[Federal Register Volume 70, Number 181 (Tuesday, September 20, 2005)]
[Notices]
[Page 55185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-18620]



[[Page 55185]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52413; File No. 4-429]


Joint Industry Plan; Order Approving Amendment No. 15 to the Plan 
for the Purpose of Creating and Operating an Intermarket Option Linkage 
Relating to a ``Trade and Ship'' Exception to the Definition of 
``Trade-Through'' and a ``Book and Ship'' Exception to the Locked 
Markets Provision

September 13, 2005.

I. Introduction

    On April 13, 2005, April 22, 2005, April 26, 2005, April 27, 2005, 
May 5, 2005, and June 2, 2005, the International Securities Exchange 
(``ISE''), the American Stock Exchange LLC (``Amex''), the Chicago 
Board Options Exchange, Incorporated (``CBOE''), the Pacific Exchange, 
Inc. (``PCX''), the Boston Stock Exchange, Inc. (``BSE''), and the 
Philadelphia Stock Exchange, Inc. (``Phlx'') (collectively, 
``Participants''), respectively, filed with the Securities and Exchange 
Commission (``Commission'') an amendment (``Joint Amendment No. 15'') 
to the Plan for the Purpose of Creating and Operating an Intermarket 
Option Linkage (``Linkage Plan'').\1\ In Joint Amendment No. 15, the 
Participants propose to add a ``trade and ship'' exception to the 
definition of ``Trade-Through'' \2\ and a ``book and ship'' exception 
to the locked markets provision of the Linkage Plan.\3\ The proposed 
amendment to the Linkage Plan was published in the Federal Register on 
August 9, 2005.\4\ No comments were received on the proposed amendment. 
This order approves the proposed amendment to the Linkage Plan.
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    \1\ On 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 Amex, the CBOE, and the ISE. See 
Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 
48023 (August 4, 2000). Subsequently, upon separate requests by the 
Phlx, the PCX, and the BSE, 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 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).
    \2\ See Section 2(29) of the Linkage Plan.
    \3\ Specified in Section 7(a)(i)(C) of the Linkage Plan.
    \4\ See Securities Exchange Act Release No. 52167 (July 29, 
2005), 70 FR 46224.
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II. Description and Purpose of the Proposed Amendment

    The purpose of Joint Amendment No. 15 is to provide that: (i) A 
Participant may trade an order at a price that is one minimum quoting 
increment inferior to the national best bid or offer (``NBBO'') if a 
Linkage Order \5\ is sent contemporaneously to each Participant 
disseminating the NBBO to satisfy all interest at the NBBO price; and 
(ii) a Participant may book an order that would otherwise lock another 
Participant if a Linkage Order is sent contemporaneously to such other 
Participant to satisfy all interest at the lock price and only the 
remaining portion of the order is booked. Under the proposed trade and 
ship provision, any execution received from the market disseminating 
the NBBO must (pursuant to agency obligations) be reassigned to the 
customer order underlying the Linkage Order that would be sent to trade 
with the market disseminating the NBBO.
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    \5\ See Section 2(16) of the Linkage Plan.
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III. Discussion

    After careful consideration, the Commission finds that the proposed 
amendment to the Linkage Plan seeking to add a trade and ship exception 
to the definition of Trade-Through and a book and ship exception to the 
locked markets provision of the Linkage Plan is consistent with the 
requirements of the Act and the rules and regulations thereunder. 
Specifically, the Commission finds that the proposed amendment to the 
Linkage Plan is consistent with Section 11A of the Act \6\ and Rule 
11Aa3-2 thereunder,\7\ in that the proposed amendment should facilitate 
the ability of Participants' members to execute their customer orders 
in a timely manner and potentially could decrease the incidence of 
Trade-Throughs and locked markets in the options market.
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    \6\ 15 U.S.C. 78k-1.
    \7\ 17 CFR 240.11Aa3-2.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act \8\ and 
Rule 11Aa3-2 thereunder,\9\ that the proposed Joint Amendment No. 15 is 
hereby approved.
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    \8\ 15 U.S.C. 78k-1.
    \9\ 17 CFR 240.11Aa3-2.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(29).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-18620 Filed 9-19-05; 8:45 am]
BILLING CODE 8010-01-P