Document ID: SEC-2007-1389-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC et al.
Posted Date: 2007-10-04T04:00Z

[Federal Register: October 4, 2007 (Volume 72, Number 192)]
[Notices]               
[Page 56814-56815]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04oc07-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56555; File Nos. SR-Amex-2007-65; SR-BSE-2007-45; SR-
CBOE-2007-64; SR-ISE-2007-44; SR-NYSEArca-2007-65]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Boston Stock Exchange, Inc; Chicago Board Options Exchange, 
Incorporated and International Securities Exchange, LLC: Notice of 
Filing of Proposed Rule Changes Relating to the Definition of a Complex 
Trade; NYSE Arca, Inc.: Notice of Filing of Proposed Rule Change and 
Amendment No. 1 Thereto Relating to the Definition of a Complex Trade

September 27, 2007.
    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 June 27, 2007, September 13, 2007, June 12, 2007, June 1, 2007, and 
July 6, 2007, the American Stock Exchange LLC (``Amex''), the Boston 
Stock Exchange, Inc. (``BSE''), the Chicago Board Options Exchange, 
Incorporated (``CBOE''), the International Securities Exchange, LLC 
(``ISE''), and NYSE Arca, Inc. (``NYSE Arca'') (each, an ``Exchange'' 
and, collectively, the ``Exchanges''), respectively, filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
changes as described in Items I, II and III below, which Items have 
been substantially prepared by the Exchanges. On July 11, 2007, NYSE 
Arca filed Amendment No. 1 to its proposed rule change.\3\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule changes, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240. 19b-4.
    \3\ Amendment No. 1 to SR-NYSEArca-2007-65 effected technical 
corrections to the proposed rule change.
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I. Self-Regulatory Organizations' Statement of the Terms of Substance 
of the Proposed Rule Changes

    The Exchanges propose to amend the definition of ``complex trade'' 
set forth in their respective rules pertaining to the Intermarket 
Options Linkage (``Linkage'') to include stock-option trades. The text 
of the proposed rule changes is available at the Exchanges' Web 
sites,\4\ the Exchanges' principal offices, and at the Commission's 
Public Reference Room.
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    \4\ See http://www.amex.com, http://www.bostonstock.com, http://www.cboe.com, http://www.ise.com, and http://www.nyse.com.

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II. Self-Regulatory Organizations' Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    In their filings with the Commission, each Exchange included 
statements concerning the purpose of, and basis for, their proposed 
rule changes and discussed any comments they received on the proposed 
rule changes. The text of these statements may be examined at the 
places specified in Item IV below. The Exchanges have prepared 
summaries, set forth in Sections A, B, and C below, of the most 
significant aspects of such statements.

A. Self-Regulatory Organizations' Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

1. Purpose
    Under Section 8(c)(iii)(G) of the Plan for the Purpose of Creating 
and Operating an Intermarket Option Linkage (``Linkage Plan''),\5\ the 
Linkage

[[Page 56815]]

Plan participants (``Participants'') may amend the definition of the 
term ``complex trade'' from time to time. The Participants have agreed 
to update the definition of ``complex trade'' to extend the associated 
trade-through liability exemption to cover certain stock-option trades. 
Accordingly, each of the Exchanges has submitted a proposal that would 
amend each of the Exchange's definition of ``complex trade,'' set forth 
in the Exchange's respective rules pertaining to the Linkage, to 
include the execution of a stock option order to buy or sell a stated 
number of units of an underlying stock or a security convertible into 
the underlying stock (``convertible security'') coupled with the 
purchase or sale of option contract(s) on the opposite side of the 
market representing either (A) The same number of units of the 
underlying stock or convertible security, or (B) the number of units of 
the underlying stock or convertible security necessary to create a 
delta neutral position, but in no case in a ratio greater than 8 option 
contracts per unit of trading of the underlying stock or convertible 
security established for that series by the Options Clearing 
Corporation.\6\
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    \5\ On July 28, 2000, the Commission approved a national market 
system plan for the purpose of creating and operating the Linkage 
proposed by Amex, CBOE, and ISE. See Securities Exchange Act Release 
No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). 
Subsequently, Phlx, Pacific Exchange, Inc. (n/k/a NYSE Arca, Inc.), 
and BSE 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); and 
49198 (February 5, 2004), 69 FR 7029 (February 12, 2004).
    \6\ The Exchanges propose to amend their respective rules that 
define ``complex trade'' for Linkage purposes, namely Amex Rule 
940(b)(3), Boston Options Exchange Rule Chapter XII, Section 1(c), 
CBOE Rule 6.80(4), ISE Rule 1900(3), and NYSEArca Rule 6.92(a)(4).
    The Phlx has filed a proposed rule change with the Commission to 
amend its definitions of ``synthetic option'' and ``complex trade'' 
to conform such definitions with the related ``stock option'' and 
``complex trade'' definitions of the Exchanges. See SR-Phlx-2007-40.
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2. Statutory Basis
    The Exchanges believe the proposed rule changes are consistent with 
the Act and the rules and regulations under the Act applicable to 
national securities exchanges and, in particular, the requirements of 
Section 6(b) of the Act.\7\ Specifically, the Exchanges believe the 
proposed rule changes are consistent with the requirements of Section 
6(b)(5) of the Act,\8\ which provides that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organizations' Statement on Burden on Competition

    The Exchanges believe that the proposed rule changes would impose 
no burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organizations' Statement on Comments on the Proposed 
Rule Changes Received From Members, Participants or Others

    The Exchanges have neither solicited nor received comments on these 
proposals.

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 self-regulatory organizations consent, the Commission will:
    (A) By order approve such proposed rule changes, or
    (B) Institute proceedings to determine whether the proposed rule 
changes 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 
changes are 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 rule-comments@sec.gov. Please include 

File Numbers SR-Amex-2007-65; SR-BSE-2007-45; SR-CBOE-2007-64; SR-ISE-
2007-44; and SR-NYSEArca-2007-65 on the subject line.

Paper Comments

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

All submissions should refer to File Numbers SR-Amex-2007-65; SR-BSE-
2007-45; SR-CBOE-2007-64; SR-ISE-2007-44; and SR-NYSEArca-2007-65. 
These file numbers 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 submissions, all subsequent amendments, 

all written statements with respect to the proposed rule changes that 
are filed with the Commission, and all written communications relating 
to the proposed rule changes 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 the filings also will be available for 
inspection and copying at the principal offices of the Exchanges. 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 Numbers SR-Amex-2007-65; SR-BSE-2007-
45; SR-CBOE-2007-64; SR-ISE-2007-44; and SR-NYSEArca-2007-65 and should 
be submitted on or before October 25, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-19558 Filed 10-3-07; 8:45 am]

BILLING CODE 8011-01-P