
[Federal Register Volume 76, Number 92 (Thursday, May 12, 2011)]
[Notices]
[Pages 27677-27678]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-11613]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64423; File No. SR-ISE-2011-28]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing of Proposed Rule Change by International 
Securities Exchange to Amend ISE Rule 2102

May 6, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 5, 2011, the International Securities Exchange, LLC (the 
``Exchange'' or the ``ISE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I 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\ 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 Rule 2102 (Hours of Business) to 
expand the applicability of Trading Pauses to cover all NMS Stocks.
    The text of the proposed rule change is available on the Exchange's 
Internet Web site at http://www.ise.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in sections A, B and C below, of the 
most significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to amend ISE Rule 2102 to expand the 
applicability of Trading Pauses to cover all NMS Stocks.\3\ Initial 
amendments to ISE Rule 2102 to allow the Exchange to pause trading in 
an individual stock when the primary listing market for such stock 
issues a trading pause were approved by the Commission on June 10, 2010 
on a pilot basis.\4\ The Exchange noted in its filing to adopt the 
initial amendments to Rule 2102 that during the pilot period it would 
continue to assess whether additional securities need to be added and 
whether the parameters of the trading pause would need to be modified 
to accommodate trading characteristics of different securities. On 
September 10, 2010, ISE Rule 2102 was amended again to expand the pilot 
rule to apply to the Russell 1000[reg] Index and other specified 
exchange traded products.\5\
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    \3\ See ISE Rule 2100(c)(13).
    \4\ See Securities Exchange Act Release Nos. 62252 (June 10, 
2010), 75 FR 34186 (June 16, 2010) (SR-ISE-2010-48) (Approving the 
pilot with an expiration date of December 10, 2010); 63506 (December 
9, 2010), 75 FR 78301 (December 15, 2010) (SR-ISE-2010-117) 
(Extending the date by which the pilot rule will expire to April 11, 
2011); 64193 (April 5, 2011), 76 FR 20062 (April 11, 2011) (SR-ISE-
2011-17) (Extending the date by which the pilot rule will expire to 
the earlier of August 11, 2011 or the date on which a limit up/limit 
down mechanism to address extraordinary market volatility, if 
adopted, applies).
    \5\ See Securities Exchange Act Release No. 62884 (September 10, 
2010), 75 FR 56618 (September 16, 2010) (SR-ISE-2010-66).
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    The Exchange has continued to assess whether additional securities 
need to be added to the pilot and whether the parameters of Rule 2102 
need to be modified to accommodate trading characteristics of different 
securities. In consultation with other markets and the staff of the 
Commission, the Exchange now proposes to include all NMS Stocks within 
the pilot that are not already included therein and to apply a wider 
Threshold Move percentage to the newly added securities. In particular, 
the proposed additional stocks are those not currently included in the 
S&P 500 Index, Russell 1000 Index, or specified ETPs, and therefore are 
more likely to be less liquid securities or securities with lower 
trading volumes. Accordingly, the Exchange believes that broader 
Threshold Move percentages would be appropriate. Similarly, because 
leveraged ETPs trade at a ratio against the associated index, a broader 
Threshold Move percentage would also be appropriate for leveraged ETPs. 
The Exchange proposes that the Threshold Move required to trigger a 
Trading Pause for the proposed new securities be 30% or more for such 
securities priced at $1 or higher and 50% or more

[[Page 27678]]

for such securities priced less than $1.\6\ The Exchange believes that 
this threshold differentiation is appropriate because lower priced 
securities tend to be more volatile, which amounts to a higher 
percentage move than a similar price change in a higher-priced stock. 
The Exchange is not proposing a change to the Threshold Move percentage 
applicable to securities currently included within the current pilot.
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    \6\ Under the proposed rule change, the price of a security 
would be based on the closing price on the previous trading day, or, 
if no closing price exists, the last sale reported to the 
Consolidate Tape on the previous trading day.
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    Accordingly, with respect to expanding the applicability of Trading 
Pauses to include all NMS Stocks, the Exchange is proposing to amend 
Section (f)(4) of ISE Rule 2102 to reflect this change. With respect to 
widening the Threshold Move percentage for the newly added securities, 
the Exchange is not proposing a change to its rule text because the ISE 
is not a primary listing market for equity securities and is therefore 
not responsible for calculating the Threshold Moves to trigger a 
Trading Pause. The current rule text provides that the Exchange shall 
immediately institute a Trading Pause anytime an exchange-listed 
security moves by 10% or more within a five-minute period, as 
calculated by the primary listing market, therefore the widening of the 
Threshold Move percentages need not be reflected in the ISE's rule text 
as the newly proposed process conforms with the current rule text.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act,\7\ which requires the rules of an exchange 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 
proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \8\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets. The 
Exchange believes that the proposed rule meets these requirements in 
that it promotes uniformity across markets concerning decisions to 
pause trading in a security when there are significant price movements.
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    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not 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

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

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-ISE-2011-28 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2011-28. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's 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 such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make publicly available. All 
submissions should refer to File Number SR-ISE-2011-28 and should be 
submitted on or before June 2, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-11613 Filed 5-11-11; 8:45 am]
BILLING CODE 8011-01-P


