Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 55197 

5 15 U.S.C. 78s(b)(3)(A)(iii). 

6 17 CFR 240.19b–4(f)(4). 

7 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 Chicago Board Options Exchange, 

Incorporated, and the ISE. 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 

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). 

4See Securities Exchange Act Release No. 52174 

(July 29, 2005), 70 FR 45455. 

5See ISE Rule 1900(10). 

6 15 U.S.C. 78f. 

7 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). 

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

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective upon filing pursuant to Section 

19(b)(3)(A)(iii) of the Act 5 and Rule 

19b–4(f)(4) 6 thereunder because it does 

not adversely affect the safeguarding of 

securities or funds in the custody or 

control of DTC or for which it is 

responsible and does not significantly 

affect the respective rights or obligations 

of the clearing agency or persons using 

the service. At any time within sixty 

days of the filing of the rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the 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–DTC–2005–11 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–9303. 

All submissions should refer to File 

Number SR–DTC–2005–11. 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 rule change that are 

filed with the Commission, and all 

written communications relating to the 

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, 

100 F Street, NE., Washington, DC 

20549. Copies of such filings also will 

be available for inspection and copying 

at the principal office of DTC and on 

DTC’s Web site at https:// 

login.dtcc.com/dtcorg/. 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–DTC–

2005–11 and should be submitted on or 

before October 11, 2005. 

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.7

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18668 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52418; File No. SR–ISE–

2005–33] 

Self-Regulatory Organizations; 

International Securities Exchange, Inc.; 

Order Approving a Proposed Rule 

Change To Amend the Exchange’s 

Trade-Through and Locked Markets 

Rules 

September 13, 2005. 

On July 8, 2005, the International 

Securities Exchange, Inc. (‘‘ISE’’), 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 

amending ISE Rules 1900 and 1903 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. The proposed rule change 

was published for comment in the 

Federal Register on August 5, 2005.4

The Commission received no comments 

on the proposal. This order approves the 

proposed rule change. 

Under the proposed rule change, an 

ISE member could 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 

the market(s) disseminating the NBBO 

to satisfy all interest at the NBBO price. 

The proposed rule change also would 

provide that an ISE member may enter 

an order on the ISE 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 ISE 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 6

and the rules and regulations 

thereunder applicable to a national 

securities exchange.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,8 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 ISE’s 

members to execute their customer 

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.