Document ID: SEC-2007-1051-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc.
Posted Date: 2007-08-02T04:00Z

[Federal Register: August 2, 2007 (Volume 72, Number 148)]
[Notices]               
[Page 42450-42452]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02au07-138]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56149; File No. SR-BSE-2007-38]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Penny Pilot Program

July 26, 2007.
    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 24, 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 and 
II below, which Items have been substantially prepared by the BSE. 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 rendered 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 extend the Boston Options Exchange 
(``BOX'') pilot program that permits BOX to quote certain classes in 
penny increments (``Penny Pilot Program'') through September 27, 2007. 
The text of the proposed rule change is available at BSE, 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

[[Page 42451]]

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 extend the Penny 
Pilot Program under the Rules of the BOX for approximately an 
additional two months, extending the program through September 27, 
2007. The Penny Pilot Program permits BOX to quote certain designated 
classes in penny increments.\5\ The proposed extension will amend 
Section 33, (``Penny Pilot Program'') of Chapter V (``Doing business on 
BOX'') of the BOX Rules.
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    \5\ Under BOX's Rules, the Penny Pilot Program is currently set 
to expire on July 26, 2007. See Securities Exchange Act Release No. 
55155 (January 23, 2007), 72 FR 4741 (February 1, 2007) (SR-BSE-
2006-49); see also Securities Exchange Act Release No. 54789 
(November 20, 2006), 71 FR 68654 (November 27, 2006) (SR-BSE-2006-
49) (respectively, the ``Original Penny Pilot Program Approval 
Order'' and ``Notice'').
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    Currently, all six options exchanges, including BOX, participate in 
the Penny Pilot Program which includes the following thirteen options: 
Ishares Russell 2000 (IWM); NASDAQ-100 Index Tracking Stock (QQQQ); 
SemiConductor Holders Trust (SMH); General Electric Company (GE); 
Advanced Micro Devices, Inc. (AMD), Microsoft Corporation (MSFT); Intel 
Corporation (INTC); Caterpillar, Inc. (CAT); Whole Foods Market, Inc. 
(WFMI); Texas Instruments, Inc. (TXN); Flextronics International Ltd. 
(FLEX); Sun Microsystems, Inc. (SUNW); and Agilent Technologies, Inc. 
(A).
    The minimum price variation for all classes included in the Penny 
Pilot Program, except for the QQQQs, will continue to be $0.01 for all 
quotations in option series that are quoted at less than $3 per 
contract and $0.05 for all quotations in option series that are quoted 
at $3 per contract or greater. The QQQQs will continue to be quoted in 
$0.01 increments for all options series.
    BOX will deliver a report to the Commission during the first month 
after the expiration of the pilot, which will be composed of data from 
approximately the last five months of trading, from May 1, 2007 through 
September 27, 2007. The report will analyze the impact of penny pricing 
on market quality and options system capacity.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with section 6(b) of the Act \6\ in general, and furthers the 
objectives of section 6(b)(5) of the Act,\7\ in particular, in that it 
is designed to foster cooperation and coordination with persons engaged 
in regulating, clearing, settling, processing information with respect 
to, and 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.
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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 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

    No written comments were either solicited or received by the 
Exchange.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    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\ because 
the foregoing proposed rule does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (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.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30-days after the date of filing.\10\ 
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.\11\ The Exchange has requested that 
the Commission waive the 5-day pre-filing requirement and the 30-day 
operative delay. The Commission believes that waiving the 5-day pre-
filing requirement and the 30-day operative delay is consistent with 
the protection of investors and the public interest because such waiver 
will ensure continuity of the Exchange's rules and will allow the Penny 
Pilot Program to remain in effect without interruption. For these 
reasons, the Commission designates the proposal to be operative upon 
filing with the Commission.\12\
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    \10\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the 
Commission 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.
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ 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. 15 U.S.C. 78c(f).
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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.\13\
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    \13\ 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-2007-38 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-2007-38. 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

[[Page 42452]]

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 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-2007-38 and should be submitted on or before August 
23, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-14915 Filed 8-1-07; 8:45 am]

BILLING CODE 8010-01-P