[Federal Register: October 10, 2006 (Volume 71, Number 195)]
[Notices]
[Page 59562-59563]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10oc06-95]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54556; File No. SR-BSE-2005-09]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Order
Approving Proposed Rule Change and Amendment Nos. 1 and 2 Thereto
Relating to Its Minor Rule Violation Plan
October 2, 2006.
On February 7, 2005, the Boston Stock Exchange, Inc. (``BSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend BSE Rule Chapter XXX (``Disciplining of
Members--Denial of Membership'') and BSE Rule Chapter XXXIV (``Minor
Rule Violations''). The Exchange filed Amendment No. 1 to the proposed
rule change on July 7, 2006, and Amendment No. 2 on August 18, 2006.
The proposed rule change, as amended, was published for comment in the
Federal Register on September 1, 2006.\3\ The Commission received no
comments regarding the proposal.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 54374 (August 28,
2006), 71 FR 52183.
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BSE proposed to make the following changes:
Add ``Principal Considerations in Determining Sanctions''
to BSE Rule Chapter XXX;
Move Acceptance Waiver and Consent Procedures (``AWC'')
from BSE Rule Chapter XXXIV to BSE Rule Chapter XXX;
[[Page 59563]]
Change references to the ``Chief Regulatory Officer'' in
the AWC to the ``General Counsel or his/her delegatee'';
Add a provision in BSE Rule Chapter XXX imposing a late
charge when a member fails to pay a fine on a timely basis;
Add violations of the Exchange's rules governing the
Intermarket Trading System to BSE Rule Chapter XXXIV;
Restructure the fine levels of violations in BSE Rule
Chapter XXXIV pertaining to Failure to Display Limit Orders, Floor
Order Facilitation, Failure to Designate an Order (PPS), and Dealings
Outside of Exchange Operating Hours; and
Adjust the fine levels for short sale violations in BSE
Rule Chapter XXXIV.
The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\4\
In particular, the Commission believes that the proposal is consistent
with Section 6(b)(5) of the Act,\5\ because delineating factors to be
considered in determining sanctions should promote transparency of the
Exchange's disciplinary process and the ability to impose a late charge
for the failure to pay fines should help the Exchange carry out its
supervisory responsibilities.
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\4\ In approviing this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\5\ 15 U.S.C. 78f(b)(5).
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The Commission further believes that the proposal is consistent
with Sections 6(b)(1) and 6(b)(6) of the Act,\6\ which require that the
rules of an exchange enforce compliance with, and provide appropriate
discipline for, violations of Commission and Exchange rules. In
addition, because BSE Rule Chapter XVIII provides procedural rights to
contest the fine for any violation of an Exchange rule and permits
disciplinary proceedings on the matter, the Commission believes BSE
Rule Chapter XXXIV, as amended by this proposal, provides a fair
procedure for the disciplining of members and persons associated with
members, consistent with Sections 6(b)(7) and 6(d)(1) of the Act.\7\
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\6\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\7\ 15 U.S.c. 78f(b)(7) and 78f(d)(1).
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Finally, the Commission finds that the proposal is consistent with
the public interest, the protection of investors, or otherwise in
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2)
under the Act \8\ which governs minor rule violation plans. The
Commission believes that the proposed change to BSE Rule Chapter XXXIV
will strengthen the Exchange's ability to carry out its oversight and
enforcement responsibilities as a self-regulatory organization in cases
where full disciplinary proceedings are unsuitable in view of the minor
nature of the particular violation.
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\8\ 17 CFR 240.19d-1(c)(2).
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In approving this proposed rule change, as amended, the Commission
in no way minimizes the importance of compliance with BSE rules and all
other rules subject to the imposition of fines under the minor rule
violation plan of the Exchange. The Commission believes that the
violation of any self-regulatory organization's rules, as well as
Commission rules, is a serious matter. However, the Exchange's minor
rule violation plan under BSE Rule Chapter XXXIV provides a reasonable
means of addressing rule violations that do not rise to the level of
requiring formal disciplinary proceedings, while providing greater
flexibility in handling certain violations. The Commission expects that
BSE will continue to conduct surveillance with due diligence and make a
determination based on its findings, on a case-by-case basis, whether a
fine of more or less than the recommended amount is appropriate for a
violation under the minor rule violation plan or whether a violation
requires formal disciplinary action under BSE Rule Chapter XXX.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\9\ and Rule 19d-1(c)(2) under the Act,\10\ that the proposed rule
change (SR-BSE-2005-09), as amended, be, and hereby is, approved and
declared effective.
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\9\ 15 U.S.C. 78s(b)(2).
\10\ 17 CFR 240.19d-1(c)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(44).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-16645 Filed 10-6-06; 8:45 am]
BILLING CODE 8011-01-P