

[Federal Register: November 2, 2005 (Volume 70, Number 211)]
[Notices]               
[Page 66477-66478]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02no05-143]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52656; File No. 4-429]

 
Joint Industry Plan; Order Approving Amendment No. 16 to the Plan 
for the Purpose of Creating and Operating an Intermarket Option Linkage 
Relating to the Definition of Firm Customer Quote Size and Limitations 
on Sending Secondary P/A Orders

October 24, 2005.

I. Introduction

    On April 13, 2005, April 26, 2005, April 26, 2005, April 27, 2005, 
May 27, 2005 and June 2, 2005, the International Securities Exchange, 
Inc. (``ISE''), American Stock Exchange LLC (``Amex''), Chicago Board 
Options Exchange, Incorporated (``CBOE''), Pacific Exchange, Inc. 
(``PCX''), Boston Stock Exchange, Inc. (``BSE''), and Philadelphia 
Stock Exchange, Inc. (``Phlx'') (collectively, the ``Participants'') 
respectively submitted to the Securities and Exchange Commission 
(``Commission'') an amendment (``Joint Amendment No. 16'') to the Plan 
for the Purpose of Creating and Operating an Intermarket Option Linkage 
(the ``Linkage Plan'').\1\

[[Page 66478]]

The Participants are proposing: (i) To amend the definition of ``Firm 
Customer Quote Size'' (``FCQS'') \2\ to provide automatic executions 
for Principal Acting as Agent Orders (``P/A Orders'') \3\ sent via the 
intermarket option linkage (``Linkage'') up to the full size of a 
Participant's disseminated quotation; and (ii) to eliminate a 15-second 
waiting period between the sending of P/A Orders. The proposed 
amendment to the Linkage Plan was published in the Federal Register on 
September 16, 2005.\4\ No comments were received on the proposed 
amendment. This order approves the proposed amendment to the Linkage 
Plan.
---------------------------------------------------------------------------

    \1\ 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 Amex, CBOE, and ISE. See 
Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 
48023 (August 4, 2000). Subsequently, upon separate requests by the 
Phlx, PCX, and BSE, 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).
    \2\ See Section 2(11) of the Linkage Plan.
    \3\ See Section 2(16)(a) of the Linkage Plan.
    \4\ See Securities Exchange Act Release No. 52401 (September 9, 
2005), 70 FR 54781.
---------------------------------------------------------------------------

II. Description and Purpose of the Proposed Amendment

    The purpose of Joint Amendment No. 16 is to modify the Linkage Plan 
in two respects. First, the definition of FCQS will be amended to 
reflect that all Participants disseminate dynamic option quotes with 
size. Specifically, Participants propose to amend the Linkage Plan so 
that the FCQS will be calculated based on the size of the disseminated 
quotation of the Participant receiving the P/A Order. Secondly, Joint 
Amendment No. 16 will eliminate a 15-second waiting period for sending 
a subsequent P/A Order currently provided for in the Linkage Plan. 
Finally, Joint Amendment No. 16 will clarify the conditions under which 
automatic execution is required in response to P/A Orders.

III. Discussion

    After careful consideration, the Commission finds that the proposed 
amendment to the Linkage Plan is consistent with the requirements of 
the Securities Exchange Act of 1934 (``Act'') and the rules and 
regulations thereunder. Specifically, the Commission finds that the 
proposed amendment to the Linkage Plan is consistent with Section 11A 
of the Act \5\ and Rule 608 under the Act,\6\ in that the proposed 
amendment to calculate FCQS on the basis of the size of the Participant 
receiving the P/A Order is appropriate and should facilitate the use of 
the Linkage for the Participants. This change, coupled with the 
proposed elimination of the 15-second waiting period for sending a 
subsequent P/A Order should facilitate investors' intermarket access to 
superior prices disseminated by Participants other than the one to 
which the order was initially sent.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78k-l.
    \6\ 17 CFR 242.608.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act \7\ and 
Rule 608 thereunder,\8\ that the proposed Joint Amendment No. 16 is 
hereby approved.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78k-l.
    \8\ 17 CFR 242.608.
    \9\ 17 CFR 200.30-3(a)(29).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-6054 Filed 11-1-05; 8:45 am]

BILLING CODE 8010-01-P
