Document ID: SEC-2009-1263-0001
Agency: sec
Document Type: Notice
Title: Joint Industry Plan: Order Approving Amendments to Withdraw from the Intermarket Options Linkage Plan filed by Chicago Board Options Exchange, Inc., et al.
Posted Date: 2009-09-03T04:00Z

[Federal Register: September 3, 2009 (Volume 74, Number 170)]
[Notices]               
[Page 45662-45663]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03se09-79]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60582; File No. 4-429]

 
Joint Industry Plan; Order Approving Amendments To Withdraw From 
the Intermarket Options Linkage Plan Filed by 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.

August 28, 2009.

I. Introduction

    On June 25, 2009, June 25, 2009, July 2, 2009, July 2, 2009, July 
7, 2009, July 17, 2009, and July 20, 2009, NYSE Arca, Inc. (``NYSE 
Arca''), NYSE Amex, LLC (``NYSE Amex''), International Securities 
Exchange, LLC (``ISE''), Chicago Board Options Exchange, Incorporated 
(``CBOE''), NASDAQ OMX BX, Inc. (``BX''), NASDAQ OMX PHLX, Inc. 
(``Phlx''), and The NASDAQ Stock Market LLC (``Nasdaq'') (collectively, 
``Participants''),\1\ respectively, submitted to the Securities and 
Exchange Commission (``Commission'') amendments to the Plan for the 
Purpose of Creating and Operating an Intermarket Option Linkage 
(``Linkage Plan'') (``Amendments'').\2\ The proposed Amendments were 
published for comment in the Federal Register on July 28, 2009.\3\ The 
Commission received no comment letters in response to the Notice. This 
order approves the Amendments.
---------------------------------------------------------------------------

    \1\ See letter from Peter G. Armstrong, NYSE Arca, to Elizabeth 
Murphy, Secretary, Commission, dated June 24, 2009; letter from 
Michael Babel, NYSE Amex, to Elizabeth Murphy, Secretary, 
Commission, dated June 24, 2009; letter from Michael J. Simon, ISE, 
to Elizabeth Murphy, Secretary, Commission, dated July 1, 2009; 
letter from Edward J. Joyce, CBOE, to Elizabeth Murphy, Secretary, 
Commission, dated July 1, 2009; letter from Maura A. Looney, 
Associate Vice President, BX, to Elizabeth Murphy, Secretary, 
Commission, dated July 6, 2009; letter from Richard S. Rudolph, 
Assistant General Counsel, Phlx, to Elizabeth Murphy, Secretary, 
Commission, dated July 16, 2009; and letter from Jeffrey S. Davis, 
Vice President and Deputy General Counsel, Nasdaq, to Elizabeth 
Murphy, Secretary, Commission, dated July 17, 2009.
    \2\ On July 28, 2000, the Commission approved a national market 
system plan for the purpose of creating and operating an intermarket 
options market linkage proposed by the American Stock Exchange LLC 
(n/k/a NYSE Amex), CBOE, and ISE. See Securities Exchange Act 
Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). 
Subsequently, Philadelphia Stock Exchange, Inc. (n/k/a Phlx), 
Pacific Exchange, Inc. (n/k/a NYSE Arca), Boston Stock Exchange, 
Inc. (n/k/a BX), and Nasdaq joined 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); 49198 (February 5, 2004), 69 FR 7029 (February 
12, 2004); and 57545 (March 21, 2008), 73 FR 16394 (March 27, 2008).
    \3\ See Securities Exchange Act Release No. 60360 (July 21, 
2009), 74 FR 37265 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Amendments

    The Participants submitted the Amendments to withdraw from the 
Linkage Plan. Pursuant to Section 4(d) of the Linkage Plan, a 
Participant may withdraw from the Linkage Plan by: (i) Providing not 
less than 30 days prior written notice to each of the other 
Participants and to the facilities manager \4\ of such intent to 
withdraw; and (ii) effecting an amendment to the Linkage Plan as 
specified in Section 5(c)(iii) of the Linkage Plan. Section 5(c)(iii) 
of the Linkage Plan states that a Participant can withdraw from the 
Linkage Plan by filing an amendment deleting its name in Section 4(a) 
of the Linkage Plan and submitting such amendment to the Commission for 
approval. The submitting Participant must state how it plans to 
accomplish, by alternate means, the goals of the Linkage Plan regarding 
limiting trade-throughs of prices on other exchanges trading the same 
options classes. Such amendment is effective upon Commission approval.
---------------------------------------------------------------------------

    \4\ The facilities manager of the Linkage Plan is the Options 
Clearing Corporation.
---------------------------------------------------------------------------

    As set forth in the Notice, the Participants plan to accomplish the 
Linkage Plan's goals through

[[Page 45663]]

membership in the Options Order Protection and Locked/Crossed Market 
Plan (``New Plan''), which was approved by the Commission on July 30, 
2009.\5\ The New Plan requires its participants to establish, maintain 
and enforce written procedures and policies that are reasonably 
designed to prevent trade-throughs.\6\ The Participants state that the 
New Plan will accomplish this in a more efficient manner than the 
Linkage Plan. Specifically, the New Plan eliminates a central hub and 
addresses trade-through compliance through the use of intermarket sweep 
orders. The New Plan incorporates certain concepts of Regulation NMS 
\7\ which, among other things, addresses trade-throughs in the equity 
market. The Participants further note that the New Plan also requires 
its participants to conduct surveillance of their markets to ascertain 
the effectiveness of these policies and procedures.\8\ Finally, the New 
Plan contains provisions requiring its participants to establish, 
maintain and enforce written rules addressing locked and crossed 
markets.\9\ The Participants believe that the New Plan will fully 
accomplish the same goals of the Linkage Plan, including imposing 
limits on trade-throughs.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 60405 (July 30, 
2009), 74 FR 39362 (August 6, 2009).
    \6\ Section 5(a)(i) of the New Plan.
    \7\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005) (File No. S7-10-04); 17 CFR 
242.600 et seq.
    \8\ Section 5(a)(ii) of the New Plan.
    \9\ Section 6 of the New Plan.
---------------------------------------------------------------------------

III. Discussion

    After careful consideration, the Commission finds that the proposed 
Amendments to the Linkage Plan are consistent with the requirements of 
the Act and the rules and regulations thereunder.\10\ Specifically, the 
Commission finds that the Amendments are consistent with Section 11A of 
the Act \11\ and Rule 608 of Regulation NMS thereunder \12\ in that 
they are necessary or appropriate in the public interest, for the 
protection of investors and the maintenance of fair and orderly 
markets, to remove impediments to, and perfect the mechanisms of, a 
national market system.
---------------------------------------------------------------------------

    \10\ In approving the proposed Amendments, the Commission has 
considered the Amendments' impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78k-1.
    \12\ 17 CFR 242.608.
---------------------------------------------------------------------------

    The Commission believes that the New Plan accomplishes, by 
alternate means, the goals of the Linkage Plan, including the goal of 
limiting trade-throughs of prices on other exchanges trading the same 
options classes. The Commission notes that it has approved the rule 
filings implementing the New Plan submitted by each of the Participants 
(``Exchange Linkage Rules'') and has found such rules consistent with 
the requirements of the Act and the New Plan.\13\
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release Nos. 60525 (August 18, 
2009) (SR-NASDAQ-2009-056); 60526 (August 18, 2009) (SR-NYSEAmex-
2009-19); 60527 (August 18, 2009) (SR-NYSEArca-2009-45); 60530 
(August 18, 2009) (SR-BX-2009-028); 60550 (August 20, 2009) (SR-
Phlx-2009-61); 60551 (August 20, 2009) (SR-CBOE-2009-040); and 60559 
(August 21, 2009) (SR-ISE-2009-27).
---------------------------------------------------------------------------

    The Commission notes that the withdrawal of each Participant will 
be effective with this approval of the Amendments. In addition, the 
Commission notes that each of the Exchange Linkage Rules will become 
effective upon this approval of the Amendments.

IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act \14\ 
and Rule 608 thereunder,\15\ that the proposed Amendments to the 
Linkage Plan are approved.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78k-1.
    \15\ 17 CFR 242.608.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(29).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21214 Filed 9-2-09; 8:45 am]

BILLING CODE 8010-01-P