[Federal Register: April 3, 2006 (Volume 71, Number 63)]
[Notices]
[Page 16601-16603]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03ap06-83]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53557; File No. SR-BSE-2006-09]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Chapter VII, Section 1(g) Relating to the Exercise of Options
Contracts
March 28, 2006.
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 March 15, 2006, the Boston Stock Exchange, Inc. (``BSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule
[[Page 16602]]
change as described in Items I and II below, which Items have been
prepared by the Exchange. The BSE 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 it
effective upon filing with the Commission.\5\ 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).
\5\ As required by Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-
4(f)(6)(iii), the BSE submitted 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The BSE, pursuant to Section 19(b)(1) of the Act \6\ and Rule 19b-4
thereunder,\7\ proposes to amend the Rules of the Boston Options
Exchange (``BOX''), an options trading facility of the BSE, to amend
Chapter VII, Section 1(g) relating to the exercise of options contracts
and the deadline within which one may make a final decision to exercise
or not exercise an expiring option. The text of the proposed rule
change is available on the BSE's Web site at (http://bostonstock.com),
at the BSE's principal office, and at the Commission's Public Reference
Room.\8\
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\6\ 15 U.S.C. 78s(b)(1).
\7\ 17 CFR 240.19b-4.
\8\ In its proposal, the Exchange indicated that no change is
being made to subsections .01 and .02 of the Supplementary Material
following Chapter VII, Section 1 of the BOX Rules. During a
telephone conversation on March 21, 2006, the Exchange clarified
that no change is to be made to subsections .03 through .05 of the
Supplementary Material following Chapter VII, Section 1 of the BOX
Rules. Telephone conversation between Bill Meehan, General Counsel,
BSE, and Johnna B. Dumler, Attorney, Division of Market Regulation
(``Division''), Commission, on March 21, 2006.
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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 proposal. 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
The BSE proposes to amend Chapter VII, Section 1(g) of the BOX
Rules to clarify the amount of time that is set forth as the deadline
to make a final decision to exercise or not exercise an options
contract.
On January 11, 2006, the BSE filed a proposed rule change, which
the Commission subsequently approved on an accelerated basis, relating
to the change in the closing time for trading options on individual
stocks from 4:02 p.m. Eastern Time (``ET'') to 4 p.m. ET.\9\ However,
that proposed rule change did not address a corresponding change to
Chapter VII, Section 1(g) of the BOX Rules relating to the time frame
within which to exercise or not exercise an options contract.
Therefore, the BSE now seeks to amend this rule text for purposes of
consistency with the new hours of trading in equity options on
individual stocks. The BSE proposes to change all references in Chapter
VII, Section 1(g) from 28 minutes to 30 minutes to reflect the two
minute change in the closing time for trading of options on individual
stocks.
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\9\ See Securities Exchange Act Release No. 53245 (February 7,
2006), 71 FR 8010 (February 15, 2006) (approving SR-BSE-2006-02).
The BSE filed SR-BSE-2006-02 on January 11, 2006 and subsequently
filed a partial amendment on February 2, 2006, which requested the
implementation date for the new closing time be changed from
February 1, 2006, as originally proposed, to February 13, 2006.
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According to the Exchange, the proposed rule change is based on
similar rule changes submitted by the Pacific Exchange, Inc., the
Philadelphia Stock Exchange, Inc. and the International Securities
Exchange, Inc.\10\
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\10\ See Securities Exchange Act Release Nos. 53249 (February 7,
2006), 71 FR 8035 (February 15, 2006) (SR-PCX-2005-138); 53407
(March 3, 2006), 71 FR 12764 (March 13, 2006) (SR-Phlx-2006-12);
53439 (March 7, 2006), 71 FR 13643 (March 16, 2006) (SR-ISE-2006-
11). See also 53438 (March 7, 2006, 71 FR 13641 (March 16, 2006)
(SR-CBOE-2006-19).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \11\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \12\ in particular, because it
is designed 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.\13\
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ The Exchange clarified that it is relying on the statutory
bases set forth above, as opposed to the factors enumerated in the
``Basis'' Section of Exhibit 1. Telephone conversation between Bill
Meehan, General Counsel, BSE, and Johnna B. Dumler, Attorney,
Division, Commission, on March 21, 2006.
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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
The BSE 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 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 for 30-days after 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 \14\ and Rule 19b-4(f)(6)
thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative prior to 30-days after the date of filing.
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. The BSE has asked the Commission to
waive the 30-day operative delay. The Commission believes that waiving
the 30-day operative delay is consistent with the protection of
investors and the public interest because such waiver will allow the
BSE to immediately clarify its rule and conform it to the industry-wide
close of trading times now in effect. Accelerating the operative date
will facilitate efficient and effective market operation by offering
clarity and internal consistency with existing BSE rules. For these
reasons, the
[[Page 16603]]
Commission designates the proposed rule change as effective and
operative immediately upon filing with the Commission.\17\
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\16\ Id.
\17\ For the purposes only of waiving the 30-day 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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At any time within 60-days after 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.
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-2006-09 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-2006-09. 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 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-2006-09 and should be submitted on or before April
24, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-4755 Filed 3-31-06; 8:45 am]
BILLING CODE 8010-01-P