55192 Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 

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

8 15 U.S.C. 78f(b)(5). 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3On July 28, 2000, the Commission approved a 

national market system plan for the purpose of 

creating and operating an intermarket option 

linkage proposed by the American Stock Exchange 

LLC, the CBOE, and the International Securities 

Exchange, Inc. See Securities Exchange Act Release 

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

2000) (‘‘Linkage Plan’’). Subsequently, upon 

separate requests by the Philadelphia Stock 

Exchange, Inc., the Pacific Exchange, Inc., and the 

Boston Stock Exchange, Inc., the Commission 

issued orders to permit these exchanges to 

participate in the Linkage Plan. See Securities 

all Participants disseminate dynamic 

quotes with size, the Participants 

believe that it is appropriate to calculate 

the FCQS based on the size of the 

disseminated quotation of the 

Participant receiving the P/A Order. 

Accordingly, the Participant Exchanges 

submitted Amendment No. 16 to the 

Linkage Plan, and the Exchange 

proposes to amend the definition of 

FCQS to Chapter XII, Section 1(g) of 

BOX Rules. As such, upon 

implementation of the proposed rule 

change and Amendment No. 16, a 

Participant will provide incoming P/A 

Orders with executions up to the full 

size of a Participant’s disseminated 

quotation. 

The proposed rule change will 

eliminate a 15-second period 

Participants must wait before sending a 

second P/A Order. Specifically, Chapter 

XII, Section 2(c) of BOX’s Rules governs 

the manner in which P/A Orders larger 

than the FCQS are handled. It provides 

that an initial P/A Order may be sent to 

a Participant for execution at the FCQS; 

if the same Participant continues to 

disseminate the same price 15 seconds 

after the execution of the initial P/A 

Order, the market maker can send a 

second P/A Order, subject to certain 

restrictions. The Exchange proposes to 

eliminate the 15-second wait period 

because the Participants now employ 

dynamic quotes with size, obviating the 

need for a manual quote refresh period 

for P/A Orders. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 7 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 8

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, 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. 

Specifically, the Exchange believes the 

proposed rule change will help promote 

the Linkage Plan by providing greater 

automatic execution of Linkage orders. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would 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 

Written comments were neither 

solicited nor received. 

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 BSE 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 

Number SR–BSE–2005–39 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–9303. 

All submissions should refer to File 

Number SR–BSE–2005–39. 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 

Section 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 

publicly available. All submissions 

should refer to File Number SR–BSE–

2005–39 and should be submitted on or 

before October 11, 2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.9

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18669 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52419; File No. SR–CBOE–

2005–51] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Approving a 

Proposed Rule Change and 

Amendment No. 1 Thereto To Amend 

the Exchange’s Trade-Through and 

Locked Markets Rules 

September 13, 2005. 

On June 30, 2005, the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’), filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

a proposed rule change pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 to implement 

Amendment No. 15 to the Plan for the 

Purpose of Creating and Operating an 

Intermarket Option Linkage 3 by 

Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 55193 

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 In Amendment No. 1, the CBOE revised the rule 

text to use terms consistent with CBOE’s current 

rules and made certain clarifying changes to the 

purpose section. 5See Securities Exchange Act Release No. 52173 

(July 29, 2005), 70 FR 45452. 6See CBOE Rule 6.80(12). 7 15 U.S.C. 78f. 

8 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 52401 

(September 9, 2005) (File No. 4–429) (‘‘Amendment 

No. 16’’). 

4On July 28, 2000, the Commission approved a 

national market system plan for the purpose of 

creating and operating an intermarket option market 

linkage proposed by the American Stock Exchange, 

LLC, CBOE, and International Securities Exchange, 

Inc. See Securities Exchange Act Release No. 43086 

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

Subsequently, upon separate requests by the 

Philadelphia Stock Exchange, Inc., Pacific 

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

Commission issued orders to permit these 

exchanges to participate in the Linkage Plan. See 

Securities Exchange Act Release Nos. 43573 

(November 16, 2000), 65 FR 70850 (November 28, 

2000), 43574 (November 16, 2000), 65 FR 70851 

(November 28, 2000) and 49198 (February 5, 2004), 

69 FR 7029 (February 12, 2004). 

5See Exchange Rule 6.80(9). 

6See Section 2(16)(a) of the Linkage Plan and 

Exchange Rule 6.80(12)(i). 

amending CBOE Rules 6.80 and 6.84 to 

add a ‘‘trade and ship’’ exception to the 

definition of ‘‘Trade-Through’’ and add 

a ‘‘book and ship’’ exception to the 

provision relating to locked markets, 

respectively. On July 26, 2005, the 

CBOE filed Amendment No. 1 to the 

proposed rule change.4 The proposed 

rule change, as amended, was published 

for comment in the Federal Register on 

August 5, 2005.5 The Commission 

received no comments on the proposal. 

This order approves the proposed rule 

change, as amended. 

Under the proposed rule change, an 

order could be traded at a price that is 

one minimum quoting increment 

inferior to the national best bid or offer 

(‘‘NBBO’’) if a Linkage Order 6 is sent 

contemporaneously to the market(s) 

disseminating the NBBO to satisfy all 

interest at the NBBO price. The 

proposed rule change also would 

provide that an order may be booked 

that would otherwise lock another 

market if a Linkage Order is sent 

contemporaneously to such other 

market to satisfy all interest at the lock 

price and only the remaining portion of 

the order is booked. The CBOE proposes 

that, under trade and ship, any 

execution received from the market 

disseminating the NBBO must (pursuant 

to agency obligations) be reassigned to 

the customer order that is underlying 

the Linkage Order that was sent to trade 

with the market disseminating the 

NBBO. 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of section 6 of the Act 7

and the rules and regulations 

thereunder applicable to a national 

securities exchange.8 In particular, the 

Commission finds that the proposed 

rule change is consistent with section 

6(b)(5) of the Act,9 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 a national market system, and, in 

general, to protect investors and the 

public interest. The Commission 

believes that the proposed rule change 

should help to implement the Linkage 

Plan by facilitating the ability of CBOE’s 

members to execute their customer 

orders in a timely manner and 

potentially could decrease the incidence 

of Trade-Throughs and locked markets. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–CBOE–2005–

51) as amended, is approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18623 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52424; File No. SR–CBOE–

2005–68] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of 

Proposed Rule Change Relating to the 

Definition of Firm Customer Quote Size 

in the Linkage Plan 

September 14, 2005. 

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 August 

29, 2005, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ 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 by the CBOE. 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 its 

rules governing the operation of the 

intermarket option linkage (‘‘Linkage’’) 

to conform with a proposed 

amendment 3 to the Plan for the Purpose 

of Creating and Operating an 

Intermarket Option Linkage (‘‘Linkage 

Plan’’).4 The Exchange is proposing: (i) 

To amend the definition of ‘‘Firm 

Customer Quote Size’’ (‘‘FCQS’’)5 to 

provide automatic executions for 

Linkage Principal Acting as Agent 

Orders (‘‘P/A Orders’’)6 up to the full 

size of the Exchange’s disseminated 

quotation; and (ii) to eliminate a 15- 

second waiting period between the 

sending of P/A Orders. 

The text of the proposed rule change 

is available on CBOE’s Web site 

(www.cboe.com), at the CBOE’s Office of 

the Secretary, and at the Commission’s 

public reference room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

CBOE 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 

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 modernize the definition of 

FCQS in CBOE rules related to the 

operation of the Linkage rules. At the 

time the Linkage commenced, options 

quote sizes were not disseminated 

through the Options Price Reporting 

Authority and most participants in the 

Linkage Plan employed automatic 

execution systems that guaranteed 

automatic fills on orders under a certain 

contract size (which was generally a 

static number). As such, the FCQS was