[Federal Register Volume 69, Number 179 (Thursday, September 16, 2004)]
[Notices]
[Pages 55850-55852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2228]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50341; File No. SR-BSE-2004-14]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change, and Amendment No. 1 Thereto, by the Boston Stock Exchange, Inc. 
To Amend Its Intermarket Options Linkage Rules

September 9, 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 April 6, 2004, the Boston Stock Exchange, Inc. (``BSE'' or 
``Exchange'') submitted to 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 BSE. On June 9, 
2004, 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, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from John Boese, BSE, to Nancy Sanow, Assistant 
Director, Division of Market Regulation (``Division''), Commission, 
dated June 8, 2004 (``Amendment No. 1''). In Amendment No. 1, the 
BSE amended the proposed rule text to clarify that the general 
requirement that the Exchange's Firm Customer Quote Size (``FCQS'') 
and Firm Principal Quote Size (``FPQS'') be at least 10 contracts 
would not apply if the BSE were disseminating a quotation of fewer 
than 10 contracts. In that case, the Exchange may establish a FQCS 
or FPQS equal to its disseminated size.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The BSE proposes to amend its rules relating to the Plan for the 
Purpose of Creating and Operating an Intermarket Option Linkage 
(``Linkage Plan'').
    The text of the proposed rule change, as amended, is below. 
Proposed additions are in italics.
* * * * *

[[Page 55851]]

Rules of the Boston Options Exchange Facility

Trading of Options Contracts on BOX

Chapter XII Intermarket Linkage Rules

Sec. 1 Definitions
* * * * *
    (g) ``Firm Customer Quote Size'' with respect to a P/A Order means 
the lesser of (a) The number of option contracts that the Participant 
sending a P/A Order guarantees it will automatically execute at its 
disseminated quotation in a series of an Eligible Option Class for 
Customer orders entered directly for execution in that market; or (b) 
the number of option contracts that the Participant receiving a P/A 
Order guarantees it will automatically execute at its disseminated 
quotation in a series of an Eligible Option Class for Customer orders 
entered directly for execution in that market. This number shall be at 
least 10 contracts unless the receiving Participant Exchange is 
disseminating a quotation of less than 10 contracts, in which case this 
number may equal such quotation size.
    (h) ``Firm Principal Quote Size'' means the number of option 
contracts that a Participant Exchange guarantees it will execute at its 
disseminated quotation for incoming Principal Orders in an Eligible 
Option Class. This number shall be 10. However, if the Participant 
Exchange is disseminating a quotation size of less than 10 contracts, 
this number may equal such quotation size.
* * * * *

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 had 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 make the rules of the 
Boston Options Exchange (``BOX''), a facility of the BSE, consistent 
with the other participants in the Linkage Plan (``Participants'') with 
regard to the ``natural size'' of quotations under the Linkage Plan.\4\ 
Specifically, the Linkage Plan currently requires that the Participants 
be firm for both Principal Acting as Agent (``P/A'') and Principal 
Orders for at least 10 contracts. Concurrent with proposed Joint 
Amendment No. 13, the current proposed rule change would eliminate this 
requirement, permitting BOX to be firm for the actual size of its 
quotation, even if this amount is less than 10 contracts. This change 
would enable BOX to conform its quotation requirements for incoming 
Principal and P/A Orders to be consistent with its quotation 
requirements for non-Linkage orders.
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    \4\ The Participants have filed an amendment to the Linkage Plan 
to change the definitions of ``Firm Customer Quote Size'' (``FCQS'') 
and ``Firm Principal Quote Size'' (``FPQS'') (Joint Amendment No. 
13). See Securities Exchange Act Release No. 50211 (August 18, 
2004), 69 FR 52050 (August 26, 2004) (File No. 4-429).
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2. Statutory Basis
    The BSE believes that the proposed rule is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Section 
6(b)(5) \6\ 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 
protect investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 impose 
any burden on competition 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 solicited or received with respect to the 
proposed rule change.

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 BSE consents, the Commission will:
    (A) By order approve such proposed rule change, as amended; or
    (B) Institute proceedings to determine whether the proposed rule 
change, as amended, should be disapproved.

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-2004-14 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-2004-14. 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 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-

[[Page 55852]]

2004-14 and should be submitted on or before October 7, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E4-2228 Filed 9-15-04; 8:45 am]
BILLING CODE 8010-01-P