55198 Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 

9 15 U.S.C. 78s(b)(2). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 made technical corrections to 

the proposed rule change. 

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 ISE. 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). 

6See Exchange Rule 1900(7). 

7See Section 2(16)(a) of the Linkage Plan and 

Exchange Rule 1900(10)(i). 

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

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

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,9 that the 

proposed rule change (SR–ISE–2005–33) 

is approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18616 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52410; File No. SR–ISE–

2005–42] 

Self-Regulatory Organizations; 

International Securities Exchange, Inc.; 

Notice of Filing of Proposed Rule 

Change and Amendment No. 1 Thereto 

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 

31, 2005, the International Securities 

Exchange, Inc. (‘‘ISE’’ 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 ISE. On 

September 7, 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 (‘‘Linkage’’) 

to conform with a proposed 

amendment 4 to the Plan for the Purpose 

of Creating and Operating an 

Intermarket Linkage (‘‘Linkage Plan’’).5

The Exchange is proposing: (i) to amend 

the definition of ‘‘Firm Customer Quote 

Size’’ (‘‘FCQS’’) 6 to provide automatic 

executions for Principal Acting as Agent 

Orders (‘‘P/A Orders’’) 7 sent via Linkage 

up to the full size of the receiving 

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 ISE’s Web site (http:// 

www.iseoptions.com), at the ISE’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 

ISE included statements concerning the 

purpose of, and basis for, the proposed 

rule change, as amended, 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 Exchange proposes to amend its 

rules governing Linkage trading in two 

areas: the definition of FCQS; and 

limitations on sending multiple P/A 

Orders. As to the definition of FCQS, 

the participants in the Linkage Plan 

(‘‘Participants’’) provide automatic 

execution to P/A Orders up to the 

FCQS. At the time the Participants 

adopted the Linkage Plan, options quote 

sizes were not disseminated through the 

Options Price Reporting Authority, and 

the floor-based exchanges 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 calculated based on the 

number of contracts the sending and 

receiving exchanges guaranteed they 

would automatically execute. Now that 

all the 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 exchange receiving the 

P/A Order. As such, upon 

implementation of the proposed rule 

change, the ISE will provide incoming 

P/A Orders with executions up to the 

full size of the ISE’s disseminated 

quotation. 

With respect to multiple P/A Orders, 

the proposed rule change will eliminate 

a 15-second period members must wait 

before sending a second P/A Order. 

Specifically, ISE Rule 1901(c)(2)(ii) 

governs the manner in which the 

Participants will execute P/A Orders 

larger than the FCQS. ISE Rule 

1901(c)(2)(ii) 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 the 

proposed rule change, as amended, is 

consistent with Section 6(b) of the Act 8

in general, and furthers the objectives of 

Section 6(b)(5) of the Act 9 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 transaction in securities, 

to remove impediments to and perfect 

the mechanism for a free and open 

market and a national market system, 

and, in general, to protect investors and 

the public interest. In particular, the 

proposed rule change will help 

implement the Linkage Plan by 

providing greater automatic execution of 

Linkage Orders. 

Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 55199 

10 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. 52255 

(August 15, 2005), 70 FR 48792. 

4NYSE Rule 123C defines an ‘‘expiration day’’ as 

‘‘a trading day prior to the expiration of indexrelated derivative products (futures, options or 

options on futures), whose settlement pricing is 

based upon opening or closing prices on the 

Exchange, as identified by a qualified clearing 

corporation (e.g., the Options Clearing Corporation). 

The twelve expiration days are ‘expiration Fridays’

which fall on the third Friday in every month.’’ On 

these expiration days, the Exchange has specific 

requirements governing the entry of orders in stocks 

relating to index contracts whose settlement prices 

are based on the opening prices on the Exchange 

of the stocks comprising the indices. 

5 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

6 15 U.S.C. 78f(b)(5). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The ISE does not believe that the 

proposed rule change, as amended, 

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 ISE 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–ISE–2005–42 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–ISE–2005–42. 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 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–ISE–2005–42 and should be 

submitted on or before October 11, 

2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18672 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52421; File No. SR–NYSE–

2005–54] 

Self-Regulatory Organizations; New 

York Stock Exchange, Inc.; Order 

Granting Accelerated Approval of a 

Proposed Rule Change To Amend 

NYSE Rule 123C (Market on the Close 

Policy and Expiration Procedures) To 

Eliminate the Requirement To Publish 

Pre-Opening Market Order Imbalances 

on Expiration Fridays 

September 14, 2005. 

I. Introduction 

On July 26, 2005, the New York Stock 

Exchange, Inc. (‘‘NYSE’’ 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 proposal to amend 

NYSE Rule 123C (Market on the Close 

Policy and Expiration Procedures) to 

eliminate the requirement to publish 

pre-opening market order imbalances on 

expiration Fridays. The proposed rule 

change was published for comment in 

the Federal Register on August 19, 

2005.3 The Commission received no 

comments regarding the proposal. This 

order approves the proposed rule 

change on an accelerated basis. 

II. Description of the Proposal 

NYSE Rule 123C contains 

requirements with respect to operation 

of the Exchange’s market concerning 

market-on-close (‘‘MOC’’) and limit-onclose (‘‘LOC’’) orders as well as order 

entry and imbalance publication 

requirements for use on expiration 

days.4 Under NYSE Rule 123C(6), the 

Exchange currently publishes 

information order imbalances, as 

promptly as possible after 9 a.m., only 

with respect to the imbalance of buy 

and sell market orders, and does not 

include buy and sell limit orders 

entered up to that time for execution at 

the opening. The NYSE proposes to 

eliminate the publication of pre-opening 

market order imbalances on expiration 

Fridays. The NYSE believes that the 

publication of only market order 

imbalances does not provide useful 

information, especially with respect to 

stocks which are part of an expiring 

index whose settlement is based on 

NYSE opening prices on one of those 

days. 

III. Discussion 

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.5 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,6 which requires, 

among other things, that the rules of a 

national securities exchange be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and