indicates
that the current limit of three price levels has worked well to balance
the interests of investors receiving execution of their orders while
protecting them from being executed at unreasonable prices.
Nevertheless, the Exchange believes it is appropriate to maintain some
flexibility to adjust the number of price level so that it can
continually evaluate market conditions and investor needs. In this
respect, under the proposal, the Exchange has the flexibility to adjust
the number of price levels up to ten. The Exchange believes this limit
is sufficient to give it the ability to make appropriate adjustments as
necessary and appropriate to maintain fair and orderly markets.
    The Exchange also represents that the proposal merely clarifies the
existing PMM obligations by specifying that the PMM must address orders
it handles by either providing an execution or releasing orders for
execution against bids and offers on the Exchange. The proposal further
specifies that the price at which a PMM may execute an order must be at
least equal to the NBBO and improve upon the best bid (offer) on the
Exchange.\28\ While this was not previously stated explicitly in the
Rules for this specific circumstance, the Exchange has always applied
the obligations contained in ISE Rule 803(b) and Supplementary Material
.01 thereto, as well as Rule 400 and Rule 713, consistent with the
additional proposed language and has enforced compliance
accordingly.\29\ Moreover, the Exchange believes the specified order
handling provisions are appropriate to assure compliance with all
applicable Exchange Rules with respect to the handling of orders by the
PMM.\30\
---------------------------------------------------------------------------

    \28\ See supra, note 15.
    \29\ See supra, notes 14 and 15.
    \30\ Id.
---------------------------------------------------------------------------

    With respect to the trade through limit for complex orders, the
Exchange believes it is consistent with the protection of investors to
limit the amount by which the legs of a complex order are allowed to
trade through the NBBO for the series. Pursuant to ISE Rule 722(b), the
legs of a complex order are not permitted to trade at prices that are
inferior to the ISE best bid or offer.\31\ It is possible, however,
that the ISE best bid and/or offer are not at or near the NBBO for the
options series.\32\ Investors understand that there is a benefit to
executing certain trading strategies using complex orders, which
assures that all parts of the strategy are executed and if applicable,
at a specified net price. They also understand that the benefit of
using a complex order may come at a ``cost'' because complex orders may
be executed at prices that are inferior to the net price that might
have been achieved if the individual legs of the complex order were
executed at the NBBO.\33\ However, the Exchange believes it is
necessary to protect investors from executing complex orders when such
``cost'' becomes

economically irrational. Indeed, such pricing discrepancies indicate
that there likely is an error, such as the wrong symbol, series or
price was entered on the order.
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    \31\ See supra, note 16.
    \32\ See example supra, note 18 (demonstrating that a net price
of $2.25 would be unreasonable given that the national best offers
for series A and series B indicate a net price closer to $1.95
($1.00 + $0.95)).
    \33\ Executing strategies through separate, non-contingent
transactions, carries the risk that an investor will not be able to
execute all of the components at the desired prices and/or sizes.
---------------------------------------------------------------------------

    The Exchange believes that providing the trade-through limit
protection to complex orders is appropriate and consistent with
feedback from members that enter complex orders on the Exchange, who
prefer that their complex orders not be executed in this circumstance.
In this respect, the Exchange's experience and member feedback
indicates that the current limit of $0.05 is appropriate to balance the
interests of investors receiving execution of their complex orders
while protecting them from being executed at unreasonable prices.\34\
Nevertheless, the Exchange believes it is appropriate to maintain some
flexibility to adjust the amount by which a complex order may trade
through the NBBO, so that it can continually evaluate market conditions
and investor needs. In this respect, under the proposal, the Exchange
has the flexibility to adjust the absolute value up to $0.10 and the
percentage up to 500 percent.\35\ The Exchange believes this will be
sufficient to give it the ability to make appropriate adjustments
should market conditions so require.
---------------------------------------------------------------------------

    \34\ See supra, note 18 and accompanying text.
    \35\ Id.
---------------------------------------------------------------------------

    As discussed, the complex order trade-through limit is designed to
prevent investors from erroneously executing complex orders at
unreasonable prices while not unreasonably restricting the ability for
investors to price complex orders. In some instances, however,
investors may prefer that the Exchange further restrict the execution
of complex orders by not allowing them to trade through the NBBO at
all. Accordingly, the Exchange proposes to offer the optional ability
for investors to instruct the Exchange not to execute the legs of a
complex orders through the NBBO for the individual series. While the
Exchange does not believe it would be appropriate to impose such a
restriction on all investors, it believes that offering this optional
limitation on complex orders is reasonable and appropriate for
investors that prefer only to execute complex orders at net prices that
equal or better the NBBO for the component series.
    The limit order price protection and size limitation for both
regular and complex orders were designed to reject orders upon entry
that were likely submitted in error. Limit orders that are entered with
prices that cross the market by a large amount are likely to have been
entered in the wrong options series, on the wrong side of the market,
or with an erroneous price (e.g., a bid of $15 rather than $1.50).
Similarly, orders entered with an unreasonably large size (e.g., 1
million contracts or more) are likely to have been entered in error.
The Exchange believes that it is in the interest of fair and orderly
markets and the protection of investors to reject these orders upon
entry, and thereby prevent erroneous transactions from occurring.
    The Exchange further believes that the Exchange's experience and
member feedback indicates that the current limits of $1.00 and 1
percent for the limit order price protection, and 999,999 contracts
(and 9,999,999 shares in the case of a stock-option order) for the size
limitation, has worked well to provide the protection of rejecting
orders that have been entered in error while assuring that valid orders
are not rejected. In this respect, the Exchange notes that orders below
the established limits may well have been entered in error, but that it
is highly unlikely that orders entered above the current limits were
not entered in error. The Exchange believes it is appropriate to
maintain some flexibility to adjust the limits so that it can
continually evaluate the extent to which such limits could be reduced
to prevent the entry of additional erroneous orders without rejecting
legitimate orders. In this respect, under the proposal, the Exchange
has specified that the limit order price protection limits shall not
exceed $2.00 and 10 percent respectively. The Exchange believes that
these limits provide sufficient flexibility for the Exchange to make
appropriate adjustments in the interest of maintaining fair and orderly
markets. The Exchange also notes that it has specified that the order
size limitation shall not be less than 10,000 contracts (and 100,000
shares in the case of a stock-option order). The Exchange notes in this
respect that a block-size options order is defined as an order of at
least 50 contracts,\36\ and that an order of 500 contracts is
considered a very large institutional-size order (a block-size order in
the equities market is an order of at least 10,000 shares).\37\
Accordingly, the Exchange believes that it would not be unreasonable to
set a size limit as low as 10,000 contracts (and 100,000 shares in the
case of a stock-option order) should the Exchange determine that it was
necessary to maintain fair and orderly markets and to protect investors
from executing orders entered with an erroneously large size.
---------------------------------------------------------------------------

    \36\ ISE Rule 716(a).
    \37\ See, e.g., ISE Rule 716(e) (providing that the minimum size
of an order entered into the Solicited Order Mechanism is 500
contracts); and ISE Rule 715(j) (providing that a qualified
Contingent Cross Order must be for at least 1,000 contracts).
---------------------------------------------------------------------------

    As discussed above, a complex order strategy where all legs are to
buy will be rejected if it is entered at a price that is less than the
minimum price. The Exchange believes it is reasonable to reject such
orders upon entry as they are not executable.\38\ Allowing such orders
to be entered would create investor confusion; as such orders would not
receive an execution and would remain pending until canceled.
Similarly, the Exchange believes that rejecting vertical spread orders
that are entered at a negative price protects investors from executing
orders that were entered in error, and that preventing the execution of
single-sided vertical spread orders at negative prices when they are
entered as a sell market order, protects investors from paying to sell
a strategy when they expected to receive payment for selling the
strategy. These restrictions help the Exchange to maintain a fair and
orderly market, and provide a valuable service to investors.
---------------------------------------------------------------------------

    \38\ See supra, note 20.
---------------------------------------------------------------------------

    Finally, the Exchange notes that it will give members at least a
two week notice prior to changing the level at which the system
protections are triggered to allow members to perform any system
changes, and that the Exchange provides these protections for the
benefit of, and in consultation with, its members. Notwithstanding, the
Exchange also recognizes that the applicable protections may not be
appropriate in unusual market conditions. In this respect, the Exchange
has included in the proposal a provision providing that, in the event
of unusual market conditions and in the interest of a fair and orderly
market, the Exchange may temporarily establish the levels at which the
system protections are triggered that are beyond those specified in the
rule. The Exchange believes this is consistent with its obligation to
assure a fair and orderly market, and that the need for such
flexibility is recognized in other Exchange rules, such as those
related to position limits, quote-width differentials and market maker
risk parameters.\39\ In the event that the Exchange temporarily revises
the levels at which the protections are triggered, it will immediately
notify all members.
---------------------------------------------------------------------------

    \39\ See ISE Rule 412 (regarding position limits), ISE Rule 803
(regarding maximum quotation spreads), ISE Rule 804 (regarding
market maker risk parameters) and ISE Rule 722 (regarding market
maker risk parameters for complex orders).

---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change specifies circumstances in which the
trading system does not provide an automatic execution in the interest
of protecting investors against the execution of erroneous orders or
the execution of orders at erroneous prices. As such, the proposal does
not impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not become operative for 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) \40\ of the Act and Rule 19b-
4(f)(6) \41\ thereunder. The Exchange provided the Commission with
written notice of its 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 the proposed rule
change.
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78s(b)(3)(A).
    \41\ 17 C.F.R. 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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.

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-ISE-2014-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

    All submissions should refer to File Number SR-ISE-2014-05. 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 (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
10:00 a.m. and 3:00 p.m. Copies of the 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-2014-05 and should be
submitted on or before February 21, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
---------------------------------------------------------------------------

    \42\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-01966 Filed 1-30-14; 8:45 am]
BILLING CODE 8011-01-P