Joint Industry Plan; Notice of Filing of Joint Amendment No. 11 to the Options Intermarket Linkage Plan Relating to the Handling of Satisfaction Orders

Pursuant to Section 11A of the Securities Exchange Act of 1934 (“Act”) and Rule 11Aa3-2 thereunder, notice is hereby given that on February 18, 2004, March 1, 2004, March 23, 2004, April 20, 2004, April 23, 2004, and April 28, 2004, the International Securities Exchange, Inc. (“ISE”), the American Stock Exchange LLC (“Amex”), the Chicago Board Options Exchange, Inc. (“CBOE”), the Pacific Exchange, Inc. (“PCX”), the Philadelphia Stock Exchange, Inc. (“Phlx”), and the Boston Stock Exchange, Inc. (“BSE”), (collectively, the “Participants”), respectively, filed with the Securities and Exchange Commission (“Commission”) an amendment (“Joint Amendment No. 11”) to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (“Linkage Plan”). In proposed Joint Amendment No. 11, the Participants propose to change the manner in which the Participants and their members process Satisfaction Orders sent to them following a Trade-Through. The Commission is publishing this notice to solicit comments from interested persons on the proposed Joint Amendment No. 11 to the Linkage Plan.

I. Description and Purpose of the Amendment

The purpose of proposed Joint Amendment No. 11 is to change the manner in which the Participants process Satisfaction Orders following a Trade-Through. Pursuant to the Linkage Plan, if a disseminated quote that is traded through represents a customer order, a member representing that order may send a Satisfaction Order. Upon receipt of the Satisfaction Order, the member that initiated the Trade-Through can either fill the Satisfaction Order, or cause the price of the transaction that constituted the Trade-Through to be corrected to a price at which a Trade-Through would not have occurred. While the Participants believe this process generally works well, the experience with the Options Intermarket Linkage (“Linkage”) to date has led the Participants to agree to three changes to Satisfaction Order processing.

First, the Linkage Plan currently permits a Participant to send a Satisfaction Order for the full size of the customer order traded through, regardless of the size of the transaction that caused the Trade-Through (although the Participant receiving the Satisfaction Order that elects to execute it must limit its execution to the size of the Trade-Through). The amendment proposes that the size of the Satisfaction Order be limited to the lesser of the size of the customer order traded through and the size of the transaction that caused the Trade-Through.

Second, the Plan currently permits a Participant that sends a Satisfaction Order through Linkage to reject the receiving Participant's execution of the Satisfaction Order (a “fill”) within 30 seconds of being notified of the fill if the customer order that underlies the Satisfaction Order either has been executed on the sending exchange or has been canceled while the Satisfaction Order is being processed. The proposed amendment would clarify that the customer order must be cancelled or executed prior to the receipt of the Satisfaction Order fill report. However, if the order is filled or canceled, there is currently no requirement in the Linkage Plan for the Participant that sent the Satisfaction Order to cancel it while it is still pending execution on another market. The Participants believe that this aspect of the Linkage Plan leads to the rejection of Satisfaction Order fills that may have been avoided had the Satisfaction Order been canceled. To address this issue, the amendment proposes a requirement that a Participant cancel a pending Satisfaction Order that it sent through Linkage if the underlying customer order is filled or canceled.

Third, as noted above, a Participant can reject a Satisfaction Order fill if the underlying customer order is executed or cancelled while the Satisfaction Order is pending. However, it is possible that the member that initiated the Satisfaction Order could decide to trade against the customer order before the member receives a notice from another Participant that the Satisfaction Order has been filled. In this case, the Participants believe that it would be inappropriate to reject the fill. Accordingly, the proposed amendment would provide that a Participant may not reject the fill of the Satisfaction Order when the underlying customer order has been executed against the member that initiated the Satisfaction Order.

II. Implementation of the Plan Amendment

The Participants propose to make the 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 Joint Amendment No. 11 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 rule-comments@sec.gov. Please include File Number 4-429 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 Joint Amendment No. 11 to File Number 4-429. 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 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 in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the Participants. 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 Joint Amendment No. 11 to File Number 4-429 and should be submitted on or before June 9, 2004.