Joint Industry Plan; Order Approving Amendment No. 15 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage Relating to a “Trade and Ship” Exception to the Definition of “Trade-Through” and a “Book and Ship” Exception to the Locked Markets Provision, 55185 [05-18620]

Download as PDF Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52413; File No. 4–429] Joint Industry Plan; Order Approving Amendment No. 15 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage Relating to a ‘‘Trade and Ship’’ Exception to the Definition of ‘‘Trade-Through’’ and a ‘‘Book and Ship’’ Exception to the Locked Markets Provision September 13, 2005. I. Introduction On April 13, 2005, April 22, 2005, April 26, 2005, April 27, 2005, May 5, 2005, and June 2, 2005, the International Securities Exchange (‘‘ISE’’), the American Stock Exchange LLC (‘‘Amex’’), the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), the Pacific Exchange, Inc. (‘‘PCX’’), the Boston Stock Exchange, Inc. (‘‘BSE’’), and the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’) (collectively, ‘‘Participants’’), respectively, filed with the Securities and Exchange Commission (‘‘Commission’’) an amendment (‘‘Joint Amendment No. 15’’) to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Linkage Plan’’).1 In Joint Amendment No. 15, the Participants propose to add a ‘‘trade and ship’’ exception to the definition of ‘‘Trade-Through’’ 2 and a ‘‘book and ship’’ exception to the locked markets provision of the Linkage Plan.3 The proposed amendment to the Linkage Plan was published in the Federal Register on August 9, 2005.4 No comments were received on the proposed amendment. This order approves the proposed amendment to the Linkage Plan. II. Description and Purpose of the Proposed Amendment The purpose of Joint Amendment No. 15 is to provide that: (i) A Participant 1 On July 28, 2000, the Commission approved a national market system plan for the purpose of creating and operating an intermarket option linkage proposed by the Amex, the CBOE, and the ISE. See Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). Subsequently, upon separate requests by the Phlx, the PCX, and the 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 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). 2 See Section 2(29) of the Linkage Plan. 3 Specified in Section 7(a)(i)(C) of the Linkage Plan. 4 See Securities Exchange Act Release No. 52167 (July 29, 2005), 70 FR 46224. VerDate Aug<31>2005 14:53 Sep 19, 2005 Jkt 205001 may trade an order at a price that is one minimum quoting increment inferior to the national best bid or offer (‘‘NBBO’’) if a Linkage Order 5 is sent contemporaneously to each Participant disseminating the NBBO to satisfy all interest at the NBBO price; and (ii) a Participant may book an order that would otherwise lock another Participant if a Linkage Order is sent contemporaneously to such other Participant to satisfy all interest at the lock price and only the remaining portion of the order is booked. Under the proposed trade and ship provision, any execution received from the market disseminating the NBBO must (pursuant to agency obligations) be reassigned to the customer order underlying the Linkage Order that would be sent to trade with the market disseminating the NBBO. III. Discussion After careful consideration, the Commission finds that the proposed amendment to the Linkage Plan seeking to add a trade and ship exception to the definition of Trade-Through and a book and ship exception to the locked markets provision of the Linkage Plan is consistent with the requirements of the 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 6 and Rule 11Aa3–2 thereunder,7 in that the proposed amendment should facilitate the ability of Participants’ members to execute their customer orders in a timely manner and potentially could decrease the incidence of Trade-Throughs and locked markets in the options market. IV. Conclusion It is therefore ordered, pursuant to Section 11A of the Act 8 and Rule 11Aa3–2 thereunder,9 that the proposed Joint Amendment No. 15 is hereby approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.10 Jonathan G. Katz, Secretary. [FR Doc. 05–18620 Filed 9–19–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meeting Federal Register Citation of Previous Announcement: [To Be Published] STATUS: PLACE: Open Meeting. 100 F Street, NE., Washington, DC. DATE AND TIME OF PREVIOUSLY ANNOUNCED MEETING: Wednesday, September 21, 2005. Additional item. The following item has been added to the Open Meeting scheduled for Wednesday, September 21, 2005: CHANGE IN THE MEETING: In addition, the Commission will consider whether to propose interpretive guidance and solicit comment regarding the scope of ‘‘brokerage and research services’’ within Section 28(e) of the Securities Exchange Act of 1934. The interpretive release is designed to provide guidance to securities industry participants on money managers’ use of client commission dollars to pay for research and brokerage services under Section 28(e). The release also reminds industry participants of the statutory requirements for client commission arrangements under Section 28(e). For further information, please contact Jo Anne Swindler, Assistant Director, at (202) 551–5750; Patrick M. Joyce, Special Counsel, at (202) 551–5758; Stanley C. Macel, IV, Special Counsel, at (202) 551–5755; or Marlon Quintanilla Paz, Special Counsel, at (202) 551–5756, at the Office of Enforcement Liaison and Institutional Trading, Division of Market Regulation. Commissioner Glassman, as duty officer, determined that Commission business required the above change and that no earlier notice thereof was possible. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact the Office of the Secretary at (202) 551–5400. Dated: September 15, 2005. Jonathan G. Katz, Secretary. [FR Doc. 05–18816 Filed 9–16–05; 12:04 pm] BILLING CODE 8010–01–P 5 See Section 2(16) of the Linkage Plan. U.S.C. 78k–1. 7 17 CFR 240.11Aa3–2. 8 15 U.S.C. 78k–1. 9 17 CFR 240.11Aa3–2. 10 17 CFR 200.30–3(a)(29). 6 15 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 55185 E:\FR\FM\20SEN1.SGM 20SEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 181 (Tuesday, September 20, 2005)]
[Notices]
[Page 55185]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18620]



[[Page 55185]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52413; File No. 4-429]


Joint Industry Plan; Order Approving Amendment No. 15 to the Plan 
for the Purpose of Creating and Operating an Intermarket Option Linkage 
Relating to a ``Trade and Ship'' Exception to the Definition of 
``Trade-Through'' and a ``Book and Ship'' Exception to the Locked 
Markets Provision

September 13, 2005.

I. Introduction

    On April 13, 2005, April 22, 2005, April 26, 2005, April 27, 2005, 
May 5, 2005, and June 2, 2005, the International Securities Exchange 
(``ISE''), the American Stock Exchange LLC (``Amex''), the Chicago 
Board Options Exchange, Incorporated (``CBOE''), the Pacific Exchange, 
Inc. (``PCX''), the Boston Stock Exchange, Inc. (``BSE''), and the 
Philadelphia Stock Exchange, Inc. (``Phlx'') (collectively, 
``Participants''), respectively, filed with the Securities and Exchange 
Commission (``Commission'') an amendment (``Joint Amendment No. 15'') 
to the Plan for the Purpose of Creating and Operating an Intermarket 
Option Linkage (``Linkage Plan'').\1\ In Joint Amendment No. 15, the 
Participants propose to add a ``trade and ship'' exception to the 
definition of ``Trade-Through'' \2\ and a ``book and ship'' exception 
to the locked markets provision of the Linkage Plan.\3\ The proposed 
amendment to the Linkage Plan was published in the Federal Register on 
August 9, 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 
option linkage proposed by the Amex, the CBOE, and the ISE. See 
Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 
48023 (August 4, 2000). Subsequently, upon separate requests by the 
Phlx, the PCX, and the 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 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).
    \2\ See Section 2(29) of the Linkage Plan.
    \3\ Specified in Section 7(a)(i)(C) of the Linkage Plan.
    \4\ See Securities Exchange Act Release No. 52167 (July 29, 
2005), 70 FR 46224.
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II. Description and Purpose of the Proposed Amendment

    The purpose of Joint Amendment No. 15 is to provide that: (i) A 
Participant may trade an order at a price that is one minimum quoting 
increment inferior to the national best bid or offer (``NBBO'') if a 
Linkage Order \5\ is sent contemporaneously to each Participant 
disseminating the NBBO to satisfy all interest at the NBBO price; and 
(ii) a Participant may book an order that would otherwise lock another 
Participant if a Linkage Order is sent contemporaneously to such other 
Participant to satisfy all interest at the lock price and only the 
remaining portion of the order is booked. Under the proposed trade and 
ship provision, any execution received from the market disseminating 
the NBBO must (pursuant to agency obligations) be reassigned to the 
customer order underlying the Linkage Order that would be sent to trade 
with the market disseminating the NBBO.
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    \5\ See Section 2(16) of the Linkage Plan.
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III. Discussion

    After careful consideration, the Commission finds that the proposed 
amendment to the Linkage Plan seeking to add a trade and ship exception 
to the definition of Trade-Through and a book and ship exception to the 
locked markets provision of the Linkage Plan is consistent with the 
requirements of the 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 \6\ and Rule 
11Aa3-2 thereunder,\7\ in that the proposed amendment should facilitate 
the ability of Participants' members to execute their customer orders 
in a timely manner and potentially could decrease the incidence of 
Trade-Throughs and locked markets in the options market.
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    \6\ 15 U.S.C. 78k-1.
    \7\ 17 CFR 240.11Aa3-2.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act \8\ and 
Rule 11Aa3-2 thereunder,\9\ that the proposed Joint Amendment No. 15 is 
hereby approved.
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    \8\ 15 U.S.C. 78k-1.
    \9\ 17 CFR 240.11Aa3-2.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(29).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-18620 Filed 9-19-05; 8:45 am]
BILLING CODE 8010-01-P

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