1784 Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Notices 

5Section 6(b)(4) requires that the rules of a 

national securities exchange provide for the 

equitable allocation of reasonable dues, fees, and 

other charges among its members and issuers and 

other persons using its facilities. 

6 15 U.S.C. 78f(b)(4). 

7 15 U.S.C. 78s(b)(3)(A)(ii). 8 17 CFR 240.19b–4(f)(2). 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to amend 

its Options Fee schedule to eliminate 

the licensing fee of $0.10 a contract 

which is currently charged on options 

on the iShares Russell 1000 Index Fund 

(symbol: IWB), the iShares Russell 1000 

Growth Index Fund (symbol: IWF), the 

iShares Russell 1000 Value Index Fund 

(symbol: IWD), the iShares Russell 2000 

Index Fund (symbol: IWM), the iShares 

Russell 2000 Growth Index Fund 

(symbol: IWO), the iShares Russell 2000 

Value Index Fund (symbol: IWN), and 

the iShares Russell 3000 Index Fund 

(symbol: IWV) (collectively, the ‘‘ETF 

Options’’). 

The Exchange is proposing to 

eliminate the licensing fee applicable to 

the ETF Options as of January 3, 2007 

due to the termination of existing 

licensing agreements on December 31, 

2006. 

The Exchange asserts that the 

proposal is equitable as required by 

Section 6(b)(4) of the Act.5

2. Statutory Basis 

The proposed fee change is consistent 

with Section 6(b)(4) of the Act 6

regarding the equitable allocation of 

reasonable dues, fees, and other charges 

among exchange members and other 

persons using exchange facilities. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change 

has become effective pursuant to 

Section 19(b)(3)(A)(ii) of the Act 7 and 

paragraph (f)(2) of Rule 19b–4 

thereunder 8 because it establishes or 

changes a member due, fee, or other 

charge. At any time within 60 days of 

the filing of the proposed rule change, 

the Commission may summarily 

abrogate such rule change if it appears 

to the Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Amex–2007–02 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Amex–2007–02. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the Amex. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Amex–

2007–02 and should be submitted on or 

before February 6, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–381 Filed 1–12–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55048; File No. SR–Amex–

2006–119] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing of a Proposed Rule Change 

Relating to the Definition of Complex 

Trade as Applied to Trades Through 

the Options Intermarket Linkage 

January 5, 2007. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

28, 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, II, and III below, which Items 

have been prepared substantially by the 

Exchange. 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 Amex proposes to revise Amex 

Rule 940(b)(3) to amend the definition 

of ‘‘Complex Trade.’’ The text of the 

proposed rule change appears below, 

with additions italicized and deletions 

in [brackets]: 

Options Intermarket Linkage 

Rule 940 (a) No Change 

(b) Definitions—The following terms 

shall have the meaning specified in this 

Rule solely for the purpose of this 

Section 4: 

(1)–(2) No Change 

(3) ‘‘Complex Trade’’ means the 

execution of an order in an option series 

in conjunction with the execution of 

one or more related order(s) in different 

options series in the same underlying 

security occurring at or near the same 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Notices 1785 

3See Amex Rule 950–ANTE(d), Commentary .01. 

4 15 U.S.C. 78f(b). 

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

time for the purpose of executing a 

particular investment strategy and for 

an equivalent number of contracts, 

provided that the number of contracts of 

the legs of a spread, straddle or 

combination order may differ by a 

permissible ratio [for the equivalent 

number of contracts and for the purpose 

of executing a particular investment 

strategy]. The permissible ratio for this 

purpose is any ratio that is equal to or 

greater than one-to-three (.333) and less 

than or equal to three-to-one (3.00). 

(4) through (20) No Change 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of, and basis for, 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has substantially prepared 

summaries, set forth in Sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Amex proposes to revise Amex 

Rule 940(b)(3) to amend the definition 

of ‘‘Complex Trade.’’ For the purpose of 

the Options Intermarket Linkage (the 

‘‘Linkage’’), the Amex defines a 

‘‘Complex Trade’’ as a trade reflecting 

the execution of an order in an options 

series in conjunction with one or more 

other orders in different series in the 

same underlying security ‘‘for the 

equivalent number of contracts.’’ A 

Complex Trade is exempt from the 

trade-through rule provided by Amex 

Rule 942(b)(7). 

In contrast to the Linkage definition of 

Complex Trade, the definition of ‘‘ratio 

order’’ set forth in Amex Rule 950—

ANTE(e)(vii) does not require that there 

be an equivalent number of contracts in 

the orders. Specifically, Rule 950–

ANTE(e)(vii) permits ratios that are 

equal to or greater than one-to-three and 

less than or equal to three-to-one. The 

Exchange applies modified priority 

rules to ratio orders as well as other 

complex orders, including spread 

orders, straddle orders, and combination 

orders.3

This proposal will conform the 

Linkage definition of Complex Trade in 

Amex Rule 940(b)(3) to the Amex’s 

definition of a ratio order. According to 

the Amex, the other options exchanges 

also will adopt a similar definition, 

thereby resulting in a uniform 

application of the definition of Complex 

Trade across exchanges. The Amex 

believes that this uniformity will 

facilitate efficient executions of 

Complex Trades on all markets. In 

addition, the Exchange submits that the 

proposal will align the Linkage rules 

with the Amex’s internal market rules to 

facilitate the trading of complex orders. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act,4

in general, and furthers the objectives of 

Section 6(b)(5),5 in particular, in that it 

is designed to prevent fraudulent and 

manipulative acts and practices, 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Amex believes that the proposed 

rule change will impose no burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Amex neither solicited nor 

received written comments with respect 

to the proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

A. by order approve such proposed 

rule change; or 

B. institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form http://www.sec.gov/ 

rules/sro.shtml; or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

No. SR–Amex–2006–119 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Amex–2006–119. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–Amex–2006–119 and 

should be submitted on or before 

February 6, 2007. 


sroberts on PROD1PC70 with NOTICES
1786 Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Notices 

6 17 CFR 200.30–3(a)(12). 

1 5 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Capitalized terms not otherwise defined herein 

shall have the meanings prescribed under the BOX 

Rules. 

4See paragraph (a) of Section 18 of Chapter V of 

the BOX Rules. 

5Pursuant to Paragraph (e)(iii) of Section 18 of 

Chapter V of the BOX Rules. 

6Pursuant to Paragraph (b) of Section 16 of 

Chapter V of the BOX Rules (‘‘Filter Rule’’). 

Pursuant to the Filter Rule, a Limit Order that has 

a Buy (Sell) limit price equal to or better than the 

National Best Offer (Bid), and the Best BOX Offer 

(Bid) is not equal to the National Best Offer (Bid), 

the Limit Order is ‘‘exposed’’ for three seconds to 

seek potential BOX orders that can match the 

National Best Offer (Bid) before the order is routed 

to an away market that is equal to the National Best 

Offer (Bid). 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–384 Filed 1–12–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55050; File No. SR–BSE–

2006–03] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Notice of Filing 

of Proposed Rule Change and 

Amendment No. 1 Thereto, Relating to 

the Treatment of Limit Orders That Are 

Submitted to the Boston Options 

Exchange During a Price Improvement 

Period 

January 5, 2007. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

8, 2006, the Boston Stock Exchange, Inc. 

(‘‘BSE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change. On January 4, 2007, the BSE 

filed Amendment No. 1 to the proposed 

rule change. The proposed rule change 

is described in Items I, II, and III below, 

which Items have been prepared 

substantially by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

As described in more detail herein, 

the Exchange proposes to modify the 

Boston Options Exchange (‘‘BOX’’) 

Rules to clarify the treatment of Limit 

Orders that are submitted to the BOX 

during a Price Improvement Period 

(‘‘PIP’’).3 In addition, this proposal 

clarifies that certain Improvement 

Orders (as explained below) are not 

accepted by the BOX Trading Host. The 

text of the proposed rule change is 

available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.bostonstock.com/legal/ 

pending_rule_filings.html. 

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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to clarify the treatment of 

Limit Orders that are submitted to the 

BOX during a PIP. In addition, this 

proposal clarifies that certain 

Improvement Orders (as explained 

below) are not accepted by the BOX 

Trading Host. 

I. Background and Introduction 

In general, the BOX PIP is a threesecond auction starting at a price better 

than the current National Best Bid and 

Offer (‘‘NBBO’’), during which BOX 

Participants compete to participate in 

the execution of the Customer Order 

submitted to the PIP (the ‘‘PIP Order’’) 

by submitting specially designated 

orders called Improvement Orders in 

one penny increments that are only 

accepted in a PIP auction. A Limit 

Order, in the same series as the PIP 

Order, that is submitted to BOX during 

a PIP auction is considered an 

‘‘unrelated order’’ pursuant to the BOX 

PIP Rules,4 and under certain 

circumstances, may prematurely 

terminate the PIP or may immediately 

execute against the PIP Order. When the 

PIP is prematurely terminated, the PIP 

Order is matched against the best 

prevailing orders on BOX (whether 

Improvement Orders or unrelated orders 

received by BOX during the PIP).5 Then 

the Limit Order is filtered from trading 

through the NBBO and executed 

accordingly.6

Competing Principles Underlying the 

Treatment of Unrelated Orders in a PIP 

The BOX trading system operates 

under four main principles when 

handling the interaction of an unrelated 

Limit Order with the PIP process. 

Specifically, the BOX system: 

1. Allows the PIP to continue for as 

long as possible. The BSE believes that 

in most cases this will maximize the 

price improvement potential to the PIP 

Order. 

2. Maintains the relative price/time 

priority of all orders on the system, 

including Improvement Orders. 

3. Will not allow Improvement Orders 

to lock or cross the BOX Book. 

4. Never ‘‘holds-up’’ the processing of 

any order and seeks to execute an order 

as quickly as practicable in order to 

mitigate the risk of adverse market 

movements. 

On the few occasions when these four 

principles intersect or are in conflict, 

BSE has sought to maintain a reasonable 

balance between the interests of all 

orders while offering each order the best 

available price, without violating any 

BOX Rules or the securities laws. 

Therefore, the first principle, allowing 

the PIP to continue for as long as 

possible, will apply until it conflicts 

with any of the other three (3) 

principles. 

Consideration of the size of orders or 

the potential execution volume at any 

PIP price level is not one of these main 

principles of the BOX system. The BOX 

system does not consider the number of 

contracts that may be executed at the 

best PIP improvement price when 

determining priority or when the PIP 

should terminate. Having at least one 

contract available at the best 

improvement price is all that is 

required. 

II. Same Side Limit Orders—Premature 

Termination Events 

The submission to BOX of a Limit 

Order that is on the same side of the 

market as the PIP Order will 

prematurely terminate the PIP, allowing 

the PIP Order to be immediately 

executed against the best prevailing 

orders on BOX (whether Improvement 

Orders or unrelated orders received by 

BOX during the PIP), if at the time the 

Limit Order is submitted to BOX: 

i. The Buy (Sell) Limit Order price is 

equal to or higher (lower) than the 

National Best Offer (Bid) and either: 


sroberts on PROD1PC70 with NOTICES