Document ID: SEC-2008-1467-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Boston Stock Exchange, Inc.
Posted Date: 2008-10-27T04:00Z

[Federal Register: October 27, 2008 (Volume 73, Number 208)]
[Notices]               
[Page 63742-63744]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc08-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58822; File No. SR-BSE-2008-47]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to a Change in the Percentage Ownership Interest in the Boston 
Options Exchange Group, LLC

October 21, 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 October 14, 2008, 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 prepared by the self-regulatory 
organization. The Exchange filed the proposed rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Schedule A of the Sixth Amended and 
Restated Operating Agreement (``BOX LLC Agreement''), of the Boston 
Options Exchange Group, LLC (``BOX''), in connection with the change in 
the percentage ownership interest of IB Exchange Corporation (``IB''). 
The text of the proposed rule change is available from the principal 
office of the Exchange, at the Commission's Public Reference Room and 
also on the Exchange's Internet Web site at http://nasdaqtrader.com/
Trader.aspx?id=Boston_Stock_Exchange.

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 self-regulatory organization 
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 self-regulatory organization 
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 January 13, 2004, the Commission approved four BSE proposals 
that together established, through an operating agreement among its 
owners, a Delaware limited liability company, BOX LLC, to operate BOX 
as an options trading facility of the Exchange.\5\ On August 7, 2008, 
the Commission approved three BSE proposals that included a transfer of 
BSE's Ownership Interest in BOX to MX US 2, Inc. (``MX US 2''), a 
wholly owned U.S. subsidiary of the Montreal Exchange Inc. (``MX''), 
and an amendment to the BOX LLC Agreement among the BOX owners.\6\
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    \5\ See Securities Exchange Act Release No. 49066 (January 13, 
2004), 69 FR 2773 (January 20, 2004) (SR-BSE-2003-17) (establishing 
a fee schedule for the proposed BOX facility); Securities Exchange 
Act Release No. 49065 (January 13, 2004), 69 FR 2768 (January 20, 
2004) (SR-BSE-2003-04) (creating Boston Options Exchange Regulation, 
LLC to which the BSE would delegate its self-regulatory functions 
with respect to the BOX facility); Securities Exchange Act Release 
No. 49068 (January 13, 2004), 69 FR 2775 (January 20, 2004) (SR-BSE-
2002-15) (approving trading rules for the BOX facility); Securities 
Exchange Act Release No. 49067 (January 13, 2004), 69 FR 2761 
(January 20, 2004) (SR-BSE-2003-19) (approving certain regulatory 
provisions of the operating agreement of BOX LLC).
    \6\ See Securities Exchange Act Release No. 58324 (August 7, 
2008), 73 FR 46936 (August 12, 2008) (SR-BSE-2008-02, SR-BSE-2008-
23, and SR-BSE-2008-25).
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    BOX intends to purchase the BOX units (``Units'') held by a BOX LLC 
member (``Seller's Units'') representing

[[Page 63743]]

an ownership interest of 1.09% and subsequently cancel the Seller's 
Units pursuant to Section 2.8(d) of the BOX LLC Agreement. As a result 
of this transaction, the percentage ownership interests of the other 
members of the BOX LLC Agreement will increase. In particular, IB's 
19.87% ownership interest in BOX LLC will thereafter be 20.09%, and MX 
US 2, Inc.'s 53.24% ownership interest will increase to 53.83%.
    Pursuant to Section 8.4(f) of the BOX LLC Agreement, any transfer 
of BOX Units that results in the acquisition and holding by any person, 
alone or together with any affiliate of such person, of an aggregate 
percentage interest level which meets or crosses the threshold level of 
20% is subject to the rule filing process pursuant to Section 19 of the 
Act. In addition, Section 8.7 of the BOX LLC Agreement, as previously 
approved by the Commission, states that upon the valid transfer of all 
or any portion of a BOX Member's Units, the BOX Board shall amend 
Schedule A as may be necessary to reflect changes in the rights of Unit 
holders.\7\
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    \7\ See Section 8.7, BOX LLC Agreement.
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    As a result of IB crossing the 20% threshold level, the Exchange is 
submitting the proposed rule change and amended Schedule A of the BOX 
LLC Agreement to the Commission. This proposal, in compliance with 
Sections 8.4(f) and 8.7 of the BOX LLC Agreement, will allow BOX to 
amend Schedule A to reflect the changes in the percentage ownership 
interests of the other Unit holders that are the result of the 
transfer.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\8\ in general, and furthers 
the objectives of Section 6(b)(1),\9\ in particular, in that it enables 
the Exchange to be so organized so as to have the capacity to be able 
to carry out the purposes of the Act and to comply, and to enforce 
compliance by its exchange members and persons associated with its 
exchange members, with the provisions of the Act, the rules and 
regulations thereunder, and the rules of the Exchange. The Exchange 
also believes that this filing furthers the objectives of Section 
6(b)(5) of the Act \10\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(1).
    \10\ 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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30-days after the date of filing.\13\ 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest.\14\ The Exchange has requested that 
the Commission waive the 30-day operative delay. The Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because the transfer of 
ownership interests occurred on October 15, 2008, and there is no 
reason to delay implementation of the changes to Schedule A of the BOX 
LLC Agreement. Accordingly, the Commission designates the proposal to 
be operative upon filing with the Commission.\15\
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
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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    Rule 19b-4(f)(6)(iii) requires the self-regulatory organization to 
give the Commission 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 filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. BSE has requested that the Commission designate a shorter 
notification time. The Commission hereby waives the five-day notice 
period. As explained above, it was necessary for BSE to file its 
proposed rule change expeditiously so that the changes in the 
percentage ownership interest of the Unit holders can be immediately 
incorporated in the BOX LLC Agreement.
    At any time within 60 days of the filing of the 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\ 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

    *a 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-2008-47 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-2008-47. 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/

[[Page 63744]]

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 the 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-2008-47 and should be 
submitted on or before November 17, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-25536 Filed 10-24-08; 8:45 am]

BILLING CODE 8011-01-P