Document ID: SEC-2008-0785-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Boston Stock Exchange, Inc.
Posted Date: 2008-06-06T04:00Z

[Federal Register: June 6, 2008 (Volume 73, Number 110)]
[Notices]               
[Page 32368-32369]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn08-126]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57900; File No. SR-BSE-2008-32]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Relating to the Liquidity Make or Take Pricing Structure 
Linkage Fees Portion of the Fee Schedule for Exchange Services

June 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 May 29, 2008, the Boston Stock Exchange, Inc. (``BSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared substantially by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons, and simultaneously 
granting accelerated approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend the Liquidity Make or Take 
Pricing Structure (``Make or Take Pricing'')--Intermarket Linkage 
Transaction fees (``Linkage Fees'') portion of the Fee Schedule \3\ of 
the Boston Options Exchange (``BOX'') to modify the Linkage Fees 
associated with the Make or Take Pricing.\4\ The text of the proposed 
rule change is available at the Exchange, the Commission's Public 
Reference Room, and http://www.bostonoptions.com.
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    \3\ The BOX Fee Schedule can be found on the BOX Web site at 
http://www.bostonoptions.com.
    \4\ Capitalized terms not otherwise defined herein shall have 
the meanings set forth in the BOX Rules.
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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 III 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
    The purpose of this filing is to amend Section 7(c) of the BOX Fee 
Schedule in order to revise the Liquidity Make or Take Pricing--Linkage 
Fees portion of the BOX Fee Schedule, so as to conform with fee changes 
the Exchange recently proposed for Liquidity Make or Take Pricing 
within certain liquid Penny Pilot Program classes.\5\
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    \5\ See Securities Exchange Act Release No. 57887 (May 30, 2008) 
(SR-BSE-2008-31) (proposing reduced fees and credits for certain 
liquid Penny Pilot Program classes).
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    Executions on BOX resulting from orders sent via the Intermarket 
Linkage System (``Linkage Orders'') are subject to the same billing 
treatment as other broker-dealer orders. On September 6, 2007, the 
Exchange introduced the Liquidity Make or Take Pricing for all classes 
contained in the Penny Pilot Program.\6\ Since Linkage Orders that are 
sent to and executed on BOX take liquidity, such orders are assessed a 
$0.45 per contract fee for executed transactions in issues 
participating in the Penny Pilot Program.\7\
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    \6\ Securities Exchange Act Release No. 56371 (September 7, 
2007), 72 FR 52401 (September 13, 2007) (SR-BSE-2007-43). The 
Exchange may trade options contracts in one-cent increments in 
certain approved issues as part of the Penny Pilot Program through 
March 27, 2009. See Securities Exchange Act Release No. 56566 
(September 27, 2007), 72 FR 56400 (October 3, 2007) (SR-BSE-2007-
40).
    \7\ See Securities Exchange Act Release No. 56371 (September 7, 
2007), 72 FR 52401 (September 13, 2007) (SR-BSE-2007-43). ``Linkage 
Orders that are not executed upon receipt are rejected back to the 
sender and are never posted in the BOX Book. Therefore, a Linkage 
Order would never be eligible to receive a credit of the Transaction 
Fee.'' Id.
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    On May 28, 2008, the Exchange filed a rule proposal with the 
Commission that reduces the fees and credits that it charges and 
applies to transactions in the iShares Russell 2000 [supreg] Index Fund 
(``IWM''), Powershares [supreg] QQQ Trust Series 1 (``QQQQ'') and the 
Standard & Poor's Depositary Receipts [supreg] (``SPY'') (``Tier 2 
Classes'') by fifteen cents ($0.15).\8\ In conjunction with the 
reduction of these fees and credits for Tier 2 Classes, the Exchange is 
now proposing to make the applicable fee for Linkage Orders the same as 
those for classes included in the Liquidity Make or Take Pricing. 
Specifically, the Exchange proposes to change the fee schedule to state 
that: ``[t]he charge for inbound Linkage Orders in instruments which 
are contained in the Liquidity Make or Take pricing structure will be 
the applicable `take' fee for classes included in the Liquidity Make or 
Take pricing structure.'' Consequently, the Exchange is proposing to 
reduce the fees that it charges for Linkage Orders in Tier 2 Classes by 
fifteen cents ($0.15) to thirty cents ($0.30). The Linkage Fee of 
forty-five cents ($0.45) will remain the same for Tier 1 classes.\9\ 
The Exchange

[[Page 32369]]

is proposing to amend the BOX Fee Schedule, effective June 2, 2008, 
pending Commission approval.
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    \8\ See note 5, supra. Fee changes made pursuant to the 
proposal, which was effective upon filing, are reflected in the Fee 
Schedule attached to SR-BSE-2008-31 as Exhibit 5.
    \9\ Tier 1 pricing applies to all classes that currently 
participate in the Penny Pilot, other than the Tier 2 Classes.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\10\ in general, and Section 
6(b)(4) of the Act,\11\ in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and issuers and other persons using its 
facilities for the purpose of executing Linkage Orders that are routed 
to the Exchange from other market centers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. 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-2008-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BSE-2008-32. 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 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-2008-32 and should be 
submitted on or before June 27, 2008.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange \12\ and, in particular, with the requirements of Section 6(b) 
of the Act.\13\ In particular, the Commission finds that the Exchange's 
proposal is consistent with Section 6(b)(4) of the Act,\14\ which 
requires that the rules of the Exchange provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. The Commission notes 
that this proposal conforms Linkages Fees with those fees charged on 
other broker-dealer executions.
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    \12\ In approving this rule, the Commission notes that it has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \13\ 15. U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
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    The Exchange requests that the Commission approve the proposed rule 
change on an accelerated basis pursuant to Section 19(b)(2) of the 
Act.\15\ The Commission finds good cause, pursuant to Section 
19(b)(2)(B) of the Act,\16\ for approving the proposed rule change 
prior to the 30th day after the date of publication of the notice of 
the filing thereof in the Federal Register. An accelerated approval 
will allow the Exchange to immediately implement a lower fee for market 
participants executing certain Linkage Orders on the Exchange.
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    \15\ 15 U.S.C. 78s(b)(2).
    \16\ 15 U.S.C. 78s(b)(2)(B).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\17\ that the proposed rule change (SR-BSE-2008-32), is hereby approved 
on an accelerated basis.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 15 U.S.C. 78s(b)(2)(B).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-12688 Filed 6-5-08; 8:45 am]

BILLING CODE 8010-01-P