Document ID: SEC-2007-0933-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc
Posted Date: 2007-07-10T04:00Z

[Federal Register: July 10, 2007 (Volume 72, Number 131)]
[Notices]               
[Page 37549-37551]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jy07-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55999; File No. SR-BSE-2007-27]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto To Extend a Pilot Program That Allows for 
No Minimum Size Order Requirement for the Price Improvement Period 
Process on the Boston Options Exchange

July 2, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 37550]]

``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 26, 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 and 
II below, which Items have been substantially prepared by the BSE. The 
BSE has designated the proposed rule change 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 the proposed rule change 
effective upon filing with the Commission. On June 27, 2007, BSE filed 
Amendment No. 1 to the proposed rule change.\5\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ In Amendment No. 1, BSE requested a waiver of the 30-day 
operative delay.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The BSE proposes to amend the rules of the Boston Options Exchange 
(``BOX'') to extend the BOX pilot program that permits BOX to have no 
minimum size requirement for orders entered into the Price Improvement 
Period (``PIP'') process (``PIP Pilot Program''). The text of the 
proposed rule change is available on BSE's Web site at: http://www.bostonoptions.com
, at BSE's principal office, 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 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to extend a Pilot 
Program under the Rules of the BOX for an additional year. The Pilot 
Program allows BOX to have no minimum size requirement for orders 
entered into the PIP process.\6\ The proposed rule change retains the 
text of Supplementary Material .01 to Section 18 of Chapter V of the 
BOX Rules and seeks to extend the operation of the PIP Pilot Program 
until July 18, 2008.
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    \6\ The Pilot Program is currently set to expire on July 18, 
2007. See Securities Exchange Act Release No. 54066 (June 29, 2006), 
71 FR 38434 (July 6, 2006) (SR-BSE-2006-24); See also Securities 
Exchange Act Release Nos. 52149 (July 28, 2005), 70 FR 44704 (August 
3, 2005) (SR-BSE-2005-22); and 49068 (January 13, 2004), 69 FR 2775 
(January 20, 2004) (SR-BSE-2002-15) (``Original PIP Pilot Program 
Approval Order'').
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    The Exchange notes that the PIP Pilot Program provides small 
customer orders with benefits not available under the rules of other 
exchanges. One of the important factors of the PIP Pilot Program is 
that it guarantees members the right to trade with their customer 
orders that are less than 50 contracts. In particular, any order 
entered into the PIP is guaranteed an execution at the end of the 
auction at a price at least a penny better than the national best bid 
or offer.
    In further support of this proposed rule change, and as required by 
the Original PIP Pilot Program Approval Order, the Exchange represents 
that it has been submitting to the Commission a monthly PIP Pilot 
Program Report, offering detailed data from and analysis of the PIP 
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. The Exchange represents that the proposed rule change is 
designed to provide investors with real and significant price 
improvement regardless of the size of the order. Accordingly, the 
Exchange believes that the proposal is consistent with the requirements 
of Section 6(b) of the Act,\7\ in general, and Section 6(b)(5) of the 
Act,\8\ in particular, in that it is designed to provide price 
improvement to any order, which is consistent with the public interest 
and protection of investors from a best execution standpoint. 
Additionally, the Exchange believes that price improvement to any size 
order creates competition for the best execution of all orders, without 
unduly burdening competition.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 
result in 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 proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) \9\ of the Act and Rule 19b-4(f)(6) thereunder.\10\ 
As required under Rule 19b-4(f)(6)(iii),\11\ the Exchange provided the 
Commission with written 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 the filing of 
the proposed rule change.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
may not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The BSE requests that the Commission 
waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii),\14\ which would make the rule change effective and 
operative upon filing. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because such waiver would allow the PIP Pilot Program 
to continue without interruption through July 18, 2008.\15\ 
Accordingly, the Commission designates the proposed

[[Page 37551]]

rule change operative upon filing with the Commission.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ Id.
    \15\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such 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.\16\
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    \16\ The effective date of the original proposed rule is June 
26, 2007. The effective date of Amendment No. 1 is June 27, 2007. 
For purposes of calculating the 60-day period within which the 
Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on June 27, 2007, the date on which the BSE submitted 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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. 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 rule-comments@sec.gov. Please include 

File Number SR-BSE-2007-27 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-2007-27. 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 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-2007-27 and should be 
submitted on or before July 31, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-13309 Filed 7-9-07; 8:45 am]

BILLING CODE 8010-01-P