[Federal Register Volume 73, Number 71 (Friday, April 11, 2008)]
[Notices]
[Pages 19914-19916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-7781]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57630; File No. SR-BSE-2008-22]


Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Amending Its Make or Take Linkage Transaction Fees

April 7, 2008.
    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 3, 2008, the Boston Stock Exchange (``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 substantially prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule from 
interested persons and is approving the proposed rule change on an 
accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

---------------------------------------------------------------------------

[[Page 19915]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend, retroactively effective to 
March 28, 2008, the Liquidity Make or Take Pricing Structure (``Make or 
Take Pricing'')--Intermarket Linkage Transaction fees (``Linkage 
Fees'') portion of the Fee Schedule of the Boston Options Exchange 
(``BOX'').\3\ The text of the proposed rule change is available at the 
Exchange, the Commission's Public Reference Room, and http://www.bostonoptions.com.
---------------------------------------------------------------------------

    \3\ Capitalized terms not otherwise defined herein shall have 
the meanings prescribed under the BOX Rules.
---------------------------------------------------------------------------

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 Exchange 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 III below. The Exchange 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 proposing to amend, retroactively effective to 
March 28, 2008, Section 7(c) of the BOX Fee Schedule in order to revise 
the Make or Take Pricing Linkage Fees portion of the BOX Fee Schedule, 
so as to conform it with fee changes the Exchange recently proposed for 
Make or Take Pricing within non-Penny Pilot Program classes.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 57618 (April 4, 
2008) (SR-BSE-2008-21) (eliminating the Make or Take Pricing 
Structure for non-Penny Pilot Program classes).
---------------------------------------------------------------------------

    Executions on BOX resulting from orders sent via the Intermarket 
Option Linkage (``Linkage Orders'') are subject to the same billing 
treatment as other broker-dealer orders. On September 6, 2007, the 
Exchange introduced the Make or Take Pricing for all classes contained 
in the Penny Pilot Program.\5\ Since Linkage Orders that are sent to 
and executed on BOX take liquidity, such orders are assessed a $0.45 
per contract fee for executed transactions in issues participating in 
the Penny Pilot Program.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 56371 (September 7, 
2007), 72 FR 52401 (September 13, 2007) (SR-BSE-2007-43). The 
Exchange may trade options contracts in one-cent increments in 
certain approved issues as part of the Penny Pilot Program through 
March 27, 2009. See Securities Exchange Act Release No. 56566 
(September 27, 2007), 72 FR 56400 (October 3, 2007) (SR-BSE-2007-
40).
    \6\ See Securities Exchange Act Release No. 56371 (September 7, 
2007), 72 FR 52401, 52402 (September 13, 2007) (SR-BSE-2007-43), 
which provides that ``Linkage Orders that are not executed upon 
receipt are rejected back to the sender and are never posted in the 
BOX Book. Therefore, a Linkage Order would never be eligible to 
receive a credit of the Transaction Fee.''
---------------------------------------------------------------------------

    Furthermore, on November 30, 2007, the Exchange filed a rule 
proposal with the Commission, which added the twenty five (25) most 
actively traded options classes on BOX that at that time were not 
included within the Penny Pilot Program (``M or T Non-Penny Pilot 
Classes'') to the Make or Take Pricing.\7\ Recently, nineteen (19) of 
these M or T Non-Penny Pilot Classes were included in an expansion of 
the Penny Pilot Program.\8\ As a result, on March 28, 2008, the 
Exchange filed with the Commission a proposal that eliminates the Make 
or Take Pricing for M or T Non-Penny Pilot Classes.\9\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 56948 (December 12, 
2007), 72 FR 72426 (December 20, 2007) (SR-BSE-2007-52).
    \8\ See Securities Exchange Act Release No. 57566 (March 26, 
2008), 73 FR 18013 (April 2, 2008) (SR-BSE-2008-20). This most 
recent expansion added twenty eight (28) of the most actively traded 
multiply listed options classes, according to Clearing Corporation 
volume, to the Penny Pilot Program.
    \9\ See note 4 supra.
---------------------------------------------------------------------------

    In conjunction with the elimination of this fee, the Exchange is 
now proposing to also eliminate the $0.50 per contract Make or Take 
Pricing for Linkage Orders in these M or T Non-Penny Pilot Classes. 
Consequently, the Linkage Fees associated with the Make or Take Pricing 
will only apply to Linkage Orders in any class of options that is 
included in the Penny Pilot Program. The standard Linkage Fees shall 
apply to those options classes that are not part of the Penny Pilot 
Program.\10\ The standard Linkage Fee is $0.20 per contract. Because 
the Make or Take Pricing for M or T Non-Penny Pilot Classes was 
eliminated on March 28, 2008, and the Exchange is seeking to reduce the 
fee charged, the Exchange requests that the effective date of the 
proposed rule change be retroactive to March 28, 2008.
---------------------------------------------------------------------------

    \10\ The BOX Fee Schedule can be found on the BOX Web site at 
www.bostonoptions.com.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\11\ in general, and Section 
6(b)(4) of the Act,\12\ in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and issuers and other persons using its 
facilities for the purpose of executing Linkage Orders that are routed 
to the Exchange from other market centers.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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.

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. 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-2008-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BSE-2008-22. 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

[[Page 19916]]

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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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-2008-22 and should be 
submitted on or before May 2, 2008.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, 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\13\ and, in particular, with the requirements of Section 6(b) 
of the Act.\14\ In particular, the Commission finds that the Exchange's 
proposal is consistent with Section 6(b)(4) of the Act,\15\ which 
requires that the rules of the Exchange provide for the equitable 
allocation or reasonable dues, fees, and other charges among its 
members and other persons using its facilities. The Commission notes 
that the proposal conforms Linkage Fees with those fees charged on 
other broker-dealer executions.
---------------------------------------------------------------------------

    \13\ In approving this rule, the Commission notes that it has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\16\ for approving the proposed rule change prior to the 30th 
day after the date of publication of the notice of the filing thereof 
in the Federal Register. The Commission notes that the Make or Take 
Pricing for M or T Non-Penny Pilot Classes was eliminated on March 28, 
2008.\17\ Further, because the Exchange is proposing to reduce the fee 
charged from $0.50 per contract to $0.20 per contract for those M or T 
Non-Penny Pilot Classes not included in the Penny Pilot Program 
expansion, granting accelerated approval on a retroactive basis would 
allow the Exchange to implement a lower fee for market participants 
executing Linkage Orders at the same time as the Exchange's related fee 
changes, which should benefit investors and reduce confusion.\18\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2).
    \17\ See note 4 supra.
    \18\ See note 8 supra and accompanying text.
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\19\ that the proposed rule change (SR-BSE-2008-22) is hereby approved 
on an accelerated basis.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Florence E. Harmon,
Deputy Secretary.
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12)
---------------------------------------------------------------------------

 [FR Doc. E8-7781 Filed 4-10-08; 8:45 am]
BILLING CODE 8011-01-P