Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc.,
[Federal Register: March 1, 2004 (Volume 69, Number 40)]
[Notices]
[Page 9655-9657]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01mr04-106]
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49300; File No. SR-BSE-2004-07]
Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendment No. 1 Thereto by the Boston Stock Exchange, Inc. Relating to the Extension of a Linkage Fee Pilot Program
February 23, 2004.
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 February 11, 2004, the Boston Stock Exchange, Inc. (``Exchange'' or ``BSE'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. On February 20, 2004, the BSE filed Amendment No. 1 to the proposed rule change.\3\ The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons and is approving the proposed rule change, as amended, on an accelerated basis, until July 31, 2004.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from John A. Boese, Assistant Vice President, Legal and Compliance, BSE, to Nancy J. Sanow, Assistant Director, Commission, dated February 19, 2004 (``Amendment No. 1''). In Amendment No. 1, the Exchange made technical corrections to the proposed rule change.
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Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The BSE proposes to extend the current pilot program applicable to Options Intermarket Linkage (``Linkage'') fees \4\ for six months until July 31, 2004.
\4\ See Exchange Act Release No. 49066 (January 13, 2004), 69 FR 2773 (January 20, 2004) (SR-BSE-2003-17) (Approving Linkage fees on a pilot basis to expire January 31, 2004).
The proposed fee schedule is available at the Exchange and at the Commission.
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Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the BSE included statements concerning the purpose of, and basis for, the 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 Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
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Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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Purpose
The BSE proposes to extend the current pilot program for the effectiveness of its Linkage fees on its Boston Options Exchange (``BOX'') facility through July 31, 2004. BOX's current fee structure for Principal (``P'') and Principal Acting as Agent (``P/A'') orders \5\ executed on BOX is operating under a pilot program which expired on January 31, 2004.\6\ Because all Linkage Orders received by BOX are for the account of a market maker on another exchange, the fees applicable to P and P/A Orders would be the same as fees applicable to market makers on other exchanges that submit orders to BOX outside of Linkage. The side of a BOX trade opposite an inbound P or P/A order would be billed normally as any other BOX trade. Also, consistent with the Linkage Plan, no fees would be charged to a party sending a Satisfaction request (``S'' order) to BOX. However, a fee would be charged to the BOX Options Participant that was responsible for the trade-through that caused the S order to be sent.
\5\ Under the Options Intermarket Linkage Plan (``Plan'' or ``Linkage Plan'') and Chapter XII of the BOX Rules, which tracks the language of the Plan, a ``Linkage Order'' means an Immediate or Cancel order routed through the Linkage as permitted under the Plan. There are three types of Linkage orders:
(i) ``P/A Order,'' which is an order for the principal account of a Market Maker (or equivalent entity on another Participant Exchange that is authorized to represent Public Customer orders), reflecting the terms of a related unexecuted Public Customer order for which the specialist is acting as agent;
(ii) ``P Order,'' which is an order for the principal account of a market maker (or equivalent entity on another Participant exchange) and is not a P/A Order; and
(iii) ``Satisfaction Order,'' which is an order sent through the Linkage to notify a Participant Exchange of a Trade-Through and to seek satisfaction of the liability arising from that Trade-Through.
\6\ See supra note 4.
The BSE now proposes to extend the pilot program to July 31, 2004, and have the requested extension applied retroactively to February 1, 2004, in order to remain consistent with the other options exchanges concerning these fees. The Exchange notes that BOX did not commence trading until February 6, 2004, and therefore the Linkage fees would not be applicable until that date. 2. Statutory Basis
The Exchange believes that the proposal is consistent with section 6(b) of the Act,\7\ in general, and section 6(b)(4),\8\ in particular, in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among its members.
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
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Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
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Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the proposed rule change.
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Solicitation of Comments
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Comments may also be submitted electronically at the following e-mail address: rule-comments@sec.gov. All comment letters should refer to File No. SR-BSE-2004-07. 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, comments should be sent in hardcopy or by e-mail but not by both methods. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change 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 will also be available for inspection and copying at the principal office of the Exchange. All submissions should be submitted by March 22, 2004.
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Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change and Amendment No. 1
After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder, applicable to a national securities exchange,\9\ and, in particular, with the requirements of section 6(b) of the Act \10\ and the rules and regulations thereunder. The Commission finds that the proposed rule change, as amended, is consistent with section 6(b)(4) of the Act,\11\ which requires that the rules of the Exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities. The Commission believes that the extension of the Exchange's Linkage fee pilot program until July 31, 2004 will give the Exchange and the Commission opportunity to evaluate whether such fees are appropriate.
\9\ In approving this rule, the Commission notes that it has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
The BSE has requested that the Commission approve the extension of the pilot retroactively to February 1, 2004. The Commission notes that BOX did not commence trading until February 6, 2004 and, therefore, the Linkage fees would not be applicable until that date. The Commission believes that applying the fees retroactively will enable BOX to charge fees for Linkage Orders in a manner consistent with the charges for Linkage fees imposed pursuant to the rules of the other options exchanges, which were previously approved by the Commission.
The Commission finds good cause, pursuant to section 19(b)(2) of the Act,\12\ for approving the proposed rule change, as amended, prior to the thirtieth day after the date of publication of the notice of the filing thereof in the
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Federal Register. The Commission believes that granting accelerated approval of the proposed rule change will allow the Exchange to implement its existing pilot program for Linkage fees as the BSE and the Commission consider the appropriateness of Linkage fees.
\12\ 15 U.S.C. 78s(b)(2).
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Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the Act,\13\ that the proposed rule change (SR-BSE-2004-07), as amended, is hereby approved on an accelerated basis for a pilot period to expire on July 31, 2004.
\13\ Id.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\14\
\14\ 17 CFR 200.30-3(a)(12).
Margaret H. McFarland, Deputy Secretary.
[FR Doc. 04-4429 Filed 2-27-04; 8:45 am]
BILLING CODE 8010-01-P
