SEC Division of Trading and Markets no-action letter: The Operating Committee of the Options Linkage Authority

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May 30, 2003

Mr. Michael Ryan Executive Vice President and General Counsel American Stock Exchange LLC 86 Trinity Place New York, NY 10006

Ms. Joanne Moffic-Silver General Counsel and Corporate Secretary Chicago Board Options Exchange, Inc. 400 South LaSalle Street Chicago, IL 60605

Ms. Kathryn L. Beck Senior Vice President, General Counsel, and Corporate Secretary Pacific Exchange, Inc. 301 Pine Street San Francisco, CA 94104

Mr. Lanny A. Schwartz Executive Vice President and General Counsel Philadelphia Stock Exchange, Inc. 1900 Market Street Philadelphia, PA 19103

Re:

Request for Exemption from Section 12 of the Options Intermarket Linkage Plan

Dear Mr. Ryan, Ms. Moffic-Silver, Ms. Beck, and Mr. Schwartz:

In your letter, dated, May 30, 2003, you request that the Securities and Exchange Commission ("Commission" or "SEC"), pursuant to Rule 11Aa3-2(f) under the Securities Exchange Act of 1934 ("Exchange Act"), 1 exempt the American Stock Exchange ("Amex"), the Chicago Board Options Exchange ("CBOE"), the International Securities Exchange ("ISE"), the Pacific Exchange ("PCX"), and the Philadelphia Stock Exchange ("Phlx") (collectively, the "Participants") from Section 12 of the Options Intermarket Linkage Plan ("Linkage Plan"). Section 12(a)(ii) of the Linkage Plan provides that the Participants must implement the Remaining Linkage Functionality, as defined in the Linkage Plan no later than April 30, 2003. Exchange Act Rule 11Aa3-2(d) requires each self-regulatory organization to comply with the terms of any effective national market system plan of which it is a participant.

The Linkage Plan is a national market system plan approved by the Commission pursuant to Section 11A of the Exchange Act 2 and Rule 11Aa3-2. 3 The Linkage Plan provides for the intermarket communication linkage among Participants.

Section 12(a)(ii) of the Linkage Plan requires that:

The Participants shall begin full intermarket testing of all Linkage functionality not included in the Initial Linkage Functionality no later than March 2, 2003 ("Remaining Linkage Functionality"). The Participants shall implement the Remaining Linkage Functionality as soon as practical upon successful intermarket testing, but no later than April 30, 2003.

As the Participants have not yet fully implemented the Remaining Linkage Functionality, you request that the Commission, pursuant to Exchange Act Rule 11Aa3-2(f), exempt the Participants from compliance with Exchange Act Rule 11Aa3-2(d) and the requirements of Section 12 of the Linkage Plan, extending implementation of Phase II of the linkage until June 27, 2003.

Response:

On the basis of the representations and facts presented in your letter, the Commission grants an exemption to the Participants, pursuant to Exchange Act Rule 11Aa3-2(f), from the requirements of Exchange Act Rule 11Aa3-2(d), and Section 12 of the Linkage Plan, conditioned upon the Participants' successful implementation of Remaining Linkage Functionality no later than June 27, 2003. The Commission believes that this exemption is consistent with the public interest, the protection of investors, the maintenance of fair and orderly markets and the removal of impediments to, and perfection of the mechanisms of, a national market system.

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

Robert L.D. Colby Deputy Director

Cc: Michael J. Simon, International Securities Exchange, Inc.

Exchange Act Rule 11Aa3-2(f) provides:

The Commission may exempt from the provisions of this section, either unconditionally or on specific terms and conditions, any self-regulatory organization, member thereof, or specified security, if the Commission determines that such exemption is consistent with the public interest, the protection of investors, the maintenance of fair and orderly markets and the removal of impediments to, and perfection of the mechanisms of, a national market system.

The Division of Market Regulation has delegated authority to grant an exemption pursuant to 17 CFR 200.30-3(a)(42).

15 U.S.C. 78k-1.

See Securities Exchange Act Release Nos. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000) (order approving the Linkage Plan submitted by American Stock Exchange LLC, Chicago Board Options Exchange, Inc. and International Securities Exchange, Inc.); 43574 (November 16, 2000), 65 FR 70850 (November 28, 2000) (order approving the PCX as participant in Options Intermarket Linkage Plan); and 43573 (November 16, 2000), 65 FR 70851 (November 28, 2000) (order approving Philadelphia Stock Exchange, Inc. as participant in the Linkage Plan).

17 CFR 200.30-3(a)(42).

Incoming Letter

May 30, 2003

Elizabeth King, Esq. Associate Director Division of Market Regulation Securities and Exchange Commission 450 Fifth Street, N.W. Mail Stop 10-01 Washington, D.C. 20549

Dear Ms. King:

On behalf of the Operating Committee ("Operating Committee") under the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage ("Plan"), I am requesting an exemption for the American Stock Exchange, the Chicago Board Options Exchange, the International Securities Exchange, the Pacific Exchange and the Philadelphia Stock Exchange, Inc. (together, the "Plan Participants"), pursuant to Securities Exchange Act Rule 11Aa3-2(f) 1 , from the provisions of Securities Exchange Act Rule 11Aa3-2(d) 2 and Section 12 of the Plan extending the implementation of the Remaining Linkage Functionality (known as "Phase II Functionality") to June 27, 2003. 3

It is believed that the exemption is consistent with the public interest, the protection of investors, the maintenance of fair and orderly markets and the removal of impediments to, and perfection of the mechanisms of, a national market system, because such extension of time will allow the Plan Participants to provide more effective operation of Phase II Functionality for their members, the national market system and, ultimately, public investors. 4

Please feel free to contact me at (215) 496-1615 if you have any questions or comments regarding this letter.

Sincerely,

Charlie Rogers

Presiding Chairman of the Operating Committee

cc:

Annette L. Nazareth, Esq., Director, Division of Market Regulation Robert L.D. Colby, Esq., Deputy Director, Division of Market Regulation Deborah Lassman Flynn, Esq., Assistant Director, Division of Market Regulation

17 C.F.R. 240 § 11Aa3-2(f).

17 C.F.R. 240 § 11Aa3-2(d).

The Operating Committee, by a majority vote of the Plan Participants, resolved to request this exemption on May 30, 2003. The International Securities Exchange voted against the resolution.

This exemption request does not mean, nor should it be construed to mean, that the Plan Participants believe they must receive such exemption in order to extend the implementation of the Phase II Functionality.

http://www.sec.gov/divisions/marketreg/mr-noaction/ocola081403.htm

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Modified: 02/09/2005