[Federal Register Volume 70, Number 107 (Monday, June 6, 2005)]
[Notices]
[Pages 32853-32854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2872]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51755; File No. 4-208]


Intermarket Trading System; Notice of Filing of the Twenty First 
Amendment to the ITS Plan Relating to the Recognition of the Automatic 
Generation of Outgoing ITS Commitments

May 27, 2005.
    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 April 27, 2005, the Intermarket Trading System Operating 
Committee (``ITSOC'') submitted to the Securities and Exchange 
Commission (``Commission'') a proposed amendment (``Twenty First 
Amendment'') to the restated ITS Plan.\3\ The purpose of the proposed 
amendment is to recognize the automatic generation of outgoing ITS 
commitments in circumstances where members in the Participants' markets 
send such commitments contemporaneously with trading at inferior 
prices, disseminating a locking bid/offer in their own market, or a 
block trade.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 240.11Aa3-2.
    \3\ The ITS Plan is a National Market System (``NMS'') plan, 
which was designed to facilitate intermarket trading in exchange-
listed equity securities based on current quotation information 
emanating from the linked markets. See Securities Exchange Act 
Release No. 19456 (January 27, 1983), 48 FR 4938 (February 3, 1983).
    The ITS Participants include the American Stock Exchange LLC 
(``Amex''), the Boston Stock Exchange, Inc. (``BSE''); the Chicago 
Board Options Exchange, Inc. (``CBOE''); the Chicago Stock Exchange 
(``CHX''), Inc., the Cincinnati Stock Exchange, Inc. (``CSE''), the 
National Association of Securities Dealers, Inc. (``NASD''), the New 
York Stock Exchange, Inc. (``NYSE''), the Pacific Exchange, Inc. 
(``PCX''), and the Philadelphia Stock Exchange, Inc. (``Phlx'') 
(``Participants'').
---------------------------------------------------------------------------

I. Description of the Proposed Amendment

    The ITSOC proposes to amend the restated ITS Plan to recognize the 
automatic generation of outgoing ITS commitments in circumstances where 
members in the Participants' markets send such commitments 
contemporaneously with trading at inferior prices, disseminating a 
locking bid/offer in their own market, or a block trade.
    The ITSOC proposes to amend the restated ITS Plan to add a new 
paragraph (G) to section 6(a)(ii). Proposed new language is italicized.

(G) Description Applicable to Contemporaneous Automatic Formatting and 
Sending Commitments

    Notwithstanding the descriptions set forth in section 6(a)(ii)(A), 
(B), (D) and (F) above, a Participant (and, in the case of the NASD, 
ITS/CAES Market Makers) may automatically format and automatically send 
a commitment to trade to one or more other Participants, under the 
following circumstances: Each such commitment is sent contemporaneously 
with: (i) One or more transactions on the market of the sending 
Participant that, absent the commitment(s), would be considered an 
Exchange trade-through(s) or a third market participating market center 
trade-through(s) (both as defined in Exhibit B); (ii) the dissemination 
by the sending Participant of a locking bid (offer) (as defined in 
Exhibit B); or (iii) a block trade (as defined in Exhibit C). The term 
``one or more transactions on the market of the sending Participant'' 
used in clause (i) in the preceding

[[Page 32854]]

sentence means, in addition to the transaction that would be priced 
lower than superior priced bid(s) or higher than superior priced 
offer(s) of another Participant(s), those one or more transactions 
priced at such superior priced bid(s) or offer(s).
    The ITSOC provided the following example that demonstrates the 
functioning of clause (i) in subsection G, utilizing the CHX as the 
sending Participant:
    a. CHX Receives Order: Buy 2000 at-the-market. Member handling 
execution of order determines to complete order at 45.56, necessitating 
satisfaction of superior priced offers on other Participant markets.
    NBBO: N--45.50, 45.53; B--5x2.

------------------------------------------------------------------------
                  Mkt                       Bid       Offer       Size
------------------------------------------------------------------------
B......................................      45.30      45.53        1x2
T......................................      45.30      45.54        3x3
N......................................      45.50      45.55        5x5
X......................................      45.25      45.59        2x5
P......................................      45.20      45.60        1x1
M......................................      45.40      45.65        1x1
------------------------------------------------------------------------

    b. CHX Executions: Customer buying/member selling as principal 2000 
shares: 200 at 45.53; 300 at 45.54; 500 at 45.55; 1000 at 45.56.
    c. CHX Computer Generated Commitments: Member buying to partially 
off-set sales on CHX: M to B--Buy--200 at 45.53; M to T--Buy--300 at 
45.54; M to N--Buy--500 at 45.55.

A. Governing or Constituent Documents

    Not applicable.

B. Implementation of Amendment

    The Participants have manifested their approval of the proposed 
amendment to the Plan by means of their execution of the proposed 
amendments. The proposed amendment would become effective upon the 
Commission's approval of the amendment.

C. Development and Implementation Phases

    Not applicable.

D. Analysis of Impact on Competition

    The Participants believe that the proposed amendment does not 
impose any burden on competition.

E. Written Understanding or Agreements relating to Interpretation of, 
or Participation in, Plan

    Not applicable.

F. Approval by Sponsors in Accordance with Plan

    Under section 4(c) of the restated ITS Plan, the requisite approval 
of the amendment is achieved by execution of the amendment on behalf of 
each ITS Participant and by Commission approval. The amendment is so 
executed.

G. Description of Operation of Facility Contemplated by the Proposed 
Amendment

    Not applicable.

II. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed Plan 
amendment is 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 [email protected]. Please include 
File No. 4-208 on the subject line.
    Paper Comments:
     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File No. 4-208. 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 (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed Plan amendment that are filed 
with the Commission, and all written communications relating to the 
proposed 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 in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the ITS. 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 No. 4-208 and should be submitted on or before June 27, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
---------------------------------------------------------------------------

    \4\ 17 CFR 200.30-3(a)(27).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2872 Filed 6-3-05; 8:45 am]
BILLING CODE 8010-01-P