59148 Federal Register / Vol. 71, No. 194 / Friday, October 6, 2006 / Notices 

1 17 CFR 242.608. 

2 15 U.S.C. 78k–1(a)(3)(B). 

3A Linkage Plan, dated August 1, 2006, reflecting 

Phlx’s inclusion as a Linkage Participant, was 

received by the Commission on August 9, 2006. 

4See Securities Exchange Act Release No. 54239 

(July 28, 2006), 71 FR 44328. 

5 15 U.S.C. 78k–1. 

6See Securities Exchange Act Release No. 14661 

(Apr. 14, 1978), 43 FR 17419 (Apr. 24, 1978) 

(temporarily approving the ITS Plan). See also 

Securities Exchange Act Release No. 19456 (Jan. 27, 

1983), 48 FR 4938 (Feb. 3, 1983) (permanently 

approving the ITS Plan). 

7See Securities Exchange Act Release No. 51808 

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

8See Securities Exchange Act Release No. 53829 

(May 18, 2006), 71 FR 30038 (May 24, 2006) 

(extending Rule 610 and Rule 611 compliance 

dates). 

9Because the Linkage Plan does not contain 

trade-through and locked/crossed market 

prohibitions, it is necessary to preserve the 

operation of the ITS Plan for the period before the 

Trading Phase Date. It is the Commission’s 

understanding that the ITS Plan Participants intend 

to file with the Commission a request for the 

termination of the ITS Plan. See letter from ITS Plan 

Participants to Nancy Morris, Secretary, 

Commission, dated September 18, 2006 (the 

‘‘Letter’’). 

10As provided in Sections 11 and 13 of the 

Linkage Plan, the Linkage Plan is to become 

operative on October 1, 2006 and will terminate on 

June 30, 2007. Linkage Plan Participants that wish 

to extend the term could agree to do so, subject to 

Commission approval. 

11The National Association of Securities Dealers, 

Inc. (‘‘NASD’’) is not planning to join the Linkage 

Plan and until the Trading Phase Date will continue 

to maintain its connectivity under the ITS Plan. 

12With the exception of SRO rules pertaining to 

locked and crossed markets, the ITS Plan 

Participants have requested relief from the 

requirement to enforce compliance with those SRO 

rules, which correspond to the requested ITS Plan 

exemptions. See the Letter. The Linkage Plan 

Participants will continue to be subject to Section 

8(d)(i) of the ITS Plan (Trade-Throughs; Locked 

Markets) and corresponding SRO rules. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54551; File No. 4–524] 

Joint Industry Plan; Order Approving 

NMS Linkage Plan Filed by the 

American Stock Exchange LLC, 

Boston Stock Exchange, Inc., Chicago 

Board Options Exchange, 

Incorporated, Chicago Stock 

Exchange, Inc., The NASDAQ Stock 

Market LLC, National Stock Exchange, 

New York Stock Exchange LLC, NYSE 

Arca, Inc., and Philadelphia Stock 

Exchange, Inc. 

September 29, 2006. 

I. Introduction 

On July 17, 2006, pursuant to Rule 

608 of the Securities Exchange Act of 

1934 (‘‘Act’’),1 the American Stock 

Exchange LLC (‘‘Amex’’), the Boston 

Stock Exchange, Inc. (‘‘BSE’’), the 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’), the Chicago 

Stock Exchange, Inc. (‘‘CHX’’), The 

NASDAQ Stock Market LLC (‘‘Nasdaq’’), 

the National Stock Exchange (‘‘NSX’’), 

the New York Stock Exchange LLC 

(‘‘NYSE’’), and NYSE Arca, Inc. (‘‘NYSE 

Arca’’) (‘‘Linkage Participants’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) an 

executed copy of the ‘‘Plan for the 

Purpose of Creating and Operating an 

Intermarket Communications Linkage 

Pursuant to Section 11A(a)(3)(B) of the 

Securities Exchange Act of 1934’’

(‘‘Linkage Plan’’ or ‘‘Plan’’), a national 

market system plan to create and 

operate an intermarket communications 

linkage pursuant to Section 11A(a)(3)(B) 

of the Act.2 The Linkage Plan was 

initially executed by the eight selfregulatory organizations (‘‘SROs’’) listed 

above. The Philadelphia Stock 

Exchange, Inc. (‘‘Phlx’’) subsequently 

executed the Linkage Plan on August 1, 

2006.3 The Commission published the 

Linkage Plan for comment in the 

Federal Register on August 4, 2006.4 No 

comments were received on the Plan. 

This Order approves the Linkage Plan, 

thus authorizing the Plan Participants to 

act jointly in planning, developing, 

operating and regulating the NMS 

Linkage System (‘‘Linkage’’ or 

‘‘System’’) that will electronically link 

the Participant Markets to one another, 

as described in the Linkage Plan, so as 

to further the objectives of Congress as 

set forth in Section 11A of the Act.5 A 

copy of the Plan, as approved, is 

attached as Exhibit A. 

II. Background 

Currently, the connectivity between 

markets is provided pursuant to the 

Intermarket Trading System (‘‘ITS’’) 

Plan, a National Market System plan, 

which was designed to facilitate 

intermarket trading in exchange-listed 

equity securities based on current 

quotation information emanating from 

the linked markets.6 Physical access is 

provided by ITS connectivity, and the 

terms of access are governed by the ITS 

Plan. Participants in the ITS Plan have 

agreed not to charge for access to their 

markets through the ITS. The ITS Plan 

provides grievance procedures for 

instances when a market’s quote is 

traded through and sets forth 

procedures to follow in the event of a 

locked or crossed market. 

When the Commission adopted 

Regulation NMS over a year ago,7 it 

stated its belief that fair and efficient 

access to markets can be achieved 

without a collective intermarket linkage 

facility such as ITS, if baseline 

intermarket access rules are established. 

The Commission adopted Rule 610 

(Access Rule) that requires nondiscriminatory direct or indirect access 

and enables the use of private linkages 

offered by a variety of connectivity 

providers. The Commission also 

adopted Rule 611 (The Order Protection 

Rule) that establishes intermarket 

protection against trade-throughs for all 

NMS stocks. The required date for full 

operation of Regulation NMS-compliant 

trading systems of all automated trading 

centers that intend to qualify their 

quotations for trade-through protection 

under Rule 611 is February 5, 2007 

(‘‘Trading Phase Date’’).8

Following the adoption of Regulation 

NMS and considering the limitations of 

the ITS Plan, and anticipating its 

termination, the ITS Participants (other 

than the NASD) agreed to the Linkage 

Plan, which, together with the ITS Plan, 

would govern the operation of the 

System until the termination of the ITS 

Plan, which is expected to take place on 

the Trading Phase Date.9 After the 

Trading Phase Date and until the SROs 

otherwise arrange to meet their access 

responsibilities, the operation of the 

System would be governed by the 

Linkage Plan.10 The Linkage Plan is 

intended to serve as an interim solution 

until all Participants are able to make 

other arrangements to meet their access 

responsibilities.11

Until the Trading Phase Date, the 

Linkage Plan would run concurrently 

with the ITS Plan. Therefore, until the 

Trading Phase Date, when the ITS Plan 

is expected to terminate, all Linkage 

Plan Participants remain subject to the 

ITS Plan. To permit the Linkage Plan 

Participants to commence trading 

pursuant to the Linkage Plan, the ITS 

Plan Participants have requested that 

the Commission issue an exemption 

from certain provisions of the ITS Plan 

that would interfere with the operation 

of the Linkage Plan.12

III. Description of the Linkage Plan 

A. Operation of the Linkage Plan 

The System includes the data 

processing hardware, software and 

communications network that 

electronically link the Participant 

Markets to one another. The System 

accommodates only regular-way trading. 

All System trades must be compared, 

cleared and settled through 

Commission-registered clearing 

corporations. The System is designed to 

accommodate trading in any Eligible 

Security, as defined in Section VII of the 

Consolidated Tape Association (‘‘CTA’’) 

Plan. Section VII of the CTA Plan 

provides generally that Eligible 

Securities include equity securities 


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13Section 5(d) of the Linkage Plan. 

14 In the event that the Participants are unable to 

implement Sponsoring Member billing on October 

1, 2006, the Participants have agreed to accept 

direct exchange-to-exchange billing and have filed 

proposed rule changes to this effect. See, e.g., 

Securities Exchange Act Release No. 54480 (Sept. 

21, 2006), 71 FR 57596 (Sept. 29, 2006). 

15Section 6(a)(ii) of the Linkage Plan. 

16Section 6(a)(v) of the Linkage Plan. 

17Section 6(b) of the Linkage Plan. 

18Section 10(a)(iii)(C) of the Linkage Plan. 19The Sponsoring Member is responsible for 

paying applicable transaction fees of the destination 

market. 20Section 10(b) of the Linkage Plan. Any fees 

charged by Participants must be filed with the 

Commission pursuant to Section 19(b) of the Act. 

21 15 U.S.C. 78k–1. 22 15 U.S.C. 78k–1(a)(3)(B). 23 17 CFR 242.608. 24 17 CFR 242.608(b)(2). 25 15 U.S.C. 78k–1(a)(3)(B). 26 17 CFR 242.608. 27Although Phlx initially did not sign the Plan, 

it subsequently executed the Linkage Plan on 

August 1, 2006. A Linkage Plan, dated August 1, 

2006, reflecting Phlx’s inclusion as a Linkage 

Participant, was received by the Commission on 

August 9, 2006. 

28Section 11A(a)(1)(D) of the Act. 

registered on the NYSE, the Amex or 

another national securities exchange 

whose original listing requirements 

substantially meet those of NYSE or 

Amex except for securities that are 

listed on the Nasdaq Stock Market. The 

particular securities that may be traded 

through the System at any time are 

selected by the Supervisory Committee. 

The Supervisory Committee may add or 

delete System securities as it deems 

appropriate and may delay the 

commencement of trading in any 

Eligible Security if capacity or other 

operational considerations require a 

delay. 

The Securities Industry Automation 

Corporation (‘‘SIAC’’) serves as the 

System’s facilities manager and has 

responsibility for the operation and 

maintenance of the System. SIAC 

performs its function as facilities 

manager in accordance with Plan 

provisions and subject to the 

administrative oversight of the 

Supervisory Committee.13

The System accepts only immediateor-cancel limit orders. Orders must be 

sent to a Participant Market through the 

auspices of a member of that 

Participant, known as a Sponsoring 

Member.14 The minimum information 

that must be specified in an order 

includes the Sponsoring Member; the 

‘‘give-up’’ in the originating Participant 

Market; the security; the side (buy or 

sell); the amount to be bought or sold 

(which must be for one unit of trading 

(i.e., 100 shares) or any multiple 

thereof); and the price.15 The price must 

be equal to the bid or offer then being 

furnished by the destination Participant 

Market. An order must specify a ‘‘time 

in force’’ of 5, 15 or 120 seconds, after 

which the order will expire if 

unexecuted. 

After Trading Phase Date, all routed 

limit orders will be presumed by the 

executing market to be intermarket 

sweep orders sent in accordance with 

Rule 611(b) of Regulation NMS.16 The 

trading rules applicable in destination 

Participant Markets will apply to orders 

received in the market and the 

execution of those orders in the 

market.17

B. Terms and Conditions of Access 

Section 3(c) of the Plan provides that 

any national securities exchange or 

national securities association may 

become a Plan Participant by agreeing, 

in an amendment to the Plan adopted in 

accordance with its provisions, to 

comply, and to enforce compliance, 

with the Plan as provided in Section 

3(b) of the Plan. An applicant for Plan 

participation is required to pay SIAC an 

amount estimated by SIAC to cover 

development costs to be incurred to 

accommodate the new Participant. In 

addition, before the applicant becomes 

a Plan Participant, the applicant must 

pay SIAC actual development costs in 

excess of estimated development costs, 

or SIAC will reimburse the applicant 

estimated development costs that were 

paid and are in excess of actual 

development costs. A new Participant 

shares in development costs incurred 

after it becomes a Participant in 

accordance with Section 10(a)(iii)(A).18

C. Fees and Charges 

The Linkage Plan imposes no fees or 

charges in connection with orders 

executed through the Linkage. A 

Sponsoring Member is subject to 

applicable transaction charges imposed 

by the executing market.19 Each 

Participant is free to determine whether 

or not to impose, and the amount of, a 

fee or charge on its members in 

connection with use of its facilities to 

access the System. Any such fee or 

charge must not be of such size, or so 

structured, as to discourage use of the 

System.20

D. Dispute Resolution 

The Linkage Plan does not include 

specific provisions regarding resolution 

of disputes between or among 

Participants. Section 4(d) of the Plan 

provides that no action or inaction by 

the Supervisory Committee shall 

prejudice any Participant’s right to 

present its views to the Commission or 

any other person with respect to any 

matter relating to the System or to seek 

to enforce its views in any other forum 

it deems appropriate. In addition, 

Section 6(b) provides that the trading 

rules of the destination market apply to 

orders received in that market, as well 

as to executions of orders in that market. 

Each Participant determines the extent 

to which its trading rules apply to 

members in its market with respect to 

the members’ issuance of orders from 

the market and executions that occur in 

the market. 

IV. Discussion 

In Section 11A of the Act,21 Congress 

directed the Commission to facilitate the 

development of a national market 

system consistent with the objectives of 

the Act. In particular, Section 

11A(a)(3)(B) of the Act 22 authorizes the 

Commission ‘‘by rule or order, to 

authorize or require SROs to act jointly 

with respect to matters as to which they 

share authority under this title in 

planning, developing, operating, or 

regulating a national market system (or 

a subsystem thereof) or one or more 

facilities’’. Rule 608 under the Act 

establishes the procedures for filing, 

amending, and approving national 

market system plans.23 Pursuant to 

paragraph (b)(2) of Rule 608, the 

Commission’s approval of a national 

market system plan is conditioned upon 

a finding that the proposed plan ‘‘is 

necessary or appropriate in the public 

interest, for the protection of investors 

and the maintenance of fair and orderly 

markets, to remove impediments to, and 

perfect the mechanisms of, a national 

market system, or otherwise in 

furtherance of the purposes of the 

Act’’.24

After carefully considering the 

proposed Linkage Plan, the Commission 

has determined to approve, pursuant to 

Section 11A(a)(3)(B) of the Act,25 and 

Rule 608 thereunder,26 the Linkage 

Plan, thus authorizing the Plan 

Participants to act jointly to implement 

the Plan’s intermarket linkage.27

In 1975, Congress determined that the 

‘‘linking of all markets’’ for NMS stocks 

through communications and data 

processing facilities would ‘‘foster 

efficiency; enhance competition; 

increase the information available to 

brokers, dealers, and investors; facilitate 

the offsetting of investors’ orders; and 

contribute to the best execution of 

investors’ orders’’.28 All SROs that trade 

exchange-listed stocks currently are 

linked through ITS, an intermarket 

linkage facility. ITS provides a means of 

access to exchanges and Nasdaq by 

permitting each market to send a 


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29See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496 (June 29, 2005). 30The Linkage Plan does not contain tradethrough and locked/crossed market prohibitions, 

therefore it is necessary to preserve the operation 

of the ITS Plan for the period before the Trading 

Phase Date. It is the Commission’s understanding 

that the ITS Plan Participants intend to file with the 

Commission a request for the termination of the ITS 

Plan. See the Letter. 31As provided in Sections 11 and 13 of the 

Linkage Plan, the Linkage Plan is to become 

operative on October 1, 2006 and will terminate on 

June 30, 2007. Linkage Plan Participants that 

wished to extend the term could agree to do so, 

subject to Commission approval. 32NASD is not planning to join the Linkage Plan 

and until the Trading Phase Date will maintain its 

connectivity under the ITS Plan. 33With the exception of SRO rules pertaining to 

locked and crossed markets, the ITS Plan 

Participants have requested relief from the 

requirement to enforce compliance with those SRO 

rules, which correspond to the requested ITS Plan 

exemptions. See the Letter. 34See letter from Erik R. Sirri, Director, Division 

of Market Regulation, Commission, dated 

September 29, to Robert Hill, Chairman, ITS 

Operating Committee. 35 15 U.S.C. 78k–1(a)(3)(B). 36 17 CFR 242.608. 37 17 CFR 200.30–2(a)(27). 1The Philadelphia Stock Exchange, Inc. (‘‘Phlx’’) 

subsequently executed the Linkage Plan on August 

1, 2006. A Linkage Plan, dated August 1, 2006, 

reflecting Phlx’s inclusion as a Linkage Plan 

participant, was sent to the Commission on August 

8, 2006. 

‘‘commitment to trade’’ through the 

system, with receiving markets 

generally having up to 30 seconds to 

respond. ITS also provides access to 

quotations of participants without fees 

and establishes uniform rules to govern 

quoting practices. Although ITS 

promotes access among participants that 

is uniform and free, it also is often slow 

and limited. Moreover, it is governed by 

a unanimous vote requirement that has 

at times impeded innovation in the 

system or its set of rules. In contrast, 

there is no collective intermarket 

linkage system for Nasdaq stocks. 

Instead, access is achieved primarily 

through private linkages among 

individual trading centers. This 

approach has demonstrated its benefits 

among electronic markets; it is flexible 

and can readily incorporate 

technological advances as they occur. Rule 610 adopted by the Commission 

in Regulation NMS 29 reflects the 

Commission’s determination that fair 

and efficient access to markets can be 

achieved without an intermarket linkage 

facility such as ITS, if baseline 

intermarket access rules are established. 

The proposed Linkage Plan would 

govern the operation of the System 

together with the ITS Plan until the 

termination of the ITS Plan expected to 

take place on the Trading Phase Date.30

After the Trading Phase Date and until 

the SROs otherwise arrange to meet 

their access responsibilities, the 

operation of the System would be 

governed by the Linkage Plan.31 The 

Linkage Plan is intended to serve as an 

interim solution until all Participants 

otherwise arrange to meet their access 

responsibilities.32

To permit the Linkage Plan 

Participants to commence trading 

pursuant to the Linkage Plan, the ITS 

Plan Participants have requested that 

the Commission issue an exemption 

from certain provisions of the ITS Plan 

that would interfere with the operation 

of the Linkage Plan.33 In a separate 

action, the Commission today has 

granted an exemption from certain 

provisions of the ITS Plan that could 

interfere with the operation of the 

Linkage Plan, but until the Trading 

Phase Date, the Linkage Plan 

Participants will continue to be subject 

to certain provisions of the ITS Plan and 

corresponding SRO rules governing 

Trade-Throughs and Locked Markets, as 

well as to some other provisions of the 

ITS Plan.34

In approving the Linkage Plan, the 

Commission finds that the Linkage Plan 

is consistent with the Act in that it 

enhances intermarket competition by 

providing a means of intermarket access 

for Eligible securities, pending the full 

implementation of Regulation NMS and, 

therefore, would promote investor 

protection and the maintenance of fair 

and orderly markets. 

V. Conclusion 

It is hereby ordered, pursuant to 

Section 11A(a)(3)(B) of the Act,35 and 

Rule 608 thereunder,36 that the Linkage 

Plan submitted by the Linkage Plan 

Participants is approved and the 

Linkage Plan Participants (and any other 

self-regulatory organization which 

agrees to be a Plan Participant) are 

authorized to act jointly in planning, 

developing, operating or regulating the 

Linkage Plan as a means of facilitating 

a national market system.37

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority. 

Nancy M. Morris, 

Secretary. 

Exhibit A 

Plan for the Purpose of Creating and 

Operating an Intermarket 

Communications Linkage Pursuant to 

Section 11A(a)(3)(B) of the Securities 

Exchange Act of 1934 

Agreement made as of June 12, 2006, 

among American Stock Exchange LLC, 

Boston Stock Exchange, Inc., Chicago 

Board Options Exchange, Inc., Chicago 

Stock Exchange, Inc., Nasdaq Stock 

Market LLC, National Stock Exchange, 

New York Stock Exchange LLC, and 

NYSE 1Arca, Inc. 

Whereas, the undersigned national 

securities exchanges are parties to the 

plan submitted to the Securities and 

Exchange Commission (the ‘‘SEC’’) for 

the purpose of creating and operating an 

intermarket communications linkage 

pursuant to section 11A(a)(3)(B) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’). 

Now, Therefore, in consideration of 

the premises and the mutual covenants 

and agreements contained herein, the 

parties agree to submit this Agreement 

called the NMS Linkage Plan to the SEC 

for approval pursuant to section 

11A(a)(3)(B) of the Act and Rule 608 

thereunder. 

1. Definitions. 

(1) ‘‘Application’’ means any use of 

the System to facilitate trades between 

Participant Markets that is described in 

the NMS Linkage Plan. 

(2) ‘‘CTA Plan’’ means the plan filed 

with the SEC pursuant to SEC Rule 17a–

15 (subsequently amended and 

redesignated as Rule 11Aa3–1, and 

subsequently amended and redesignated 

as Rule 601), approved by the SEC and 

declared effective as of May 17, 1974, as 

from time to time amended. 

(3) ‘‘CTA Plan Processor’’ means the 

organization serving as recipient and 

processor of last sale prices under the 

CTA Plan. 

(4) ‘‘Eligible Security’’ has the 

meaning assigned to that term in the 

CTA Plan. 

(5) ‘‘NMS Linkage Plan’’ or ‘‘Linkage 

Plan’’ means this plan as from time to 

time amended in accordance with the 

provisions hereof. 

(6) ‘‘NMS Linkage System’’

(‘‘Linkage’’ or ‘‘Linkage System’’) means 

the system described in section 5. 

(7) ‘‘Network A Eligible Security’’ has 

the meaning assigned to that term in the 

CTA Plan. 

(8) ‘‘Network B Eligible Security’’ has 

the meaning assigned to that term in the 

CTA Plan. 

(9) ‘‘Participant’’ means a party to the 

Linkage Plan with respect to which such 

plan has become effective pursuant to 

section 13. 

(10) ‘‘Participant(’s) Market’’ means a 

facility for the trading of System 

securities operated by a Participant. 

(11) ‘‘System’’ means the data 

processing hardware, software and 

communications network that links 

electronically the Participant Markets to 

one another. The System includes (a) 

computers that perform such functions 

as message validation, processing, 

logging and switching and (b) from a 

functional standpoint, (i) high speed 

communications lines that link such 

computers with the Participant Markets 

(either directly or through Participant 


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Switches), and (ii) Linkage System 

stations. 

(12) ‘‘System security (stock)’’ means 

a security (stock) selected for trading 

through the Applications in accordance 

with section 5(b)(ii). 

(13) ‘‘System trade’’ means any trade 

made through any Application. 

2. Purpose of Linkage Plan. The 

purpose of the Linkage Plan is to enable 

the Participants to act jointly in 

planning, developing, operating and 

regulating the system as described in the 

Linkage Plan so as to further the 

objectives of Congress as set forth in 

section 11A(a) of the Act and to 

facilitate compliance by the Participants 

and their respective members with SEC 

Rules 610 and 611. 

3. Parties. 

(a) List of Parties. The parties to the 

Linkage Plan are as follows: American 

Stock Exchange LLC (‘‘AMEX’’), 

registered as a national securities 

exchange under the Act and having its 

principal place of business at 86 Trinity 

Place, New York, New York 10006. 

Boston Stock Exchange, Inc. (‘‘BSE’’), 

registered as a national securities 

exchange under the Act and having its 

principal place of business at 100 

Franklin Street, Boston, Massachusetts 

02110. Chicago Board Options 

Exchange, Inc. (‘‘CBOE’’), registered as a 

national securities exchange under the 

Act and having its principal place of 

business at 400 South LaSalle Street, 

Chicago, Illinois 60605. 

Chicago Stock Exchange, Inc. 

(‘‘CHX’’), registered as a national 

securities exchange under the Act and 

having its principal place of business at 

One Financial Place, 440 South LaSalle 

Street, Chicago, Illinois 60605. 

Nasdaq Stock Market LLC (‘‘Nasdaq’’), 

registered as a national securities 

exchange under the Act and having its 

principal place of business at 1 Liberty 

Plaza, 165 Broadway, New York, NY 

10006. 

National Stock Exchange (‘‘NSX’’), 

registered as a national securities 

exchange under the Act and having its 

principal place of business at 440 South 

LaSalle Street, Suite 2600, Chicago, 

Illinois 60605. 

New York Stock Exchange LLC 

(‘‘NYSE’’), registered as a national 

securities exchange under the Act and 

having its principal place of business at 

11 Wall Street, New York, New York 

10005. NYSE Arca, Inc. (‘‘Arca’’), 

registered as a national securities 

exchange under the Act and having its 

principal place of business at 100 S. 

Wacker Drive, Chicago, IL 60606. 

Philadelphia Stock Exchange, Inc. 

(‘‘Phlx’’), registered as a national 

securities exchange under the Act and 

having its principal place of business at 

1900 Market Street, Philadelphia, 

Pennsylvania 19103. 

(b) Compliance Undertaking. By 

subscribing to and submitting the 

Linkage Plan for filing with the SEC, 

each undersigned party agrees to 

comply to the best of its ability and, 

absent reasonable justification or 

excuse, to enforce compliance by its 

members in their use of the Linkage 

through its facilities with the provisions 

of the Linkage Plan. 

(c) New Participants. The Participants 

agree that any other national securities 

exchange or national securities 

association may subscribe to the 

Linkage Plan and become a Participant 

by agreeing, in an amendment to the 

Linkage Plan adopted in accordance 

with its provisions, to comply and to 

enforce compliance with the provisions 

of the Linkage Plan as provided in 

section 3(b). 

4. Administration of Linkage Plan. 

(a) Supervisory Committee: 

Composition, Voting. Each Participant 

shall select from its staff one individual 

to represent such Participant as a 

member of the Supervisory Committee 

under the Linkage Plan. Except as may 

be specifically otherwise provided 

herein, action taken pursuant to the vote 

of a majority of the members of the 

Supervisory Committee present at a 

meeting of the committee at which a 

majority of the full committee is present 

shall be deemed to be the action of the 

Supervisory Committee. 

(b) Supervisory Committee: Authority. 

The Supervisory Committee shall not be 

a policy-making or a rule-making body, 

but shall, either directly or by delegating 

its functions to individuals, 

subcommittees established by it from 

time to time or others, (i) oversee 

development of the System in 

accordance with the specifications 

therefore agreed upon by each 

Participant, (ii) monitor the operation of 

the System and (iii) advise the 

Participants with respect to any 

deficiencies, problems or 

recommendations as the Supervisory 

Committee may deem appropriate in its 

administration of the Linkage Plan. In 

this connection, the Supervisory 

Committee shall have authority to 

develop procedures and make 

administrative decisions necessary to 

facilitate the operation of the System in 

accordance with the provisions of the 

Linkage Plan. 

(c) Amendments to Linkage Plan. Any 

proposed change in, addition to, or 

deletion from the Linkage Plan may be 

effected only by means of a written 

amendment to the Linkage Plan which 

sets forth the change, addition or 

deletion, is executed on behalf of each 

Participant and is approved by the SEC 

or otherwise becomes effective pursuant 

to section 11A of the Act and Rule 

608(b). 

(d) Participant’s Rights. No action or 

inaction by the Supervisory Committee 

shall prejudice any Participant’s right to 

present its views to the SEC or any other 

person with respect to any matter 

relating to the System or to seek to 

enforce its views in any other forum it 

deems appropriate. 

5. The System. 

(a) System Monitoring. 

(i) Linkage Supervisory Stations. Each 

Participant will maintain a Linkage 

supervisory station where supervisors 

appointed by such Participant will be 

able to coordinate trade adjustments. 

(ii) Linkage Control Center. The 

System also includes the Linkage 

control center (‘‘LCC’’), which monitors 

and controls communications within 

the System, including the processing of 

error conditions. The LCC staff is able 

to display and, when authorized by any 

Participant, to modify the security and 

market records of that Participant’s 

Market as such records relate to the 

System. The LCC staff is also able to 

indicate whether or not any Participant 

Market is open for System trades. In 

addition, the LCC may be used as ‘‘backup’’ for the Linkage supervisory systemwide broadcasts. Finally, the LCC staff 

is able to enter adjustments of any trade 

pursuant to the procedures specified in 

section 6(a)(iv) and to perform data base 

control after trading hours. 

(b) General Operation. 

(i) Registered Clearing Corporations. 

The System accommodates only regularway trading, and all System trades must 

be compared, cleared and settled 

through clearing corporations registered 

with the SEC that maintain facilities 

through which such transactions may be 

compared and settled and that agree to 

supply each Participant with data 

reasonably requested in order to permit 

such Participant to enforce compliance 

by its members with its rules, the 

provisions of the Act, the rules and 

regulations thereunder, and the Linkage 

Plan. 

(ii) Selection of System Securities. 

The System is designed to accommodate 

trading in any Eligible Security. The 

particular securities that may be traded 

through the System at any time 

(‘‘System securities’’) shall be selected 

by the Supervisory Committee. The 

Supervisory Committee may add or 

delete System securities as it deems 

appropriate and may delay the 

commencement of trading in any 

Eligible Security if capacity or other 


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2The member of the destination market will be 

identified by a unique clearing number. If the 

clearing number provided by the originating 

Participant Market does not identify a member of 

the destination market, SIAC will identify the 

default Sponsoring Member of the originating 

market at the destination market for the security in 

question and that Sponsoring Member’s 

identification information will be included on the 

order to the destination market on all reports sent 

to the destination market, including any report for 

billing purposes. The member identified on the 

order will be responsible for any fees in the 

destination market. SIAC will provide to 

Participants a key to match the clearing number to 

the member’s name. 

3A Participant Market may prevent the execution, 

through its facilities, of an otherwise marketable 

System order, prior to the 5, 15 or 120 second time 

in force parameter assigned to that order, if the time 

in force parameter would result in the issuance of 

an expiration notice to the sending market before 

execution of such order could be reported to SIAC. 

Any such procedure must be effective pursuant to 

a filing with the SEC. No order with a time in force 

parameter of 5 or 15 seconds shall be sent to AMEX, 

CBOE, CHX, or PHLX prior to the earlier of (i) the 

date on which all automated trading centers 

intending to qualify their quotations for tradethrough protection under Rule 611 of Regulation 

NMS must have achieved full operation of 

Regulation NMS-compliant trading systems or (ii) 

the date on which AMEX, CBOE, CHX, or PHLX, 

as the case may be, has notified the Supervisory 

Committee in writing that it is capable of accepting 

and executing such orders. If an order with either 

of these time in force parameters is sent to AMEX, 

CBOE, CHX, or PHLX prior to such time, it will not 

be executed due to system limitations. 

operational considerations shall require 

such delay. 

(c) Administrative Messages. 

Administrative messages, as 

distinguished from orders, responses 

thereto and trade adjustment inputs 

(including names later information), 

may also be sent through the System. 

There are two categories of 

administrative messages that can be sent 

by Participant members: Single 

destination and security broadcast. 

Another category of administrative 

message, a ‘‘system-wide broadcast’’, 

may be sent through the System only 

from the Linkage control center. 

(d) Facilities Manager. The Securities 

Industry Automation Corporation 

(‘‘SIAC’’) serves as the System’s 

facilities manager and has responsibility 

for the operation and maintenance of 

the System. SIAC performs its function 

as facilities manager in accordance with 

the provisions of the Linkage Plan and 

subject to the administrative oversight 

of the Supervisory Committee. 

6. Linkage System. 

(a) Technical Matters. 

(i) The System shall accept immediate 

or cancel (‘‘IOC’’) orders, provided 

however, that, upon the request of a 

Participant or Participants, and in 

accordance with Section 10(a)(iii)(A) 

relating to New Development Costs 

Sharing, the System shall accommodate 

additional order types to be utilized by 

such Participant or Participants. Orders 

must be sent to a Participant market 

through the auspices of a member of 

that Participant, known as a Sponsoring 

Member. Each market will maintain 

within SIAC a database of default 

Sponsoring Members (not to exceed 10) 

for after hours processing and billing for 

orders sent to a market where the 

originating firm is not a member of the 

destination market. 

(ii) Order Information. An order shall, 

at a minimum, specify the following: 

(A) The member of the destination 

market (either clearing member or 

Sponsoring Member); 2

(B) Original clearing member or 

omnibus clearing account of the 

originating Participant Market, 

commonly referred to as the Give-Up, 

(C) The receiving Participant Market, 

(D) The security that is the subject of 

the order, 

(E) Designation of the order as an 

order to buy or to sell, 

(F) The amount of the security to be 

bought or sold, which amount shall be 

for one unit of trading or any multiple 

thereof, 

(G) A price equal to the offer or bid 

price then being furnished by the 

destination Participant Market, which 

price shall represent the price at or 

below which the security is to be bought 

or the price at or above which the 

security is to be sold, respectively, 

(H) To facilitate application of the 

short sale rule in effect in the 

destination Participant Market, a 

designation of the order as ‘‘short’’ or 

‘‘short exempt’’ whenever it is a order 

to sell short, and 

(I) Time in force as 5, 15 or 120 

seconds.3

(iii) Order Validation, Routing. At the 

time of transmission, each order 

undergoes validation procedures. If the 

order passes the validation procedures, 

the System assigns a unique order 

identifier number (a ‘‘OID’’) to the order, 

time stamps it and logs it on a mass 

storage device (the ‘‘daily log’’). The 

System also sends a transmission 

acceptance message to the Participant 

Market that originated the order. The 

order is then routed to the destination 

Participant Market. If the order is 

accepted, in whole or in part, in the 

destination Participant Market, the 

execution is reported back through the 

System to the originating and receiving 

Participant Markets. 

The System rejects the transmission of 

a response that fails the validation 

check and sends an appropriate error 

message to the Participant Market that 

originated the response. The validation 

of a response causes the System to 

retrieve the related order from the daily 

log and update it with appropriate 

response information. This log forms the 

basis from which the after-hours reports 

described in section 7(a) are produced. 

Validation also causes the System to 

send a transmission acceptance message 

to the Participant Market that originated 

the response. The System then sends the 

response to the Participant Market that 

originated the order. When an order is 

only partially executed, the unexecuted 

shares are not filled, and the System 

generates a cancellation for the 

unexecuted quantity and appends the 

cancellation to the execution report that 

it sends to the Participant Market that 

originated the order. 

(iv) Trade Adjustments. In accordance 

with section 5(a)(ii), supervisors 

monitoring the Participant Markets may 

request the LCC to enter adjustments to 

trades (i.e., to price, share size, buy or 

sell side, to cancel a trade or to insert 

a trade ‘‘as-of’’ a prior day). The 

following sets forth the procedures to 

facilitate trade adjustments and to 

authorize the LCC to make such 

adjustments. All requests among 

Participants and to the LCC for trade 

adjustments shall be in the form of 

administrative messages sent through 

the System. For the purposes of this 

section 6(a)(vi), administrative messages 

sent or received among Participant 

Markets, or sent to the LCC, shall be 

deemed to have been issued by 

supervisors of Participant Markets 

authorized by such Participant Markets 

to issue such administrative messages. 

A) Adjustments on Trade Day. The 

LCC shall make an adjustment to a trade 

entered into that same day based upon 

an administrative message request made 

from a supervisor of the Participant 

Market that received and executed the 

order (‘‘executing market supervisor’’). 

Such request shall not be made to the 

LCC unless an executing market 

supervisor has received from a 

supervisor in the Participant Market that 

issued the order (‘‘issuing market 

supervisor’’), in the form of an 

administrative message sent through the 

System, agreement as to the terms of, 

and authorization to make, the 

adjustment. The administrative message 

request to the LCC by the executing 

market supervisor shall specify the 

terms of, and authorization to the LCC 

to make, the adjustment. 

In the event that, notwithstanding the 

provisions of the prior paragraph, an 

executing market supervisor requests 

the LCC to make a trade adjustment 

without having received an 

administrative message from an issuing 

market supervisor, and the LCC has 


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made such requested adjustment, then 

the LCC shall, at the request and 

direction of an issuing market 

supervisor, made prior to the settlement 

for such trade, readjust such trade to its 

terms as they existed prior to such 

adjustment. 

(B) Adjustments for Prior Trade Day. 

Except as provided in the preceding 

paragraph, the LCC shall make an 

adjustment to a trade entered into on a 

prior day only upon administrative 

message requests made from both 

executing and issuing market 

supervisors, each message specifying 

the same terms of, and authorization to 

the LCC to make, the adjustment. 

(C) The provisions of paragraphs (A) 

and (B) of this section 6(a)(iv) shall not 

restrict the ability of any Participant 

Market to unilaterally request the LCC 

to end adjustments to trades or to cancel 

or adjust any System trade executed in 

its market pursuant to its rules 

pertaining to clearly erroneous 

transactions or obvious errors, and 

system malfunctions. The sending 

market may invoke any appellate or 

review process provided by such rules 

on behalf of the Sponsoring Member. In 

the event of any cancellation or 

adjustment, the executing market shall 

notify the LCC and all affected 

Participants by administrative message 

specifying the terms of the cancellation 

or adjustment and authorizing the LCC 

to make the adjustments or cancel the 

trades. 

(D) LCC Confirmation. The LCC shall, 

after making a trade adjustment, send an 

administrative message to both the 

executing and sending market 

supervisors confirming that the 

adjustment has been made and 

specifying the terms of the adjustment. 

(v) Intermarket Sweep Orders. All 

routed limit orders shall be presumed 

by the executing market to be orders 

sent pursuant to the intermarket sweep 

order exception in SEC Rule 611(b). 

(vi) Other. Each Participant shall also 

determine how orders received in the 

market for which it has responsibility 

are to be handled therein and agrees that 

any procedures it may adopt in this 

regard shall be consistent with the 

provisions of the Linkage Plan and the 

efficient operation of the System. 

Participants are required to execute 

orders at a minimum at the size of their 

displayed quotes. Each Participant shall 

insure that no communication shall be 

entered into the System from its market 

except (A) on behalf of a member of 

such Participant who is permitted by 

the Linkage Plan and such Participant’s 

rules to use the System with respect to 

the security or securities that are the 

subject of the communication or (B) by 

employees of such Participant in 

performance of such Participant’s 

obligations under the Linkage Plan. 

(b) Participant Trading Rules. The 

trading rules applicable in destination 

Participant Markets shall apply to 

orders received in such market and 

executions of orders therein. Each 

Participant shall determine the extent to 

which its trading rules shall apply to 

members within its market insofar as 

such members’ issuance of orders from 

such market and resulting executions 

are concerned. 

7. Comparison and Settlement. 

Comparison of a side of a System trade 

furnished by a Participant shall be the 

responsibility of such Participant. 

(a) After Hours Functions. The 

functions of the System after the close 

of trading in all Participant Markets 

shall consist of the following: 

(i) The System’s daily log of messages 

will be put on tape for retention; 

(ii) The System will generate four 

reports: 

(A) An order/response report that will 

match orders to trade with the 

appropriate responses, 

(B) An order/cancellation report that 

will list all orders to trade that were 

canceled, 

(C) A trade adjustment report that will 

list all adjustments made to previously 

executed System trades, and 

(D) A traffic summary report that will 

indicate the number of orders to trade, 

the number of responses and the 

number of administrative messages 

entered from each Participant Market 

during the trading day; and 

(iii) The System will generate the 

clearing tape referred to in section 7(b). 

(b) Clearing Tape. At the end of each 

trading day, the System generates a 

clearing tape as part of after-hours 

processing. This tape is in OID 

sequence, includes all of the day’s 

System trades, and shows: 

(i) The OID, 

(ii) The originating Participant and 

clearing member(s), or the clearing 

corporation(s) through which such 

clearing member(s) shall settle the trade, 

(iii) The destination Participant and 

destination clearing member(s), or the 

clearing corporation(s) through which 

such clearing member(s) shall settle the 

trade, 

(iv) The type of trade action (buy or 

sell), 

(v) The security symbol, 

(vi) The executed quantity and price, 

and 

(vii) The date and time of trade. 

Adjustments to any System trade 

made by agreement between both sides 

of the trade are included in the tape and 

shown as a separate ‘‘trade adjustment 

record’’. If a trade has been adjusted, the 

original trade record is followed by 

trade adjustment record(s). The trade 

adjustment record(s) carry the same OID 

as the original trade record. There are 

two types of trade adjustments, System 

trade cancellations and System trade 

changes. For System trade cancellations, 

the adjustment record negates the 

original trade record. For example, a 

cancellation of a trade to buy is reflected 

on the adjustment record as a ‘‘negative 

buy’’. For System trade changes, there 

are two adjustment records. The first 

adjustment record negates the original 

trade record. The second adjustment 

record logs the trade data as adjusted 

for, e.g., a change in action, security, 

quantity and/or price. The adjustment 

records are generated from the trade 

adjustment file that is created during 

trading hours and from inputs from the 

Linkage control center pursuant to 

requests from the Participants’

supervisors. 

(c) Comparison of System Trades. The 

contra side of each System trade 

ultimately is the clearing interface 

account used to identify the clearing 

corporation through which the 

comparison of such side is completed. 

If both sides of a System trade are to 

settle through the same clearing 

corporation, the clearing corporation 

may, at its option, either book each side 

against the clearing member responsible 

for that side or offset each side against 

an internal omnibus account (in which 

case the omnibus account will net to 

zero). 

While sorting and format changes may 

be required, the various clearing 

corporations are able to use the System 

clearing tape as the basic input to their 

trade comparison operations. The 

clearing member(s) responsible for an 

Exchange-supplied side of a System 

trade shall follow routine comparison 

procedures. In instances where an 

uncompared transaction cannot be 

resolved through routine procedures, 

the Exchange-supplied side(s) of the 

trade discrepancy will be handled in 

accordance with the rules of the 

Participant(s) and clearing 

corporation(s) involved. 

Once comparison has been 

completed, clearance and settlement can 

proceed in a routine manner. System 

trades are processed with all other 

transactions through established 

clearing interfaces. 

(d) Participant Settlement 

Obligations. The rules of each 

Participant shall be designed to assure 

that if a System trade reported on the 

clearing tape (as adjusted) at the close 

of any trading day, as such trade relates 

to such Participant, cannot be compared 


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4 If the previous day’s consolidated closing price 

of a Network A Eligible Security exceeded $100 and 

the security does not underlie an individual stock 

option contract listed and currently trading on a 

national securities exchange, the ‘‘applicable price 

change’’ is one dollar. 

5 If the previous day’s consolidated closing price 

of a Network B Eligible Security exceeded $75 and 

the security is not a Portfolio Depositary Receipt, 

Index Fund Share, or Trust Issued Receipt, or does 

not underlie an individual stock option contract 

listed and currently trading on a national securities 

exchange, the ‘‘applicable price change’’ is one 

dollar. 

notwithstanding the use of routine 

comparison procedures, such 

Participant shall on the scheduled 

settlement date honor such uncompared 

trade; provided, however, that, if such a 

System trade as it relates to such 

Participant is rejected or excluded from 

the settlement operation conducted by 

the clearing corporation to which it was 

reported for settlement either because of 

the insolvency of the member(s) for 

whose account(s) it was to be settled or 

for any other reason (other than failure 

to compare), such Participant shall not 

be obligated to honor such trade and 

such trade shall be returned to such 

member(s). 

In the event that a System trade as it 

relates to any Participant is rejected or 

excluded from the settlement operation 

conducted by the clearing corporation to 

which it was reported for settlement for 

any reason other than failure to 

compare, neither the Participant from 

whose market the side of the trade that 

is rejected or excluded was supplied, 

the Participant from whose market the 

contra side of such trade was supplied 

nor any clearing corporation to which 

either side of the trade was submitted 

shall be obligated to honor the trade. 

Instead, the member(s) constituting the 

contra side of the rejected or excluded 

trade (the ‘‘contra party’’) shall, without 

unnecessary delay after receipt of notice 

of such rejection or exclusion, close out 

such trade in the best available market, 

except insofar as the rules of the 

clearing corporation to which the contra 

side was submitted or of the Participant 

from whose market the contra side was 

supplied are applicable and provide an 

alternative method for closing. The rules 

of each Participant shall state the 

foregoing closing obligations of the 

contra party. 

8. Pre-Opening Price Information. 

The NYSE and AMEX will 

disseminate, through the System, preopening price information whenever a 

member in that Participant market, in 

arranging an opening transaction in his 

or her market in a System security, 

anticipates that the opening transaction 

will be at a price that represents a 

change from the ‘‘previous day’s 

consolidated closing price’’ of more 

than the ‘‘applicable price change’’. 

The ‘‘previous day’s consolidated 

closing price’’ is the last price at which 

a transaction in the security was 

reported by the CTA Plan Processor on 

the last previous day on which 

transactions in the security were 

reported by the CTA Plan Processor. 

The ‘‘applicable price changes’’ are: 

Security Consolidated closing price 

Applicable 

price change 

($) (more 

than) 

Network A ................................................................................... Under $15 ...................................................................................

$15 or over .................................................................................

0.10 

4 0.25 

Network B ................................................................................... Under $5 .....................................................................................

$5 or over ...................................................................................

0.10 

5 0.25 

Prior to the opening of trading in a 

System security for which the NYSE or 

AMEX has disseminated pre-opening 

price information, orders in that 

security shall be sent to that Participant 

through the Participant’s order delivery 

system and not the NMS Linkage. 

9. Operating Hours. Regular trading 

hours are from 9:30 a.m. to 4 p.m. 

eastern time. The normal operating 

hours of the System are 9 a.m. to 6:30 

p.m. eastern time or such other period 

as the Supervisory Committee, by 

affirmative vote of all its members, may 

specify. Any period outside the normal 

operating hours of the System is herein 

referred to as an ‘‘additional period’’. 

The System shall be operable during 

any additional period requested in 

writing by any two or more Participants; 

provided that such Participants have 

agreed to pay all costs and expenses 

attributable to the operation of the 

System during such additional period as 

agreed to by those Participants. 

10. Financial Matters. 

(a) Costs. The Participants shall share 

the ‘‘development costs’’ and 

‘‘production costs’’, in accordance with 

the provisions of this section 10(a). 

(i) Costs Definitions 

(A) ‘‘Computer software’’ includes all 

programs or routines developed by or at 

the direction of the System’s facilities 

manager (including such development 

in connection with the Intermarket 

Trading System) to cause computers to 

perform tasks required for any one or 

more Applications and the 

documentation required to describe and 

maintain those programs. Computer 

programs of all classes, for example, 

operating systems, execution systems, 

monitors, compilers and translators, 

assembly routines, and utility programs 

are included. 

(B) ‘‘Development costs’’ mean all 

costs incurred by the System’s facilities 

manager in developing and improving 

the computer software and installing 

hardware as necessary to facilitate 

System functionality (including any 

testing conducted in connection with 

the System). 

(C) ‘‘Installing hardware as necessary’’

includes, but is not limited to, 

installation and maintenance of all 

installations and computer facilities 

required to support the System. 

(D) ‘‘New Participant’’ means any 

national securities exchange or national 

securities association that becomes a 

Participant in accordance with section 

3(c) after SEC approval of this Linkage 

Plan. 

(E) ‘‘Production costs’’ mean all 

operating expenses associated with the 

operation of the System, including all 

costs and expenses (including 

appropriate overhead costs and all 

applicable taxes however designated, 

exclusive of net income taxes) of the 

System’s facilities manager associated 

with, relating to, or resulting from its 

operation or maintenance of the System, 

but excluding any cost or expense 

associated with any Participant’s selfregulatory function. Production costs 

also include the costs and expenses of 

the facilities manager: (i) In maintaining 

‘‘hot lines’’ that permit conversations 

among broker-dealers and staff in 

different Participant Markets and with 

the Systems control center; and (ii) 

associated with reports rendered by a 

firm of independent accountants 

pursuant to paragraph (a)(vi) of this 

section 10. 

(F) ‘‘Routed orders base’’ for any 

calendar quarter means the total number 

of orders sent through the System. 


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(G) ‘‘Share of the routed orders base’’

of any Participant as computed for any 

calendar quarter means a fraction, the 

numerator of which is the total number 

of orders sent through the System by 

that Participant during the calendar 

quarter and the denominator of which is 

the routed orders base for the calendar 

quarter. 

(H) ‘‘Share of the transactions base’’

for a calendar quarter means: 

(1) For any Participant other than 

AMEX or NYSE, a fraction, the 

numerator of which is the total number 

of transactions in Network A Eligible 

Securities that the Participant reports to 

the CTA Plan Processor during that 

quarter and the denominator of which is 

the quarter’s transactions base; 

(2) For AMEX, a fraction, the 

numerator of which is the number of 

transactions in ‘‘Top Ten Network B 

Eligible Securities’’ (as clause (2) of 

section 10(a)(i)(I) defines that term) that 

AMEX reports to the CTA Plan 

Processor during that quarter and the 

denominator of which is the quarter’s 

transactions base; and 

(3) For NYSE, the fraction derived by 

subtracting from 1 (one) the sum of all 

other Participants’ shares of the 

transaction base for the quarter. 

(I) ‘‘Transactions base’’ for any 

calendar quarter means the sum of (1) 

the number of transaction reports in 

Network A Eligible Securities that the 

CTA Plan Processor disseminates during 

the quarter and (2) the number of 

transaction reports in the ‘‘Top Ten 

Network B Eligible Securities’’ that the 

CTA Plan Processor disseminates during 

the quarter. A quarter’s ‘‘Top Ten 

Network B Eligible Securities’’ refers to 

the ten Network B Eligible securities for 

which the CTA Plan Processor 

disseminates the greatest number of 

transaction reports during that quarter. 

(ii) Dispute Costs Excluded. The 

development costs and production costs 

shall not include any cost or expense 

incurred by any Participant as a result 

of or in connection with the defense of 

any claim, suit or proceeding against the 

Supervisory Committee or any one or 

more of the Participants relating to the 

Linkage Plan or the operation of the 

System. All such costs and expenses 

incurred by any Participant shall be 

borne by such Participant without 

contribution or reimbursement. 

(iii) Development Costs. 

(A) New Development Costs Sharing. 

Development costs shall not be incurred 

except as agreed to by all Participants. 

Each Participant shall pay a fraction 

equal to its share of the transactions 

base for the calendar quarter preceding 

the calendar quarter during which the 

Participants agree to incur such cost. 

Any development costs that are 

incurred for the benefit of less than all 

Participants shall be shared by the 

Participant or Participants that benefit 

therefrom as they shall mutually agree. 

(B) Development Costs Payment. 

Development costs will be computed by 

the System’s facilities manager as soon 

as practicable following the close of the 

calendar month or, if relatively small, 

the calendar quarter during which they 

were incurred. Each Participant’s share 

shall be billed to, and payable by, such 

Participant promptly thereafter. 

(C) New Participant’s Share of 

Development Costs. At the time any 

national securities exchange or national 

securities association applies to become 

a new Participant, such applicant shall 

be charged by, and shall pay to, the 

System’s facilities manager an amount 

estimated by the System’s facilities 

manager to cover development costs to 

be incurred to accommodate such 

applicant’s status as a Participant. Prior 

to the effective date of the SEC’s 

approval of such Participant status, the 

applicant shall pay to the System’s 

facility manager actual development 

costs in excess of estimated 

development costs, if any, or the 

System’s facility manager shall 

reimburse to the applicant estimated 

development costs that were paid and 

that are in excess of actual development 

costs. Each new Participant shall share 

in development costs incurred after it 

becomes a Participant in accordance 

with section 10(a)(iii)(A). 

(D) Title to Software. The entire right, 

title and interest in and to all ‘‘computer 

software’’ (as defined in section 

10(a)(i)(A)) developed prior to July 1, 

1978 shall be vested in the Participants 

who share the cost of such computer 

software as joint owners. The entire 

right, title and interest in and to all 

computer software developed after June 

30, 1978 shall be vested in the 

Participant who pays the cost thereof. If 

more than one Participant shares in the 

cost of computer software developed 

after June 30, 1978, then the entire right, 

title and interest in and to such 

computer software, the cost of which is 

so shared, shall be vested in the 

Participants who share such cost as joint 

owners. The System’s facilities manager 

shall use computer software solely for 

the purpose of performing tasks 

required for the Applications as 

provided in the Linkage Plan. 

(iv) Production Costs 

(A) Production Costs Sharing. The 

production costs attributable to any 

calendar quarter shall be shared by the 

markets that were Participants during 

any portion of the calendar quarter. 

Each such Participant, except the NYSE, 

shall pay 50% of the fraction of such 

production costs equal to its share of the 

routed orders base as computed for the 

calendar quarter. Notwithstanding the 

foregoing, the aggregate dollar amount 

of all of a Participant’s quarterly 

payments shall not exceed its 

‘‘Production Costs Sharing Cap’’. A 

Participant’s ‘‘Production Costs Sharing 

Cap’’ means total production costs for 

calendar year 2005 multiplied by 50 

percent of the Participant’s percentage 

of the routed order base for the period 

commencing January 1, 2005, and 

ending July 31, 2005. The NYSE shall 

pay those production costs that this 

Paragraph does not require the other 

Participants to pay. 

(B) Production Costs Payment. 

Production costs will be computed by 

the System’s facilities manager as soon 

as practicable following the close of 

each calendar month. Each Participant’s 

(or former Participant’s) estimated share 

thereof shall be billed by the System’s 

facilities manager and shall be payable 

to the System’s facilities manager 

promptly following receipt. Any 

appropriate adjustment will be made 

between the System’s facilities manager 

and each Participant promptly following 

the close of each calendar quarter. 

(v) Communications Connection 

Costs. Each Participant shall bear 100% 

of the costs to provide communication 

connection from a Participant’s facilities 

to the System’s communications 

facilities maintained by the facilities 

manager. 

(vi) Accounts. The System’s facilities 

manager and the independent public 

accountants hereinafter referred to shall 

furnish any information and/or 

documentation reasonably requested in 

writing by a majority of the Participants 

in support of or relating to any of the 

computations referred to in this section 

10(a). All expenses, allocations and 

computations referred to or required by 

this section 10(a) shall be reported at 

least annually to the Participants. For 

even numbered years, (or such other 

yearly interval as the Supervisory 

Committee, by affirmative vote of all its 

members, may specify), such reports 

shall be rendered by a firm of 

independent public accountants (which 

may be the firm regularly employed by 

the NYSE or the System’s facilities 

manager), and such accountants shall 

render their opinion that such expenses, 

allocations and computations have been 

reported in accordance with the 

understanding among the Participants 

as set forth in this section 10(a). For 

those years when a firm of independent 

public accountants is not engaged to 

render a report, the facilities manager’s 

internal auditor shall review all 


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expenses, allocations and computations 

referred to or required by this section 

10(a) and that internal auditor shall 

report that such expenses, allocations 

and computations have been reported in 

accordance with the understanding 

among the Participants as set forth in 

this section 10(a). 

(b) User Charges. Each Participant 

shall be free to determine whether or 

not to impose a fee or charge on some 

or all of its members in connection with 

use of its facilities to access the System 

and, if so, the amount of such fee or 

charge. Any fee or charge that may be 

imposed by any Participant shall not be 

of such size, and shall not be so 

structured, as to discourage use of the 

System. 

(c) Facilities Manager Liability Limits. 

The System’s facilities manager shall 

not be liable to any Participant or to any 

member of any Participant using or 

having access to the System or to any 

other person for any loss or damage 

resulting from any non-performance, or 

interruption in the operation of the 

System, from any inaccuracies, errors or 

omissions in any of the information 

conveyed or received through the 

System, or from any delays or errors in 

the transmission of any such 

information, or for making trade 

adjustments. 

11. Termination; withdrawal. The 

Linkage Plan will terminate on June 30, 

2007. Participants that wish to extend 

the term may agree to do so, subject to 

filing with and approval by the SEC. 

During the term of the Plan a Participant 

may withdraw with 30 days notice if it 

continues to maintain connectivity to all 

other Participants and accept orders 

through the Linkage until June 30, 2007. 

A withdrawing Participant’s right to 

send orders through the Linkage shall 

terminate on the date the withdrawal is 

effective. In addition, a withdrawing 

Participant’s obligation to share 

development and production costs shall 

terminate on the date the withdrawal is 

effective, provided, however, that such 

Participant shall remain liable for, and 

shall pay upon demand, its portion of 

the costs of developing and operating 

the System and any other amounts 

payable by it as determined pursuant to 

sections 10 and 12 of the Linkage Plan. 

12. System Inoperability. 

(a) General. In the event of a disaster 

that renders the System inoperable, the 

NYSE has authorized the facilities 

manager to utilize a designated NYSE 

operating system (the ‘‘NYSE System’’) 

on a preemptive and priority basis to 

function as detailed in section (c)(i), 

below. 

(b) Participants’ Implementation 

Obligations. 

(i) At any time the NYSE System 

assumes the functions of the System, all 

Plan provisions not inconsistent with 

this section 12, and Participant rules 

and policies governing use of the 

System will continue to apply. 

(ii) Each Participant’s cost of 

maintaining communications 

connectivity to the NYSE System shall 

be borne by that Participant. 

(c) NYSE Implementation Obligations. 

In consideration of the fees to be paid 

to the NYSE as specified in paragraph 

(d) of this section 12, the NYSE agrees: 

(i) To have and to make available the 

NYSE System to assume the functions of 

the System on a preemptive and priority 

basis in the event of a disaster which 

renders the System inoperable. Such 

system is composed of computers and 

peripheral equipment sufficient to 

operate the System at a minimum of 

50% of the System’s rated 150 messages 

per second capacity and 75% of the 

System’s disk capacity. 

(ii) that the facilities manager is 

authorized to take the actions necessary 

to make the NYSE System available to 

assume the functions of the System 

within two hours in the event of a 

limited disaster and on the next day in 

the event of a full site disaster. The 

facilities manager is authorized to make 

the determinations that, in its good faith 

judgment, there has been a limited 

disaster or full site disaster, the System 

is inoperable, and the NYSE System will 

assume the functions of the System. 

(iii) That the NYSE System will be 

located at a site remote from the site 

where the System is located. 

(d) Implementation Obligations of 

Participants Other than NYSE (‘‘Other 

Participants’’). 

(i) Fees. In consideration of the 

NYSE’s making available the NYSE 

System to assume the functions of the 

System in the event of a disaster, the 

Other Participants agree to pay to the 

NYSE: (A) a preemptive and priority 

reserve fee totaling $24,800 per calendar 

quarter (such reserve fee shall be 

adjusted each January by the same 

percentage change as in the Consumer 

Price Index as calculated by the U.S. 

Department of Commerce for the 

preceding calendar year); and (B) a per 

diem fee, if in the event of a disaster the 

NYSE System assumes the functions of 

the System, for each day in excess of 

five consecutive trading days that the 

NYSE System is so utilized. Such per 

diem fee shall equal 1/250 of the yearly 

dollar amount the facilities manager 

charges the NYSE to operate the NYSE 

System. 

This subsection (d)(i) shall become 

effective on the date that the facilities 

manager confirms in writing to the 

Supervisory Committee that it has taken 

all actions necessary to make the NYSE 

System available to assume the 

functions of the System as specified in 

subsection (c) of this section 12. If such 

effective date is other than the first day 

of the calendar quarter, then the 

preemptive and priority reserve fee for 

such calendar quarter shall be 

calculated pro rata based upon the 

number of days in such calendar quarter 

that the NYSE System is so available. 

(ii) Fee Sharing. Each of the Other 

Participants agrees to pay a share of the 

preemptive and priority reserve and per 

diem fees based upon a proportional 

share of its production costs excluding 

the NYSE’s share. 

(iii) Fee Payment. Fee payment will 

be computed by the System’s facilities 

manager as soon as practicable 

following the close of each calendar 

month. Each Other Participant’s (or 

former Participant’s) estimated share 

thereof shall be billed by the System’s 

facilities manager and shall be payable 

to the System’s facilities manager 

promptly following receipt. Any 

appropriate adjustment will be made 

between the System’s facilities manager 

and each Other Participant promptly 

following the close of each calendar 

quarter. The facilities manager shall 

forward such payments to the NYSE as 

the NYSE may from time to time 

instruct the facilities manager. 

(e) Liability Limits. Neither the NYSE 

nor the facilities manager shall be liable 

to any Participant, to any member of any 

Participant using or having access to the 

NYSE system, or to any other person for 

any loss or damage resulting from any 

non-performance or interruption in the 

operation of the NYSE System, from any 

inaccuracies, errors or omissions in any 

of the information conveyed or received 

through the NYSE System, or from any 

delays, omissions, or errors in the 

transmissions, or errors in the 

transmission of any such information. 

(f) Termination. 

(i) In the event that the NYSE 

determines to withdraw the NYSE 

System from use by the Linkage, it shall 

so notify the Supervisory Committee, in 

writing, a minimum of six months prior 

to such withdrawal. 

(ii) In the event of such withdrawal, 

this section 12 shall be terminated and 

the Participants must then determine 

whether they should provide for 

alternative procedures in the event of 

System inoperability. 

13. Effective Date: The Linkage Plan 

shall become operative on October 1, 

2006. 

14. Counterparts. The Linkage Plan 

may be executed in any number of 

counterparts, no one of which need 


cprice-sewell on PROD1PC66 with NOTICES
Federal Register / Vol. 71, No. 194 / Friday, October 6, 2006 / Notices 59157 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

contain all signatures of all Participants, 

and as many of such counterparts as 

shall together contain all such 

signatures shall constitute one and the 

same instrument. 

By lllllllllllllllll

AMERICAN STOCK EXCHANGE LLC. 

By lllllllllllllllll

NATIONAL STOCK EXCHANGE. 

By lllllllllllllllll

BOSTON STOCK EXCHANGE, INC. 

By lllllllllllllllll

NEW YORK STOCK EXCHANGE LLC. 

By lllllllllllllllll

CHICAGO BOARD OPTIONS 

EXCHANGE, INC. 

By lllllllllllllllll

NYSE ARCA, INC. 

By lllllllllllllllll

CHICAGO STOCK EXCHANGE, INC. 

By lllllllllllllllll

PHILADELPHIA STOCK EXCHANGE, 

INC. 

By lllllllllllllllll

NASDAQ STOCK MARKET LLC. 

[FR Doc. 06–8543 Filed 10–5–06; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Pub. L. 94–409, that the 

Securities and Exchange Commission 

will hold the following meetings during 

the week of October 9, 2006: An Open 

Meeting will be held on Wednesday, 

October 11, 2006 at 10 a.m. in the 

Auditorium, Room LL–002, and Closed 

Meetings will be held on Wednesday, 

October 11, 2006 at 11 a.m. and 

Thursday, October 12, 2006 at 2 p.m. 

Commissioners, Counsels to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meetings. Certain 

staff members who have an interest in 

the matters may also be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), (9)(B) and (10) 

and 17 CFR 200.402(a)(3), (5), (7), (9)(ii), 

and (10) permit consideration of the 

scheduled matters at the Closed 

Meetings. 

Commissioner Atkins, as duty officer, 

voted to consider the items listed for the 

closed meeting in closed session. 

The subject matter of the Open 

Meeting on Wednesday, October 11, 

2006 will be: 

The Commission will hear oral argument 

in an appeal by James T. Patten from the 

decision of an administrative law judge. The 

law judge found that, during two separate 

periods in 2002 and 2003, Patten 

manipulated, and aided and abetted the 

manipulation of, the common stock price of 

Initio, Inc., formerly traded on the Nasdaq 

Small Cap Market. The law judge found that, 

through his conduct in placing orders to buy 

Initio shares for himself and on behalf of a 

customer, Patten violated Section 10(b) of the 

Securities Exchange Act of 1934 and Rule 

10b–5 thereunder. The law judge ordered 

Patten to cease and desist from committing, 

causing, and aiding and abetting violations of 

Section 10(b) and Rule 10b–5, ordered him 

to pay a $60,000 civil penalty, and barred 

him from association with any broker or 

dealer. Among the issues likely to be argued 

are whether Patten violated Section 10(b) of 

the Exchange Act and Rule 10b–5 thereunder 

in entering orders to buy Initio shares, and, 

if so, whether and to what extent sanctions 

should be imposed on him. 

The subject matter of the Closed 

Meeting scheduled for Wednesday, 

October 11, 2006 will be: Post-argument 

discussion. 

The subject matters of the Closed 

Meeting scheduled for Thursday, 

October 12, 2006 will be: Formal orders 

of investigation; institution and 

settlement of injunctive actions; 

institution and settlement of 

administrative proceedings of an 

enforcement nature; and an adjudicatory 

matter. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: The Office of the Secretary at 

(202) 551–5400. 

Dated: October 4, 2006. 

Nancy M. Morris, 

Secretary. 

[FR Doc. 06–8580 Filed 10–4–06; 3:55 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54543; File No. SR–Amex–

2006–92] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change Relating to 

the Exercise Deadline for Quarterly 

Options Series 

September 29, 2006. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19(b)(4) thereunder,2

notice is hereby given that on 

September 25, 2006, the American Stock 

Exchange LLC (‘‘Amex’’ 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 

substantially been prepared by the 

Exchange. The Commission has 

designated this proposed rule change as 

non-controversial under Section 

19(b)(3)(A)(iii) of the Act 3 and Rule 

19b–4(f)(6) thereunder,4 which renders 

the proposed rule change effective upon 

filing with the Commission. 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 amend 

Amex Rule 980(c) to provide that 

options holders of quarterly options 

have until the expiration date to make 

a decision to exercise or not exercise an 

expiring option. The text of the 

proposed rule change is set forth below. 

Proposed new language is italicized. 

* * * * * 

American Stock Exchange LLC 

* * * * * 

Rule 980. Exercise of Option Contracts 

(a)–(b) No change. 

(c) Exercise cut-off time. Option 

holders have until 5:30 p.m. Eastern 

time (‘‘ET’’) on the business day 

immediately prior to the expiration date 

or, in the case of a Quarterly Options 

Series, on the expiration date, to make 

a final decision to exercise or not 

exercise an expiring option. For 

customer accounts, members and 

member organizations may not accept 

exercise instructions after 5:30 p.m. ET 

but have until 6:30 p.m. ET to submit 

a Contrary Exercise Advice. For noncustomer accounts, members and 

member organizations may not accept 

exercise instructions after 5:30 p.m. ET 

but have until 6:30 p.m. ET to submit 

a Contrary Exercise Advice if such 

member or member organization 

employs an electronic submission 

procedure with time stamp for the 

submission of exercise instructions by 

option holders. Consistent with 

Commentary .04, members and member 

organizations are required to submit a 

Contrary Exercise Advice by 5:30 p.m. 


cprice-sewell on PROD1PC66 with NOTICES