Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Order Approving Proposed Rule Change Relating to a Proposal To Transfer a Portion of Its Ownership Interest in Boston Options Exchange Facility, 55188-55189 [05-18615]
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Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make publicly available. All
submissions should refer to File
Number SR–Amex–2005–047 and
should be submitted on or before
October 11, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.10
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18671 Filed 9–19–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52404; File No. SR–BSE–
2005–21]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Order Approving
Proposed Rule Change Relating to a
Proposal To Transfer a Portion of Its
Ownership Interest in Boston Options
Exchange Facility
September 9, 2005.
On July 27, 2005, the Boston Stock
Exchange (‘‘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 announcing BSE’s intention to
transfer a portion of its ownership
interest in BOX LLC, the operator of its
Boston Options Exchange facility
(‘‘BOX’’), such that its aggregate
percentage interest will fall below
20%.3 The purpose of the transfer
would be to assist BSE in funding its
equities-related business interests and
initiatives related thereto.
The proposed rule change was
published for comment in the Federal
Register on August 5, 2005.4 The
Commission received no comments on
the proposed rule change. This order
approves the proposed rule change.
The Commission has reviewed
carefully BSE’s proposed rule change
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In the proposed rule change, BSE acknowledged
that pursuant to Section 8.4(f) of the operating
agreement of BOX LLC (the ‘‘LLC Agreement’’), any
transfer that would result in a reduction of BSE’s
aggregate Percentage Interest in BOX LLC to below
20% is subject to the rule filing process pursuant
to Section 19(b)(1) of the Act (15 U.S.C. 78s(b)(1))
and Rule 19b–4 thereunder (17 CFR 240–19b–4).
4 See Securities Exchange Act Release No. 52169
(July 29, 2005), 70 FR 45451.
1 15
VerDate Aug<31>2005
14:53 Sep 19, 2005
Jkt 205001
and finds that the proposal is consistent
with the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange,5 and with the requirements of
Section 6(b).6 In particular, the
Commission finds that the proposal
furthers the objectives of Section
6(b)(1),7 in that it will help ensure that
the Exchange is so organized and has
the capacity to carry out the purposes of
the Act and to comply and to enforce
compliance by the Exchange’s members
with the Act, the rules and regulations
of the Act, and the rules of the
Exchange; and Section 6(b)(5),8 in that
it is designed to facilitate transactions in
securities; to prevent fraudulent and
manipulative acts and practices; to
promote just and equitable principles of
trade; 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.
Although BSE does not presently have
a transferee designated, BSE represented
in its proposed rule change that: (1) Any
transferee will need to sign and be
bound by the provisions of the LLC
Agreement; and (2) any Transfer,9
including a Transfer that will result in
BSE’s Percentage Interest falling below
the 20% threshold, will be subject to the
various limitations set forth in the LLC
Agreement, throughout Article 8 and
elsewhere, regarding suitability and
other regulatory and business
requirements.10
5 In approving this proposed rule change, the
Commission notes that it has also considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(1).
8 15 U.S.C. 78f(b)(5).
9 Under the terms of the LLC Agreement, a
‘‘Transfer’’ occurs when any LLC Member would
‘‘dispose of, sell, alienate, assign, exchange,
participate, subparticipate, encumber, or otherwise
transfer in any manner * * * all or any part or
portion of its Units’’ (ownership interest).
10 For example, BSE would be prohibited, under
Section 8.1(d), from Transferring any of its Units to
anyone other than a Member, an affiliate of a
Member, or Interactive Brokers Group LLC (‘‘IB’’)
(according to the terms set forth in Section 8.6(d)),
until the earlier of the second anniversary of the
Launch Date of BOX or the date on which IB’s
percentage interest has been reduced to no more
than 8.00%. Further, pursuant to Section 8.1(a) of
the LLC Agreement, except for: (i) Transfers among
Members; (ii) certain transfers by IB; and (iii)
transfers to Affiliates of a Member, prior to any
transfer, the proposed transferee must be approved
by the BOX LLC Board. To be eligible for approval,
the proposed transferee must: (i) Be of high
professional and financial standing; (ii) be able to
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
Further, the BSE represented that its
proposed transfer of Units will not affect
additional provisions of the LLC
Agreement that make special
accommodations for BSE as the SRO of
the BOX facility. For example, Section
4.1(b) of the LLC Agreement provides
that, with its present ownership interest,
BSE is entitled to maintain two seats on
the BOX LLC Board. Because BSE is not
proposing to make any transfers that
would result in BSE’s percentage
interest in BOX LLC going below 8.00%,
which is the threshold amount
established in Section 4.1(b) for BSE to
maintain two directors on the Board,
this entitlement will remain. In
addition, pursuant to Section 4.1 of the
LLC Agreement, BSE has an absolute
right to designate at least one director
on the BOX LLC Board regardless of
whether it maintains any ownership
interest in BOX LLC.
BSE also noted that, as a facility of an
exchange, BOX is an integral part of a
self-regulatory organization registered
pursuant to the Act and is subject to the
requirements of the Act. Although BOX
LLC itself will not carry out any
regulatory functions, all of its activities
must be consistent with the Act. These
obligations continue as long as BOX is
a facility of BSE, regardless of the size
of BSE’s ownership interest in BOX
LLC. BSE also represented that because
the Exchange is the SRO for the BOX
facility, it will, independent of its
ownership interest, ensure that BOX
LLC conducts the facility’s business in
a manner consistent with the regulatory
and oversight responsibilities of the BSE
and with the Act.
Finally, BSE represented that neither
its proposal nor the actual transfer of
any BSE units will alter or modify the
terms or the enforcement of the LLC
Agreement.
The Commission believes that
because the proposed transfer of Units
by the BSE pursuant to the proposed
rule change and the terms of the LLC
Agreement will not affect BOX’s
responsibilities as a facility of BSE, or
the Exchange’s rights and obligations as
the SRO for the BOX facility, including
the Exchange’s right to designate at least
one director on the Board of BOX LLC,
the proposed transfer of Units is
consistent with the requirements of the
Act and the rules and regulations
carry out their duties as a Member; and (iii) be
under no regulatory or governmental bar or
disqualification. In addition, pursuant to Section
8.4(e) of the LLC Agreement, BOX would be
required to provide the Commission with notice ten
days prior to the closing date of any acquisition that
results in a BOX Member’s ownership percentage
interest meeting or crossing the threshold level of
5%, or the successive 5% percentage interest levels
of 10% and 15%.
E:\FR\FM\20SEN1.SGM
20SEN1
Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices
thereunder applicable to a national
securities exchange.
The Commission expects, and BSE
has represented, that should there be
any changes in the terms of the LLC
Agreement between the date of the
publication of this proposal and the
proposed transfer of BSE’s Units that
would result in the BSE’s Percentage
Interest falling below the 20%
threshold, the Exchange will submit a
new proposed rule change in order for
the Commission to consider the transfer
of Units in light of any changes made to
the LLC Agreement.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,11 that the
proposed rule change (SR–BSE–2005–
21) is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18615 Filed 9–19–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52415; File No. SR–BSE–
2005–29]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Order Approving
a Proposed Rule Change To Amend
the Exchange’s Trade-Through and
Locked Markets Rules
September 13, 2005.
On August 1, 2005, the Boston Stock
Exchange, Inc. (‘‘BSE’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
pursuant to Section 10(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 to
implement Amendment No. 15 to the
Plan for the Purpose of Creating and
Operating an Intermarket Option
Linkage 3 by amending Sections 1 and 4
11 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 On July 28, 2000, the Commission approved a
national market system plan for the purpose of
creating and operating an intermarket option
linkage proposed by the American Stock Exchange
LLC, the Chicago Board Options Exchange,
Incorporated, and the International Securities
Exchange, Inc. See Securities Exchange Act Release
No. 43086 (July 28, 2000), 65 FR 48023 (August 4,
2000) (‘‘Linkage Plan’’). Subsequently, upon
separate requests by the Philadelphia Stock
Exchange, Inc., the Pacific Exchange, Inc., and the
BSE, the Commission issued order to permit these
exchanges to participate in the Linkage Plan. See
Securities Exchange Act Release Nos. 43573
(November 16, 2000), 65 FR 70851 (November 28,
2000); 43574 (November 16, 2000), 65 FR 70850
12 17
VerDate Aug<31>2005
14:53 Sep 19, 2005
Jkt 205001
of chapter XII of the Boston Options
Exchange Facility (‘‘BOX’’) Rules to add
a ‘‘trade and ship’’ exception to the
definition of ‘‘Trade-Through’’ and add
a ‘‘book and ship’’ exception to the
provision relating to locked markets,
respectively. The proposed rule change
was published for comment in the
Federal Register on August 10, 2005.4
The Commission received no comments
on the proposal. This order approves the
proposed rule change.
Under the proposed rule change, a
BOX Options Participant could trade an
order at a price that is one minimum
quoting increment inferior to the
national best bid or offer (‘‘NBBO’’) if a
Linkage Order 5 is sent
contemporaneously to the market(s)
disseminating the NBBO to satisfy all
interest of the NBBO price. The
proposed rule change also would
provide that a BOX Options Participant
may book an order on BOX that would
otherwise lock another market if a
Linkage Order is sent
contemporaneously to such other
market to satisfy all interest at the lock
price and only the remaining portion of
the order is booked. The BSE proposes
that, under trade and ship, any
execution received from the market
disseminating the NBBO must (pursuant
to agency obligations) be reassigned to
the customer order that is underlying
the Linkage Order that was sent to trade
with the market disseminating the
NBBO.
After careful consideration, the
Commission finds that the proposed
rule change is consistent with the
requirements of Section 6 of the Act 6
and the rules and regulations
thereunder applicable to a national
securities exchange.7 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,8 which requires,
among other things, that the rules of an
exchange be designed to promote just
and equitable principles of trade, 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. The Commission
believes that the proposed rule change
(November 28, 2000); and 40198 (February 5, 2004),
69 FR 7029 (February 12, 2004).
4 See Securities Exchange Act Release No. 52205
(August 4, 2005), 70 FR 46551.
5 See Section 1, subsection (j) of Chapter XII of
the BOX Rules.
6 15 U.S.C. 78f.
7 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
8 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
55189
should help to implement the Linkage
Plan by facilitating the ability of BOX
Options Participants to execute their
customer orders in a timely manner and
potentially could decrease the incidence
of Trade-Throughs and locked markets.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,9 that the
proposed rule change (SR–BSE–2005–
29) is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.10
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18618 Filed 9–19–05; 8:45 am]
BILLING CODE 8010–01–M
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52412; File No. SR–BSE–
2005–38]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto
Relating to the Exchange’s
Transaction Fees and Tape a Revenue
Sharing Program for Electronically
Routed Cross Trades
September 13, 2005.
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 August
19, 2005, 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 prepared by the Exchange.
The BSE filed the proposal pursuant to
Section 19(b)(3)(A)(ii) of the Act,3 and
Rule 19b–4(f)(2) thereunder,4 as one
establishing or changing a due, fee or
other charge imposed by the BSE, which
renders the proposal effective upon
filing with the Commission. On
September 9, 2005, the Exchange filed
Amendment No. 1 to the proposed rule
change.5 On September 12, 2005, the
Exchange filed Amendment No. 2 to the
proposed rule change.6 The Commission
9 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
5 The BSE withdrew Amendment No. 1 on August
12, 2005 for technical and formatting reasons.
6 In Amendment No. 2, the Exchange: (1)
provided additional detail about the Exchange’s
10 17
E:\FR\FM\20SEN1.SGM
Continued
20SEN1
]]>Agencies
[Federal Register Volume 70, Number 181 (Tuesday, September 20, 2005)]
[Notices]
[Pages 55188-55189]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18615]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52404; File No. SR-BSE-2005-21]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Order
Approving Proposed Rule Change Relating to a Proposal To Transfer a
Portion of Its Ownership Interest in Boston Options Exchange Facility
September 9, 2005.
On July 27, 2005, the Boston Stock Exchange (``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 announcing BSE's intention to transfer a portion
of its ownership interest in BOX LLC, the operator of its Boston
Options Exchange facility (``BOX''), such that its aggregate percentage
interest will fall below 20%.\3\ The purpose of the transfer would be
to assist BSE in funding its equities-related business interests and
initiatives related thereto.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In the proposed rule change, BSE acknowledged that pursuant
to Section 8.4(f) of the operating agreement of BOX LLC (the ``LLC
Agreement''), any transfer that would result in a reduction of BSE's
aggregate Percentage Interest in BOX LLC to below 20% is subject to
the rule filing process pursuant to Section 19(b)(1) of the Act (15
U.S.C. 78s(b)(1)) and Rule 19b-4 thereunder (17 CFR 240-19b-4).
---------------------------------------------------------------------------
The proposed rule change was published for comment in the Federal
Register on August 5, 2005.\4\ The Commission received no comments on
the proposed rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 52169 (July 29,
2005), 70 FR 45451.
---------------------------------------------------------------------------
The Commission has reviewed carefully BSE's proposed rule change
and finds that the proposal is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to a national
securities exchange,\5\ and with the requirements of Section 6(b).\6\
In particular, the Commission finds that the proposal furthers the
objectives of Section 6(b)(1),\7\ in that it will help ensure that the
Exchange is so organized and has the capacity to carry out the purposes
of the Act and to comply and to enforce compliance by the Exchange's
members with the Act, the rules and regulations of the Act, and the
rules of the Exchange; and Section 6(b)(5),\8\ in that it is designed
to facilitate transactions in securities; to prevent fraudulent and
manipulative acts and practices; to promote just and equitable
principles of trade; 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.
---------------------------------------------------------------------------
\5\ In approving this proposed rule change, the Commission notes
that it has also considered the proposed rule's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(1).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Although BSE does not presently have a transferee designated, BSE
represented in its proposed rule change that: (1) Any transferee will
need to sign and be bound by the provisions of the LLC Agreement; and
(2) any Transfer,\9\ including a Transfer that will result in BSE's
Percentage Interest falling below the 20% threshold, will be subject to
the various limitations set forth in the LLC Agreement, throughout
Article 8 and elsewhere, regarding suitability and other regulatory and
business requirements.\10\
---------------------------------------------------------------------------
\9\ Under the terms of the LLC Agreement, a ``Transfer'' occurs
when any LLC Member would ``dispose of, sell, alienate, assign,
exchange, participate, subparticipate, encumber, or otherwise
transfer in any manner * * * all or any part or portion of its
Units'' (ownership interest).
\10\ For example, BSE would be prohibited, under Section 8.1(d),
from Transferring any of its Units to anyone other than a Member, an
affiliate of a Member, or Interactive Brokers Group LLC (``IB'')
(according to the terms set forth in Section 8.6(d)), until the
earlier of the second anniversary of the Launch Date of BOX or the
date on which IB's percentage interest has been reduced to no more
than 8.00%. Further, pursuant to Section 8.1(a) of the LLC
Agreement, except for: (i) Transfers among Members; (ii) certain
transfers by IB; and (iii) transfers to Affiliates of a Member,
prior to any transfer, the proposed transferee must be approved by
the BOX LLC Board. To be eligible for approval, the proposed
transferee must: (i) Be of high professional and financial standing;
(ii) be able to carry out their duties as a Member; and (iii) be
under no regulatory or governmental bar or disqualification. In
addition, pursuant to Section 8.4(e) of the LLC Agreement, BOX would
be required to provide the Commission with notice ten days prior to
the closing date of any acquisition that results in a BOX Member's
ownership percentage interest meeting or crossing the threshold
level of 5%, or the successive 5% percentage interest levels of 10%
and 15%.
---------------------------------------------------------------------------
Further, the BSE represented that its proposed transfer of Units
will not affect additional provisions of the LLC Agreement that make
special accommodations for BSE as the SRO of the BOX facility. For
example, Section 4.1(b) of the LLC Agreement provides that, with its
present ownership interest, BSE is entitled to maintain two seats on
the BOX LLC Board. Because BSE is not proposing to make any transfers
that would result in BSE's percentage interest in BOX LLC going below
8.00%, which is the threshold amount established in Section 4.1(b) for
BSE to maintain two directors on the Board, this entitlement will
remain. In addition, pursuant to Section 4.1 of the LLC Agreement, BSE
has an absolute right to designate at least one director on the BOX LLC
Board regardless of whether it maintains any ownership interest in BOX
LLC.
BSE also noted that, as a facility of an exchange, BOX is an
integral part of a self-regulatory organization registered pursuant to
the Act and is subject to the requirements of the Act. Although BOX LLC
itself will not carry out any regulatory functions, all of its
activities must be consistent with the Act. These obligations continue
as long as BOX is a facility of BSE, regardless of the size of BSE's
ownership interest in BOX LLC. BSE also represented that because the
Exchange is the SRO for the BOX facility, it will, independent of its
ownership interest, ensure that BOX LLC conducts the facility's
business in a manner consistent with the regulatory and oversight
responsibilities of the BSE and with the Act.
Finally, BSE represented that neither its proposal nor the actual
transfer of any BSE units will alter or modify the terms or the
enforcement of the LLC Agreement.
The Commission believes that because the proposed transfer of Units
by the BSE pursuant to the proposed rule change and the terms of the
LLC Agreement will not affect BOX's responsibilities as a facility of
BSE, or the Exchange's rights and obligations as the SRO for the BOX
facility, including the Exchange's right to designate at least one
director on the Board of BOX LLC, the proposed transfer of Units is
consistent with the requirements of the Act and the rules and
regulations
[[Page 55189]]
thereunder applicable to a national securities exchange.
The Commission expects, and BSE has represented, that should there
be any changes in the terms of the LLC Agreement between the date of
the publication of this proposal and the proposed transfer of BSE's
Units that would result in the BSE's Percentage Interest falling below
the 20% threshold, the Exchange will submit a new proposed rule change
in order for the Commission to consider the transfer of Units in light
of any changes made to the LLC Agreement.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (SR-BSE-2005-21) is approved.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jonathan G. Katz,
Secretary.
[FR Doc. 05-18615 Filed 9-19-05; 8:45 am]
BILLING CODE 8010-01-P
