[Federal Register Volume 69, Number 249 (Wednesday, December 29, 2004)]
[Notices]
[Pages 78063-78064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-28477]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50921; File No. SR-BSE-2004-53]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment 1 Thereto by the 
Boston Stock Exchange, Inc., Regarding Short Sales

December 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 3, 2004, the Boston Stock Exchange, Inc., (``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') the proposed rule change as described in items I, II, and III 
below, which items have been prepared by the self-regulatory 
organization. On December 13, 2004, the Exchange filed Amendment No. 1 
to the proposed rule change.\3\ The proposed rule change, as amended, 
was filed by the Exchange as a non-controversial filing, under Rule 
19b-4(f)(6) of the Act.\4\ 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\ See Amendment No. 1 to the proposed rule change (December 
13, 2004). Amendment No. 1 replaced the Exchange's original filing 
in its entirety.
    \4\ 17 CFR 240.19b-4(f)(6). For purposes of determining the 
effective date and calculating the sixty-day period within which the 
Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers that period 
to commence on December 13, 2004, the date the Exchange filed 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is seeking to make minor modifications to its rules 
which relate to short sales, in order to comply with the requirmenets 
sent forth in the Commission's recent release and final rule, 
Securities Exchange Act Release No. 50103 (July 28, 2004), 69 FR 48008 
(August 6, 2004) (``SHO Release'') and accompanying orders, Securities 
Exchange Act Release No. 50104 (July 28, 2004), 69 FR 48032 (August 6, 
2004) and Securities Exchange Act Release No. 50747 (November 29, 
2004), 69 FR 70480 (December 6, 2004) (``Pilot Orders''). The text of 
the proposed rule change is available for viewing on the Exchange's Web 
site, http://www.bostonstock.com, the Commission's Web site, http://www.sec.gov/rules/sro.shtml, and at the Exchange and 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 self-regulatory organization 
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 self-regulatory organization 
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 is seeking to make minor modifications to its rules 
that relate to short sales, in order to comply with the requirements 
set forth in the Commission's SHO Release and accompanying Pilot 
Orders.
    The Exchange need only make minor modifications to its current 
rules in order to comply with the requirements set forth in the 
Commission's recent SHO Release. The first Exchange rule requiring 
minor modification is Rules of the Board of Governors of the Boston 
Stock Exchange (``BSE Rules'' or ``Rules''), Chapter II, Dealings on 
the Exchange, Section 16, Short Sales. Section 16 is modeled after and 
is similar to the language appearing in 17 CFR 240.10a-1, prior to the 
SHO Release and the changes resulting therefrom. This proposed rule 
modifies the Exchange's rule so that it continues to be modeled after 
and is consistent with the Commission's rules and regulations regarding 
short sales.
    The second Exchange rule requiring minor modification is BSE Rule 
Chapter II, Dealings on the Exchange, Section 39, Periodic Reports. 
Section 39 in the Supplementary Material uses a definition which is no 
longer applicable under the SHO Release. There is also a reference to a 
clause which no longer exists in the Commission's rule. The proposed 
rule modifies the language and removed the clause to be consistent with 
the Commission's rules.
    The third Exchange rule requiring minor modification is BSE Rule 
Chapter II, Dealings on the Exchange, Section 40, Limit Order Display 
Rule. In order for the BSE Rule to be consistent with the SHO Release 
and the Pilot Orders, the proposed rule adds the following sentence: 
``However, a customer short sale limit should be displayed where the 
order is eligible for execution if the application of a price test has 
been suspended by Commission rule, motion or order.''
    The fourth Exchange rule requiring minor modification is BSE Rule 
Chapter XXXV, Trading in Nasdaq Securities, Section 27, Short Sales. In 
order for the BSE Rule to be consistent with the SHO Release and the 
Pilot Orders, the proposed rule adds the following sentence. ``The 
provisions of this rule shall not prohibit any transaction or 
transactions which the Commission, upon written request or upon its own 
motion or order, exempts, either unconditionally or on specified terms 
and conditions.''
    As stated above, the changes are required so that the Exchange's 
rules are consistent with the SHO Release and the Pilot Orders. 
Accordingly, the Exchange is proposing the immediate effectiveness of 
its proposal.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act, 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 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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    \5\ 15 U.S.C. 78f(b)(5).
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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 not necessary or appropriate in 
furtherance of the purposes of the Act.

[[Page 78064]]

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

    The foregoing rule change, as amended, has been filed by the 
Exchange pursuant to section 19(b)(3)(A) of the Act \6\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\7\ The Exchange has 
designated the proposed rule change as one that: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) does not become operative for 30 days from the date on which 
it was filed, or such shorter time as the Commission may designate. 
Therefore, the foregoing rule change, as amended, has become effective 
pursuant to section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
thereunder.\9\ The Exchange requests that the Commission waive the 30-
day pre-operative requirements contained in Rule 19b-4(f)(6)(iii).\10\ 
The Exchange believes good cause exists to grant such waiver because of 
the importance of short sale regulation to the protection of investors. 
The Exchange will implement this rule change immediately.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ See supra note 6.
    \9\ See supra note 7.
    \10\ Under subparagraph (f)(6)(iii) of Rule 19b-4, the proposal 
may 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. 17 CFR 
240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day pre-operative delay 
is consistent with the protection of investors and the public interest. 
The Commission believes that accelerating the operative date does not 
raise any new regulatory issues, significantly affect the protection of 
investors or the public interest, or impose any significant burden on 
competition. For these reasons, the Commission designates the proposed 
rule change as effective and operative immediately.
    At any time within 60 days of the filing of a rule change pursuant 
to section 19(b)(3)(A) of the Act, the Commission may summarily 
abrogate the rule change if it appears to the Commission that such 
action is necessary or appropriate in the public 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, as amended, 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-2004-53 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-2004-53. 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 
Exchange. 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-
2004-53 and should be submitted on or before January 19, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 FR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-28477 Filed 12-28-04; 8:45 am]
BILLING CODE 8010-01-M