[Federal Register Volume 69, Number 155 (Thursday, August 12, 2004)]
[Notices]
[Pages 49919-49920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18423]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50154; File No. SR-BSE-2003-09]


Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Order 
Approving Proposed Rule Change and Amendment Nos. 1 and 2 Thereto 
Relating to the Extension of Certain Listed Trading Rules to the 
Trading of Nasdaq Securities

August 5, 2004.
    On July 2, 2003, 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 extend certain of its listed trading rules to 
the trading of Nasdaq securities. On April 5, 2004, the Exchange 
amended the proposed rule change.\3\ On May 6, 2004, the Exchange 
amended the proposed rule change.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from John Boese, Vice President, Legal and 
Compliance, Exchange, to Nancy Sanow, Assistant Director, Division 
of Market Regulation (``Division''), Commission, dated April 2, 2004 
(``Amendment No. 1''). In Amendment No. 1, the Exchange restated the 
proposed rule change in its entirety.
    \4\ See letter from John Boese, Chief Regulatory Officer, 
Exchange, to Nancy Sanow, Assistant Director, Division, Commission, 
dated May 5, 2004 (``Amendment No. 2''). In Amendment No. 2, the 
Exchange restated the proposed rule change in its entirety.
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    The proposed rule change was published for comment in the Federal 
Register on June 7, 2004.\5\ The Commission received no comments on the 
proposal. This order approves the proposed rule change, as amended.
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    \5\ See Securities Exchange Act Release No. 49771 (May 25, 
2004), 69 FR 31851.
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    The proposed rule change would add two new sections to the BSE's 
Rules relating to the trading of Nasdaq securities on the Exchange. The 
first proposed new section, ``Section 30. Competing Specialist 
Initiative,'' would permit specialists who trade Nasdaq securities on 
the BSE to avail themselves of the Exchange's competing specialist 
program. The second proposed new section, ``Section 31. Remote Trading 
in Nasdaq Securities,'' would extend the BSE's BEACON Remote trading 
program to include Nasdaq trading.\6\ In both cases, the proposed new 
rules would track the language contained in corresponding existing 
rules relating to listed securities. For example, the BEACON Remote 
trading program requirements currently applicable to the trading of 
listed securities, including the applicability of other BSE Rules, 
confidentiality, ``Chinese Walls,'' communications, and Electronic 
Trading Permits (``ETPs''), would apply with respect to the remote 
trading of Nasdaq securities.
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    \6\ The BSE's BEACON Remote trading system was approved by the 
Commission on August 8, 2000. See Securities Exchange Act Release 
No. 43127 (August 8, 2000), 65 FR 49617 (August 14, 2000) (SR-BSE-
99-1).
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    The Commission notes that the Exchange has represented that, as 
with current BEACON Remote locations, the Exchange's Compliance 
Department will physically inspect each remote Nasdaq location. 
Likewise, the proposed rule change includes ETP provisions that 
require, among other things, that all registered specialists and clerks 
complete a floor-training program, unless waived under certain 
exceptional circumstances, as well as successfully complete the BSE 
floor examination and the Series 63 (NASAA Uniform State Law Exam).\7\ 
In addition, each registered clerk in a remote location who qualifies 
for an ETP would be required to operate under the direct supervision of 
a registered specialist at such remote location, just as a registered 
clerk is supervised in the on-floor environment.
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    \7\ According to the BSE, the on-site floor training includes, 
among other things: Communication procedures with Front Desk 
Operations, Surveillance, Systems Support; Competing Specialist 
Initiative and Unlisted Trading Privilege applications and 
procedures; stock allocation procedures; trading halt procedures; 
and availability of books and records.
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    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.\8\ The 
Commission believes that the proposed rule change is consistent with 
Section 6(b) of the Act,\9\ in general, and furthers the objectives of 
Section 6(b)(5),\10\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, 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. Specifically, the

[[Page 49920]]

Exchange's proposal permits BSE members who trade Nasdaq securities to 
trade from a remote location subject to the same requirements and 
surveillance that are currently in place with respect to remote trading 
of listed securities.
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    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and rules 
and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change, as amended (SR-BSE-2003-09), is 
approved.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-18423 Filed 8-11-04; 8:45 am]
BILLING CODE 8010-01-P