[Federal Register Volume 62, Number 198 (Tuesday, October 14, 1997)]
[Notices]
[Pages 53357-53358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27047]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 39199; File No. SR-BSE-97-05]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Boston Stock Exchange 
Relating to Its Transaction Fee Schedule

October 3, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on 
September 4, 1997, 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 prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.

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

    The Exchange seeks to amend its transaction fee schedule to 
implement two additional transaction fee maximums.
    The text of the proposed rule change is available at the Office of 
the Secretary, BSE and at the Commission.

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 self-regulatory organization 
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 self-regulatory organization 
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 fee revision is to respond to the needs 
of the Exchange's constituents with respect to overall competitive 
market conditions and customer satisfaction. As such, the Exchange 
intends to implement two additional transaction fee maximums.
    A monthly transaction fee maximum (including both Trade Recording 
and Comparison and Value Charge fees) of $50,000 per member firm for 
all electronic order flow (both incoming and outgoing trades) is being 
implemented. The monthly electronic transaction fee maximum of $50,000 
will precede the existing total volume maximum of $.45 per 100 average 
monthly shares. Member firms will continue to pay the current rate for 
Trade Recording and Comparison and Value Charge fees on all electronic 
trades up to the maximum charge of $50,000 for this type of order flow. 
Any electronic trading beyond the $50,000 electronic transaction fee 
cap will be assessed at $0.00 per 100 average monthly shares throughout 
the remainder of the month.\1\ If at month's end, a member firm's fee 
for electronic order flow has reached the $50,000 maximum and its total 
volume rate per 100 average monthly shares exceeds $.45, the firm's 
transaction fees will then be capped at $.45 per 100 average monthly 
shares.\2\
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    \1\ Telephone conversation between Kathy Marshall, Boston Stock 
Exchange, and Christine Richardson, Division of Market Regulation, 
Commission (Sep. 17, 1997).
    \2\ For example, assume Member Firm ABC generated $100,000 in 
total transaction fees, $60,000 of which were associated with 
electronic order flow. Assume further that this $100,000 related to 
200,000 total shares traded during the month. Under the new fee 
maximum, ABC's electronic order flow fees would be capped at $50,000 
and any electronic order flow executed beyond this maximum would be 
assessed at $0.00 throughout the remainder of the month. At the end 
of the month, the Exchange would calculate the total fees generated 
by ABC's account, here $90,000 ($50,000 in electronic order flow 
plus $40,000 in non-electronic order flow), and divide it by the 
total number of shares traded during the month. Here, the Exchange 
would divide $90,000 by 200,000 shares, which would equate to a rate 
of $.45 per 100 average monthly shares. Thus ABC would pay a total 
of $90,000 in transaction fees for that month. If, however, the 
resulting rate were greater than $.45 per 100 average monthly 
shares, the total transaction fees would be further reduced to this 
maximum. Telephone Conversation between Kathy Marshall, Boston Stock 
Exchange, and Christine Richardson, Division of Market Regulation, 
Commission (Sep. 24, 1997).
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    A transaction fee maximum (including both Trade Recording and 
Comparison and Value Charge fees) for multiple automated cross trades 
is also being implemented. The transaction fee maximum of $.25 per 100 
shares will apply once a firm has executed 100,000 average daily 
multiple automated cross trade shares. This maximum is in addition to 
the maximum rate per trade side of $25.00 for Trade Recording and 
Comparison fees and $50.00 for Value Charge fees. Member firms will pay 
the lesser of $.25 per 100 shares or the original rate per share at the 
time of execution.\3\
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    \3\ For example, assume Member Firm ABC executed 2,500,000 
multiple automated cross trade shares in a month comprised of 21 
trading days. Under the new proposal, the cost structure of the 
first 2,100,000 multiple automated cross trade shares (21 trading 
days  x  100,000 average daily shares) would not change. However, 
for every share of this type executed above and beyond 100,000 
average daily shares (in this example, 2,100,000 shares), the cost 
per share would be the lesser of $.0025 per share or the original 
rate per share at the time of execution. If a 7,500 share cross 
trade generated a total fee of $30.00 ($.0040 per share), the total 
fee of this trade would be capped at $18.75 ($.0025 per share) for a 
reduction in the cost of the trade of $11.25. If the same trade 
generated a total fee of $15.00 ($.0020 per share), the total cost 
of the trade would remain at $15.00. Telephone Conversation between 
Kathy Marshall, Boston Stock Exchange, and Christine Richardson, 
Division of Market Regulation, Commission (Oct. 1, 1997).
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2. Statutory Basis
    The basis for the proposed rule change is Section 6(b)(5) of the 
Act, in that the proposed rule change is designed to promote just and 
equitable principles of trade; 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; and is not designed to 
permit unfair discrimination between customers, issuers, brokers or 
dealers.

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

    Because the foregoing rule change establishes or changes a due, 
fee, or other change imposed by the Exchange, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act and subparagraph (e) of Rule 
19b-4

[[Page 53358]]

thereunder. At any time within 60 days of the filing of such proposed 
rule change, the Commission may summarily abrogate such rule change if 
its 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
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 at the 
Commission's Public Reference Room. Copies of the filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-BSE-97-05 and 
should be submitted by November 4, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-27047 Filed 10-10-97; 8:45 am]
BILLING CODE 8010-01-M