Document ID: SEC-2009-0449-0001
Agency: sec
Document Type: Notice
Title: Joint Industry Plan: Chicago Board Options Exchange, Inc., et al.
Posted Date: 2009-04-02T04:00Z

[Federal Register: April 2, 2009 (Volume 74, Number 62)]
[Notices]               
[Page 15010-15016]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap09-90]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59647; File No. 4-546]

 
Joint Industry Plan; Chicago Board Options Exchange, 
Incorporated, International Securities Exchange, LLC, The NASDAQ Stock 
Market LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, Inc., NYSE Amex LLC, 
and NYSE Arca, Inc.; Notice of Filing of Proposed Options Order 
Protection and Locked/Crossed Market Plan

March 30, 2009.

I. Introduction

    On September 13, 2007, and September 18, 2007, pursuant to Rule 608 
of Regulation NMS under the Securities Exchange Act of 1934 (``Act'') 
(``Rule 608''),\1\ the International Securities Exchange, LLC (``ISE'') 
and NYSE Arca, Inc. (``NYSE Arca''), respectively, filed with the 
Securities and Exchange Commission (``Commission'') the proposed 
Options Order Protection and Locked/Crossed Market Plan.\2\ On December 
11, 2007, ISE and NYSE Arca separately filed Amendment No. 1 to the 
Proposed Plan.\3\ On April 24, 2008, and April 17, 2008, ISE and NYSE 
Arca, respectively, filed Amendment No. 2 to the Proposed Plan.\4\ On 
November 10, 2008 and October 31, 2008, ISE and NYSE Arca, 
respectively, filed Amendment No. 3 to the Proposed Plan.\5\ On April 
30, 2008, May 8, 2008, June 18, 2008, June 18, 2008, and July 9, 2008, 
respectively, Chicago Board Options Exchange, Incorporated (``CBOE''), 
The NASDAQ Stock Market LLC (``Nasdaq''), American Stock Exchange LLC 
(``Amex'') (f/k/a NYSE Alternext US LLC, ``NYSE Alternext,'' n/k/a NYSE 
Amex LLC, ``NYSE Amex''), Philadelphia Stock Exchange, Incorporated (n/
k/a NASDAQ OMX PHLX, Inc., ``Phlx''), and Boston Stock Exchange, Inc. 
(``BSE'') (n/k/a NASDAQ OMX BX, Inc., ``BX'' and together with ISE, 
NYSE Arca, CBOE, Nasdaq, NYSE Amex, and Phlx, the ``Proposing 
Exchanges'') filed with the Commission the Proposed Plan.\6\ On 
November 25, 2008, November 26, 2008, December 2, 2008, December 4, 
2008, and December 5, 2008, CBOE, NYSE Alternext, BSE,

[[Page 15011]]

Phlx, and Nasdaq, respectively, filed Amendment No. 1 to the Proposed 
Plan.\7\ Pursuant to Rule 608, the Commission is publishing this notice 
of, and soliciting comments on, the Proposed Plan.
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    \1\ 17 CFR 242.608.
    \2\ See letter from Michael J. Simon, General Counsel, ISE, to 
Nancy M. Morris, Secretary, Commission, dated September 12, 2007 
(``ISE Letter 1''); and letter from Peter G. Armstrong, Managing 
Director, Options, NYSE Arca, to Nancy M. Morris, Secretary, 
Commission, dated September 14, 2007 (``NYSE Arca Letter 1''). The 
proposed Options Order Protection and Locked/Crossed Market Plan, as 
amended, is defined herein as the ``Proposed Plan.''
    \3\ See letter from Michael J. Simon, General Counsel, ISE, to 
Nancy M. Morris, Secretary, Commission, dated December 10, 2007; and 
letter from Peter G. Armstrong, Managing Director, Options, NYSE 
Arca, to Nancy M. Morris, Secretary, Commission, dated December 10, 
2007.
    \4\ Amendment No. 2 superseded Amendment No. 1 and replaced it 
in its entirety. See letter from Michael J. Simon, General Counsel, 
ISE, to Nancy M. Morris, Secretary, Commission, dated April 16, 
2008; and letter from Peter G. Armstrong, Managing Director, 
Options, NYSE Arca, to Nancy M. Morris, Secretary, Commission, dated 
April 16, 2008.
    \5\ See letter from Michael J. Simon, General Counsel, ISE, to 
Florence Harmon, Acting Secretary, Commission, dated November 7, 
2008 (``ISE Letter 2''); and letter from Peter G. Armstrong, 
Managing Director, Options, NYSE Arca, to Florence Harmon, Acting 
Secretary, Commission, dated October 30, 2008 (``NYSE Arca Letter 
2'').
    \6\ In their respective filings of the Proposed Plan, Amex, BSE, 
CBOE, Nasdaq, and Phlx incorporated the changes made by ISE and NYSE 
Arca in Amendment No. 2. See letters from Jeffrey P. Burns, Vice 
President and Associate General Counsel, Amex, to Nancy M. Morris, 
Secretary, Commission, dated June 17, 2008 (``Amex Letter 1''); 
Bruce Goodhue, Chief Regulatory Officer, BSE, to Florence Harmon, 
Acting Secretary, Commission, dated July 8, 2008 (``BSE Letter 1''); 
Edward J. Joyce, President and Chief Operating Officer, CBOE, to 
Nancy M. Morris, Secretary, Commission, dated April 29, 2008 (``CBOE 
Letter 1''); Jeffrey S. Davis, Vice President and Deputy General 
Counsel, The NASDAQ OMX Group, Inc., to Nancy M. Morris, Secretary, 
Commission, dated May 7, 2008 (``Nasdaq Letter 1''); and Richard S. 
Rudolph, Vice President and Counsel, Phlx, to Nancy M. Morris, 
Secretary, Commission, dated June 17, 2008 (``Phlx Letter 1'').
    \7\ In their respective Amendment No. 1 to the Proposed Plan, 
BSE, CBOE, NYSE Alternext, Phlx, and Nasdaq made changes identical 
to those made by ISE and NYSE Arca in Amendment No. 3. See letters 
from Edward J. Joyce, President and Chief Operating Officer, CBOE, 
to Florence Harmon, Acting Secretary, Commission, dated November 25, 
2008 (``CBOE Letter 2''); Jeffrey P. Burns, Managing Director, NYSE 
Alternext, to Florence Harmon, Acting Secretary, Commission, dated 
November 25, 2008 (``Amex Letter 2''); John Katovich, Vice 
President, BSE, to Florence Harmon, Acting Secretary, Commission, 
dated December 1, 2008 (``BSE Letter 2''); Richard S. Rudolph, Vice 
President and Counsel, Phlx, to Florence Harmon, Acting Secretary, 
Commission, dated December 3, 2008 (``Phlx Letter 2''); and Jeffrey 
S. Davis, Vice President and Deputy General Counsel, The NASDAQ OMX 
Group, Inc., to Florence Harmon, Acting Secretary, Commission, dated 
December 4, 2008 (``Nasdaq Letter 2'').
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II. Background

    Currently, the Proposing Exchanges are signatories to the Plan for 
the Purpose of Creating and Operating an Intermarket Option Linkage 
(``Current Plan'').\8\
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    \8\ On July 28, 2000, the Commission approved the Current Plan 
which was proposed by Amex, CBOE, and ISE. See Securities Exchange 
Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000).
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    The Current Plan is a national market system plan linking its 
participants. In adopting the Securities Acts Amendments of 1975, 
Congress stated its finding that ``linking of all markets for qualified 
securities through communication and data processing facilities will 
foster efficiency, enhance competition, increase the information 
available to brokers, dealers, and investors, facilitate the offsetting 
of investors' orders, and contribute to best execution of such 
orders.'' \9\ Consequently, Congress directed the Commission to oversee 
the development of a national market system. One of the principal 
purposes of the national market system is to assure ``the 
practicability of brokers executing investors' orders in the best 
market.'' \10\
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    \9\ Section 11A(a)(1)(D) of the Act.
    \10\ 15 U.S.C. 78k-1(a)(1)(C)(iv).
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    Prior to 1999, options were primarily traded on a single exchange. 
However, as the options exchanges increasingly began multiply listing 
and trading options classes previously listed on a single exchange, the 
need for measures to ensure that customer orders are executed in the 
best market became necessary.\11\ For this reason, on October 19, 1999, 
the Commission ordered the options markets to submit a linkage plan 
within 90 days that, at a minimum, included uniform trade-through rules 
and expanded firm quote obligations to cover agency orders presented by 
competing exchanges.\12\ In response, Amex, CBOE, and ISE submitted the 
Current Plan, and Pacific Exchange, Inc. (``PCX,'' n/k/a NYSE Arca) and 
Phlx each filed separate plans. The Commission published these plans 
for comment in the Federal Register and ultimately approved the Current 
Plan on July 28, 2000.\13\ Subsequently, both PCX and Phlx submitted 
proposed amendments to the Current Plan to become participants to the 
Current Plan. Both of these proposed amendments were approved on 
November 16, 2000.\14\ On February 5, 2004, BSE's proposed amendment to 
become a participant to the Current Plan became effective.\15\ Further, 
Nasdaq's proposed amendment to become a participant to the Current Plan 
became effective on March 21, 2008.\16\
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    \11\ See Securities Exchange Act Release No. 43086 (July 28, 
2000), 65 FR 48023, 48024 (August 4, 2000).
    \12\ See Securities Exchange Act Release No. 42029 (October 19, 
1999), 64 FR 57674, 57675-76 (October 26, 1999).
    \13\ See supra note 8. The plans filed by PCX and Phlx could not 
be approved as national market system plans, pursuant to Rule 11Aa3-
2 (n/k/a Rule 608) under the Act, because neither was filed by two 
or more sponsors, as required by the rule. 17 CFR 240.11Aa3-2 (n/k/a 
17 CFR 242.608).
    \14\ See Securities Exchange Act Release Nos. 43573 (November 
16, 2000), 65 FR 70851 (November 28, 2000) and 43574 (November 16, 
2000), 65 FR 70850 (November 28, 2000).
    \15\ See Securities Exchange Act Release No. 49198 (February 5, 
2004), 69 FR 7029 (February 12, 2004).
    \16\ See Securities Exchange Act Release No. 57545 (March 21, 
2008), 73 FR 16394 (March 27, 2008).
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    The Current Plan requires its participants to avoid, absent 
reasonable justification and during normal market conditions, trading 
at a price inferior to that displayed on another market (``trade-
through'').\17\ The Current Plan provides for several exceptions to 
trade-through liability, including, among other things, systems 
malfunction, failure of the receiving market to respond to an incoming 
order within 30 seconds, failure of the market traded through to 
complain within the specified time period, complex trades, trading 
rotations, and non-firm quotations on the market that was traded 
through.\18\ The Current Plan also provides a mechanism by which a 
member of a participating exchange could seek satisfaction if a 
customer order is traded through.\19\
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    \17\ Section 8(c) of the Current Plan.
    \18\ Section 8(c)(iii) of the Current Plan.
    \19\ Section 8(c)(ii) of the Current Plan.
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    In addition, under the Current Plan, its participants agree that 
the dissemination of ``locked'' or ``crossed'' markets should be 
avoided, and, if their members lock or cross a market, they should take 
remedial actions to unlock or uncross such market.\20\ Further, the 
Current Plan contains provisions to address trade comparison, clearing, 
trading halts, non-firm quotations, and administration of the Current 
Plan.\21\ Except with respect to the addition of new participants and 
the withdrawal of current participants, any proposed change to the 
Current Plan must be approved unanimously by its participants.\22\
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    \20\ Section 7(a)(i)(C) of the Current Plan.
    \21\ Sections 5, 9, and 10 of the Current Plan.
    \22\ Section 5(c)(i) of the Current Plan.
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    The participating exchanges comply with the requirements of the 
Current Plan, including the prohibition against trade-throughs, by 
utilizing a stand alone system (``Linkage Hub'') to send and receive 
specific order types. The Linkage Hub is a centralized data 
communications network that electronically links the options exchanges 
to one another. The Options Clearing Corporation (``OCC'') operates the 
Linkage Hub.\23\
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    \23\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
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    There are three defined order types under the Current Plan that its 
participants could route through the Linkage Hub to limit trade-
throughs: orders represented by eligible market makers on behalf of 
customers (``Principal Acting as Agent Orders'' or ``P/A Orders''); 
\24\ orders for the principal accounts of market makers and specialists 
(``Principal Orders''); \25\ and orders intended to satisfy trade-
through liabilities (``Satisfaction Orders'').\26\ Non-market-maker 
broker-dealers do not have access to the Linkage Hub.
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    \24\ Sections 2(16)(a) and 7(a)(ii)(B) of the Current Plan.
    \25\ Sections 2(16)(b) and 8(b)(iii) of the Current Plan.
    \26\ Sections 2(16)(c) and 7(a)(ii)(C) of the Current Plan.
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    While acknowledging that the Current Plan largely has worked 
satisfactorily,\27\ the Proposing Exchanges seek to withdraw from the 
Current Plan \28\ and

[[Page 15012]]

operate under an alternative linkage plan, the Proposed Plan. The 
Proposing Exchanges contend that the continuing growth in the volume of 
options traded since the Commission approved the Current Plan has 
strained market makers' ability to comply with the current Linkage Hub 
rules. They further note that the options markets have been moving 
towards quoting in pennies, and options quoted in pennies now represent 
a significant amount of the total industry volume. The Proposing 
Exchanges assert that quoting in pennies increases the number of price 
changes in an option, which in turn gives rise to a greater chance of 
missing the market.\29\
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    \27\ See ISE Letter 1 and NYSE Arca Letter 1, supra note 2; see 
also Amex Letter 1, BSE Letter 1, CBOE Letter 1, Nasdaq Letter 1, 
and Phlx Letter 1, supra note 6.
    \28\ Section 4(d) of the Current Plan states that a participant 
could withdraw from the Current Plan by giving notice, filing an 
amendment to the Current Plan, and paying any accrued costs for 
which it is responsible. Section 5(c)(iii) of the Current Plan 
further states that the amendment effecting the withdrawal must 
specify how such participant ``plans to accomplish, by alternate 
means, the goals of the [Current Plan] regarding limiting Trade-
Throughs of prices on other exchanges trading the same options 
classes.'' The Commission notes that, should the Proposing Exchanges 
choose to withdrawal from the Current Plan, they would be required 
to meet these requirements.
    \29\ See ISE Letter 1 and NYSE Arca Letter 1, supra note 2; see 
also Amex Letter 1, BSE Letter 1, CBOE Letter 1, Nasdaq Letter 1, 
and Phlx Letter 1, supra note 6.
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    The Proposing Exchanges also state that the operating rules of the 
Current Plan are complex. They contend that there are restrictions on 
when market makers could send Principal Orders, and rules on the size 
of P/A Orders are complicated. Moreover, the Proposing Exchanges 
represent that, unlike the Current Plan, their proposed alternative 
linkage would eliminate the need for achieving unanimity to change even 
the most minor aspect of the linkage mechanism.\30\
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    \30\ See infra note 84 and accompanying text.
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    The Proposing Exchanges propose an alternative, rules-based 
approach to intermarket options linkage. This rules-based approach 
would require neither a central linkage mechanism, nor a complex set of 
operating rules.

III. Description of the Proposed Plan

    A brief summary of the Proposed Plan is provided below. The full 
text of the Proposed Plan submitted by the Proposing Exchanges, is 
available on the Commission's Web site at http://sec.gov/rules/sro/nms/
nmsarchive/nms2007.shtml#4-546, at the each Proposing Exchange's 
principal office, and at the Commission's Public Reference Room.

A. Order Protection

1. Prevention of Trade-Throughs
    The Proposed Plan would require each Participant \31\ to establish, 
maintain, and enforce written policies and procedures as approved by 
the Commission that are reasonably designed to prevent Trade-Throughs 
in Eligible Options Classes.\32\ The Proposed Plan would define an 
``Eligible Options Class'' \33\ as all option series overlying a 
security or group of securities, which class is available for trading 
on two or more Eligible Exchanges. A ``Trade-Through'' \34\ would be 
defined as a transaction in an option series, either as principal or 
agent, at a price that is lower than a Protected Bid or higher than a 
Protected Offer. A ``Protected Bid'' or a ``Protected Offer'' \35\ 
would mean a bid or offer in an option series that is displayed by an 
Eligible Exchange, is disseminated pursuant to the OPRA Plan, and is 
the Best Bid or Best Offer of an Eligible Exchange. A ``Best Bid'' or 
``Best Offer'' \36\ would mean the highest bid price or the lowest 
offer price communicated by a member of an Eligible Exchange to any 
broker-dealer or to any customer \37\ at which such member is willing 
to buy or sell, either as principal or agent. A Best Bid or Best Offer 
would not include indications of interest.
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    \31\ The Proposed Plan defines ``Participant'' to mean an 
Eligible Exchange whose participation in the plan has become 
effective pursuant to Section 3(c) of the Proposed Plan. See Section 
2(15) of the Proposed Plan. As with the Current Plan, the Proposed 
Plan defines ``Eligible Exchange'' to mean a national securities 
exchange registered with the Commission in accordance with Section 
6(a) of the Act that is a Participant Exchange in OCC (as that term 
is defined in Section VII of the OCC by-laws) and is a party to the 
OPRA Plan (as that term is described in Section I of the OPRA Plan). 
In addition, under the Proposed Plan, if a national securities 
exchange chooses not to become a party to the Proposed Plan, it 
would still be included in the definition of ``Eligible Exchange'' 
if it is a participant in another plan approved by the Commission 
providing for comparable Trade-Through and Locked and Crossed Market 
protection. See Section 2(6) of the Proposed Plan and Section 2(6) 
of the Current Plan. Thus, the Best Bids and Best Offers on 
exchanges that remain participants in the Current Plan would be 
protected against Trade-Throughs by Participants in the Proposed 
Plan. ``OPRA Plan'' means the plan filed by the Options Price 
Reporting Authority with the Commission pursuant to Section 
11Aa(1)(C)(iii) of the Act and approved by the Commission and 
declared effective as of January 22, 1976, as from time to time 
amended. See Section 2(14) of the Proposed Plan. For the definitions 
of ``Trade-Through,'' ``Best Bid'' or ``Best Offer,'' ``Locked 
Market,'' and ``Crossed Market,'' see infra notes 34, 36, 78, and 
79, respectively, and accompanying texts.
    \32\ Section 5(a)(i) of the Proposed Plan.
    \33\ Section 2(7) of the Proposed Plan. The Current Plan defines 
``Eligible Options Class'' to mean all option series overlying a 
security or group of securities, including both put options and call 
options, which class is traded on two or more participants of the 
Current Plan. See Section 2(8) of the Current Plan.
    \34\ Section 2(21) of the Proposed Plan. The Current Plan 
defines ``Trade-Through'' to mean a transaction in an options series 
at a price that is inferior to the national best bid and offer in an 
options series calculated by that plan's participant, but does not 
include a transaction that occurs at a price that is one minimum 
quoting increment inferior to the national best bid and offer 
provided a linkage order is contemporaneously sent to each of that 
plan' participant disseminating the national best bid and offer for 
the full size of the participant's bid (offer) that represents the 
national best bid and offer. See Section 2(29) of the Current Plan.
    \35\ Section 2(17) of the Proposed Plan. Protected Bid and 
Protected Offer, together are referred to herein as ``Protected 
Quotation.'' See Section 2(18) of the Proposed Plan.
    \36\ Sections 2(1) and 2(2) of the Proposed Plan. Under the 
Current Plan, ``best'' as used with reference to bids (offers) means 
the bid (offer) that is highest (lowest). See Section 2(2) of the 
Current Plan.
    \37\ A ``customer'' would be defined an individual or 
organization that is not a broker-dealer. See Section 2(5) of the 
Proposed Plan.
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    The Proposed Plan would also require each Participant to agree to 
conduct surveillance of its market on a regular basis to ascertain the 
effectiveness of the policies and procedures to prevent Trade-Throughs 
and to take prompt action to remedy any deficiencies in such policies 
and procedures.\38\ In addition, the Commission notes that Rule 608(c) 
requires that each self-regulatory organization, absent reasonable 
justification or excuse, enforce compliance with any national market 
system plan by its members and persons associated with its members.\39\
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    \38\ Section 5(a)(ii) of the Proposed Plan. The Current Plan 
states each of its participants shall establish procedures to 
conduct surveillance of its market to identify trades executed at 
prices inferior to the national best bid and offer. See Section 
8(c)(i)(B) of the Current Plan.
    \39\ 17 CFR 242.608(c).
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2. Exceptions to Trade-Throughs
    The Proposed Plan would provide exceptions for certain transactions 
from the prohibition against Trade-Throughs. The Proposed Plan would 
also provide that, if a Participant relies on an exception, it would be 
required to establish, maintain, and enforce written policies and 
procedures reasonably designed to assure compliance with the terms of 
the exception.\40\ Below is a discussion of the proposed exceptions.
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    \40\ Section 5(a)(i) of the Proposed Plan.
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    System Issues: \41\ The Proposing Exchanges state that this 
exception corresponds to the system-failure exception in Regulation NMS 
for equity securities and would permit a Participant to trade through a 
Protected Quotation when the Eligible Exchange displaying such 
Protected Quotation is experiencing system problems.\42\ The 
Participants would adopt ``self-help'' rules to implement this 
exception.\43\
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    \41\ Section 5(b)(1) of the Proposed Plan.
    \42\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7. See also Rule 611(b)(1) of 
Regulation NMS under the Act (17 CFR 242.611(b)(1)).
    \43\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7. Such proposed rules would be 
subject to notice, comment, and Commission review pursuant to 
Section 19(b) of the Act.

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[[Page 15013]]

    Trading Rotations: \44\ This exception would permit a Participant 
to trade through a Protected Quotation disseminated by an Eligible 
Exchange during a trading rotation. It carries forward a trade-through 
exception in the Current Plan \45\ and is the options equivalent to the 
single price opening exception in Regulation NMS for equity 
securities.\46\ Options exchanges use a trading rotation to open an 
option for trading or reopen an option after a trading halt. The 
rotation is effectively a single price auction to price the option,\47\ 
and there are no practical means to include prices on other exchanges 
in that auction.\48\
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    \44\ Section 5(b)(ii) of the Proposed Plan.
    \45\ Section 8(c)(iii)(E) of the Current Plan.
    \46\ See Rule 611(b)(3) of Regulations NMS under the Act (17 CFR 
242.611(b)(3)).
    \47\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
    \48\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, Nasdaq Letter 2, and Phlx Letter 
2, supra note 7.
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    Crossed Markets: \49\ This exception would permit a Participant to 
trade through when markets are crossed and is identical to the crossed 
quote exception in Regulation NMS.\50\ A Crossed Market is when a 
Protected Bid is higher than a Protected Offer. The Proposing Exchanges 
state that permitting transactions to be executed without regard to 
Trade-Throughs in a Crossed Market would allow the market quickly 
return to equilibrium.\51\
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    \49\ Section 5(b)(iii) of the Proposed Plan. For the definition 
of a ``Crossed Market,'' see infra note 79 and accompanying text.
    \50\ See Rule 611(b)(4) of Regulation NMS under the Act (17 CFR 
242.611(b)(4)).
    \51\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
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    Intermarket Sweep Orders: \52\ The Proposed Plan includes two 
exceptions from the prohibition against Trade-Throughs for certain 
transactions involving Intermarket Sweep Orders \53\ (or ``ISOs''). An 
ISO would be defined as a limit order for an options series that, when 
routed to an Eligible Exchange, is identified as an Intermarket Sweep 
Order and, simultaneously with the routing of the order, one or more 
additional orders, as necessary, are routed to execute against the full 
displayed size of any Protected Bid, in the case of a limit order to 
sell, or any Protected Offer, in the case of a limit order to buy, for 
the options series with a price that is superior to the limit price of 
the order. Such additional orders would also be marked as ISOs.\54\
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    \52\ Section 5(b)(iv) and (v) of the Proposed Plan.
    \53\ Section 2(9) of the Proposed Plan. Moreover, the Proposed 
Plan would provide that each Participant would be required to take 
reasonable steps to establish that ISOs meet the requirements of the 
Proposed Plan. See Section 5(c) of the Proposed Plan.
    \54\ A Participant could place any unexecuted, and uncancelled, 
portion of an ISO on its book.
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    The Proposed Plan would permit a Participant to execute orders 
marked as ISOs even when the Participant is not at the national best 
bid or offer (``NBBO''). A Participant would also be permitted to 
execute an order when it is not at the NBBO, provided the Participant 
simultaneously ``sweeps'' all Protected Quotations using an ISO.\55\ 
The Proposing Exchanges state that these exceptions correspond to the 
ISO exceptions in Regulation NMS.\56\
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    \55\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
    \56\ Id. See also Rule 611(b)(5) and (6) of Regulation NMS under 
the Act (17 CFR 242.611(b)(5) and (6)).
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    Quote Flickering: \57\ This exception would permit a Participant to 
trade through a Protected Quotation on an Eligible Exchange if within 
one second prior to the execution, such Eligible Exchange had displayed 
a price equal or inferior to the price of the transaction. The 
Proposing Exchanges state that this exception corresponds to the 
flickering quote exception in Regulation NMS.\58\ The Proposing 
Exchanges state that options quotations change as rapidly, if not more 
rapidly, than cash-equity quotations. Options quotations track the 
price of the underlying instrument or index and thus generally change 
when the price of the underlying changes. This exception would provide 
a form of ``safe harbor'' to Participants to allow them to trade 
through prices that have changed within a second of the transaction 
causing a nominal Trade-Through.\59\
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    \57\ Section 5(b)(vi) of the Proposed Plan.
    \58\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7. See also Rule 611(b)(8) of 
Regulation NMS under the Act (17 CFR 242.611(b)(8)).
    \59\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
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    Non-Firm Quotes: \60\ This exception carries forward the current 
non-firm quote Trade-Through exception in the Current Plan \61\ and 
would permit a Participant to trade through a Protected Quotation that 
was ``Non-Firm.'' \62\ The Proposing Exchanges state that an Eligible 
Exchange's quotations may not be firm for automatic execution during 
this trading state and thus should not be protected from Trade-
Throughs, and, in effect, these quotations are akin to ``manual 
quotations'' under Regulation NMS.\63\
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    \60\ Section 5(b)(vii) of the Proposed Plan.
    \61\ Section 8(c)(iii)(C) of the Current Plan.
    \62\ ``Non-Firm'' would be defined to mean, with respect to 
Quotations in an Eligible Options Class, that members of a 
Participant are relieved of their obligations under that 
Participant's firm quote rule in that Eligible Options Class. See 
Section 2(11) of the Proposed Plan. The Commission notes that, when 
quotations in an Eligible Options Class are non-firm, exchange rules 
require the exchange to provide notice that its quotations are non-
firm by appending an indicator to its quotations. See, e.g., CBOE 
Rule 43.14(b) and NYSE Arca Rule 6.86(d)(1)(C).
    \63\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
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    Complex Trades: \64\ This exception carries forward the complex 
trade exception in the Current Plan \65\ and would permit a Participant 
to trade through a Protected Quotation if the transaction was part of a 
``complex trade.'' The definition of ``complex trade'' would be 
implemented through rules adopted by the Participants, which would be 
subject to notice, comment, and Commission review pursuant to the 
Section 19(b) rule filing process. The Proposing Exchanges state that 
because complex trades are composed of multiple transactions (``legs'') 
effected at a net price, it is not practical to price each leg at a 
price that does not constitute a Trade-Through. Narrowly-crafted 
implementing rules should ensure that this exception does not undercut 
Trade-Through protections.\66\
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    \64\ Section 5(b)(viii) of the Proposed Plan.
    \65\ Section 8(c)(iii)(G) of the Current Plan.
    \66\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
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    Customer Stopped Orders: \67\ This exception would permit a 
Participant to trade through a Protected Quotation if the trade 
executed a ``stopped order.'' The exception would require that the 
``stopped order'' be for the account of a Customer; that the Customer 
agreed to the specified price on an order-by-order basis; and that the 
price of the Trade-Through was, for a stopped buy order, lower than the 
national Best Bid in the options series at the time of execution, or, 
for a stopped sell order, higher than the national Best Offer in the 
options series at the time of execution. The Proposing Exchanges \68\ 
state that this exception corresponds to the customer stopped order 
exception in Regulation

[[Page 15014]]

NMS.\69\ The Proposing Exchanges state that this exception would permit 
broker-dealers to execute large Customer orders over time at a price 
agreed upon by a customer, even though the price of the option may 
change before the order is executed in its entirety.\70\
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    \67\ Section 5(b)(ix) of the Proposed Plan.
    \68\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
    \69\ See Rule 611(b)(9) of Regulation NMS under the Act (17 CFR 
242.611(b)(9)).
    \70\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7. For a further discussion on how 
this exemption operates, see the Regulation NMS Adopting Release, 
Securities Exchange Act Release No. 51808, June 9, 2005 at notes 
322-325.
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    Stopped Orders and Price Improvement: \71\ This exception would 
permit a Participant to trade through a Protected Quotation if the 
trade executes an order that is stopped at a price that did not 
constitute a Trade-Through at the time of the stop.\72\ The Proposing 
Exchanges state that this exception would allow a Participant to seek 
price improvement for an order, even if the market moves in the 
interim, and the transaction ultimately is effected at a price that 
would trade through the then currently-displayed market.\73\
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    \71\ Section 5(b)(x) of the Proposed Plan.
    \72\ The rules of several of the Proposing Exchanges currently 
contain provisions relating to price improvement mechanisms. See, 
e.g., ISE's Price Improvement Mechanism and ISE Rule 723. Under 
these price improvement mechanisms, certain exchange members are 
typically given the opportunity to offer price improvement to orders 
received by the exchange during a specified period of time 
(``auction''). During this auction period, the NBBO could move from 
where the NBBO was when the order was received. However, the 
exchange is not required to execute the order at a price at or 
better than this new NBBO, but instead must guarantee a price no 
worse than the NBBO at the time the order was received. Thus, 
following the auction, an execution could result in a Trade-Through 
if the NBBO improves from the time the order was received although, 
had the order been executed at the time of receipt, the execution 
would not have resulted in a Trade-Through.
    \73\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
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    Benchmark Trades: \74\ This exception would permit a Participant to 
trade through a Protected Quotation if the trade was executed at a 
price not tied to the price of an option at the time of execution and 
for which the material terms were not reasonably determinable at the 
time of the commitment to make the trade. An example would be a volume-
weighted average price trade, or ``VWAP.'' The Proposing Exchanges 
state that this exception corresponds to a Trade-Through exemption in 
Regulation NMS.\75\ No Participant currently permits these types of 
options trades, and any transaction-type relying on this exemption 
would require the Participant to adopt rules, which would be subject to 
notice, comment, and Commission review pursuant to the Section 19(b) 
rule filing process.\76\
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    \74\ Section 5(b)(xi) of the Proposed Plan.
    \75\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7. See also Rule 611(b)(7) of 
Regulation NMS under the Act (17 CFR 242.611(b)(7)).
    \76\ See ISE Letter 2 and NYSE Arca Letter 2, supra note 5; see 
also Amex Letter 2, BSE Letter 2, CBOE Letter 2, Nasdaq Letter 2, 
and Phlx Letter 2, supra note 7.
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B. Locked and Crossed Markets

    The Proposed Plan would also address Locked and Crossed 
Markets.\77\ A ``Locked Market'' \78\ would be defined as a quoted 
market in which a Protected Bid is equal to a Protected Offer in a 
series of an Eligible Options Class. A ``Crossed Market'' \79\ would be 
defined as a quoted market in which a Protected Bid is higher than a 
Protected Offer in a series of an Eligible Options Class.
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    \77\ Section 6 of the Proposed Plan.
    \78\ Section 2(10) of the Proposed Plan.
    \79\ Section 2(4) of the Proposed Plan.
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    Under the Current Plan, its participants agree that the 
dissemination of ``locked'' or ``crossed'' markets should be avoided. 
Further, the Current Plan requires its participants to have rules 
requiring that, if a member of a participating exchange locks or 
crosses a market, such member must take remedial actions to unlock or 
uncross such market. In addition, under the Current Plan, eligible 
market makers may direct a Principal Order through the Linkage to trade 
against the bid or offer that was locked or crossed.\80\
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    \80\ Section 7(a)(i)(C) of the Current Plan.
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    The Proposed Plan would require each Participant to establish, 
maintain, and enforce written rules that require their members 
reasonably to avoid displaying Locked and Crossed Markets.\81\ 
Participants would also be required to establish, maintain, and enforce 
written rules reasonably designed to assure the reconciliation of 
Locked and Crossed Markets.\82\ Finally, the Proposed Plan would 
provide that Participants must establish, maintain, and enforce written 
rules that prohibit its members from engaging in a pattern or practice 
of displaying Locked and Crossed Markets, subject to exceptions as may 
be contained in the rules of a Participant, as approved by the 
Commission.\83\
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    \81\ Section 6(a) of the Proposed Plan. All such rules would be 
subject to notice, comment, and Commission review pursuant to 
Section 19(b) of the Act.
    \82\ Section 6(b) of the Proposed Plan.
    \83\ Section 6(c) of the Proposed Plan.
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C. Compliance With the Proposed Plan

1. Amendments to the Proposed Plan
    Any proposed change in, addition to, or deletion from the Proposed 
Plan could be effected only by means of a written amendment to the 
Proposed Plan that is unanimously approved and executed by the 
Participants.\84\ Any amendment would need to set forth the change, 
addition, or deletion and would not become effective until approved by 
the Commission or otherwise becomes effective pursuant to Section 11A 
of the Act and Rule 608 thereunder.\85\
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    \84\ The Commission notes that the Proposing Exchanges believe 
that the Proposed Plan would eliminate the need for achieving 
unanimity to change even the most minor aspect of the linkage 
mechanism. See supra note 30 and accompanying text. Although, as 
with the Current Plan, any change to the Proposed Plan requires the 
unanimous approval by its Participants, unlike the Current Plan, the 
Proposed Plan does not prescribe order types or a method of routing 
such order types through a centralized linkage mechanism to prevent 
Trade-Throughs. See supra notes 23-26 and accompanying text. Thus, 
for example, a Participant in the Proposed Plan would not need to 
seek the approval of any other Participant to modify the method by 
which it routes orders to other Participants to comply with the 
requirements of the Proposed Plan.
    \85\ Section 4(a) of the Proposed Plan.
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2. Joining the Proposed Plan
    Any national securities exchange would be eligible to become a 
Participant by executing a copy of the Proposed Plan and providing each 
Participant with a copy of such executed Proposed Plan \86\ if it is: 
(1) Registered with the Commission in accordance with Section 6(a) of 
the Act; (2) a Participant Exchange \87\ in OCC; and (3) a party to the 
OPRA Plan.\88\ Further, any such national securities exchange wishing 
to become a Participant would be required to file an amendment to the 
Proposed Plan by executing a copy of the Proposed Plan and submitting 
such executed Proposed Plan to the Commission.\89\ Such

[[Page 15015]]

amendment would be effective when the amendment is approved by the 
Commission or otherwise becomes effective pursuant to Section 11A of 
the Act and Rule 608 thereunder.\90\
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    \86\ Section 3(c) of the Proposed Plan. The Commission notes 
that Section 3(c) of the Proposed Plan actually states that an 
``Eligible Exchange'' may become a Participant by executing a copy 
of the Proposed Plan and providing each Participant with a copy of 
the same. The definition of an ``Eligible Exchange'' includes the 
conditions listed above and also the condition that, if a national 
securities exchange who chooses not to become a party to the 
Proposed Plan, such exchange is a participant in another plan 
approved by the Commission providing for comparable Trade-Through 
and Locked and Crossed Market protection. See infra note 31. As this 
portion of the Eligible Exchange definition is not applicable to the 
instance of an exchange joining the Proposed Plan as a new 
Participant, it is not included in the discussion above.
    \87\ For a definition of a ``Participant Exchange,'' see Section 
VII of the OCC by-laws.
    \88\ For more information on who is a party to the OPRA Plan, 
see Section I of the OPRA Plan.
    \89\ Section 4(b) of the Proposed Plan.
    \90\ Id. These requirements are identical to those contained in 
the Current Plan. See Sections 4(c)(i) and 5(c) of the Current Plan. 
The Current Plan also requires that an eligible exchange pay a fee 
to join the Current Plan. See Section 4(c)(i)(iv) of the Current 
Plan. The Proposed Plan does not require an Eligible Exchange to pay 
a fee to join the Proposed Plan.
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3. Withdrawal From the Proposed Plan
    Any Participant may withdraw from the Proposed Plan at any time by 
providing not less than 30 days' prior written notice to each of the 
other Participants of such intent to withdraw.\91\ To withdraw, such 
Participant also would be required to effect an amendment to the 
Proposed Plan by submitting such amended Proposed Plan to the 
Commission for approval.\92\ In submitting the amended Proposed Plan to 
the Commission, the Participant proposing to withdraw from the Proposed 
Plan would be required to state how the Participant plans to 
accomplish, by alternate means, the goal of the Proposed Plan regarding 
limiting Trade-Throughs of prices on other exchanges trading the same 
options classes.\93\ Such withdrawal from the Proposed Plan would be 
effective when the amendment is approved by the Commission or otherwise 
becomes effective pursuant to Section 11A of the Act and Rule 608 
thereunder. Upon the effectiveness of such withdrawal, the withdrawing 
Participant would have no further rights or obligations under the 
Proposed Plan.
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    \91\ Section 3(d) of the Proposed Plan.
    \92\ Section 4(c) of the Proposed Plan.
    \93\ Id. These requirements are identical to those contained in 
the Current Plan. See Sections 4(d) and 5(c)(iii) of the Current 
Plan.
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D. Implementation

    As noted above,\94\ the Proposed Plan would permit a member of a 
Participant to trade at a price inferior to another market's 
disseminated quotation if the member sends an Intermarket Sweep Orders 
to such market for the full size of the disseminated quotation. Thus, 
unless each Eligible Exchange can accept and execute Intermarket Sweep 
Orders, a trade-through could occur because the Eligible Exchange would 
not have the ability to fill the better priced order. Therefore, unless 
the Commission otherwise authorizes, the Proposed Plan may not be 
implemented unless all Eligible Exchanges either (1) have become 
parties to the Proposed Plan and the Commission has approved all 
necessary implementing rules \95\ or (2) have developed the ability to 
accept and execute incoming ISOs. If either of these conditions has 
been met, the Proposed Plan would be implemented on a date upon which 
all Participants agree, but not later than February 27, 2009.\96\
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    \94\ See supra notes 52-56 and accompanying text.
    \95\ Section 7 of the Proposed Plan. As noted above, 
consideration of the exchanges' proposed rules to implement the 
Proposed Plan would be pursuant to Section 19(b) of the Act. See 
supra notes 43 and 81 and accompanying text.
    \96\ Section 7 of the Proposed Plan.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the Proposed Plan 
is consistent with the Act. The Commission generally invites comments 
on all aspects of the Proposed Plan, including whether the foregoing 
assures fair competition. In addition, the Commission seeks comment on 
the following issues:
    1. The Commission requests comment on the relative merits of the 
Proposed Plan in comparison to the Current Plan. Should the Commission 
approve the Proposed Plan and permit exchanges to withdraw from the 
Current Plan? For example, have options volumes increased since the 
Commission's approval of the Current Plan such that that the option 
markets are constrained in their ability to comply with the current 
Linkage Hub rules, as the Proposing Exchanges contend? If so, is the 
Proposed Plan an appropriate alternative to the Current Plan? Further, 
under the Current Plan, does quoting in pennies give rise to a greater 
chance of missing the market by increasing the number of price changes 
in an option, as the Proposing Exchanges contend? If so, is the 
Proposed Plan more appropriate means to address this concern?
    2. Is the Proposed Plan's model for addressing Trade-Throughs and 
Locked and Crossed Markets, which is similar to that used in the 
equities markets, appropriate for use in the options markets? If not, 
please specify the aspects of the Proposed Plan that should be 
modified, how they should be modified, and why. Beyond modifications to 
the Proposed Plan, please specify if there any aspects of the Proposed 
Plan that should be eliminated and why.
    3. The Commission requests comment as to whether, and if so, to 
what extent, the Proposed Plan's order protection provisions would have 
the desired effect of limiting Trade-Throughs.
    4. Is the proposed requirement that each Participant establish, 
maintain, and enforce policies and procedures that are reasonably 
designed to prevent Trade-Throughs sufficient to protect investors who 
would no longer have an avenue under the Proposed Plan to obtain 
satisfaction when an order has been traded through and no exception 
applies? Are there any consequences for investors and other market 
participants if satisfaction for Trade-Throughs is no longer is 
available under the Proposed Plan? How often is satisfaction requested 
following a Trade-Through? How often are requests for satisfaction 
filled?
    5. Commenters are also asked to comment on the proposed exceptions 
to the general Trade-Through prohibitions and whether these exceptions 
would permit adequate protection of customer orders. Are there proposed 
exceptions that should not be included or that should be adjusted in 
the Proposed Plan? Should the Commission consider adding additional 
exceptions? If so, what are they?
    6. The Commission requests comment regarding the proposed use of 
Intermarket Sweep Orders in the options market. What types of 
identifiers should be required to help ensure Participants know that 
they are receiving an Intermarket Sweep Order so that the receiving 
Participant would be able to execute the order without regard to 
whether a better price was displayed on another market center?
    7. The Proposed Plan would require each Participant to take 
reasonable steps to establish that Intermarket Sweep Orders meet the 
requirement of the Proposed Plan. The Commission requests comment on 
what such reasonable steps should be. For example, because the Proposed 
Plan would permit members of a Participant to send ISOs, what rules, 
policies, and procedures should Participants have in place to ensure 
that such ISOs comply with the requirements of the Proposed Plan?
    8. The Commission specifically requests comment on the 
appropriateness of the proposed Trade-Through exception relating to a 
systems or equipment failure, material delay, or malfunction. What are 
the types of situations in which this proposed exception would 
appropriately apply?
    9. Are there any situations for which the exception relating to 
non-firm quotes would not be sufficient?
    10. The proposed definition of ``Bid'' or ``Offer'' states that the 
terms shall mean the bid price or the offer price communicated by a 
member of an Eligible Exchange to any Broker/Dealer,

[[Page 15016]]

or to any customer, at which it is willing to buy or sell, as either 
principal or agent, but shall not include indications of interest. Is 
this definition sufficiently clear? For example, when would a 
communication constitute an indication of interest, and thus not be 
considered a Bid or Offer under the Proposed Plan? Should this concept 
be defined in the Proposed Plan? If so, how should it be defined?
    11. The Commission requests comment on the Proposed Plan's 
treatment of Locked and Crossed Markets. Are there aspects of the 
options market that call for different treatment of Locked Market from 
the equities market? Are there exceptions to Locked Markets that the 
Commission should consider? What are possible methods the Participants 
could adopt in their policies and procedures for a member to reconcile 
or clear Locked and Crossed Markets?
    12. Amendments to the Proposed Plan would require the unanimous 
approval by the Participants. The Commission requests comment on 
whether a unanimous vote is appropriate.
    13. The Commission requests comment on whether the Proposed Plan's 
February 27, 2009, implementation date is sufficient to allow market 
participants time to adapt to the new linkage system. If not, what 
would be an appropriate implementation date?
    14. Unless the Commission otherwise authorizes, the Proposed Plan 
could not be implemented unless all Eligible Exchanges either have 
become parties to the Proposed Plan or have developed the ability to 
accept and execute incoming Intermarket Sweep Orders. The Commission 
requests comment on whether it is appropriate to delay implementation 
of the Proposed Plan until all Eligible Exchanges have met such 
requirements. In addition, the Commission requests comment on under 
what circumstances, if any, it would be appropriate for the Commission 
to authorize the implementation of the Proposed Plan, despite one or 
more Eligible Exchanges failing to satisfy such prerequisites.
    15. The Commission requests comment, if it were to approve the 
Proposed Plan, on the nature and length of implementation periods that 
would be appropriate to allow market participants to prepare for the 
new linkage system in an efficient and orderly manner.
    16. The proposed definition for ``Eligible Options Class'' is ``all 
options series overlying a security (as that term is defined in Section 
3(a)(10) of the Exchange Act) or group of securities, including both 
put options and call options, which class is available for trading on 
two or more Eligible Exchanges.'' Is this definition sufficient for the 
Proposed Plan? Is it too narrowly drafted? For example, should the 
definition include Foreign Currency Options, which are not currently 
covered by the proposed definition? Are there other products that are, 
or might be, multiply traded that should be included in the definition 
of Eligible Options Class?
    17. As in Rule 611(a)(1) of Regulations NMS, Section 5(a)(i) of the 
Proposed Plan provides, in pertinent part, that each Participant agrees 
to establish, maintain and enforce written policies and procedures that 
are reasonably designed to prevent trade-throughs. Unlike Regulation 
NMS, however, the Proposed Plan requires that such policies and 
procedures be approved by the Commission. In addition, the Current Plan 
does not require the trade-through surveillance procedures of its 
Participants to be approved by the Commission.\97\ While national 
securities exchanges must file proposed rule changes pursuant to 
Section 19(b) of the Act and the rules thereunder, the Commission notes 
that it generally does not approve, pursuant to Section 19(b), policies 
and procedures, though they may be reviewed by the Commission, for 
example, pursuant to inspections and examinations. The Commission 
requests comment on whether the Proposed Plan should require that such 
policies and procedures be approved by the Commission, or whether such 
a requirement should be deleted.
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    \97\ See Section 8(c)(i)(B) of the Current Plan.
---------------------------------------------------------------------------

    18. The Proposed Plan requires participants to establish, maintain, 
and enforce policies and procedures that are reasonably designed to 
prevent Trade-Throughs in Eligible Options Classes. The Commission 
requests comment on the impact that fees charged by exchanges to trade 
with their best displayed prices would have on the ability of 
participants to comply with this requirement under the Proposed Plan. 
Should there be a maximum amount that an exchange is permitted to 
charge for trading with its displayed prices? If so, what should this 
maximum amount be? 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 rule-comments@sec.gov. Please include 
File Number 4-546 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number 4-546. 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, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of such filing also will be available for inspection and 
copying at the respective principal office of BX, CBOE, ISE, Nasdaq, 
Phlx, NYSE Amex, and NYSE Arca. 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 4-546 and should be submitted on or before April 23, 2009.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
 [FR Doc. E9-7410 Filed 4-1-09; 8:45 am]

BILLING CODE 8010-01-P