[Federal Register Volume 69, Number 156 (Friday, August 13, 2004)]
[Notices]
[Pages 50230-50232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18530]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50163; File No. SR-BSE-2004-28]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Boston Stock Exchange, 
Inc. Relating to Its Boston Options Exchange Trading Rules Regarding 
Market Opening Procedures

August 6, 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 26, 2004, the Boston Stock Exchange, Inc.

[[Page 50231]]

(``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 BSE. 
Pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder,\4\ the BSE has designated this proposal as non-
controversial, which renders the proposed rule change effective 
immediately upon filing. 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\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The BSE proposes to extend the pilot program for a provision of its 
Boston Options Exchange (``BOX'') trading rules regarding its market 
opening procedures for one year through August 6, 2005. The text of the 
proposed rule change is available at the Office of the Secretary, 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 purpose of the proposed rule change is to extend the pilot 
program (``Pilot Program'') for a section of the Rules of the BOX (the 
``BOX Rules'') relating to opening the market until August 6, 2005. 
Chapter V, Doing Business on BOX, Section 9, Opening the Market, 
establishes guidelines regarding market-opening procedures (``Market 
Opening Rules''). On February 4, 2004, the Commission approved these 
guidelines, as set forth in the BOX Rules, on a pilot basis through 
August 6, 2004.\5\ The BSE now seeks to extend the pilot for one year, 
until August 6, 2005.
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    \5\ See Securities Exchange Act Release No. 49192 (February 4, 
2004), 69 FR 7051 (February 12, 2004) (SR-BSE-2004-05).
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    According to the BOX Market Opening Rules, for a period of at least 
one hour prior to the start of trading each day, the BOX Trading Host 
is in Pre-Opening Phase. During the Pre-Opening Phase Options 
Participants are able to enter, modify and cancel orders and quotes, 
and Limit Orders from previous trading sessions which are still valid 
(e.g., Good ``Till Cancelled orders) are automatically brought to the 
new Pre-Opening Phase and are available for modification and 
cancellation. A Theoretical Opening Price (``TOP''), which is the price 
which would be the opening price if the Opening Match were to occur at 
that moment, is calculated and broadcast continuously to all BOX 
Options Participants during the Pre-Opening Phase; however no orders 
are matched, nor trades executed until the primary market opens for 
each underlying security. At that point, an Opening Match is conducted 
and any orders or quotes remaining on the BOX Book after the Opening 
Match are accessible for modification or cancellation during regular 
trading.
2. Statutory Basis
    The BSE believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\6\ in general, and Section 
6(b)(5)\7\ in particular, in that it is designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
is not designed to permit unfair discrimination between customers, 
brokers, or dealers, or to regulate by virtue of any authority matters 
not related to the administration of the Exchange.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The BSE does not believe that the proposed rule change will result 
in 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

    The BSE neither solicited nor received written comments with 
respect to the proposed rule change.

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

    The BSE filed the proposed rule change pursuant to Section 
19(b)(3)(A)\8\ of the Act and Rule 19b-4(f)(6)\9\ thereunder. Because 
the proposal: (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 
from the date of filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest; provided that the self-regulatory organization has given the 
Commission written notice of its intent to file the proposed rule 
change at least five business days prior to the filing date of the 
proposed rule change.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    Under Rule 19b-4(f)(6)(iii) of the Act,\10\ the proposal does not 
become operative for 30 days after the date of its filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest and the BSE is required 
to give the Commission written notice of its intention to file the 
proposed rule change at least five business days prior to filing. The 
BSE has requested that the Commission waive the five-day pre-filing 
notice requirement and accelerate the 30-day operative delay so that 
the Pilot Program may continue without interruption after it would have 
otherwise expired on August 6, 2004. The Commission believes that 
accelerating the 30-day operative period and waiving the five-day pre-
filing requirement is consistent with the protection of investors and 
the public interest because it would allow the BSE to continue to 
provide standardized market open procedures for BOX that the BSE can 
surveil, enforce, and continue to evaluate without interruption after 
it would have otherwise expired on August 6, 2004.\11\ For this reason, 
the Commission designates that the proposal become operative 
immediately.
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    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For the purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule 
change's impact on efficiency, competition, and capital formation. 
15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public

[[Page 50232]]

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 
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-2004-28 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-2004-28. 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 Room, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
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-
2004-28 and should be submitted on or before September 3, 2004.

    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. 04-18530 Filed 8-12-04; 8:45 am]
BILLING CODE 8010-01-P