Document ID: SEC-2007-1139-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc
Posted Date: 2007-08-15T04:00Z

[Federal Register: August 15, 2007 (Volume 72, Number 157)]
[Notices]               
[Page 45845-45846]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15au07-125]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56226; File No. SR-BSE-2007-35]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to the Market Opening Procedures of the Rules of the Boston Options 
Exchange

August 8, 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 August 3, 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 Exchange. 
The Exchange filed the proposal as a ``non-controversial'' proposed 
rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing this 
notice to solicit comments on the proposed rule 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The BSE is proposing to amend Chapter V, Section 9(e) of the rules 
of the Boston Options Exchange (``BOX'') to establish a permanent 
market opening procedure and to also define the relationship between 
the opening of an underlying stock in its primary market and the 
opening of the option on BOX during such times when the underlying 
stock's primary market has not opened. The text of the proposed rule 
change is available on the BSE's Web site at http://www.bostonoptions.com
, at BSE's principle 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 Exchange 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 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
    On February 4, 2004, the Commission approved the market opening 
guidelines, as set forth in the BOX Rules, on a pilot basis through 
August 6, 2004 \5\ and has since extended the Pilot Program through 
August 6, 2007.\6\ The purpose of this rule filing is to make these 
market opening guidelines permanent. The Exchange proposes to make its 
market opening guidelines permanent since they have successfully opened 
the market since BOX's inception.\7\
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    \5\ See Securities Exchange Act Release No. 49192 (February 4, 
2004), 69 FR 7051 (February 12, 2004) (SR-BSE-2004-05).
    \6\ See Securities Exchange Act Release Nos. 50163 (August 6, 
2004) 69 FR 50230 (August 13, 2004) (SR-BSE-2004-28); 52166 (July 
29, 2005), 70 FR 44957 (August 4, 2005) (SR-BSE-2005-34); 54507 
(September 26, 2006) 71 FR 58020 (October 2, 2006) (SR-BSE-2006-36); 
and 54467 (September 18, 2006) 71 FR 55530 (September 22, 2006) (SR-
BSE-2006-37).
    \7\ The BOX market first opened on February 6, 2004.
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    In addition, the purpose of this rule filing is also to define the 
relationship between the opening of the underlying stock in its primary 
market and the opening of the option on BOX during such times when the 
underlying stock's primary market has not opened.\8\ The BSE seeks to 
establish a process that allows for BOX to have the proper flexibility 
to open its market in an option in the morning when all other option 
Exchanges are open for trading and BOX rules currently do not allow for 
the opening of said options.
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    \8\ The proposed rule will deem an underlying security to have 
opened on the primary market when the primary market has reported a 
transaction in the underlying security, or disseminated opening 
quotations for the underlying security and not given an indication 
of a delayed opening, whichever occurs first.
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    In establishing this process, the BSE seeks to delegate to the 
Exchange the authority to decide whether BOX should open the market in 
an option when the underlying stock has not opened in the primary 
market, and all other Exchanges are trading the option. The Exchange 
presently has no express authority within the BOX Rules to authorize 
said opening of the market. The BSE seeks to establish this process to 
allow BOX to have the same authority as other Exchanges,\9\ to 
eliminate a competitive disadvantage and to provide additional 
liquidity and competitive quotes into the marketplace. Specifically, 
the Exchange will delay opening an option until the underlying security 
has opened unless the Exchange determines that the interests of a fair 
and orderly market are best served by opening trading in the option.
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    \9\ See ISE Rules 701(b)(2) and 701(b)(3).
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement

[[Page 45846]]

under Section 6(b) in general,\10\ and Section 6(b)(5) of the Act,\11\ 
in particular, that an exchange have rules that are designed to prevent 
fraudulent and manipulative 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 for a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. In particular, the proposed 
rule change will define the relationship between the opening of the 
stock in its primary market and the opening of the option on BOX during 
outages which will provide for a quick, efficient, fair and orderly 
market opening process.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 
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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \12\ and subparagraph (f)(6) of Rule 19b-4 
\13\ thereunder because it does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; (iii) become operative for 30 days 
from the date on which it was filed, or such shorter time as the 
Commission may designate; and the Exchange has given the Commission 
written notice of its intention to file the proposed rule change at 
least five business days prior to filing. 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
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    Under Rule 19b-4(f)(6) of the Act,\14\ the proposal does not become 
operative for 30 days after the date of its filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange has requested that 
the Commission waive the 30-day operative date, so that the Exchange 
may have a market opening procedure which commences immediately. The 
Commission believes that the proposed rule change does not raise any 
new regulatory issues and, consistent with the protection of investors 
and the public interest, has determined to waive the 30-day operative 
date, so that the proposal may become operative upon filing.\15\
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    \14\ Id.
    \15\ For purposes only of waiving the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition and capital formation. 15 U.S.C. 78c(f).
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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-2007-35 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-2007-35. 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-2007-35 and should be 
submitted on or before September 5, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-15933 Filed 8-14-07; 8:45 am]

BILLING CODE 8010-01-P