Document ID: SEC-2007-1273-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc
Posted Date: 2007-09-13T04:00Z

[Federal Register: September 13, 2007 (Volume 72, Number 177)]
[Notices]               
[Page 52401-52403]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13se07-88]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56371; File No. SR-BSE-2007-43]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change, 
as Modified by Amendment No. 1, Relating to Exchange Fees and Charges

September 7, 2007.
    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 August 31, 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 BSE. 
On September 6, 2007, the BSE submitted Amendment No. 1 to the proposed 
rule change. The BSE has designated this proposal as one establishing 
or changing a due, fee, or other charge imposed by the BSE 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 change, as amended, 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 proposes to amend the Boston Options Exchange (``BOX'') Fee 
Schedule in order to revise certain transaction fees for issues that 
trade as part of the Penny Pilot Program.\5\
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    \5\ See Securities Exchange Act Release No. 55155 (January 23, 
2007) 72 FR 4741 (February 1, 2007) (SR-BSE-2006-49) (``Original 
Penny Pilot Program Approval Order''). See also Securities Exchange 
Act Release No. 56149 (July 26, 2007), 72 FR 42450 (August 2, 2007) 
(SR-BSE-2007-38).

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[[Page 52402]]

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 BSE 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 BSE 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 revise the existing 
BOX Fee Schedule in conjunction with the Penny Pilot Program. The 
Exchange plans to introduce the Make or Take pricing structure for all 
classes contained in the Penny Pilot Program.\6\ The Exchange is 
proposing to amend the BOX Fee Schedule in order to make the following 
changes to certain fees and charges that are assessed to Participants 
in the issues referenced below, effective as of the first trading day 
of September 2007.\7\
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    \6\ The Original Penny Pilot Program Approval Order, supra note 
5, lists the initial thirteen options classes currently 
participating in the Penny Pilot Program. If the Penny Pilot Program 
is expanded to introduce more participating options classes, the 
Make or Take Pricing model will also apply to those options classes. 
Furthermore, if the Penny Pilot Program is extended, the Make or 
Take Pricing model will also be extended accordingly.
    \7\ Participating classes are listed in Section 33 to Chapter V 
of the BOX Rules.
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Transaction Fees for Classes Contained in the Penny Pilot
    The Exchange is proposing to implement a Liquidity Make or Take 
pricing structure for executed transactions in issues participating in 
the Penny Pilot Program. Under the proposed Fee Schedule change, orders 
that add or ``make'' liquidity to the BOX Book will receive a 
transaction credit upon execution. BOX Market Makers will receive a 
credit of $0.30 per contract. All other Participants will receive a 
credit of $0.25 per contract. Any order, including an order with a Fill 
and Kill designation, which executes against an order which is being 
exposed before being placed on the BOX Book, will be deemed to be 
making liquidity and will receive a transaction credit upon execution.
    The Transaction Fee for all Participants that ``take'' liquidity 
from the BOX Book will be $0.45 per contract. This fee will be applied 
to all Participants, including Market Makers, Broker-Dealers and 
Executing Participants executing orders on behalf of Public Customers. 
Any order, including an order with a Fill and Kill designation, which 
takes liquidity by trading immediately upon entry to the BOX Book or 
following its exposure as part of NBBO filtering will be assessed the 
$0.45 per contract fee.
Linkage Fees
    Linkage Orders executed at BOX are subject to the same billing 
treatment as other Broker-Dealer orders. Since Linkage Orders that are 
sent to and executed on BOX will be taking liquidity, these orders will 
be assessed a $0.45 per contract fee. Linkage Orders that are not 
executed upon receipt are rejected back to the sender and are never 
posted in the BOX Book. Therefore, a Linkage Order would never be 
eligible to receive a credit of the Transaction Fee.
MAC and Mini MAC Exemption
    No MAC or MiniMAC fees will be charged for classes contained in the 
Liquidity Make or Take pricing structure. In addition, the trades in 
these classes will not count toward the calculation of Average Daily 
Volume rebates for BOX Market Makers.
Transactions Exempted From the Liquidity Make or Take Model
    The following transactions will be exempt from the Liquidity Make 
or Take pricing structure as they are deemed to neither take nor make 
liquidity: Transactions which occur on the opening or re-opening of 
trading and transactions on both sides of a PIP, with the exception of 
unrelated orders that interact with an Improvement Auction, which will 
be charged a ``take'' fee. Transactions which are exempt from the 
Liquidity Make or Take pricing structure will be subject to standard 
transaction fees as stated in the Fee Schedule.
2. Statutory Basis
    BSE believes that the proposed rule change is consistent with 
Section 6(b) of the Act,\8\ in general, and furthers the objectives of 
Section 6(b)(4) of the Act,\9\ in particular, in that it is designed to 
provide for the equitable allocation of dues, fees and other charges 
among its members and issuers and other persons using its facilities.
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    \8\ 15 U.S.C. 78f(b)
    \9\ 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 
result in 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4 \11\ 
thereunder because it establishes or changes a due, fee or other charge 
imposed by the Exchange. 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 the furtherance of the purposes of the 
Act.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)
    \11\ 17 CFR 240.19b-4(f)(2)
    \12\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on September 6, 2007, the date on which the BSE filed 
Amendment No. 1. 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

     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-2007-43 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission,

[[Page 52403]]

100 F Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-BSE-2007-43. 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 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-2007-43 and should be 
submitted on or before October 4, 2007.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-18076 Filed 9-12-07; 8:45 am]

BILLING CODE 8010-01-P