[Federal Register: June 18, 2004 (Volume 69, Number 117)]
[Notices]
[Page 34204-34205]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jn04-153]
[[Page 34204]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49850; File No. SR-BSE-2004-16]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Boston Stock Exchange,
Inc. Relating to the Initial Allocation Plan of the Boston Options
Exchange Facility
June 10, 2004.
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 May 26, 2004, the Boston Stock Exchange (``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 prepared by the Exchange. The proposed rule change has
been filed by the BSE as a ``non-controversial'' rule change pursuant
to Rule 19b-4(f)(6) under the Act.\3\ 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\ 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 BSE proposes to amend the list of options classes approved for
initial allocation on its Boston Options Exchange facility (``BOX'').
The text of the proposed rule change is available at the BSE and at the
Commission.
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 IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts 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 amend the list of
securities approved for initial allocation, as set forth in Chapter
XXXVII of the BSE Rules, for market makers in BOX. The list of options
classes approved for initial allocation was set forth in a rule
proposal detailing the initial allocation process for BOX, which was
ultimately approved by the Commission on October 16, 2003.\4\
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\4\ See Securities Exchange Act Release No. 48644 (October 16,
2003), 68 FR 60423 (October 22, 2003) (approving File No. SR-BSE-
2003-13).
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The initial allocation of approved classes, as set forth in
aforementioned filing, was conducted on October 17, 2003. BOX commenced
operations on February 6, 2004, after receiving approval from the
Commission in January 2004. For a variety of reasons, including
mergers, acquisitions, and failure to meet BOX listing standards,
eighteen of the classes initially allocated to BOX participants were
not listed. Those eighteen classes are as follows:
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Symbol Security
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OVER............................... Overture Services, Inc.
BGEN............................... Biogen, Inc.
GMH................................ General Motors Class H.
CLS................................ Celestica, Inc.
PDG................................ Placer Dome, Inc.
PCS................................ Sprint PCS Group.
ONE................................ Bank One Corp.
INVN............................... Invision Technologies, Inc.
DYN................................ Dynegy, Inc.
BVF................................ BiovailCorp.
GG................................. Goldcorp, Inc.
AES................................ AES Corp.
PPD................................ Pre-Paid Legal Services, Inc.
ADCT............................... ADC Telecommunications, Inc.
TBS................................ Telebras Holders.
IDPH............................... IDEC Pharmaceuticals Corp.
FBF................................ Fleet Boston Financial Corp.
AWE................................ AT&T Wireless Services.
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The Exchange is now seeking to replace those eighteen classes which
were not originally listed with the following eighteen classes:
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Symbol Security
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NT................................. Nortel Network Corp. Hldg. Co.
RIMM............................... Research in Motion Ltd.
JDSU............................... JDS Uniphase Corp.
NFLX............................... Netflix, Inc.
RJR................................ RJ Reynolds Tobacco Hldg, Inc.
SIRI............................... Sirius Satellite Radio, Inc.
X.................................. United States Steel Corp.
CFC................................ Countrywide Financial Corp.
OVTI............................... Omnivision Technologies, Inc.
CMCSA.............................. Comcast Corp. New.
UTSI............................... UT Starcom, Inc.
STX................................ Seagate Technology.
ET................................. E*Trade Financial Corp.
CREE............................... Cree, Inc.
CHINA.............................. Chinadotcom Corporation.
IGT................................ International Game Tech.
APPX............................... American Pharmaceutical, Inc.
TASR............................... Taser International, Inc.\5\
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The Exchange notes that, according to the rules approved by the
Commission for the initial allocation, certain deposits were required
for all firms requesting allocations in order to ensure that
participants were making legitimate allocation requests. According to
the approved deposit schedule, the deposit required for 16 of the
original 18 securities, which were not originally listed (as set forth
above), was $300 per class. The other two classes fell into a different
category, and the deposit required for them was $750 per class. Of the
firms contacted to ascertain whether they sought to have their deposits
returned for those securities that BOX was not able to list, each chose
to have their deposits remain with BOX to offset future transaction
fees.\6\ Nevertheless, the Exchange is not seeking any additional
deposits for the options classes it is proposing to have replace those
not originally listed by BOX, as set forth above.
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\5\ The original eighteen classes, which BSE proposes to
replace, were part of the initial 250 classes approved for trading
on BOX based on Options Clearing Corporation (``OCC'') volume
statatistics from January 2003 through June 2003. See Securities
Exchange Act Release No. 48644 (October 16, 2003), 68 FR 60423
(October 22, 2003) (approving File No. SR-BSE-2003-13). BSE
represents that the proposed replacement classes were selected based
on updated OCC volume statistics. Telephone conversation between
John Boese, Chief Regulatory Officer, BSE, and Frank N. Genco,
Attorney, Division of Market Regulation, Commission, on June 10,
2004.
\6\ BSE represents that only 15 firms had represented the 18
classes at issue. BSE further represents that all 15 firms were
informed that BOX planned to replace the original 18 classes and
chose to have their deposits remain with BOX to offset further
transaction fees. Telephone conversation between John Boese, Chief
Regulatory Officer, BSE, and Frank N. Genco, Attorney, Division of
Market Regulation, Commission, on June 10, 2004.
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Moreover, the Exchange represents that BOX is well ahead of its
six-month schedule of having all classes allocated to all participants
that requested allocations. BOX anticipates filling all initial
allocation requests by the end of June 2004. According to the Exchange,
the classes proposed to replace those not originally listed will have
no adverse effect on BOX's system capacity and will not affect the
overall allocation schedule.
[[Page 34205]]
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\8\ in particular, in that it
is designed to promote just and equitable principles of trade and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, according to the Exchange, is
not designed to permit unfair discrimination between customers,
brokers, or dealers, or to regulate by virtue of any authority matters
not related to the administration of the Exchange.
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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 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
Written comments were neither solicited nor received with respect
to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because, the foregoing proposed rule change (1) does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms, does not become operative until 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, and the Exchange provided the Commission with written notice
of its intent to file the proposed rule change at least five business
days prior to the date of filing of the proposed rule change,\9\ or
such shorter time as designated by the Commission, it has become
effective pursuant to section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\9\ See letter from John Boese, Vice President and Chief
Regulatory Officer, BSE, to Nancy Sanow, Assistant Director,
Division, Commission, dated May 25, 2004.
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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Although Rule 19b-4(f)(6) under the Act \12\ requires that an
Exchange submit a notice of its intent to file at least five business
days prior to the filing date, the Commission waived this requirement
at the BSE's request. The BSE has also requested that the Commission
waive the 30-day operative delay. The Commission believes waiving the
30-day operative delay is consistent with the protection of investors
and the public interest. Acceleration of the operative date will allow
the Exchange to substitute the proposed classes for those that it was
unable to list according to the BOX original allocation plan as set
forth in chapter XXXVII of the BSE Rules. For these reasons, the
Commission designates the proposal to be effective and operative upon
filing with the Commission.\13\ At any time within 60 days of the
filing of this 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.
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\12\ Id.
\13\ For purposes only of accelerating the operative date of
this proposal, 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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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-2004-16 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-BSE-2004-16. 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 Section, 450 Fifth Street,
NW., Washington, DC 20549. 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-2004-16 and should be
submitted on or before July 9, 2004.
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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-13846 Filed 6-17-04; 8:45 am]
BILLING CODE 8010-01-P