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41490 Federal Register / Vol. 71, No.

140 / Friday, July 21, 2006 / Notices

SECURITIES AND EXCHANGE general, to protect investors and the (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
COMMISSION public interest. notice is hereby given that on July 12,
In particular, the Commission 2006, the International Securities
[Release No. 34–54151; File No. SR–ISE– believes that the proposed change Exchange, Inc. (‘‘Exchange’’ or ‘‘ISE’’)
2006–27] should help to prevent Non-Customer filed with the Securities and Exchange
Orders from automatically trading at Commission (‘‘Commission’’) the
Self-Regulatory Organizations; prices that are inferior to the NBBO. The proposed rule change as described in
International Securities Exchange, Inc.; Commission also believes that the Items I and II below, which items have
Order Granting Approval of Proposed proposed rule change provides clarity been prepared by the Exchange. The
Rule Change Relating to Automatic with respect to the handling of Public Exchange filed the proposed rule change
Execution of Non-Customer Orders Customer Orders and Non-Customer pursuant to Section 19(b)(3)(A) of the
Orders when such orders are not Act 3 and Rule 19b–4(f)(6) thereunder,4
July 14, 2006. which renders the proposed rule change
automatically executed—Public
On May 15, 2006, the International Customer Orders would be handled by effective upon filing with the
Securities Exchange, Inc. (‘‘ISE’’ or the Primary Market Maker pursuant to Commission. The Commission is
‘‘Exchange’’), filed with the Securities ISE Rule 803(c) and Non-Customer publishing this notice to solicit
and Exchange Commission Orders would be automatically rejected. comments on the proposed rule change
(‘‘Commission’’) a proposed rule change The Commission further believes that from interested persons.
pursuant to section 19(b)(1) of the the proposed change relating to ‘‘fill-or-
Securities Exchange Act of 1934 I. Self-Regulatory Organization’s
kill’’ orders clarifies for investors and Statement of the Terms of Substance of
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 to market participants how such orders
amend ISE Rule 714 to provide that the Proposed Rule Change
will be handled by the Exchange.
incoming Non-Customer Orders 3 would The Commission notes that the The Exchange proposes to extend the
not be automatically executed at prices Exchange represents that the proposed Pilot Periods contained in paragraphs
that are inferior to the best bid or offer rule change with respect to the handling .03 and .05 of the Supplemental
disseminated by another national of Non-Customer Orders requires the Material to Exchange Rule 723. The text
securities exchange (‘‘NBBO’’) and that Exchange to implement a systems of the proposed rule change is available
Non-Customer Orders that are not change that will be implemented by on the Exchange’s Web site (http://
automatically executed would be early September 2006. Therefore, this www.iseoptions.com), at the Exchange’s
rejected. The proposed rule change also Office of the Secretary, and at the
part of the proposed rule change will
would clarify the handling of Public Commission’s Public Reference Room.
not be operative until such systems
Customer Orders 4 that are not change is implemented.9 II. Self-Regulatory Organization’s
automatically executed and update the It is therefore ordered, pursuant to Statement of the Purpose of, and
rule text to conform with the Exchange’s section 19(b)(2) of the Act,10 that the Statutory Basis for, the Proposed Rule
current handling of ‘‘fill-or-kill’’ orders. proposed rule change (SR–ISE–2006–27) Change
The proposed rule change was is approved.
published for comment in the Federal In its filing with the Commission, the
Register on June 14, 2006.5 The For the Commission, by the Division of Exchange included statements
Market Regulation, pursuant to delegated concerning the purpose of and basis for
Commission received no comments on
authority.11 the proposed rule change and discussed
the proposal. This order approves the
proposed rule change. Jill M. Peterson, any comments it received on the
The Commission has reviewed Assistant Secretary. proposed rule change. The text of these
carefully the proposed rule change and [FR Doc. E6–11571 Filed 7–20–06; 8:45 am] statements may be examined at the
finds that it is consistent with the BILLING CODE 8010–01–P places specified in Item IV below. The
requirements of section 6 of the Act 6 Exchange has prepared summaries, set
and the rules and regulations forth in Sections A, B, and C below, of
thereunder applicable to a national SECURITIES AND EXCHANGE the most significant aspects of such
securities exchange.7 In particular, the COMMISSION statements.
Commission finds that the proposed A. Self-Regulatory Organization’s
rule change is consistent with section [Release No. 34–54146; File No. SR–ISE– Statement of the Purpose of, and
6(b)(5) of the Act,8 which requires, 2006–39]
Statutory Basis for, the Proposed Rule
among other things, that the rules of an Self-Regulatory Organizations; Change
exchange be designed to promote just International Securities Exchange, Inc.; 1. Purpose
and equitable principles of trade, to Notice of Filing and Immediate
remove impediments to and perfect the The pilot periods provided in
Effectiveness of Proposed Rule paragraphs .03 and .05 of the
mechanism of a free and open market Change Relating to a One-Year Pilot
and a national market system, and, in Supplementary Material to ISE Rule 723
Extension Until July 18, 2007 for the expire on July 18, 2006.5 Paragraph .03
Price Improvement Mechanism provides that there is no minimum size
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4. July 14, 2006. requirement for orders to be eligible for
3 See ISE Rule 100(a)(23). the Price Improvement Mechanism.
4 See ISE Rule 100(a)(33).
Pursuant to Section 19(b)(1) of the
5 See Securities Exchange Act Release No. 53946 Securities Exchange Act of 1934 1 15 U.S.C. 78s(b)(1).
rwilkins on PROD1PC63 with NOTICES_1

(June 6, 2006), 71 FR 34406 (‘‘Notice’’). 2 17 CFR 240.19b–4.


6 15 U.S.C. 78f. 9 The
Exchange represents in the Notice that it 3 15 U.S.C. 78s(b)(3)(A).
7 In approving this proposal, the Commission has would issue a Regulatory Information Circular 4 17 CFR 240.19b–4(f)(6).

considered the proposed rule’s impact on notifying members at least five days prior to the 5 See Securities Exchange Act Release Nos. 50819
efficiency, competition, and capital formation. 15 operative date of the rule change. (December 8, 2004), 69 FR 75093 (December 15,
U.S.C. 78c(f). 10 15 U.S.C. 78s(b)(2).
2004); and 52027 (July 13, 2005), 70 FR 41804 (July
8 15 U.S.C. 78f(b)(5). 11 17 CFR 200.30–3(a)(12). 20, 2005).

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