Self-Regulatory Organizations: American Stock Exchange LLC, Chicago Board Options Exchange, Incorporated and International Securities Exchange, LLC: Notice of Filing and Order Granting Accelerated Approval to Proposed Rule Changes; Boston Stock Exchange, Inc.; NYSE Arca, Inc.; and Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to Proposed Rule Changes, as Amended, Relating to the Elimination of the Class Gate, 66004-66006 [E7-22916]

Download as PDF 66004 Federal Register / Vol. 72, No. 226 / Monday, November 26, 2007 / Notices Pursuant to the proposed rule change, ABCs will undertake responsibilities comparable to those currently held by options specialists with respect to customer orders. For example, an ABC must use due diligence to execute the orders placed in his or her custody at the best prices available to him or her under Exchange rules. In addition, ABCs will assume the obligations related to displaying public customer orders that improve Amex’s disseminated quote by maintaining the ANTE Central Book, the Exchange’s automated limit order display facility, and keeping it active. Accordingly, the Commission believes that the Exchange’s proposal should ensure that customers’ orders continue to be represented and handled in a timely fashion on the Exchange. The Commission therefore believes that the proposal will continue to protect customer orders while preventing fraudulent and manipulative acts and practices. The ABCs also would assume responsibilities related to Linkage orders. An ABC would use an options specialist’s account to route P/A Orders and Satisfaction Orders to other participants in the Linkage Plan based on prior written instructions provided by the options specialist to the ABC.24 The written instructions provided by the options specialist will also include direction as to how the ABC should handle responses to Linkage orders routed to other Linkage Participants that are not responded to in a timely manner.25 The ABC will also use the options specialist’s account to fill any Satisfaction Order that results from a Trade Through that is effected on the Exchange by ABCs. Finally, the ABC will handle all Linkage orders or portions of Linkage orders received by the Exchange that are not automatically executed. The Commission believes that the proposed rules governing the handling of Linkage orders by the ABC and the use of the options specialist’s accounts mstockstill on PROD1PC66 with NOTICES 24 The Commission today is also granting the Exchange a conditional exemption from the requirement in Rule 608(c) of Regulation NMS promulgated under the Act that the Exchange comply with and enforce compliance by its members with certain provisions of the Linkage Plan to facilitate the establishment of ABCs and their handling of Linkage Orders. See Letter from Elizabeth K. King, Associate Director, Division of Trading and Markets, Commission, to Jeffrey P. Burns, Vice President and Associate General Counsel, Amex, dated November 16, 2007. 25 Amex Rule 942(d)(3) specifically addresses the situations in which an Amex member (or, as proposed to be amended, an ABC acting as employee of the Exchange) does not receive a response to a Linkage order within 20 seconds of sending the order. VerDate Aug<31>2005 22:03 Nov 23, 2007 Jkt 214001 for routing Linkage orders is consistent with the promotion of a national market system because, among other things, it will allow P/A Orders that reflect the terms of Amex customer orders to be generated by Amex and routed to other Linkage Participant markets, which will allow a Amex customer order to receive possible execution at a price better than the price disseminated by Amex. IV. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,26 that the proposed rule change (File No. SR– Amex–2006–107), as modified by Amendment No. 1, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–22911 Filed 11–23–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56808; File Nos. SR– Amex–2007–117; SR–BSE–2007–44; SR–CBOE–2007–121; SR–ISE–2007– 92; SR–NYSEArca–2007–109; SR– Phlx–2007–86] Self-Regulatory Organizations: American Stock Exchange LLC, Chicago Board Options Exchange, Incorporated and International Securities Exchange, LLC: Notice of Filing and Order Granting Accelerated Approval to Proposed Rule Changes; Boston Stock Exchange, Inc.; NYSE Arca, Inc.; and Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to Proposed Rule Changes, as Amended, Relating to the Elimination of the Class Gate November 16, 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 November 1, 2007, September 19, 2007, October 9, 2007, October 1, 2007, October 18, 2007, and November 14, 2007, American Stock Exchange LLC (‘‘Amex’’), Boston Stock Exchange, Inc. (‘‘BSE’’), Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), International Securities Exchange, LLC (‘‘ISE’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), and Philadelphia Stock 26 15 U.S.C. 78s(b)(2). 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(l). 2 17 CFR 240.19b–4. 27 27 PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 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, which Items have been substantially prepared by the Exchanges. On November 13, 2007, November 6, 2007, and November 16, 2007, BSE, NYSE Arca, and Phlx respectively, filed Amendment No. 1 to their proposed rule changes. On November 16, 2007, BSE filed Amendment No. 2 to its proposed rule change. 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. I. Self-Regulatory Organizations’ Statement of the Terms of Substance of the Proposed Rule Changes Each Exchange proposes to eliminate a restriction on Principal Order (‘‘P Order’’) 3 access through Linkage. The text of the proposed rule changes are available at the Exchanges’ Web sites,4 the Exchanges’ principal offices, and at the Commission’s Public Reference Room. 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. 3 See Section 2(16)(b) of the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Linkage Plan’’).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 (‘‘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), 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). 4 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. E:\FR\FM\26NON1.SGM 26NON1 Federal Register / Vol. 72, No. 226 / Monday, November 26, 2007 / Notices A. Self-Regulatory Organizations’ Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Changes and a national market system, and, in general, to protect investors and the public interest. 1. Purpose The Exchanges propose to eliminate the Linkage Class Gate restriction from their respective rules.5 These changes will conform the Exchanges’ rules to changes recently approved by the Commission to section 7(a)(ii)(C) of the Linkage Plan.6 Each Exchange currently has a rule which provides that, once the Exchange automatically executes a P Order in a series of an Eligible Option Class,7 it may reject any other P Orders sent in the same Eligible Option Class by the same Exchange for 15 seconds after the initial execution unless there is a price change in the receiving Exchange’s disseminated offer (bid) in the series in which there was the initial execution and such price continues to be the national best bid or offer. After the 15second period, and until the sooner of one minute after the initial execution or a change in its disseminated offer (bid), each Exchange’s rule provides that the Exchange that provided the initial execution is not obligated to automatically execute any P Orders received from the same Exchange in the same Eligible Option Class. The Exchanges proposed to eliminate the Class Gate provision from their rules, because all Exchanges have removed restrictions on non-customer access to the automatic execution systems, rendering the Class Gate restriction unnecessary. mstockstill on PROD1PC66 with NOTICES 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.8 Specifically, the Exchanges believe the proposed rule changes are consistent with the requirements of section 6(b)(5) of the Act 9 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 5 See Amex Rule 941(c)(2); Boston Options Exchange Facility Rule, Chapter XII, Section 2(d)(ii); CBOE Rule 6.81(c)(2); ISE Rule 1901(d)(2); NYSE Arca Rule 6.93(c)(2); and Phlx Rule 1084(d)(2). 6 See Securities Exchange Act Release No. 56806 (November 16, 2007) (Joint Amendment No. 24 of the Linkage Plan). 7 See Section 2(8) of the Linkage Plan. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 22:03 Nov 23, 2007 Jkt 214001 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: 66005 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, 100 F Street, NE., Washington, DC 20549–1090, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such 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–2007–117; SR– BSE–2007–44; SR–CBOE–2007–121; SR–ISE–2007–92; SR–NYSEArca–2007– 109; and SR–Phlx–2007–86 and should be submitted on or before December 17, 2007. IV. Commission’s Findings and Order Granting Accelerated Approval of Proposed Rule Changes After careful consideration, the Commission finds that the proposed Electronic Comments rule changes, as amended, are consistent • Use the Commission’s Internet with the requirements of the Act and the comment form (http://www.sec.gov/ rules and regulations thereunder, rules/sro.shtml ); or applicable to national securities • Send an e-mail to ruleexchanges.10 In particular, the comments@sec.gov. Please include File Commission finds that the proposals are Numbers SR–Amex–2007–117; SR– consistent with the provisions of section BSE–2007–44; SR–CBOE–2007–121; 11 SR–ISE–2007–92; SR–NYSEArca–2007– 6(b)(5) of the Act in that they are designed to promote just and equitable 109; and SR–Phlx–2007–86 on the principles of trade, to remove subject line. impediments to and perfect the Paper Comments mechanism of a free and open market and a national market system, and, in • Send paper comments in triplicate general, to protect investors and the to Nancy M. Morris, Secretary, public interest. Securities and Exchange Commission, The Commission recognizes that, at 100 F Street, NE., Washington, DC the time of the creation of the Linkage, 20549–1090. certain Exchanges had restrictions on All submissions should refer to File non-customer access to their automatic Numbers SR–Amex–2007–117; SR– execution systems. The Class Gate BSE–2007–44; SR–CBOE–2007–121; restriction in the Exchanges’ rules SR–ISE–2007–92; SR–NYSEArca–2007– served to protect those Exchanges that 109; and SR–Phlx–2007–86. These file did not limit non-customer access numbers should be included on the against being obligated to automatically subject line if e-mail is used. To help the execute an unlimited number of P Commission process and review your Orders. Since the implementation of the comments more efficiently, please use Linkage, all Exchanges have removed only one method. The Commission will restrictions on non-customer access to post all comments on the Commission’s their automatic execution systems. All Internet Web site (http://www.sec.gov/ of the Exchanges, therefore, allow access rules/sro.shtml ). Copies of the to their trading platforms orders on submissions, all subsequent behalf of non-member market makers. amendments, all written statements The Commission believes that the with respect to the proposed rule greater access to automatic execution changes that are filed with the systems has rendered the Class Gate Commission, and all written communications relating to the 10 In approving this proposal, the Commission has proposed rule changes between the considered its impact on efficiency, competition, Commission and any person, other than and capital formation. See 15 U.S.C. 78c(f). 11 15 U.S.C. 78f(b)(5). those that may be withheld from the PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 E:\FR\FM\26NON1.SGM 26NON1 66006 Federal Register / Vol. 72, No. 226 / Monday, November 26, 2007 / Notices provision unnecessary and that its elimination should facilitate a more efficient operation of the options markets. The Commission also finds good cause, consistent with section 19(b)(2) of the Act 12 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 Joint Amendment No. 24 to the Linkage Plan.13 V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule changes (SR–Amex– 2007–117; SR–BSE–2007–44; SR– CBOE–2007–121; SR–ISE–2007–92; NYSEArca–2007–109; and SR–Phlx– 2007–86), as amended, are hereby approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–22916 Filed 11–23–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56816; File No. SR–CBOE– 2007–130] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change To Amend its Rule 4.20 Regarding Anti-Money Laundering mstockstill on PROD1PC66 with NOTICES Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 2, 2007, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the CBOE. On November 9, 2007, CBOE filed Amendment No. 1 to the proposed rule change. The Commission is publishing this notice to solicit comments on the 12 15 U.S.C. 78s(b)(2). note 6, supra. 14 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 13 See 22:03 Nov 23, 2007 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend CBOE Rule 4.20, codifying the Anti-Money Laundering Compliance Program (the ‘‘AML Program’’), to: (1) Establish independent testing for compliance be conducted at least annually by members with a public business, or every two years if no public business is conducted; and (2) clarify the persons designated to implement and monitor the Anti-Money Laundering Compliance Rule. The text of the proposed rule change is provided below. The text of the proposed rule change is available on the Exchange’s Web site (http://www.cboe.org/Legal), at the Exchange’s Office of the Secretary and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CBOE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. CBOE has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose November 19, 2007. VerDate Aug<31>2005 proposed rule change, as amended, from interested persons. Financial institutions, including broker-dealers, must develop and implement AML Programs pursuant to the Bank Secrecy Act,3 as amended by Section 352 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001 (‘‘PATRIOT Act’’).4 Consistent with the Department of Treasury’s (‘‘Treasury’’) regulation 31 CFR 103.120 under the Bank Secrecy Act, CBOE Rule 4.20 requires that each member organization and each member not associated with a member organization develop and implement a written AML program and specifies the minimum requirements for these programs. 3 31 U.S.C. 5311 et seq. L. 107–56, 115 Stat. 272 (2001). 4 Pub. Jkt 214001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 The AML program must include the development of internal policies, procedures and controls; the designation of a person to implement and monitor the day-to-day operations and internal controls of the program (commonly referred to as an ‘‘AML Officer’’); ongoing training for appropriate persons; and an independent testing function for overall compliance. In order to provide interpretive clarity to the requirements under CBOE Rule 4.20 with respect to independent testing and AML Officers, as well as to clarify references to the Bank Secrecy Act, CBOE proposes the following amendments to CBOE Rule 4.20. References to Bank Secrecy Act The proposed rule change would delete references to certain sections of the Bank Secrecy Act and a reference to USA PATRIOT Act to more clearly reflect the requirements under CBOE Rule 4.20. Timeframes for Independent Testing The proposed rule change would require that independent testing of AML programs be conducted, at a minimum, on an annual (calendar-year) basis by members or member organizations, unless the member or member organization does not execute transactions for customers or otherwise hold customer accounts or act as an introducing broker with respect to customer accounts (e.g., engages solely in proprietary trading, or conducts business only with other brokerdealers), in which case such independent testing is required every two years (on a calendar-year basis). CBOE believes these timeframes are reasonable in that they require more frequent testing of AML programs designed to monitor a business with customers from the general public, which may be more susceptible to money laundering schemes than a strictly proprietary business involving transactions with other broker-dealers. Further, the one-year time frame for testing is consistent with standard industry practice in that it is similar to generally accepted guidelines for conducting tests in the context of, for instance, general audits and branch office visits. However, the proposed rule change establishes only a minimum requirement and makes clear that members should undertake more frequent testing when circumstances warrant (e.g. should the business mix of the member or member organization materially change; in the event of a merger or acquisition; in light of systemic weaknesses uncovered via E:\FR\FM\26NON1.SGM 26NON1

Agencies

[Federal Register Volume 72, Number 226 (Monday, November 26, 2007)]
[Notices]
[Pages 66004-66006]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-22916]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56808; File Nos. SR-Amex-2007-117; SR-BSE-2007-44; 
SR-CBOE-2007-121; SR-ISE-2007-92; SR-NYSEArca-2007-109; SR-Phlx-
2007-86]


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

November 16, 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 November 1, 2007, September 19, 2007, October 9, 2007, October 1, 
2007, October 18, 2007, and November 14, 2007, American Stock Exchange 
LLC (``Amex''), Boston Stock Exchange, Inc. (``BSE''), Chicago Board 
Options Exchange, Incorporated (``CBOE''), International Securities 
Exchange, LLC (``ISE''), NYSE Arca, Inc. (``NYSE Arca''), and 
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, which Items have been 
substantially prepared by the Exchanges. On November 13, 2007, November 
6, 2007, and November 16, 2007, BSE, NYSE Arca, and Phlx respectively, 
filed Amendment No. 1 to their proposed rule changes. On November 16, 
2007, BSE filed Amendment No. 2 to its proposed rule change. 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organizations' Statement of the Terms of Substance 
of the Proposed Rule Changes

    Each Exchange proposes to eliminate a restriction on Principal 
Order (``P Order'') \3\ access through Linkage. The text of the 
proposed rule changes are available at the Exchanges' Web sites,\4\ the 
Exchanges' principal offices, and at the Commission's Public Reference 
Room.
---------------------------------------------------------------------------

    \3\ See Section 2(16)(b) of the Plan for the Purpose of Creating 
and Operating an Intermarket Option Linkage (``Linkage Plan'').\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 (``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), 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).
    \4\ 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.
---------------------------------------------------------------------------

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.

[[Page 66005]]

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

1. Purpose
    The Exchanges propose to eliminate the Linkage Class Gate 
restriction from their respective rules.\5\ These changes will conform 
the Exchanges' rules to changes recently approved by the Commission to 
section 7(a)(ii)(C) of the Linkage Plan.\6\
---------------------------------------------------------------------------

    \5\ See Amex Rule 941(c)(2); Boston Options Exchange Facility 
Rule, Chapter XII, Section 2(d)(ii); CBOE Rule 6.81(c)(2); ISE Rule 
1901(d)(2); NYSE Arca Rule 6.93(c)(2); and Phlx Rule 1084(d)(2).
    \6\ See Securities Exchange Act Release No. 56806 (November 16, 
2007) (Joint Amendment No. 24 of the Linkage Plan).
---------------------------------------------------------------------------

    Each Exchange currently has a rule which provides that, once the 
Exchange automatically executes a P Order in a series of an Eligible 
Option Class,\7\ it may reject any other P Orders sent in the same 
Eligible Option Class by the same Exchange for 15 seconds after the 
initial execution unless there is a price change in the receiving 
Exchange's disseminated offer (bid) in the series in which there was 
the initial execution and such price continues to be the national best 
bid or offer. After the 15-second period, and until the sooner of one 
minute after the initial execution or a change in its disseminated 
offer (bid), each Exchange's rule provides that the Exchange that 
provided the initial execution is not obligated to automatically 
execute any P Orders received from the same Exchange in the same 
Eligible Option Class. The Exchanges proposed to eliminate the Class 
Gate provision from their rules, because all Exchanges have removed 
restrictions on non-customer access to the automatic execution systems, 
rendering the Class Gate restriction unnecessary.
---------------------------------------------------------------------------

    \7\ See Section 2(8) of the Linkage Plan.
---------------------------------------------------------------------------

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.\8\ Specifically, the Exchanges believe the 
proposed rule changes are consistent with the requirements of section 
6(b)(5) of the Act \9\ 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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-2007-117; SR-BSE-2007-44; SR-CBOE-2007-121; SR-
ISE-2007-92; SR-NYSEArca-2007-109; and SR-Phlx-2007-86 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-2007-117; SR-BSE-
2007-44; SR-CBOE-2007-121; SR-ISE-2007-92; SR-NYSEArca-2007-109; and 
SR-Phlx-2007-86. 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, 100 F Street, NE., Washington, DC 20549-1090, on 
official business days between the hours of 10 a.m. and 3 p.m. Copies 
of such 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-2007-117; SR-BSE-2007-44; SR-CBOE-
2007-121; SR-ISE-2007-92; SR-NYSEArca-2007-109; and SR-Phlx-2007-86 and 
should be submitted on or before December 17, 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.\10\ In particular, the Commission finds that the 
proposals are consistent with the provisions of section 6(b)(5) of the 
Act \11\ 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.
---------------------------------------------------------------------------

    \10\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission recognizes that, at the time of the creation of the 
Linkage, certain Exchanges had restrictions on non-customer access to 
their automatic execution systems. The Class Gate restriction in the 
Exchanges' rules served to protect those Exchanges that did not limit 
non-customer access against being obligated to automatically execute an 
unlimited number of P Orders. Since the implementation of the Linkage, 
all Exchanges have removed restrictions on non-customer access to their 
automatic execution systems. All of the Exchanges, therefore, allow 
access to their trading platforms orders on behalf of non-member market 
makers. The Commission believes that the greater access to automatic 
execution systems has rendered the Class Gate

[[Page 66006]]

provision unnecessary and that its elimination should facilitate a more 
efficient operation of the options markets.
    The Commission also finds good cause, consistent with section 
19(b)(2) of the Act \12\ 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 
Joint Amendment No. 24 to the Linkage Plan.\13\
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ See note 6, supra.
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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-2007-117; SR-BSE-2007-44; SR-
CBOE-2007-121; SR-ISE-2007-92; NYSEArca-2007-109; and SR-Phlx-2007-86), 
as amended, are hereby approved on an accelerated basis.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-22916 Filed 11-23-07; 8:45 am]
BILLING CODE 8011-01-P