[Federal Register Volume 69, Number 27 (Tuesday, February 10, 2004)]
[Notices]
[Pages 6348-6350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2760]


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SECURITIES AND EXCHANGE COMMISSION

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


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Boston Stock Exchange, 
Inc. Relating to Complex Orders

February 3, 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 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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.

[[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.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 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.

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.
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
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    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.
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    \7\ 17 CFR 240.19b-4(f)(6)(iii).
    \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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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: <a href="/cdn-cgi/l/email-protection#ff8d8a939ad29c9092929a918b8cbf8c9a9cd1989089"><span class="__cf_email__" data-cfemail="7103041d145c121e1c1c141f0502310214125f161e07">[email protected]</span></a>. 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

[[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\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-2760 Filed 2-9-04; 8:45 am]
BILLING CODE 8010-01-P


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