55188 Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In the proposed rule change, BSE acknowledged 

that pursuant to Section 8.4(f) of the operating 

agreement of BOX LLC (the ‘‘LLC Agreement’’), any 

transfer that would result in a reduction of BSE’s 

aggregate Percentage Interest in BOX LLC to below 

20% is subject to the rule filing process pursuant 

to Section 19(b)(1) of the Act (15 U.S.C. 78s(b)(1)) 

and Rule 19b–4 thereunder (17 CFR 240–19b–4). 

4See Securities Exchange Act Release No. 52169 

(July 29, 2005), 70 FR 45451. 

5 In approving this proposed rule change, the 

Commission notes that it has also considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f). 

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

7 15 U.S.C. 78f(b)(1). 

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

9Under the terms of the LLC Agreement, a 

‘‘Transfer’’ occurs when any LLC Member would 

‘‘dispose of, sell, alienate, assign, exchange, 

participate, subparticipate, encumber, or otherwise 

transfer in any manner * * * all or any part or 

portion of its Units’’ (ownership interest). 

10For example, BSE would be prohibited, under 

Section 8.1(d), from Transferring any of its Units to 

anyone other than a Member, an affiliate of a 

Member, or Interactive Brokers Group LLC (‘‘IB’’) 

(according to the terms set forth in Section 8.6(d)), 

until the earlier of the second anniversary of the 

Launch Date of BOX or the date on which IB’s 

percentage interest has been reduced to no more 

than 8.00%. Further, pursuant to Section 8.1(a) of 

the LLC Agreement, except for: (i) Transfers among 

Members; (ii) certain transfers by IB; and (iii) 

transfers to Affiliates of a Member, prior to any 

transfer, the proposed transferee must be approved 

by the BOX LLC Board. To be eligible for approval, 

the proposed transferee must: (i) Be of high 

professional and financial standing; (ii) be able to 

carry out their duties as a Member; and (iii) be 

under no regulatory or governmental bar or 

disqualification. In addition, pursuant to Section 

8.4(e) of the LLC Agreement, BOX would be 

required to provide the Commission with notice ten 

days prior to the closing date of any acquisition that 

results in a BOX Member’s ownership percentage 

interest meeting or crossing the threshold level of 

5%, or the successive 5% percentage interest levels 

of 10% and 15%. 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make publicly available. All 

submissions should refer to File 

Number SR–Amex–2005–047 and 

should be submitted on or before 

October 11, 2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18671 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52404; File No. SR–BSE–

2005–21] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Order Approving 

Proposed Rule Change Relating to a 

Proposal To Transfer a Portion of Its 

Ownership Interest in Boston Options 

Exchange Facility 

September 9, 2005. 

On July 27, 2005, the Boston Stock 

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

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change announcing BSE’s intention to 

transfer a portion of its ownership 

interest in BOX LLC, the operator of its 

Boston Options Exchange facility 

(‘‘BOX’’), such that its aggregate 

percentage interest will fall below 

20%.3 The purpose of the transfer 

would be to assist BSE in funding its 

equities-related business interests and 

initiatives related thereto. 

The proposed rule change was 

published for comment in the Federal 

Register on August 5, 2005.4 The 

Commission received no comments on 

the proposed rule change. This order 

approves the proposed rule change. 

The Commission has reviewed 

carefully BSE’s proposed rule change 

and finds that the proposal is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange,5 and with the requirements of 

Section 6(b).6 In particular, the 

Commission finds that the proposal 

furthers the objectives of Section 

6(b)(1),7 in that it will help ensure 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; and Section 6(b)(5),8 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 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. 

Although BSE does not presently have 

a transferee designated, BSE represented 

in its proposed rule change that: (1) Any 

transferee will need to sign and be 

bound by the provisions of the LLC 

Agreement; and (2) any Transfer,9

including a Transfer that will result in 

BSE’s Percentage Interest falling below 

the 20% threshold, will be subject to the 

various limitations set forth in the LLC 

Agreement, throughout Article 8 and 

elsewhere, regarding suitability and 

other regulatory and business 

requirements.10

Further, the BSE represented that its 

proposed transfer of Units will not affect 

additional provisions of the LLC 

Agreement that make special 

accommodations for BSE as the SRO of 

the BOX facility. For example, Section 

4.1(b) of the LLC Agreement provides 

that, with its present ownership interest, 

BSE is entitled to maintain two seats on 

the BOX LLC Board. Because BSE is not 

proposing to make any transfers that 

would result in BSE’s percentage 

interest in BOX LLC going below 8.00%, 

which is the threshold amount 

established in Section 4.1(b) for BSE to 

maintain two directors on the Board, 

this entitlement will remain. In 

addition, pursuant to Section 4.1 of the 

LLC Agreement, BSE has an absolute 

right to designate at least one director 

on the BOX LLC Board regardless of 

whether it maintains any ownership 

interest in BOX LLC. 

BSE also noted that, as a facility of an 

exchange, BOX is an integral part of a 

self-regulatory organization registered 

pursuant to the Act and is subject to the 

requirements of the Act. Although BOX 

LLC itself will not carry out any 

regulatory functions, all of its activities 

must be consistent with the Act. These 

obligations continue as long as BOX is 

a facility of BSE, regardless of the size 

of BSE’s ownership interest in BOX 

LLC. BSE also represented that because 

the Exchange is the SRO for the BOX 

facility, it will, independent of its 

ownership interest, ensure that BOX 

LLC conducts the facility’s business in 

a manner consistent with the regulatory 

and oversight responsibilities of the BSE 

and with the Act. 

Finally, BSE represented that neither 

its proposal nor the actual transfer of 

any BSE units will alter or modify the 

terms or the enforcement of the LLC 

Agreement. 

The Commission believes that 

because the proposed transfer of Units 

by the BSE pursuant to the proposed 

rule change and the terms of the LLC 

Agreement will not affect BOX’s 

responsibilities as a facility of BSE, or 

the Exchange’s rights and obligations as 

the SRO for the BOX facility, including 

the Exchange’s right to designate at least 

one director on the Board of BOX LLC, 

the proposed transfer of Units is 

consistent with the requirements of the 

Act and the rules and regulations 

Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 55189 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3On July 28, 2000, the Commission approved a 

national market system plan for the purpose of 

creating and operating an intermarket option 

linkage proposed by the American Stock Exchange 

LLC, the Chicago Board Options Exchange, 

Incorporated, and the International Securities 

Exchange, Inc. See Securities Exchange Act Release 

No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 

2000) (‘‘Linkage Plan’’). Subsequently, upon 

separate requests by the Philadelphia Stock 

Exchange, Inc., the Pacific Exchange, Inc., and the 

BSE, the Commission issued order to permit these 

exchanges to participate in the Linkage Plan. See 

Securities Exchange Act Release Nos. 43573 

(November 16, 2000), 65 FR 70851 (November 28, 

2000); 43574 (November 16, 2000), 65 FR 70850 

(November 28, 2000); and 40198 (February 5, 2004), 

69 FR 7029 (February 12, 2004). 

4See Securities Exchange Act Release No. 52205 

(August 4, 2005), 70 FR 46551. 

5See Section 1, subsection (j) of Chapter XII of 

the BOX Rules. 

6 15 U.S.C. 78f. 

7 In approving this proposal, the Commission has 

considered the proposed 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 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5The BSE withdrew Amendment No. 1 on August 

12, 2005 for technical and formatting reasons. 

6 In Amendment No. 2, the Exchange: (1) 

provided additional detail about the Exchange’s 

Continued 

thereunder applicable to a national 

securities exchange. 

The Commission expects, and BSE 

has represented, that should there be 

any changes in the terms of the LLC 

Agreement between the date of the 

publication of this proposal and the 

proposed transfer of BSE’s Units that 

would result in the BSE’s Percentage 

Interest falling below the 20% 

threshold, the Exchange will submit a 

new proposed rule change in order for 

the Commission to consider the transfer 

of Units in light of any changes made to 

the LLC Agreement. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,11 that the 

proposed rule change (SR–BSE–2005–

21) is approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18615 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52415; File No. SR–BSE–

2005–29] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Order Approving 

a Proposed Rule Change To Amend 

the Exchange’s Trade-Through and 

Locked Markets Rules 

September 13, 2005. 

On August 1, 2005, the Boston Stock 

Exchange, Inc. (‘‘BSE’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

pursuant to Section 10(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 to 

implement Amendment No. 15 to the 

Plan for the Purpose of Creating and 

Operating an Intermarket Option 

Linkage 3 by amending Sections 1 and 4 

of chapter XII of the Boston Options 

Exchange Facility (‘‘BOX’’) Rules to add 

a ‘‘trade and ship’’ exception to the 

definition of ‘‘Trade-Through’’ and add 

a ‘‘book and ship’’ exception to the 

provision relating to locked markets, 

respectively. The proposed rule change 

was published for comment in the 

Federal Register on August 10, 2005.4

The Commission received no comments 

on the proposal. This order approves the 

proposed rule change. 

Under the proposed rule change, a 

BOX Options Participant could trade an 

order at a price that is one minimum 

quoting increment inferior to the 

national best bid or offer (‘‘NBBO’’) if a 

Linkage Order 5 is sent 

contemporaneously to the market(s) 

disseminating the NBBO to satisfy all 

interest of the NBBO price. The 

proposed rule change also would 

provide that a BOX Options Participant 

may book an order on BOX that would 

otherwise lock another market if a 

Linkage Order is sent 

contemporaneously to such other 

market to satisfy all interest at the lock 

price and only the remaining portion of 

the order is booked. The BSE proposes 

that, under trade and ship, any 

execution received from the market 

disseminating the NBBO must (pursuant 

to agency obligations) be reassigned to 

the customer order that is underlying 

the Linkage Order that was sent to trade 

with the market disseminating the 

NBBO. 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of Section 6 of the Act 6

and the rules and regulations 

thereunder applicable to a national 

securities exchange.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,8 which requires, 

among other things, that the rules of an 

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 proposed rule change 

should help to implement the Linkage 

Plan by facilitating the ability of BOX 

Options Participants to execute their 

customer orders in a timely manner and 

potentially could decrease the incidence 

of Trade-Throughs and locked markets. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,9 that the 

proposed rule change (SR–BSE–2005–

29) is approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18618 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–M 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52412; File No. SR–BSE–

2005–38] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change and 

Amendment Nos. 1 and 2 Thereto 

Relating to the Exchange’s 

Transaction Fees and Tape a Revenue 

Sharing Program for Electronically 

Routed Cross Trades 

September 13, 2005. 

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 August 

19, 2005, 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 BSE filed the proposal pursuant to 

Section 19(b)(3)(A)(ii) of the Act,3 and 

Rule 19b–4(f)(2) thereunder,4 as one 

establishing or changing a due, fee or 

other charge imposed by the BSE, which 

renders the proposal effective upon 

filing with the Commission. On 

September 9, 2005, the Exchange filed 

Amendment No. 1 to the proposed rule 

change.5 On September 12, 2005, the 

Exchange filed Amendment No. 2 to the 

proposed rule change.6 The Commission