53262 Federal Register / Vol. 70, No. 172 / Wednesday, September 7, 2005 / Notices 

5The Exchange has a proposal pending with the 

Commission that would modify Amex Rule 22 to 

establish a three-level review process in which 

Floor Official decisions, as needed, may be 

appealed to a three Senior Floor Official Panel. See 

Securities Exchange Act Release No. 52325 (August 

23, 2005), 70 FR 51392 (August 30, 2005) (SR–

AMEX–2005–052). 

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

7 15 U.S.C. 78f(b)(5). 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange defines a Principal Order as an 

order for a principal account of an eligible Market 

Maker that does not relate to a customer order the 

Market Maker is holding. See PCX Rule 

6.92(a)(12)(ii). 

4On 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 the 

American Stock Exchange, LLC, Chicago Board 

Options Exchange, Inc., and the International Stock 

Exchange, Inc. See Securities Exchange Act Release 

No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 

2000). Subsequently, the Philadelphia Stock 

Exchange, Inc., the PCX and the Boston Stock 

Exchanges, Inc. 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). 

5See Securities Exchange Act Release No. 52070 

(July 20, 2005), 70 FR 43490 (July 27, 2005). 

conditions applicable to the use of 

personal cellular telephones on the ATF 

are set forth in paragraph (e) to the 

proposed rule. Paragraph (f) provides 

that Exchange Officials may substitute 

for Senior Floor Officials without 

reference to their seniority in the event 

that a Floor Official’s ruling is appealed 

to a three Senior Floor Official panel 

and there is an insufficient number of 

available Senior Floor Officials to 

consider the appeal.5

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act 6

in general and furthers the objectives of 

Section 6(b)(5) 7 in particular in that it 

is designed to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling and 

processing information with respect to, 

and facilitating transactions in 

securities. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change will impose 

no burden on competition 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 by the Exchange on this 

proposal. 

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, as amended, 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-2004–76 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–9303. 

All submissions should refer to File 

Number SR-Amex-2004–76. 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 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-2004–76 and should 

be submitted on or before September 28, 

2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.8

Jonathan G. Katz, 

Secretary. 

[FR Doc. E5–4854 Filed 9–6–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Docket No. 34–52345; File No. SR–PCX–

2005–61] 

Self-Regulatory Organizations; Pacific 

Exchange, Inc.; Order Approving 

Proposed Rule Change, and 

Amendment No. 1 Thereto Establishing 

a De Minimis Exception to the 80/20 

Test 

August 26, 2005. 

I. Introduction 

On April 26, 2005, the Pacific 

Exchange, Inc. (‘‘PCX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to section 19(b)(1) of the Securities 

Exchange Act of 1954 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change seeking to modify the 80/20 Test 

in determining limitations on Principal 

Order 3 access under the rules imposed 

by the Plan for the Purpose of Creating 

and Operating an Intermarket Option 

Linkage (‘‘Linkage Plan’’) 4 and related 

rules. On July 29, 2005, the Exchange 

submitted Amendment No. 1 to the 

proposed rule change. The proposed 

rule change, as amended, was noticed 

for comment in the Federal Register on 

July 27, 2005.5 The Commission 

received no comments on the proposed 

rule change. This order approves the 

proposed rule change, as amended. 

Federal Register / Vol. 70, No. 172 / Wednesday, September 7, 2005 / Notices 53263 

6 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, completion, and capital 

formation. 15 U.S.C. 78c(f). 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(2). 

9 17 CFR 200.3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A ‘‘Principal Order’’ is an order for the principal 

account of an eligible market maker that does not 

relate to a customer order the market maker is 

holding. See Section 2(16)(b) of the Linkage Plan. 

4On 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 the 

American Stock Exchange, LLC, Chicago Board 

Options Exchange, Inc., and the International Stock 

Exchange, Inc. See Securities Exchange Act Release 

No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 

2000). Subsequently, the Phlx, the Pacific 

Exchange, Inc. and the Boston Stock Exchange, Inc. 

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). 

5See Securities Exchange Act Release No. 52072 

(July 20, 2005), 70 FR 43495 (July 27, 2005). 

II. Description 

The purpose of this proposed rule 

change, as amended, is to implement 

proposed Joint Amendment No. 17 to 

the Linkage Plan. Joint Amendment No. 

17, together with this proposed rule 

change, would modify the ‘‘80/20 Test’’

set forth in section 8(b)(iii) of the 

Linkage Plan and PCX Rule 6.96. PCX 

Rule 6.96 stats that Market Makers 

should send Principal Orders through 

Linkage on a limited basis and not as a 

primary aspect of their business. The 

80/20 Test implements this general 

principle by prohibiting a Market Maker 

from sending Principal Orders in an 

eligible option class if, in the last 

calendar quarter, the Market Maker’s 

Principal Order contract volume is 

disproportionate to the Market Maker’s 

contract volume executed against 

customer orders in its own market. 

The Exchange believes that applying 

the 80/20 Test has resulted in anomalies 

for Market Makers with limited volume 

in an eligible option class. Specifically, 

if a Market Maker has very little overall 

trading volume in an option, the 

execution of one or two Principal 

Orders during a calendar quarter could 

result in the Market Maker failing to 

meet the Test. This would bar the 

Market Maker from using the Linkage to 

send Principal Orders in that option 

class for the following calendar quarter. 

The Exchange contends that it was not 

its intention to bar Market Makers with 

limited volume from sending Principal 

Order through the Linkage in these 

circumstances since such trading was 

not ‘‘a primary aspect of their business.’’

Thus, the proposed rule would create a 

de minimis exemption from the 80/20 

Test for Market Makers that have total 

contract volume of less than 1,000 

contracts in an option class for a 

calendar quarter. 

III. Discussion 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.6 In particular, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of section 6(b)(5) of the 

Act 7 which requires, among other 

things, that the rules of an exchange be 

designed to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market, 

and to protect investors and the public 

interest. The Commission believes that 

the proposed rule change will increase 

the availability of Linkage to members 

of the Participants by limiting the 

applicability of the 80/20 Test in 

situations where market makers have 

minimal trading volume in a particular 

options class. 

The Commission recognizes that the 

Exchange does not believe that it is 

necessary to bar market makers with 

limited volume from sending Principal 

Orders through the Linkage, as such 

trading does not raise concerns that a 

member is sending such orders as ‘‘a 

primary aspect of their business.’’ The 

Commission believes that the de 

minimus exemption from the 80/20 Test 

proposed by the Exchange for market 

makers that have a total contract volume 

of less than 1,000 contracts in an 

options class for a calendar quarter 

should ensure that members with 

relatively low volume in a particular 

options class can send a reasonable 

number of Principal Orders without 

being barred from using the Linkage by 

application of the 80/20 Test in the 

following calendar quarter. 

IV. Conclusion 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder. 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,8 that the 

proposed rule change (SR–PCX–2005–

61), as amended, is approved. 

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.9

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–17707 Filed 9–6–05; 8:45 am] 

BILLING CODE 8010–01–M 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52344; File No. SR–Phlx–

2005–33] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Order Approving Proposed Rule 

Change, and Amendments No. 1 and 2 

Thereto, Relating to Sending Principal 

Orders Via the Intermarket Options 

Linkage 

August 26, 2005. 

I. Introduction 

On May 6, 2005, the Philadelphia 

Stock Exchange, Inc. (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change 

seeking to amend Phlx Rule 1087, 

Limitation on Principal Order 3 Access, 

relating to the Plan for the Purpose of 

Creating and Operating an Intermarket 

Option Linkage (‘‘Linkage Plan’’) 4 and 

related rules. On May 11, 2005, the Phlx 

submitted Amendment No. 1 to the 

proposed rule change. On July 8, 2005, 

the Exchange submitted Amendment 

No. 2. The proposed rule change, as 

amended, was noticed for comment in 

the Federal Register on July 27, 2005.5

The Commission received no comments 

on the proposed rule change. This order 

approves the proposed rule change, as 

amended. 

II. Description 

The purpose of this proposed rule 

change, as amended, is to implement 

proposed Joint Amendment No. 17 to 

the Linkage Plan. Joint Amendment No. 

17, together with this proposed rule 

change, would establish a de minimis 

exception to the ‘‘80/20 Test’’ set forth