[Federal Register Volume 72, Number 51 (Friday, March 16, 2007)]
[Notices]
[Pages 12639-12640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-4783]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55436; File No. 4-429]


Joint Industry Plan; Notice of Summary Effectiveness on a 
Temporary Basis of Joint Amendment No. 22 to the Plan for the Purpose 
of Creating and Operating an Intermarket Option Linkage Relating to 
Response Time for Certain Orders Sent Through the Linkage, and Notice 
of Filing of Such Amendment

March 8, 2007.

I. Introduction

    On February 2, 2007, February 15, 2007, February 5, 2007, February 
7, 2007, January 30, 2007, and February 13, 2007, the American Stock 
Exchange LLC (``Amex''), the Boston Stock Exchange, Inc. (``BSE''), the 
Chicago Board Options Exchange, Incorporated (``CBOE''), the 
International Securities Exchange, LLC (``ISE''), the NYSE Arca, Inc., 
and the Philadelphia Stock Exchange, Inc. (``Phlx'') (collectively, 
``Participants''), respectively, filed with the Securities and Exchange 
Commission (``Commission'') pursuant to Section 11A of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 608 thereunder \2\ an 
amendment (``Joint Amendment No. 22'') to the Plan for the Purpose of 
Creating and Operating an Intermarket Option Linkage (``Linkage 
Plan'').\3\ In Joint Amendment No. 22, the Participants propose to 
reduce (i) The amount of time a member must wait after sending a 
Linkage Order \4\ to a market before the member can trade through that 
market and (ii) the timeframe within which a Participant must respond 
to a Linkage Order after receipt of that Order. This order summarily 
puts into effect Joint Amendment No. 22 on a temporary basis not to 
exceed 120 days and solicits comment on Joint Amendment No. 22 from 
interested persons.\5\
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ On July 28, 2000, the Commission approved a national market 
system plan for the purpose of creating and operating an intermarket 
options market linkage (``Linkage'') proposed by Amex, CBOE, and 
ISE. See Securities Exchange Act Release No. 43086 (July 28, 2000), 
65 FR 48023 (August 4, 2000). Subsequently, Phlx, Pacific Exchange, 
Inc. (n/k/a NYSE Arca, Inc.), and BSE joined the Linkage Plan. See 
Securities Exchange Act Release Nos. 43573 (November 16, 2000), 65 
FR 70851 (November 28, 2000); 43574 (November 16, 2000), 65 FR 70850 
(November 28, 2000); and 49198 (February 5, 2004), 69 FR 7029 
(February 12, 2004).
    \4\ See Section 2(16) of the Linkage Plan. For the purposes of 
this Joint Amendment No. 22 only, references to ``Linkage Orders'' 
herein pertain to P/A Orders and Principal Orders. For definitions 
of ``P/A Order'' and ``Principal Order,'' see note 6 infra.
    \5\ A proposed amendment may be put into effect summarily upon 
publication of notice of such amendment, on a temporary basis not to 
exceed 120 days, if the Commission finds that such action is 
necessary or appropriate in the public interest, for the protection 
of investors or the maintenance of fair and orderly markets, to 
remove impediments to, and perfect mechanisms of, a national market 
system or otherwise in furtherance of the purposes of the Act. See 
17 CFR 242.608(b)(4).
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II. Description of the Proposed Amendment

    First, the purpose of Joint Amendment No. 22 is to reduce the 
amount of time a member must wait after sending a Linkage Order to a 
market before the member can trade through that market. The 
Participants propose to decrease this time period from 20 seconds to 5 
seconds.
    Second, Joint Amendment No. 22 will also reduce the time frame in 
which a Participant must respond to a Linkage Order from 15 to 5 
seconds after receipt of that Order. Because the Linkage is highly 
automated and a Participant should receive a response to a Linkage 
Order within seconds after it is sent, the Participants do not believe 
it is necessary to wait the current 15 seconds for such a response. In 
addition, especially in fast-moving markets like the options market, 
the Participants believe that amending the time period to 5 seconds for 
the rejection of a P/A

[[Page 12640]]

Order or Principal Order \6\ due to an untimely response will provide 
an opportunity for the transmittal of responses while also allowing a 
Participant's members to execute orders on their own exchanges in a 
timely manner.
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    \6\ See Section 2(16)(a) and (b) of the Linkage Plan, 
respectively.
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III. Discussion

    After careful consideration, the Commission finds that the proposed 
amendment to the Linkage Plan is consistent with the requirements of 
the Act and the rules and regulations thereunder.\7\ Specifically, the 
Commission finds that the proposed amendment to the Linkage Plan is 
consistent with Section 11A of the Act \8\ and Rule 608 thereunder \9\ 
in that it is appropriate in the public interest, for the protection of 
investors and the maintenance of fair and orderly markets. 
Specifically, the Commission believes that reducing the time required 
by a Participant to respond to a Linkage Order and the amount of time a 
member sending a Linkage Order must wait before trading through a 
nonresponsive Participant should facilitate the more timely execution 
of orders across the options markets. In addition, the Commission finds 
that it is appropriate to summarily put into effect Joint Amendment No. 
22 upon publication of this notice on a temporary basis for 120 days. 
The Commission believes that such action is appropriate in the public 
interest, for the protection of investors and the maintenance of fair 
and orderly markets, because it will facilitate implementation of the 
Joint Amendment No. 22 in conjunction with the commencement of options 
penny quoting pilot program.
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    \7\ In summarily putting into effect this Joint Amendment No. 
22, the Commission has considered its impact on efficiency, 
competition, and capital formation.
    \8\ 15 U.S.C. 78k-1.
    \9\ 17 CFR 242.608.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether proposed Joint 
Amendment No. 22 is consistent with the Act. Comments may be submitted 
by any of the following methods:

Electronic Comments

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#cdbfb8a1a8e0aea2a0a0a8a3b9be8dbea8aee3aaa2bb"><span class="__cf_email__" data-cfemail="cfbdbaa3aae2aca0a2a2aaa1bbbc8fbcaaace1a8a0b9">[email protected]</span></a>. Please include 
File Number 4-429 on the subject line.

Paper Comments

    <bullet> 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 4-429. 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 proposed Joint Amendment No. 22 that are 
filed with the Commission, and all written communications relating to 
proposed Joint Amendment No. 22 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 
filings also will be available for inspection and copying at the 
principal offices of the Amex, BSE, CBOE, ISE, NYSE Arca, and Phlx. 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 publicly available. All 
submissions should refer to File Number 4-429 and should be submitted 
on or before April 6, 2007.

V. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act \10\ 
and Rule 608(b)(4) thereunder,\11\ that Joint Amendment No. 22 is 
summarily put into effect until July 16, 2007.
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    \10\ 15 U.S.C. 78k-1.
    \11\ 17 CFR 242.608(b)(4).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12 \
Florence E. Harmon,
Deputy Secretary.
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    \12\ 17 CFR 200.30-3(a)(29).
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[FR Doc. E7-4783 Filed 3-15-07; 8:45 am]
BILLING CODE 8010-01-P


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