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, 55189-55191 [05-18619]
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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
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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).
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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
55190
Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices
is publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Transaction Fee Schedule in relation to
electronically routed cross trade
executions. The text of the proposed
rule change is available on the
Exchange’s Web site (https://
www.bostonstock.com), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
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 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 its
Transaction Fee Schedule by
eliminating all fees for cross trades
delivered electronically to the
Exchange.7 Specifically, the Exchange
rules and procedures regarding electronically
routed cross trades; (2) clarified that the proposed
changes will not adversely affect the BSE’s
regulatory responsibilities; and (3) amended the
proposed rule text regarding the Exchange’s Tape A
revenue sharing program to clarify how the revenue
sharing will be calculated. The effective date of the
original proposed rule change is August 19, 2005,
and the effective date of Amendment No. 2 is
September 12, 2005. 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 September
12, 2005, the date on which the Exchange filed
Amendment No. 2. See 15 U.S.C. 78s(b)(3)(C).
7 Upon entry into the BEACON trading system, all
orders are transmitted to a BSE specialist.
Depending on factors such as order size and type,
the orders are either automatically or manually
executed. Cross trades would automatically
execute, provided that no customer orders existed
on the book which held priority over either side of
the cross and could ‘‘break up’’ the cross. See
Chapter II, ‘‘Dealings on the Exchange,’’ Section 6,
‘‘Bids and Offer for Stocks,’’ and Section 18,
‘‘Orders to Buy and Sell the Same Security’’ of the
Rules of the Board of Governors of the BSE (‘‘BSE
VerDate Aug<31>2005
14:53 Sep 19, 2005
Jkt 205001
proposes to waive all Value Charges and
Trade Recording Fees on cross trades
that are electronically routed to the BSE
for execution. The current fee structure
for Automated Portfolio Crosses will
also be eliminated. The category of
Automated Portfolio Crosses was
created in the Transaction Fee Schedule
several years ago for a specific type of
business related only to cross trades that
would be routed to the Exchange as part
of a larger basket of trades. The BSE no
longer receives this type of specialized
cross trade. Therefore, the separate
category of fees for Automated Portfolio
Crosses is no longer required. The BSE
believes that these changes to its
Transaction Fee Schedule will allow the
Exchange to attract a new segment of
business to the Exchange, which will, in
turn, allow the Exchange to remain
competitive in the overall marketplace.
The BSE is now proposing to
eliminate all fees for all electronically
delivered cross trades. Since the
Exchange requires that all orders
submitted to a BSE specialist by
members be transmitted through the
BEACON trading system, all cross trades
submitted to BSE specialists for
execution would be considered to be
electronically routed, with the
exception of those entered by a BSE
Floor Broker. While floor brokered
orders must also be entered into the
BEACON trading system for
transmission to a BSE specialist, the
Exchange does not consider floor
brokered orders to be electronically
routed cross trades, due to the
intervention of and handling by the
floor broker. Thus, the proposed fee
waiver would not apply to floor broker
entered cross trades, even though such
cross trades are entered through the
BEACON trading system, but would
apply to all other cross trades submitted
to BSE specialists through BEACON.
The Exchange also proposes to amend
its Tape A revenue sharing program to
further encourage its member firms to
electronically route cross trades to the
BSE. Under this proposal, electronically
routed cross trades would be excluded
from the current Tape A revenue
sharing program, which requires that a
pre-determined Exchange-wide Tape A
revenue target be achieved, and requires
that a member firm generate a minimum
of $50,000 in overall monthly
transaction fees before being eligible to
participate in a 50% revenue share for
Tape A business. The BSE is proposing
that member firms that electronically
Rules’’). Additionally, cross trades of 5,000 shares
or more are considered, under Chapter II, Section
18 of the BSE Rules, to be ‘‘clean crosses,’’ which
can execute within the prevailing bid and offer
given a set of qualifying conditions.
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
route cross trades to the BSE for
execution be permitted to receive 50%
of the Tape A revenue generated by
such electronically routed cross trades,
regardless of whether the Exchange has
met its pre-determined Tape A revenue
target, and regardless of the amount of
the firm’s overall monthly transaction
fees. The 50% revenue sharing would be
a flat rate, calculated on a trade-by-trade
basis. Thus, a BSE member would
receive 50% of the Tape A revenue
generated by each electronically routed
cross trade that the member routes to
the BSE for execution.
The Exchange is cognizant of its
surveillance and compliance
responsibilities as a self-regulatory
organization. Although this proposal
involves the waiver of certain fees and
amendments to the Tape A revenue
sharing program, which could result in
a reduction of revenue to the BSE, the
Exchange represents that its
responsibilities as a self-regulatory
organization will in no way be
compromised by the implementation of
the changes proposed herein.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the Act,8
in general, and furthers the objectives of
Section 6(b)(4) of the Act,9 in particular,
in that it provides for the equitable
allocation of reasonable dues, fees, and
other charges among its members and
issuers and other persons using its
facilities.
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.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange 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
The proposed rule change has become
effective upon filing pursuant to Section
19(b)(3)(A)(ii) of the Act 10 and
subparagraph (f)(2) of Rule 19b–4
thereunder,11 because it establishes or
changes a due, fee or other charge
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
10 15 U.S.C. 78s(b)(3)(A)(ii).
11 17 CFR 240.19b–4(f)(2).
9 15
E:\FR\FM\20SEN1.SGM
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Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices
imposed by the BSE. At any time within
60 days of the filing of such 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.12
Number SR-BSE–2005–38 and should
be submitted on or before October 11,
2005.
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:
BILLING CODE 8010–01–P
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BSE–2005–38 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303.
All submissions should refer to File
Number SR-BSE–2005–38. 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 (https://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 the filing also will be
available for inspection and copying at
the principal office of the Exchange. 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
12 See
supra note 6.
VerDate Aug<31>2005
14:53 Sep 19, 2005
Jkt 205001
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18619 Filed 9–19–05; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52429; File No. SR–BSE–
2005–39]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Notice of Filing
of Proposed Rule Change Relating to
the Definition of Firm Customer Quote
Size and Limitations on Sending of
Multiple P/A Orders on the Boston
Options Exchange
September 14, 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
September 13, 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 BSE. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to amend
its rules governing the operation of the
intermarket option linkage (‘‘Linkage’’)
on the Boston Options Exchange
(‘‘BOX’’) to conform with a proposed
amendment 3 to the Plan for the Purpose
of Creating and Operating an
Intermarket Option Linkage (‘‘Linkage
Plan’’).4 The Exchange is proposing: (i)
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 52401
(September 9, 2005) (File No. 4–429) (‘‘Amendment
No. 16’’).
4 On July 28, 2000, the Commission approved a
national market system plan for the purpose of
creating and operating an intermarket option market
linkage proposed by the American Stock Exchange,
LLC, Chicago Board Options Exchange,
Incorporated, and International Securities
Exchange, Inc. See Securities Exchange Act Release
No. 43086 (July 28, 2000), 65 FR 48023 (August 4,
2000). Subsequently, upon separate requests by the
Philadelphia Stock Exchange, Inc., Pacific
Exchange, Inc., and BSE, the Commission issued
1 15
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
55191
To amend the definition of ‘‘Firm
Customer Quote Size’’ (‘‘FCQS’’) 5 to
provide automatic executions for
Principal Acting as Agent Orders (‘‘P/A
Orders’’) 6 sent via Linkage up to the full
size of a Participant’s disseminated
quotation; and (ii) to eliminate a 15second waiting period between the
sending of P/A Orders.
The text of the proposed rule
amendment is available on BSE’s Web
site at https://www.bostonstock.com, at
the BSE’s Office of the Secretary, and at
the Commission’s public reference
room.
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 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 Exchange proposes to amend its
rules governing Linkage in two areas:
the definition of FCQS and limitations
on sending multiple P/A Orders.
The Linkage Plan participants
(‘‘Participants’’) provide automatic
execution to P/A Orders up to the
FCQS, if automatic execution is
available. At the time the Participants
adopted the Linkage Plan, options quote
sizes were not disseminated through the
Options Price Reporting Authority, and
the floor-based Participants employed
automatic execution systems that
guaranteed automatic fills on orders
under a certain contract size (which
generally was a static number). As such,
the FCQS was calculated based on the
number of contracts the sending and
receiving Participants guaranteed they
would automatically execute. Now that
orders to permit these exchanges to participate in
the Linkage Plan. See Securities Exchange Act
Release Nos. 43573 (November 16, 2000), 65 FR
70850 (November 28, 2000), 43574 (November 16,
2000), 65 FR 70851 (November 28, 2000) and 49198
(February 5, 2004), 69 FR 7029 (February 12, 2004).
5 See Section 2(11) of the Linkage Plan and
Chapter XII, Section 1(g) of BOX’s Rules.
6 See Section 2(16)(a) of the Linkage Plan and
Chapter XII, Section 1(j)(i) of BOX’s Rules.
E:\FR\FM\20SEN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 181 (Tuesday, September 20, 2005)]
[Notices]
[Pages 55189-55191]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18619]
-----------------------------------------------------------------------
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
[[Page 55190]]
is publishing this notice to solicit comments on the proposed rule
change, as amended, from interested persons.
---------------------------------------------------------------------------
\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 rules and procedures regarding
electronically routed cross trades; (2) clarified that the proposed
changes will not adversely affect the BSE's regulatory
responsibilities; and (3) amended the proposed rule text regarding
the Exchange's Tape A revenue sharing program to clarify how the
revenue sharing will be calculated. The effective date of the
original proposed rule change is August 19, 2005, and the effective
date of Amendment No. 2 is September 12, 2005. 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 September 12, 2005, the date on which the Exchange filed
Amendment No. 2. See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Transaction Fee Schedule in
relation to electronically routed cross trade executions. The text of
the proposed rule change is available on the Exchange's Web site
(https://www.bostonstock.com), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
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 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 its Transaction Fee Schedule by
eliminating all fees for cross trades delivered electronically to the
Exchange.\7\ Specifically, the Exchange proposes to waive all Value
Charges and Trade Recording Fees on cross trades that are
electronically routed to the BSE for execution. The current fee
structure for Automated Portfolio Crosses will also be eliminated. The
category of Automated Portfolio Crosses was created in the Transaction
Fee Schedule several years ago for a specific type of business related
only to cross trades that would be routed to the Exchange as part of a
larger basket of trades. The BSE no longer receives this type of
specialized cross trade. Therefore, the separate category of fees for
Automated Portfolio Crosses is no longer required. The BSE believes
that these changes to its Transaction Fee Schedule will allow the
Exchange to attract a new segment of business to the Exchange, which
will, in turn, allow the Exchange to remain competitive in the overall
marketplace.
---------------------------------------------------------------------------
\7\ Upon entry into the BEACON trading system, all orders are
transmitted to a BSE specialist. Depending on factors such as order
size and type, the orders are either automatically or manually
executed. Cross trades would automatically execute, provided that no
customer orders existed on the book which held priority over either
side of the cross and could ``break up'' the cross. See Chapter II,
``Dealings on the Exchange,'' Section 6, ``Bids and Offer for
Stocks,'' and Section 18, ``Orders to Buy and Sell the Same
Security'' of the Rules of the Board of Governors of the BSE (``BSE
Rules''). Additionally, cross trades of 5,000 shares or more are
considered, under Chapter II, Section 18 of the BSE Rules, to be
``clean crosses,'' which can execute within the prevailing bid and
offer given a set of qualifying conditions.
---------------------------------------------------------------------------
The BSE is now proposing to eliminate all fees for all
electronically delivered cross trades. Since the Exchange requires that
all orders submitted to a BSE specialist by members be transmitted
through the BEACON trading system, all cross trades submitted to BSE
specialists for execution would be considered to be electronically
routed, with the exception of those entered by a BSE Floor Broker.
While floor brokered orders must also be entered into the BEACON
trading system for transmission to a BSE specialist, the Exchange does
not consider floor brokered orders to be electronically routed cross
trades, due to the intervention of and handling by the floor broker.
Thus, the proposed fee waiver would not apply to floor broker entered
cross trades, even though such cross trades are entered through the
BEACON trading system, but would apply to all other cross trades
submitted to BSE specialists through BEACON.
The Exchange also proposes to amend its Tape A revenue sharing
program to further encourage its member firms to electronically route
cross trades to the BSE. Under this proposal, electronically routed
cross trades would be excluded from the current Tape A revenue sharing
program, which requires that a pre-determined Exchange-wide Tape A
revenue target be achieved, and requires that a member firm generate a
minimum of $50,000 in overall monthly transaction fees before being
eligible to participate in a 50% revenue share for Tape A business. The
BSE is proposing that member firms that electronically route cross
trades to the BSE for execution be permitted to receive 50% of the Tape
A revenue generated by such electronically routed cross trades,
regardless of whether the Exchange has met its pre-determined Tape A
revenue target, and regardless of the amount of the firm's overall
monthly transaction fees. The 50% revenue sharing would be a flat rate,
calculated on a trade-by-trade basis. Thus, a BSE member would receive
50% of the Tape A revenue generated by each electronically routed cross
trade that the member routes to the BSE for execution.
The Exchange is cognizant of its surveillance and compliance
responsibilities as a self-regulatory organization. Although this
proposal involves the waiver of certain fees and amendments to the Tape
A revenue sharing program, which could result in a reduction of revenue
to the BSE, the Exchange represents that its responsibilities as a
self-regulatory organization will in no way be compromised by the
implementation of the changes proposed herein.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act,\9\ in particular, in that
it provides for the equitable allocation of reasonable dues, fees, and
other charges among its members and issuers and other persons using its
facilities.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange 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
The proposed rule change has become effective upon filing pursuant
to Section 19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of
Rule 19b-4 thereunder,\11\ because it establishes or changes a due, fee
or other charge
[[Page 55191]]
imposed by the BSE. At any time within 60 days of the filing of such
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.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
\12\ See supra note 6.
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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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-BSE-2005-38 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-BSE-2005-38. 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 (https://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 the
filing also will be available for inspection and copying at the
principal office of the Exchange. 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-2005-38 and should be submitted on or before October
11, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-18619 Filed 9-19-05; 8:45 am]
BILLING CODE 8010-01-P
