Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendments No. 1 and 2 Thereto Relating to Information Contained in a Directed Order on the Boston Options Exchange, 15232-15234 [E6-4339]
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Federal Register / Vol. 71, No. 58 / Monday, March 27, 2006 / Notices
the issuance of new trading rights.11 The
AMC Board can, if it so chooses, seek
the consent of its full membership for
any proposal calling for the issuance of
new trading rights. Further, any new
trading rights would be subject to
approval by the Commission pursuant
to the rule filing process of section 19
of the Act. The Commission also notes
that the AMC membership’s consent
will be required for any action taken by
Amex to increase the number of
memberships issued by AMC.12 In
addition, these changes to the AMC
Certificate shall provide Amex with
more flexibility to take prompt action to
implement new forms of trading rights.
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,13 that the
proposed rule change (SR–Amex–2005–
117), as amended, is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Nancy M. Morris,
Secretary.
[FR Doc. E6–4368 Filed 3–24–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53516; File No. SR–BSE–
2006–14]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change and
Amendments No. 1 and 2 Thereto
Relating to Information Contained in a
Directed Order on the Boston Options
Exchange
March 20, 2006.
wwhite on PROD1PC65 with NOTICES
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 14,
2006, 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 and II
11 See Amex Constitution Article II, section 8.
The AMC Nominating Committee nominates
director candidates for the AMC board of directors,
and AMC members have the right to put up their
own nominees by petition. The AMC board is then
elected by the members of AMC. See Amended and
Restated By-Laws of The Amex Membership
Corporation Sections 1.10, 1.13 and 3.03.
12 See AMC Certificate section 7(a)(ii); Amex
Constitution Article II, section 8; and Amex
Constitution Article IV, section 1(a)(1) and section
1(b)(1).
13 15 U.S.C. 78s(b)(2).
14 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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18:19 Mar 24, 2006
Jkt 208001
below, which Items have been prepared
by the BSE. On March 16, 2006, the BSE
filed Amendment No. 1 to the proposed
rule change.3 On March 17, 2006, the
BSE filed Amendment No. 2 to the
proposed rule change.4 The BSE filed
the proposed rule change pursuant to
section 19(b)(3)(A) of the Act 5 and Rule
19b–4(f)(6) thereunder,6 which renders
the proposed rule change effective upon
filing with the Commission. The
Commission 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 Boston Stock Exchange, Inc.
(‘‘BSE’’ or ‘‘Exchange’’) is proposing to
amend its rules governing its Directed
Order process on the Boston Options
Exchange (‘‘BOX’’). The Exchange is
proposing to clearly state that the BOX
Trading Host identifies to an Executing
Participant (‘‘EP’’) 7 the identity of the
firm entering a Directed Order. This rule
will be effective until June 30, 2006,
while the Commission considers a
corresponding Exchange proposal 8 to
amend its rules to permit EPs to choose
the firms from whom they will accept
Directed Orders, while providing
complete anonymity of the firm entering
a Directed Order.9 In addition, the
Exchange commits that it will cease to
provide the identity of order entry firms
prior to June 30, 2006, if the
Commission staff prohibits all options
exchanges from disclosing the identity
of order entry firms in their Directed
Order systems.
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
BSE included statements concerning the
3 In Amendment No. 1, which supersedes and
replaces the original filing in its entirety, the BSE
changed the statutory basis of the filing.
4 In Amendment No. 2, which supersedes and
replaces the original filing and Amendment No. 1
in its entirety, the BSE changed the statutory basis
of the filing.
5 15 U.S.C. 78s(b)(3)(A).
6 17 CFR 240.19b–4(f)(6).
7 BSE proposes that a Market Maker who desires
to accept Directed Orders must systemically
indicate that it is an EP whenever the Market Maker
wishes to receive Directed Orders.
8 See Securities Exchange Act Release No. 53357
(February 23, 2006), 71 FR 10730 (March 2, 2006)
(SR–BSE–2005–52).
9 In the event that the issue of anonymity in the
Directed Order process is not resolved by June 30,
2006, the Exchange intends to submit another filing
under Rule 19b–4(f)(1) under the Act extending this
rule and system process.
PO 00000
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Fmt 4703
Sfmt 4703
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 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
BSE seeks to amend its rules to clearly
state that the BOX Trading Host
identifies to an EP the identity of the
firm entering a Directed Order. Market
Makers are able to handle orders on an
agency basis directed to them by Order
Flow Providers (‘‘OFPs’’). In Section 1,
Chapter I of the BOX Rules, a Directed
Order is defined as a Customer Order
directed to a Market Maker by an OFP.
An OFP sends a Directed Order to BOX
with a designation of the Market Maker
to whom the order is to be directed.
BOX then routes the Directed Order to
the appropriate Market Maker. Under
Chapter VI, Section 5(c)(ii) of the BOX
Rules, a Market Maker only has two
choices when he receives a Directed
Order: (1) Submit the order to the PIP
process; or (2) send the order back to
BOX for placement onto the BOX Book.
The BSE proposes to amend Chapter
VI, Section 5(c)(i) of the BOX Rules to
clarify that unlike all other orders
submitted to the BOX Trading Host,
Directed Orders are not anonymous. The
Options Participant identification
number (‘‘Participant ID’’) of the OFP
sending the Directed Order will be
revealed to the Market Maker recipient.
The Market Maker must submit this
Participant ID to BOX whenever the
Market Maker chooses to submit the
Directed Order and his Primary
Improvement Order to the PIP process.
However, once the Directed Order is
submitted to the PIP process or the BOX
Book, the Participant ID is not shown to
any market participant and the identity
of the OFP will be anonymous pursuant
to Chapter V, Section 14(e) of the BOX
Rules.
Chapter VI, Section 5(c)(i) of the BOX
Rules prohibits a Market Maker from
rejecting a Directed Order. The BSE
wishes to clarify that upon
systematically indicating its desire to
accept Directed Orders, a Market Maker
that receives a Directed Order is not,
under any circumstances, to reject the
receipt of the Directed Order from the
BOX Trading Host nor reject the
Directed Order back to the OFP who
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Federal Register / Vol. 71, No. 58 / Monday, March 27, 2006 / Notices
sent it. A Market Maker who desires to
accept Directed Orders must
systemically indicate that it is an EP
whenever the Market Maker wishes to
receive Directed Orders from the BOX
Trading Host. If a Market Maker does
not systemically indicate that it is an
EP, then the BOX Trading Host will not
forward any Directed Orders to that
Market Maker. In such a case, the BOX
Trading Host will send the order
directly to the BOX Book.
Other Clarifying Rule Change Relating
to Directed Orders
Currently, Chapter V, Section 14(e) of
the BOX Rules states that the identity of
Options Participants who submit orders
to the Trading Host will remain
anonymous to market participants at all
times, except during error resolution or
through the normal clearing process as
set forth in Chapter V, Section 16(a)(vi)
of the BOX Rules. Proposed Chapter V,
Section 14(e) of the BOX Rules and the
Supplementary Material thereto, would
clarify that the Participant ID of an OFP
who submits orders to the Trading Host
for use in the Directed Order process
will be revealed to the EP who receives
such Directed Orders as set forth in
Chapter VI, Section 5(c) of the BOX
Rules.
2. Statutory Basis
The Exchange believes that the
proposed rule change is designed to
clarify the information contained in a
Directed Order. This clarification will
allow Options Participants to make
better informed decisions in
determining when and how to use the
Directed Order process. Accordingly,
the Exchange believes that the proposal
is consistent with the requirements of
section 6(b) of the Act,10 in general, and
section 6(b)(5) of the Act,11 in
particular, in that it is designed to
promote just and equitable principles of
trade, to prevent fraudulent and
manipulative acts and, in general, to
protect investors and the public interest.
wwhite on PROD1PC65 with NOTICES
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.
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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18:19 Mar 24, 2006
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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
Because the foregoing proposed rule
change, as amended: (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 of this filing, 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) 12 of the Act and Rule 19b–
4(f)(6) thereunder.13
The BSE requests that the
Commission waive the 30-day operative
delay, as specified in Rule 19b–
4(f)(6)(iii),14 and designate the proposed
rule change to become operative
immediately. The Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest
because such waiver would
immediately conform the BOX rules
with BOX’s current practice and clarify
that Directed Orders on BOX are not
anonymous.15
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.16
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). Rule 19b–4(f)(6)(iii)
under the Act requires the self-regulatory
organization to provide the Commission written
notice of its intent to file the proposed rule change
at least five business days (or such shorter time as
designated by the Commission) before doing so. The
BSE has requested that the Commission waive the
five-day pre-filing notice requirement. The
Commission granted BSE’s request.
14 17 CFR 240.19b–4(f)(6)(iii).
15 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
16 The effective date of the original proposed rule
is March 14, 2006. The effective date of
Amendment No. 1 is March 16, 2006. The effective
date of Amendment No. 2 is March 17, 2006. For
purposes of calculating the 60-day period within
which the Commission may summarily abrogate the
13 17
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15233
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, 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 rulecomments@sec.gov. Please include File
No. SR–BSE–2006–14 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BSE–2006–14. 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 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–2006–14 and should
be submitted on or before April 17,
2006.
proposed rule change under section 19(b)(3)(C) of
the Act, the Commission considers the period to
commence on March 17, 2006, the date on which
the BSE submitted Amendment No. 2. See 15 U.S.C.
78s(b)(3)(C).
17 17 CFR 200.30–3(a)(12).
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15234
Federal Register / Vol. 71, No. 58 / Monday, March 27, 2006 / Notices
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
Nancy M. Morris,
Secretary.
[FR Doc. E6–4339 Filed 3–24–06; 8:45 am]
Chicago Board Options Exchange,
Inc.—Fees Schedule
March 1, 2006
1. No Change.
2. Marketing Fee (6)(16)—$.65
3.–4. No Change.
BILLING CODE 8010–01–P
Footnotes:
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53511; File No. SR–CBOE–
2006–23]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change and Amendment No. 1
Thereto Relating to Its Marketing Fee
Program
March 17, 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 1,
2006, the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’ 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. On March
16, 2006, the Exchange submitted
Amendment No. 1 to the proposed rule
change.3 The CBOE has designated this
proposal as one establishing or changing
a due, fee, or other charge imposed by
the CBOE under Section 19(b)(3)(A)(ii)
of the Act 4 and Rule 19b–4(f)(2)
thereunder,5 which renders the
proposal, as amended, effective upon
filing with the Commission. The
Commission 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
wwhite on PROD1PC65 with NOTICES
The CBOE proposes to amend its Fees
Schedule and its marketing fee program.
Below is the text of the proposed rule
change. Proposed new language is
italicized and proposed deletions are in
[brackets].
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1 (‘‘Amendment No. 1’’) makes
a minor, technical clarification in the rule text of
footnote 6 to CBOE’s Fees Schedule.
4 15 U.S.C. 78s(b)(3)(A)(ii).
5 17 CFR 240.19b–4(f)(2).
2 17
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18:19 Mar 24, 2006
Jkt 208001
(1)–(5) No Change.
(6) [Commencing on December 12,
2005, t]The Marketing Fee will be
assessed only on transactions of MarketMakers, RMMs, e-DPMs, DPMs, and
LMMs resulting from orders for less
than 1,000 contracts (i) from payment
accepting firms, or (ii) that have
designated a ‘‘Preferred Market-Maker’’
under CBOE Rule 8.13 at the rate of $.65
per contract on all classes of equity
options, options on HOLDRs, options on
SPDRs, and options on DIA. The fee will
not apply to: Market-Maker-to-MarketMaker transactions including
transactions resulting from orders from
non-member market-makers; [or]
transactions resulting from P/A orders;
transactions resulting from
accommodation liquidations (cabinet
trades); and transactions resulting from
dividend strategies, merger strategies,
and short stock interest strategies as
defined in footnote 13 of this Fees
Schedule. This fee shall not apply to
index options and options on ETFs
(other than options on SPDRs and
options on DIA). A Preferred MarketMaker will only be given access to the
marketing fee funds generated from a
Preferred order if the Preferred MarketMaker has an appointment in the class
in which the Preferred order is received
and executed. If less than 80% of the
marketing fee funds are paid out by the
DPM/LMM or Preferred Market-Maker
in a given month, then the Exchange
would refund such surplus at the end of
the month on a pro rata basis based
upon contributions made by the MarketMakers, RMMs, e-DPMs, DPMs and
LMMs. However, if 80% or more of the
accumulated funds in a given month are
paid out by the DPM/LMM or Preferred
Market-Maker, there will not be a rebate
for that month and the funds will carry
over and will be included in the pool of
funds to be used by the DPM/LMM or
Preferred Market-Maker the following
month. At the end of each quarter, the
Exchange would then refund any
surplus, if any, on a pro rata basis based
upon contributions made by the MarketMakers, RMMs, DPMs, e-DPMs and
LMMs. CBOE’s marketing fee program
as described above will be in effect until
June 2, 2006.
Remainder of Fees Schedule—No
Change.
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
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, as amended,
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 CBOE 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
Effective December 12, 2005, CBOE
amended its marketing fee program in a
number of respects.6 CBOE states that,
as amended, the fee is assessed upon
DPMs, LMMs, e-DPMs, RMMs, and
Market-Makers at the rate of $.65 per
contract on transactions of MarketMakers, RMMs, e-DPMs, DPMs, and
LMMs resulting from orders for less
than 1,000 contracts (i) from payment
accepting firms (‘‘PAFs’’), or (ii) that
have designated a ‘‘Preferred MarketMaker’’ under CBOE Rule 8.13. CBOE
notes that the fee does not apply to
Market-Maker-to-Market-Maker
transactions (which includes all
transactions between any combination
of DPMs, e-DPMs, RMMs, LMMs, and
Market-Makers), or transactions of
Market-Makers, RMMs, e-DPMs, DPMs,
and LMMs resulting from inbound P/A
orders. CBOE states that the marketing
fee is assessed in all equity option
classes and options on HOLDRs,
options on SPDRs and options on DIA.
CBOE proposes to amend its
marketing fee program to provide that
CBOE Market-Makers, RMMs, e-DPMs,
DPMs, and LMMs would not be
assessed the marketing fee on
transactions resulting from orders from
non-member market-makers, which
orders may be submitted to CBOE from
PAFs. CBOE believes that this would be
consistent with CBOE’s existing
marketing fee program which expressly
provides that the fee does not apply to
CBOE Market-Maker-to-Market-Maker
transactions.
Additionally, CBOE proposes to
amend its marketing fee program to
provide that the fee would not apply to
6 See Securities Exchange Act Release No. 53016
(December 22, 2005), 70 FR 77209 (December 29,
2005) (SR–CBOE–2005–107).
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]]>Agencies
[Federal Register Volume 71, Number 58 (Monday, March 27, 2006)]
[Notices]
[Pages 15232-15234]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-4339]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53516; File No. SR-BSE-2006-14]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendments No. 1 and 2 Thereto Relating to Information Contained in
a Directed Order on the Boston Options Exchange
March 20, 2006.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 14, 2006, 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 and
II below, which Items have been prepared by the BSE. On March 16, 2006,
the BSE filed Amendment No. 1 to the proposed rule change.\3\ On March
17, 2006, the BSE filed Amendment No. 2 to the proposed rule change.\4\
The BSE filed the proposed rule change pursuant to section 19(b)(3)(A)
of the Act \5\ and Rule 19b-4(f)(6) thereunder,\6\ which renders the
proposed rule change effective upon filing with the Commission. The
Commission 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\ In Amendment No. 1, which supersedes and replaces the
original filing in its entirety, the BSE changed the statutory basis
of the filing.
\4\ In Amendment No. 2, which supersedes and replaces the
original filing and Amendment No. 1 in its entirety, the BSE changed
the statutory basis of the filing.
\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Boston Stock Exchange, Inc. (``BSE'' or ``Exchange'') is
proposing to amend its rules governing its Directed Order process on
the Boston Options Exchange (``BOX''). The Exchange is proposing to
clearly state that the BOX Trading Host identifies to an Executing
Participant (``EP'') \7\ the identity of the firm entering a Directed
Order. This rule will be effective until June 30, 2006, while the
Commission considers a corresponding Exchange proposal \8\ to amend its
rules to permit EPs to choose the firms from whom they will accept
Directed Orders, while providing complete anonymity of the firm
entering a Directed Order.\9\ In addition, the Exchange commits that it
will cease to provide the identity of order entry firms prior to June
30, 2006, if the Commission staff prohibits all options exchanges from
disclosing the identity of order entry firms in their Directed Order
systems.
---------------------------------------------------------------------------
\7\ BSE proposes that a Market Maker who desires to accept
Directed Orders must systemically indicate that it is an EP whenever
the Market Maker wishes to receive Directed Orders.
\8\ See Securities Exchange Act Release No. 53357 (February 23,
2006), 71 FR 10730 (March 2, 2006) (SR-BSE-2005-52).
\9\ In the event that the issue of anonymity in the Directed
Order process is not resolved by June 30, 2006, the Exchange intends
to submit another filing under Rule 19b-4(f)(1) under the Act
extending this rule and system process.
---------------------------------------------------------------------------
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 BSE 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 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
BSE seeks to amend its rules to clearly state that the BOX Trading
Host identifies to an EP the identity of the firm entering a Directed
Order. Market Makers are able to handle orders on an agency basis
directed to them by Order Flow Providers (``OFPs''). In Section 1,
Chapter I of the BOX Rules, a Directed Order is defined as a Customer
Order directed to a Market Maker by an OFP. An OFP sends a Directed
Order to BOX with a designation of the Market Maker to whom the order
is to be directed. BOX then routes the Directed Order to the
appropriate Market Maker. Under Chapter VI, Section 5(c)(ii) of the BOX
Rules, a Market Maker only has two choices when he receives a Directed
Order: (1) Submit the order to the PIP process; or (2) send the order
back to BOX for placement onto the BOX Book.
The BSE proposes to amend Chapter VI, Section 5(c)(i) of the BOX
Rules to clarify that unlike all other orders submitted to the BOX
Trading Host, Directed Orders are not anonymous. The Options
Participant identification number (``Participant ID'') of the OFP
sending the Directed Order will be revealed to the Market Maker
recipient. The Market Maker must submit this Participant ID to BOX
whenever the Market Maker chooses to submit the Directed Order and his
Primary Improvement Order to the PIP process. However, once the
Directed Order is submitted to the PIP process or the BOX Book, the
Participant ID is not shown to any market participant and the identity
of the OFP will be anonymous pursuant to Chapter V, Section 14(e) of
the BOX Rules.
Chapter VI, Section 5(c)(i) of the BOX Rules prohibits a Market
Maker from rejecting a Directed Order. The BSE wishes to clarify that
upon systematically indicating its desire to accept Directed Orders, a
Market Maker that receives a Directed Order is not, under any
circumstances, to reject the receipt of the Directed Order from the BOX
Trading Host nor reject the Directed Order back to the OFP who
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sent it. A Market Maker who desires to accept Directed Orders must
systemically indicate that it is an EP whenever the Market Maker wishes
to receive Directed Orders from the BOX Trading Host. If a Market Maker
does not systemically indicate that it is an EP, then the BOX Trading
Host will not forward any Directed Orders to that Market Maker. In such
a case, the BOX Trading Host will send the order directly to the BOX
Book.
Other Clarifying Rule Change Relating to Directed Orders
Currently, Chapter V, Section 14(e) of the BOX Rules states that
the identity of Options Participants who submit orders to the Trading
Host will remain anonymous to market participants at all times, except
during error resolution or through the normal clearing process as set
forth in Chapter V, Section 16(a)(vi) of the BOX Rules. Proposed
Chapter V, Section 14(e) of the BOX Rules and the Supplementary
Material thereto, would clarify that the Participant ID of an OFP who
submits orders to the Trading Host for use in the Directed Order
process will be revealed to the EP who receives such Directed Orders as
set forth in Chapter VI, Section 5(c) of the BOX Rules.
2. Statutory Basis
The Exchange believes that the proposed rule change is designed to
clarify the information contained in a Directed Order. This
clarification will allow Options Participants to make better informed
decisions in determining when and how to use the Directed Order
process. Accordingly, the Exchange believes that the proposal is
consistent with the requirements of section 6(b) of the Act,\10\ in
general, and section 6(b)(5) of the Act,\11\ in particular, in that it
is designed to promote just and equitable principles of trade, to
prevent fraudulent and manipulative acts and, in general, to protect
investors and the public interest.
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\10\ 15 U.S.C. 78f(b).
\11\ 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
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
Because the foregoing proposed rule change, as amended: (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 of this filing, 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) \12\ of the Act and Rule 19b-4(f)(6)
thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6)(iii) under the Act
requires the self-regulatory organization to provide the Commission
written notice of its intent to file the proposed rule change at
least five business days (or such shorter time as designated by the
Commission) before doing so. The BSE has requested that the
Commission waive the five-day pre-filing notice requirement. The
Commission granted BSE's request.
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The BSE requests that the Commission waive the 30-day operative
delay, as specified in Rule 19b-4(f)(6)(iii),\14\ and designate the
proposed rule change to become operative immediately. The Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because such waiver
would immediately conform the BOX rules with BOX's current practice and
clarify that Directed Orders on BOX are not anonymous.\15\
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\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.\16\
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\16\ The effective date of the original proposed rule is March
14, 2006. The effective date of Amendment No. 1 is March 16, 2006.
The effective date of Amendment No. 2 is March 17, 2006. 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 March 17, 2006, the date on which the BSE submitted
Amendment No. 2. See 15 U.S.C. 78s(b)(3)(C).
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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, as amended, 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 No. SR-BSE-2006-14 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BSE-2006-14. 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 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-2006-14 and should be submitted on or before April
17, 2006.
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\17\ 17 CFR 200.30-3(a)(12).
[[Page 15234]]
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
Nancy M. Morris,
Secretary.
[FR Doc. E6-4339 Filed 3-24-06; 8:45 am]
BILLING CODE 8010-01-P
