43188 Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 

39 15 U.S.C. 78f(b)(5). 

40See Plan Approval, supra, note 5. 

41The Commission notes that any Participating 

Options Exchange that wishes to utilize such order 

types in a manner that would result in a TradeThrough would need to separately request an 

exemption from the Plan for such use. 

42The Commission notes that the rules contained 

in NYSE Amex Temporary Rule 993NY are not 

required by the Plan, but rather are rules proposed 

by the Exchange in order to facilitate the 

participation in the Plan of certain exchanges 

during an initial transition period. 

43 15 U.S.C. 78f(b)(5). 

44 15 U.S.C. 78s(b)(2). 

45 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 60186 

(June 29, 2009), 74 FR 32657 (‘‘Notice’’). 

4Amendment No. 1 made technical corrections to 

the rule text proposed by Nasdaq. Because the 

amendment did not affect the substance of the rule 

filing, the amendment did not require notice and 

comment. 

5The Plan is a national market system plan 

proposed by the seven existing options exchanges 

and approved by the Commission. See Securities 

Exchange Act Release No. 59647 (March 30, 2009), 

74 FR 15010 (April 2, 2009) (File No. 4–546) (‘‘Plan 

Notice’’) and 60405 (July 30, 2009), 74 FR 39362 

(August 6, 2009) (File No. 4–546) (‘‘Plan 

Approval’’). The seven options exchanges are: 

Chicago Board Options Exchange, Incorporated 

(‘‘CBOE’’); International Securities Exchange LLC 

(‘‘ISE’’); NASDAQ OMX BX, Inc. (‘‘BOX’’); 

NASDAQ OMX PHLX, Inc. (‘‘Phlx’’); NYSE Amex 

LLC (‘‘NYSE Amex’’); NYSE Arca, Inc. (‘‘NYSE 

Arca’’); and Nasdaq (each exchange individually a 

‘‘Participant’’ and, together, the ‘‘Participating 

Options Exchanges’’). 

In addition, the Commission notes that 

the rule requires that such 

determination be made via 

identification available pursuant to the 

OPRA Plan, which is working with the 

participating options exchanges on a 

method to so identify customer 

quotations through OPRA. The 

Exchange has represented that, absent 

the ability to identify a customer quote 

as part of an exchange’s BBO, the 

Exchange would assume that the quote 

represents, in whole or in part, a 

customer order. As such, the Exchange 

has represented that it would not permit 

its members to avail themselves of this 

exemption unless the away market has 

informed the Exchange that it would 

designate all customer orders as such in 

OPRA and such exchange’s quotation 

does not contain such designation. 

Finally, the Exchange has represented 

that if an exchange chooses not to 

identify its customer quotations, the 

Exchange would treat all of such 

exchange’s quotations as customer 

orders and, absent application of 

another exception, would not permit 

locks of such quotations. 

Therefore, the Commission finds that 

Exchange’s rule regarding locked and 

crossed markets appropriately 

implements Section 6 of the Plan, and 

is consistent with Section 6(b)(5) of the 

Act 39 which requires, among other 

things, that the rules of a national 

securities exchange be 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. 

The Commission also finds that 

proposed NYSE Amex Temporary Rule 

993NY, which facilitates the 

participation of certain Participating 

Options Exchanges who may require the 

use of P/A Orders and Principal Orders 

after implementation of the Plan, is 

consistent with the Act. Although the 

Commission has already approved the 

Plan,40 the Commission also recognizes 

that there may be one or more 

Participating Options Exchanges that 

may require a temporary transition 

period during which they may want to 

continue to utilize these order types that 

exist currently under the Old Plan.41

The Exchange and each of the other 

Participating Options Exchanges have 

proposed substantially identical 

temporary provisions to accommodate 

this possibility.42 Thus, the Commission 

finds that the proposed rule relating to 

the Exchange’s receipt and handling of 

P/A Orders and Principal Orders, and 

imposing certain obligations on the 

Exchange with respect to such orders 

that are similar to those that exist under 

the Old Plan, is appropriate and 

consistent with Section 6(b)(5) of the 

Act 43 which requires, among other 

things, that the rules of a national 

securities exchange be 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. 

Finally, the Commission finds that 

NYSE Amex’s other proposed changes, 

including the proposed modifications to 

NYSE Amex Rule 921NY, 

Commentaries .01–.03 to NYSE Amex 

Rule 923NY, NYSE Amex Rule 964NY, 

and NYSE Amex Rule 476A are 

appropriate and consistent with the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,44 that the 

proposed rule change (SR–NYSEAmex– 

2009–19), as modified by Amendment 

No. 1, be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.45

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20536 Filed 8–25–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60525; File No. SR– 

NASDAQ–2009–056] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Granting Approval of a Proposed Rule 

Change as Modified by Amendment 

No. 1 Thereto To Adopt Rules 

Implementing the Options Order 

Protection and Locked/Crossed Market 

Plan 

August 18, 2009. 

I. Introduction 

On June 23, 2009, The NASDAQ 

Stock Market LLC (‘‘Nasdasq’’ or 

‘‘Exchange’’) 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 to 

amend and adopt rules to implement 

the Options Order Protection and 

Locked/Crossed Market Plan. The 

proposed rule change was published for 

comment in the Federal Register on July 

8, 2009.3 On August 14, 2009, the 

Exchange filed Amendment No. 1 to the 

proposed rule change.4 The Commission 

received no comments on the proposal. 

This order approves the proposed rule 

change, as modified by Amendment No. 

1. 

II. Description of the Proposal 

The Exchange proposes to amend and 

adopt new Nasdaq rules to implement 

the Options Order Protection and 

Locked/Crossed Market Plan (‘‘Plan’’).5

Specifically, the Exchange proposes to 

replace current Chapter XII of its rules 

with new rules implementing the Plan, 

amend other Exchange rules to reflect 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 43189 

6On July 28, 2000, the Commission approved the 

Old Plan as a national market system plan for the 

purpose of creating and operating an intermarket 

options market linkage proposed by the American 

Stock Exchange LLC (n/k/a NYSE Amex), CBOE, 

and ISE. See Securities Exchange Act Release No. 

43086 (July 28, 2000), 65 FR 48023 (August 4, 

2000). Subsequently, Philadelphia Stock Exchange, 

Inc. (n/k/a Phlx), Pacific Exchange, Inc. (n/k/a 

NYSE Arca), Boston Stock Exchange, Inc. (n/k/a 

BOX), and Nasdaq joined the Linkage Plan. See 

Securities Exchange Act Release Nos. 43573 

(November 16, 2000), 65 FR 70851 (November 28, 

2000); 43574 (November 16, 2000), 65 FR 70850 

(November 28, 2000); 49198 (February 5, 2004), 69 

FR 7029 (February 12, 2004); and 57545 (March 21, 

2008), 73 FR 16394 (March 27, 2008). 

7Section 8(c) of the Old Plan. 

8The Linkage Hub is a centralized data 

communications network that electronically links 

the Participating Options Exchanges to one another. 

The Options Clearing Corporation (‘‘OCC’’) operates 

the Linkage Hub. 

9Section 2(16) of the Old Plan. 

10Section 7(a)(i)(C) of the Old Plan. 

11See Securities Exchange Act Release No. 60360 

(July 21, 2009) 74 FR 37265 (July 28, 2009) (File No. 

4–429). 

12 17 CFR 242.608. 

13See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496 (June 29, 2005) (File 

No. S7–10–04); 17 CFR 242.600 et seq. For 

discussions of the similarities between the 

provisions of Regulation NMS and the provisions in 

the Plan, see the Plan Notice and Plan Approval, 

supra note 5. 

14Under the Plan, a ‘‘Trade-Through’’ is generally 

defined as a transaction in an option series, either 

as principal or agent, at a price that is lower than 

a Protected Bid or higher than a Protected Offer.’’ 

See Section 2(21) of the Plan. A ‘‘Protected Bid’’ 

and ‘‘Protected Offer’’ generally means a bid or offer 

in an option series, respectively, that is displayed 

by a Participant, is disseminated pursuant to the 

Options Price Reporting Authority (‘‘OPRA’’) Plan, 

and is the Best Bid or Best Offer. See Section 2(17) 

of the Plan. A ‘‘Best Bid’’ or ‘‘Best Offer’’ means the 

highest bid price and the lowest offer price. Section 

(2)(1) of the Plan. ‘‘Protected Bid’’ and ‘‘Protected 

Offer,’’ together are referred to herein as ‘‘Protected 

Quotation.’’ See Section 2(18) of the Plan. 

15Section 5(a)(ii) of the Plan. 

16Section 5(b) of the Plan. 

17Subparagraphs (ii), (vii), and (viii), 

respectively, of Section 5(b) of the Plan. 

18Subparagraphs (i), (iii), (vi), (ix), (xi), and (iv)– 

(v), respectively, of Section 5(b) of the Plan. 

19Subparagraph (x) of Section 5(b) of the Plan. 

20Section 6 of the Plan. The Plan also contains 

provisions relating to the operation of the Plan 

including, for example, provisions relating to the 

entry of new parties to the Plan; withdrawal from 

the Plan; and amendments to the Plan. 

21A more detailed description of the Exchange’s 

proposed rule change may be found in the Notice, 

supra, note 3. 

22Proposed Nasdaq Chapter XII, Section 1. 

23Proposed Nasdaq Chapter XII, Section 2(a). 

24Proposed Nasdaq Chapter XII, Section 2(b)(1)– 

(11). In addition, the Exchange proposes to add 

ISOs as a new type of order under proposed Nasdaq 

Chapter VI, Section 1(e)(8). 

25A ‘‘locked market’’ is defined as a quoted 

market in which a Protected Bid is equal to a 

Protected Offer. Proposed Nasdaq Chapter XII, 

Section 1(10). A ‘‘crossed market’’ is defined as a 

quoted market in which a Protected Bid is higher 

than a Protected Offer. Proposed Nasdaq Chapter 

XII, Section 1(5). 

26Proposed Nasdaq Chapter XII, Section 3(a). 

27Proposed Nasdaq Chapter XII, Section 3(b). 

the Plan, and delete rules rendered 

unnecessary by the Plan. 

The Old Plan 

Each of the Participating Options 

Exchanges are signatories to the Plan for 

the Purpose of Creating and Operating 

an Intermarket Option Linkage (‘‘Old 

Plan’’).6 In pertinent part, the Old Plan 

generally requires its participants to 

avoid trading at a price inferior to the 

national best bid or offer (‘‘tradethrough’’), although it provides for a 

number of exceptions to trade-through 

liability.7 The Participating Options 

Exchanges comply with this 

requirement of the Old Plan by utilizing 

a stand alone system (‘‘Linkage Hub’’) to 

send and receive specific order types,8

namely Principal Acting as Agent 

Orders (‘‘P/A Orders’’), Principal 

Orders, and Satisfaction Orders.9 The 

Old Plan also provided that 

dissemination of ‘‘locked’’ or ‘‘crossed’’ 

markets should be avoided, and 

remedial actions that should be taken to 

unlock or uncross such market.10 Each 

of the Participating Options Exchanges, 

including the Exchange, has submitted 

an amendment to the Old Plan to 

withdraw from such Plan.11 The 

withdrawals will be effective upon 

approval by the Commission of such 

amendments pursuant to Rule 608 of 

Regulation NMS under the Act 

(‘‘Regulation NMS’’).12

The Plan 

The Plan does not require a central 

linkage mechanism akin to the Old 

Plan’s Linkage Hub. Instead, the Plan 

includes the framework for routing 

orders via private linkages that exist for 

NMS stocks under Regulation NMS.13

The Plan requires the Participating 

Options Exchanges to adopt rules 

‘‘reasonably designed to prevent TradeThroughs.’’ 14 Participating Options 

Exchanges are also required to conduct 

surveillance of their respective markets 

on a regular basis to ascertain the 

effectiveness of the policies and 

procedures to prevent Trade-Throughs 

and to take prompt action to remedy 

deficiencies in such policies and 

procedures.15 As further described 

below, the Plan incorporates a number 

of exceptions to trade-through 

liability.16 Some of these exceptions are 

carried over from the Old Plan, 

including exceptions for trading 

rotations, non-firm quotes, and complex 

trades.17 Others are substantially similar 

to exceptions available for NMS stocks 

under Regulation NMS, such as 

exceptions for systems issues, crossed 

markets, quote flickering, customer 

stopped orders, benchmark trades and, 

notably, intermarket sweep orders 

(‘‘ISOs’’).18 In addition, the Plan 

contains a new exception for stopped 

orders and price improvement.19

The Plan also requires each 

Participant to establish, maintain, and 

enforce written rules that: require its 

members reasonably to avoid displaying 

locked and crossed markets; assure the 

reconciliation of locked and crossed 

markets; and prohibit its members from 

engaging in a pattern or practice of 

displaying locked and crossed markets; 

subject to exceptions as may be 

contained in the rules of the Participant, 

as approved by the Commission.20

The Exchange’s Proposal 

To implement the Plan, the Exchange 

proposes to replace its current rules 

relating to the Old Plan with new rules 

relating to the Plan, and makes 

amendments to other rules as necessary 

to conform to the requirements of the 

Plan.21 As such, the Exchange proposes 

to adopt all applicable definitions from 

the Plan into the Exchange’s rules.22

In addition, the Exchange proposes to 

prohibit its members from effecting 

Trade-Throughs, unless an exception 

applies.23 Consistent with the Plan, the 

Exchange also proposes exceptions to 

the prohibition on trade throughs 

relating to: System issues; trading 

rotations; crossed markets; intermarket 

sweep orders; quote flickering; non-firm 

quotes; complex trades; customer 

stopped orders; stopped orders and 

price improvement; and benchmark 

trades.24

The Exchange also proposes a rule to 

address locked and crossed markets, as 

required by the Plan.25 Specifically, the 

Exchange proposes that, except for 

quotations that fall within a stated 

exception, members shall reasonably 

avoid displaying, and shall not engage 

in a pattern or practice of displaying, 

any quotations that lock or cross a 

Protected Quote.26

The Exchange proposes three 

exceptions to the prohibition against 

locked and crossed markets: when the 

Exchange is experiencing a failure, 

material delay, or malfunction of its 

systems or equipment; when the locking 

or crossing quotation was displayed at 

a time where there is a crossed market; 

and when an Exchange member 

simultaneously routes an ISO to execute 

against the full displayed size of any 

locked or crossed Protected Bid or 

Protected Offer.27

The Exchange also proposes rules to 

permit it to continue to accept P/A 

Orders and Principal Orders from 

Participating Options Exchanges that are 


jlentini on DSKJ8SOYB1PROD with NOTICES
43190 Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 

28Proposed Nasdaq Chapter XII, Section 4. 29 In addition, the Exchange proposes to rely 

upon the order routing arrangements already in 

place on its market. 30 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 31 15 U.S.C. 78f(b)(5). 32 17 CFR 242.608(c). Section 1 of the Plan 

provides in pertinent part that, ‘‘The Participants 

will submit to the [Commission] for approval their 

respective rules that will implement the framework 

of the Plan.’’ 33See supra note 5. 34The Commission notes that the Exchange’s 

proposed definition of ‘‘Complex Trade’’ under 

proposed Nasdaq Chapter XII, Section 1(4) is 

identical to the definition of ‘‘Complex Trade’’ 

under old Nasdaq Chapter XII, Section 1(c), which 

is being deleted. 

35Proposed Nasdaq Chapter XII, Section 2(b)(1)– 

(11). 

36Proposed Nasdaq Chapter XII, Sections 2(b)(4) 

and (5). 37 15 U.S.C. 78f(b)(5). 

not able to send ISOs in order to avoid 

Trade-Throughs.28

The Exchange proposes to amend 

certain other rules to reflect the Plan 

and delete terms related to the Old Plan. 

In particular, the Exchange proposes to 

amend Nasdaq Chapter IV, Section 5(b) 

and (c) and Nasdaq Chapter VII, Section 

5(a)(viii) to modify language that is no 

longer applicable under the Plan and 

eliminate the ‘‘Removal of Unreliable 

Quotes’’ provision of Nasdaq Chapter 

12, Section 3(e).29

NASDAQ proposes to implement this 

proposed rule change upon withdrawal 

from the current Linkage Plan and 

effectiveness of the new Plan. 

II. Discussion and Commission’s 

Findings 

After careful review, the Commission 

finds that the proposed rule change, as 

amended, is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.30 In 

particular, the Commission finds that 

the proposal is consistent with Section 

6(b)(5) of the Act 9 31 which requires, 

among other things, that the rules of a 

national securities exchange be 

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. The Commission also 

finds that the proposal is consistent 

with Rule 608(c) of Regulation NMS 

under the Act, which requires that each 

exchange comply with the terms of any 

effective national market system plan of 

which it is a participant.32 Finally, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Plan.33

Proposed Nasdaq Chapter XII, Section 

1 would define applicable terms in a 

manner that are substantively identical 

to the defined terms of the Plan.34 As 

such, the Commission finds that 

proposed Nasdaq Chapter XII, Section 1 

is consistent with the Act and the Plan. 

Proposed Nasdaq Chapter XII, Section 

2(a) would prohibit members from 

effecting Trade-Throughs unless an 

exception applies. Proposed Nasdaq 

Chapter XII, Section 2(b) would provide 

for 11 exceptions to the general TradeThrough prohibition, relating to systems 

issues, trading rotations, crossed 

markets, ISOs, quote flickering, nonfirm quotes, complex trades, customer 

stopped orders, stopped orders and 

price improvement, and benchmark 

trades.35 Aside from the proposed 

exception relating to systems issues, 

each proposed exception would be 

substantively identical to the parallel 

exception under Section 5(b) of the 

Plan. 

The systems issues exception under 

proposed Nasdaq Chapter XII, Section 

2(b)(1) would implement the parallel 

exception available under Section 5(b)(i) 

of the Plan and would permit the 

Exchange to bypass the Protected 

Quotation of another Participant if such 

other Participant repeatedly fails to 

respond within one second to incoming 

orders attempting to access its Protected 

Quotations. The Exchange’s rule would 

require the Exchange to notify such nonresponding Participant immediately 

after (or at the same time as) electing 

self-help, and assess whether the cause 

of the problem lies with the Exchange’s 

own systems and, if so, take immediate 

steps to resolve the problem. Finally, 

the Exchange would be required to 

promptly document its reasons 

supporting any such determination to 

bypass a Protected Quotation. The 

Commission believes that this exception 

should provide the Exchange with the 

necessary flexibility for dealing with 

problems that occur on an away market 

during the trading day. At the same 

time, the exception’s requirements to 

immediately notify such away market of 

its determination and also assess its 

own system should help prevent the use 

of this exception when there in fact is 

a problem with the Exchange’s own 

systems, rather than those of an away 

market. 

The Commission notes that included 

among the exceptions in proposed 

Nasdaq Chapter XII, Section 2(b) would 

be exceptions for certain transactions 

involving ISOs.36 An order identified as 

an ISO would be immediately 

executable by the Exchange (or any 

other Plan Participant that received 

such an order) based on the premise that 

the market participant sending the ISO 

has already attempted to access all 

better-priced Protected Quotations up to 

their displayed size. The Commission 

believes that this exception should help 

ensure more efficient and faster 

executions in the options markets. 

The Commission notes that, in 

addition to these rules regarding TradeThroughs, the Plan requires that each 

Participant establish, maintain and 

enforce written policies and procedures 

that are reasonably designed to prevent 

Trade-Throughs in that Participant’s 

market that do not fall within an 

applicable exception and, if relying on 

such exception, that are reasonably 

designed to assure compliance with the 

terms of the exception. In addition, the 

Commission notes that the Plan requires 

each Participant to conduct surveillance 

of its market on a regular basis to 

ascertain the effectiveness of such 

policies and procedures and to take 

prompt action to remedy any 

deficiencies in such policies and 

procedures. 

Accordingly, the Commission finds 

that proposed Nasdaq Chapter XII, 

Section 2 is consistent with Section 5 of 

the Plan and Section 6(b)(5) of the Act 37

which requires, among other things, that 

the rules of a national securities 

exchange be 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. 

Proposed Nasdaq Chapter XII, Section 

3(a) would require Exchange members 

to reasonably avoid displaying, and not 

engage in a pattern or practice of 

displaying, any quotation that locks or 

crosses a Protected Quotation, subject to 

certain exceptions delineated in 

proposed Nasdaq Chapter XII, Section 

3(b). The Commission recognizes that 

locked and crossed markets may occur 

accidentally and cannot always be 

avoided. However, the Commission 

believes that giving priority to the firstdisplayed Protected Bid or Protected 

Offer, particularly when it includes a 

public customer’s order, will encourage 

price discovery and contribute to fair 

and orderly markets. Therefore, the 

Commission believes that the proposed 

rule, which corresponds to the Plan’s 

language, to require members to 

reasonably avoid displaying, and not 

engaging in a pattern or practice of, 

locks and crosses is appropriate. 

Proposed Nasdaq Chapter XII, Section 

3(b) would permit three exceptions to 


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Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 43191 

38Section 6 of the Plan permits exceptions to the 

Plan’s locked and crossed market rules as may be 

contained in the rules of a Participant approved by 

the Commission. 

39 15 U.S.C. 78f(b)(5). 

40See Plan Approval, supra, note 5. 

41The Commission notes that any Participating 

Options Exchange that wishes to utilize such order 

types in a manner that would result in a TradeThrough would need to separately request an 

exemption from the Plan for such use. 

42The Commission notes that the rules contained 

in Proposed Nasdaq Chapter XII, Section 4 are not 

required by the Plan, but rather are rules proposed 

by the Exchange in order to facilitate the 

participation in the Plan of certain exchanges 

during an initial transition period. 

43 15 U.S.C. 78f(b)(5). 

44 15 U.S.C. 78s(b)(2). 

45 17 CFR 200.30–3(a)(12). 

1 15 U.S.C.78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4FLEX Options provide investors with the ability 

to customize basic option features including size, 

expiration date, exercise style, and certain exercise 

prices. FLEX Options can be FLEX Index Options 

or FLEX Equity Options. FLEX Index Options Series 

may be approved and open for trading on any index 

that has been approved for Non-FLEX Options 

trading on the Exchange. FLEX Equity Options may 

be on underlying securities that have been 

approved by the Exchange in accordance with 

NYSE Amex Rule 915, which includes but is not 

limited to stock options and exchange-traded fund 

options. Both FLEX Index Options and FLEX Equity 

Options are subject to the FLEX rules in Section 15. 

the Exchange’s general rule relating to 

locked and crossed markets.38 These 

exceptions would be similar to 

analogous certain trade-through 

exceptions under proposed Nasdaq 

Chapter XII, Section 2(b), and relate to 

when the Exchange is experiencing 

systems issues, when there exists a 

crossed market, and when a member 

simultaneously routes ISOs against the 

full displayed size of any locked or 

crossed Protected Bid or Protected Offer. 

The Commission believes that the 

Exchange’s proposed rules relating to 

locked and crossed markets are 

consistent with the Plan and the Act 

and should help ensure that the display 

of locked or crossed markets will be 

limited and that any such display will 

be promptly reconciled. The 

Commission also believes that each of 

the proposed exceptions to locked and 

crossed markets relate to circumstances 

when it is appropriate to permit a 

limited, narrow exception to the general 

locked and crossed market rule. 

Therefore, the Commission finds that 

Exchange’s rule regarding locked and 

crossed markets appropriately 

implements Section 6 of the Plan, and 

is consistent with Section 6(b)(5) of the 

Act 39 which requires, among other 

things, that the rules of a national 

securities exchange be 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. 

The Commission also finds that 

proposed Nasdaq Chapter XII, Section 4, 

which facilitates the participation of 

certain Participating Options Exchanges 

who may require the use of P/A Orders 

and Principal Orders after 

implementation of the Plan, is 

consistent with the Act. Although the 

Commission has already approved the 

Plan,40 the Commission also recognizes 

that there may be one or more 

Participating Options Exchanges that 

may require a temporary transition 

period during which they may want to 

continue to utilize these order types that 

exist currently under the Old Plan.41

The Exchange and each of the other 

Participating Options Exchanges have 

proposed substantially identical 

temporary provisions to accommodate 

this possibility.42 Thus, the Commission 

finds that the proposed rule relating to 

the Exchange’s receipt and handling of 

P/A Orders and Principal Orders, and 

imposing certain obligations on the 

Exchange with respect to such orders 

that are similar to those that exist under 

the Old Plan, is appropriate and 

consistent with Section 6(b)(5) of the 

Act 43 which requires, among other 

things, that the rules of a national 

securities exchange be 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. 

Finally, the Commission finds that 

Nasdaq’s proposed amendments to 

certain other Nasdaq rules to modify 

and/or delete language that is no longer 

necessary under the Plan are 

appropriate and consistent with the Act 

and the Plan. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,44 that the 

proposed rule change (SR–NASDAQ– 

2009–056), as modified by Amendment 

No. 1, be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.45

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20535 Filed 8–25–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60548; File No. SR– 

NYSEAMEX–2009–44] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

AMEX LLC Amending the Permissible 

Expiration Dates for Flexible Exchange 

Options 

August 20, 2009. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on August 

7, 2009, NYSE Amex LLC (‘‘NYSE 

Amex’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (the ‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to its rules 

regarding permissible expiration dates 

for Flexible Exchange Options (‘‘FLEX 

Options’’).4 The text of the proposed 

rule change is available on the 

Exchange’s Web site at http:// 

www.nyse.com, at the Exchange’s 

principal office 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this proposal is to 

modify the permissible expiration dates 

for FLEX Options. These options are 

governed by Trading of Option 

Contracts, Section 15 (Flexible 


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