26188 Federal Register / Vol. 72, No. 88 / Tuesday, May 8, 2007 / Notices 

7 In approving the proposed rule, the Commission 

has considered the rule’s impact on efficiency, 

competition and capital formation. See 15 U.S.C. 

78c(f). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(2). 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6). 

5BSE implemented the Pilot Program in February 

2004 and extended it three times through June 5, 

2007. See Securities Exchange Act Release Nos. 

49292 (February 20, 2004), 69 FR 8993 (February 

26, 2004) (SR–BSE–2004–01) (establishing the Pilot 

Program); 49806 (June 4, 2004), 69 FR 32640 (June 

10, 2004) (SR–BSE–2004–22); 51778 (June 2, 2005), 

70 FR 33562 (June 8, 2005) (SR–BSE–2005–18); and 

53855 (May 24, 2006), 71 FR 30973 (May 31, 2006) 

(SR–BSE–2006–19). 

exchange.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of Section 6(b)(5) of the 

Act,8 which requires, among other 

things, that the rules of the Exchange be 

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, in 

general, to protect investors and the 

public interest. 

The Commission believes that the 

quote assist feature should help to 

ensure that eligible customer limit 

orders are displayed within the required 

time period. The Commission notes that 

the Exchange represents that it will 

continue to conduct surveillance to 

ensure that specialists comply with 

their obligation to execute or book all 

eligible limit orders within the time 

period prescribed by Exchange rules, 

and that excessive reliance upon the 

quote assist feature will be reviewed by 

the Exchange as a possible violation of 

the Rule. 

The Exchange has requested that the 

Commission approve the proposed rule 

change prior to the thirtieth day after 

publication of notice of the filing in the 

Federal Register. The Commission 

believes that granting accelerated 

approval will allow the Exchange to 

continue to operate the Pilot Program 

without interruption. Accordingly, the 

Commission finds good cause, pursuant 

to Section 19(b)(2) of the Act,9 for 

approving the proposal prior to the 

thirtieth day after publication of the 

notice of the filing thereof in the 

Federal Register. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–Amex–2007–

41) is hereby approved on an 

accelerated basis. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–8734 Filed 5–7–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55684; File No. SR–BSE–

2007–17] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Extend the 

$1 Strike Pilot Program for an 

Additional Year 

April 30, 2007. 

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 25, 

2007, 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 

substantially prepared by BSE. The 

Exchange has filed the proposal as a 

‘‘non-controversial’’ rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder,4

which renders it effective upon filing 

with the Commission. 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 

rules to extend its $1 strike pilot 

program (‘‘Pilot Program’’) for an 

additional year until June 5, 2008. The 

text of the proposed rule change is 

available at BSE, the Commission’s 

Public Reference Room, and http:// 

www.bostonstock.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 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. 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 

The purpose of the proposed rule 

change is to extend the Pilot Program 5

under the Rules of the Boston Options 

Exchange (‘‘BOX’’) for an additional 

year. The Pilot Program allows the 

Boston Options Exchange Regulation 

(‘‘BOXR’’), the department of BSE with 

the delegated regulatory authority over 

BOX, to list options on a pilot basis on 

up to five selected underlying equities 

trading below $20 at $1 strike price 

intervals and to list $1 strike prices on 

any equity option included in the $1 

strike price pilot program of any other 

options exchange until June 5, 2007. 

The proposed rule change retains the 

text of Supplementary Material .02 to 

Section 6 of Chapter IV of the BOX 

Rules, as currently established on a pilot 

basis, and seeks to extend the operation 

of the Pilot Program for another year 

until June 5, 2008. 

Chapter IV, Section 6 of the BOX 

Rules establishes guidelines regarding 

the addition of options series for trading 

on BOX. Under the Pilot Program, in 

order to be eligible for selection into the 

Pilot Program, the underlying stock 

must close below $20 on its primary 

market on the previous trading day. If 

selected for the Pilot Program, BOXR 

may list strike prices at $1 intervals 

from $3 to $20, but no $1 strike price 

may be listed that is greater than $5 

from the underlying stock’s closing 

price on its primary market on the 

previous day. BOXR also may list $1 

strikes on any other options class 

designated by another options exchange 

that employs a similar pilot program 

under its rules. BOXR may not list longterm option series (‘‘LEAPS’’) at $1 

strike price intervals for any class 

selected for the Pilot Program. BOXR 

also is restricted from listing any series 

that would result in strike prices being 

$0.50 apart. 

The Pilot Program was initially 

proposed in reaction to the general 

decrease in stock prices and the 

proliferation of stocks trading below 

$20, including some of the most widely 

held and actively traded equity 

securities listed on the New York Stock 


cprice-sewell on PROD1PC66 with NOTICES
Federal Register / Vol. 72, No. 88 / Tuesday, May 8, 2007 / Notices 26189 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). Rule 19b–4(f)(6) also 

requires the self-regulatory organization to give the 

Commission notice of its intent to file the proposed 

rule change, along with a brief description and text 

of the proposed rule change, at least five business 

days prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. BSE has satisfied the five-day prefiling requirement. In the event that BSE proposes 

to: (1) Extend the Pilot Program beyond June 5, 

2008; (2) expand the number of options eligible for 

inclusion in the Pilot Program; or (3) seek 

permanent approval of the Pilot Program, BSE will 

submit a Pilot Program report to the Commission 

along with the filing of its proposal to extend, 

expand, or seek permanent approval of the Pilot 

Program. BSE will file any proposal to expand or 

seek permanent approval of the Pilot Program and 

the Pilot Program report with the Commission at 

least 60 days prior to the expiration of the Pilot 

Program. The Pilot Program report will cover the 

entire time the Pilot Program was in effect and will 

include: (1) Data and written analysis on the open 

interest and trading volume for options (at all strike 

price intervals) selected for the Pilot Program; (2) 

delisted options series (for all strike price intervals) 

for all options selected for the Pilot Program; (3) an 

assessment of the appropriateness of $1 strike price 

intervals for the options BSE selected for the Pilot 

Program; (4) an assessment of the impact of the 

Pilot Program on the capacity of BSE’s, the Options 

Price Reporting Authority’s, and vendors’

automated systems; (5) any capacity problems or 

other problems that arose during the operation of 

the Pilot Program and how BSE addressed them; (6) 

any complaints that BSE received during the 

operation of the Pilot Program and how BSE 

addressed them; and (7) any additional information 

that would help to assess the operation of the Pilot 

Program. 

10 17 CFR 200.30–3(a)(12). 

Exchange, the American Stock 

Exchange, and Nasdaq. BSE notes that 

many of these stocks are still trading 

below $20, including, for example, 

Oracle, Micron Technology, EMC Corp, 

and Motorola. 

When a stock underlying an option 

trades at a lower price, it requires a 

larger percentage gain in the price of the 

stock for an option to become in-themoney. For example, if a stock trades at 

$10, an investor that wants to purchase 

a slightly out-of-the-money call option 

would have to buy the $12.50 call. At 

these levels, the stock price would need 

to increase by 25% to reach in-themoney status. BSE notes that a 25% or 

higher gain in the price of the 

underlying stock is especially large 

given the lessened degree of volatility 

that recently has accompanied many 

stocks and options. According to BSE, 

listing additional strike prices on these 

classes has allowed BOX Participants to 

provide their customers with greater 

trading flexibility in achieving their 

investment strategies. In further support 

of this proposed rule change, the 

Exchange submitted to the Commission 

a Pilot Program Report, attached as 

Exhibit 3 to the filing, offering detailed 

data from and analysis of the Pilot 

Program. 

2. Statutory Basis 

The Exchange believes that the data 

demonstrates that there is sufficient 

investor interest and demand to extend 

the Pilot Program for another year, 

without adversely affecting systems 

capacity. The proposed rule change is 

designed to provide investors with 

greater trading opportunities, and the 

flexibility and ability to more closely 

tailor their investment strategies and 

decisions to the movement of the 

underlying security. Accordingly, the 

Exchange believes that the proposal is 

consistent with the requirements of 

Section 6(b) of the Act,6 in general, and 

of Section 6(b)(5) of the Act,7 in 

particular, in that it is designed to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

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 the 

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 

Because the foregoing rule change 

does not: (1) Significantly affect the 

protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for 30 days from the date of 

this filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 8 and Rule 19b–

4(f)(6) thereunder.910

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. 

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 

• Send an e-mail to rulecomments@sec.gov. Please include File 

No. SR–BSE–2007–17 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 No. 

SR–BSE–2007–17. 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 will also be 

available for inspection and copying at 

the principal office of 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 No. 

SR–BSE–2007–17 and should be 

submitted on or before May 29, 2007. 


cprice-sewell on PROD1PC66 with NOTICES
26190 Federal Register / Vol. 72, No. 88 / Tuesday, May 8, 2007 / Notices 

10 17 CFR 200.30–3(a)(12). 

1 15 U.S.C.78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(2). 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–8733 Filed 5–7–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55679; File No. SR–

NYSEArca–2007–35] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Exchange 

Fees and Charges 

April 27, 2007. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on April 3, 

2007, NYSE Arca, Inc. (the ‘‘Exchange’’), 

through its wholly owned subsidiary, 

NYSE Arca Equities, Inc. (‘‘NYSE Arca 

Equities’’), filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by Exchange. The 

Exchange has filed this proposal 

pursuant to Section 19(b)(3)(A) of the 

Act 4 and Rule 19b–4(f)(2) thereunder,5

which renders the proposed rule change 

effective upon filing with the 

Commission. 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 

NYSE Arca is proposing to amend its 

Schedule of Fees and Charges for 

Exchange Services (‘‘Schedule’’). The 

text of the proposed rule change is 

available at http://www.nysearca.com, at 

the Exchange’s Office of the Secretary, 

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 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule changes and 

discussed any comments it received 

regarding the proposal. 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 this filing is to amend 

the existing NYSE Arca Rate Schedule 

by revising or eliminating certain fees 

and adding clarifying language to either 

footnotes or explanatory text, associated 

with certain fees. The Exchange also 

proposes making minor technical 

changes to the Schedule. A brief 

description of each proposed change is 

shown below. 

OTP Trading Participant Rights 

NYSE Arca Market Makers pay a fee 

of $4,000 per month for each Options 

Trading Permit (OTP) used. The fee is 

presently capped at $16,000 per month, 

which represents four OTPs. Pursuant to 

NYSEArca Rule 6.35(d)(4), a Market 

Maker with four OTPs is permitted to 

trade all issues on the Exchange. 

Because of this provision, there would 

never be an occasion for a Market Maker 

to need more than four OTPs, thereby 

negating any need for a fee cap. As a 

result, the Exchange proposes to 

eliminate the $16,000 fee cap from the 

Schedule. 

LMM Options Issue Relinquishment Fee 

This fee was initially implemented to 

help offset the costs incurred by the 

Exchange when a Lead Market Maker 

(‘‘LMM’’) relinquished an allocated 

option issue. Previously, the 

relinquishment process involved 

administrative and technological 

changes, both of which were mostly 

manual processes. Much of the process 

has now been automated and the 

associated cost has been significantly 

reduced. Accordingly, the Exchange 

proposes eliminating the Issue 

Relinquishment Fee in its entirety. 

DEA Fee 

The Exchange charges a one time $75 

registration fee, for new applicants, 

when the Exchange also acts as the 

Designated Examining Authority. This 

fee helps to offset administrative 

expenses involved in processing new 

applications. Much of the processing is 

now done over the NASD Central 

Registration Depository (‘‘CRD’’). 

Included in the fees that NASD collects 

on behalf of the Exchange, is a $55 

assessment for new applicants. The 

Exchange believes that these fees are 

duplicitous and as such, will eliminate 

the $75 one time registration fee. 

Weekly Bulletin Subscription Fee 

NYSE Arca distributes a Weekly 

Bulletin (‘‘Bulletin’’) to OTP Holders 

and OTP Firms in order to provide them 

with regulatory bulletins, rule adoption 

notices, and other official 

communications. The Bulletin has been 

available either electronically or via 

U.S. Mail. To offset the cost of postage 

and handling, the Exchange charges a 

$200 per year subscription fee to anyone 

electing to receive the Bulletin via 

regular mail. 

NYSE Arca Rule 2.25 requires that 

Each OTP Holder and OTP Firm must 

maintain with NYSE Arca an electronic 

mail account for communication with 

the NYSE Arca. Presently, all OTP 

Holders and OTP Firms receive the 

Bulletin via e-mail subscriptions. As a 

result, the Exchange will no longer offer 

the option of receiving the Bulletin via 

regular mail. Therefore, the Exchange 

proposes eliminating the Subscription 

Fee. 

Transaction Fees 

The Exchange proposes making minor 

changes to the Order Types included in 

the Transaction Fee section of the 

Schedule. 

Orders executed on behalf of 

registered Broker Dealers (‘‘BD’’), or 

Broker Dealer Firms, are presently 

assessed the ‘‘BD rate.’’ In order to avoid 

any misunderstanding and to clarify 

that the ‘‘BD rate’’ is applicable to the 

BD Firms as well as the BDs, the BD 

Electronic rate and BD Manual rate will 

now read ‘‘Broker Dealer & Firm 

Electronic’’ and ‘‘Broker Dealer & Firm 

Manual.’’

Presently, the ‘‘Firm rate’’ applies to 

any transaction involving a proprietary 

trading account of an OTP Firm that has 

a customer of that OTP Firm on the 

contra side of the transaction. This 

explanation presently appears on the 

Schedule as a footnote to the Firm fee. 

This practice is generally referred to as 

‘‘facilitating’’ an order. In order to better 

explain that the ‘‘Firm rate’’ is only 

applicable when a firm facilitates their 

customer’s order, the Schedule will now 

read ‘‘Firm Facilitation.’’

Marketing Charge—QQQQ 

The Exchange assesses Market Makers 

a Marketing Charge on certain 

transactions. The Standard and Poor’s 

Depository Receipts (QQQQ) carry a 

$1.00 per contract charge. Marketing 

Charges are not assessed on issues that 


cprice-sewell on PROD1PC66 with NOTICES