Document ID: SEC-2008-1620-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations: Boston Stock Exchange, Inc.
Posted Date: 2008-12-01T05:00Z

[Federal Register: December 1, 2008 (Volume 73, Number 231)]
[Notices]               
[Page 72878-72879]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01de08-132]                         

[[Page 72878]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58996; File No. SR-BSE-2008-55]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Boston Stock Exchange, 
Inc. To Temporarily Increase the Number of Additional Quarterly Option 
Series in Exchange-Traded Fund Share Options That May Be Listed on the 
Boston Options Exchange Facility

November 21, 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 November 19, 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 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 Chapter IV, Section 6 (Series of 
Options Contracts Open for Trading), Supplemental Material .04, of the 
Rules of the Boston Options Exchange Group, LLC (``BOX'') to 
temporarily increase the number of additional Quarterly Options Series 
(``QOS'') in exchange-traded fund share (``ETF'') options from sixty 
(60) to one hundred (100) that may be added by BOX. 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
    This proposed rule change is based on a similar proposal by the 
Chicago Board Options Exchange, Incorporated (``CBOE'').\5\
    A pilot program (the ``Pilot Program'') on BOX currently permits 
the listing and trading of QOS.\6\ The purpose of this proposed rule 
change is to temporarily increase the number of additional QOS in ETF 
options from sixty (60) to one hundred (100) that may be added by BOX. 
To effect this change, the Exchange is proposing to add new 
subparagraph (h) to Supplemental Material .04.
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    \5\ See Securities Exchange Act Release No. 58887 (October 30, 
2008), 73 FR 66083 (November 6, 2008) (SR-CBOE-2008-111).
    \6\ The term ``Quarterly Options Series'' is defined in the BOX 
Rules as a series in an options class that is approved for listing 
and trading on the Exchange in which the series is opened for 
trading on any business day and that expires at the close of 
business on the last business day of a calendar quarter.
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    Because of the current, unprecedented market conditions, demand 
from market participants exists to add lower priced strikes for certain 
of the QOS. However, currently under Supplemental Material .04, BOX 
cannot honor this demand because the maximum number of additional 
series, sixty (60), has already been listed. These strikes which are 
currently in demand are much lower than those currently listed for 
which there is open interest.
    The Exchange is therefore seeking to temporarily increase the 
number of additional QOS that may be added to one hundred (100). The 
increase of additional series would be permitted immediately for 
expiration months currently listed and for expiration months added 
throughout the last quarter of 2008, including the new expiration month 
added after December 2008 expiration. The Exchange believes that this 
proposal is reasonable and will allow for more efficient risk 
management. The Exchange believes that this proposal will facilitate 
the functioning of the BOX market and will not harm investors or the 
public interest.
    The Exchange believes that user demand and the recent downward 
price movements in the underlying ETFs warrants a temporary increase in 
the number of strikes for all QOS in ETF options. BOX currently lists 
QOS in five (5) ETFs: (1) Nasdaq-100 Index Tracking Stock (``QQQQ''); 
(2) iShares Russell 2000 Index Fund (``IWM''); (3) DIAMONDS Trust, 
Series 1 (``DIA''); (4) Standard and Poor's Depositary Receipts/SPDRs 
(``SPY''); and (5) Energy Select SPDR (``XLE''). The chart below 
provides the historical closing prices of these ETFs over the past 
several months:

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                           ETF                              10/27/2008      10/13/2008       10/6/2008       9/30/2008       8/29/2008       7/31/2008
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QQQQ....................................................           28.69           35.13           34.86           38.91           46.12           45.46
IWM.....................................................           44.86           56.98           59.72              68           73.87           71.32
DIA.....................................................           80.26           95.03            99.9          108.36          115.45           113.7
SPY.....................................................           83.95          101.35          104.72          115.99          128.79          126.83
XLE.....................................................           40.86           50.55           54.89            63.3           74.65            74.4
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    The additional series will enable BOX to list in-demand, lower 
priced strikes.
    BOX represents that it has the necessary systems capacity to 
support the new options series that will result from this proposal. 
Further, as proposed, the Exchange notes that these series would 
temporarily become part of the Pilot Program and will be considered by 
the Commission when the Exchange seeks to renew or make permanent the 
Pilot Program in the future. In addition, the Exchange states that in 
the event that current market volatility continues, it may seek to 
continue (through a rule filing) the time period during which the 
additional

[[Page 72879]]

series proposed by this filing may be added.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed 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 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. Specifically, the current proposed 
rule change is responsive to the current, unprecedented market 
conditions, is limited in scope as to QOS in ETF options and as to 
time, and the proposed additional new series can be added without 
presenting capacity problems.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 \9\ and Rule 19b-4(f)(6) 
thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 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 enable the Exchange to better meet customer demand in light of 
recent increased volatility in the marketplace.\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-2008-55 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-2008-55. 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-2008-55 and should be 
submitted on or before December 22, 2008.

    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. E8-28421 Filed 11-28-08; 8:45 am]

BILLING CODE 8011-01-P