[Federal Register Volume 67, Number 248 (Thursday, December 26, 2002)]
[Notices]
[Page 78834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32531]



[[Page 78834]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47027; File No. 4-429]


Joint Industry Plan; Notice of Filing of Amendment to the Options 
Intermarket Linkage Plan To Provide a Process for Potential New Options 
Exchanges To Have Interim Access to Linkage Information

December 18, 2002.
    Pursuant to section 11A of the Securities Exchange Act of 1934 
(``Act'') \1\ and rule 11Aa3-2 thereunder,\2\ notice is hereby given 
that on November 8, 2002, November 14, 2002, November 15, 2002, 
November 26, 2002, and December 6, 2002, the Philadelphia Stock 
Exchange, Inc. (``Phlx''), International Securities Exchange LLC 
(``ISE''), Chicago Board Options Exchange, Inc. (``CBOE''), American 
Stock Exchange LLC (``Amex''), and Pacific Exchange, Inc. (``PCX'') 
(collectively the ``Participants'') respectively submitted to the 
Securities and Exchange Commission (``SEC'' or ``Commission'') 
Amendment No. 5 to the Options Intermarket Linkage Plan (the ``Linkage 
Plan'').\3\ The amendment proposes to provide a process for potential 
new options exchanges to have interim access to Linkage information to 
help such exchanges prepare to join the Linkage. The Commission is 
publishing this notice to solicit comments from interested persons on 
the proposed Linkage Plan 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 request by the Phlx and 
PCX, 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) and 
43574 (November 16, 2000), 65 FR 70851 (November 28, 2000).
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I. Description and Purpose of the Amendment

    Currently, the Plan allows a new exchange to join the Linkage by 
executing the Plan, filing an amendment to the Plan including 
themselves as a participant, and paying the then-applicable 
participation fee. Thus, the Plan provides new entrants with the 
ability to join the Linkage unilaterally, without requiring any action 
by the current Participants.
    However, before an exchange can join the Linkage, it first must be 
a participant exchange in The Options Clearing Corporation and be a 
party to the Plan for Reporting of Consolidated Options Last Sale 
Reports and Quotation Information (``OPRA Plan'').\4\ This effectively 
requires that the applicant exchange have effective rules for the 
trading of options approved by the Commission. While this is a 
reasonable requirement for full participation in the Linkage, the 
Participants acknowledge that this structure does not recognize that 
exchanges proposing to develop an options market reasonably need access 
to Linkage information, particularly technical information, in order to 
build their market and prepare for Linkage participation. The proposed 
amendment will provide conditional interim access to Linkage 
information.
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    \4\ OPRA is a national market system plan approved by the 
Commission pursuant to section 11A of the Exchange Act, 15 U.S.C. 
78k-1, and rule 11Aa3-2 thereunder, 17 CFR 240.11Aa3-2. See 
Securities Exchange Act Release No. 17638 (March 18, 1981). The OPRA 
Plan provides for the collection and dissemination of last sale and 
quotation information on options that are traded on the participant 
exchanges. The five signatories to the OPRA Plan that currently 
operate an options market are the American Stock Exchange, the 
Chicago Board Options Exchange (``CBOE''), the International 
Securities Exchange (``ISE''), the Pacific Exchange, and the 
Philadelphia Stock Exchange. The New York Stock Exchange is a 
signatory to the OPRA Plan, but sold its options business to the 
Chicago Board Options Exchange in 1997. See Securities Exchange Act 
Release No. 38542 (April 23, 1997), 62 FR 23521 (April 30, 1997).
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    The Participants anticipate that a new entrant will require the 
existing Participants to spend considerable time working with an 
applicant on both technical and policy issues. Accordingly, the 
proposed amendment includes certain requirements as a safeguard to 
limit access to serious applicants fully committed to pursuing the 
development of an options market. Specifically, an applicant will have 
access to Linkage documentation, testing and other necessary Linkage 
facilities upon the Commission having published for comment the 
applicant's proposed rules governing the trading of standardized 
options. The applicant also must affirm that it is seriously pursuing 
the establishment of an options market and must pay a refundable 
deposit towards the participation fee. Once an applicant is granted 
interim access, such access will remain in effect for one year. If the 
applicant has not yet joined the Linkage after this time period, it can 
request an additional period of access, and the Linkage participants 
will not unreasonably deny such a request.

II. Implementation of the Plan Amendment

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

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed 
Linkage Plan amendment is consistent with the Act. Persons making 
written submission should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609. Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed Linkage Plan amendment 
that are filed with the Commission, and all written communications 
relating to the proposed Linkage Plan amendment 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 at the Commission's Public Reference Room. 
Copies of such filings will also be available for inspection and 
copying at the principal offices of the Amex, CBOE, ISE, Phlx, and PCX. 
All submissions should refer to File No. 4-429 and should be submitted 
by January 16, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-32531 Filed 12-24-02; 8:45 am]
BILLING CODE 8010-01-P