[Federal Register: November 26, 2007 (Volume 72, Number 226)]
[Notices]
[Page 66004-66006]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26no07-78]
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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.
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\1\ 15 U.S.C. 78s(b)(l).
\2\ 17 CFR 240.19b-4.
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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.
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\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.
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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.
[[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\
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\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).
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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.
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\7\ See Section 2(8) of the Linkage Plan.
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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.\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.
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\8\ 15 U.S.C. 78f(b).
\9\ 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-2007-117; 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.
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\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).
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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