Document ID: SEC-2008-0983-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Boston Stock Exchange, Inc.
Posted Date: 2008-07-16T04:00Z

[Federal Register: July 16, 2008 (Volume 73, Number 137)]
[Notices]               
[Page 40884-40886]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16jy08-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58136; File No. SR-BSE-2008-41]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Options on Shares of the SPDR[supreg] Gold Trust

July 10, 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 July 9, 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 Exchange. BSE filed the 
proposal 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 3 (Criteria for Underlying 
Securities) of Chapter IV of the Rules of the Boston Options Exchange 
Group LLC (``BOX'') to enable the listing and trading on BOX of options 
on the SPDR[supreg] Gold Trust (Ticker: GLD). The text of the proposed 
rule change is available at the Exchange, the Commission's Public 
Reference Room, and http://www.bostonstock.com.

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
    The purpose of the proposed rule change is to enable the listing 
and trading of options on the SPDR[supreg] Gold Trust (the ``Gold 
ETF'') on BOX.
    Currently, Section 3(i) of Chapter IV of the BOX Rules provides 
that securities deemed appropriate for options trading shall include 
shares or other securities (``Exchange-Traded Fund Shares'') that are 
traded on a national securities exchange and are defined as an ``NMS'' 
stock under Rule 600 of Regulation NMS, and that (i) Represent 
interests in registered investment companies (or series thereof) 
organized as open-end management investment companies, unit investment 
trusts or similar entities that hold portfolios of securities and/or 
financial instruments, including, but not limited to, stock index 
futures contracts, options on futures, options on securities and 
indices, equity caps, collars and floors, swap agreements, forward 
contracts, repurchase agreements and reverse repurchase agreements (the 
``Financial Instruments'') and money market instruments, including, but 
not limited to, U.S. government securities and repurchase agreements 
(the ``Money Market Instruments'') comprising or otherwise based on or 
representing investments in broad-based indexes or portfolios of 
securities and/or Financial Instruments and Money Market Instruments 
(or that hold securities in one or more other registered investment 
companies that themselves hold such portfolios of securities and/or 
Financial Instruments and Money Market Instruments) or (ii) represent 
interests in a trust that holds a specified non-U.S. currency or 
currencies deposited with the trust when aggregated in some specified 
minimum number may be surrendered to the trust by the beneficial owner 
to receive the specified non-U.S. currency or currencies and pays the 
beneficial owner interest and other distributions on the deposited non-
U.S. currency or currencies, if any, declared and paid by the trust or 
(iii) represent commodity pool interests principally engaged, directly 
or indirectly, in holding and/or managing portfolios or baskets of 
securities, commodity futures contracts, options on commodity futures 
contracts, swaps, forward contracts and/or options on physical 
commodities and/or non-U.S. currency. The proposed rule change would 
expand the types of ETFs that may be approved for options trading on 
BOX to include the SPDR[supreg] Gold Trust.
    Apart from allowing the SPDR[supreg] Gold Trust to be an underlying 
for options traded on BOX as described above, the listing standards for 
ETFs would remain unchanged from those that apply under current BOX 
rules. In addition to satisfying the aforementioned listing standards 
in Section 3(i) of Chapter IV of the BOX Rules, the Gold ETF must be 
traded on a national securities exchange and must be defined as an 
``NMS stock'' under Rule 600 of Regulation NMS. The Gold ETF must also 
either: (1) Meet the criteria and guidelines of paragraphs (a) and (b) 
under Section 3 of Chapter IV of the BOX Rules (Criteria for Underlying 
Securities); or (2) be available for creation or redemption each 
business day from and through the issuing trust, investment company, 
commodity pool or other entity in cash or in kind at a price related to 
net asset value, and the issuer is obligated to issue the Gold ETF in a 
specified aggregate number even if some or all of the investments and/
or cash required to be deposited have not been received by the issuer, 
subject to the condition that the person obligated to deposit the 
investment assets has undertaken to deliver them as soon as possible 
and such undertaking is secured by the delivery and maintenance of 
collateral consisting of cash or cash equivalents satisfactory to the 
issuer of the Gold ETF, all as described in the Gold ETF's prospectus.
    The Exchange proposes that the current applicable continued listing 
standards for options on ETFs would apply to options on the SPDR 
[supreg] Gold Trust. Specifically, as set forth in Section 4(h) of 
Chapter IV of the BOX Rules, the Gold ETF approved for options trading 
will not be deemed to meet the requirements for continued approval, and 
the Exchange will not open for trading any additional series of options 
contracts if the Gold ETF ceases to be an ``NMS stock,'' or the Gold 
ETF is delisted, halted or suspended from trading on its primary market 
or if any of the following circumstances occur: (1) Following the 
initial twelve-month period beginning upon the commencement of trading 
of the Gold ETF, there are fewer than 50 record and/or beneficial 
holders of the Gold ETF for 30 or more consecutive trading days; (2)

[[Page 40885]]

the value of the index or portfolio of securities or portfolio of 
commodities including commodity futures contracts, options on commodity 
futures contracts, swaps, forward contracts, and/or options on physical 
commodities, on which the Gold ETF is based is no longer calculated or 
available; or (3) such other event occurs or condition exists that in 
the opinion of the Exchange makes further dealing in such options on 
the Exchange inadvisable.
    The Exchange represents that its surveillance procedures applicable 
to trading in options on the Gold ETF will be similar to those 
applicable to all other options on ETFs currently traded on BOX. 
Further, the Exchange may obtain trading information via the 
Intermarket Surveillance Group (``ISG'') from other exchanges who are 
members or affiliates of the ISG, including, but not limited to, the 
New York Mercantile Exchange, Inc., related to any financial 
instrument(s) traded on that exchange that is based, in whole or in 
part, upon an interest in, or performance of, gold.
    Finally, the listing and trading of options on the Gold ETF under 
Section 3(i) will not have any effect on the rules pertaining to 
position and exercise limits \5\ or margin.\6\
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    \5\ See Sections 7 and 9 of Chapter III of the BOX Rules.
    \6\ See Section 3 of Chapter XIII of the BOX Rules.
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    This proposed rule change is based on filings recently approved by 
the Commission.\7\
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    \7\ See Securities Exchange Act Release No. 57894 (May 30, 
2008), 73 FR 32061 (June 5, 2008) (File Nos. SR-Amex-2008-15; SR-
CBOE-2005-11; SR-ISE-2008-12; SR-NYSEArca-2008-52; and SR-Phlx-2008-
17). See also Securities Exchange Act Release No. 57945 (June 10, 
2008), 73 FR 34353 (June 17, 2008) (SR-NASDAQ-2008-051).
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\9\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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 
Exchange believes that amending the BOX Rules to accommodate the 
listing and trading of options on the Gold ETF will benefit investors 
by providing them with greater risk management tools.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, 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 \10\ and Rule 19b-4(f)(6) 
thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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 Exchange has fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. 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. The Exchange requests that the Commission waive 
the 30-day operative delay so that the Exchange can list and trade 
options on the Gold ETF immediately. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest to permit the listing and trading of 
options on the SPDR Gold Trust without further delay.\12\ The 
Commission notes the proposal is substantively identical to proposals 
that were recently approved by the Commission, and does not raise any 
new regulatory issues.\13\ For these reasons, the Commission designates 
the proposed rule change as operative upon filing.
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    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \13\ See supra note 7.
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    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.

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-2008-41 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-2008-41. 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 the filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted

[[Page 40886]]

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-2008-41 and should be submitted on or before August 
6, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-16234 Filed 7-15-08; 8:45 am]

BILLING CODE 8010-01-P