[Federal Register Volume 69, Number 151 (Friday, August 6, 2004)]
[Notices]
[Pages 47963-47965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17955]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50124; File No. SR-BSE-2004-32]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of the Proposed Rule Change by the Boston 
Stock Exchange, Inc. Relating to the Extension of the Linkage Fee Pilot 
Program

July 30, 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 July 29, 2004, 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. The 
Commission is publishing this notice to solicit comments on the 
proposed rule from interested persons and is approving the proposed 
rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 47964]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    BSE proposes to extend the current pilot program applicable to 
Options Intermarket Linkage (``Linkage'') fees for one year until July 
31, 2005.
    The proposed fee schedule is available at the principal office of 
the Exchange and at the Commission' Public Reference Room.

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 III 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
    BSE proposes to extend the current pilot program for Linkage fees 
on its Boston Options Exchange (``BOX'') facility through July 31, 
2005. BOX's current fee structure for Principal (``P'') and Principal 
Acting as Agent (``P/A'') Orders \3\ executed on BOX is operating under 
a pilot program which expires on July 31, 2004. Currently, because all 
Linkage Orders received by BOX are for the account of a broker-dealer 
market maker on another exchange, the fees applicable to P and P/A 
Orders are the same as fees applicable to market makers on other 
exchanges that submit orders to BOX outside of the Linkage. The side of 
a BOX trade opposite an inbound P or P/A order would be billed normally 
as any other BOX trade. Also, consistent with the Plan, no fees will be 
charged to a party sending a Satisfaction request (``S'' order) to BOX. 
However, a fee will be charged to the BOX Options Participant that was 
responsible for the trade-through that caused the S order to be sent.
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    \3\ Under section 2(16) of the Purpose of Creating and Operating 
an Options Intermarket Linkage (``Plan'') and Chapter XII of the BOX 
Rules, which tracks the language of the Plan, a ``Linkage Order'' 
means an Immediate or Cancel order routed through the Linkage as 
permitted under the Plan. There are three types of Linkage orders:
    (i) ``P/A Order,'' which is an order for the principal account 
of a Market Maker (or equivalent entity on another Participant 
Exchange that is authorized to represent Public Customer orders), 
reflecting the terms of a related unexecuted Public Customer order 
for which the specialist is acting as agent;
    (ii) ``P Order,'' which is an order for the principal account of 
a market maker (or equivalent entity on another Participant 
exchange) and is not a P/A Order; and
    (iii) ``Satisfaction Order,'' which is an order sent through the 
Linkage to notify a Participant Exchange of a Trade-Through and to 
seek satisfaction of the liability arising from that Trade-Through.
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    BSE now proposes to extend the pilot program to July 31, 2005, in 
order to remain consistent with the other options exchanges concerning 
these fees.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of section 6(b) of the Act,\4\ in general, and furthers 
the objectives of section 6(b)(4),\5\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among its members.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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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.

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. 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-2004-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-BSE-2004-32. 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal offices of 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-2004-32 
and should be submitted on or before August 27, 2004.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder, applicable to a national securities 
exchange,\6\ and, in particular, with the requirements of section 6(b) 
of the Act \7\ and the rules and regulations thereunder. The Commission 
finds that the proposed rule change is consistent with section 6(b)(4) 
of the Act,\8\ which requires that the rules of the Exchange provide 
for the equitable allocation or reasonable dues, fees and other charges 
among its members and other persons using its facilities. The 
Commission believes that the extension of the Linkage fee pilot until 
July 31, 2005 will give the Exchange and the Commission further 
opportunity to evaluate whether such fees are appropriate.
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    \6\ In approving this rule, the Commission notes that it has 
considered its impact on efficiency, competition and capital 
formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
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    The Commission finds good cause, pursuant to section 19(b)(2) of 
the Act,\9\

[[Page 47965]]

for approving the proposed rule change prior to the thirtieth day after 
the date of publication of the notice of the filing thereof in the 
Federal Register. The Commission believes that granting accelerated 
approval will preserve the Exchange's existing pilot program for 
Linkage fees without interruption as BSE and the Commission further 
consider the appropriateness of Linkage fees.
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    \9\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the Act 
\10\ that the proposed rule change (SR-BSE-2004-32) is hereby approved 
on an accelerated basis for a pilot period to expire on July 31, 2005.
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    \10\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-17955 Filed 8-5-04; 8:45 am]
BILLING CODE 8010-01-P