[Federal Register Volume 62, Number 198 (Tuesday, October 14, 1997)]
[Notices]
[Pages 53357-53358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27047]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 39199; File No. SR-BSE-97-05]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Boston Stock Exchange
Relating to Its Transaction Fee Schedule
October 3, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on
September 4, 1997, the Boston Stock Exchange, Inc. (``BSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II and III below, which items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement on the Terms of Substance
of the Proposed Rule Change
The Exchange seeks to amend its transaction fee schedule to
implement two additional transaction fee maximums.
The text of the proposed rule change is available at the Office of
the Secretary, BSE and at the Commission.
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 self-regulatory organization
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 IV below. The self-regulatory organization
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 purpose of the proposed fee revision is to respond to the needs
of the Exchange's constituents with respect to overall competitive
market conditions and customer satisfaction. As such, the Exchange
intends to implement two additional transaction fee maximums.
A monthly transaction fee maximum (including both Trade Recording
and Comparison and Value Charge fees) of $50,000 per member firm for
all electronic order flow (both incoming and outgoing trades) is being
implemented. The monthly electronic transaction fee maximum of $50,000
will precede the existing total volume maximum of $.45 per 100 average
monthly shares. Member firms will continue to pay the current rate for
Trade Recording and Comparison and Value Charge fees on all electronic
trades up to the maximum charge of $50,000 for this type of order flow.
Any electronic trading beyond the $50,000 electronic transaction fee
cap will be assessed at $0.00 per 100 average monthly shares throughout
the remainder of the month.\1\ If at month's end, a member firm's fee
for electronic order flow has reached the $50,000 maximum and its total
volume rate per 100 average monthly shares exceeds $.45, the firm's
transaction fees will then be capped at $.45 per 100 average monthly
shares.\2\
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\1\ Telephone conversation between Kathy Marshall, Boston Stock
Exchange, and Christine Richardson, Division of Market Regulation,
Commission (Sep. 17, 1997).
\2\ For example, assume Member Firm ABC generated $100,000 in
total transaction fees, $60,000 of which were associated with
electronic order flow. Assume further that this $100,000 related to
200,000 total shares traded during the month. Under the new fee
maximum, ABC's electronic order flow fees would be capped at $50,000
and any electronic order flow executed beyond this maximum would be
assessed at $0.00 throughout the remainder of the month. At the end
of the month, the Exchange would calculate the total fees generated
by ABC's account, here $90,000 ($50,000 in electronic order flow
plus $40,000 in non-electronic order flow), and divide it by the
total number of shares traded during the month. Here, the Exchange
would divide $90,000 by 200,000 shares, which would equate to a rate
of $.45 per 100 average monthly shares. Thus ABC would pay a total
of $90,000 in transaction fees for that month. If, however, the
resulting rate were greater than $.45 per 100 average monthly
shares, the total transaction fees would be further reduced to this
maximum. Telephone Conversation between Kathy Marshall, Boston Stock
Exchange, and Christine Richardson, Division of Market Regulation,
Commission (Sep. 24, 1997).
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A transaction fee maximum (including both Trade Recording and
Comparison and Value Charge fees) for multiple automated cross trades
is also being implemented. The transaction fee maximum of $.25 per 100
shares will apply once a firm has executed 100,000 average daily
multiple automated cross trade shares. This maximum is in addition to
the maximum rate per trade side of $25.00 for Trade Recording and
Comparison fees and $50.00 for Value Charge fees. Member firms will pay
the lesser of $.25 per 100 shares or the original rate per share at the
time of execution.\3\
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\3\ For example, assume Member Firm ABC executed 2,500,000
multiple automated cross trade shares in a month comprised of 21
trading days. Under the new proposal, the cost structure of the
first 2,100,000 multiple automated cross trade shares (21 trading
days x 100,000 average daily shares) would not change. However,
for every share of this type executed above and beyond 100,000
average daily shares (in this example, 2,100,000 shares), the cost
per share would be the lesser of $.0025 per share or the original
rate per share at the time of execution. If a 7,500 share cross
trade generated a total fee of $30.00 ($.0040 per share), the total
fee of this trade would be capped at $18.75 ($.0025 per share) for a
reduction in the cost of the trade of $11.25. If the same trade
generated a total fee of $15.00 ($.0020 per share), the total cost
of the trade would remain at $15.00. Telephone Conversation between
Kathy Marshall, Boston Stock Exchange, and Christine Richardson,
Division of Market Regulation, Commission (Oct. 1, 1997).
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2. Statutory Basis
The basis for the proposed rule change is Section 6(b)(5) of the
Act, in that the proposed rule change is designed 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; and is not designed to
permit unfair discrimination between customers, issuers, brokers or
dealers.
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 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 the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change establishes or changes a due,
fee, or other change imposed by the Exchange, it has become effective
pursuant to Section 19(b)(3)(A) of the Act and subparagraph (e) of Rule
19b-4
[[Page 53358]]
thereunder. At any time within 60 days of the filing of such proposed
rule change, the Commission may summarily abrogate such rule change if
its 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
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 at the
Commission's Public Reference Room. Copies of the filing will also be
available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No. SR-BSE-97-05 and
should be submitted by November 4, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-27047 Filed 10-10-97; 8:45 am]
BILLING CODE 8010-01-M