Document ID: SEC-2008-1735-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Boston Stock Exchange, Inc.
Posted Date: 2008-12-30T05:00Z

[Federal Register: December 30, 2008 (Volume 73, Number 250)]
[Notices]               
[Page 79945-79946]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30de08-142]                         

[[Page 79945]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59129; File No. SR-BSE-2008-57]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Boston Stock Exchange, 
Inc. To List Options on the Mini-Nasdaq-100 Index at $1 Strike Price 
Intervals

 December 22, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 16, 2008, the Boston Stock Exchange, Inc. (``BSE'' or 
``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 by the self-regulatory 
organization. The Exchange filed the proposal as a ``non-
controversial'' 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 Section 6 (Series of Options 
Contracts Open for Trading) of Chapter IV and Section 10 (Terms of 
Index Option Contracts) of Chapter XIV of the Rules of the Boston 
Options Exchange Group, LLC (``BOX'') to allow BOX to list options on 
the Mini-Nasdaq-100 Index (``MNX'' or ``Mini-NDX''), which is based on 
1/10th the value of the Nasdaq-100 Index (``NDX''), at $1 strike price 
intervals. 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
    The purpose of the proposed rule change is to amend Chapter XIV, 
Section 10 of the BOX Rules by adding new rule text which would allow 
BOX to list options on the Mini-Nasdaq-100 Index, which is based on 1/
10th the value of the Nasdaq-100 Index, at $1 or greater strike price 
intervals.\5\
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    \5\ Currently, under Chapter XIV, Sec. 10(c) of the BOX Rules, 
BOX has authority to list Mini-NDX options at $2.50 strike price 
intervals.
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    Specifically, the Exchange proposes that the minimum strike price 
interval for Mini-NDX options will be 0.01 point ($1.00). The Exchange 
believes that $1 strike price intervals in Mini-NDX option series will 
provide investors with greater flexibility by allowing them to 
establish positions that are better tailored to meet their investment 
objectives.
    For initial series, BOX would list at least two strike prices above 
and two strike prices below the current value of MNX at or about the 
time a series is opened for trading on BOX. As part of this initial 
listing, BOX would list strike prices that are within 5 points from the 
closing value of MNX on the preceding day.
    As for additional series, BOX would be permitted to add additional 
series when deemed necessary to maintain an orderly market, to meet 
customer demand or when the underlying MNX moves substantially from the 
initial exercise price or prices. To the extent that any additional 
strike prices are listed by BOX, such additional strike prices shall be 
within thirty percent (30%) above or below the closing value of MNX. 
BOX would also be permitted to open additional strike prices that are 
more than 30% above or below the current MNX value provided that 
demonstrated customer interest exists for such series, as expressed by 
institutional, corporate or individual customers or their brokers. 
Market Makers trading for their own account would not be considered 
when determining customer interest. In addition to the initial listed 
series, BOX may list up to sixty (60) additional series per expiration 
month for each series in Mini-NDX options. In addition, the Exchange 
proposes that BOX shall not list Long-Term Equity AnticiPation 
Securities (``LEAPS'') on Mini-NDX options at intervals less than $5.
    The Exchange is also proposing to set forth a delisting policy with 
respect to Mini-NDX options. Specifically, BOX would, on a monthly 
basis, review series that are outside a range of five (5) strikes above 
and five (5) strikes below the current value of MNX and delist series 
with no open interest in both the put and the call series having a: (i) 
Strike higher than the highest strike price with open interest in the 
put and/or call series for a given expiration month; and (ii) strike 
lower than the lowest strike price with open interest in the put and/or 
call series for a given expiration month.
    Notwithstanding the proposed delisting policy, customer requests to 
add strikes and/or maintain strikes in Mini-NDX options in series 
eligible for delisting shall be granted.
    Further, in connection with the proposed delisting policy, if BOX 
identifies series for delisting, BOX shall notify other options 
exchanges with similar delisting policies regarding eligible series for 
listing, and shall work with such other exchanges to develop a uniform 
list of series to be delisted, so as to ensure uniform series delisting 
of multiply listed Mini-NDX options.
    It is expected that the proposed delisting policy for Mini-NDX 
options will be adopted by other options exchanges that list and trade 
Mini-NDX options.
    The Exchange also proposes to add new Supplementary Material .05 to 
Chapter IV, Section 6 of the BOX Rules, which would be an internal 
cross reference stating that the intervals between strike prices for 
Mini-NDX option series would be determined in accordance with proposed 
new Chapter XIV, Section 10(c)(5) of the BOX Rules.
    The Exchange has analyzed BOX's capacity and represents that it 
believes BOX and the Options Price Reporting Authority have the 
necessary systems capacity to handle the additional traffic associated 
with the listing and trading of $1 strikes or greater for Mini-NDX 
options.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\6\

[[Page 79946]]

in general, and Section 6(b)(5) of the Act,\7\ in particular, in that 
it is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, to prevent fraudulent and 
manipulative acts, 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. Specifically, the 
proposed rule change will allow BOX to list options on MNX at $1 strike 
intervals, providing investors with greater flexibility and allowing 
them to better tailor their investment objectives, while allowing BOX 
to remain competitive with other options exchanges listing $1 strike 
intervals on MNX options.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 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 rule does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; or (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, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written 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. The Commission deems this requirement to be met.
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    The Exchange stated in its filing that the proposed rule change is 
based in all material respects on a Chicago Board Options Exchange rule 
change recently approved by the Commission \10\ and does not raise any 
novel issues. Additionally, the Exchange believes the proposed rule 
change is necessary to eliminate any confusion among members of 
multiple exchanges regarding the listing and trading of MNX options and 
for purposes of maintaining a fair and orderly market.
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    \10\ See Securities Exchange Act Release No. 58924 (November 10, 
2008), 73 FR 68464 (November 18, 2008) (SR-CBOE-2008-96).
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    The Exchange has asked the Commission to waive the operative delay 
to permit the proposed rule change to become operative prior to the 
30th day after filing. The Commission has determined that waiving the 
30-day operative delay of the Exchange's proposal is consistent with 
the protection of investors and the public interest because such waiver 
will permit the Exchange to respond promptly to demand by market 
participants to list options on MNX at $1 strike price intervals, and 
compete with other exchanges listing options on MNX at $1 strike price 
intervals.\11\ Therefore, the Commission designates the proposal 
operative upon filing.
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    \11\ 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. See 15 U.S.C. 
78c(f).
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    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.

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 No. SR-BSE-2008-57 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-2008-57. 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 No. SR-BSE-2008-57 and should be 
submitted on or before January 20, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-30859 Filed 12-29-08; 8:45 am]

BILLING CODE 8011-01-P