Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 55441 

3 15 U.S.C. 78f(b). 

4 15 U.S.C. 78f(b)(5). 5 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1, which replaced the original 

filing, made technical and clarifying changes to the 

proposed rule change. 

4Amendment No. 2, which replaced Amendment 

No. 1, clarified the execution priority of Passive 

Liquidity orders in PCXE Rule 7.37, as compared 

to other orders that are part of the Display Order 

Process and the Working Order Processes, and as 

compared to Directed Fills in the Display Order 

Process. In addition, Amendment No. 2 made other 

technical and clarifying changes to the proposed 

rule change. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act,3

in general, and furthers the objectives of 

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

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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 Exchange has neither solicited 

nor received comments 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 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–NYSE–2005–62 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-NYSE–2005–62. 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 offices of NYSE. 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-NYSE–2005–62 and should 

be submitted on or before October 12, 

2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.5

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18766 Filed 9–20–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52436; File No. SR–PCX–

2005–53] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change and 

Amendment Nos. 1 and 2 Thereto by 

the Pacific Exchange, Inc. To Create a 

New Order Type—Passive Liquidity 

Orders—for Use in the ArcaEx Trading 

Facility of the PCX 

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 April 15, 

2005, the Pacific Exchange, Inc. (‘‘PCX’’

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 PCX. On June 3, 2005, 

the PCX filed Amendment No. 1 to the 

proposed rule change.3 On August 26, 

2005, the PCX filed Amendment No. 2 

to the proposed rule change.4 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 

The PCX, through its wholly-owned 

subsidiary PCX Equities, Inc. (‘‘PCXE’’), 

proposes to amend its rules governing 

the Archipelago Exchange (‘‘ArcaEx’’), 

the equities trading facility of PCXE. 

With this filing, the Exchange proposes 

to add one new order type, the Passive 

Liquidity Order (‘‘PL Order’’). The 

changes described in this rule proposal 

would add new Rule 7.31(h)(4) and 

amend existing Rule 7.37(b). 

The text of the proposed rule change, 

as amended, appears below. Additions 

are in italics. Deleted items are in 

brackets. 

* * * * * 

55442 Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 

5See PCXE Rule 1.1(yy) for the definition of 

‘‘User.’’

6More specifically, the pegging functionality will 

not be available for PL Orders in that the Passive 

Liquidity Order price will not automatically track 

the NBBO. See PCXE Rule 7.31(cc). Further, reserve 

functionality, meaning undisplayed size, and 

discretionary functionality, meaning undisplayed 

prices, will not be available for PL Orders since the 

Passive Liquidity Order price and size are 

undisplayed by definition. 

7See PCXE Rule 1.1(a). 

8The Directed Order Process, as set forth in PCXE 

Rule 7.37, precedes the Display, Working, and 

Tracking Order Processes, but is not operable at this 

time on ArcaEx. ArcaEx intends to implement a 

new Directed Process in a future filing. 

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

Rule 7 

Equities Trading 

Rule 7.31(a)–(g)—No Change 

(h) Working Order. Any order with a 

conditional or undisplayed price and/or 

size designated as a ‘‘Working Order’’ by 

the Corporation, including, without 

limitation: 

(1)–(3)—No Change 

(4) Passive Liquidity Order. An order 

to buy or sell a stated amount of a 

security at a specified, undisplayed 

price. Passive Liquidity Orders will be 

executed in the Working Order Process 

after all other Working Orders except 

undisplayed discretionary order 

interest. Passive Liquidity Orders with a 

price superior to that of Directed Fills 

will have price priority and will execute 

ahead of inferior priced Directed Fills in 

the Directed Order Process. Passive 

Liquidity Orders with a price superior to 

that of displayed orders will have price 

priority and will execute ahead of 

inferior priced displayed orders in the 

Display Order Process. 

* * * * * 

Rule 7.37 

(a) Step 1: Directed Order Process. 

During Core Trading Hours only, orders 

may be matched and executed in the 

Directed Order Process as follows: 

(1) If a User submits a marketable 

Directed Order to the Archipelago 

Exchange and the User’s designated 

Market Maker has a standing instruction 

for a Directed Fill to the Archipelago 

Exchange, the Directed Order shall be 

executed against the Directed Fill of the 

designated Market Maker, unless there 

is a Passive Liquidity Order as defined 

in PCXE Rule 7.31(h) with a price 

superior to that of the Directed Fill, in 

which case the Passive Liquidity Order 

will have price priority and will execute 

ahead of inferior priced Directed Fills in 

the Directed Order Process. 

(2)–(4)—No Change. 

(b) If an incoming marketable order 

has not been executed in its entirety 

pursuant to paragraph (a) of this Rule, 

any remaining part of the order shall be 

routed to the Display Order Process. 

(1) Step 2: Display Order Process. 

(A) An incoming marketable order 

shall first attempt to be matched for 

execution against orders in the Display 

Order Process at the display price of the 

resident order for the total amount of 

stock available at that price or for the 

size of the incoming order, whichever is 

smaller. Passive Liquidity Orders as 

defined in PCXE Rule 7.31(h) with a 

price superior to that of displayed 

orders will have price priority and will 

execute ahead of inferior priced 

displayed orders in the Display Order 

Process. For the purposes of this 

subsection, the size of an incoming 

Reserve Order includes the displayed 

and reserve size, and the size of the 

portion of the Reserve Order resident in 

the Display Order Process is equal to its 

displayed size. If the incoming 

marketable order has not been executed 

in its entirety, the remaining part of the 

order shall be routed to the Working 

Order Process. 

(B)—No Change. 

Rule 7.37(b)(2) 

(2) Step 3: Working Order Process. 

(A) An incoming marketable order 

shall be matched for execution against 

orders in the Working Order Process in 

the following manner: 

(i) An incoming marketable order 

shall be matched against orders within 

the Working Order Process in the order 

of their ranking, at the price of the 

displayed portion (or in the case of an 

All-or-None Order, at the limit price or 

in the case of a Passive Liquidity Order, 

at its price), for the total amount of stock 

available at that price or for the size of 

the incoming order, whichever is 

smaller. 

Rule 7.37(b)(2)(A)(ii)–(d)—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 

PCX 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 PCX 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 

As part of its continuing efforts to 

enhance participation on the ArcaEx 

facility, the Exchange proposes to add a 

new order type for use by Users.5 The 

new order type, the PL Order, is an 

order to buy or sell a stated amount of 

a security at a specified, undisplayed 

price. 

PL Order Type Features 

A PL Order would be an order to buy 

or sell a stated amount of a security at 

a specified, undisplayed price. PL 

Orders must be entered with a volume 

of at least 200 shares and will only be 

permitted in round lot denominations. 

ArcaEx pegging, reserve, and 

discretionary functionality will not be 

available to modify PL Orders.6 PL 

Orders will not route out of ArcaEx to 

other market centers and will not 

execute against incoming orders sent via 

the Intermarket Trading System. 

PL Order Execution Priority in ArcaEx 

ArcaEx maintains an electronic file of 

orders called the Arca book.7 The Arca 

book is divided into three components: 

the Display Order Process, the Working 

Order Process and the Tracking Order 

Process.8 Arca ranks and maintains 

limit orders in the Arca book according 

to price/time priority and generally 

affords priority to displayed orders in 

the Display Process and prices over 

undisplayed orders in the Working 

Order Process, sizes and prices. 

PL Orders would be executed in the 

Working Order Process after all other 

orders including reserve orders and the 

display portion of discretionary orders 

at a particular price level. PL Orders 

would, however, take precedence over 

undisplayed discretionary order 

interest. PL Orders with a price superior 

to that of Directed Fills would have 

price priority and would execute ahead 

of inferior priced Directed Fills in the 

Directed Order Process. Also, PL Orders 

with a price superior to that of 

displayed orders would have price 

priority and would execute ahead of 

inferior priced displayed orders in the 

Display Order Process. 

The Exchange believes that the 

implementation of the aforementioned 

rule changes relating to ArcaEx order 

processing would enhance order 

execution opportunities on ArcaEx. The 

Exchange believes that the proposed 

order type would allow for additional 

opportunities for liquidity providers to 

passively interact with interest in the 

Arca book. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change, as amended, is 

consistent with Section 6(b) of the Act,9

in general, and furthers the objectives of 

Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 55443 

10 15 U.S.C. 78f(b)(1). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b-4. 

3 In Amendment No. 1, the Exchange made 

clarifying changes to the proposed rule text relating 

to the availability of Participant exchanges’

automatic execution system. 

4See Securities Exchange Act Release No. 52401 

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

5On 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, Chicago Board Options Exchange, 

Incorporated, and International Securities 

Exchange, Inc. See Securities Exchange Act Release 

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

Continued 

Section 6(b)(1) of the Act,10 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 facilitating 

transactions in securities, and to remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will 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 on the proposed 

rule change were neither solicited nor 

received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange requested that the 

proposed rule change be given 

expedited review and accelerated 

approval pursuant to Section 19(b)(2) of 

the Act. The Exchange believes that the 

proposed rule proposal is consistent 

with the requirements of Section 6(b)(5) 

of the Act and the rules and regulations 

thereunder applicable to a national 

securities exchange. In particular, the 

Exchange believes that its proposal to 

implement the PL Order adds 

significant value to investors and Users, 

will enhance available order interaction 

opportunities, and does not raise any 

new regulatory issues. Accordingly, the 

Exchange believes that its proposal will 

facilitate transactions in securities, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national system, and, in general, 

protect investors and the public interest. 

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 Exchange consents, 

the Commission will: 

(A) By order approve such proposed 

rule change, as amended, or 

(B) Institute proceedings to determine 

whether the proposed rule change, as 

amended, 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-PCX–2005–53 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-PCX–2005–53. 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, Station Place, 100 F Street, NE., 

Washington, DC 20549. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of the PCX. 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–PCX–

2005–53 and should be submitted on or 

before October 12, 2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18762 Filed 9–20–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52425; File No. SR–Phlx–

2005–27] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing of Proposed Rule 

Change and Amendment No. 1 Thereto 

Relating to the Modification of the 

Definition of Firm Customer Quote Size 

and the Removal of Certain 

Restrictions on Sending Secondary P/ 

A Orders Under 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 April 26, 

2005, the Philadelphia Stock Exchange, 

Inc. (‘‘Phlx’’ 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 Phlx. On 

September 2, 2005, the Exchange 

submitted Amendment No. 1 to the 

proposed rule change.3 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 

The Exchange proposes to amend its 

rules governing the operation of the 

intermarket option linkage to conform 

with a proposed amendment 4 to the 

Plan for the Purpose of Creating and 

Operating an Intermarket Option 

Linkage (‘‘Linkage Plan’’).5 The