Document ID: SEC-2006-1714-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Boston Stock Exchange, Inc.
Posted Date: 2006-12-29T05:00Z

[Federal Register: December 29, 2006 (Volume 71, Number 250)]
[Notices]               
[Page 78479-78481]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29de06-118]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55000; File No. SR-BSE-2006-47]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto to Eliminate Fees on Certain Exchange 
Traded Funds and to Establish Fees on Certain Options on Indexes

December 21, 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 November 14, 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, II, 
and III below, which Items have been substantially prepared by the BSE. 
On December 20, 2006, BSE filed Amendment No. 1 to the proposed rule 
change.\3\ The BSE has designated this proposal as one establishing or 
changing a due, fee, or other charge applicable only to a member under 
Section 19(b)(3)(A)(ii) of the Act,\4\ and Rule 19b-4(f)(2) 
thereunder,\5\ 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\ In Amendment No. 1, the Exchange, among other things: (1) 
Clarified that the proposed rule change establishes fees applicable 
only to members for transactions in options on indices effected by 
members; (2) made additional amendments to correct certain errors 
and omissions; and (3) corrected certain errors in the purpose 
section of the proposed rule change. Changes made in Amendment No. 1 
have been incorporated into this notice.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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

    BSE is proposing to amend the Fee Schedule of the Boston Options 
Exchange (``BOX'') to remove the surcharge fee for certain Exchange 
Traded Funds (``ETFs'') and to establish fees applicable only to 
members for transactions in options on indices effected by members. The 
BOX Fee Schedule is available at the Exchange, the Commission's Public 
Reference Room, and http://www.bostonoptions.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 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
    BSE is proposing to amend the BOX Fee Schedule to remove the 
surcharge fee for transactions in options on the ETF Nasdaq 100 
(``QQQQs''), the Standard & Poor's (``S&P'') Depository Receipts 
(``SPY''), the iShares Nasdaq Biotechnology Index Fund (``IBB''), 
iShares Russell 2000 Index Fund (``IWM''), iShares Russell 2000 Growth 
Index Fund (``IWO''), the S&P Energy Select Sector SPDR Fund (``XLE'') 
and the S&P Financial Select Sector SPDR Fund (``XLF''). The Exchange 
is proposing to remove the surcharge from its Fee Schedule because it 
no longer pays a licensing fee on such ETFs.
    The Exchange is also proposing to establish a fifteen (15) cent 
surcharge fee for transactions in options on the Russell 2000[supreg] 
Index (``RUT''),\6\ the full

[[Page 78480]]

value Nasdaq-100[supreg] Index (``NDX''),\7\ and the reduced value 
Nasdaq-100[supreg] Index (Mini-NDX[supreg] Index (``MNX'')) \8\ 
effected by members for broker-dealer proprietary accounts.\9\ The 
Exchange represents that these fees will only be charged to BOX members 
and shall apply to Linkage Orders \10\ under a pilot program that is 
set to expire on July 31, 2007. The Exchange believes that the proposed 
rule change will further the Exchange's goal of introducing new 
products to the marketplace that are competitively priced. BOX began 
trading options on RUT, NDX, and MNX on November 13, 2006 but did not 
begin charging fees for transactions in the above-referenced products 
until November 14, 2006, the date SR-BSE-2006-47 was filed with the 
Commission.
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    \6\ Russell 2000[supreg]is a trademark and service mark of the 
Frank Russell Company, used under license. Neither Frank Russell 
Company's Publication of the Russell Indexes nor its licensing of 
its trademarks for use in connection with securities or other 
financial products derived from a Russell Index in any way suggests 
or implies a representation or opinion by Frank Russell Company as 
to the attractiveness of investment in any securities or other 
financial products based upon or derived from any Russell Index. 
Frank Russell Company is not the issuer of any such securities or 
other financial products and makes no express or implied warranties 
or merchantability or fitness for any particular purpose with 
respect to any Russell Index or any data included or reflected 
therein, nor as to results to be obtained by any person or any 
entity from the use of the Russell Index or any data included or 
reflected therein. Options on RUT are currently listed for trading 
on the American Stock Exchange (``AMEX''), BOX, the Chicago Board 
Options Exchange, Inc. (``CBOE''), and the International Securities 
Exchange, LLC (``ISE''). See Securities Exchange Act Release No. 
53968 (June 9, 2006), 71 FR 34971 (June 16, 2006) (approving Amex 
listing); Securities Exchange Act Release No. 54397 (August 31, 
2006), 71 FR 53142 (September 8, 2006) (approving BOX listing); 
Securities Exchange Act Release No. 51749 (May 26, 2005), 70 FR 
34510 (June 14, 2005) (approving CBOE listing); Securities Exchange 
Act Release No. 51858 (June 16, 2005), 70 FR 36218 (June 22, 2005) 
(approving ISE listing).
    \7\ Nasdaq[supreg], Nasdaq-100[supreg] and Nasdaq-100 
Index[supreg] are registered trademarks of The Nasdaq Stock Market, 
Inc. (which with its affiliates are the ``Corporations'') and are 
licensed for use by the Boston Options Exchange Group in connection 
with the trading of options products based on the Nasdaq-100 
Index[supreg]. The product(s) have not been passed on by the 
Corporations as to their legality or suitability. The product(s) are 
not issued, endorsed, sold, or promoted by the Corporations. The 
Corporations make no warranties and bear no liability with respect 
to the product(s). The Corporations do not guarantee the accuracy 
and/or uninterrupted calculation of the Nasdaq-100 Index[supreg] or 
any data included therein. The Corporations make no warranty, 
express or implied, as to results to be obtained by licensee, owners 
of the product(s), or any other person or entity from the use of the 
Nasdaq-100 Index[supreg] or any data included therein. The 
Corporations make no express or implied warranties, and expressly 
disclaim all warranties of merchantability or fitness for a 
particular purpose or use with respect to the Nasdaq-100 
Index[supreg] or any data included therein. Without limiting any of 
the foregoing, in no event shall the Corporations have any liability 
for any lost profits or special, incidental, punitive, indirect or 
consequential damages, even if notified of the possibility of such 
damages.
    \8\ Options on NDX and MNX are currently listed for trading on 
Amex, BOX, CBOE, and ISE. See Securities Exchange Act Release No. 
45163 (December 18, 2001), 66 FR 66958 (December 27, 2001) (imposing 
licensing fees for transactions in options on the NDX and MNX, among 
other things); Securities Exchange Act Release No. 51884 (June 20, 
2005), 70 FR 36973 (June 27, 2005) (correcting Amex's failure to 
file a proposed rule change with respect to its listing of NDX and 
MNX); Securities Exchange Act Release No. 54397 (August 31, 2006), 
71 FR 53142 (September 8, 2006) (approving BOX NDX and MNX listing); 
Securities Exchange Act Release No. 51351 (March 9, 2005), 70 FR 
12917 (March 16, 2005) (approving CBOE NDX and MNX listing); 
Securities Exchange Release No. 51397 (March 18, 2005), 70 FR 15372 
(March 25, 2005) (approving ISE NDX and MNX listing).
    \9\ The Exchange notes that the fees that are the subject of 
this proposed rule change do not apply to public customer orders.
    \10\ See BOX Rules Chapter XII, Section 1(defining Linkage 
Orders).
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    The Exchange has entered into licensing agreements to use various 
indexes and trademarks in connection with the listing and trading of 
index options on the Russell[supreg] 2000 Index, Nasdaq-100[supreg] 
Index and the Mini-NDX[supreg] Index. As with certain other licensed 
options, the Exchange is adopting a surcharge fee for trading in these 
options to defray the licensing costs. The Exchange believes that 
charging BOX Options Participants \11\ that trade these instruments is 
the most equitable means of recovering the licensing costs.
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    \11\ See BOX Rules, Chapter 1, Section 1(a)(40) (defining 
Options Participants).
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2. Statutory Basis
    The Exchanges believes that the proposal is consistent with the 
requirement of Section 6(b) of the Act,\12\ in general, and Section 
6(b)(4) of the Act,\13\ in particular, in that it 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 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, as amended, 
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 not 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 change, as amended, establishes or 
changes a due, fee, or other charge applicable only to a member, it has 
become effective pursuant to Section 19(b)(3)(A)(ii) of the Act \14\ 
and Rule 19b-4(f)(2) \15\ thereunder. At any time within 60 days of the 
filing of such amended 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.\16\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 19b-4(f)(2).
    \16\ 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 December 20, 2006, the date on which the BSE 
submitted 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, as amended, 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-2006-47 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BSE-2006-47. 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

[[Page 78481]]

the Commission's Public Reference Room. 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-
2006-47 and should be submitted on or before January 19, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E6-22395 Filed 12-28-06; 8:45 am]

BILLING CODE 8011-01-P