ATTENTION:
TO: ALL MEMBERS AND MEMBER ORGANIZATIONS
SUBJECT: ELIMINATION OF ITS (INTERMARKET TRADING SYSTEM)
I. Purpose
The purpose of this Information Memo is to alert members and member organizations that the Intermarket Trading System (âITSâ) will be eliminated on June 30, 2007. In addition, the NMS Linkage Plan (âNMS Linkage Planâ) will expire on June 30, 2007.
II. Background
Since 1979, ITS has been the principal means of electronically transmitting orders between market centers to avoid trading through superior quotes in those markets. In connection with the implementation of Regulation NMS, the ITS Plan participants terminated the governing agreement, the ITS Plan, and replaced it, until June 30, 2007, with the NMS Linkage Plan. The NMS Linkage Plan continued to use the ITS connectivity between markets, and also preserved certain elements of the ITS Plan, including the requirement to disseminate ITS Pre-Opening Indications.
Beginning Monday, July 2, 2007 the former ITS Participants and other markets will rely solely on private linkages to communicate orders and information between and among other market centers.
III. Pre-Opening Price Information
Member and member organizations are advised that as of June 30, 2007, because of the decommissioning of ITS, the Display Book functionality associated with the ITS pre-opening price information will no longer operate. Accordingly, specialists will no longer be required to disseminate ITS Pre-Opening Indications pursuant to NYSE Rule 15(c)(i)(A)(1). Nor will they be able to so on a voluntary basis. Specialists are advised that the requirements of NYSE Rule 123D (other than those aspects of the rule relating to ITS) will continue to apply, and specialists should be disseminating indications before opening or reopening a stock as required under NYSE Rule 123D.1
The NYSE is currently preparing conforming changes to its rules that will eliminate references to ITS, which it intends to file with the SEC on an expedited basis in the near future. In the interim, to the extent that a rule contains an obligation on members or member organizations that is dependent on the existence of ITS connectivity and cannot be carried out without the ITS connectivity, failure to comply with such provisions will not result in disciplinary action. Members and member organizations are advised, however, that they continue to be bound by all other rules relating to intermarket trading and communication, including Regulation NMS rules and NYSE rules, and that violations of such rules may result in formal or informal disciplinary action.
IV. NYSE Regulation Staff Contacts
Questions concerning this Information Memo should be addressed to:
Patrick Giraldi, Director, On-Floor Surveillance Unit, at (212) 656-6804
Craig Hammond, Managing Director, Office of the General Counsel, at (212) 656-2661
Karen Lorentz, Managing Director, Operations Planning, at (212) 656-5858
Questions may also be directed to the On-Floor Surveillance Unit via the White Phone or in person at their Booth in the EBR. Questions that are not time sensitive may also be submitted to Ask Market Surveillance. (For information about the Ask Market Surveillance system, refer to Member Education Bulletin 2006-3, which was issued on January 30, 2006, if you or your firm is not already a subscriber.)
