Document ID: SEC-2007-0021-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc.
Posted Date: 2007-01-08T05:00Z

[Federal Register: January 8, 2007 (Volume 72, Number 4)]
[Notices]               
[Page 811-812]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja07-96]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55015; File No. SR-BSE-2006-55]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc; Notice 
of Filing of a Proposed Rule Change and Amendment No. 1 Thereto 
Relating to the Definition of Complex Trade as Applied to Trades 
Through the Intermarket Linkage

 December 28, 2006.
    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 December 13, 2006, 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 substantially prepared by the 
Exchange. The BSE filed Amendment No. 1 to the proposal on December 27, 
2006. The Commission is publishing this notice to solicit comments on 
the proposed rule change, as amended, from interested persons.
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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 BSE proposes to amend Chapter XII, Section 1(c) of the rules of 
the Boston Options Exchange (``BOX'') to revise the definition of 
``Complex Trade'' as such definition applies to trades through the 
Intermarket Linkage (``Linkage''). The text of the proposed rule change 
appears below, with additions italicized and deletions in [brackets]:
Chapter XII. Intermarket Linkage Rules
Sec. 1 Definitions
    The following terms shall have the meaning specified in this 
Section 1 solely for the purpose of this Chapter XII:
    (a)-(b) No Change.
    (c) ``Complex Trade'' means the execution of an order in an options 
series in conjunction with the execution of one or more related orders 
in different options series in the same underlying security occurring 
at or near the same time for the purpose of executing a particular 
investment strategy and for an equivalent number of contracts, provided 
that the number of contracts of the legs of a spread, straddle, or 
combination order may differ by a permissible ratio [for the equivalent 
number of contracts and for the purpose of executing a particular 
investment strategy]. The permissible ratio for this purpose is any 
ratio that is equal to or greater than one-to-three (.333) and less 
than or equal to three-to-one (3.00).
    (d)-(s) No Change.
* * * * *

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 substantially 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
    This proposed rule change will amend the definition of ``Complex 
Trade'' in Chapter XII, Section 1(c) of the BOX Rules. For Linkage 
purposes, the BOX Rules define a ``Complex Trade'' as a trade 
reflecting the execution of an order in an options series in 
conjunction with one or more other orders in different series in the 
same underlying security ``for the equivalent number of contracts.'' A 
Complex Trade is exempt from the trade-through rule.\3\
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    \3\ See Box Rules, Chapter XII, Section 3(b)(vii).
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    In contrast to the Linkage definition of ``Complex Trade,'' Chapter 
V, Section 27(a) of the BOX Rules defines ``complex orders'' for other 
purposes on the Exchange. This definition includes ``Ratio Orders,'' 
which do not require that there be an equivalent number of contracts in 
the orders.\4\ Specifically, the rule permits ratios that are equal to 
or greater than one-to-two. The Exchange applies modified priority 
rules to complex orders.
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    \4\ See Box Rules, Chapter V, Section 27(a)(vi).
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    According to the BSE, the proposed rule change will conform the 
Linkage definition of Complex Trade to BOX's general definition of the 
concept. The BSE represents that the other five options exchanges are 
adopting a similar definition, which will result in uniform application 
of the term across all options exchanges. The BSE believes that such 
uniformity will facilitate the speedy execution of complex trades on 
all markets.
2. Statutory Basis
    The basis under the Act for the proposed rule change is the 
requirement under Section 6(b)(5) of the Act \5\ that the rules of a 
national securities 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. In particular, 
the BSE believes that the proposed rule change will make BOX's Linkage 
Rules consistent with BOX's internal market rules and will facilitate 
the trading of complex orders.\6\
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    \5\ 15 U.S.C. 78f(b)(5).
    \6\ See Amendment No. 1.

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[[Page 812]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The BSE does not believe that the proposed rule change will impose 
any burden on competition 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 BSE 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change; or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 No. SR-BSE-2006-55 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-2006-55. 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. 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-2006-55 and should be submitted on or before January 
29, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
Jill M. Peterson,
Assistant Secretary.
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    \7\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E6-22661 Filed 1-5-07; 8:45 am]

BILLING CODE 8011-01-P