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


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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 [email protected]. 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