Joint Industry Plan; Order Approving Joint Amendment No. 14 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage Relating to the Limitation in Liability for Filling Satisfaction Orders Sent Through the Linkage at the End of the Trading Day, 30498-30499 [E5-2673]

Download as PDF 30498 Federal Register / Vol. 70, No. 101 / Thursday, May 26, 2005 / Notices ROUTINE USES OF RECORDS MAINTAINED IN THE SYSTEM, INCLUDING CATEGORIES OF USERS AND THE PURPOSES OF SUCH USES: SECURITIES AND EXCHANGE COMMISSION This order approves Joint Amendment No. 14. PBGC General Routine Uses G1, G4, G5, and G7 apply to this system of records (See Prefatory Statement of General Routine Uses, 60 FR 57462, 57563 (1995)). [Release No. 34–51721; File No. 4–429] II. Description of the Proposed Amendment In Joint Amendment No 14, the Participants propose to extend the pilot contained in Section 8(c)(ii)(B)(2)(b) of the Linkage Plan, which limits TradeThrough 5 liability at the end of the trading day for an additional year, until January 31, 2006, and to increase the limitation on liability from 25 contracts to 50 contracts, per Satisfaction Order 6 for the period between five minutes prior to the close of trading in the underlying security and the close of trading in the option class. POLICIES AND PRACTICES FOR STORING, RETRIEVING, ACCESSING, RETAINING, AND DISPOSING OF RECORDS IN THE SYSTEM: Joint Industry Plan; Order Approving Joint Amendment No. 14 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage Relating to the Limitation in Liability for Filling Satisfaction Orders Sent Through the Linkage at the End of the Trading Day STORAGE: May 19, 2005. Records are maintained an electronic database that is available to authorized PBGC employees and contractors who have been granted access to PBGC’s intranet website. I. Introduction On January 28, 2005, January 31, 2005, January 26, 2005, January 27, 2005, January 28, 2005, and January 28, 2005, the American Stock Exchange LLC (‘‘Amex’’), the Boston Stock Exchange, Inc. (‘‘BSE’’), the Chicago Board Options Exchange, Inc. (‘‘CBOE’’), the International Securities Exchange, Inc. (‘‘ISE’’), the Pacific Exchange, Inc. (‘‘PCX’’), and the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’) (collectively, ‘‘Participants’’), respectively, filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to Section 11A of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 11Aa3–2 thereunder,2 an amendment (‘‘Joint Amendment No. 14’’) to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Linkage Plan’’).3 On January 31, 2005, the Commission summarily put into effect Joint Amendment No. 14, on a temporary basis not to exceed 120 days, and solicited comment on Joint Amendment No. 14 from interested persons.4 The Commission received no comments on Joint Amendment No. 14. RETRIEVABILITY: Records are indexed by name, organizational component, or user ID and password. SAFEGUARDS: The PBGC has adopted appropriate administrative, technical, and physical controls in accordance with the PBGC’s Automated Information Systems Security Program to protect the security, integrity, and availability of the information, and to assure that records are not disclosed to or accessed by unauthorized individuals. RETENTION AND DISPOSAL: Records are maintained until they are out of date. SYSTEM MANAGER(S) AND ADDRESS: Director, Facilities and Services Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005–4026. 1 15 NOTIFICATION PROCEDURE: Procedures are detailed in PBGC regulations: 29 CFR part 4902. RECORD ACCESS PROCEDURES: An employee or contractor may access his or her record with a valid user-id and password via the electronic notification and messaging system through the PBGC’s intranet website, or by following the procedures outlined at 29 CFR part 4902. CONTESTING RECORD PROCEDURES: Same as notification procedure. RECORD SOURCE CATEGORIES: Subject individual. EXEMPTIONS CLAIMED FOR THE SYSTEM: None. [FR Doc. 05–10575 Filed 5–25–05; 8:45 am] BILLING CODE 7708–01–P VerDate jul<14>2003 19:11 May 25, 2005 U.S.C. 78k–1. CFR 240.11Aa3–2. 3 On July 28, 2000, the Commission approved the Linkage Plan, which was initially proposed by Amex, CBOE, and ISE. See Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). Subsequently, Phlx, PCX, 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). On June 27, 2001, May 30, 2002, January 29, 2003, June 18, 2003, January 29, 2004, June 15, 2004, June 17, 2004, July 2, 2004, and October 19, 2004, the Commission approved joint amendments to the Linkage Plan. See Securities Exchange Act Release Nos. 44482 (June 27, 2001), 66 FR 35470 (July 5, 2001); 46001 (May 30, 2002), 67 FR 38687 (June 5, 2002); 47274 (January 29, 2003), 68 FR 5313 (February 3, 2003); 48055 (June 18, 2003), 68 FR 37869 (June 25, 2003); 49146 (January 29, 2004), 69 FR 5618 (February 5, 2004); 49863 (June 15, 2004), 69 FR 35081 (June 23, 2004); 49885 (June 17, 2004), 69 FR 35397 (June 24, 2004); 49969 (July 2, 2004), 69 FR 41863 (July 12, 2004); and 50561 (October 19, 2004), 69 FR 62920 (October 28, 2004). 4 See Securities Exchange Act Release No. 51108, 70 FR 6471 (February 7, 2005). 2 17 Jkt 205001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 III. Discussion and Commission Findings When the Participants initially proposed the limitation on TradeThrough liability at the end of the trading day in Joint Amendment No. 4 to the Linkage Plan,7 the Participants represented to the Commission that the Participants’ members had expressed concerns regarding their obligations to fill Satisfaction Orders (which may be sent by a Participant’s member that is traded through) at the close of trading in the underlying security. Specifically, the Participants represented that their members were concerned that they may not have sufficient time to hedge the positions they acquire.8 The Participants stated that they believed that their proposal to limit liability at the end of the options trading day to the filling of 10 contracts per exchange, per transaction, would protect small customer orders, but still establish a reasonable limit for their members’ liability. The Participants further represented that the proposal should not affect a member’s potential liability under an exchange disciplinary rule for engaging in a pattern or practice of trading through other markets under Section 8(c)(i)(C) of the Linkage Plan. The Commission approved Joint Amendment No. 4 for a one-year pilot 9 5 A ‘‘Trade Through’’ is defined as a transaction in an options series at a price that is inferior to the national best bid or offer. See Section 2(29) of the Linkage Plan. 6 A ‘‘Satisfaction Order’’ is defined as an order sent through the Intermarket Option Linkage to notify a Participant of a Trade-Through and to seek satisfaction of the liability arising from that TradeThrough. See Section 2(16)(c) of the Linkage Plan. 7 See Securities Exchange Act Release Nos. 47028 (December 18, 2002), 67 FR 79171 (December 27, 2002) (Notice of Proposed Joint Amendment No. 4). 8 See letter from Michael Simon, Senior Vice President and General Counsel, ISE, to Annette Nazareth, Director, Division of Market Regulation, Commission, dated November 19, 2002. 9 See Securities Exchange Act Release Nos. 47298 (January 31, 2003), 68 FR 6524 (February 7, 2003) E:\FR\FM\26MYN1.SGM 26MYN1 Federal Register / Vol. 70, No. 101 / Thursday, May 26, 2005 / Notices to give the Participants and the Commission an opportunity to evaluate: (1) The need for the limitation on liability for Trade-Throughs near the end of the trading day; (2) whether 10 contracts per Satisfaction Order is the appropriate limitation; and (3) whether the opportunity to limit liability for Trade-Throughs near the end of the trading day leads to an increase in the number of Trade-Throughs. In the order approving Joint Amendment No. 4, the Commission stated that in the event the Participants chose to seek permanent approval of this limitation, the Participants must provide the Commission with a report regarding data on the use of the exemption no later than 60 days before seeking permanent approval (‘‘Report’’).10 The Commission specified that the Report should include information about the number and size of Trade-Throughs that occur during the last seven minutes of the equity options trading day and during the remainder of the trading day, the number and size of Satisfaction Orders that Participants might be required to fill without the limitation on liability and how those amounts are affected by the limitation on liability, and the extent to which the Participants use the underlying market to hedge their options positions.11 In a subsequent amendment to the Linkage Plan for the purpose of extending the pilot, Joint Amendment No. 8, the Participants represented that if they were to seek to make the limitation on Trade-Through liability permanent, they would submit the Report to the Commission no later than March 31, 2004.12 Following the extension of the pilot program pursuant to Joint Amendment No. 8, certain Participants provided the Commission with portions of the data required in the Report, but were unable to provide sufficient information to enable the Commission to evaluate whether permanent approval would be appropriate. The Commission extended the pilot program until January 31, 2005, to allow the limitation to continue (Temporary effectiveness of pilot program on a 120day basis); and 48055 (June 18, 2003), 68 FR 37869 (June 25, 2003) (Order approving Joint Amendment No. 4). The Commission subsequently extended the pilot program, until June 30, 2004 and January 31, 2005, respectively. See Securities Exchange Act Release Nos. 49146 (January 29, 2004), 69 FR 5618 (February 5, 2004) (Order approving Joint Amendment No. 8); and 49863 (June 15, 2004), 69 FR 35081 (June 23, 2004) (Order approving Joint Amendment No. 12). 10 See Order approving Joint Amendment No. 4, supra note 9. 11 Id. 12 See Order approving Joint Amendment No. 8, supra note 9. VerDate jul<14>2003 19:11 May 25, 2005 Jkt 205001 in effect, with an increase in liability to 25 contracts per Satisfaction Order, to enable the Participants to continue to gather and the Commission to evaluate the data relating to the effect of the operation of the pilot program.13 Since the extension of the pilot program pursuant to Joint Amendment No. 12, the Participants have provided no additional data to the Commission to justify permanent approval of the limitation on liability. The Participants have represented that they are currently considering amendments to the Linkage Plan that, if proposed and approved, could obviate the need for the limitation on liability for Trade-Throughs at the end of the trading day. Specifically, the amendments the Participants are considering are intended to minimize the incidence of Trade-Throughs, and subsequently decrease the incidence of Satisfaction Orders. The Participants have represented that these amendments could be in effect within a year, and at that time, Participants would either allow the pilot program to lapse, or, if they believed that a continuation of the limitation was appropriate, would discuss that matter with the Commission staff. In this regard, the Commission notes that the Participants must submit sufficient information to enable the Commission to evaluate whether permanent approval of the pilot program would be appropriate no later than 60 days prior to seeking permanent approval before the Commission will consider such permanent approval. The Commission previously determined, pursuant to Rule 11Aa3– 2(c)(4) under the Act,14 to put into effect summarily on a temporary basis not to exceed 120 days, the amendments detailed above in Joint Amendment No. 14. After careful consideration of Joint Amendment No. 14, the Commission finds that approving Joint Amendment No. 14 is consistent with the requirements of the Act and the rules and regulations thereunder. Specifically, the Commission finds that Joint Amendment No. 14 is consistent with Section 11A of the Act 15 and Rule 11Aa3–2 thereunder,16 in that it is appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets. Specifically, the Commission believes that extending the pilot program and raising the limitation on liability to 50 contracts per Satisfaction Order will 13 See Order approving Joint Amendment No. 12, supra note 9. 14 17 CFR 240.11Aa3–2(c)(4). 15 15 U.S.C. 78k–1. 16 17 CFR 240.11Aa3–2. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 30499 afford the Participants the opportunity to either gather sufficient information to justify the need for the pilot program or determine that the limitation on TradeThrough liability is no longer necessary. The Commission believes that raising the limitation on liability to 50 contracts per Satisfaction Order will increase the average size of Satisfaction Order fills during the end of the options trading day, thereby enhancing customer order protection. IV. Conclusion It is therefore ordered, pursuant to Section 11A of the Act 17 and Rule 11Aa3–2 thereunder,18 that Joint Amendment No. 14, which extends the pilot program until January 31, 2006, is approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.19 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–2673 Filed 5–25–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51716; File No. SR–OPRA– 2005–01] Options Price Reporting Authority; Order Approving an Amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information to Clarify How the Requirements of the OPRA Plan Pertaining to Vendors Apply to Persons Who Redistribute OPRA Data Over the Internet May 19, 2005. On March 30, 2005, the Options Price Reporting Authority (‘‘OPRA’’) submitted to the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 11A of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 11Aa3–2 thereunder,2 an amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information (‘‘OPRA Plan’’).3 The 17 15 U.S.C. 78k–1. CFR 240.11Aa3–2. 19 17 CFR 200.30–3(a)(29). 1 15 U.S.C. 78k–1. 2 17 CFR 240.11Aa3–2. 3 The OPRA Plan is a national market system plan approved by the Commission pursuant to Section 11A of the Act and Rule 11Aa3–2 thereunder. https://www.opradata.com. The OPRA Plan provides for the collection and dissemination of last sale and quotation information on options that are traded on the participant 18 17 E:\FR\FM\26MYN1.SGM Continued 26MYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 101 (Thursday, May 26, 2005)]
[Notices]
[Pages 30498-30499]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2673]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51721; File No. 4-429]


Joint Industry Plan; Order Approving Joint Amendment No. 14 to 
the Plan for the Purpose of Creating and Operating an Intermarket 
Option Linkage Relating to the Limitation in Liability for Filling 
Satisfaction Orders Sent Through the Linkage at the End of the Trading 
Day

May 19, 2005.

I. Introduction

    On January 28, 2005, January 31, 2005, January 26, 2005, January 
27, 2005, January 28, 2005, and January 28, 2005, the American Stock 
Exchange LLC (``Amex''), the Boston Stock Exchange, Inc. (``BSE''), the 
Chicago Board Options Exchange, Inc. (``CBOE''), the International 
Securities Exchange, Inc. (``ISE''), the Pacific Exchange, Inc. 
(``PCX''), and the Philadelphia Stock Exchange, Inc. (``Phlx'') 
(collectively, ``Participants''), respectively, filed with the 
Securities and Exchange Commission (``Commission'') pursuant to Section 
11A of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
11Aa3-2 thereunder,\2\ an amendment (``Joint Amendment No. 14'') to the 
Plan for the Purpose of Creating and Operating an Intermarket Option 
Linkage (``Linkage Plan'').\3\ On January 31, 2005, the Commission 
summarily put into effect Joint Amendment No. 14, on a temporary basis 
not to exceed 120 days, and solicited comment on Joint Amendment No. 14 
from interested persons.\4\ The Commission received no comments on 
Joint Amendment No. 14. This order approves Joint Amendment No. 14.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 240.11Aa3-2.
    \3\ On July 28, 2000, the Commission approved the Linkage Plan, 
which was initially proposed by Amex, CBOE, and ISE. See Securities 
Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 
4, 2000). Subsequently, Phlx, PCX, 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). On June 27, 2001, May 30, 2002, January 29, 
2003, June 18, 2003, January 29, 2004, June 15, 2004, June 17, 2004, 
July 2, 2004, and October 19, 2004, the Commission approved joint 
amendments to the Linkage Plan. See Securities Exchange Act Release 
Nos. 44482 (June 27, 2001), 66 FR 35470 (July 5, 2001); 46001 (May 
30, 2002), 67 FR 38687 (June 5, 2002); 47274 (January 29, 2003), 68 
FR 5313 (February 3, 2003); 48055 (June 18, 2003), 68 FR 37869 (June 
25, 2003); 49146 (January 29, 2004), 69 FR 5618 (February 5, 2004); 
49863 (June 15, 2004), 69 FR 35081 (June 23, 2004); 49885 (June 17, 
2004), 69 FR 35397 (June 24, 2004); 49969 (July 2, 2004), 69 FR 
41863 (July 12, 2004); and 50561 (October 19, 2004), 69 FR 62920 
(October 28, 2004).
    \4\ See Securities Exchange Act Release No. 51108, 70 FR 6471 
(February 7, 2005).
---------------------------------------------------------------------------

II. Description of the Proposed Amendment

    In Joint Amendment No 14, the Participants propose to extend the 
pilot contained in Section 8(c)(ii)(B)(2)(b) of the Linkage Plan, which 
limits Trade-Through \5\ liability at the end of the trading day for an 
additional year, until January 31, 2006, and to increase the limitation 
on liability from 25 contracts to 50 contracts, per Satisfaction Order 
\6\ for the period between five minutes prior to the close of trading 
in the underlying security and the close of trading in the option 
class.
---------------------------------------------------------------------------

    \5\ A ``Trade Through'' is defined as a transaction in an 
options series at a price that is inferior to the national best bid 
or offer. See Section 2(29) of the Linkage Plan.
    \6\ A ``Satisfaction Order'' is defined as an order sent through 
the Intermarket Option Linkage to notify a Participant of a Trade-
Through and to seek satisfaction of the liability arising from that 
Trade-Through. See Section 2(16)(c) of the Linkage Plan.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    When the Participants initially proposed the limitation on Trade-
Through liability at the end of the trading day in Joint Amendment No. 
4 to the Linkage Plan,\7\ the Participants represented to the 
Commission that the Participants' members had expressed concerns 
regarding their obligations to fill Satisfaction Orders (which may be 
sent by a Participant's member that is traded through) at the close of 
trading in the underlying security. Specifically, the Participants 
represented that their members were concerned that they may not have 
sufficient time to hedge the positions they acquire.\8\ The 
Participants stated that they believed that their proposal to limit 
liability at the end of the options trading day to the filling of 10 
contracts per exchange, per transaction, would protect small customer 
orders, but still establish a reasonable limit for their members' 
liability. The Participants further represented that the proposal 
should not affect a member's potential liability under an exchange 
disciplinary rule for engaging in a pattern or practice of trading 
through other markets under Section 8(c)(i)(C) of the Linkage Plan.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release Nos. 47028 (December 18, 
2002), 67 FR 79171 (December 27, 2002) (Notice of Proposed Joint 
Amendment No. 4).
    \8\ See letter from Michael Simon, Senior Vice President and 
General Counsel, ISE, to Annette Nazareth, Director, Division of 
Market Regulation, Commission, dated November 19, 2002.
---------------------------------------------------------------------------

    The Commission approved Joint Amendment No. 4 for a one-year pilot 
\9\

[[Page 30499]]

to give the Participants and the Commission an opportunity to evaluate: 
(1) The need for the limitation on liability for Trade-Throughs near 
the end of the trading day; (2) whether 10 contracts per Satisfaction 
Order is the appropriate limitation; and (3) whether the opportunity to 
limit liability for Trade-Throughs near the end of the trading day 
leads to an increase in the number of Trade-Throughs.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release Nos. 47298 (January 31, 
2003), 68 FR 6524 (February 7, 2003) (Temporary effectiveness of 
pilot program on a 120-day basis); and 48055 (June 18, 2003), 68 FR 
37869 (June 25, 2003) (Order approving Joint Amendment No. 4). The 
Commission subsequently extended the pilot program, until June 30, 
2004 and January 31, 2005, respectively. See Securities Exchange Act 
Release Nos. 49146 (January 29, 2004), 69 FR 5618 (February 5, 2004) 
(Order approving Joint Amendment No. 8); and 49863 (June 15, 2004), 
69 FR 35081 (June 23, 2004) (Order approving Joint Amendment No. 
12).
---------------------------------------------------------------------------

    In the order approving Joint Amendment No. 4, the Commission stated 
that in the event the Participants chose to seek permanent approval of 
this limitation, the Participants must provide the Commission with a 
report regarding data on the use of the exemption no later than 60 days 
before seeking permanent approval (``Report'').\10\ The Commission 
specified that the Report should include information about the number 
and size of Trade-Throughs that occur during the last seven minutes of 
the equity options trading day and during the remainder of the trading 
day, the number and size of Satisfaction Orders that Participants might 
be required to fill without the limitation on liability and how those 
amounts are affected by the limitation on liability, and the extent to 
which the Participants use the underlying market to hedge their options 
positions.\11\ In a subsequent amendment to the Linkage Plan for the 
purpose of extending the pilot, Joint Amendment No. 8, the Participants 
represented that if they were to seek to make the limitation on Trade-
Through liability permanent, they would submit the Report to the 
Commission no later than March 31, 2004.\12\
---------------------------------------------------------------------------

    \10\ See Order approving Joint Amendment No. 4, supra note 9.
    \11\ Id.
    \12\ See Order approving Joint Amendment No. 8, supra note 9.
---------------------------------------------------------------------------

    Following the extension of the pilot program pursuant to Joint 
Amendment No. 8, certain Participants provided the Commission with 
portions of the data required in the Report, but were unable to provide 
sufficient information to enable the Commission to evaluate whether 
permanent approval would be appropriate. The Commission extended the 
pilot program until January 31, 2005, to allow the limitation to 
continue in effect, with an increase in liability to 25 contracts per 
Satisfaction Order, to enable the Participants to continue to gather 
and the Commission to evaluate the data relating to the effect of the 
operation of the pilot program.\13\
---------------------------------------------------------------------------

    \13\ See Order approving Joint Amendment No. 12, supra note 9.
---------------------------------------------------------------------------

    Since the extension of the pilot program pursuant to Joint 
Amendment No. 12, the Participants have provided no additional data to 
the Commission to justify permanent approval of the limitation on 
liability. The Participants have represented that they are currently 
considering amendments to the Linkage Plan that, if proposed and 
approved, could obviate the need for the limitation on liability for 
Trade-Throughs at the end of the trading day. Specifically, the 
amendments the Participants are considering are intended to minimize 
the incidence of Trade-Throughs, and subsequently decrease the 
incidence of Satisfaction Orders. The Participants have represented 
that these amendments could be in effect within a year, and at that 
time, Participants would either allow the pilot program to lapse, or, 
if they believed that a continuation of the limitation was appropriate, 
would discuss that matter with the Commission staff. In this regard, 
the Commission notes that the Participants must submit sufficient 
information to enable the Commission to evaluate whether permanent 
approval of the pilot program would be appropriate no later than 60 
days prior to seeking permanent approval before the Commission will 
consider such permanent approval.
    The Commission previously determined, pursuant to Rule 11Aa3-
2(c)(4) under the Act,\14\ to put into effect summarily on a temporary 
basis not to exceed 120 days, the amendments detailed above in Joint 
Amendment No. 14. After careful consideration of Joint Amendment No. 
14, the Commission finds that approving Joint Amendment No. 14 is 
consistent with the requirements of the Act and the rules and 
regulations thereunder. Specifically, the Commission finds that Joint 
Amendment No. 14 is consistent with Section 11A of the Act \15\ and 
Rule 11Aa3-2 thereunder,\16\ in that it is appropriate in the public 
interest, for the protection of investors and the maintenance of fair 
and orderly markets. Specifically, the Commission believes that 
extending the pilot program and raising the limitation on liability to 
50 contracts per Satisfaction Order will afford the Participants the 
opportunity to either gather sufficient information to justify the need 
for the pilot program or determine that the limitation on Trade-Through 
liability is no longer necessary. The Commission believes that raising 
the limitation on liability to 50 contracts per Satisfaction Order will 
increase the average size of Satisfaction Order fills during the end of 
the options trading day, thereby enhancing customer order protection.
---------------------------------------------------------------------------

    \14\ 17 CFR 240.11Aa3-2(c)(4).
    \15\ 15 U.S.C. 78k-1.
    \16\ 17 CFR 240.11Aa3-2.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act \17\ 
and Rule 11Aa3-2 thereunder,\18\ that Joint Amendment No. 14, which 
extends the pilot program until January 31, 2006, is approved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78k-1.
    \18\ 17 CFR 240.11Aa3-2.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(29).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2673 Filed 5-25-05; 8:45 am]
BILLING CODE 8010-01-P

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