[Federal Register Volume 69, Number 18 (Wednesday, January 28, 2004)]
[Notices]
[Pages 4186-4187]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1789]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49117; File No. SR-BSE-2003-31]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Boston Stock Exchange, Inc. To Extend Trading Hours From 
8 a.m. Until 9:28 a.m., and From 4:16 p.m. Until 6:30 p.m. To Allow for 
the Execution of Matched Orders Only

January 22, 2004.
    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 December 22, 2003, 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, II 
and III 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.
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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 Exchange proposes to amend its rules to add a new chapter 
relating to the execution of transactions during an extended hours 
session. The text of the proposed rule change is available at the 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 BSE 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 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
    The Exchange proposes to add new Chapter IIC to its Rules in order 
to provide for the facilitation of certain orders outside of the 
regular 9:30 a.m. to 4 p.m. Primary Session, and the 4:01 p.m. to 4:15 
p.m. Post Primary Session. Specifically, the Exchange is seeking to 
extend trading hours from 8 a.m. until 9:28 a.m., and from 4:16 p.m. 
until 6:30 p.m. to allow for the execution of matched orders only. All 
orders for execution during the Extended Trading Session (``ETS'') 
would need to be specifically designated and submitted with a contra 
order, matched in price and size. The BSE believes that the addition of 
the ETS will allow the BSE to more effectively compete with other 
exchanges that operate similar extended hours trading sessions.
    During the ETS, the Exchange's auction market rules would apply, as 
during Primary Session trading hours, with minor exceptions. Although 
no book quote will be available, the Exchange will comply with the 
requirements of Rule 11Ac1-1 under the Act \3\ and supply a quotation 
in all securities, which will be traded during the ETS. Additionally, 
the BSE's Execution Guarantee Rule, as set forth in Chapter II, Section 
33 of its Rules, will not apply as it is specifically tailored to the 
acceptance of market and marketable limit orders. Since there is no 
National Best Bid and Offer (``NBBO'') established outside of the 
Primary Session, there is no way to establish what would constitute a 
market or marketable limit order. Moreover, the ETS is designed so as 
to permit the execution of matched orders only, so the concept of 
market or marketable limit orders does not apply.
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    \3\ 17 CFR 240.11Ac1.1
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    Due to the fact that trading at any time other than the Exchange's 
Primary Session involves certain risks, the BSE will not permit its 
members to accept any orders for execution in the ETS without making 
certain disclosures to its customers. The BSE suggests a form of 
disclosure in its proposed rules, but mandates that the disclosure 
informs the customer that extended hours trading involves material 
trading risks, including the possibility of lower liquidity, high 
volatility, changing prices, unlinked markets, an exaggerated effect 
from news announcements, wider spreads and any other relevant risk.
    The Exchange will systematically reject any orders designated for 
execution in the ETS, but which are not submitted on both sides of the 
market and matched exactly as to security, size, price and time of 
entry (``Matched Orders''). However, the Exchange will accept orders 
for the Primary Session during the 8 a.m. to 9:28 a.m. period of the 
ETS. Any orders not specifically designated for the ETS, but submitted 
during the 8 a.m. to 9:28 a.m. period of the ETS, will be retained for 
entry into the Primary Session, and will become eligible for execution 
at 9:30 a.m.
2. Statutory Basis
    The Exchange believes the proposal is consistent with Section 6(b) 
of the Act,\4\ in general, and Section 6(b)(5) of the Act,\5\ in 
particular, in that it is designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating securities transactions, to remove 
impediments to 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).

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[[Page 4187]]

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

    No written comments were either solicited or received.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. By order approve such proposed rule change; or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposal 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, DC 20549-0609. Comments 
may also be submitted electronically at the following e-mail address: 
[email protected]. All comment letters should refer to File No. SR-
BSE-2003-31. 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, comments should be sent in hardcopy or by e-mail but 
not by both methods. 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 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-2003-31 and should be 
submitted by February 18, 2004.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-1789 Filed 1-27-04; 8:45 am]
BILLING CODE 8010-01-P