[Federal Register Volume 73, Number 175 (Tuesday, September 9, 2008)]
[Notices]
[Pages 52434-52436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-20869]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58445; File No. SR-BSE-2008-43]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Regarding Transfer of Ownership of MX U.S. 2, Inc.
August 29, 2008.
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 August 28, 2008, 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 substantially prepared by the BSE.\3\
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Capitalized terms not otherwise defined herein shall have
the meanings set forth in the BOX LLC Agreement.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is submitting the proposed rule change to the
Commission to amend the proposed Sixth Amended and Restated Operating
Agreement (``BOX LLC Agreement''), of the Boston Options Exchange Group
LLC (``BOX LLC''), in connection with the transfer by the
Montr[eacute]al Exchange Inc.,\4\ a company incorporated in
Qu[eacute]bec, Canada (``MX''), of its ownership interest in MX U.S. 2,
Inc., a U.S. subsidiary of MX (``MX U.S. 2'').\5\ The text of the
proposed rule change is available at the Exchange, the Commission's
Public Reference Room, and http://www.bostonstock.com.
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\4\ The Montr[eacute]al Exchange Inc. is also known in French as
the Bourse de Montr[eacute]al Inc.
\5\ See Securities Exchange Act Release No. 58324 (August 7,
2008), 73 FR 46936 (August 12, 2008) (SR-BSE-2008-25).
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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 proposal. The text of these
statements
[[Page 52435]]
may be examined at the places specified in Item IV below. The BSE 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
On January 13, 2004, the Commission approved four BSE proposals
that together established, through an operating agreement among its
owners, a Delaware limited liability company, BOX LLC, to operate BOX
as an options trading facility of the Exchange.\6\ MX owns a 100%
ownership interest in MX U.S. 2, which holds a 31.37% ownership
interest in BOX LLC.\7\ MX has transferred 100% of its common stock
ownership interest in MX U.S. 2 to MX U.S. 1, Inc., a wholly owned U.S.
subsidiary of MX (``MX U.S. 1'') (``Common Stock Transfer''). 3226507
Nova Scotia Company, a Nova Scotia, Canada unlimited liability company,
a subsidiary of MX (``NSULC 2''), has also acquired 100% of the
preferred stock of MX U.S. 2 (``Preferred Stock Transfer''). NSULC 2 is
a direct subsidiary of MX and 3226506 Nova Scotia Company, a Nova
Scotia, Canada unlimited liability company and a wholly owned
subsidiary of MX (``NSULC 1''). Furthermore, NSULC 1 has acquired 0.1%
of the common stock of NSULC 2 (``NSULC 2 Transfer'' and collectively
with the Common Stock Transfer and the Preferred Stock Transfer, the
``Transfers'').
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\6\ See Securities Exchange Act Release No. 49066 (January 13,
2004), 69 FR 2773 (January 20, 2004) (establishing a fee schedule
for the proposed BOX facility); Securities Exchange Act Release No.
49065 (January 13, 2004), 69 FR 2768 (January 20, 2004) (creating
Boston Options Exchange Regulation LLC to which the BSE would
delegate its self-regulatory functions with respect to the BOX
facility); Securities Exchange Act Release No. 49068 (January 13,
2004), 69 FR 2775 (January 20, 2004) (approving trading rules for
the BOX facility); Securities Exchange Act Release No. 49067
(January 13, 2004), 69 FR 2761 (January 20, 2004) (approving certain
regulatory provisions of the operating agreement of BOX LLC).
\7\ Upon the consummation of the Exchange's transfer of its
21.87% ownership interest in BOX to MX U.S. 2, MX U.S. 2 will hold a
53.24% ownership interest in BOX (``BSE Transfer''). See Securities
Exchange Act Release No. 58324 (August 7, 2008), 73 FR 46936 (August
12, 2008) (SR-BSE-2008-25).
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The Exchange is submitting the proposed rule change to the
Commission to amend the BOX LLC Agreement pursuant to the proposed
Instruments of Accession in connection with the Transfers. As a result
of the Transfers, MX U.S. 2 is a direct subsidiary of MX U.S. 1 and
NSULC 2.
Pursuant to section 8.4(g) of the BOX LLC Agreement, as previously
approved by the Commission, BOX LLC is required to amend the BOX LLC
Agreement to make a Controlling Person\8\ a party to the BOX LLC
Agreement if such Controlling Person establishes a Controlling
Interest\9\ in any BOX Member that, alone or together with any
Affiliate of such BOX Member, holds a Percentage Interest in BOX equal
to or greater than 20%.\10\ Pursuant to the Common Stock Transfer and
the Preferred Stock Transfer, MX U.S. 1 and NSULC 2 have acquired a
Controlling Interest in MX U.S. 2, which owns a 31.37% ownership
interest in BOX LLC and will own a 53.24% ownership interest in BOX LLC
upon the consummation of the BSE Transfer. MX U.S. 1 and NSULC 2, as
Controlling Persons, are required to and will become parties to the BOX
LLC Agreement pursuant to the proposed Instruments of Accession.
Furthermore, NSULC 1, which acquired 0.1% of the common stock ownership
interest in NSULC 2, a direct subsidiary of MX that holds an ownership
interest in 100% of the preferred shares of MX U.S. 2 that holds and
will hold an interest in BOX that is greater than twenty percent of all
outstanding BOX ownership interests, is also required to and will
become a party to the BOX LLC Agreement. As a result, MX U.S. 1, NSULC
1 and NSULC 2 will agree to abide by all the provisions of the BOX LLC
Agreement, including those provisions requiring submission to the
jurisdiction of the Commission.\11\
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\8\ A ``Controlling Person'' is defined as ``a Person who, alone
or together with any Affiliate of such Person, holds a controlling
interest in a [BOX] Member.'' See Section 8.4(g)(v)(B), BOX LLC
Agreement.
\9\ A ``Controlling Interest'' is defined as ``the direct or
indirect ownership of 25% or more of the total voting power of all
equity securities of a Member (other than voting rights solely with
respect to matters affecting the rights, preferences, or privileges
of a particular class of equity securities), by any Person, alone or
together with any Affiliate of such Person.'' See Section
8.4(g)(v)(A), BOX LLC Agreement.
\10\ See Section 8.4(g), BOX LLC Agreement.
\11\ The BOX LLC states, in part, that ``the Members, officers,
directors, agents, and employees of Members irrevocably submit to
the exclusive jurisdiction of the U.S. federal courts, U.S.
Securities and Exchange Commission, and the Boston Stock Exchange,
for the purposes of any suit, action or proceeding pursuant to U.S.
federal securities laws, the rules or regulations thereunder,
arising out of, or relating to, BOX activities or Article 19.6(a),
(except that such jurisdictions shall also include Delaware for any
such matter relating to the organization or internal affairs of BOX,
provided that such matter is not related to trading on, or the
regulation, of the BOX Market), and hereby waive, and agree not to
assert by way of motion, as a defense or otherwise in any such suit,
action or proceeding, any claims that they are not personally
subject to the jurisdiction of the U.S. Securities and Exchange
Commission, that the suit, action or proceeding is an inconvenient
forum or that the venue of the suit, action or proceeding is
improper, or that the subject matter hereof may not be enforced in
or by such courts or agency.'' See BOX LLC Agreement, Section 19.6.
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For the reasons stated above, the BSE is submitting to the
Commission the proposed Instruments of Accession to the BOX LLC
Agreement as a rule change.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of section 6(b) of the Act,\12\ in general, and furthers
the objectives of section 6(b)(1),\13\ in particular, in that it
enables the Exchange to be so organized so as to have the capacity to
be able to carry out the purposes of the Act and to comply, and to
enforce compliance by its exchange members and persons associated with
its exchange members, with the provisions of the Act, the rules and
regulations thereunder, and the rules of the Exchange. The Exchange
also believes that this filing furthers the objectives of section
6(b)(5) of the Act\14\ in that it is designed to facilitate
transactions in securities, to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78f(b)(5).
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B. 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 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 the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
[[Page 52436]]
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest, it has become
effective pursuant to section 19(b)(3)(A) of the Act\15\ and Rule 19b-
4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.\17\
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest.\18\ The Exchange has requested that
the Commission waive the 5-day pre-filing requirement and the 30-day
operative delay.\19\ The Commission believes that waiving the 5-day
pre-filing requirement and the 30-day operative delay is consistent
with the protection of investors and the public interest because BSE
has represented that the Instruments of Accession will be executed on
August 29, 2008, and there is no reason to delay implementation of the
changes to the BOX LLC Agreement pursuant to the Instruments of
Accession. For these reasons, the Commission designates the proposal to
be operative upon filing with the Commission.\20\
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\17\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the
Commission notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission.
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ See Email from Lisa J. Fall, General Counsel and Corporate
Secretary, BOX, to Molly Kim, Special Counsel, Division of Trading
and Markets, Commission, on August 29, 2008.
\20\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.\21\
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\21\ See 15 U.S.C. 78s(b)(3)(C).
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IV. 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-2008-43 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BSE-2008-43. 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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the BSE. 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-2008-43 and should be
submitted on or before September 30, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-20869 Filed 9-8-08; 8:45 am]
BILLING CODE 8010-01-P