[Federal Register Volume 71, Number 149 (Thursday, August 3, 2006)]
[Notices]
[Pages 44056-44058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12525]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54225; File No. SR-BSE-2006-26]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change To Extend the Linkage Fee Pilot Program
July 27, 2006.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 28, 2006, the Boston Stock Exchange, Inc. (``BSE'' or
``Exchange'') 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. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons and is approving the
proposal on an accelerated basis for a pilot period through July 31,
2007.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The BSE proposes to amend the fee schedule of the Boston Options
Exchange (``Fee Schedule''), the options trading facility of the BSE
(``BOX''), to extend until July 31, 2007, the current pilot program
applicable to the options intermarket linkage (``Linkage'') fees and to
make some technical changes to the Fee Schedule. The text of the
proposed rule change is available on the BSE's Web site at (http://www.bostonstock.com), at the offices of the Exchange, and at the
Commission's Public Reference Room.
[[Page 44057]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange's fees for Principal (``P'') and Principal Acting as
Agent (``P/A'') Orders Sec. \3\ executed on BOX currently operate
under a pilot program scheduled to expire on July 31, 2006.\4\ The BSE
proposes to extend the current pilot program for such Linkage fees
through July 31, 2007. Because all Linkage Orders received by BOX are
for the account of a market maker on another exchange, Linkage fees
that are applicable to P and P/A Orders are 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. Consistent with the
Linkage Plan, no fees will be charged to a party sending a Satisfaction
Order to BOX. Rather, a fee will be charged to the BOX Options
Participant that was responsible for the trade-through that caused the
Satisfaction Order to be sent.
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\3\ Under Chapter XII, Section 1(j) of the BOX Rules, a
``Linkage Order'' means an Immediate or Cancel order routed through
Linkage. 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 Market Maker 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.
\4\ See Securities Exchange Act Release No. 52147 (July 28,
2005) 70 FR 44706 (August 3, 2005) (SR-BSE 2005-28).
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The BSE believes that extending the Linkage fee pilot program until
July 31, 2007 will give the Exchange and the Commission additional time
and opportunity to evaluate the appropriateness of Linkage fees.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(4) of the Act,\6\ in particular, in that the
proposed rule change provides for the equitable allocation of
reasonable dues, fees and other charges among its members and other
persons using its facilities.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change does not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received comments on this
proposed rule change.
III. 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. 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 Number SR-BSE-2006-26 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 Number SR-BSE-2006-26. 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 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 the
filing also will be available for inspection and copying at the
principal office of the Exchange. 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 Number SR-BSE-2006-26 and should be submitted on or before August
24, 2006.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange,\7\ and, in particular, the requirements of Section 6(b) of
the Act \8\ and the rules and regulations thereunder. The Commission
finds that the proposed rule change is consistent with Section 6(b)(4)
of the Act,\9\ 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 Linkage fee pilot until
July 31, 2007 will give the Exchange and the Commission further
opportunity to evaluate whether such fees are appropriate.
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\7\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\10\ for approving the proposed rule change prior to the
thirtieth day after publication of notice thereof in the
[[Page 44058]]
Federal Register.\11\ The Commission believes that granting accelerated
approval of the proposed rule change will preserve the Exchange's
existing pilot program for Linkage fees without interruption as the
Exchange and the Commission further considers the appropriateness of
Linkage fees.
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\10\ 15 U.S.C. 78s(b)(2).
\11\ BSE requested that the Commission find good cause, pursuant
to Section 19(b)(2) of the Act, for approving the proposed rule
change prior to the thirtieth day after publication of notice
thereof in the Federal Register. Telephone conversation between Bill
Meehan, General Counsel, BSE, and Ronesha A. Butler, Special
Counsel, Division of Market Regulation, Commission on July 24, 2006.
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-BSE-2006-26) is hereby
approved on an accelerated basis for a pilot period to expire on July
31, 2007.
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\12\ Id.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-12525 Filed 8-2-06; 8:45 am]
BILLING CODE 8010-01-P