Joint Industry Plan; Notice of Filing of Joint Amendment No. 16 to the Intermarket Option Linkage Plan Relating to the Definition of Firm Customer Quote Size and Restrictions on Sending Certain Principal Acting as Agent Orders, 54781 [05-18410]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 179 (Friday, September 16, 2005)]
[Notices]
[Page 54781]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18410]



[[Page 54781]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52401; File No. 4-429]


Joint Industry Plan; Notice of Filing of Joint Amendment No. 16 
to the Intermarket Option Linkage Plan Relating to the Definition of 
Firm Customer Quote Size and Restrictions on Sending Certain Principal 
Acting as Agent Orders

September 9, 2005.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 (the 
``Act'') \1\ and Rule 11Aa3-2 thereunder,\2\ notice is hereby given 
that 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'') Joint Amendment No. 16 to the Plan for the Purpose of 
Creating and Operating an Intermarket Option Linkage (the ``Linkage 
Plan'').\3\ The Joint Amendment proposes to modify the definitions of 
Firm Customer Quote Size (``FCQS'') \4\ and remove certain restrictions 
on sending secondary Principal Acting as Agent orders (``P/A Orders'') 
\5\ through the Intermarket Option Linkage (``Linkage''). The 
Commission is publishing this notice to solicit comments from 
interested persons on the proposed Linkage Plan Joint Amendment.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 240.11Aa3-2.
    \3\ 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).
    \4\ Section 2(11) of the Linkage Plan.
    \5\ Section 2(16)(a) of the Linkage Plan.
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I. Description and Purpose of the Amendment

    The purpose of the Joint Amendment is to modernize the definition 
of FCQS. At the time the Linkage Plan was drafted, options quote sizes 
were not disseminated through the Options Price Reporting Authority 
(``OPRA'') and most Participants employed automatic execution systems 
that guaranteed automatic fills on orders less than a certain contract 
size (which was generally a static number). As such, the FCQS was 
calculated based on the number of contracts the sending or receiving 
Participant guaranteed it would automatically execute. Now that all 
options exchanges disseminate dynamic quotes with size, the 
Participants believe that it is appropriate to calculate the FCQS based 
on the size of the disseminated quotation of the Participant receiving 
the P/A Order.
    The other purpose of the Joint Amendment is to eliminate a 15-
second wait period for sending a secondary P/A Order pursuant to 
Section 7(a)(ii)(B)(1)(b) of the Linkage Plan. That section governs the 
manner in which a P/A Order larger than the FCQS can be broken into 
smaller P/A Orders. It provides that an initial P/A Order can be sent 
to the Participant disseminating the National Best Bid or Offer 
(``NBBO'') for the FCQS, and that if the NBBO market continues to 
disseminate the same price after 15 seconds from the execution of the 
initial P/A Order, a secondary P/A Order can be sent for at least the 
lesser of (i) the size of the disseminated quote; (ii) 100 contracts; 
or (iii) the remainder of the customer order underlying the P/A Orders. 
The Participants propose to eliminate the 15-second wait because the 
dynamic quotes with size now employed by the Participants obviate the 
need for a manual quote refresh period for P/A Orders.

II. Implementation of the Plan Amendment

    The Participants intend to make the proposed Joint Amendment to the 
Linkage Plan reflected in this filing effective when the Commission 
approves the Joint Amendment.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed 
Joint Amendment to the Linkage Plan is consistent with the Act. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number 4-429 on the subject line.

Paper Comments:

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number 4-429. This file number 
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 (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change 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 Section, 100 F Street, NE., Washington, 
DC 20549. Copies of such filing also will be available for inspection 
and copying at the principal offices of the Amex, BSE, CBOE, ISE, PCX, 
and Phlx. 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 Number 4-429 
and should be submitted on or before October 7, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(29).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-18410 Filed 9-15-05; 8:45 am]
BILLING CODE 8010-01-P