The International Securities Exchange, LLC (ISE) has filed with the Securities and Exchange Commission a third amendment to a proposed rule change to reduce the order handling and exposure periods contained in ISE Rules 716 (Block Trades), 717 (Limitations on Orders), 723 (Price Improvement Mechanism for Crossing Transactions) and 811 (Directed Orders) from three seconds to one second.
Rule 716 contains the requirements with respect to the execution of orders using the Block Order Mechanism, Facilitation Mechanism and Solicited Order Mechanism. Rule 723 contains the requirements with respect to the execution of orders using the Price Improvement Mechanism. Under the proposal, the exposure period for all four mechanisms would be reduced to one second. Rule 717 requires members to expose agency orders to the marketplace before executing them as principal or executing them against orders solicited from other members. The proposal aims to reduce the exposure period for orders entered onto the ISE to one second. Rule 811 contains the requirements applicable to the handling and execution of Directed Orders. Under the proposal, this time period would be reduced to one second.
The ISE believes that it is in the best interests of all market participants to minimize the exposure period to a time frame that continues to allow ample time for market participants to electronically respond, as both the order being exposed and the participants responding to the order are subject to market risk during the exposure period.