Document ID: SEC-2007-1738-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc.
Posted Date: 2007-12-20T05:00Z

[Federal Register: December 20, 2007 (Volume 72, Number 244)]
[Notices]               
[Page 72426-72428]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de07-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56948; File No. SR-BSE-2007-52]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Exchange Fees and Charges

December 12, 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 November 30, 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, II 
and III below, which Items have been substantially prepared by the 
Exchange. The Exchange has designated this proposal as one establishing 
or changing a due, fee, or other charge imposed by the Exchange under 
section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) 
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 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 the Fee Schedule of the Boston 
Options Exchange (``BOX''). The proposed amendment will remove the 
Minimum Activity Charge (``MAC'') from the Fee Schedule of the BOX. The 
proposed amendment also will increase the number of options classes 
that will participate in the Liquidity Make or Take Pricing Structure 
(``Make or Take''). The text of the proposed rule change is available 
at BSE's principal office, the Commission's Public Reference Room, and 
http://www.bostonstock.com.

[[Page 72427]]

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
    BOX currently charges its Market Making Participants a monthly 
fixed fee for each option class in which the Participant is assigned, 
known as the MAC. MAC fee levels are determined according to certain 
``categories'' of options classes listed on BOX. The category for each 
class is determined by its total trading volume across all U.S. options 
exchanges as determined by Options Clearing Corporation (``OCC'') data. 
BOX is proposing to eliminate the MAC so Market Makers will only be 
charged fees for contracts which are traded. Such fees will be 
determined on a ``Per Contract Execution'' basis rather than by setting 
minimum fee levels that Market Making Participants must incur each 
month, regardless of the level of their trading activity.
    Additionally, BOX currently applies an alternative pricing 
structure for certain options classes, referred to as Make or Take. 
Make or Take is currently applicable only to options classes 
participating in the Penny Pilot,\5\ as referenced in Chapter V, 
section 33 of the BOX Trading Rules. Make or Take pricing is driven by 
liquidity, whereby orders that add liquidity to the BOX Book receive a 
transaction credit and orders which take liquidity from the BOX Book 
are charged a transaction fee. The proposed amendment will increase the 
number of classes for which the Make or Take pricing structure will be 
applicable. The proposed classes being added to Make or Take are the 
twenty-five (25) most actively-traded, multiply-listed options classes 
on BOX which are presently not included in the Penny Pilot.
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    \5\ The ``Original Penny Pilot Program Approval Order'' listed 
the initial thirteen options classes participating in the Penny 
Pilot Program. See Securities Exchange Act Release No. 54789 
(November 20, 2006), 71 FR 68654 (November 27, 2006) (SR-BSE-2006-
49). On September 27, 2007, the Commission approved an extension and 
expansion of the Penny Pilot Program to include fifty additional 
classes, in two phases. See Securities Exchange Act Release No. 
56566 (September 27, 2007), 72 FR 56400 (October 3, 2007) (SR-BSE-
2007-40). Phase One began on September 28, 2007 and will continue 
for six months, until March 27, 2008. Phase One added twenty-two 
options classes to the Penny Pilot. Phase Two is scheduled to begin 
on March 28, 2008, and will continue for one year until March 27, 
2009. During the second phase, the number of options classes trading 
in pennies will again increase.
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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,\6\ in general, and section 
6(b)(4) of the Act,\7\ in particular, which requires that an exchange 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and issuers and other persons using its 
facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 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 proposed rule change is filed pursuant to section 
19(b)(3)(A)(ii) of the Act \8\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\9\ because it establishes or changes a fee applicable only 
to a member imposed by the Exchange. Accordingly, the proposal is 
effective upon Commission receipt of the 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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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
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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-2007-52 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-2007-52. 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, on official business 
days between the hours of 10 a.m. and 3 p.m., located at 100 F Street, 
NE., Washington, DC 20549. 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-2007-52 and should be 
submitted on or before January 10, 2008.

[[Page 72428]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-24724 Filed 12-19-07; 8:45 am]

BILLING CODE 8011-01-P