[Federal Register Volume 65, Number 157 (Monday, August 14, 2000)]
[Notices]
[Pages 49617-49621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20512]



[[Page 49617]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43127; File No. SR-BSE-99-1]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Notice of Filing and Order Granting Accelerated Approval to 
an Amendment to the Proposed Rule Change by the Boston Stock Exchange, 
Inc. To Allow Specialists Remote Access to the BEACON System

August 8, 2000.

I. Introduction

    On March 26, 1999, the Boston Stock Exchange, Inc. (``BSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to implement a program for remote specialist 
trading.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The Commission published notice of the proposed rule change in the 
Federal Register on June 10, 1999.\3\ The Commission did not receive 
any comment letters on the proposal. The Exchange amended the proposed 
rule change on June 26, 2000.\4\ For the reasons discussed below, the 
Commission is approving the proposed rule change and is granting 
accelerated approval to the amendment to the proposed rule change.
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    \3\ Securities Exchange Act Release No. 41471 (June 2, 1999), 64 
FR 31332 (June 10, 1999) (``Notice'').
    \4\ See Letter from George Mann, Senior Vice President and 
General Counsel, BSE, to Sharon Lawson, Senior Special Counsel, 
Division of Market Regulation (``Division''), Commission, dated June 
23, 2000 (``Amendment No. 1''). Amendment No. 1 requested that the 
Commission approve the program on a permanent basis, rather than as 
a one-year pilot. Amendment No. 1 also changed the proposed rule 
language to more clearly state the information barrier obligations 
applicable to remote specialists and to clarify other requirements 
and standards, as is discussed below.
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II. Description of the Proposal

    The Exchange proposes to permit BSE specialists to conduct regular 
trading activities off the BSE's trading floor using the BEACON trading 
system.\5\ Currently, specialists can access the BEACON system only 
from the Exchange's physical trading floor, and all market making 
occurs on that floor. Under the program, specialists will have the 
ability to access the BEACON system from remote locations using 
terminals and related equipment. Like floor specialists, remote 
specialists will receive orders, commitments over the Intermarket 
Trading System (``ITS''), and administrative messages through the 
BEACON system.
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    \5\ The BEACON system is the Exchange's securities 
communication, order-routing and execution system. See generally BSE 
Rules, Chapter XXXIII.
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    The Exchange states that it seeks to give BSE specialist firms the 
option to operate remotely under existing Exchange systems and rules, 
while retaining the ability to permit specialists to trade on the 
physical trading floor. The Exchange notes that it views the remote 
specialist proposal as being ``a natural first step in the progression 
from a manual open outcry system of trading to an automated electronic 
trading system.'' According to the Exchange, all executions occurring 
within BEACON, whether conducted on the floor or electronically from 
remote locations, will be considered to be executions occurring on the 
Exchange.
    To authorize the remote specialist program, the Exchange proposes 
to add new Section 9, ``BEACON Remote,'' to Chapter XXXIII of the 
Exchange's rules, which governs the BEACON system. The introductory 
part of Section 9 generally explains that the Exchange will provide 
terminals linked to the BEACON system for specialist trading at remote 
member firm locations with the same functions that are available to on-
floor specialists, and that all orders directed to remote specialists 
will be sent through the BEACON system. The introductory part of 
Section 9 further explains that the Exchange will not have remote floor 
brokerage services, and the BEACON system will route floor broker 
orders under existing rules.\6\ The remainder of proposed Section 9 
describes how remote specialists will operate, discusses the 
information barrier requirements that remote specialists must follow, 
and sets forth the way that the Exchange will select and surveil remote 
specialists as well as other minimum criteria that remote specialists 
must satisfy.
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    \6\ As proposed in the Notice, the introductory part of Section 
9 also referred to the remote specialist program being a 12 month 
pilot. Amendment No. 1 removed all references to a pilot program.
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A. Rights, Duties and Operation of Remote Specialists

1. Application of BSE rules to remote specialists
    The Exchange will apply all of its membership, net capital, equity, 
examination, specialist performance evaluation, competing specialist, 
stock allocation, and trading rules and policies to remote specialists 
in the same way that the Exchange applies those rules and policies to 
on-floor specialists.\7\ For example, the Exchange will require remote 
specialists--like other specialists--to make two-sided markets in 
specialty securities, execute customer orders they have accepted, and 
act as odd-lot dealers. The Exchange will also require remote 
specialists to maintain records as required by Exchange rules.
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    \7\ Proposed Section 9(a) states that all Exchange rules and 
policies will apply to remote specialists except as specifically 
excluded or amended. Moreover, proposed Section 9(g) states that all 
BSE rules pertaining to the Exchange's trading floor apply to remote 
trading, and identifies several of those rules. Section 9(i), 
however, states that floor policies regarding dress codes and 
smoking shall not apply to remote specialists.
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    Proposed Section 9(h) provides that each remote specialist must 
adopt a written confidentiality policy regarding the location of 
equipment and access to information, terminals and equipment, that must 
be filed with and approved by the Exchange prior to the commencement of 
remote trading.\8\ This policy must conform to all requirements set 
forth in the rules of the Exchange, including but not limited to 
provisions requiring confidentiality of the specialist's book, 
governing information barriers when specialists are affiliated with 
approved persons, and governing the obligation to establish procedures 
to prevent the misuse of inside information. Firms must apply 
reasonable principles to limit remote specialist access to the firm's 
other trading desks, including verbal or visible communications 
(whether or not intentional).\9\ Moreover, proposed Section 9(i) 
specifies that access to the remote specialist's designated area must 
be restricted to the specialist, backup specialists, clerks, designated 
management of the specialist firm, and Exchange-authorized 
personnel.\10\
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    \8\ Subsequent to the Notice, the sections were renumbered.
    \9\ Amendment No. 1 noted that these confidentiality provisions 
must be consistent with the Exchange's rules, added the specific 
references to Chapter XV, Section 6, and Chapter II, Sections 36 and 
37. Amendment No. 1 further stated that the firm was obligated to 
apply reasonable principles to restrict access.
    \10\ Language proposing to exempt remote specialists from 
Exchange rules regarding visitors was removed in Amendment No. 1.
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    Under the proposal, participating firms cannot remotely trade 
securities that the firm trades on the Exchange's floor, unless the 
Exchange's Market Performance Committee provides otherwise. Proposed 
Section 9(d) further states that a specialist firm may not trade 
individual securities in more than one location. Finally, no specialist 
account may remotely trade more than 200 specialty stocks.

[[Page 49618]]

2. Remote specialist access to BSE systems
    Remote specialist terminals will be linked to the BEACON trading 
system using dedicated lines and connected via the same wide area 
network that the Exchange currently uses to link the physical trading 
floor to the Exchange's data center. These terminals will provide the 
same functionality that is available to on-floor specialists. Like on-
floor specialists, remote specialists will have access to the 
Intermarket Trading System.
    Remote specialists will be routed orders, ITS commitments, and 
administrative messages from the Exchange's data center through BEACON. 
Thus, any type of order entry that has not been approved and is not 
already in use in accordance with the rules of the Exchange will be 
prohibited, including verbal orders placed directly with the 
specialist. Remote specialists will be subject to the same limit order 
display requirements that apply to other BSE specialists.\11\
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    \11\ Like other BSE specialists, remote specialists will 
maintain customer limit orders on the BEACON system, where they will 
have the opportunity to interact with other orders that arrive on 
the Exchange. The Exchange will conduct surveillance of limit order 
display practices by remote specialists to ensure that those 
practices are consistent with all applicable requirements, including 
the Commission's limit order display rule, 17 CFR 240.11Ac1-4. 
Conversation between George Mann, BSE, and Joshua Kans, Division, 
Commission, August 7, 2000.
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    Floor broker orders will also be routed to remote specialists under 
the same criteria by which they are routed to on-floor specialists.\12\ 
Members will not be able to use the BEACON remote specialists program 
to conduct floor brokerage services.
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    \12\ For example, the exchange's order routing system may route 
floor brokers to a remote specialists if that remote specialist is 
quoting with time priority on the Exchange. Conversation between 
George Mann, BSE, John Boese, Assistant Vice President, BSE, and 
Joshua Kans, Division, Commission, June 30, 2000.
    Proposed Section 9(i) provides that serving of BEACON terminals 
and related equipment will be by Exchange authorized and trained 
personnel only.
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3. Remote specialist communication with the Exchange
    All Exchange correspondence, memoranda, bulletins, and other 
publications will be sent to remote specialists via electronic mail 
through BEACON and via U.S. mail or overnight delivery. Remote 
specialists will have access to the physical trading floor through 
stentofon \13\ or a similar speakderphone, as well as through dedicated 
telephone lines. Any regulatory requirements requiring the involvement 
of floor officials, such as trading halts and other trading practices, 
will be coordinated by Exchange personnel with the remote specialist 
through the dedicated telephone lines.\14\ Finally, any arbitration or 
disciplinary action arising out of remote trading activity will be held 
at the Exchange's offices in Boston.
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    \13\ BSE's stentofon system provides electronic voice 
communications among BSE members.
    \14\ Amendment No. 1 clarified that Exchange personnel will 
coordinate floor official involvement with remote specialists.
    The Exchange explains that there are only limited situations in 
which a specialist would consult with a floor official--trading 
halts, issues involving ITS, and executions at an inferior price. 
The Exchange further explains that the Exchange keeps a record of 
any situation that requires a floor official ruling, and that the 
Exchange will continue to follow that procedure for remote 
specialists.
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4. Surveillance
    The Exchange states that it will conduct surveillance and 
compliance monitoring of remote specialist trading activity through the 
BEAM on-line surveillance system \15\ as it does today with on-floor 
specialists. Remote specialists will be required to use layoff systems 
that are electronically linked to BEACON to help ensure that a 
surveillance audit trail is created by a drop copy report.\16\
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    \15\ The BEAM system provides the Exchange with real-time 
capabilities to monitor specialist trading activity within the 
BEACON systems.
    \16\ The drop copy system generates a report of all executions 
of orders sent to other market centers for purposes of specialist 
position updating, clearance and settlement, and audit trail. BSE 
members may send orders to the New York Stock Exchange through the 
Designated Order Turnaround (``DOT'') system and to the American 
Stock Exchange through the Post Execution Reporting (``PER'' system.
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    Moreover, the Exchange's examination program will include the 
remote specialist operations of all firms. Every firm must submit 
supervisory procedures relating to remote specialist operations and to 
identify all individuals who will have access to remote specialist 
operations, including all supervisory personnel.\17\
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    \17\ The Exchange conducts a full examination of the books and 
records of those member firms assigned to it as the Designated 
Examining Authority (``DEA''). In addition, the Exchange conducts a 
more limited examination of the books and records of all non-DEA 
member firms with specialist operations on the floor (limited to 
books and records related to specialist operations only). This 
review will be expanded to include the examination of the books and 
records of all firms with remote specialist operations.
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B. Selection of Remote Specialists

    Proposed Section 9(c) provides that any eligible firm may apply to 
the Market Performance Committee to participate in the program. 
Applicant specialists must meet the current minimum requirements for 
specialists set forth in Chapter XV of the Exchange's rules, including 
requirements related to their background,\18\ experience, staffing, 
training procedures, adequacy of proposed confidentiality policy, 
adequacy of contingency plans for communication or technology failures, 
adequacy of offsite facilities, and performance standards, as well as 
the minimum margin, capital, and equity requirements set forth in 
Chapters VIII and XXII of the Exchange's rules.\19\
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    \18\ The Commission notes that an applicant's background will 
include, among other things, any disciplinary history.
    \19\ Amendment No. 1 added those specific requirements to the 
text of the rule. Amendment No. 1 also clarified that eligibility 
requirements set forth in Section 9(c) do not differ from any of the 
requirements for an on-floor specialist, other than additional 
criteria needed for off-site operational capability. Amendment No. 1 
also stated that any firm may apply for membership on the Exchange 
but must meet the various eligibility requirements, and that 
applications for a seat, as well as to become a specialist firm, can 
take place at the same time as applications to be a remote 
specialist.
    When the Committee evaluates a firm's request to change the 
location where a stock is traded, the Committee will consider the 
requirements set forth in Section 9(c).
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C. Implementation

    The Exchange states that, upon the Commission's approval of the 
proposed rule change, the Exchange will allow time to install terminals 
and make other arrangements before beginning the program. The Exchange 
expects to implement the program later this year.\20\
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    \20\ Conversation between John Boese, BSE, and Joshua Kans, 
Division, Commission, June 29, 2000.
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    Proposed Section 9(b) and the Commentary to Rule 9 state that 
during the preliminary stages of the remote specialist program, the 
Exchange will only permit member firms with existing Exchange 
specialist operations to participate because the Exchange has already 
evaluated current floor member firms as to their familiarity with the 
Exchange's rules, capital, equity and margin requirements, experience, 
staffing and training procedures, and performance standards. As soon as 
practicable after the rollout of the program, the Exchange will 
consider applications from other firms, based on the other criteria 
identified in Section 9(c), including adequate off-site facilities to 
ensure compliance with the Exchange's rules, and adequate capital to 
manage the risks associated with the program. For every applicant who 
is not an existing on-floor specialist, the Exchange will require a two 
week on-floor training period.

[[Page 49619]]

III. Discussion

A. General Findings

    The Commission finds that the proposed rule change is consistent 
with Section 6(b)(5) and 11A of the Act.\21\ Section 6(b)(5) requires, 
among other things, that the rules of an exchange be 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.\22\ Section 
11A of the Act promotes, among other things, the development of a 
national market system for securities to assure economically efficient 
execution of securities transactions and fair competition among brokers 
and dealers, among exchange markets and markets other than exchange 
markets.\23\
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    \21\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition and capital 
formation. 15 U.S.C. 78c(f).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ 15 U.S.C. 78k-1.
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    After having carefully reviewed the proposal, the Commission finds 
that it will promote efficiency by potentially reducing the costs 
associated with transactions on the Exchange, and that it will promote 
liquidity and competition on the Exchange by facilitating the ability 
of specialists to make markets either on or off of the BSE's physical 
floor. In particular, by allowing BSE specialists to conduct their 
activities off of the Exchange's physical trading floor, while 
retaining the availability of on-floor market making, the proposal will 
permit BSE specialists to choose the most efficient and cost-effective 
way of conducting their business. At the same time, remote specialists 
will have full access to the information and functions available on the 
BEACON trading system, and the BEACON system will maintain and display 
limit orders represented by remote specialists consistent with the 
practices applicable to other BSE specialists. Accordingly, the 
proposal uses technology in a manner that should promote competition in 
the securities markets, consistent with the congressional mandate set 
forth in Section 11A of the Act.
    The remote specialist proposal is consistent with other competitive 
developments in securities trading. For example, the Cincinnati Stock 
Exchange has traded stocks without a floor for several years. The 
Nasdaq Stock Market has never had a physical trading floor. In 1998, 
the Commission promulgated Regulation ATS because it recognized that 
technology had moved beyond earlier concepts of what constitutes an 
``exhange.'' \24\ To facilitate competition among trading systems, the 
Regulation ATS, among other things, enhanced the ability of existing 
stock exchanges to operate alternative trading system pilot programs. 
The BSE's remote specialist proposal is yet another initiative that 
uses technology to promote competition among market centers.
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    \24\ See Securities Exchange Act Release No. 40760 (December 8, 
1998), 63 FR 70844 (December 22, 1998).
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    At the same time, the BSE's proposal differs from those initiatives 
in that BSE will continue to maintain a physical trading floor while 
also allowing specialists to trade from off-floor locations. That 
raises special and distinct issues related to the BSE's 
responsibilities to conduct market surveillance, enforce members' 
compliance with BSE's rules and the Act, and coordinate regulatory 
actions both on and off the floor. The Commission is satisfied that the 
BSE's proposed rules provide an adequate framework to address those 
issues.

B. Remote Specialist Confidentiality Safeguards

    As noted above, all firms that apply to serve as BSE remote 
specialists must submit, for the Exchange's prior approval, a written 
confidentiality policy regarding the location of equipment and the 
access to information, terminals, and equipment. Among other things, 
the policy must conform with specific standards applicable to all 
specialists, including compliance with BSE rules that govern the 
conditions under which a broker-dealer may conduct specialist 
operations in conjunction with a diversified broker-dealer's other 
operations.\25\ Those rules permit diversified broker-dealers with non-
floor operations to also act as specialists on the BSE floor, subject 
to certain conditions. The Exchange is also implementing specific 
confidentiality rules relevant to remote specialists to address the 
regulatory concerns associated with having a firm's specialist 
facilities located in proximity to the firm's other trading desks. For 
example, proposed Section 9(i) will restrict access to the remote 
specialist's trading area to certain designated persons. Proposed 
Section 9(h) will require that a firm apply reasonable procedures to 
limit access by non-specialists to remote specialist facilities and 
information, and to limit remote specialist access to other proprietary 
trading venues. Those requirements are intended, in part, to help 
prevent the improper flow of information back and forth between remote 
specialists and a firm's trading desk personnel located in proximity to 
the specialists.
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    \25\ For example, Chapter II, Section 36 of BSE's rules provides 
that a specialist firm affiliated with an ``approved person'' must 
establish functional separation ``as appropriate to its operation 
and further establish, maintain and enforce written procedures 
reasonably designed to prevent the misuse of material, non-public 
information.'' Among other things, the rule also specifically bars 
the approved person from influencing specialist trading decisions, 
and restricts the ability of the specialist to disclose information 
about speciality stocks. Chapter II, Section 37 of the Exchange's 
rules requires member organizations to establish, maintain and 
enforce procedures to prevent the misuse of material, non-public 
information.
    Chapter XV, Section 6 of the Exchange's rules further restricts 
a specialist's ability to disclose information about limit orders 
that the specialist represents.
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    The BSE's remote specialist rules will implement those standards in 
part by specifically requiring the Exchange's Market Performance 
Committee to evaluate, among other factors, the adequacy of the firm's 
proposed confidentiality policy and offsite facilities when determining 
whether to approve a firm's application to act as a remote specialist. 
Indeed, the Exchange states that it will examine each applicant firm's 
remote site to ensure compliance with those standards, ``focusing on 
policies, procedures and physical barriers which restrict access to the 
remote specialist in all ways.''
    The BSE also notes that all orders received by remote specialists 
must be routed through BEACON, and that the Exchange will prohibit any 
kind of other entry that has not been approved and is not already in 
use in accordance with the rules of the Exchange. Among other things, 
this prohibits verbal orders placed directly with the specialist.
    Based on these requirements, and the Exchange's commitment to 
examine remote specialist locations to ensure adequate compliance with 
BSE rules, the Commission believes the Exchange has provided an 
adequate framework for addressing the confidentiality issues associated 
with allowing specialists to trade from remote locations in proximity 
to a diversified broker-dealer's other off-floor operations. BSE's 
requirements also should help to ensure that a member firm's traders 
will not get a market advantage because of their physical proximity to 
the specialist trading unit, and vice versa.\26\
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    \26\ As discussed below, the Exchange will not be able to 
commence remote specialist trading until it has developed specific 
procedures, acceptable to the Commission, for the Exchange to 
evaluate whether a firm has adequately implemented those 
confidentiality standards.

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[[Page 49620]]

C. Communications With Remote Specialists

    The BSE proposal is also designed to ensure that the Exchange can 
properly communicate with specialists operating from remote locations. 
In this regard, the remote specialist locations will be linked to the 
Exchange through either stentofon or similar device, as well as a 
dedicated line. Using those links, Exchange personnel will coordinate 
regulatory rulings requiring floor official approval or involvement, 
such as trading halts, ITS issues and executions at an inferior price. 
Any ruling will continue to be recorded in a log maintained by the 
Surveillance Department. Moreover, when reviewing applications to 
become a remote specialist, the Exchange's Market Performance Committee 
must evaluate the adequacy of the firm's contingency plans for 
communications or technology failures, as well as the adequacy of the 
off-site facilities generally. The Commission agrees that these rules 
are reasonable, and that adequate means exist for Exchange personnel to 
communicate with remote specialists and facilitate transactions in 
securities consistent with the requirements of Section 6(b)(5) of the 
Act. The Commission expects that the BSE will carefully monitor such 
communications to ensure they are done in a timely manner, particularly 
if the communication involves a regulatory issue.

D. Implementation

    The Commission finds that the Exchange has proposed a reasonable 
schedule for implementing its remote specialist program. During the 
preliminary stages of the program, only member firms with existing 
specialist operations on the Exchange will be eligible to participate 
in the program. The Exchange explains that this is because the Exchange 
has already evaluated current floor member firms' familiarity with the 
Exchange's rules and procedures. As soon as practicable following the 
rollout of the program, the Exchange will consider other applicants. 
The Commission finds that this is a reasonable approach to allow the 
Exchange to implement the program while reducing potential 
difficulties.

E. Conclusion

    Based on the above, the Commission finds that the BSE proposal 
satisfies the minimum necessary framework for operating specialist 
units off of the physical trading floor. Accordingly, the Commission 
finds that the proposal is consistent with the Section 11A and 6(b)(5) 
of the Act. By applying general specialist standards to remote 
specialists, but exempting them from irrelevant rules, the Exchange 
will promote the fair application of its rules and competitive market 
making by specialists. The Commission further finds that the Exchange's 
other proposed remote specialist rules, such as conditions on 
eligibility for the remote specialist program, are suitable because 
they will allow the Exchange to implement and evaluate the program 
while minimizing disruptions to Exchange operations, and because they 
otherwise appear reasonably geared to promote the fair and efficient 
implementation of the program.\27\
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    \27\ The Commission also notes that while the remote specialist 
program may have the effect of attracting additional order flow to 
the BSE, this must occur consistent with best execution principles. 
Accordingly, broker-dealers choosing where to route orders must 
assess periodically the quality of competing markets to assure that 
order flow is directed to markets providing the most advantageous 
terms for their customers' orders. Thus, a broker-dealer may not 
simply employ default order routing to a BSE remote specialist 
without undertaking such an evaluation on an ongoing basis. To reach 
this conclusion, the broker-dealer must rigorously and regularly 
examine the executions likely to be obtained for customer orders in 
the different markets trading the security, in addition to any other 
relevant considerations in routing customer orders.
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    As noted above, however, although the Exchange's proposal requires 
that adequate protections against the misuse of information be put into 
place, the proposed rules do not enunciate the specific standards that 
are necessary to satisfy that requirement. Accordingly, the Commission 
is conditioning its approval of the proposed rule change to require 
that, before the Exchange begins remote specialist trading, the 
Exchange must develop and put into place specific information barrier 
policies and surveillance policies that are consistent with the 
Exchange's existing rules and that are acceptable to the Commission's 
Office of Compliance Inspections and Examinations.\28\
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    \28\ Before the BSE allows remote specialist trading to begin at 
an off-site facility, the Exchange must fully investigate that 
facility, and ensure that trading at the facility will be subject to 
information barrier and surveillance policies that address the 
particular circumstances of the facility.
    The Commission notes that the participants to the ITS plan are 
proposing amendments to the plan to accommodate remote specialists.
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    The Commission finds good cause for approving Amendment No. 1 prior 
to the thirtieth day after the date of publication of notice thereof in 
the Federal Register. Amendment No. 1 requested that the Commission 
approve the program on a permanent basis, rather than as a one-year 
pilot program. Permanent approval of the program is appropriate because 
it will permit the Exchange to implement the program in a manner that 
will expedite the ability of firms to take advantage of the program, 
subject to the Exchange exercising its responsibility for ensuring that 
remote specialist firms follow all applicable rules. Amendment No. 1 
also modified several of the proposed remote specialist rules to 
specify the nature of the information barrier procedures that remote 
specialist firms must follow. In addition, Amendment No. 1 identified 
the factors that will govern applications involving remote specialists, 
and otherwise clarified the rules and practices involving remote 
specialists. Those modifications did not change the underlying nature 
of the original proposal that was noticed for comment, and for which no 
comments were received. Based on the above, the Commission believes 
that good cause exists, consistent with Section 6(b)(5) and 19(b)(2) 
\29\ of the Act, to accelerate approval of Amendment No. 1.
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    \29\ 15 U.S.C. 78s(b)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 1, including whether it is 
consistent with the Act. Persons making written submissions should file 
six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. 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 refer to File No. SR-BSE-99-1 and 
should be submitted by September 5, 2000.

V. Conclusion

    It is Therefore Ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change SR-BSE-99-1, including Amendment No. 1, 
is approved.

[[Page 49621]]

    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\30\
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    \30\ See 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-20512 Filed 8-11-00; 8:45 am]
BILLING CODE 8010-01-M