82 FR 12269 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Delay Directed Orders

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 39 (March 1, 2017)

Page Range		12269-12270
FR Document		2017-03984
Federal Register, Volume 82 Issue 39 (Wednesday, March 1, 2017)
[Federal Register Volume 82, Number 39 (Wednesday, March 1, 2017)]
[Notices]
[Pages 12269-12270]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-03984]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80100; File No. SR-ISE-2017-15]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Delay Directed Orders

February 24, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 23, 2017, the International Securities Exchange, LLC 
(``ISE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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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 delay the implementation of the Directed 
Orders \3\ functionality on ISE.
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    \3\ ISE currently operates a Directed Orders system in which 
Electronic Access Members (``EAMs'') can send an order to a DMM for 
possible price improvement. If a DMM accepts Directed Orders 
generally, that DMM must accept all Directed Orders from all EAMs. 
Once such a DMM receives a Directed Order, it either (i) must enter 
the order into the Exchange's PIM auction and guarantee its 
execution at a price better than the ISE best bid or offer (``ISE 
BBO'') by at least a penny and equal to or better than the NBBO or 
(ii) must release the order into the Exchange's limit order book, in 
which case there are certain restrictions on the DMM interacting 
with the order. See ISE Rule 811.
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    The text of the proposed rule change is available on the Exchange's 
Web site at www.ise.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to delay the implementation of the Directed 
Orders functionality in ISE Rule 811. The Exchange proposes to no 
longer offer the functionality as of February 24, 2017. The Exchange 
has notified Members that the functionality will no longer be available 
by issuing a Market Information Circular. The Exchange proposes to 
launch this functionality within one year from the date of filing of 
this rule change to be announced in a separate notice.\4\ The Exchange 
notes that ISE Gemini functionality is also similarly being turned off 
on February 24, 2017.\5\
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    \4\ The separate notice will be an Options Trader Alert.
    \5\ See Securities Exchange Act Release No. 80011 (February 10, 
2017), 82 FR 10927 (SR-ISEGemini-2016-17) (Order Approving Proposed 
Rule Change, as Modified by Amendment Nos. 1 and 2, To Amend Various 
Rules in Connection With a System Migration to Nasdaq INET 
Technology).
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    The Exchange desires to turn off this functionality at this time 
and rollout this functionality at a later date in light of the upcoming 
migration to the new INET platform. The Exchange is staging the 
replatform to provide maximum benefit to its Members while also 
ensuring a successful rollout. This delay will provide the Exchange 
additional time to test and implement this functionality. The Exchange 
notes that no market participant would be impacted by the delay in 
implementation as no participants currently utilize this feature on ISE 
because no market participant has utilized the Directed Orders 
functionality in the last thirteen months.
    The Exchange will introduce the Directed Orders functionality on 
ISE within one year from the date of this filing, otherwise the 
Exchange will file a rule proposal with the Commission to remove these 
rules.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ in particular, in that it is 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 
because the Exchange desires to rollout this functionality at a later 
date to allow additional time to rebuild this technology on the new 
platform. By turning off the functionality on February 24, 2017, this 
will provide the Exchange additional time to test and implement this 
functionality, which is not being amended. The Exchange believes that 
Members have been given adequate notice of the implementation dates. 
The Exchange notes that Members are aware of the Exchange's efforts to 
replatform to the INET technology and no Member is using the Directed 
Orders functionality. The Exchange will continue to provide 
notifications to Members to ensure clarity about the availability of 
this functionality. The Exchange will note the applicable dates within 
the rule text as to the availability of this functionality.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change will impact the intense competition that 
exists in the options market. No market participant will be impacted by 
turning off this functionality and delaying its implementation as no 
participants currently utilize this feature on ISE. The Exchange plans 
to offer the functionality after a period of delay.

[[Page 12270]]

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \8\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Commission has waived the five-day prefiling requirement in this 
case.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The Exchange represents that waiver of the operative delay would 
provide the Exchange additional time to implement the Directed Orders 
functionality and ensure that it is properly functioning prior to 
implementation on INET. The Exchange states that it provided notice of 
the proposed rule change to Members on February 17, 2017. The 
Commission notes that the Exchange represents that there will be no 
adverse effect from turning off this functionality for a short period 
of time because no market participant has utilized the Directed Orders 
functionality in the last thirteen months. Accordingly, the Commission 
hereby waives the operative delay and designates the proposal operative 
upon filing.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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.

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 protected]. Please include 
File Number SR-ISE-2017-15 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2017-15. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ISE-2017-15 and should be 
submitted on or before March 22, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-03984 Filed 2-28-17; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 39 / Wednesday, March 1, 2017 / Notices 12269

Chairman Michael S. Piwowar; plenary The text of the proposed rule change because no market participant has
remarks by panelists Brigitte Madrian is available on the Exchange’s Web site utilized the Directed Orders
and Terry Odean; a panel discussion at www.ise.com, at the principal office functionality in the last thirteen months.
exploring how investors think and act; of the Exchange, and at the The Exchange will introduce the
a keynote address by panelist George Commission’s Public Reference Room.
Directed Orders functionality on ISE
Lowenstein; a panel discussion
II. Self-Regulatory Organization’s within one year from the date of this
addressing ways in which the
Statement of the Purpose of, and filing, otherwise the Exchange will file
Commission’s disclosure regime can
Statutory Basis for, the Proposed Rule a rule proposal with the Commission to
facilitate disclosure in the most effective
Change remove these rules.
manner for a wide variety of users;
remarks from Commissioner Kara M. In its filing with the Commission, the
2. Statutory Basis
Stein; a panel discussion regarding ways Exchange included statements
in which to improve the disclosure of concerning the purpose of and basis for The Exchange believes that its
fees, strategies/risks, and performance; the proposed rule change and discussed proposal is consistent with Section 6(b)
and a nonpublic networking session for any comments it received on the of the Act,6 in general, and furthers the
panelists during lunch. proposed rule change. The text of these objectives of Section 6(b)(5) of the Act,7
statements may be examined at the in particular, in that it is designed to
Dated: February 24, 2017.
places specified in Item IV below. The promote just and equitable principles of
Brent J. Fields,
Exchange has prepared summaries, set
Secretary. trade, to remove impediments to and
forth in sections A, B, and C below, of
[FR Doc. 2017–03945 Filed 2–28–17; 8:45 am] perfect the mechanism of a free and
the most significant aspects of such
BILLING CODE 8011–01–P statements. open market and a national market
system, and, in general to protect
A. Self-Regulatory Organization’s investors and the public interest
SECURITIES AND EXCHANGE Statement of the Purpose of, and because the Exchange desires to rollout
COMMISSION Statutory Basis for, the Proposed Rule this functionality at a later date to allow
Change additional time to rebuild this
[Release No. 34–80100; File No. SR–ISE–
2017–15] 1. Purpose technology on the new platform. By
The Exchange proposes to delay the turning off the functionality on February
Self-Regulatory Organizations; 24, 2017, this will provide the Exchange
International Securities Exchange, implementation of the Directed Orders
functionality in ISE Rule 811. The additional time to test and implement
LLC; Notice of Filing and Immediate this functionality, which is not being
Effectiveness of Proposed Rule Exchange proposes to no longer offer the
functionality as of February 24, 2017. amended. The Exchange believes that
Change To Delay Directed Orders Members have been given adequate
The Exchange has notified Members
February 24, 2017. that the functionality will no longer be notice of the implementation dates. The
Pursuant to Section 19(b)(1) of the available by issuing a Market Exchange notes that Members are aware
Securities Exchange Act of 1934 Information Circular. The Exchange of the Exchange’s efforts to replatform to
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 proposes to launch this functionality the INET technology and no Member is
notice is hereby given that on February within one year from the date of filing using the Directed Orders functionality.
23, 2017, the International Securities of this rule change to be announced in The Exchange will continue to provide
Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) a separate notice.4 The Exchange notes notifications to Members to ensure
filed with the Securities and Exchange that ISE Gemini functionality is also clarity about the availability of this
Commission (‘‘Commission’’) the similarly being turned off on February functionality. The Exchange will note
proposed rule change as described in 24, 2017.5 the applicable dates within the rule text
Items I and II below, which Items have The Exchange desires to turn off this as to the availability of this
been prepared by the Exchange. The functionality at this time and rollout functionality.
Commission is publishing this notice to this functionality at a later date in light
solicit comments on the proposed rule of the upcoming migration to the new B. Self-Regulatory Organization’s
change from interested persons. INET platform. The Exchange is staging Statement on Burden on Competition
the replatform to provide maximum
I. Self-Regulatory Organization’s The Exchange does not believe that
benefit to its Members while also
Statement of the Terms of Substance of the proposed rule change will impose
ensuring a successful rollout. This delay
the Proposed Rule Change any burden on competition not
will provide the Exchange additional
The Exchange proposes to delay the time to test and implement this necessary or appropriate in furtherance
implementation of the Directed Orders 3 functionality. The Exchange notes that of the purposes of the Act. The
functionality on ISE. no market participant would be Exchange does not believe that the
impacted by the delay in proposed rule change will impact the
1 15 U.S.C. 78s(b)(1). implementation as no participants intense competition that exists in the
2 17 CFR 240.19b–4.
3 ISE currently operates a Directed Orders system
currently utilize this feature on ISE options market. No market participant
will be impacted by turning off this
asabaliauskas on DSK3SPTVN1PROD with NOTICES

in which Electronic Access Members (‘‘EAMs’’) can
send an order to a DMM for possible price which case there are certain restrictions on the functionality and delaying its
improvement. If a DMM accepts Directed Orders DMM interacting with the order. See ISE Rule 811.
4 The separate notice will be an Options Trader
implementation as no participants
generally, that DMM must accept all Directed
Orders from all EAMs. Once such a DMM receives Alert. currently utilize this feature on ISE. The
a Directed Order, it either (i) must enter the order 5 See Securities Exchange Act Release No. 80011 Exchange plans to offer the functionality
into the Exchange’s PIM auction and guarantee its (February 10, 2017), 82 FR 10927 (SR–ISEGemini- after a period of delay.
execution at a price better than the ISE best bid or 2016–17) (Order Approving Proposed Rule Change,
offer (‘‘ISE BBO’’) by at least a penny and equal to as Modified by Amendment Nos. 1 and 2, To
6 15 U.S.C. 78f(b).
or better than the NBBO or (ii) must release the Amend Various Rules in Connection With a System
order into the Exchange’s limit order book, in Migration to Nasdaq INET Technology). 7 15 U.S.C. 78f(b)(5).

VerDate Sep<11>2014 18:09 Feb 28, 2017 Jkt 241001 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 E:\FR\FM\01MRN1.SGM 01MRN1
Document Created: 2017-03-01 03:39:04
Document Modified: 2017-03-01 03:39:04
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 12269