80 FR 15262 - Self-Regulatory Organizations; International Securities Exchange, LLC; Order Approving Proposed Rule Change, as Modified by Amendment No. 1, Amending its Information Barrier Rules
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 55 (March 23, 2015)
Federal Register Volume 80, Issue 55 (March 23, 2015)
| Page Range | 15262-15264 | |
| FR Document | 2015-06515 |
[Federal Register Volume 80, Number 55 (Monday, March 23, 2015)] [Notices] [Pages 15262-15264] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-06515] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74521; File No. SR-ISE-2014-43] Self-Regulatory Organizations; International Securities Exchange, LLC; Order Approving Proposed Rule Change, as Modified by Amendment No. 1, Amending its Information Barrier Rules March 17, 2015. I. Introduction On September 15, 2014, International Securities Exchange, LLC (``Exchange'' or ``ISE'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change amending its information barrier rules. The proposed rule change was published for comment in the Federal Register on October 6, 2014.\3\ The Commission received one comment letter regarding the proposed rule change \4\ and one response letter from ISE.\5\ On November 17, 2014, the Commission extended the time period in which to either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change to January 2, 2015.\6\ On December 31, 2014, the Commission instituted proceedings to determine whether to approve or disapprove the proposed rule change.\7\ On March 9, 2015, the Exchange filed Amendment No. 1 to the proposed rule change.\8\ 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. 73261 (September 30, 2014), 79 FR 60226 (``Notice''). \4\ See Letter from John Kinahan, Chief Executive Officer, Group One Trading, L.P., dated October 27, 2014 (``Group One Letter''). \5\ See Letter from Michael J. Simon, Secretary and General Counsel, International Securities Exchange, LLC, dated November 14, 2014 (``ISE Response Letter''). \6\ See Securities Exchange Act Release No. 73614 (November 17, 2014), 79 FR 69547 (November 21, 2014). \7\ See Securities Exchange Act Release No. 73973 (December 31, 2014), 80 FR 583 (January 6, 2015). \8\ In Amendment No. 1 the Exchange clarifies that an Electronic Access Member (``EAM'') would only have access to the publicly available orders and quotes of its affiliated market maker. In addition, the Exchange clarifies that the proposed rule change would not permit a member's EAM unit to access any non-public order or quote information of its affiliated market maker, including any hidden or undisplayed size or price information. The Exchange also clarifies that market makers are not allowed to post hidden or undisplayed orders and quotes on the Exchange. Finally, the Exchange clarifies that its members would not expect to receive any additional order or quote information as a result of this proposed rule change. Amendment No. 1 is not subject to notice and comment because it is a technical amendment that does not materially alter the substance of the proposed rule change or raise any novel regulatory issues. Amendment No. 1 has been placed in the public comment file for SR-ISE-2014-43 at http://www.sec.gov/comments/sr-ise-2014-43/ise201443.shtml (see letter from Michael J. Simon, Secretary and General Counsel, International Securities Exchange, LLC, to Secretary, Commission, dated March 9, 2015) and also is available at the Exchange's Web site at www.ise.com. --------------------------------------------------------------------------- II. Description of the Proposal The Exchange proposes to amend ISE Rules 810 (Limitations on Dealings) and 717 (Limitations on Orders) governing information barriers. Specifically, the Exchange proposes to amend Rule 810 to permit information to flow to a member's EAM unit, which handles the customer/agency side of the business, from its affiliated Primary Market Maker (``PMM'') and/or Competitive Market Maker (``CMM'') (jointly, ``market makers'') unit. As amended, ISE Rule 810 will allow EAMs to know where, and at what price, their affiliated market makers are either quoting or have orders on the order book \9\ and to use that information to influence routing decisions. The Exchange represents that it currently provides guidance to its members that ISE Rule 810 is to be interpreted as a two-way information barrier between the EAM unit and its affiliated market maker unit.\10\ --------------------------------------------------------------------------- \9\ According to ISE Rule 805(b)(1)(ii), market makers may only have orders on the order book in option classes to which they are not appointed. \10\ See Notice, supra note 3, 79 FR 60226, 60226. --------------------------------------------------------------------------- The Exchange also proposes to amend ISE Rule 717, Supplementary Material .06 to specify that the orders of a EAM [[Page 15263]] unit and its affiliated PMM and/or CMM unit may interact within one second without violating the ISE Rule 717(d) and (e) order exposure requirements when the firm can demonstrate that: (1) The customer order was marketable when routed; (2) the EAM was not handling the affiliated market maker quote/order; and (3) the affiliated market maker quote/ order was in existence at the time the customer order(s) were entered into the ISE system. In combination, the proposed amendments to ISE Rules 810 and 717 will make it possible for an EAM to route a customer order to the ISE to immediately interact with the quote or an order of an affiliated market maker, but only subject to the conditions stated above. III. Comment Letter and ISE's Response As noted above, the Commission received one comment letter \11\ opposing the proposed rule change.\12\ The commenter asserts that the proposed one-way information barrier would introduce a conflict of interest which could result in EAMs routing orders based on self- interest as opposed to the customer's interest.\13\ The commenter disagrees with the Exchange's premise that the proposed rule change would not compromise market integrity or cause customer harm.\14\ The commenter also indicates that although other exchanges may interpret their rules to permit the sharing of information between the various units of a firm, such sharing only weakens a customer's chance of best execution. --------------------------------------------------------------------------- \11\ See Group One Letter, supra note 5. \12\ See ISE Response Letter, supra note 6. \13\ See Group One Letter at 1, supra note 4. \14\ Id. --------------------------------------------------------------------------- The commenter believes there are two specific scenarios where a costumer may be harmed under this proposed rule change. First, the commenter states that EAMs could route customer orders to an affiliated market maker's quote at an exchange's best bid or offer rather than to an exchange with a better fill rate or price improvement mechanism.\15\ Second, the commenter argues that an EAM holding a large customer order that could influence the price in the underlying could opt to route away from the quote of its affiliated market maker to avoid the potential risk of the trade and deprive the customer of a fill they were otherwise entitled to.\16\ --------------------------------------------------------------------------- \15\ Id. \16\ Id. at 2. --------------------------------------------------------------------------- The commenter indicates that these routing scenarios are not ``mere conjecture'' as broker-dealers ``openly admit'' that numerous factors are built into routing decisions that are primarily beneficial to broker-dealers.\17\ The commenter also notes that there are litigation and academic studies that suggest that routing decisions are negatively impacted by conflicts of interest. The commenter believes that the erosion of information barriers would increase the likelihood that customer orders are routed based on the firm's best interest as opposed to duty of best execution owed to the customer.\18\ The commenter concludes that two-way information barriers are the ``only way to truly guard customer interests and protect against the misuse of material non-public information,'' and a shift to a one-way information barrier would not provide any benefits EAM customers.\19\ The commenter also believes that exchange rules should be written and interpreted in a way that prevents conflicts of interest from ever arising, and a two-way information barrier takes the potential conflict of interest out of the equation.\20\ --------------------------------------------------------------------------- \17\ Id. \18\ Id. \19\ Id. \20\ Id. --------------------------------------------------------------------------- The ISE responds that the commenter did not raise any new issues and its concerns were addressed in the Notice.\21\ The ISE states that nothing in the proposed rule change would relieve members of their best execution obligation to obtain the most favorable terms reasonably available for customer orders.\22\ The Exchange notes that, as a national securities exchange, it has a comprehensive surveillance program to monitor member compliance with applicable securities and regulations, including best execution.\23\ ISE also represents that it would continue to monitor for abnormalities in interaction rates between members, and investigate and take appropriate regulatory action against members that fail to comply with their best execution obligations.\24\ ISE believes that its surveillance tools will allow it to fulfill its regulatory responsibilities.\25\ ISE also suggests that the filing is a competitive imperative as other options exchanges currently interpret their information barrier rules to be one way barriers that permit members to make routing decisions based on the quotes and orders of affiliated business units.\26\ --------------------------------------------------------------------------- \21\ See ISE Response Letter at 1, supra note 6. \22\ Id. \23\ Id. \24\ Id. \25\ Id. \26\ Id. at 2. --------------------------------------------------------------------------- IV. Discussion and Commission Findings After careful consideration, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\27\ The Commission believes that the proposed rule change, as modified by Amendment No. 1, is consistent with Section 6(b)(5) \28\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, 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. --------------------------------------------------------------------------- \27\ In approving this rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \28\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Amended ISE Rule 810 permits a less restrictive, one-way information barrier between market makers and other business units, as opposed to the prior rule that required a prescriptive, two-way information barrier. Nonetheless, the Commission notes that Exchange members are still required to have policies and procedures that are reasonably designed to prevent the misuse of material, non-public information consistent with Section 15(g) of the Act \29\ and ISE Rule 408.\30\ The Commission notes that the EAM unit of a member would not, pursuant to the proposed rule change, have access to any non-public quote or order information, including hidden or undisplayed price or size information, of an affiliated market maker.\31\ The Commission also notes that the Exchange has represented that its ongoing surveillance for manipulative conduct and the Financial Industry Regulatory Authority's exam program that reviews for member compliance with such policies and procedures should provide a regulatory framework [[Page 15264]] that guards customer interests and protects against the misuse of material non-public information.\32\ --------------------------------------------------------------------------- \29\ See 15 U.S.C. 78o(g). Section 15(g) of the Act requires every broker or dealer to ``establish, maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of such broker's or dealer's business, to prevent the misuse. . .of material, nonpublic information by such broker or dealer or any person associated with such broker or dealer.'' \30\ Further, Exchange members will continue to be subject to ISE Rules 400 (Just and Equitable Principles of Trade), 401 (Adherence to Law), and 405 (Manipulation). \31\ See Amendment No. 1, supra note 8. \32\ See Notice, supra note 3, 79 FR 60226, 60227. --------------------------------------------------------------------------- Finally, as noted above, the commenter expressed concern that this proposed rule change would introduce a conflict of interest that would erode the duty of best execution and harm customers. The Exchange believes, and the Commission agrees, that this proposed rule change, as modified by Amendment No. 1, does not alter a broker-dealer's duty of best execution.\33\ Although the proposed rule change, as modified by Amendment No. 1, will permit EAMs to know and consider the quotes of its affiliated market makers when making routing decisions, the Commission continues to expect that routing decisions related to the duty of best execution will be premised solely on customer considerations such as the likelihood of execution, the opportunity to obtain price improvement, availability of best price and minimization of market impact.\34\ The Commission emphasizes that a broker-dealer's duty of best execution exists whether an EAM determines to route customer order flow toward its affiliated market maker or away from its affiliated market maker. Further, the Commission notes that in response to the commenter's concern that the proposed rule change would negatively impact best execution considerations, ISE stated that it would ``continue to monitor for abnormalities in interaction rates between members, and will investigate and take appropriate regulatory action against members that fail to comply with their best execution obligations . . . [and that] these surveillance tools will allow ISE to comply with its regulatory responsibilities, consistent with treatment across competitor options exchanges.'' \35\ Among other things, the Commission's oversight of the ISE program is designed to evaluate the ISE's performance in regard to that representation. --------------------------------------------------------------------------- \33\ See Notice, supra note 3, 79 FR 60226, 60227; ISE Response Letter at 1, supra note 6. \34\ See e.g., FINRA Rule 5310 (Best Execution and Interpositioning); see also Securities Exchange Act Release No. 34- 51808, 70 FR 37496, 37537-8 (Jun. 29, 2005) (File No. S7-10-04) (Regulation NMS Final Rules); Securities Exchange Act Release No. 37619A, 61 FR 48290, 48322-3 (Sep. 12, 1996) (File No. S7-30-95) (Order Execution Obligations Final Rules). \35\ See ISE Response Letter at 1, supra note 6. --------------------------------------------------------------------------- V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act \36\ that the proposed rule change (SR-ISE-2014-43), as modified by Amendment No. 1, be, and it hereby is, approved. --------------------------------------------------------------------------- \36\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\37\ --------------------------------------------------------------------------- \37\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Jill M. Peterson, Assistant Secretary. [FR Doc. 2015-06515 Filed 3-20-15; 8:45 am] BILLING CODE 8011-01-P
![15262 Federal Register / Vol. 80, No. 55 / Monday, March 23, 2015 / Notices
days of the filing of the proposed rule inspection and copying at the principal January 2, 2015.6 On December 31,
change, the Commission summarily may office of the Exchange. All comments 2014, the Commission instituted
temporarily suspend such rule change if received will be posted without change; proceedings to determine whether to
it appears to the Commission that such the Commission does not edit personal approve or disapprove the proposed
action is: (i) Necessary or appropriate in identifying information from rule change.7 On March 9, 2015, the
the public interest; (ii) for the protection submissions. You should submit only Exchange filed Amendment No. 1 to the
of investors; or (iii) otherwise in information that you wish to make proposed rule change.8 This order
furtherance of the purposes of the Act. available publicly. All submissions approves the proposed rule change, as
If the Commission takes such action, the should refer to File Number SR– modified by Amendment No. 1.
Commission shall institute proceedings NASDAQ–2015–022 and should be II. Description of the Proposal
to determine whether the proposed rule submitted on or before April 13, 2015.
should be approved or disapproved. The Exchange proposes to amend ISE
For the Commission, by the Division of
Rules 810 (Limitations on Dealings) and
IV. Solicitation of Comments Trading and Markets, pursuant to delegated
authority.13
717 (Limitations on Orders) governing
Interested persons are invited to information barriers. Specifically, the
Jill M. Peterson,
submit written data, views and Exchange proposes to amend Rule 810
arguments concerning the foregoing, Assistant Secretary. to permit information to flow to a
including whether the proposed rule [FR Doc. 2015–06513 Filed 3–20–15; 8:45 am] member’s EAM unit, which handles the
change is consistent with the Act. BILLING CODE 8011–01–P customer/agency side of the business,
Comments may be submitted by any of from its affiliated Primary Market Maker
the following methods: (‘‘PMM’’) and/or Competitive Market
SECURITIES AND EXCHANGE Maker (‘‘CMM’’) (jointly, ‘‘market
Electronic Comments COMMISSION makers’’) unit. As amended, ISE Rule
• Use the Commission’s Internet 810 will allow EAMs to know where,
comment form (http://www.sec.gov/ [Release No. 34–74521; File No. SR–ISE– and at what price, their affiliated market
rules/sro.shtml); or 2014–43] makers are either quoting or have orders
• Send an email to rule-comments@ on the order book 9 and to use that
sec.gov. Please include File Number SR– Self-Regulatory Organizations; information to influence routing
NASDAQ–2015–022 on the subject line. International Securities Exchange, decisions. The Exchange represents that
LLC; Order Approving Proposed Rule it currently provides guidance to its
Paper Comments
Change, as Modified by Amendment members that ISE Rule 810 is to be
• Send paper comments in triplicate No. 1, Amending its Information Barrier interpreted as a two-way information
to Secretary, Securities and Exchange Rules barrier between the EAM unit and its
Commission, 100 F Street NE., affiliated market maker unit.10
Washington, DC 20549–1090. March 17, 2015.
The Exchange also proposes to amend
All submissions should refer to File I. Introduction ISE Rule 717, Supplementary Material
Number SR–NASDAQ–2015–022. This .06 to specify that the orders of a EAM
file number should be included on the On September 15, 2014, International
subject line if email is used. To help the Securities Exchange, LLC (‘‘Exchange’’ 6 See Securities Exchange Act Release No. 73614
Commission process and review your or ‘‘ISE’’) filed with the Securities and (November 17, 2014), 79 FR 69547 (November 21,
comments more efficiently, please use Exchange Commission (‘‘Commission’’), 2014).
only one method. The Commission will pursuant to Section 19(b)(1) of the 7 See Securities Exchange Act Release No. 73973
Securities Exchange Act of 1934 (December 31, 2014), 80 FR 583 (January 6, 2015).
post all comments on the Commission’s 8 In Amendment No. 1 the Exchange clarifies that
Internet Web site (http://www.sec.gov/ (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
an Electronic Access Member (‘‘EAM’’) would only
rules/sro.shtml). Copies of the proposed rule change amending its have access to the publicly available orders and
submission, all subsequent information barrier rules. The proposed quotes of its affiliated market maker. In addition,
amendments, all written statements rule change was published for comment the Exchange clarifies that the proposed rule change
would not permit a member’s EAM unit to access
with respect to the proposed rule in the Federal Register on October 6, any non-public order or quote information of its
change that are filed with the 2014.3 The Commission received one affiliated market maker, including any hidden or
Commission, and all written comment letter regarding the proposed undisplayed size or price information. The
rule change 4 and one response letter Exchange also clarifies that market makers are not
communications relating to the allowed to post hidden or undisplayed orders and
proposed rule change between the from ISE.5 On November 17, 2014, the quotes on the Exchange. Finally, the Exchange
Commission and any person, other than Commission extended the time period clarifies that its members would not expect to
those that may be withheld from the in which to either approve the proposed receive any additional order or quote information
rule change, disapprove the proposed as a result of this proposed rule change.
public in accordance with the Amendment No. 1 is not subject to notice and
provisions of 5 U.S.C. 552, will be rule change, or institute proceedings to comment because it is a technical amendment that
available for Web site viewing and determine whether to approve or does not materially alter the substance of the
printing in the Commission’s Public disapprove the proposed rule change to proposed rule change or raise any novel regulatory
issues.
Reference Room, 100 F Street NE., Amendment No. 1 has been placed in the public
13 17 CFR 200.30–3(a)(12).
Washington, DC 20549, on official 1 15
comment file for SR–ISE–2014–43 at http://
U.S.C. 78s(b)(1). www.sec.gov/comments/sr-ise-2014–43/
business days between the hours of 2 17 CFR 240.19b–4.
ise201443.shtml (see letter from Michael J. Simon,
mstockstill on DSK4VPTVN1PROD with NOTICES
10:00 a.m. and 3:00 p.m. Copies of the 3 See Securities Exchange Act Release No. 73261 Secretary and General Counsel, International
filing also will be available for (September 30, 2014), 79 FR 60226 (‘‘Notice’’). Securities Exchange, LLC, to Secretary,
4 See Letter from John Kinahan, Chief Executive Commission, dated March 9, 2015) and also is
the Commission written notice of its intent to file Officer, Group One Trading, L.P., dated October 27, available at the Exchange’s Web site at
the proposed rule change at least five business days 2014 (‘‘Group One Letter’’). www.ise.com.
9 According to ISE Rule 805(b)(1)(ii), market
prior to the date of filing of the proposed rule 5 See Letter from Michael J. Simon, Secretary and
change, or such shorter time as designated by the General Counsel, International Securities Exchange, makers may only have orders on the order book in
Commission. The Exchange has satisfied this LLC, dated November 14, 2014 (‘‘ISE Response option classes to which they are not appointed.
requirement. Letter’’). 10 See Notice, supra note 3, 79 FR 60226, 60226.
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![15264 Federal Register / Vol. 80, No. 55 / Monday, March 23, 2015 / Notices
that guards customer interests and 43), as modified by Amendment No. 1, programmed response to Request for
protects against the misuse of material be, and it hereby is, approved. Responses based on information
non-public information.32 For the Commission, by the Division of regarding the particular Agency Order
Finally, as noted above, the Trading and Markets, pursuant to delegated or solicited order.
commenter expressed concern that this authority.37 * * * * *
proposed rule change would introduce Jill M. Peterson,
a conflict of interest that would erode Rule 6.74B. Solicitation Auction
Assistant Secretary. Mechanism
the duty of best execution and harm
[FR Doc. 2015–06515 Filed 3–20–15; 8:45 am]
customers. The Exchange believes, and * * * * *
BILLING CODE 8011–01–P
the Commission agrees, that this . . . Interpretations and Policies:
proposed rule change, as modified by * * * * *
Amendment No. 1, does not alter a .03 Under Rule 6.74B, Trading Permit
SECURITIES AND EXCHANGE
broker-dealer’s duty of best execution.33 Holders may enter contra orders that are
COMMISSION
Although the proposed rule change, as solicited. The Auction provides a
modified by Amendment No. 1, will [Release No. 34–74519; File No. SR–CBOE–
facility for Trading Permit Holders that
permit EAMs to know and consider the 2015–026]
locate liquidity for their customer
quotes of its affiliated market makers orders. Trading Permit Holders may not
when making routing decisions, the Self-Regulatory Organizations;
Chicago Board Options Exchange, use the Auction to circumvent Rules
Commission continues to expect that 6.45A.01, 6.45B.01 or 6.74A limiting
routing decisions related to the duty of Incorporated; Notice of Filing of a
Proposed Rule Change Relating to principal transactions. This may
best execution will be premised solely
Rules 6.74A and 6.74B include, but is not limited to, Trading
on customer considerations such as the
Permit Holders entering contra orders
likelihood of execution, the opportunity March 17, 2015. that are solicited from (a) affiliated
to obtain price improvement, Pursuant to Section 19(b)(1) of the broker-dealers, or (b) broker-dealers
availability of best price and Securities Exchange Act of 1934 (the with which the Trading Permit Holder
minimization of market impact.34 The ‘‘Act’’),1 and Rule 19b–4 thereunder,2 has an arrangement that allows the
Commission emphasizes that a broker- notice is hereby given that, on March 6, Trading Permit Holder to realize similar
dealer’s duty of best execution exists 2015, Chicago Board Options Exchange, economic benefits from the solicited
whether an EAM determines to route Incorporated (the ‘‘Exchange’’ or
customer order flow toward its affiliated transaction as it would achieve by
‘‘CBOE’’) filed with the Securities and executing the customer order in whole
market maker or away from its affiliated
Exchange Commission (the or in part as principal. Additionally,
market maker. Further, the Commission
‘‘Commission’’) the proposed rule [solicited contra orders entered by
notes that in response to the
change as described in Items I, II, and Trading Permit Holders to trade against
commenter’s concern that the proposed
III below, which Items have been Agency Orders may not be for the
rule change would negatively impact
prepared by the Exchange. The account of a CBOE Market-Maker
best execution considerations, ISE
Commission is publishing this notice to assigned to the options class.] a Market-
stated that it would ‘‘continue to
solicit comments on the proposed rule Maker submitting a solicited order to
monitor for abnormalities in interaction
change from interested persons. execute against a particular Agency
rates between members, and will
investigate and take appropriate I. Self-Regulatory Organization’s Order may not modify its pre-
regulatory action against members that Statement of the Terms of Substance of programmed response to Request for
fail to comply with their best execution the Proposed Rule Change Responses based on information
obligations . . . [and that] these regarding the particular Agency Order
The Exchange seeks to amend CBOE or solicited order.
surveillance tools will allow ISE to Rules 6.74A and 6.74B. The text of the
comply with its regulatory * * * * *
proposed rule change is provided below The text of the proposed rule change
responsibilities, consistent with (additions are italicized; deletions are
treatment across competitor options is also available on the Exchange’s Web
[bracketed]). site (http://www.cboe.com/AboutCBOE/
exchanges.’’ 35 Among other things, the
Commission’s oversight of the ISE * * * * * CBOELegalRegulatoryHome.aspx), at
program is designed to evaluate the Chicago Board Options Exchange, the Exchange’s Office of the Secretary,
ISE’s performance in regard to that Incorporated Rules and at the Commission’s Public
representation. Reference Room.
Rule 6.74A. Automated Improvement
V. Conclusion Mechanism (‘‘AIM’’) II. Self-Regulatory Organization’s
It is therefore ordered, pursuant to Statement of the Purpose of, and
* * * * * Statutory Basis for, the Proposed Rule
Section 19(b)(2) of the Act 36 that the . . . Interpretations and Policies:
proposed rule change (SR–ISE–2014– Change
* * * * *
.04 [Any solicited orders submitted In its filing with the Commission, the
32 See Notice, supra note 3, 79 FR 60226, 60227. by the Initiating Trading Permit Holder Exchange included statements
33 See Notice, supra note 3, 79 FR 60226, 60227;
to trade against the Agency Order may concerning the purpose of and basis for
ISE Response Letter at 1, supra note 6. the proposed rule change and discussed
34 See e.g., FINRA Rule 5310 (Best Execution and not be for the account of a Market-Maker
mstockstill on DSK4VPTVN1PROD with NOTICES
Interpositioning); see also Securities Exchange Act assigned to the option class.] A Market- any comments it received on the
Release No. 34–51808, 70 FR 37496, 37537–8 (Jun. Maker submitting a solicited order to proposed rule change. The text of these
29, 2005) (File No. S7–10–04) (Regulation NMS execute against a particular Agency statements may be examined at the
Final Rules); Securities Exchange Act Release No. places specified in Item IV below. The
37619A, 61 FR 48290, 48322–3 (Sep. 12, 1996) (File Order may not modify its pre-
No. S7–30–95) (Order Execution Obligations Final
Exchange has prepared summaries, set
Rules). 37 17 CFR 200.30–3(a)(12). forth in sections A, B, and C below, of
35 See ISE Response Letter at 1, supra note 6. 1 15 U.S.C. 78s(b)(1). the most significant aspects of such
36 15 U.S.C. 78s(b)(2). 2 17 CFR 240.19b–4. statements.
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Document Created: 2018-02-21 09:47:47
Document Modified: 2018-02-21 09:47:47
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