

[Federal Register: January 25, 2007 (Volume 72, Number 16)]
[Notices]               
[Page 3451]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25ja07-86]                         


[[Page 3451]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55138; File Nos. SR-Amex-2006-119; SR-BSE-2006-55; SR-
CBOE-2006-109; SR-ISE-2006-73; and SR-NYSEArca-2007-01]

 
Self-Regulatory Organizations; International Securities Exchange, 
Inc.: Order Approving Proposed Rule Change; American Stock Exchange 
LLC; Chicago Board Options Exchange, Incorporated; and NYSEArca, Inc.: 
Order Granting Accelerated Approval to Proposed Rule Changes; and 
Boston Stock Exchange, Inc.: Order Granting Accelerated Approval to a 
Proposed Rule Change, as Amended, Relating to the Definition of 
``Complex Trade'' as Applied to Trades Through the Options Intermarket 
Linkage

January 19, 2007.

I. Introduction

    On December 4, 2006, the International Securities Exchange, Inc. 
(``ISE'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposal to amend ISE Rule 1900(3) to revise the definition of 
``Complex Trade'' as applied to trades through the Intermarket Options 
Linkage (``Linkage''). The proposed rule change was published for 
comment in the Federal Register on December 20, 2006.\3\ The Commission 
received no comments regarding the ISE's proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 54923 (December 12, 
2006), 71 FR 76399.
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    On December 13, 2006, December 21, 2006, December 28, 2006, and 
January 3, 2007, the Boston Stock Exchange, Inc. (``BSE''), the Chicago 
Board Options Exchange, Incorporated (``CBOE''), the American Stock 
Exchange LLC (``Amex''), and NYSE Arca, Inc. (``NYSEArca'') (with the 
ISE, collectively, the ``Options Exchanges''), respectively, filed 
proposals to amend their rules \4\ to revise the definition of 
``Complex Trade'' as applied to trades through the Linkage. The BSE 
filed Amendment No. 1 to its proposal on December 27, 2006. The 
proposals, including the BSE's proposal, as amended, were published for 
comment in the Federal Register on January 5, 2007,\5\ January 8, 
2007,\6\ and January 16, 2007.\7\
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    \4\ See Amex Rule 940(b)(3); BOX Rules, Chapter XII, Section 
1(c); CBOE Rule 6.80(4); and NYSEArca Rule 6.92(a)(4).
    \5\ See Securities Exchange Act Release No. 55012 (December 27, 
2006), 72 FR 599 (notice of filing of File No. SR-CBOE-2006-109).
    \6\ See Securities Exchange Act Release No. 55015 (December 28, 
2006), 72 FR 811 (notice of filing of File No. SR-BSE-2006-55).
    \7\ See Securities Exchange Act Release Nos. 55048 (January 5, 
2007), 72 FR 1784 (notice of filing of File No. SR-Amex-2006-119); 
and 55051 (January 5, 2007), 72 FR 1796 (notice of filing of File 
No. SR-NYSEArca-2007-01).
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    This order approves the ISE's proposal and approves the proposals 
of the Amex, CBOE, NYSEArca, and BSE, as amended, on an accelerated 
basis.

II. Description of the Proposals

    The proposals will revise the rules of each of the Options 
Exchanges to provide that, for purposes of trades through the Linkage, 
a ``Complex Trade'' includes a spread, straddle, or combination order 
where the number of contracts on the legs of the spread, straddle, or 
combination order differs by any ratio equal to or greater than one-to-
three and less than or equal to three-to-one. There is no Trade-Through 
liability for Complex Trades.\8\ The proposed definition of ``Complex 
Trade'' is generally consistent with the definitions of ``ratio order'' 
contained in the rules of the Options Exchanges and used for purposes 
other than Linkage.\9\
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    \8\ See Amex Rule 942(b)(7); BOX Rules, Chapter VII, Section 
3(b)(vii); CBOE Rule 6.83(b)(7); ISE Rule 1902(b)(7); and NYSEArca 
Rule 6.94(b)(7).
    \9\ See Amex Rule 950--ANTE(e)(vii); CBOE Rule 6.53C(a)(5); ISE 
Rule 722(a)(6); and NYSEArca Rule 6.62(k). Unlike the rules of the 
Amex, the CBOE, the ISE, and NYSEArca, which permit ratio orders 
with ratios equal to or greater than one-to-three and less than or 
equal to three-to-one, the BOX Rules permit ratio orders with ratios 
equal to or greater than one-to-two. See BOX Rules, Chapter V, 
Section 27(a)(vi).
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III. Discussion

    The Commission finds that the proposed rule changes by the Amex, 
the CBOE, the ISE, and NYSEArca, and the BSE's proposal, as amended, 
are consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\10\ Specifically, the Commission finds that the proposals are 
consistent with Section 6(b)(5) of the Act \11\ in that they are 
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. The Commission believes that by defining a ``Complex Trade'' 
for Linkage purposes to include spreads, straddles, and combination 
orders with ratios equal to or greater than one-to-three and less than 
or equal to three-to-one, and by providing a consistent definition of 
``Complex Trade'' in the rules of the Options Exchanges, the proposals 
could facilitate the execution of complex orders.
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    \10\ In approving the proposed rule changes, the Commission has 
considered the proposed rules' impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for approving the proposals of the 
Amex, the CBOE, and NYSEArca, and the BSE's proposal, as amended, prior 
to the thirtieth day after the date of publication of notice of filing 
thereof in the Federal Register. The proposals of the Amex, the BSE, 
the CBOE, and NYSEArca propose definitions of ``Complex Trade'' that 
are identical to the definition proposed by the ISE. The ISE's proposal 
was subject to a 21-day comment period and the Commission received no 
comments regarding the ISE's proposal. Accordingly, the Commission 
finds good cause, consistent with Sections 6(b)(5) and 19(b) of the 
Act, to approve the proposals of the Amex, the CBOE, and NYSEArca, and 
the BSE's proposal, as amended, on an accelerated basis.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the ISE's proposed rule change (SR-ISE-2006-73), is 
approved, that the proposed rule changes of the Amex (SR-Amex-2006-
119), the CBOE (SR-CBOE-2006-109), and NYSEArca (SR-NYSEArca-2007-01) 
are approved on an accelerated basis, and that the BSE's proposed rule 
change (SR-BSE-2006-55), as amended, is approved on an accelerated 
basis.
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-1109 Filed 1-24-07; 8:45 am]

BILLING CODE 8011-01-P
