26170 Federal Register / Vol. 73, No. 90 / Thursday, May 8, 2008 / Notices 

41 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. 78c(a)(2). 

4MX US currently has a 31.37% ownership 

interest in BOX. The BSE notes that in SR–BSE–

2008–06, MX US’s ownership interest in BOX was 

rounded up to 31.4%. See Securities Exchange Act 

Release No. 57260 (February 1, 2008), 73 FR 7617 

(February 8, 2008) (SR–BSE–2008–06). 

5The ‘‘Regulatory Authority’’ is defined as the 

BSE as the non-equity, non-Member authority of 

BOX and, together with and pursuant to delegated 

authority from BSE, the Boston Options Exchange 

Regulation LLC (‘‘BOXR’’), as approved by the SEC. 

See Section 1.1, 6th BOX LLC Agreement. 

6Capitalized terms not otherwise defined herein 

shall have the meanings set forth in the 6th BOX 

LLC Agreement. 

7See Securities Exchange Act Release Nos. 49066 

(January 13, 2004), 69 FR 2773 (January 20, 2004) 

(SR–BSE–2003–17) (establishing a fee schedule for 

the proposed BOX Market); 49065 (January 13, 

2004), 69 FR 2768 (January 20, 2004) (SR–BSE–

2003–04) (creating BOXR to which the BSE would 

delegate its self-regulatory functions with respect to 

the BOX Market); 49068 (January 13, 2004), 69 FR 

2775 (January 20, 2004) (SR–BSE–2002–15) 

(approving trading rules for the BOX Market); and 

49067 (January 13, 2004), 69 FR 2761 (January 20, 

2004) (SR–BSE–2003–19) (approving certain 

regulatory provisions of the operating agreement of 

BOX). 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed rule 

change, or 

(B) Institute proceedings to determine 

whether the proposed rule change should be 

disapproved. 

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 

Number SR–BSE–2008–23 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–2008–23. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the 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–2008–23 and should 

be submitted on or before May 29, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.41

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–10093 Filed 5–7–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57762; File No. SR–BSE–

2008–25] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Notice of Filing 

of a Proposed Rule Change Relating to 

Proposal to Transfer Boston Stock 

Exchange, Inc.’s Ownership Interest in 

Boston Options Exchange Group, LLC 

May 1, 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 23, 

2008, the Boston Stock Exchange, Inc. 

(‘‘BSE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

substantially prepared by the BSE. 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 transfer its 

21.87% ownership interest in the 

Boston Options Exchange Group, LLC 

(‘‘BOX’’), the operator of its Boston 

Options Exchange facility (‘‘BOX 

Market’’) 3 to MX US 2, Inc. (‘‘MX US’’), 

a wholly-owned U.S. subsidiary of the 

Montre ́al Exchange Inc. (‘‘MX’’), such 

that, following the transfer, the 

Exchange’s aggregate Percentage Interest 

will be 0% and MX US’s Percentage 

Interest will increase to 53.24%.4 The 

Exchange will remain the Regulatory 

Authority 5 for the BOX Market and is 

submitting the proposed rule change to 

the Commission to approve the transfer 

of interests to MX US and to amend the 

Fifth Amended and Restated Operating 

Agreement (the ‘‘5th BOX LLC 

Agreement’’) of BOX accordingly (such 

agreement, as amended, the ‘‘6th BOX 

LLC Agreement’’).6 The Exchange is 

requesting confidential treatment of the 

sections of the 6th BOX LLC Agreement, 

which contain confidential business 

information and do not relate to the 

control and governance of BOX. 

The text of the proposed rule change 

is available at the BSE, the 

Commission’s Public Reference Room, 

and http://www.bostonstock.com. The 

text of Exhibits 3A and 3B of the 

proposed rule change are also available 

on the Exchange’s Web site and on the 

Commission’s Web site (http:// 

www.sec.gov/rules/sro/bse.shtml). 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On January 13, 2004, the Commission 

approved four BSE proposals that 

together established the BOX Market as 

a facility of the Exchange.7 This 

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Federal Register / Vol. 73, No. 90 / Thursday, May 8, 2008 / Notices 26171 

8A ‘‘Transfer’’ occurs when any member of BOX 

(‘‘Member’’) disposes of, sells, alienates, assigns, 

exchanges, participates, subparticipates, 

encumbers, or otherwise transfers in any manner all 

or any portion of its Units. See Section 8.1(a), 5th 

BOX LLC Agreement. 

9See Section 8.4(f), 5th BOX LLC Agreement. 

10 15 U.S.C. 78s(b)(1). 

11 17 CFR 240.19b–4. 

12See Section 8.4(f), 5th BOX LLC Agreement. 

13Although MX has transferred its BOX Units to 

MX US, MX has signed an Instrument of Accession 

through which MX has agreed to abide by all of the 

provisions of the 5th BOX LLC Agreement, as 

amended and in effect from time to time, including 

those provisions requiring submission to the 

jurisdiction of the Commission. See SR–BSE–2008–

28. 

14See Securities Exchange Act Release No. 44983 

(October 25, 2001), 66 FR 55225 (November 1, 2001) 

(SR–PCX–00–25). ArcaEx was operated by 

Archipelago Exchange LLC (‘‘Arca LLC’’). At the 

time of its approval, PCX’s ownership interest in 

Arca LLC consisted solely of a 10% interest in 

Archipelago Holdings, LLC, the parent company of 

Arca LLC. 

15 15 U.S.C. 78c(a)(2). 

16The ‘‘Regulatory Director’’ is defined as the 

individual designated as such by the BSE pursuant 

to Section 4.1(b) of the 6th BOX LLC Agreement. 

The Regulatory Director must be a member of the 

senior management of the regulation staff of the 

Regulatory Authority, who is separated from the 

business operations of the BSE via effective 

information barriers. The Regulatory Director shall 

not be an employee, officer, or director of Nasdaq 

or its Affiliates, other than the BSE and the BSE’s 

subsidiaries. See Section 1.1, 6th BOX LLC 

Agreement. 

17As long as BOX Market remains a facility of the 

BSE pursuant to Section 3(a)(2) of the Act, the BSE 

shall have the right to retain/designate one 

Regulatory Director, whether or not the BSE is 

admitted as a Member of BOX. See Section 4.1(a)(i), 

6th BOX LLC Agreement. 

18See Section 4.4(b), 5th BOX LLC Agreement. 

19 ‘‘Non-Market Matters’’ include changes relating 

solely to one or more of the following: Marketing, 

administrative matters, personnel matters, social or 

team-building events, meetings of Members, 

communication with Members, finance, location 

and timing of BOX Board meetings, market 

research, real property, equipment, furnishings, 

personal property, intellectual property, insurance, 

contracts unrelated to the operation of the BOX 

Market, and de minimis items. See Section 

3.2(a)(ii), 6th BOX LLC Agreement. 

20See Section 3.2(a)(ii), 6th BOX LLC Agreement. 

21 Id. 

22See Section 3.2(a)(iii), 6th BOX LLC 

Agreement. A ‘‘Regulatory Deficiency’’ is defined as 

‘‘the operation of the BOX (in connection with 

matters that are not Non-Market Matters) or the 

BOX Market (including, but not limited to, the 

System) in a manner that is not consistent with the 

Regulatory Authority Rules and/or the SEC Rules 

governing the BOX Market or BOX Options 

Participants, or that otherwise impedes the 

Regulatory Authority’s ability to regulate the BOX 

Market or BOX Options Participants or to fulfill its 

obligations under the Exchange Act as an SRO.’’ See 

Section 1.1, 6th BOX LLC Agreement. 

23See Section 3.2(a)(iv), 6th BOX LLC Agreement. 

proposal relates to Section 8.4(f) of the 

5th BOX LLC Agreement, which 

requires that any Transfer 8 that results 

in the acquisition and holding by any 

Person, alone or together with any 

Affiliate of such Person, of an aggregate 

Percentage Interest level which meets or 

crosses the threshold level of 20% or 

any successive 5% Percentage Interest 

level 9 be subject to the rule filing 

process pursuant to Section 19(b)(1) of 

the Act 10 and Rule 19b–4 thereunder.11

BSE Transfer of BOX Units 

The NASDAQ OMX Group, Inc. 

(‘‘Nasdaq’’) has entered into an 

agreement to purchase the BSE but not 

the BSE’s BOX Units. In conjunction 

therewith, the BSE proposes to Transfer 

such BOX Units to MX US. The BSE is 

proposing to Transfer all of its BOX 

Units to MX US, which would result in 

the BSE’s Percentage Interest falling to 

0% and MX US’s Percentage Interest 

increasing from 31.37% to 53.24%. 

Since MX US already holds an 

ownership interest in BOX in excess of 

20% and the BSE’s proposed Transfer of 

its BOX Units to MX US would cross the 

5% threshold specified in Section 8.4(f) 

of the 5th BOX LLC Agreement, such 

Transfer necessitates SEC approval.12

MX US, as a current Member of BOX, 

is already a party to, and is therefore 

bound by the provisions of, the 5th BOX 

LLC Agreement.13

The BSE states that the Act does not 

require that a self-regulatory 

organization (‘‘SRO’’) have any 

ownership interest in the operator of 

one of its facilities. The Commission has 

stated in a similar case involving the 

establishment of Archipelago Exchange 

(‘‘ArcaEx’’) as a facility of the Pacific 

Exchange, Inc. (‘‘PCX’’), that a national 

securities exchange need not have a 

significant ownership interest in the 

operator of one of its facilities.14

Although the BSE will no longer hold 

an ownership interest in BOX, the BSE 

will continue to act as the SRO and 

regulatory services provider for the BOX 

Market. The BSE and BOXR, by 

delegated authority, will act as the 

Regulatory Authority for the BOX 

Market. Furthermore, the BOX Market 

will remain a facility of the BSE 

pursuant to Section 3(a)(2) of the Act.15

Amendments to BOX LLC Agreement 

In conjunction with the BSE’s 

Transfer of its BOX Units to MX US, the 

BSE is proposing to amend the 5th BOX 

LLC Agreement to reflect modifications 

to the BSE’s role as Regulatory 

Authority of the BOX Market. Below is 

a description of certain proposed 

amendments to the 5th BOX LLC 

Agreement. 

Regulatory Director 

Since the BSE’s Percentage Interest in 

BOX will be less than 8%, the BSE will 

no longer be entitled to maintain two 

directors on the BOX Board, but the BSE 

will have the right to designate one nonvoting Regulatory Director 16 to the BOX 

Board, pursuant to Section 4.1(a)(i) of 

the 6th BOX LLC Agreement.17

Regulatory Veto 

Under the provisions of the 5th BOX 

LLC Agreement, the BSE holds veto 

power over certain ‘‘Major Actions,’’

which relate to both commercial and 

regulatory actions.18 After the sale of the 

BSE’s BOX Units to MX US, the BSE 

will continue to have a regulatory 

interest in the BOX Market but will no 

longer have a commercial interest in 

BOX. Consequently, the BSE will no 

longer hold veto power over Major 

Actions of BOX but will instead hold 

veto power over all regulatory actions 

(‘‘Regulatory Veto’’). The terms of the 

Regulatory Veto provide that the 

Regulatory Authority shall receive 

notice of planned or proposed changes 

to BOX (except certain Non-Market 

Matters) 19 or the BOX Market 

(including, but not limited to, the 

System) pursuant to procedures 

established by the mutual agreement of 

BOX and the Regulatory Authority, 

which will require an affirmative 

approval of such changes by the 

Regulatory Authority prior to 

implementation.20 The planned or 

proposed changes subject to the 

Regulatory Veto shall include, without 

limitation: (A) Planned or proposed 

changes to the System; (B) the sale by 

BOX of any material portion of its 

assets; (C) taking any action to effect a 

voluntary, or which would precipitate 

an involuntary, dissolution or winding 

up of BOX; or (D) obtaining regulatory 

services from a regulatory services 

provider other than the Regulatory 

Authority.21 The Regulatory Authority, 

in its sole discretion, may direct BOX, 

subject to approval of the BOXR Board, 

to modify a proposal as necessary to 

ensure that it does not cause a 

Regulatory Deficiency if the Regulatory 

Authority, in its sole discretion, 

determines that the proposed or 

planned changes to BOX or the BOX 

Market (including, but not limited to, 

the System) could cause a Regulatory 

Deficiency if implemented.22 The 

Regulatory Authority will also have the 

authority to direct BOX, subject to the 

approval of the BOXR Board, to 

undertake modifications to BOX (but 

not to include Non-Market Matters) or 

the BOX Market as are necessary or 

appropriate to eliminate or prevent a 

Regulatory Deficiency in the event that 

the Regulatory Authority, in its sole 

discretion, determines that a Regulatory 

Deficiency exists or is planned.23

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26172 Federal Register / Vol. 73, No. 90 / Thursday, May 8, 2008 / Notices 

24See Section 4.1(f), 6th BOX LLC Agreement. 

The BOXR Board shall also include at least two 

BOX Options Participant directors (but not less than 

20% of all directors on the BOXR Board) selected 

in accordance with the BOXR Limited Liability 

Company Agreement and By-Laws and at least four 

directors who do not have a material direct or 

indirect relationship with Nasdaq, its Affiliates, or 

any Regulatory Outsourcing provider (other than 

service solely as a director of BOXR and/or BSE). 

Id. 

‘‘Regulatory Outsourcing’’ is defined as all BOXrelated regulatory functions that are outsourced by 

the BSE to the Financial Industry Regulatory 

Authority or other service provider that is an SRO. 

See Section 1.1, 6th BOX LLC Agreement. 

25See Section 4.1(f), 6th BOX LLC Agreement. 

26 ‘‘Regulatory Authority Rules’’ are defined as 

the rules of the Regulatory Authority, including for 

the avoidance of doubt, the BOX Rules, that 

constitute ‘‘rules of an exchange,’’ within the 

meaning of Section 3 of the Act, and that pertain 

to the BOX Market. See Section 1.1, 6th BOX LLC 

Agreement. 

27See Section 4.1(f), 6th BOX LLC Agreement. 

28The BOX Committee of the BSE Board shall 

include a BOX Options Participant representative, 

in accordance with the BSE’s By-Laws, to serve as 

a representative of BOX Options Participants and 

four other directors who do not have a material 

direct or indirect relationship with Nasdaq, its 

Affiliates, or any Regulatory Outsourcing provider 

(other than service as directors of the BSE and/or 

BOXR). Furthermore, at least 50% of the BOX 

Committee must be Public Directors, as defined in 

the BSE’s By-Laws. Id. 

29 Id. 

30 Id. 

31See Section 4.1(f), 6th BOX LLC Agreement. 

Material direct or indirect relationship includes, 

without limitation, any of the following: Being an 

Affiliate; serving as a board member, employee, 

officer, consultant, advisor, or any Regulatory 

Outsourcing provider; being a party to any 

contractual or other relationship pursuant to which 

more than $50,000 is paid; reporting to, controlling, 

being controlled by, or holding an investment 

greater than 5% in any such Person; and being a 

parent, child, sibling, spouse, or in-law of such 

Person. Id. 

32 ‘‘Permitted Recipients’’ are defined as: (A) The 

BSE’s Chief Regulatory Officer and only those 

members of his regulatory staff responsible for 

regulatory technology and budget, counsel to the 

BSE’s Chief Regulatory Officer, or staff of the BSE’s 

internal audit department (it being agreed and 

understood, for purposes of this definition that 

these roles may be performed for the BSE by Nasdaq 

employees serving comparable regulatory functions 

for Nasdaq), (B) any member of the BSE Board 

serving on the BOX Committee or the BSE 

Regulatory Oversight Committee, (C) Nasdaq’s Chief 

Regulatory Officer and his staff in the Office of 

General Counsel, (D) any member of the Nasdaq 

Board of Directors serving on the Nasdaq Regulatory 

Oversight Committee, and (E) any Professional 

Services provider. See Section 1.1, 6th BOX LLC 

Agreement. 

‘‘Professional Services’’ is defined as services 

performed by outside counsel, consultants, 

Regulatory Outsourcing, or subcontractors for the 

benefit of BOX or the BOX Market. Id. 

33See Section 4.1(f), 6th BOX LLC Agreement. 

34See Section 12.1, 6th BOX LLC Agreement. 

35 Id. BOX shall not be entitled to refuse the 

inspection, review, or copying of its books and 

records by the Regulatory Authority as provided in 

Board Composition 

Although BOX itself will not carry out 

any regulatory functions, all of its 

activities must be consistent with the 

Act. For example, provisions set forth in 

Sections 4.2(a) and 5.3 of the 6th BOX 

LLC Agreement state that each unit 

holder and director of BOX agrees to 

cooperate with the Commission and the 

BSE in carrying out their regulatory 

responsibilities. The BOX Market, as a 

facility of an exchange, is not solely a 

commercial enterprise; it is an integral 

part of an SRO registered pursuant to 

the Act and is subject to the obligations 

imposed by the Act. These obligations 

endure so long as the BOX Market is a 

facility of the Exchange, regardless of 

whether the BSE has an ownership 

interest in BOX. In recognition of these 

obligations, the BSE has agreed that for 

so long as the BOX Market remains a 

facility of the BSE pursuant to Section 

3(a)(2) of the Act, BOX shall have the 

right to recommend at least 10% of the 

BOXR Board (but no fewer than one 

director) for election to the BOXR 

Board.24 The BOXR director 

recommended by BOX shall: (1) Have 

the right to attend all BOXR Board 

meetings and committees thereof; (2) 

receive equivalent notice of BOXR 

Board meetings and committees thereof 

as other BOXR directors; and (3) receive 

a copy of the meeting materials 

provided to other BOXR directors, 

including, without limitation, agendas, 

action items, and minutes.25

The BSE has also agreed to delegate 

all actions and decisions relating to the 

Regulatory Authority Rules,26 regulation 

of the BOX Market (except regulatory 

actions and decisions delegated to the 

BSE Regulatory Oversight Committee) 

and appeals from regulatory decisions of 

the BOXR Board to a committee of the 

BSE Board (the ‘‘BOX Committee’’).27

The resolutions to be adopted by the 

BSE Board to establish the BOX 

Committee are being filed herein as 

proposed rules of the Exchange. The 

resolutions reflect the compositional 

requirements for the BOX Committee 

that are also required by the 6th BOX 

LLC Agreement.28 In addition, the 

resolutions provide that the BOX 

Committee may not be dissolved, and 

the resolutions and the powers of the 

BOX Committee established thereby 

may not be altered, amended, removed, 

or abridged, without the express written 

consent of BOX. In addition, any 

resolution or other action that would 

have the effect of dissolving the BOX 

Committee or altering, amending, 

removing, or abridging the resolutions 

or the powers of the BOX Committee 

established thereby must be submitted 

to the BSE Board, and if the same must 

be filed with, or filed with and 

approved by, the SEC under Section 19 

of the Act, then it shall not be effective 

until filed with, or filed with and 

approved by, the SEC, as the case may 

be. 

The BSE has also agreed that for so 

long as the BOX Market remains a 

facility of the BSE pursuant to Section 

3(a)(2) of the Act, BOX shall have the 

right to designate one non-voting 

participant (‘‘Non-Voting Participant’’) 

to the BSE Board.29 The Non-Voting 

Participant shall: (1) Have the right to 

attend all meetings of the BOX 

Committee and all BOX-related 

deliberations of the BSE Board and 

committees thereof (collectively, ‘‘BOXRelated Meetings’’); (2) receive 

equivalent notice of BOX-Related 

Meetings as BSE directors; and (3) 

receive a copy of the meeting minutes 

provided to BSE directors, including 

agendas, action items, and minutes for 

all BOX-Related Meetings.30

The BSE has agreed that the directors 

sitting on the BOXR Board or any 

committees thereof or the BOX 

Committee or otherwise engaged in 

BOX-Related Meetings (other than by 

membership on the BSE Regulatory 

Oversight Committee) shall not have a 

material direct or indirect relationship 

with Nasdaq or its Affiliates or any 

Regulatory Outsourcing provider (other 

than service as directors of the BSE and/ 

or BOXR).31 Furthermore, all other 

persons permitted to attend meetings of 

the BOXR Board or any committees 

thereof or the BOX Committee or 

otherwise engaged in BOX-Related 

Meetings shall not have a material direct 

or indirect relationship with Nasdaq or 

its Affiliates or any Regulatory 

Outsourcing provider unless they are: (i) 

Permitted Recipients; 32 (ii) BOXR 

directors, officers, or employees; (iii) 

other parties making presentations to 

directors of the BSE Board engaged in 

BOX-Related Meetings, the BOXR 

Board, BOX Committee, or BSE 

Regulatory Oversight Committee, if such 

parties’ participation is only to the 

extent necessary to make such 

presentations; or (iv) consented to by 

BOX.33

Books and Records 

In accordance with the BSE’s 

obligations as the SRO for the BOX 

Market, the books, records, premises, 

officers, directors, agents, and 

employees of BOX shall be deemed to 

be the books, premises, officers, 

directors, agents, and employees of the 

Regulatory Authority for the purpose of, 

and subject to, oversight pursuant to the 

Act.34 Furthermore, the books and 

records of BOX shall be subject at all 

times to inspection and copying by the 

Regulatory Authority and the SEC.35

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Section 12.1 of the 6th BOX LLC Agreement but 

shall be entitled to damages in the event any 

inspection, copying, or review of BOX books and 

records by the Regulatory Authority is, in whole or 

in part, used by the Regulatory Authority or any of 

its Affiliates for any purpose other than to fulfill the 

Regulatory Authority’s regulatory obligations. Id. 

36 Id. 

37 ‘‘BOX Confidential Information’’ includes any 

financial, scientific, technical, trade, or business 

secrets of BOX and any financial, scientific, 

technical, trade, or business materials that BOX 

treats, or is obligated to treat, as confidential or 

proprietary, including, but not limited to, 

innovations or inventions belonging to BOX and 

confidential information obtained by or given to 

BOX about or belonging to its suppliers, licensors, 

licensees, partners, affiliates, customers, potential 

customers, or others. The definition of BOX 

Confidential Information, with respect to any 

Person, shall not include information which: (i) Is 

publicly known through publication or otherwise 

through no wrongful act of such Person; or (ii) is 

received by such Person from a third Party who 

rightfully discloses it to such Person without 

restriction on its subsequent disclosure. See Section 

1.1, 6th BOX LLC Agreement. 

38See Section 16.2, 6th BOX LLC Agreement. 

39 Id. No Member or Regulatory Authority shall 

share BOX Confidential Information with Nasdaq or 

its Affiliates, other than BSE and BOXR, or as 

permitted in the Regulatory Services Agreement. Id. 

40See Section 16.5, 6th BOX LLC Agreement. 

41See Section 16.6, 6th BOX LLC Agreement. 

42See Section 19.1, 6th BOX LLC Agreement. 

43 Id. 

44 Id. 

45See Section 19.6(a), 6th BOX LLC Agreement. 

46See Section 19.6(b), 6th BOX LLC Agreement. 

47See Section 19.6(c), 6th BOX LLC Agreement. 

48 15 U.S.C. 78f(b). 

49 15 U.S.C. 78f(b)(1). 

50 15 U.S.C. 78f(b)(5). 

Inspection, copying, and review of the 

books and records of BOX by the 

Regulatory Authority at the premises of 

BOX, and access to any copied books 

and records removed from the premises 

of BOX or produced to the Regulatory 

Authority at its request, shall in all 

cases be conducted by, or limited to, 

BSE employees who are Permitted 

Recipients and/or directors or 

employees of BOXR.36

Confidential Information 

All Members of BOX and the 

Regulatory Authority are prohibited 

from using BOX Confidential 

Information 37 otherwise than in 

connection with its respective activities 

contemplated by the 6th BOX LLC 

Agreement and other related agreements 

(the ‘‘Agreements’’) or pursuant to the 

Act and the rules and regulations 

thereunder.38 All Members of BOX and 

the Regulatory Authority are prohibited 

from disclosing any BOX Confidential 

Information to any Person except as 

expressly permitted by the Agreements 

and pursuant to the Act and the rules 

and regulations thereunder.39 The 

Commission and the Regulatory 

Authority, however, are not limited or 

impeded in their right to access and 

examine BOX Confidential Information. 

In addition, the 6th BOX LLC 

Agreement does not limit or impede the 

ability of a Member, officer, director, 

agent, or employee of a Member to 

disclose BOX Confidential Information 

to the SEC or the Regulatory 

Authority.40

Furthermore, all confidential 

information, including BOX 

Confidential Information, pertaining to 

regulatory matters of BOX and the BOX 

Market (including, but not limited to, 

disciplinary matters, trading data, 

trading practices, and audit information) 

contained in the books and records of 

BOX shall: (i) Not be made available to 

any persons other than to those officers, 

directors, employees, and agents of BOX 

that have a reasonable need to know the 

contents thereof; (ii) be retained in 

confidence by BOX and the officers, 

directors, employees, and agents of 

BOX; and (iii) not be used for any 

commercial purposes.41

Future Amendments to BOX LLC 

Agreement 

When BOX formally presents any 

amendments, modifications, waivers, or 

supplements to the 6th BOX LLC 

Agreement or any future amended BOX 

LLC Agreement (‘‘BOX LLC 

Agreement’’) to the BOX Board for 

approval, BOX represents that it will 

provide prompt notice to the Regulatory 

Authority and the Regulatory Director 

and submit any proposed amendments 

to the BOX Committee for its review and 

filing with the SEC if deemed necessary 

under Section 19 of the Act and the 

rules promulgated thereunder.42 BOX, 

however, shall not be required to obtain 

the approval of the Regulatory Authority 

for any amendment to the BOX LLC 

Agreement pursuant to which the BOX 

Market would cease to be a facility of 

the BSE within the meaning of Section 

3 of the Act, provided that such 

amendment shall be filed with, or filed 

with and approved by, the SEC, as the 

case may be, before such amendment 

may be effective.43 In the event the BSE 

ceases to be the Regulatory Authority, 

the BSE shall no longer be a party to the 

BOX LLC Agreement and thereafter the 

provisions of the BOX LLC Agreement 

shall not apply to the BSE or BOXR 

except for certain delineated provisions, 

which shall survive.44

Jurisdiction 

Each Member of BOX acknowledges 

that, to the extent that they are related 

to BOX activities, the books, records, 

premises, officers, directors, agents, and 

employees of the Members shall be 

deemed to be the books, records, 

premises, officers, directors, agents, and 

employees of the Regulatory Authority 

for the purpose of and subject to 

oversight pursuant to the Act.45 BOX, 

the Members and the officers, directors, 

agents, and employees of each, 

irrevocably submit to the exclusive 

jurisdiction of the U.S. federal courts, 

the SEC, and the Regulatory Authority 

for the purposes of any suit, action, or 

proceeding pursuant to the U.S. federal 

securities laws and the rules or 

regulations thereunder, arising out of, or 

relating to, BOX activities or Section 

19.6(a) of the 6th BOX LLC 

Agreement.46 Furthermore, BOX, the 

Regulatory Authority, and each Member 

are required to take necessary action to 

ensure that the officers, directors, and 

employees of BOX, the Regulatory 

Authority, and each Member consent to 

the applicability of certain of the 

provisions in the 6th BOX LLC 

Agreement, including provisions 

relating to confidentiality, books and 

records, and jurisdiction.47

Conclusion 

The BSE will remain the SRO for the 

BOX Market, and the BSE will continue 

to provide the regulatory services for the 

BOX Market in order for BOX to 

conduct BOX’s business in a manner 

consistent with the regulatory and 

oversight responsibilities of the BSE, 

even though the BSE will no longer 

have an ownership interest in BOX. The 

BSE proposes to amend the 5th BOX 

LLC Agreement to make the 

aforementioned changes and reflect the 

BSE’s status as the Regulatory 

Authority. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the requirements of Section 6(b) of the 

Act,48 in general, and furthers the 

objectives of Section 6(b)(1) of the Act,49

in particular, in that it ensures that the 

Exchange is so organized and has the 

capacity to carry out the purposes of the 

Act and to comply and to enforce 

compliance by the Exchange’s members 

with the Act, the rules and regulations 

of the Act, and the rules of the 

Exchange. The Exchange also believes 

that the proposal is consistent with the 

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

Act,50 in particular, in that it is designed 

to facilitate transactions in securities, to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

mstockstill on PROD1PC66 with NOTICES

26174 Federal Register / Vol. 73, No. 90 / Thursday, May 8, 2008 / Notices 

51 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). 

5See Securities Exchange Act Release No. 54389 

(August 31, 2006), 71 FR 52829 (September 7, 2006) 

(Order Granting an Exemption for Qualified 

Contingent Trades from Rule 611(a) of Regulation 

NMS) (‘‘Exemptive Order’’). 

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 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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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 

Number SR–BSE–2008–25 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–2008–25. 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, 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 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–2008–25 and should 

be submitted on or before May 29, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.51

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–10094 Filed 5–7–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57767; File No. SR–CHX–

2008–06] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change and 

Amendment No. 1 Thereto Regarding 

the Definition of Qualified Contingent 

Trade 

May 2, 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 29, 

2008, the Chicago Stock Exchange, Inc. 

(‘‘CHX’’ 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 CHX. On May 

1, 2008, CHX submitted Amendment 

No. 1 to the proposed rule change. 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, 

as amended, 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 delete from the definition of 

Qualified Contingent Trade the 

requirement that such transactions be 

for a minimum size of either 10,000 

shares or $200,000 in transaction value. 

The text of the proposed rule change is 

available at CHX, the Commission’s 

Public Reference Room, and http:// 

www.chx.com/rules/ 

proposed_rules.htm. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

CHX 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. CHX 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’s rules currently define 

the term ‘‘Qualified Contingent Trade’’

according to the definition included in 

an exemptive order issued by the 

Commission on August 31, 2006.5

Pursuant to the Exemptive Order, 

Qualified Contingent Trades are exempt 

from the trade-through restrictions of 

mstockstill on PROD1PC66 with NOTICES