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 

55194 Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 

7The Commission added to this sentence 

pursuant to a telephone conversation with CBOE, 

as noted herein. Telephone call between Tim Fox, 

Special Counsel, Commission, and Patrick Sexton, 

Assistant General Counsel, CBOE on September 12, 

2005. 

8See Supra note 3. 

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

10 15 U.S.C. 78f(b)(5). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

calculated based on the number of 

contracts the sending and receiving 

Linkage Plan participants 

(‘‘Participants’’) guaranteed they would 

automatically execute. Now that 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 Exchange proposes to 

amend CBOE Rule 6.80 to effect this 

change.7

The other purpose of the proposed 

rule change is to eliminate a 15-second 

wait period for sending a secondary 

P/A Order currently provided in 

Exchange Rule 6.81(b)(2). Exchange 

Rule 6.81(b)(2) governs the manner in 

which a P/A Order larger than the FCQS 

can be broken into smaller P/A Orders. 

Currently, Exchange Rule 6.81(b)(2) 

provides that an initial P/A Order can 

be sent to the Participant disseminating 

the National Best Bid or Offer for the 

FCQS, and if that Participant continues 

to disseminate the same price after 15 

seconds from the execution of the initial 

P/A Order, a subsequent P/A Order can 

be sent for at least the lesser of (i) the 

size of the disseminated quote; (ii) 100 

contracts; or (iii) the remainder of the 

customer order underlying the P/A 

Orders. The Exchange proposes to 

eliminate the 15-second waiting period 

because the dynamic quotes with size 

now employed by the Participants 

obviate the need for a manual quote 

refresh period for P/A Orders. This 

proposed rule change would conform 

the CBOE rules to the pending 

Amendment No. 16 to the Linkage 

Plan.8

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with section 6(b) 

of the Act 9 in general, and furthers the 

objectives of section 6(b)(5) of the Act 10

in particular, in that it is 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The CBOE 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 CBOE 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–CBOE–2005–68 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–CBOE–2005–68. 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–CBOE–2005–68 and should 

be submitted on or before October 11, 

2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18670 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52423; File No. SR–CBOE–

2005–76] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Inc.; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Extend the Duration of 

CBOE Rule 6.45A(b) Pertaining to 

Orders Represented in Open Outcry 

September 14, 2005. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on 

September 13, 2005, the Chicago Board 

Options Exchange, Inc. (‘‘CBOE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the CBOE. The Exchange filed the 

proposal as a ‘‘non-controversial’’

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder,4 which