Document ID: SEC-2006-0996-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc.
Posted Date: 2006-08-03T04:00Z

[Federal Register: August 3, 2006 (Volume 71, Number 149)]
[Notices]               
[Page 44056-44058]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03au06-82]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54225; File No. SR-BSE-2006-26]

 
 Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change To Extend the Linkage Fee Pilot Program

July 27, 2006.
    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 June 28, 2006, 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. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and is approving the 
proposal on an accelerated basis for a pilot period through July 31, 
2007.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 fee schedule of the Boston Options 
Exchange (``Fee Schedule''), the options trading facility of the BSE 
(``BOX''), to extend until July 31, 2007, the current pilot program 
applicable to the options intermarket linkage (``Linkage'') fees and to 
make some technical changes to the Fee Schedule. The text of the 
proposed rule change is available on the BSE's Web site at (http://www.bostonstock.com
), at the offices of the Exchange, and at the 

Commission's Public Reference Room.

[[Page 44057]]

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 III 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 Exchange's fees for Principal (``P'') and Principal Acting as 
Agent (``P/A'') Orders Sec.  \3\ executed on BOX currently operate 
under a pilot program scheduled to expire on July 31, 2006.\4\ The BSE 
proposes to extend the current pilot program for such Linkage fees 
through July 31, 2007. Because all Linkage Orders received by BOX are 
for the account of a market maker on another exchange, Linkage fees 
that are applicable to P and P/A Orders are the same as fees applicable 
to market makers on other exchanges that submit orders to BOX outside 
of Linkage. The side of a BOX trade opposite an inbound P or P/A Order 
would be billed normally as any other BOX trade. Consistent with the 
Linkage Plan, no fees will be charged to a party sending a Satisfaction 
Order to BOX. Rather, a fee will be charged to the BOX Options 
Participant that was responsible for the trade-through that caused the 
Satisfaction Order to be sent.
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    \3\ Under Chapter XII, Section 1(j) of the BOX Rules, a 
``Linkage Order'' means an Immediate or Cancel order routed through 
Linkage. There are three types of Linkage Orders:
    (i) ``P/A Order,'' which is an order for the principal account 
of a Market Maker (or equivalent entity on another Participant 
Exchange that is authorized to represent Public Customer orders), 
reflecting the terms of a related unexecuted Public Customer order 
for which the Market Maker is acting as agent;
    (ii) ``P Order,'' which is an order for the principal account of 
a market maker (or equivalent entity on another Participant 
exchange) and is not a P/A Order; and
    (iii) ``Satisfaction Order,'' which is an order sent through the 
Linkage to notify a Participant Exchange of a Trade-Through and to 
seek satisfaction of the liability arising from that Trade-Through.
    \4\ See Securities Exchange Act Release No. 52147 (July 28, 
2005) 70 FR 44706 (August 3, 2005) (SR-BSE 2005-28).
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    The BSE believes that extending the Linkage fee pilot program until 
July 31, 2007 will give the Exchange and the Commission additional time 
and opportunity to evaluate the appropriateness of Linkage fees.
 2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act,\6\ in particular, in that the 
proposed rule change provides for the equitable allocation of 
reasonable dues, fees and other charges among its members and other 
persons using its facilities.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change does not 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 this 
proposed rule change.

III. 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-2006-26 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-2006-26. 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. 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 
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-2006-26 and should be submitted on or before August 
24, 2006.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange,\7\ and, in particular, the requirements of Section 6(b) of 
the Act \8\ and the rules and regulations thereunder. The Commission 
finds that the proposed rule change is consistent with Section 6(b)(4) 
of the Act,\9\ which requires that the rules of the Exchange provide 
for the equitable allocation of reasonable dues, fees and other charges 
among its members and other persons using its facilities. The 
Commission believes that the extension of the Linkage fee pilot until 
July 31, 2007 will give the Exchange and the Commission further 
opportunity to evaluate whether such fees are appropriate.
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    \7\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\10\ for approving the proposed rule change prior to the 
thirtieth day after publication of notice thereof in the

[[Page 44058]]

Federal Register.\11\ The Commission believes that granting accelerated 
approval of the proposed rule change will preserve the Exchange's 
existing pilot program for Linkage fees without interruption as the 
Exchange and the Commission further considers the appropriateness of 
Linkage fees.
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    \10\ 15 U.S.C. 78s(b)(2).
    \11\ BSE requested that the Commission find good cause, pursuant 
to Section 19(b)(2) of the Act, for approving the proposed rule 
change prior to the thirtieth day after publication of notice 
thereof in the Federal Register. Telephone conversation between Bill 
Meehan, General Counsel, BSE, and Ronesha A. Butler, Special 
Counsel, Division of Market Regulation, Commission on July 24, 2006.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-BSE-2006-26) is hereby 
approved on an accelerated basis for a pilot period to expire on July 
31, 2007.
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    \12\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-12525 Filed 8-2-06; 8:45 am]

BILLING CODE 8010-01-P