[Federal Register Volume 71, Number 228 (Tuesday, November 28, 2006)]
[Notices]
[Pages 68850-68852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20132]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54795; File No. SR-BSE-2006-44]


Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Existing BSE Fee Schedules

November 20, 2006.
    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 November 20, 2006, 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, II 
and III below, which Items have been prepared by the BSE. The BSE has 
designated this proposal as one changing a due, fee, or other charge 
under Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested parties.
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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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of this filing is to amend the existing BSE fee 
schedule and to establish a fee schedule for the Boston Equities 
Exchange trading system (``BeX''). The amendments to the existing BSE 
fee schedule would delete of fees that are no longer applicable or that 
will now be associated with BeX. The BeX fee schedule reflects the new 
fees associated with the services and products available to BSE 
Members, including Electronic Access Members (``EAMs''), in the BeX 
fully electronic environment. The primary categories of new fees set 
forth in the proposed BeX fee schedule include: transaction fees, 
including regulatory transaction fees; clearing services fees; facility 
fees; technology fees; and connectivity fees.
    The text of the proposed rule change is available on the Exchange's 
Web site (http://www.bostonstock.com) and at the Commission's 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 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
    On June 13, 2006, the BSE filed Amendment No. 3 to SR-BSE-2006-22 
(the ``BeX Facility Filing''), a rule filing submitted in connection 
with the implementation of the first of two phases of the BeX, a fully 
automated electronic book for the display and execution of orders in 
securities. On August 25, 2006, SR-BSE-2006-22 was approved by the 
Commission.\5\ On August 3, 2006, the BSE filed, in connection with the 
implementation of the second phase of the BeX trading system and in 
connection with satisfying the requirements of Regulation NMS, SR-BSE-
2006-30. On September 29, 2006, the Commission approved SR-BSE-2006-
30.\6\
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    \5\ See Securities Exchange Act Release No. 54365 (Aug. 25, 
2006), 71 FR 52192 (Sept. 1, 2006).
    \6\ See Securities Exchange Act Release No. 54546 (Sept. 29, 
2006), 71 FR 59161 (Oct. 6, 2006).
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    The existing BSE fee schedule will be amended so as to delete all 
Transaction Fees, Electronic File Access and Processing Fees, and Floor 
Operation Fees. The Transaction Fees and Electronic File Access and 
Processing Fees will now be contained in the BeX fee schedule and, in 
view of the fact that there will no longer be a physical trading floor 
in the traditional sense once the transition to the BeX fully 
electronic platform occurs, there is no longer a need for the Floor 
Operation Fees. The existing Membership and Other Fees will remain in 
their present form. It should be noted that while BSE Members will 
continue to be charged the Membership and Other Fees, EAMs will not be 
charged those fees. That is due to the fact that, although EAMs and BSE 
Members are treated equally, EAMs do not vote on matters related to 
mergers, consolidations, dissolution, liquidation, transfer or 
conversion of the assets of the Exchange and hold non-transferable 
permits that are solely for trading on BeX. Therefore, EAMs are not 
required to pay the Membership fees applicable to BSE Members.
    The BeX fee schedule reflects the new fees associated with the 
services and products available to BSE Members in the BeX fully 
electronic environment. The primary categories of new fees set forth in 
the proposed BeX fee schedule are: transaction fees, including 
regulatory transactions fees; clearing service fees; facility fees; 
technology fees; and connectivity fees. Unless otherwise indicated on 
the fee schedule, all fees are charged on a monthly basis. The 
following is a description of the foregoing categories:
    Transaction Fees: Transaction fees in BeX are broken down based 
upon share price and where they are listed, such as on the Nasdaq Stock 
Exchange versus another exchange. For securities listed on an exchange 
other than the Nasdaq that are traded with a share price greater than 
or equal to $1.00, the Liquidity Provider will receive a $0.0023 credit 
and the Liquidity Taker will be charged $0.0028 per share. For 
securities that are listed on the Nasdaq that are traded with a share 
price equal to or greater than $1.00, the Liquidity Provider will 
receive a $0.0025 credit and the Liquidity Taker will be charged 
$0.0028 per share.
    If a security is listed on an exchange other than the Nasdaq and 
trades with a share price less than $1.00, the Liquidity Provider 
receives a credit in

[[Page 68851]]

the amount of $0.0023, with a maximum of .3% of the quotation price per 
share and the Liquidity Taker is charged $0.0028 with a maximum of .3% 
of the quotation price per share. If a security is listed on the Nasdaq 
and trades with a share price less than $1.00, the Liquidity Provider 
receives a credit in the amount of $0.0025, with a maximum of .3% of 
the quotation price per share and the Liquidity Taker is charged 
$0.0028 with a maximum of .3% of the quotation price per share.
    Trades submitted as pre-matched cross trades are free. 
Additionally, all transaction fees and credits are capped at $100.00 
per trade side.
    Revenue Sharing: In the case of a trade that provides liquidity, 
BeX will share 50% of gross revenue received (less any CQS/CTS capacity 
and ETF registration fee expenses, if applicable) from CTA and SIP for 
all Tape A, Tape B and Tape C issues with the liquidity providing side. 
Similarly, BeX will share 50% of gross revenue with a Member Firm that 
submits a pre-matched cross trade in the same manner as it shares 
revenue with a liquidity provider.
    Smart Order Routing: BeX will charge $.0010 per order routed to an 
away Trading Center on behalf of a Member.
    Regulatory Transaction Fees: In order to fund the Section 31 
obligations of the BSE, Regulatory Transaction Fees will continue to be 
assessed in accordance with Chapter XXIII, Section 2 of the BSE Rules.
    Clearing Services: Trades cleared through the Boston Stock Exchange 
Clearing Corporation's account at the National Securities Clearing 
Corporation will incur a $0.50 trade side charge.
    Technology: While BSE Members need not utilize technology made 
available to them by BeX, BSE Members will have available to them 
through BeX technology that will enable them to access the BeX 
marketplace. That access is available through BeX Workstations. If a 
BSE Member utilizes the Basic BeX Workstation, they will incur a fee of 
$750.00 per logon. A ``logon'' is simply an identification number. Up 
to five logons are available per workstation.
    Trading Floor Fees: While the Exchange will no longer have a 
physical trading floor in the regulatory sense, the floor space will 
continue to exist and be available to BSE Members for a fee should they 
choose to maintain workspace on that floor. If BSE Members choose to 
maintain workspace on the floor, they will be charged $500.00 per month 
per post and $250.00 per month for each person who regularly shows up 
to work at that post. There will be a $50.00 per voice circuit Port 
Charge. The fee for unique telecommunications configurations will be 
cost plus a 25% mark up. Fees to cover the cost cable television, 
postage, courier service, fax, phone, after hours BeX staff assistance 
and certain other items that may arise from time to time as a result of 
the BSE Member's use of the floor space will be priced at cost.
    Reports: Daily P&S Blotters in PDF format will be available for 
free. Daily electronic trade file access and processing will cost 
$300.00 per month, per firm I.D. Special Report Development will also 
be available and fees for such reports will be determined on a case by 
case basis and will be subject to an appropriate rule filing.
    Connectivity: To the extent Members choose SIAC SFTI as their 
network provider, the Members will be charged a one time SIAC SFTI fee 
by BeX in the amount of $200.00 and a monthly fee of $200.00. Members 
need not, however, utilize SIAC SFTI as their network provider. Members 
can choose from among three other network providers, Radianz, TNS and 
Savvis, in the event they do not wish to use SIAC SFTI as their network 
provider. Should a Member choose a network provider other than SIAC 
SFTI, the relationship between the Member and the network provider, 
including any costs associated with the provision of network provider 
services, are between the Member and that network provider and BeX will 
have no involvement with that relationship.
    Members will also be charged for port connections. The first active 
and first back up ports are free to the Member, but any additional 
ports utilized by the Member beyond the first active and first back up 
ports will incur a monthly charge which is set forth on the fee 
schedule.
    Additionally, Members who choose to have their servers physically 
located at the BSE will be charged for hosting and server management. 
Hosting and server management services include the hosting of a server, 
maintenance of network connectivity, provision of power to the server, 
and day to day management of the server being hosted, such as making 
sure the server is communicating properly with the network. A Member 
who chooses to have their server hosted by BeX will have options 
available to them with respect to the server's physical location and 
the amount of power and bandwidth associated with the server, which is 
expressed in terms of Cabinet and Power Services on the fee schedule. 
In any event, fees related to hosting and server management, as with 
all fees to be charged in the BeX environment, are set forth in detail 
in the proposed fee schedule.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\7\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act,\8\ in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees, and other charges among Exchange Members and issuers and 
other persons using Exchange facilities.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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 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 proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(2) thereunder,\10\ because it establishes or changes a due, fee or 
other charge imposed by the Exchange. Accordingly, the proposal will 
take effect upon filing with the Commission. At any time within 60 days 
of the filing of such 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 interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(2).
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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

[[Page 68852]]

     Send an e-mail to [email protected]. Please include 
File Number SR-BSE-2006-44 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-BSE-2006-44. 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. 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-2006-44 and should be submitted on or before 
December 19, 2006.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-20132 Filed 11-27-06; 8:45 am]
BILLING CODE 8011-01-P