[Federal Register Volume 77, Number 52 (Friday, March 16, 2012)]
[Notices]
[Pages 15819-15822]
[FR Doc No: 2012-6383]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66568; File No. SR-NYSEARCA-2012-17]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Equities Fee Schedule

 March 9, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on March 1, 2012, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 the NYSE Arca Equities Fee Schedule
(``Fee Schedule'') to (i) Increase the fee for Mid-Point Passive
Liquidity (``MPL'') orders removing liquidity from the Book, the Tape B
Securities fee for orders routed outside the Book to any away market
centers, and the fees for Tape A, Tape B, and Tape C Securities that
take liquidity from the Book where the per share price is below $1.00,
(ii) add three new Step Up Tiers and a new Investor Tier, (iii) revise
the requirements and credits for the Tracking Order Tiers, (iv) raise
the fee cap for Market and Auction-Only Orders executed in an Opening,
Market Order or Trading Halt Auction, and (v) make other technical
changes. The amended section of the Fee Schedule is attached as Exhibit
5. [sic] A copy of this filing is available on the Exchange's Web site
at www.nyse.com, at the Exchange's principal office and at the Public
Reference Room of the Commission.

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 Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to (i) Increase the
fee for MPL \4\ orders removing liquidity from the Book, the Tape B
Securities fee for orders routed outside the Book to any away market
centers, and the fees for Tape A, Tape B, and Tape C Securities that
take liquidity from the Book where the per share price is below $1.00,
(ii) add three new Step Up Tiers and a new Investor Tier, (iii) revise
the requirements and credits for the Tracking Order \5\ Tiers, (iv)
raise the fee cap for Market and Auction-Only Orders executed in an
Opening, Market Order or Trading Halt Auction, and (v) make other
technical changes.
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    \4\ An MPL order is a version of the Passive Liquidity order,
except it is executable only at the midpoint of the Protected Best
Bid and Offer. A Passive Liquidity order is an order to buy or sell
a stated amount of a security at a specified, undisplayed price. See
NYSE Arca Equities Rule 7.31(h)(4)-(5).
    \5\ A Tracking Order is an undisplayed, priced round lot order
that is eligible for execution in the Tracking Order Process against
orders equal to or less than the aggregate size of Tracking Order
interest available at that price. See NYSE Arca Equities Rule
7.31(f).
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MPL Orders

    Currently, MPL orders receive a rebate of $0.0015 for orders that
provide liquidity and are charged a fee of $0.0025 for orders that take
liquidity in Tape A, Tape B and Tape C Securities. The Exchange
proposes to raise the fee to $0.0030 for orders that take liquidity in
Tape A, Tape B, and Tape C Securities. The Exchange does not propose to
change the rebate for MPL orders. This change will apply to the Tier 1,
Tier 2, Tier 3, and Basic Rate pricing levels for securities with a per
share price above $1.00.

Tape B Orders

    Currently, Tape B orders are charged a fee of $0.0029 for orders
that are routed outside the Book to any away market centers for clients
at Tier 1, Tier 2, Tier 3, Step Up Tier 1, and Step Up Tier 2. The
Exchange proposes to raise the fee to $0.0030 for orders that are
routed outside the Book to any away market centers. This change will
apply

to the Tier 1, Tier 2, Tier 3, Step Up Tier 1 and Step Up Tier 2
pricing levels. As a result, the routing fee for Tape B orders at this
pricing level will be the same as the Tape A and Tape C routing fees to
any away market centers other than the New York Stock Exchange
(``NYSE'').

Below $1.00 Per Share Price

    Currently, the Exchange charges 0.1% (10 basis points) of the total
dollar value of the execution for securities with a below $1.00 share
price for ETP Holders accessing liquidity. The Exchange proposes to
increase the charge to 0.2% (20 basis points) of the total dollar value
of the execution for these securities for ETP Holders accessing
liquidity. The fee is consistent with the limitations of Regulation NMS
Rule 610(c) under the Act of 1934 (``Act'') \6\ for securities with a
price of less than $1.00.
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    \6\ 15 U.S.C. 78a.
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Step Up Tiers

    The Exchange proposes to introduce three new step up pricing tier
levels--Tape A Step Up Tier, Tape B Step Up Tier, and Tape C Step Up
Tier--for securities with a per share price above $1.00.
    The Tape A Step Up Tier will allow ETP Holders and Market Makers
that take liquidity from the Book to pay a reduced fee of $0.0029 per
share \7\ if they directly execute providing volume in Tape A
Securities during the billing month (``Tape A Adding ADV'') that is at
least the greater of (a) the ETP Holder's or Market Maker's January
2012 (``Baseline Month'') Tape A Adding ADV (``Tape A Baseline ADV'')
plus 0.075% of US Tape A Consolidated Average Daily Share Volume
(``CADV'') for the Baseline Month or (b) the ETP Holder's or Market
Maker's Tape A Baseline ADV plus 20%, subject to the ETP Holders' and
Market Makers' total providing liquidity in Tape A, Tape B, and Tape C
Securities increasing in an amount no less than 0.03% of US CADV over
their Baseline Month providing liquidity.\8\
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    \7\ Under the Basic Rate, ETP Holders and Market Makers pay a
fee of $0.0030 per share for Tape A orders that take liquidity from
the Book.
    \8\ For example, assume that a particular ETP Holder's or Market
Maker's Tape A Baseline ADV was five million shares and that US Tape
A CADV during the billing month was four billion shares. To qualify
for the lower rate, the ETP Holder or Market Maker would need to
have a Tape A Adding ADV during the billing month that is at least
the greater of (i) eight million shares (i.e., five million Tape A
Baseline ADV plus three million step-up (0.075% x four billion US
Tape A CADV)) or (ii) six million shares (i.e., five million Tape A
Baseline ADV plus one million step-up (120% of Tape A Baseline
ADV)). The Exchange recognizes that a firm that becomes an ETP
Holder or Market Maker after the Baseline Month would have a Tape A
Baseline ADV of zero. In this regard, a new ETP Holder or Market
Maker would need to have a Tape A Adding ADV during the billing
month of at least three million shares (i.e., zero Tape A Baseline
ADV plus three million step-up (0.075% x four billion US Tape A
CADV)) for the $0.0029 rate to apply.
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    Additionally, if a firm's ratio of Tape A Baseline ADV to its total
Tape A average daily volume (``ADV'') during the Baseline Month is less
than 30%, the $0.0029 rate would only apply to the ETP Holder's or
Market Maker's shares that are executed in an amount up to and
including 0.75% of the US Tape A CADV during the billing month. The
rate of $0.0030 per share would apply to the ETP Holder's or Market
Maker's remaining shares that are executed, unless the ETP Holder's or
Market Maker's Tape A Adding ADV is greater than its Tape A Baseline
ADV by at least 0.25% of the US Tape A CADV during the billing month.
Investor Tier ETP Holders or Investor Tier Market Makers cannot qualify
for the Tape A Step Up Tier.\9\
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    \9\ Continuing with the example above, if the ETP Holder or
Market Maker maintains a ratio of Tape A Baseline ADV to its total
Tape A ADV during the Baseline Month of less than 30%, the $0.0029
rate would apply to the ETP Holder's or Market Maker's first 30
million shares that are executed (i.e., 0.75% x four billion US Tape
A CADV) and the rate of $0.0030 would apply to the ETP Holder's or
Market Maker's remaining shares that are executed, unless the ETP
Holder's or Market Maker's Tape A Adding ADV is greater than 15
million shares (i.e., five million Tape A Baseline ADV plus 10
million step-up (0.25% x four billion US Tape A CADV)), in which
case the $0.0029 rate would apply to all of the ETP Holder's or
Market Maker's shares that are executed. The Exchange recognizes
that a firm that becomes an ETP Holder or Market Maker after the
Baseline Month would have a ratio of Tape A Baseline ADV to its Tape
A ADV during the Baseline Month that is zero. In this regard, the
$0.0029 rate would apply only to the new ETP Holder's or Market
Maker's first 30 million shares that are executed, unless the new
ETP Holder's or Market Maker's Tape A Adding ADV is greater than 10
million, in which case the $0.0029 rate would apply to all of the
ETP Holder's or Market Maker's shares that are executed.
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    The Tape B Step Up Tier will allow ETP Holders and Market Makers
that take liquidity from the Book to pay a reduced fee of $0.0026 per
share \10\ if they directly execute providing volume in Tape B
Securities during the billing month (``Tape B Adding ADV'') that is at
least the greater of (a) the ETP Holder's or Market Maker's Baseline
Month Tape B Adding ADV (``Tape B Baseline ADV'') plus 0.25% of US Tape
B CADV for the Baseline Month or (b) the ETP Holder's or Market Maker's
Tape B Baseline ADV plus 20%, subject to the ETP Holders' and Market
Makers' total providing liquidity in Tape A, Tape B, and Tape C
Securities increasing in an amount no less than 0.03% of US CADV over
their Baseline Month providing liquidity.\11\
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    \10\ Under the Basic Rate, ETP Holders and Market Makers pay a
fee of $0.0030 per share for Tape B orders that take liquidity from
the Book.
    \11\ For example, assume that a particular ETP Holder's or
Market Maker's Tape B Baseline ADV was one million shares and that
US Tape B CADV during the billing month was 1.2 billion shares. To
qualify for the lower rate, the ETP Holder or Market Maker would
need to have a Tape B Adding ADV during the billing month that is at
least the greater of (i) four million shares (i.e., one million Tape
B Baseline ADV plus three million step-up (0.25% x 1.2 billion US
Tape B CADV)) or (ii) 1.2 million shares (i.e., one million Tape B
Baseline ADV plus 0.2 million step-up (120% of Tape B Baseline
ADV)). The Exchange recognizes that a firm that becomes an ETP
Holder or Market Maker after the Baseline Month would have a Tape B
Baseline ADV of zero. In this regard, a new ETP Holder or Market
Maker would need to have a Tape B Adding ADV during the billing
month of at least three million shares (i.e., zero Tape B Baseline
ADV plus three million step-up (0.25% x 1.2 billion US Tape B CADV))
for the $0.0026 rate to apply.
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    Additionally, if a firm's ratio of Tape B Baseline ADV to its total
Tape B ADV during the Baseline Month is less than 30%, the $0.0026 rate
would only apply to the ETP Holder's or Market Maker's shares that are
executed in an amount up to and including 1.5% of the US Tape B CADV
during the billing month. The rate of $0.0028 or $0.0030 per share, as
applicable, would apply to the ETP Holder's or Market Maker's remaining
shares that are executed, unless the ETP Holder's or Market Maker's
Tape B Adding ADV is greater than its Tape B Baseline ADV by at least
0.45% of the US Tape B CADV during the billing month. Investor Tier ETP
Holders, Investor Tier Market Makers, and Lead Market Makers (``LMMs'')
cannot qualify for the Tape B Step Up Tier. In addition, LMM provide
volume cannot apply to the Tape B Step Up Tier volume requirements.\12\
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    \12\ Continuing with the example above, if the ETP Holder or
Market Maker maintains a ratio of Tape B Baseline ADV to its total
Tape B ADV during the Baseline Month of less than 30%, the $0.0026
rate would apply to the ETP Holder's or Market Maker's first 18
million shares that are executed (i.e., 1.5% x 1.2 billion US Tape B
CADV) and the rate of $0.0028 or $0.0030, as applicable, would apply
to the ETP Holder's or Market Maker's remaining shares that are
executed, unless the ETP Holder's or Market Maker's Tape B Adding
ADV is greater than 6.4 million shares (i.e., one million Tape B
Baseline ADV plus 5.4 million step-up (0.45% x 1.2 billion US Tape B
CADV)), in which case the $0.0026 rate would apply to all of the ETP
Holder's or Market Maker's shares that are executed. The Exchange
recognizes that a firm that becomes an ETP Holder or Market Maker
after the Baseline Month would have a ratio of Tape B Baseline ADV
to its total Tape B ADV during the Baseline Month that is zero. In
this regard, the $0.0026 rate would apply only to the new ETP
Holder's or Market Maker's first 18 million shares that are
executed, unless the new ETP Holder's or Market Maker's Tape B
Adding ADV is greater than 5.4 million, in which case the $0.0026
rate would apply to all of the ETP Holder's or Market Maker's shares
that are executed.
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    The Tape C Step Up Tier will allow ETP Holders and Market Makers
that take liquidity from the Book to pay a

reduced fee of $0.0029 per share \13\ if they directly execute
providing volume in Tape C Securities during the billing month (``Tape
C Adding ADV'') that is at least the greater of (a) the ETP Holder's or
Market Maker's Baseline Month Tape C Adding ADV (``Tape C Baseline
ADV'') plus 0.10% of US Tape C CADV for the Baseline Month or (b) the
ETP Holder's or Market Maker's Tape C Baseline ADV plus 20%, subject to
the ETP Holders' and Market Makers' total providing liquidity in Tape
A, Tape B, and Tape C Securities increasing in an amount no less than
0.03% of US CADV over their Baseline Month providing liquidity.\14\
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    \13\ Under the Basic Rate, ETP Holders and Market Makers pay a
fee of $0.0030 per share for Tape C orders that take liquidity from
the Book.
    \14\ For example, assume that a particular ETP Holder's or
Market Maker's Tape C Baseline ADV was three million shares and that
US Tape C CADV during the billing month was 1.8 billion shares. To
qualify for the lower rate, the ETP Holder or Market Maker would
need to have a Tape C Adding ADV during the billing month that is at
least the greater of (i) 4.8 million shares (i.e., three million
Tape C Baseline ADV plus 1.8 million step-up (0.10% x 1.8 billion US
Tape C CADV)) or (ii) 3.6 million shares (i.e., three million Tape C
Baseline ADV plus 0.6 million step-up (120% of Tape C Baseline
ADV)). The Exchange recognizes that a firm that becomes an ETP
Holder or Market Maker after the Baseline Month would have a Tape C
Baseline ADV of zero. In this regard, a new ETP Holder or Market
Maker would need to have a Tape C Adding ADV during the billing
month of at least 1.8 million shares (i.e., zero Tape C Baseline ADV
plus 1.8 million step-up (0.10% x 1.8 billion US Tape C CADV)) for
the $0.0029 rate to apply.
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    Additionally, if a firm's ratio of Tape C Baseline ADV to its total
Tape C ADV during the Baseline Month is less than 30%, the $0.0029 rate
would only apply to the ETP Holder's or Market Maker's shares that are
executed in an amount up to and including 1.1% of the US Tape C CADV
during the billing month. The rate of $0.0030 per share would apply to
the ETP Holder's or Market Maker's remaining shares that are executed,
unless the ETP Holder's or Market Maker's Tape C Adding ADV is greater
than its Tape C Baseline ADV by at least 0.33% of the US Tape C CADV
during the billing month. Investor Tier ETP Holders or Investor Tier
Market Makers cannot qualify for the Tape C Step Up Tier.\15\
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    \15\ Continuing with the example above, if the ETP Holder or
Market Maker maintains a ratio of Tape C Baseline ADV to its total
Tape C ADV during the Baseline Month of less than 30%, the $0.0029
rate would apply to the ETP Holder's or Market Maker's first 19.8
million shares that are executed (i.e., 1.1% x 1.8 billion US Tape C
CADV) and the rate of $0.0030 would apply to the ETP Holder's or
Market Maker's remaining shares that are executed, unless the ETP
Holder's or Market Maker's Tape C Adding ADV is greater than 8.94
million shares (i.e., three million Tape C Baseline ADV plus 5.94
million step-up (0.33% x 1.8 billion US Tape C CADV)), in which case
the $0.0029 rate would apply to all of the ETP Holder's or Market
Maker's shares that are executed. The Exchange recognizes that a
firm that becomes an ETP Holder or Market Maker after the Baseline
Month would have a ratio of Tape C Baseline ADV to its total Tape C
ADV during the Baseline Month that is zero. In this regard, the
$0.0029 rate would apply only to the new ETP Holder's or Market
Maker's first 19.8 million shares that are executed, unless the new
ETP Holder's or Market Maker's Tape C Adding ADV is greater than
5.94 million, in which case the $0.0029 rate would apply to all of
the ETP Holder's or Market Maker's shares that are executed.
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Investor Tier

    The Exchange proposes to introduce a new Investor Tier 2 and
renumber current Investor Tier 2 as Investor Tier 3. New Investor Tier
2 will allow ETP Holders and Market Makers to earn a $0.0032 per share
credit in Tape A, Tape B, and Tape C Securities for orders that provide
liquidity to the Book that (1) provide liquidity of 0.60% or more of
the US CADV, (2) maintain a ratio of canceled orders to total orders of
less than 30%, excluding Immediate-or-Cancel orders, and (3) maintain a
ratio of executed liquidity adding volume to total volume of greater
than 50%. In addition, the Exchange proposes to increase the threshold
[sic] provide liquidity for new Investor Tier 3 from 0.20% to 0.30% of
US CADV. All other fees and credits will be at the existing Tiered and
Basic Rates based on the firm's qualifying levels.

Tracking Order Tiers

    Currently, the Tracking Order Tier 1 credit allows each ETP Holder
and Market Maker to receive a credit of $0.0015 per share for all
shares if its Tracking Orders result in executions on the Exchange with
an ADV per month greater than 15 million shares. The Exchange credits
ETP Holders $0.0012 per share for Tracking Orders that result in
executions up to and including 15 million shares (assuming the 5
million share threshold is met). The Tracking Order Tier 2 credit
allows each ETP Holder and Market Maker to receive a credit of $0.001
per share for all shares if its Tracking Orders result in executions on
the Exchange with an ADV per month between 2.5 million shares and
4,999,999 shares. The Tracking Order Tier 3 credit allows each ETP
Holder and Market Maker to receive a credit of $0.0005 per share for
all shares if its Tracking Orders result in executions on the Exchange
with an ADV per month between 1 million shares and 2.5 million shares.
    The Exchange proposes to replace the current Tracking Order Tier
structure with the three tiers described below. Tracking Order Tier 1
will allow each ETP Holder and Market Maker to receive a credit of
$0.0015 per share for all shares if its Tracking Orders result in
executions on the Exchange with an ADV per month greater than or equal
to 10 million shares. Tracking Order Tier 2 will allow each ETP Holder
and Market Maker to receive a credit of $0.0012 per share for Tracking
Orders that result in executions on the Exchange with an ADV per month
between 5 million shares and 9,999,999 shares. Tracking Order Tier 3
will allow each ETP Holder and Market Maker to receive a credit of
$0.001 per share for all shares if its Tracking Orders result in
executions on the Exchange with an ADV per month between 1 million
shares and 4,999,999 shares.

Fee Cap

    The Exchange proposes to raise the monthly fee cap for Market and
Auction-Only Orders executed in an Opening, Market Order or Trading
Halt Auction. Currently, the fees are capped at $10,000. The Exchange
proposes to raise the fee cap to $15,000.

Technical Changes

    The Exchange proposes to revise footnote 3 of the Fee Schedule
(currently reserved) to add a definition of US CADV and explain that
volume on days when the market closes early is excluded from the
calculation of US CADV, which will simplify the Fee Schedule. The
Exchange also proposes to add a new footnote 4 to define ADV. The
Exchange also proposes to include a reference within the Fee Schedule
to the last date on which the Fee Schedule was amended.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\16\ in general, and Section 6(b)(4) of
the Act,\17\ in particular, in that it is designed to provide for the
equitable allocation of reasonable dues, fees, and other charges among
its members and other persons using its facilities. The proposed change
is equitably allocated and not unfairly discriminatory because it
applies uniformly to all similarly situated ETP Holders and Market
Makers that send orders to the Exchange.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fee and fee cap increases
are reasonable and equitably allocated because they apply to ETP
Holders and Market Makers that remove liquidity from the Exchange and
are designed to offset the increased credits to liquidity providers.
The Exchange believes that the new Step Up Tiers, the new Investor Tier
2, and the revised Investor Tier 3

are equitable because they are open to all similarly situated ETP
Holders on an equal basis and provide credits that are reasonably
related to the value to an exchange's market quality associated with
higher volumes. For example, the proposed increase to $0.0030 for
orders in Tape B Securities routed outside the Book to any away market
centers will align such fee to Tape A and Tape C routing fees to any
away market center other than NYSE. The Exchange further believes that
the proposed Tape A, Tape B, and Tape C Step Up Tiers are reasonable,
equitable and not unfairly discriminatory because the Exchange has
previously implemented two step up tiers: Step Up Tier 1 and Step Up
Tier 2. With respect to shares priced under $1.00, the Exchange notes
that the proposal to increase the charge to 0.2% of the total dollar
value of the execution for these securities for ETP Holders accessing
liquidity is consistent with the limitations of Rule 610(c) of
Regulation NMS under the Act.
    As stated above, the Exchange believes that the new Step Up Tiers,
the new Investor Tier 2, and the revised Investor Tier 3 may
incentivize ETP Holders to increase the orders sent directly to the
Exchange and therefore provide liquidity that supports the quality of
price discovery and promotes market transparency. For example, the
increased fee with respect to MPL orders that take liquidity in Tape A,
Tape B, and Tape C Securities will provide an added incentive to ETP
Holders and Market Makers to provide displayed liquidity on the
Exchange for such orders.
    In addition to the new Tiers, the Exchange believes that the
amendments to the Tracking Order Tiers would benefit ETP Holders whose
increased order flow provides meaningful added levels of liquidity, but
may not be eligible for the current Tracking Order Tier thresholds,
thereby contributing to the depth and market quality of the Book.
    The Exchange believes that by recalibrating the fees for routing
and taking liquidity and credits for providing liquidity it will
attract additional order flow and liquidity to the Exchange, thereby
contributing to price discovery on the Exchange and benefiting
investors generally.
    The Exchange also believes that the technical amendments proposed
herein would better assist member organizations and others that view
the Fee Schedule in determining the fees and credits that are
applicable on the Exchange.

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 that is not necessary or appropriate
in furtherance of the purposes of the Act.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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)(ii) of the Act \18\ and subparagraph (f)(2) of Rule 19b-4
thereunder.\19\ 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. If
the Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule should be approved
or disapproved.
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    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \19\ 17 CFR 240.19b-4(f)(2).
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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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEARCA-2012-17 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-NYSEARCA-2012-17. 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
a.m. and 3 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-NYSEARCA-2012-17 and should
be submitted on or before April 6, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6383 Filed 3-15-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 85 (Tuesday, May 3, 2016)]
[Notices]
[Pages 26609-26610]
[FR Doc No: 2016-10410]

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SECURITIES AND EXCHANGE COMMISSION

[File No. 500-1]

Coyote Resources, Inc., Harbor Island Development Corp., Medical
Makeover Corp. of America, and Shades Holdings, Inc.; Order of
Suspension of Trading

April 29, 2016.
    It appears to the Securities and Exchange Commission that there is
a lack of current and accurate information concerning the securities of
Coyote Resources, Inc. (CIK No. 1392121), a revoked Nevada corporation
with its principal place of business listed as Davie, Florida with
stock quoted on OTC Link (previously, ``Pink Sheets'') operated by OTC
Markets Group, Inc. (``OTC Link'') under the ticker symbol COYR,
because it has not filed any periodic reports since the period ended
June 30, 2013. On August 19, 2015, a delinquency letter was sent by the
Division of Corporation Finance to Coyote Resources, Inc. requesting
compliance with its periodic filing obligations, and Coyote Resources,
Inc. received the delinquency letter on August 29, 2015, but failed to
cure its delinquencies.
    It appears to the Securities and Exchange Commission that there is
a lack of current and accurate information concerning the securities of
Harbor Island Development Corp. (CIK No. 1490824), a revoked Nevada
corporation with its principal place of business listed as Opa Locka,
Florida with stock quoted on OTC Link under the ticker symbol HIDC,
because it has not filed any periodic reports since the period ended
June 30, 2013. On July 31, 2015, a delinquency letter was sent by the
Division of Corporation Finance to Harbor Island Development Corp.
requesting compliance with its periodic filing obligations, but it did
not receive the delinquency letter due to its failure to maintain a
valid address on file with the Commission as required by Commission
rules (Rule 301 of Regulation S-T, 17 CFR 232.301 and Section 5.4 of
EDGAR Filer Manual).
    It appears to the Securities and Exchange Commission that there is
a lack of current and accurate information concerning the securities of
Medical Makeover Corp. of America (CIK No. 1083944), a void Delaware
corporation with its principal place of business listed as West Palm
Beach, Florida with stock quoted on OTC Link under the ticker symbol
MMAM, because it has not filed any periodic reports since the period
ended September 30, 2012. On

August 19, 2015, a delinquency letter was sent by the Division of
Corporation Finance to Medical Makeover Corp. of America requesting
compliance with its periodic filing obligations, and Medical Makeover
Corp. of America received the delinquency letter on August 24, 2015,
but failed to cure its delinquencies.
    It appears to the Securities and Exchange Commission that there is
a lack of current and accurate information concerning the securities of
Shades Holdings, Inc. (CIK No. 1488366), a Florida corporation with its
principal place of business listed as Aventura, Florida with stock
quoted on OTC Link under the ticker symbol SHDH, because it has not
filed any periodic reports since the period ended June 30, 2013. On
August 19, 2015, a delinquency letter was sent by the Division of
Corporation Finance to Shades Holdings, Inc. requesting compliance with
its periodic filing obligations, but it did not receive the delinquency
letter due to its failure to maintain a valid address on file with the
Commission as required by Commission rules (Rule 301 of Regulation S-T,
17 CFR 232.301 and Section 5.4 of EDGAR Filer Manual).
    The Commission is of the opinion that the public interest and the
protection of investors require a suspension of trading in the
securities of the above-listed companies.
    Therefore, it is ordered, pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that trading in the securities of the
above-listed companies is suspended for the period from 9:30 a.m. EDT
on April 29, 2016, through 11:59 p.m. EDT on May 12, 2016.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2016-10410 Filed 4-29-16; 11:15 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 85 (Thursday, May 2, 2013)]
[Proposed Rules]
[Pages 25678-25679]
[FR Doc No: 2013-10406]

=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 271

[EPA-R04-RCRA-2009-0961; FRL-9806-8]

Georgia: Final Authorization of State Hazardous Waste Management
Program Revisions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

SUMMARY: Georgia has applied to EPA for final authorization of changes
to its hazardous waste program under the Resource Conservation and
Recovery Act (RCRA). With this proposed rule, EPA is proposing to grant
final authorization to Georgia for these changes. Along with this
proposed rule, EPA is publishing an immediate final rule in the ``Rules
and Regulations'' section of today's Federal Register pursuant to which
EPA is authorizing these changes. EPA did not issue a proposed rule
before today because EPA believes this action is not controversial and
does not expect comments that oppose it. EPA has explained the reasons
for this authorization in the immediate final rule. Unless EPA receives
written comments that oppose this authorization during the comment
period, the immediate final rule in today's Federal Register will
become effective on the date it establishes, and EPA will not take
further action on this proposal. If EPA receives comments that oppose
this action, EPA will withdraw the immediate final rule and it will not
take effect. EPA will then respond to public comments in a later final
rule based on this proposed rule. You may not have another opportunity
to comment on these State program changes. If you want to comment on
this action, you must do so at this time.

DATES: Send your written comments by June 3, 2013.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
RCRA-2009-0961, by one of the following methods:
     http://www.regulations.gov. Follow the on-line
instructions for submitting comments.
     Email<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER> (prior to faxing, please notify the
EPA contact listed below)
     Mail: Send written comments to Gwendolyn Gleaton, Permits
and State Programs Section, RCRA Programs and Materials Management
Branch, RCRA Division, U.S. Environmental Protection Agency, Atlanta
Federal Center, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960.
     Hand Delivery or Courier: Gwendolyn Gleaton, Permits and
State Programs Section, RCRA Programs and Materials Management Branch,
RCRA Division, U.S. Environmental Protection Agency, Atlanta Federal
Center, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960. Such
deliveries are only accepted during the Regional Office's normal hours
of operation, and special arrangements should be made for deliveries of
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-R04-RCRA-
2009-0961. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
www.regulations.gov including any personal information provided, unless
the comment includes information claimed to be Confidential Business
Information (CBI), or other information whose disclosure is restricted
by statute. Do not submit information that you consider to be CBI or
otherwise protected through www.regulations.gov or email. The
www.regulations.gov Web site is an ``anonymous access'' system, which
means EPA will not know your identity or contact information unless you
provide it in the body of your comment. If you send an email comment
directly to EPA without going through www.regulations.gov, your email
address will be automatically captured and included as part of the
comment that is placed in the public docket and made available on the
Internet. If you submit an electronic comment, EPA recommends that you
include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses. (For additional
information about EPA's public docket, visit the EPA Docket Center
homepage at http://www.epa.gov/epahome/dockets.htm).
    Docket: All documents in the docket are listed in the
www.regulations.gov

index. Although listed in the index, some information is not publicly
available, e.g., CBI or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, will be publicly available only in hard copy. Publicly
available docket materials are available either electronically in
www.regulations.gov, or in hard copy. You may view and copy Georgia's
applications at the EPA, Region 4, RCRA Division, Atlanta Federal
Center, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960.
    You may also view and copy Georgia's applications from 8:00 a.m. to
4:00 p.m. at the Georgia Department of Natural Resources, Environmental
Protection Division, 2 Martin Luther King, Jr. Drive, Suite 1154 East
Tower, Atlanta, Georgia 30334-4910; telephone number<PHONE_NUMBER>.
Interested persons wanting to examine these documents should make an
appointment with the office at least a week in advance.

FOR FURTHER INFORMATION CONTACT: Gwendolyn Gleaton, Permits and State
Programs Section, RCRA Programs and Materials Management Branch, RCRA
Division, U.S. Environmental Protection Agency, Atlanta Federal Center,
61 Forsyth Street SW., Atlanta, Georgia 30303-8960; telephone number:
(404) 562-8500; fax number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: For additional information, please see the
immediate final rule published in the ``Rules and Regulations'' section
of this Federal Register.

    Dated: March 28, 2013.
A. Stanley Meiburg,
Acting Regional Administrator, Region 4.
[FR Doc. 2013-10406 Filed 5-1-13; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 80, Number 80 (Monday, April 27, 2015)]
[Notices]
[Page 23265]
[FR Doc No: 2015-09686]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. AD15-2-000]

Review of Cost Submittals by Other Federal Agencies for
Administering Part I of the Federal Power Act; Notice Requesting
Questions and Comments on Fiscal Year 2014 Other Federal Agency Cost
Submissions

    In its Order On Rehearing Consolidating Administrative Annual
Charges Bill Appeals And Modifying Annual Charges Billing Procedures,
109 FERC ] 61,040 (2004) the Commission set forth an annual process for
Other Federal Agencies (OFAs) to submit their costs related to
Administering Part I of the Federal Power Act. Pursuant to the
established process, the Director of the Financial Management Division,
Office of the Executive Director, on October 14, 2014, issued a letter
requesting the OFAs to submit their costs by December 31, 2014 using
the OFA Cost Submission Form.
    Upon receipt of the agency submissions, the Commission posted the
information in eLibrary, and issued, on March 12, 2015, a notice
announcing the date for a technical conference to review the submitted
costs. On March 26, 2015, the Commission held the technical conference.
Technical conference transcripts, submitted cost forms, and detailed
supporting documents are all available for review under Docket No.
AD15-2. These documents are accessible on-line at http://www.ferc.gov,
using the ``eLibrary'' link and are available for review in the
Commission's Public Reference Room in Washington, DC.
    Interested parties may file specific questions and comments on the
FY 2014 OFA cost submissions with the Commission under Docket No. AD15-
2, no later than May 1, 2015. Once filed, the Commission will forward
the questions and comments to the OFAs for response.
    Anyone with questions pertaining to the technical conference or
this notice should contact Norman Richardson at<PHONE_NUMBER> (via
email at<EMAIL_ADDRESS>or Raven A. Rodriguez at (202)
502-6276 (via email at raven.rodriguez@ferc.gov).

    Dated: April 20, 2015.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2015-09686 Filed 4-24-15; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 82, Number 134 (Friday, July 14, 2017)]
[Rules and Regulations]
[Pages 32480-32482]
[FR Doc No: 2017-14735]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R01-OAR-2016-0296; A-1-FRL-9964-81-Region 1]

Air Plan Approval; Maine; Decommissioning of Stage II Vapor
Recovery Systems

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

SUMMARY: The Environmental Protection Agency (EPA) is approving a State
Implementation Plan (SIP) revision submitted by the State of Maine
Department of Environmental Protection (Maine DEP). This SIP revision
includes regulatory amendments that repeal

Stage II vapor recovery requirements at gasoline dispensing facilities
(GDFs) as of January 1, 2012, with the mandate that all Stage II
equipment be decommissioned by January 1, 2013. Maine DEP's submission
to EPA also included a demonstration that such removal is consistent
with the Clean Air Act and relevant EPA guidance. This revision also
includes regulatory amendments that update Maine's testing and certain
equipment requirements for Stage I vapor recovery systems at GDFs. The
intended effect of this action is to approve Maine's revised gasoline
vapor recovery regulations. This action is being taken in accordance
with the Clean Air Act.

DATES: This rule is effective on August 14, 2017.

ADDRESSES: EPA has established a docket for this action under Docket
Identification No. EPA-R01-OAR-2016-0296. All documents in the docket
are listed on the http://www.regulations.gov Web site. Although listed
in the index, some information is not publicly available, i.e., 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 at http://www.regulations.gov or at the U.S. Environmental Protection Agency, EPA
New England Regional Office, Office of Ecosystem Protection, Air
Quality Planning Unit, 5 Post Office Square--Suite 100, Boston, MA. EPA
requests that if at all possible, you contact the contact listed in the
FOR FURTHER INFORMATION CONTACT section to schedule your inspection.
The Regional Office's official hours of business are Monday through
Friday, 8:30 a.m. to 4:30 p.m., excluding legal holidays.

FOR FURTHER INFORMATION CONTACT: Eric Rackauskas, Air Quality Planning
Unit, U.S. Environmental Protection Agency, EPA New England Regional
Office, 5 Post Office Square, Suite 100 [mail code: OPE05-2], Boston,
MA 02109-3912, telephone number<PHONE_NUMBER>, fax<PHONE_NUMBER>,
email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,''
``us,'' or ``our'' is used, we mean EPA.

Table of Contents

I. Background and Purpose
II. Final Action
III. Incorporation by Reference
IV. Statutory and Executive Order Reviews

I. Background and Purpose

    On May 8, 2017 (82 FR 21348), EPA published a Notice of Proposed
Rulemaking (NPR) for the State of Maine. The NPR proposed approval of
Maine's revised Chapter 118, Gasoline Dispensing Facilities Vapor
Control, that had been amended to allow for and require the
decommissioning of all Stage II vapor recovery systems at GDFs in York,
Cumberland, and Sagadahoc Counties. The updated regulation also
strengthened the testing requirements for Stage I systems throughout
the State. The formal SIP revision was submitted by the Maine DEP on
April 13, 2016, and included a demonstration that decommissioning the
Stage II vapor recovery systems is consistent with the Clean Air Act
and EPA guidance.
    A detailed discussion of Maine's April 13, 2016 SIP revision and
EPA's rationale for proposing approval of the SIP revision were
provided in the NPR and will not be restated in this notice. No public
comments were received on the NPR.

II. Final Action

    EPA is approving Maine's April 13, 2016 SIP revision. Specifically,
EPA is approving Maine's revised Chapter 118, Gasoline Dispensing
Facilities Vapor Control, and incorporating it into the Maine SIP. EPA
is approving this SIP revision because it meets all applicable
requirements of the Clean Air Act and relevant EPA guidance, and it
will not interfere with attainment or maintenance of the ozone NAAQS.

III. Incorporation by Reference

    In this rule, the EPA is finalizing regulatory text that includes
incorporation by reference. In accordance with requirements of 1 CFR
51.5, the EPA is finalizing the incorporation by reference of the of
the State of Maine's revised Chapter 118 described in the amendments to
40 CFR part 52 set forth below. The EPA has made, and will continue to
make, these documents generally available through http://www.regulations.gov.

IV. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a
SIP submission that complies with the provisions of the Act and
applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a).
Thus, in reviewing SIP submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the Clean Air Act.
Accordingly, this action merely approves state law as meeting Federal
requirements and does not impose additional requirements beyond those
imposed by state law. For that reason, this action:
     Is not a significant regulatory action subject to review
by the Office of Management and Budget under Executive Orders 12866 (58
FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the Clean Air Act; and
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian
reservation land or in any other area where EPA or an Indian tribe has
demonstrated that a tribe has jurisdiction. In those areas of Indian
country, the rule does not have tribal implications and will not impose
substantial direct costs on tribal governments or preempt tribal law as
specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
    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).
    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 September 12, 2017. 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 may not be challenged later in
proceedings to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen
dioxide, Ozone, Particulate matter, Reporting and recordkeeping
requirements, Sulfur oxides, Volatile organic compounds.

    Dated: June 26, 2017.
Deborah A. Szaro,
Acting Regional Administrator, EPA New England.

    Part 52 of chapter I, title 40 of the Code of Federal Regulations
is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart U--Maine

0
2. In Sec.  52.1020:
0
a. In paragraph (c), the table titled ``EPA-Approved Maine
Regulations'' is amended by revising the entry for ``Chapter 118.''
0
b. In paragraph (e), the table titled ``Maine Non Regulatory'' is
amended by adding an entry for ``Demonstration of Compliance with the
Comparable Measures Requirement of CAA section 184(b)(2)'' at the end
of the table.
    The revision and addition read as follows:

Sec.  52.1020  Identification of plan.

* * * * *
    (c) * * *

                                         EPA-Approved Maine Regulations
----------------------------------------------------------------------------------------------------------------
                                                                      EPA approval date
         State citation             Title/subject         State       EPA approval date        Explanations
                                                     effective date   and citation \1\
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Chapter 118....................  Gasoline                  1/1/2012  7/14/2017, [Insert  Includes
                                  Dispensing                          Federal Register    decommissioning of
                                  Facilities Vapor                    citation].          Stage II vapor
                                  Control.                                                recovery systems.

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
\1\ In order to determine the EPA effective date for a specific provision listed in this table, consult the
  Federal Register notice cited in this column for the particular provision.

* * * * *
    (e) * * *

                                              Maine Non Regulatory
----------------------------------------------------------------------------------------------------------------
                                     Applicable           State
   Name of non regulatory SIP       geographic or    submittal date/  EPA approved date        Explanations
           provision             nonattainment area  effective date          \3\
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Demonstration of Compliance      York, Cumberland,        4/13/2016  7/14/2017, [Insert  Emission calculations
 with the Comparable Measures     and Sagadahoc                       Federal Register    and narrative
 Requirement of CAA section       Counties.                           citation].          associated with Stage
 184(b)(2).                                                                               II Decommissioning SIP
                                                                                revision.
----------------------------------------------------------------------------------------------------------------
\3\ In order to determine the EPA effective date for a specific provision listed in this table, consult the
  Federal Register notice cited in this column for the particular provision.

[FR Doc. 2017-14735 Filed 7-13-17; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register: August 28, 2009 (Volume 74, Number 166)]
[Notices]
[Page 44425-44430]
[DOCID:fr28au09-96]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60559; File No. SR-ISE-2009-27]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Order Granting Approval of a Proposed Rule Change as Modified by
Amendment No. 1 Thereto To Adopt Rules Implementing the Options Order
Protection and Locked/Crossed Market Plan

I. Introduction

    On May 11, 2009, the International Securities Exchange, LLC
(``ISE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend and adopt rules to
implement the Options Order Protection and Locked/Crossed Market Plan.
The proposed rule change was published for comment in the Federal
Register on June 8, 2009.\3\ On June 10, 2009, the Exchange filed
Amendment No. 1 to the proposed rule change.\4\ The Commission received
no comments on the proposal. This order approves the proposed rule
change, as modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 60014 (June 1,
2009), 74 FR 27224 (``Notice'').
    \4\ Amendment No. 1 clarified that this proposed rule change
will become effective upon the Exchange's withdrawal from the Plan
for the Purpose of Creating and Operating an Intermarket Option
Linkage and the effectiveness of the Options Order Protection and
Locked/Crossed Market Plan. Because the amendment only provided
clarification and did not affect the substance of the rule filing,
the amendment did not require notice and comment.
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to amend and adopt new ISE rules to implement
the Options Order Protection and Locked/Crossed Market Plan
(``Plan'').\5\ Specifically, the Exchange proposes to completely
replace Chapter 19 of its rules with new rules implementing the Plan,
amend other Exchange rules to reflect the Plan, and delete rules
rendered unnecessary by the Plan.
---------------------------------------------------------------------------

    \5\ The Plan is a national market system plan proposed by the
seven existing options exchanges and approved by the Commission. See
Securities Exchange Act Release No. 59647 (March 30, 2009), 74 FR
15010 (April 2, 2009) (File No. 4-546) (``Plan Notice'') and 60405
(July 30, 2009), 74 FR 39362 (August 6, 2009) (File No. 4-546)
(``Plan Approval''). The seven options exchanges are: Chicago Board
Options Exchange, Incorporated (``CBOE''); The NASDAQ Stock Market
LLC (``Nasdaq''); NASDAQ OMX BX, Inc. (``BOX''); NASDAQ OMX PHLX,
Inc. (``Phlx''); NYSE Amex LLC (``NYSE Amex''); NYSE Arca, Inc.
(``NYSE Arca''); and ISE (each exchange individually a
``Participant'' and, together, the ``Participating Options
Exchanges'').
---------------------------------------------------------------------------

The Old Plan

    Each of the Participating Options Exchanges are signatories to the
Plan for the Purpose of Creating and Operating an Intermarket Option
Linkage (``Old Plan'').\6\ In pertinent part, the Old Plan generally
requires its participants to avoid trading at a price inferior to the
national best bid or offer (``trade-through''), although it provides
for a number of exceptions to trade-through liability.\7\ The
Participating Options Exchanges comply with this requirement of the Old
Plan by utilizing a stand alone system (``Linkage Hub'') to send and
receive specific order types,\8\ namely Principal Acting as Agent
Orders (``P/A Orders''), Principal Orders, and Satisfaction Orders.\9\
The Old Plan also provided that dissemination of ``locked'' or
``crossed'' markets should be avoided, and remedial actions that should
be taken to unlock or uncross such market.\10\ Each of the
Participating Options Exchanges, including the Exchange, has submitted
an amendment to the Old Plan to withdraw from such Plan.\11\ The
withdrawals will be effective upon approval by the Commission of such
amendments pursuant to Rule 608 of Regulation NMS under the Act
(``Regulation NMS'').\12\
---------------------------------------------------------------------------

    \6\ On July 28, 2000, the Commission approved the Old Plan as a
national market system plan for the purpose of creating and
operating an intermarket options market linkage proposed by the
American Stock Exchange LLC (n/k/a NYSE Amex), CBOE, and ISE. See
Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR
48023 (August 4, 2000). Subsequently, Philadelphia Stock Exchange,
Inc. (n/k/a Phlx), Pacific Exchange, Inc. (n/k/a NYSE Arca), Boston
Stock Exchange, Inc. (n/k/a BOX), and Nasdaq joined the Linkage
Plan. See Securities Exchange Act Release Nos. 43573 (November 16,
2000), 65 FR 70851 (November 28, 2000); 43574 (November 16, 2000),
65 FR 70850 (November 28, 2000); 49198 (February 5, 2004), 69 FR
7029 (February 12, 2004); and 57545 (March 21, 2008), 73 FR 16394
(March 27, 2008).
    \7\ Section 8(c) of the Old Plan.
    \8\ The Linkage Hub is a centralized data communications network
that electronically links the Participating Options Exchanges to one
another. The Options Clearing Corporation (``OCC'') operates the
Linkage Hub.
    \9\ Section 2(16) of the Old Plan.
    \10\ Section 7(a)(i)(C) of the Old Plan.
    \11\ See Securities Exchange Act Release No. 60360 (July 21,
2009) 74 FR 37265 (July 28, 2009) (File No. 4-429).
    \12\ 17 CFR 242.608.
---------------------------------------------------------------------------

The Plan

    The Plan does not require a central linkage mechanism akin to the
Old Plan's Linkage Hub. Instead, the Plan includes the framework for
routing

orders via private linkages that exist for NMS stocks under Regulation
NMS.\13\ The Plan requires the Participating Options Exchanges to adopt
rules ``reasonably designed to prevent Trade-Throughs.''\14\
Participating Options Exchanges are also required to conduct
surveillance of their respective markets on a regular basis to
ascertain the effectiveness of the policies and procedures to prevent
Trade-Throughs and to take prompt action to remedy deficiencies in such
policies and procedures.\15\ As further described below, the Plan
incorporates a number of exceptions to trade-through liability.\16\
Some of these exceptions are carried over from the Old Plan, including
exceptions for trading rotations, non-firm quotes, and complex
trades.\17\ Others are substantially similar to exceptions available
for NMS stocks under Regulation NMS, such as exceptions for systems
issues, crossed markets, quote flickering, customer stopped orders,
benchmark trades and, notably, intermarket sweep orders (``ISOs'').\18\
In addition, the Plan contains a new exception for stopped orders and
price improvement.\19\
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005) (File No. S7-10-04); 17 CFR
242.600 et seq. For discussions of the similarities between the
provisions of Regulation NMS and the provisions in the Plan, see the
Plan Notice and Plan Approval, supra note 5.
    \14\ Under the Plan, a ``Trade-Through'' is generally defined as
a transaction in an option series, either as principal or agent, at
a price that is lower than a Protected Bid or higher than a
Protected Offer.'' See Section 2(21) of the Plan. A ``Protected
Bid'' and ``Protected Offer'' generally means a bid or offer in an
option series, respectively, that is displayed by a Participant, is
disseminated pursuant to the Options Price Reporting Authority
(``OPRA'') Plan, and is the Best Bid or Best Offer. See Section
2(17) of the Plan. A ``Best Bid'' or ``Best Offer'' means the
highest bid price and the lowest offer price. Section (2)(1) of the
Plan. ``Protected Bid'' and ``Protected Offer,'' together are
referred to herein as ``Protected Quotation.'' See Section 2(18) of
the Plan.
    \15\ Section 5(a)(ii) of the Plan.
    \16\ Section 5(b) of the Plan.
    \17\ Subparagraphs (ii), (vii), and (viii), respectively, of
Section 5(b) of the Plan.
    \18\ Subparagraphs (i), (iii), (vi), (ix), (xi), and (iv)-(v),
respectively, of Section 5(b) of the Plan.
    \19\ Subparagraph (x) of Section 5(b) of the Plan.
---------------------------------------------------------------------------

    The Plan also requires each Participant to establish, maintain, and
enforce written rules that: Require its members reasonably to avoid
displaying locked and crossed markets; assure the reconciliation of
locked and crossed markets; and prohibit its members from engaging in a
pattern or practice of displaying locked and crossed markets; subject
to exceptions as may be contained in the rules of the Participant, as
approved by the Commission.\20\
---------------------------------------------------------------------------

    \20\ Section 6 of the Plan. The Plan also contains provisions
relating to the operation of the Plan including, for example,
provisions relating to the entry of new parties to the Plan;
withdrawal from the Plan; and amendments to the Plan.
---------------------------------------------------------------------------

The Exchange's Proposal

    To implement the Plan, the Exchange proposes to replace its current
rules relating to the Old Plan with new rules relating to the Plan, and
makes amendments to other rules as necessary to conform to the
requirements of the Plan.\21\ As such, the Exchange proposes to adopt
all applicable definitions from the Plan into the Exchange's rules.\22\
---------------------------------------------------------------------------

    \21\ A more detailed description of the Exchange's proposed rule
change may be found in the Notice, supra note 3.
    \22\ Proposed ISE Rule 1900.
---------------------------------------------------------------------------

    In addition, the Exchange proposes to prohibit its members from
effecting Trade-Throughs, unless an exception applies.\23\ Consistent
with the Plan, the Exchange also proposes exceptions to the prohibition
on trade-throughs relating to: System issues; trading rotations;
crossed markets; intermarket sweep orders; quote flickering; non-firm
quotes; complex trades; customer stopped orders; stopped orders and
price improvement; and benchmark trades.\24\
---------------------------------------------------------------------------

    \23\ Proposed ISE Rule 1901(a).
    \24\ Proposed ISE Rule 1901(b)(1)-(10). In addition, the
Exchange proposes to add ISOs as a new type of order under proposed
ISE Rule 715(b)(5).
---------------------------------------------------------------------------

    The Exchange also proposes a rule to address locked and crossed
markets, as required by the Plan.\25\ Specifically, the Exchange
proposes that, except for quotations that fall within a stated
exception, members shall reasonably avoid displaying, and shall not
engage in a pattern or practice of displaying, any quotations that lock
or cross a Protected Quote.\26\
---------------------------------------------------------------------------

    \25\ A ``locked market'' is defined as a quoted market in which
a Protected Bid is equal to a Protected Offer. Proposed ISE Rule
1900(i). A ``crossed market'' is defined as a quoted market in which
a Protected Bid is higher than a Protected Offer. Proposed ISE Rule
1900(e).
    \26\ Proposed ISE Rule 1902(a).
---------------------------------------------------------------------------

    The Exchange proposes four exceptions to the prohibition against
locked and crossed markets: When the Exchange is experiencing a
failure, material delay, or malfunction of its systems or equipment;
when the locking or crossing quotation was displayed at a time where
there is a crossed market; when an Exchange member simultaneously
routes an ISO to execute against the full displayed size of any locked
or crossed Protected Bid or Protected Offer; and, with respect to a
locking quotation, when the order entered on the Exchange that will
lock a Protected Bid or Protected Offer, is (i) not a customer order,
and the Exchange can determine via identification available pursuant to
the OPRA Plan that such Protected Bid or Protected Offer does not
represent, in whole or in part, a customer order; or (ii) a customer
order, and the Exchange can determine via identification available
pursuant to the OPRA Plan that such Protected Bid or Protected Offer
does not represent, in whole or in part, a customer order, and, on a
case-by-case basis, the customer specifically authorizes the member to
lock such Protected Bid or Protected Offer.\27\ The Exchange believes
that, in most cases, locked market maker quotes are good for the
investing public, but recognizes that the benefits of a locked market
become more complicated when one or both of the locking quotations
represent a customer order. Where there is market interest willing to
trade with a customer, the Exchange believes that the customer order
should be filled. Thus, the Exchange proposes that it would not exempt
from the locked market prohibition situations involving customer orders
unless the customer entering the locking order specifically authorizes
the lock on a case-by-case basis.\28\ As a result, its members would
not be permitted to lock another Participant's quotation unless the
Exchange can establish that the quotation on the other Participant's
market is not for the account of a customer.
---------------------------------------------------------------------------

    \27\ Proposed ISE Rule 1902(b)(1)-(4).
    \28\ ISE noted that it can envision a customer authorizing a
lock when the fees associated with trading against the locked market
make the execution price uneconomical to the customer. See Notice,
supra note 3, at 27226.
---------------------------------------------------------------------------

    The Exchange also proposes rules to permit it to continue to accept
P/A Orders and Principal Orders from Participating Options Exchanges
that are not able to send ISOs in order to avoid Trade-Throughs.\29\
The Exchange noted that, even upon the approvals of the Plan and the
implementing rules of the various Participating Options Exchanges, it
is possible that not all the Participants will be functionally able to
operate pursuant to the Plan. Thus, the Exchange has proposed to retain
certain rules governing the receipt of P/A Orders and Principal Orders
until such time that all Participating Options Exchanges are operating
pursuant to the Plan.
---------------------------------------------------------------------------

    \29\ Proposed ISE Temporary Rule 1903.
---------------------------------------------------------------------------

    The Exchange also proposes changes to its rules relating to an ISE
Primary Market Maker's (``PMM'') obligation to address customer orders
when there is a better market displayed on another exchange. The
Exchange proposes changes to ISE Rule 803(c) and the Supplementary
Material to Rule 803 to specify that ISE will discharge its obligations
under the Plan to ``establish,

maintain and enforce written policies and procedures * * * reasonably
designed to prevent Trade-Throughs'' \30\ by requiring PMMs to address
customer orders when there is a better market away via the use of
ISOs.\31\ ISE proposes that a PMM could comply with their obligation
either by (i) executing a customer order at a price that at least
matches the best price displayed or (ii) sending ISO(s) as agent for
the customer to any other exchange(s) displaying a superior price and,
with respect to any remaining portion of the customer order, either (a)
releasing the remaining portion of the order for execution in the
Exchange's auction market or (b) executing the remaining portion of the
order at a price superior to the best price in the Exchange's auction
market.\32\
---------------------------------------------------------------------------

    \30\ Section 5(a) of the Plan.
    \31\ Proposed ISE Rule 803(c)(2)(ii). ISE noted that the routing
of public customer orders to another exchange when the ISE is not at
the best price is, in effect, voluntary. See Notice, supra note 3,
at 27227. ISE stated that a customer could avoid such routing by
entering an Immediate or Cancel order (``IOC'') or Fill or Kill
(``FOK'') order. See ISE Rule 715(b)(3) and ISE Rule 715(b)(2)
respectively. If ISE cannot immediately execute such orders, it
would cancel all of the order (FOK orders) or the unexecuted portion
of the order (IOC orders) without routing such orders to another
exchange. See Notice, supra note 3, at 27227.
    \32\ Proposed ISE Rule 803(c)(2).
---------------------------------------------------------------------------

    ISE further proposes that, in addressing customer orders that are
not automatically executed because there is a displayed bid or offer on
another exchange trading the same option that is better than the best
bid or offer on the Exchange, ISE would act in compliance with its
rules and with the provisions of the Act and the rules thereunder,
including, but not limited to, the requirements in Section (6)(b)(4)
and (5) of the Act \33\ that the rules of national securities exchange
provide for the equitable allocation of reasonable dues, fees, and
other charges among its members and issuers and other persons using its
facilities, and not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.\34\ ISE also proposes to make
clear that all orders entered on ISE and routed by the PMM to another
exchange via an ISO pursuant to proposed ISE Rule 803(c)(2) and that
result in an execution are binding on the member that entered such
orders.\35\
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78(f)(b)(4) and (5).
    \34\ Proposed ISE Rule 803, Supplementary Material, .04.
    \35\ Proposed ISE Rule 803, Supplementary Material, .05.
---------------------------------------------------------------------------

    The Exchange also proposes changes to ISE Rule 810, which governs
``informational barriers'' that ISE market makers must maintain within
their firms. ISE stated that these barriers restrict the flow of
information between personnel handling market making activities on the
one hand, and personnel performing other functions, including acting as
agent for customer orders, on the other hand. ISE noted that, under the
Old Plan, when there was a better market on another exchange, a PMM
could send a P/A Order to that exchange in an attempt to access that
better price for the customer. ISE believes that this was consistent
with Rule 810 under the Old Plan because a P/A Order is a principal
order, and a firm is permitted to send such an order from the market-
making side of the information barrier. Under the Plan and ISE's
proposed rules, PMMs would send ISOs representing the underlying
customer orders, rather than P/A Orders, when there is a better market
away. Because these ISOs would be orders on behalf of a public
customer, ISE notes that current ISE Rule 810 would prohibit a PMM from
sending such an order. The Exchange therefore proposes a carve-out to
Rule 810 that would permit a PMM to send ISOs solely to comply with its
obligation under Rule 803 to address public customer orders when there
is a better market on another exchange. ISE states that PMMs would act
as agent in these circumstances, and would send the ISOs from the
market making side of the information barrier. The Exchange represents
that, in all other respects, PMMs would be subject to proposed Rule
810.\36\
---------------------------------------------------------------------------

    \36\ Proposed ISE Rule 810.
---------------------------------------------------------------------------

    Pursuant to Rule 811(b), which governs Directed Orders, ISE market
makers may act as agent for customer orders only when handling such
orders. ISE proposes to amend that rule to reflect the ability of PMMs
to act as agent when sending ISOs under proposed ISE Rule 803(c)(2).
The Exchange also proposes a rule to clarify that all public customer
ISOs entered by an Electronic Access Member (``EAM'') on behalf of
another options exchange shall be represented on the Exchange as
Priority Customer Orders, defined in ISE Rule 100(37B), and that an EAM
does not have an obligation to determine whether the public customer
for whom such other exchange is routing an ISO meets the definition of
a Priority Customer.\37\
---------------------------------------------------------------------------

    \37\ The Exchange stated that, because other options exchanges
have not adopted a distinction between Priority Customer and
Professional Orders, ISE does not believe it is practical or
appropriate to require ISOs representing customer orders sent from
other exchanges to be marked as Professional Orders. See Notice,
supra note 3, at 27227.
---------------------------------------------------------------------------

    The Exchange proposes to amend certain other rules to reflect the
Plan and its related terms. In particular, the Exchange proposes to
amend Rule 714 to reflect terminology under the Plan. The Exchange is
also proposing to delete provisions that are no longer applicable under
the Plan. Specifically, ISE is deleting current ISE Rule 701(a)(5),
which relates to the sending of P/A Orders through the Linkage Hub
during the opening, and is deleting Supplemental Material .07 to
current ISE Rule 716, relating to block trades and away market prices.

II. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule
change, as amended, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\38\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act \39\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest. The Commission also finds that the
proposal is consistent with Rule 608(c) of Regulation NMS under the
Act, which requires that each exchange comply with the terms of any
effective national market system plan of which it is a participant.\40\
Finally, the Commission finds that the proposed rule change is
consistent with the requirements of the Plan.\41\
---------------------------------------------------------------------------

    \38\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \39\ 15 U.S.C. 78f(b)(5).
    \40\ 17 CFR 242.608(c). Section 1 of the Plan provides in
pertinent part that, ``The Participants will submit to the
[Commission] for approval their respective rules that will implement
the framework of the Plan.''
    \41\ See supra note 5.
---------------------------------------------------------------------------

    Proposed ISE Rule 1900 would define applicable terms in a manner
that is substantively identical to the defined terms of the Plan.\42\
As such, the Commission finds that proposed ISE Rule 1900 is consistent
with the Act and the Plan.
---------------------------------------------------------------------------

    \42\ The Commission notes that the Exchange's proposed
definition of ``Complex Trade'' under proposed ISE Rule 1900(d) is
identical to the definition of ``Complex Trade'' under old ISE Rule
1900(3), which is being deleted.
---------------------------------------------------------------------------

    Proposed ISE Rule 1901(a) would prohibit members from effecting
Trade-Throughs unless an exception applies. Proposed ISE Rule 1901(b)
would

provide for ten exceptions to the general Trade-Through prohibition,
relating to systems issues, trading rotations, crossed markets, ISOs,
quote flickering, non-firm quotes, complex trades, customer stopped
orders, stopped orders and price improvement, and benchmark trades.\43\
Aside from the proposed exception relating to systems issues, each
proposed exception would be substantively identical to the parallel
exception under Section 5(b) of the Plan.
---------------------------------------------------------------------------

    \43\ Proposed ISE Rule 1901(b)(1)-(10).
---------------------------------------------------------------------------

    The systems issues exception under proposed ISE Rule 1901(b)(1)
would implement the parallel exception available under Section 5(b)(i)
of the Plan and would permit the Exchange to bypass the Protected
Quotation of another Participant if such other Participant repeatedly
fails to respond within one second to incoming orders attempting to
access its Protected Quotations. The Exchange's rule would require the
Exchange to notify such non-responding Participant immediately after
(or at the same time as) electing self-help, and assess whether the
cause of the problem lies with the Exchange's own systems and, if so,
take immediate steps to resolve the problem. Finally, the Exchange
would be required to promptly document its reasons supporting any such
determination to bypass a Protected Quotation. The Commission believes
that this exception should provide the Exchange with the necessary
flexibility for dealing with problems that occur on an away market
during the trading day. At the same time, the exception's requirements
to immediately notify such away market of its determination and also
assess its own system should help prevent the use of this exception
when there in fact is a problem with the Exchange's own systems, rather
than those of an away market.
    The Commission notes that included among the exception in proposed
ISE Rule 1901(b) would be an exception for certain transactions
involving ISOs.\44\ An order identified as an ISO would be immediately
executable by the Exchange (or any other Plan Participant that received
such an order) based on the premise that the market participant sending
the ISO has already attempted to access all better-priced Protected
Quotations up to their displayed size. The Commission believes that
this exception should help ensure more efficient and faster executions
in the options markets.
---------------------------------------------------------------------------

    \44\ Proposed ISE Rule 1901(b)(4).
---------------------------------------------------------------------------

    Finally, proposed Supplementary Material .01 to ISE Rule 1901 would
ensure that all public customer ISOs routed from another Participant
and entered by an Electronic Access Member (``EAM'') would be Priority
Customer Orders, rather than ``Professional Orders,'' \45\ and would
not obligate such EAM to determine whether the public customer for whom
the away market is routing the ISO meets the definition of Priority
Customer. The Commission believes that this provision clarifies the
obligations of EAMs for such orders.
---------------------------------------------------------------------------

    \45\ See Securities Exchange Act Release No. 59287 (January 23,
2009), 74 FR 5694 (January 1, 2009) (SR-ISE-2006-26).
---------------------------------------------------------------------------

    The Commission notes that, in addition to these rules regarding
Trade-Throughs, the Plan requires that each Participant establish,
maintain and enforce written policies and procedures that are
reasonably designed to prevent Trade-Throughs in that Participant's
market that do not fall within an applicable exception and, if relying
on such exception, that are reasonably designed to assure compliance
with the terms of the exception. In addition, the Commission notes that
the Plan requires each Participant to conduct surveillance of its
market on a regular basis to ascertain the effectiveness of such
policies and procedures and to take prompt action to remedy any
deficiencies in such policies and procedures.
    Accordingly, the Commission finds that proposed ISE Rule 1901 is
consistent with Section 5 of the Plan and Section 6(b)(5) of the Act
\46\ which requires, among other things, that the rules of a national
securities exchange be designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Proposed ISE Rule 1902(a) would require Exchange members to
reasonably avoid displaying, and not engage in a pattern or practice of
displaying, any quotation that locks or crosses a Protected Quotation,
subject to certain exceptions delineated in proposed ISE Rule 1902(b).
The Commission recognizes that locked and crossed markets may occur
accidentally and cannot always be avoided. However, the Commission
believes that giving priority to the first-displayed Protected Bid or
Protected Offer, particularly when it includes a public customer's
order, will encourage price discovery and contribute to fair and
orderly markets. Therefore, the Commission believes that the proposed
rule, which corresponds to the Plan's language, to require members to
reasonably avoid displaying, and not engaging in a pattern or practice
of, locks and crosses is appropriate.
    Proposed ISE Rule 1902(b) would permit four exceptions to the
Exchange's general rule relating to locked and crossed markets.\47\ The
first three would be similar to analogous certain trade-through
exceptions under proposed ISE Rule 1901(b), and relate to when the
Exchange is experiencing systems issues, when there exists a crossed
market, and when a member simultaneously routes ISOs against the full
displayed size of any locked or crossed Protected Bid or Protected
Offer.
---------------------------------------------------------------------------

    \47\ Section 6 of the Plan permits exceptions to the Plan's
locked and crossed market rules as may be contained in the rules of
a Participant approved by the Commission.
---------------------------------------------------------------------------

    The fourth exception would permit an order entered onto the
Exchange to lock a Protected Bid or Protected Offer when such order is:
(1) Not a customer order, and the Exchange can determine that such
Protected Bid or Protected Offer does not represent, in whole or in
part, a customer order; or (2) a customer order, and the Exchange can
determine that such Protected Bid or Protected Offer does not
represent, in whole or in part, a customer order and, on a case-by-case
basis, the customer specifically authorizes the Exchange's member to
lock such Protected Bid or Protected Offer. This exception would not
protect a market maker quote or broker-dealer order from being locked.
    The Commission believes that the Exchange's proposed rules relating
to locked and crossed markets are consistent with the Plan and the Act
and should help ensure that the display of locked or crossed markets
will be limited and that any such display will be promptly reconciled.
The Commission also believes that each of the proposed exceptions to
locked and crossed markets relate to circumstances when it is
appropriate to permit a limited, narrow exception to the general locked
and crossed market rule.
    In particular, the Commission believes that the fourth exception is
appropriate because it would protect customer orders that are Protected
Bids or Protected Offers from being locked, and would only permit a
customer order entered onto the Exchange to lock a Protected Bid or
Protected Offer when a customer specifically authorizes an Exchange
member, and only when such Protected Bid or Protected Offer itself does
not represent, in whole or in part, a customer order. Because of the
rapidity with which options quotes are

often updated today, particularly in response to changes in the
underlying, there is an increasing likelihood that market maker
quotations will lock each other. The proposed exception accounts for
this dynamic by not prohibiting such locking instances. Importantly,
the proposed exception in the Exchange's rules that the Commission is
approving would allow non-customer orders to lock an away market's
Protected Quotation only if the Exchange is able to affirmatively
determine that the Protected Quotation on the away market is not, in
whole or in part, for the account of a customer. If any portion of such
away market's Protected Quotation is for the account of a customer,
such Protected Quotation may not be locked. In addition, the Commission
notes that the rule requires that such determination be made via
identification available pursuant to the OPRA Plan, which is working
with the participating options exchanges on a method to so identify
customer quotations through OPRA. The Exchange has represented that,
absent the ability to identify a customer quote as part of an
exchange's BBO, the Exchange would assume that the quote represents, in
whole or in part, a customer order. As such, the Exchange has
represented that it would not permit its members to avail themselves of
this exemption unless the away market has informed the Exchange that it
would designate all customer orders as such in OPRA and such exchange's
quotation does not contain such designation. Finally, the Exchange has
represented that if an exchange chooses not to identify its customer
quotations, the Exchange would treat all of such exchange's quotations
as customer orders and, absent application of another exception, would
not permit locks of such quotations.
    Therefore, the Commission finds that Exchange's rule regarding
locked and crossed markets appropriately implements Section 6 of the
Plan, and is consistent with Section 6(b)(5) of the Act \48\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest.
---------------------------------------------------------------------------

    \48\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission also finds that proposed ISE Temporary Rule 1903,
which facilitates the participation of certain Participating Options
Exchanges who may require the use of P/A Orders and Principal Orders
after implementation of the Plan, is consistent with the Act. Although
the Commission has already approved the Plan,\49\ the Commission also
recognizes that there may be one or more Participating Options
Exchanges that may require a temporary transition period during which
they may want to continue to utilize these order types that exist
currently under the Old Plan.\50\ The Exchange and each of the other
Participating Options Exchanges have proposed substantially identical
temporary provisions to accommodate this possibility.\51\ Thus, the
Commission finds that the proposed rule relating to the Exchange's
receipt and handling of P/A Orders and Principal Orders, and imposing
certain obligations on the Exchange with respect to such orders that
are similar to those that exist under the Old Plan, is appropriate and
consistent with Section 6(b)(5) of the Act \52\ which requires, among
other things, that the rules of a national securities exchange be
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------

    \49\ See Plan Approval, supra note 5.
    \50\ The Commission notes that any Participating Options
Exchange that wishes to utilize such order types in a manner that
would result in a Trade-Through would need to separately request an
exemption from the Plan for such use.
    \51\ The Commission notes that the rules contained in ISE
Temporary Rule 1903 are not required by the Plan, but rather are
rules proposed by the Exchange in order to facilitate the
participation in the Plan of certain exchanges during an initial
transition period.
    \52\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission also finds that the amendments to ISE's rules
requiring ISE PMMs to execute or route customer orders when another
exchange is displaying a better price are consistent with the Act, and
in particular with Section 6(b)(5) of the Act.\53\ In this regard, ISE
proposes to discharge its obligations under the Plan to ``establish,
maintain and enforce written policies and procedures * * * reasonably
designed to prevent Trade-Throughs'' \54\ by requiring its PMMs to
address customer orders when there is a better away market.\55\
Pursuant to amended ISE Rule 803(c)(2), PMMs would be required to
either: (i) Execute the customer's order at a price that at least
matches the best price displayed or (ii) send ISO(s) as agent for the
customer order to any exchange(s) displaying a better price and, with
respect to any remaining portion of the customer order, either (a)
releasing such portion for execution on ISE's auction market or (b)
executing such portion at a price better than the best price available
on ISE's auction market.
---------------------------------------------------------------------------

    \53\ 15 U.S.C. 78f(b)(5).
    \54\ See Section 5(a) of the Plan.
    \55\ See Notice, supra note 3, at 27227.
---------------------------------------------------------------------------

    In addressing customer orders that are not automatically executed
because there is a better price displayed on another exchange, pursuant
to proposed Commentary .04 to Rule 803, ISE will act in compliance with
its rules, the Act, and the rules thereunder. In particular, ISE will
act in compliance with Sections 6(b)(4) and (5) of the Act \56\ which
require the Exchange to: (1) Provide for the equitable allocation of
reasonable dues, fees, and other charges among its participants and
other persons using its facilities; and (2) prohibit unfair
discrimination among customers, issuers, brokers or dealers. Customers
may choose to avoid having their orders routed away by a PMM by
entering their order with an Immediate or Cancel or Fill or Kill
designation.\57\
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78f(b)(4) and (5).
    \57\ See Notice, supra note 3, at 27227.
---------------------------------------------------------------------------

    Any PMM that handles customer orders pursuant to ISE Rule 803(c)(2)
will be subject to oversight and enforcement responsibilities of a
self-regulatory organization (``SRO'') other than ISE.\58\
Additionally, ISE Rule 810 imposes certain restrictions on the business
activities of ISE market makers, including PMMs. These restrictions
prohibit a PMM from, among other things, handling orders as agent on
behalf of customers unless there is an information barrier between its
market making activities, on the one hand, and certain other
activities, including handling customer orders as agent, on the other
hand.\59\ ISE proposes to amend ISE Rule 810 to permit PMMs to handle
public customer orders when ISE is not at the best price. ISE
represented that, under the Old Plan, PMMs were not subject to the
information barrier requirement between market making activities and
agency activities because PMMs sending P/A Orders seeking a better
market away were sending a principal order.\60\ The Commission finds
that it is consistent with the Act to permit an exception to ISE's
information barrier rule when a PMM

sends an ISO as agent for a customer order to comply with its
obligations under ISE Rule 803(c)(2), because such activity is limited
by ISE's rules, as described above, and does not provide the potential
for the type of harm against which ISE Rule 810 is intended to protect,
specifically the inappropriate sharing of information that could result
in market manipulation. The Commission also finds that the proposed
change to ISE Rule 811, governing the Exchange's Directed Order
program, to permit ISE PMMs that also handle Directed Orders on an
agency basis, to act as agent when routing ISOs under ISE Rule
803(c)(2) is consistent with the Plan and the Act.
---------------------------------------------------------------------------

    \58\ See Securities Exchange Act Release No. 42455 (February 24,
2000), 65 FR 11388, 11389 (March 2, 2000) (File No. 10-127). A PMM
must have as their examining authority designated by the Commission
pursuant to Rule 17d-1 of the Act, a SRO other than ISE. As such,
such SRO is responsible for the oversight and enforcement of the PMM
for compliance with the applicable financial responsibility rules.
    \59\ See ISE Rule 810(a).
    \60\ See Notice, supra note 3, at 27227.
---------------------------------------------------------------------------

    The Commission finds that ISE's proposed arrangements with respect
to the handling of customer orders when ISE is not at the best price,
and related amendment to its information barrier rules and Directed
Order program, are designed to comply with its responsibility under the
Plan to establish, maintain and enforce written policies and procedures
reasonably designed to prevent Trade-Through. Accordingly, the
Commission finds ISE's proposed arrangements consistent with the Plan
and the Act.
    Finally, the Commission finds that ISE's proposed amendments to
certain other ISE rules to reflect the provision of the Plan, and to
delete provisions of ISE's rules rendered unnecessary due to the Plan,
are appropriate and consistent with the Act and the Plan.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\61\ that the proposed rule change (SR-ISE-2009-27), as modified by
Amendment No. 1, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \61\ 15 U.S.C. 78s(b)(2).
    \62\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\62\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20788 Filed 8-27-09; 8:45 am]

BILLING CODE 8010-01-P