

[Federal Register: April 2, 2007 (Volume 72, Number 62)]
[Notices]               
[Page 15731-15732]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap07-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55539; File Nos. SR-Amex-2007-21; SR-BSE-2007-07; SR-
CBOE-2007-13; SR-ISE-2007-12; SR-NYSEArca-2007-28; SR-Phlx-2007-21]

 
Self-Regulatory Organizations; American Stock Exchange LLC and 
Chicago Board Options Exchange, Incorporated: Notice of Filing and 
Order Granting Accelerated Approval to Proposed Rule Changes; Boston 
Stock Exchange, Inc.; International Securities Exchange, LLC; NYSE 
Arca, Inc.; and Philadelphia Stock Exchange, Inc.: Notice of Filing and 
Order Granting Accelerated Approval to a Proposed Rule Change, as 
Amended, Relating to Linkage Orders

 March 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 February 16, 2007, February 20, 2007, February 13, 2007, February 6, 
2007, March 14, 2007, and March 14, 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''), NYSE Arca, Inc. (``NYSE Arca''), 
and the Philadelphia Stock Exchange, Inc. (``Phlx'') (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 and II below. On March 
12, 2007, March 13, 2007, March 19, 2007, and March 20, 2007, BSE, ISE, 
NYSE Arca, and Phlx, respectively, filed Amendment No. 1 to their 
proposed rule changes.\3\ On March 21, 2007, Phlx filed Amendment No. 2 
to its proposed rule change.\4\ The Commission is publishing this 
notice to solicit comments on the proposed rule changes, as amended, 
from interested persons and is approving the proposed rule changes, as 
amended, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240. 19b-4.
    \3\ Amendment No. 1 effected technical corrections to the 
proposed rule texts.
    \4\ Amendment No. 2 effected a technical correction to the 
proposed rule text.
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I. Self-Regulatory Organizations' Statement of the Terms of Substance 
of the Proposed Rule Changes

    The Exchanges propose to amend their respective rules pertaining to 
the Intermarket Options Linkage (``Linkage'') to conform such rules to 
Joint Amendment No. 22 \5\ of the Plan for the Purpose of Creating and 
Operating an Intermarket Option Linkage (``Linkage Plan'').\6\ The text 
of the proposed rule changes are available at the Exchanges' Web 
sites,\7\ the Exchanges' principal offices, and at the Commission's 
Public Reference Room.
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    \5\ See Securities Exchange Act Release No. 55436 (March 8, 
2007), 72 FR 12639 (March, 16, 2007) (File No. 4-429).
    \6\ 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).
    \7\ See http://www.amex.com, http://www.bostonstock.com, http://www.cboe.com, http://www.iseoptions.com, http://www.nyse.com, and 

http://www.phlx.com.

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

    In its filing with the Commission, each Exchange included 
statements concerning the purpose of, and basis for, its proposed rule 
change and discussed any comments it received on the proposed rule 
change. The text of these statements may be examined at the places 
specified in Item III 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
    The Exchanges propose to reduce certain ``turn-around'' times in 
the Linkage to 5 seconds. Specifically, if a member \8\ of an Exchange 
does not receive a response to its Linkage Order \9\ within 5 seconds, 
that member would be able to reject any response purporting to be an 
execution received thereafter. The member would also be able to trade

[[Page 15732]]

through the Exchange that failed to respond within 5 seconds. 
Similarly, if a member of one Exchange responds to a Linkage Order more 
than 5 seconds after receiving that order, and the Exchange that sent 
the Linkage Order cancels such response, the member would be required 
to cancel any purported trade resulting from that order. The Exchanges 
state that, as they have become more automated, experience with Linkage 
indicates that reducing the turn-around time to 5 seconds is expected 
to facilitate speedy executions of orders while not adversely affecting 
the ability of members to make markets on their Exchanges. The 
Exchanges submitted the proposed rule changes in conjunction with Joint 
Amendment No. 22 to the Linkage Plan.\10\
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    \8\ The term ``member,'' as used herein, includes NYSE Arca OTP 
Holders and OTP Firms and Boston Options Exchange (``BOX'') Options 
Participants. See NYSE Arca Rules 1.1(q) and 1.1(r) and Chapter I, 
Sec. 1(a)(40) of BOX Rules, respectively.
    \9\ See Section 2(16) of the Linkage Plan. For the purposes of 
these proposed rule changes only, references to ``Linkage Orders'' 
herein pertain to Principal Acting as Agent (``P/A'') Orders and 
Principal Orders. See Section 2(16)(a) and (b) of the Linkage Plan, 
respectively, for definitions of ``P/A Order'' and ``Principal 
Order.''
    \10\ 10 Joint Amendment No. 22 to the Linkage Plan became 
summarily effective for a period not to exceed 120 days on March 8, 
2007. See supra note 5.
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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.\11\ Specifically, the Exchanges believe the 
proposed rule changes are consistent with the requirements of Section 
6(b)(5) of the Act \12\ that the rules of an exchange be designed to 
prevent fraudulent and manipulative acts, 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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    \11\ 11 15 U.S.C. 78f(b).
    \12\ 2 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. 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-2007-21; SR-BSE-2007-07; SR-CBOE-2007-13; SR-ISE-
2007-12; SR-NYSEArca-2007-28; SR-Phlx-2007-21 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-2007-21; SR-
BSE-2007-07; SR-CBOE-2007-13; SR-ISE-2007-12; SR-NYSEArca-2007-28; SR-
Phlx-2007-21. 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. 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-2007-21; SR-BSE-2007-
07; SR-CBOE-2007-13; SR-ISE-2007-12; SR-NYSEArca-2007-28; SR-Phlx-2007-
21 and should be submitted on or before April 23, 2007.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Changes

    After careful consideration, the Commission finds that the proposed 
rule changes, as amended, are consistent with the requirements of the 
Act and the rules and regulations thereunder, applicable to national 
securities exchanges.\13\ In particular, the Commission finds that the 
proposals are consistent with the provisions of Section 6(b)(5) of the 
Act \14\ in that they are designed 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 reducing the time required by an Exchange to respond to a Linkage 
Order and reducing the amount of time a member sending a Linkage Order 
must wait before trading through a nonresponsive Exchange should 
facilitate the more timely execution of orders across the Exchanges.
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    \13\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 
U.S.C. 78c(f).
    \14\ 15 U.S.C. 78f(b)(5).
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    The Commission also finds good cause, pursuant to Section 19(b)(2) 
of the Act \15\ for approving the proposal prior to the thirtieth day 
after the date of publication of the notice of the filing thereof in 
the Federal Register. Granting accelerated approval would facilitate 
the implementation of these changes in conjunction with the Joint 
Amendment No. 22 to the Linkage Plan.\16\
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    \15\ 15 U.S.C. 78s(b)(2).
    \16\ See supra note 10.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule changes (SR-Amex-2007-21 and SR-CBOE-2007-13) 
and proposed rule changes (SR-BSE-2007-07; SR-ISE-2007-12; SR-NYSEArca-
2007-28; and SR-Phlx-2007-21), as amended, are hereby approved on an 
accelerated basis.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5967 Filed 3-30-07; 8:45 am]

BILLING CODE 8010-01-P
