[Federal Register Volume 65, Number 181 (Monday, September 18, 2000)]
[Notices]
[Pages 56352-56353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23830]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43280; File No. SR-BSE-00-06]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Boston Stock Exchange, 
Inc. Relating to the Intermarket Trading System

September 11, 2000.
    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 September 5, 2000, 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. On September 
5, 2000, the BSE submitted Amendment No. 1 to the proposed rule 
change.\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\ The BSE originally filed the proposal on August 4, 2000, 
pursuant to Section 19(b)(2) of the Act, 15 U.S.C. 78s(b)(2). On 
September 5, 2000, the BSE submitted a letter from John A. Boese, 
Assistant Vice President, Rule Development and Market Structure, 
BSE, to Florence Harmon, Senior Special Counsel, Division of Market 
Regulation, Commission, amending the proposal (``Amendment No. 1''). 
In Amendment No. 1, the BSE requested that the Commission consider 
the proposal under Section 19(b)(3)(A) of the Act. 15 U.S.C. 
78s(b)(3)(A). Because the BSE amended the proposal to file it under 
Section 19(b)(3)(A) of the Act, the Commission considers the 
proposal refiled as of the date of the amendment. Therefore, the 
date of the amendment is deemed the date of the filing of the 
proposal.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange seeks to amend its rules relating to the Intermarket 
Trading System (``ITS'') to make these rules consistent with ITS Plan 
amendments filed by the Participants in ITS.\4\
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    \4\ Participants to the ITS Plan include the American Stock 
Exchange LLC, the BSE, the Chicago Board Options Exchange, Inc., the 
Chicago Stock Exchange, Inc., the Cincinnati Stock Exchange, Inc., 
the National Association of Securities Dealers, Inc., the New York 
Stock Exchange, Inc., the Pacific Exchange, Inc., and the 
Philadelphia Stock Exchange, Inc. (collectively, ``Participants''). 
This filing incorporates ITS Plan amendments, which codify trade 
adjustment procedures and make technical revisions found in the 15th 
ITS Plan Amendment (``15th ITS Plan Amendment''). See Securities 
Exchange Act Release No. 43240 (September 1, 2000) (notice of the 
15th ITS Plan Amendment).
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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 proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV 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 purpose of the proposed rule change is to amend Sections (a)(1) 
(Definitions) and (1)(b) (Provisions of the Plan) of Chapter XXXI, 
Intermarket Trading System, and add Section (5) (Corrections) to 
Chapter XXXI, Intermarket Trading System. Specifically, the BSE seeks 
to change its rules regarding the ITS to make these rules consistent 
with the recent 15th ITS Plan Amendment filed by the Participants.
    Presently, the term ``System'' is defined in sub-section (ii) of 
Chapter XXXI, Section (1)(a) as ``the communications network and 
related equipment that links electronically the participating market 
centers as described in the Plan.'' Under the 15th ITS Plan Amendment, 
the definition of ``System'' is expanded to include the ITS control 
center which is responsible for, among other things, monitoring and 
controlling communications and processing trade adjustments as a result 
of errors.\5\ Accordingly, the Exchange seeks to expand its definition 
of ``System'' consistent with the 15th ITS Plan Amendment.
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    \5\ See supra note 4.
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    Furthermore, the term ``Participant(s) Market'' as defined in sub-
section (vii) of Chapter XXXI, Section (1)(a) does not include Remote 
Specialist locations as part of the Exchange Market. The 15th ITS Plan 
Amendment takes into account the recent approval by the Commission and 
pending addition of Remote Specialists to the Exchange.\6\ The 15th ITS 
Plan Amendment includes Remote Specialist locations at which ITS 
stations are located in the definition of ``Participant Market.'' \7\ 
Accordingly, the Exchange seeks to expand its definition of 
``Participant(s) Market'' consistent with the 15th ITS Plan Amendment 
so that Remote Specialist locations are included in all references 
thereto.
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    \6\ The Commission approved the BSE's Remote Specialist proposal 
on August 8, 2000. See Exchange Act Release No. 43127 (August 8, 
2000), 65 FR 49617 (August 14, 2000).
    \7\ See supra note 4.
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    The 15th ITS Plan Amendment adds a new paragraph to the ITS Plan 
concerning trade adjustments.\8\ In order to remain consistent with the 
15th ITS Plan Amendment, the Exchange seeks to add Section (5) (Trade 
Adjustments) to Chapter XXXI. This section sets forth the procedures 
for facilitating trade adjustments. The Exchange seeks to codify their 
responsibilities concerning these procedures. Specifically, the Section 
delineates how and by whom messages requesting trade adjustments must 
be sent and the steps which will be taken by the ITS Control Center 
(``ICC'') to process the adjustments. The messages concerning trade 
adjustments (i.e., price, size, buy or sell side, cancel or insert 
trade ``as of'' a prior day) must be sent to the ICC in the form of 
administrative messages through ITS by a supervisor of the Exchange 
(``Exchange supervisor'') authorized to send such messages.
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    \8\ Id.
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    In the case of trade day adjustments, if an Exchange member 
receives and executes a commitment to trade, the Exchange supervisor 
will be permitted to send a trade adjustment message to the ICC only 
after receiving an administrative message through ITS from the 
supervisor of the market that issued the commitment (``issuing 
supervisor''), agreeing to the terms of, and authorizing the Exchange 
supervisor to make, the adjustment. Similarly, if the Exchange is the 
issuing market, the Exchange supervisory must send administrative 
messages to any executing market supervisor regarding any trade 
adjustment terms and authorizations. In the case of ``as-of'' 
adjustments, in all cases, the Exchange supervisor and the 
corresponding supervisor of the trade must both send administrative 
messages to the ICC, each requesting the same terms and authorization 
for the adjustment. An administrative message from the ICC confirming 
any adjustments will be sent to both the issuing and executing markets 
following each adjustment.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b)(5) of the Act,\9\ in that it is designed to promote 
just and equitable principles of trade, to foster cooperation

[[Page 56353]]

and coordination with persons engaged in regulatory, 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. The Exchange believes that the proposed rule change 
is also consistent with section 11A(a)(1)(D) of the Act,\10\ which 
calls for the linking of all markets for qualified securities.
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    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78k-1(a)(1)(D).
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B. Self-Regulatory Organization's Statement of 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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Because the foregoing proposed rule, which is based on an ITS Plan 
amendment approved by the Participants: (1) Does not significantly 
affect the protection of investors or the public interest; (2) does not 
impose any significant burden on competition; and (3) does not become 
operative for 30 days or such shorter time as the Commission may 
designate,\11\ the proposed rule change has become effective pursuant 
to section 19(b)(3)(A) of the Act \12\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\13\
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    \11\ On August 4, 2000, the Exchange provided the Commission 
with the five business day notice required by Rule 19b-4(f)(6) of 
the Act:
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, as amended, 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
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, D.C. 20549-0609. Copies 
of the submission, all subsequnt 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 
BSE. All submissions should refer to File No. SR-BSE-00-06 and should 
be submitted by October 10, 2000.

    For the Commission, by the Division of market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-23830 Filed 9-15-00; 8:45 am]
BILLING CODE 8010-01-M