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###### Securities and Exchange Commission

          - [Release No. 34-49180; File No. SR-BSE-2004-02]

                    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 January 28, 2004 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 Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.                

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

                    The Exchange proposes to amend its rule regarding Complex Orders. The text of the proposed rule change is available at the Exchange and at the Commission.                          ( print page 6349)    

## 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 IV 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 purpose of the proposed rule change is to amend Chapter V, Section 27 of the Rules of the Boston Options Exchange (the “BOX Rules”) relating to the trading of Complex Orders. The Exchange is proposing to amend Section 27 by adding new paragraph (c) specifying the process by which Boston Options Exchange (“BOX”) Options Participants (“BOX Participants”) must notify BOX of a proposed Complex Order strategy. The Exchange is also setting forth, in the same paragraph, that an advisory message regarding a Complex Order strategy would be sent by BOX to all BOX Participants at its creation and prior to the start of its trading.

Each Complex Order strategy would be treated as a separate trading instrument on the Complex Order Book. During the trading day BOX would maintain a listing, accessible to all BOX Participants through the BOX system, of all Complex Order strategies available on BOX. This list would not show any orders or prices. A BOX Participant who wishes to propose trading in a Complex Order strategy, that is not already listed as available on the BOX Complex Order Book, must either send an electronic Complex Order strategy request to BOX through the BOX trading system or make a telephone request with the BOX Market Operations Center. Along with this request, the BOX Participant may also place a Complex Order in the proposed strategy. BOX would check each strategy request to validate that the option components of the strategy are listed on BOX and that the Complex Order type is available on BOX.

After validation, an “advisory” message regarding the Complex Order strategy would be sent by BOX to all BOX Participants, stating the terms of the strategy created and the time when Complex Orders on the new strategy will begin to trade. Trading would not begin until at least five minutes has elapsed from the time the advisory message was sent from BOX to all BOX Participants. Any Complex Orders on the newly-created strategy that are received prior to the start of trading would be placed in the Complex Order Book. Complex Orders on the Complex Order Book are not disseminated to the Options Price Reporting Authority (“OPRA”), but are separately disseminated by BOX through a broadcast to all BOX Participants, showing the five best limits for each strategy. Trading in the newly-created strategy would commence at the time announced in the advisory message.

#### 2. Statutory Basis

                    The Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b) of the Act,[3]                                          in general, and Section 6(b)(5) of the Act,[4]                                          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 by granting the Exchange greater authority to regulate the trading of Complex Orders.                 

### 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.

### 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 has become effective pursuant to section 19(b)(3)(A) of the Act [5]                                          and Rule 19b-4(f)(6) [6]                                          thereunder because it does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate; and the Exchange has given the Commission written notice of its intention to file the proposed rule change. 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 interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.                 

                    Under Rule 19b-4(f)(6)(iii) of the Act,[7]                                          the proposed rule change does not become operative for 30 days after the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. The Exchange has requested that the Commission accelerate the thirty-day operative date of the proposal and waive the requirement that the Exchange submit the pre-filing period written notice of its intent to file the proposed rule change at least five business days prior to the filing date, so that the Exchange may remain competitive with other exchanges that currently have similar rules in effect and may begin the trading of Complex Orders in options on the Exchange. The Commission, consistent with the protection of investors and the public interest, has determined to waive the requirements that notice be filed at least five business days prior to the filing and to accelerate the 30-day operative date to February 3, 2004,[8]                                          and, therefore, the proposal is effective and operative on that date.                

## 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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Comments may also be submitted electronically at the following e-mail address:                     *rule-comments@sec.gov*. All comment letters should refer to File No. SR-BSE-2004-02. 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, comments should be sent in hardcopy or by e-mail                           ( print page 6350)                        but not by both methods. 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 filings will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-BSE-2004-02 and should be submitted by March 2, 2004.                

                        For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[9] 

Margaret H. McFarland,

Deputy Secretary.

# Footnotes

1.                             15 U.S.C. 78s(b)(1).                    
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2.                             17 CFR 240.19b-4.                    
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3.                             15 U.S.C. 78f(b).                    
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4.                             15 U.S.C. 78f(b)(5).                    
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5.                             15 U.S.C. 78s(b)(3)(A).                    
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6.                             17 CFR 240.19b-4(f)(6).                    
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7.                             17 CFR 240.19b-4(f)(6)(iii).                    
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8.                             For purposes only of accelerating the 30-day operative period for this proposal, the commission has considered the proposed rule's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f).                    
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9.                                 17 CFR 200.30-3(a)(12).                        
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[FR Doc. 04-2760 Filed 2-9-04; 8:45 am]

BILLING CODE 8010-01-P