Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Removing Its Short Sale Price Test Rule, 56569-56571 [E6-15793]

Download as PDF Federal Register / Vol. 71, No. 187 / Wednesday, September 27, 2006 / Notices Week of October 30, 2006—Tentative There are no meetings scheduled for the week of October 30, 2006. The schedule for Commission meetings is subject to change on short notice. To verify the status of meetings call (recording)—(301) 415–1292. Contact person for more information: Michelle Schroll, (301) 415–1662. The NRC Commission Meeting Schedule can be found on the Internet at: https://www.nrc.gov/what-we-do/ policy-making/schedule.html. The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the public meetings in another format (e.g., braille, large print), please notify the NRC’s Disability Program Coordinator, Deborah Chan, at 301–415–7041, TDD: 301–415–2100, or by e-mail at DLC@nrc.gov. Determinations on requests for reasonable accommodation will be made on a case-by-case basis. This notice is distributed by mail to several hundred subscribers; if you no longer wish to receive it, or would like to be added to the distribution, please contact the Office of the Secretary, Washington, DC 20555 (301–415–1969). In addition, distribution of this meeting notice over the Internet system is available. If you are interested in receiving this Commission meeting schedule electronically, please send an electronic message to dkw@nrc.gov. Dated: September 21, 2006. R. Michelle Schroll, Office of the Secretary. [FR Doc. 06–8326 Filed 9–25–06; 9:57 am] BILLING CODE 7590–01–M SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54476; File No. SR–BSE– 2006–31] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Removing Its Short Sale Price Test Rule rwilkins on PROD1PC63 with NOTICES September 20, 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 September 6, 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, II, and III below, which Items have been prepared by the selfregulatory organization. BSE has designated the proposed rule change as constituting a ‘‘non-controversial’’ rule change under paragraph (f)(6) of Rule 19b–4 under the Act,3 which renders the proposal effective upon receipt of this filing by the Commission. 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 BSE proposes amending its rules related to trading in Nasdaq securities to remove the short sale price test rule, or ‘‘bid test’’ rule, applicable to Nasdaq Global Market securities and Nasdaq Capital Market securities (‘‘Nasdaq Securities’’) traded on facilities of the BSE. That rule is presently set forth in Chapter XXXV, Section 26 of the BSE Rules. In addition to removing the BSE ‘‘bid test’’ rule for short sales of Nasdaq Securities from the BSE Rules, the proposed amendment is intended to clarify that all Nasdaq Securities traded on BSE facilities will be exempt from the requirements of any short sale price test applicable to Nasdaq Securities, including, but not limited to, the short sale price test set forth in Rule 10a–1 of the Act. Regulation SHO Rule 202T established procedures to allow the Commission to temporarily suspend short sale price tests so that the Commission could study the effectiveness of short sale price tests (the ‘‘Pilot’’).4 The Pilot is designed to assist the Commission in assessing whether changes to short sale regulation are necessary in light of current market practices and the purposes underlying short sale regulation. To determine whether additional rulemaking is necessary, Commission staff will evaluate the results of the Pilot. After completion of the Pilot Program or at such other time if the Commission determines that such exemptions are no longer necessary or appropriate in the public interest or consistent with the protection of investors, the BSE will amend its rules accordingly, if necessary. The text of the proposed rule change is available from the principal 3 17 CFR 240.19b–4. Exchange Act Release No. 50104 (July 28, 2004), 69 FR 48032 (August 6, 2004). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. VerDate Aug<31>2005 16:48 Sep 26, 2006 4 See Jkt 208001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 56569 office of the Exchange and from 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 self-regulatory organization 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 self-regulatory organization 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 On or about August 1, 2006, The NASDAQ Stock Market LLC (‘‘Nasdaq’’) became a national securities exchange. As a result of Nasdaq becoming a national securities exchange, Nasdaq Securities became exchange listed securities subject to the short sale ‘‘tick test’’ provisions of Rule 10a–1 under the Act, which governs short sales of any security registered on, or admitted to, unlisted trading privileges on a national securities exchange if such transactions are made pursuant to an effective transaction reporting plan as defined in Rule 600 of Regulation NMS.5 Both the Chicago Stock Exchange, Inc. and Nasdaq requested, and have been granted, an exemption from the ‘‘tick test’’ provisions of Rule 10a–1 for Nasdaq listed securities while the Regulation SHO Pilot Program (the ‘‘Pilot Program’’) remains pending or until such other time as the Commission determines that such exemptions are no longer necessary or appropriate in the public interest or consistent with the protection of investors.6 The BSE intends to rely upon the exemption from the ‘‘tick test’’ provisions of Rule 10a– 1 set forth in the Commission’s July 20, 2006 letter to the Chicago Stock Exchange, Inc. As such, transactions in Nasdaq Securities on the BSE will be exempt from the ‘‘tick test’’ provisions of Rule 10a–1 just as transactions in Nasdaq Securities on the Chicago Stock Exchange, Inc. are exempt. The BSE will 5 See the July 20, 2006 letter from James Brigagliano, Acting Associate Director, Securities and Exchange Commission, Division of Market Regulation to David C. Whitcomb, Jr., at the Chicago Stock Exchange, Inc. 6 See id. E:\FR\FM\27SEN1.SGM 27SEN1 56570 Federal Register / Vol. 71, No. 187 / Wednesday, September 27, 2006 / Notices not apply a ‘‘tick test’’ for Nasdaq Securities until the Pilot Program is completed or the Commission directs otherwise. Even though the BSE will not be applying the ‘‘tick test’’ to Nasdaq Securities traded on the BSE, the BSE does have a short sale price test rule that requires Nasdaq Securities traded by specialists be subject to a ‘‘bid test.’’ 7 The BSE ‘‘bid test’’ rule is presently set forth in Chapter XXXV, Section 26 of the BSE Rules and states, in relevant part, that ‘‘No specialist shall effect a short sale for the account of a customer or for his own account in a Nasdaq security at or below the current best (inside) bid when the current best (inside) bid is below the preceding best (inside) bid in the security.’’ This proposed amendment is intended to remove the short sale ‘‘bid test’’ rule applicable to Nasdaq Securities traded by specialists on the BSE. This proposed amendment would allow short sales of Nasdaq Securities traded by specialists on the BSE without a short sale price test rule until December 31, 2006, after which the BSE will be trading Nasdaq Securities solely on its fully electronic Boston Equities Exchange (‘‘BeX’’). As of January 1, 2007 there will no longer be any specialist traded stocks on the BSE or any of its facilities. As such, BeX traded securities are not subject to Chapter XXXV, Section 26 of the BSE Rules because they are not traded by specialists. The BSE has not traded a Nasdaq security on the Exchange since or about September of 2004. BSE began receiving nominal specialist-traded Nasdaq crossing business in August 2006. In August, BSE received one cross transaction. BSE expects that the specialist-traded Nasdaq crossing business, which will conclude when BSE begins trading Nasdaq securities on the fully electronic BeX on January 1, 2007, will continue to be a nominal amount in overall Nasdaq security trading volume and should not have any material effect on the Pilot. The BSE believes if it did not remove its current short sale ‘‘bid test’’ rule it would be at a competitive disadvantage to other regional market centers. rwilkins on PROD1PC63 with NOTICES 2. Basis BSE states that the proposed amendment is designed to prevent the BSE from being at a competitive 7 Prior to Nasdaq becoming a national securities, NASD’s short sale ‘‘bid test’’ Rule 3350, now Rule 5100, was not applicable to a National Securities Exchange trading Nasdaq securities on an unlisted trading privileges basis. Therefore there was no requirement for the BSE to have a short sale ‘‘bid test’’ rule for Nasdaq securities. VerDate Aug<31>2005 16:48 Sep 26, 2006 Jkt 208001 disadvantage to other regional market centers that may be able to attract order flow as a result of their not having any short sale price test applicable to Nasdaq Securities until completion of the Pilot Program or until such other time as the Commission determines that such exemptions are no longer necessary or appropriate in the public interest or consistent with the protection of investors. Except for some nominal Nasdaq crossing business that began in August 2006 and will conclude on January 1, 2007, BSE has not traded Nasdaq securities since September 2004. In addition, the proposed amendment will delete a rule that will be rendered obsolete on January 1, 2007, when BSE begins trading Nasdaq securities on the BeX on a fully electronic basis without specialists. As such, the Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,8 in general, and Section 6(b)(5) of the Act,9 in particular, in that it is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transaction in securities, to remove impediments to and perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. 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 (a) This proposed rule change is filed pursuant to paragraph (A) of section 19(b)(3) of the Act. (b) Because the foregoing rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has 8 15 9 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00103 Fmt 4703 become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b– 4(f)(6) thereunder.11 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form https://www.sec.gov/ rules.sro.shtml; or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–BSE–2006–31 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–BSE–2006–31. 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 at the Commission’s Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the abovementioned self-regulatory organization. All comments received will be posted without change; the Commission does 10 15 11 17 Sfmt 4703 E:\FR\FM\27SEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 27SEN1 Federal Register / Vol. 71, No. 187 / Wednesday, September 27, 2006 / Notices not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to the File Number SR–BSE–2006–31 and should be submitted on or before October 18, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Nancy M. Morris, Secretary. [FR Doc. E6–15793 Filed 9–26–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [(Release No. 34–54475; File No. SR–CBOE– 2005–103)] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of Proposed Rule Change and Amendment No. 1 Thereto To Amend CBOE Rules Relating to the Electronic Designated Primary Market Maker Program September 20, 2006. I. Introduction On December 5, 2005, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 to amend CBOE rules relating to the Electronic Designated Primary Market Maker Program (‘‘e-DPM Program’’). On August 11, 2006, CBOE amended the proposed rule change.3 The proposed rule change, as modified by Amendment No. 1, was published for comment in the Federal Register on August 18, 2006.4 The Commission received no comments on the proposal. This order approves the proposed rule change, as amended. rwilkins on PROD1PC63 with NOTICES II. Description of the Proposal The Exchange’s e-DPM Program allows e-DPMs to operate remotely as competing DPMs by entering bids and offers electronically from locations other than the trading floor. Exchange rules provide that the Exchange will CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Amendment No. 1 replaced and superseded the original proposal in its entirety. 4 See Securities Exchange Act Release No. 54311 (August 11, 2006), 71 FR 47834. determine which option classes to include in the e-DPM Program and, accordingly, which classes to allocate to each respective e-DPM. The proposed rule change would give the Exchange the corresponding authority to remove any e-DPM option class from the e-DPM Program if certain factors no longer warranted the continued inclusion of that option class in the e-DPM Program. The factors used in making this determination would relate to the option class itself and would include only the following: (i) Market share; (ii) number of exchanges trading the product; (iii) average daily trading volume; and (iv) liquidity in the product. The Exchange would consider any one or all of these factors in determining whether to remove an option class from the e-DPM Program. Persons who are aggrieved by the removal of an option class from the eDPM Program would be permitted to appeal the decision in accordance with the Exchange’s standard procedures on review of Exchange actions, as set forth in Chapter XIX of the Exchange’s rules. III. Discussion After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.5 In particular, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,6 in that it is designed to promote just and equitable principles of trade and to remove impediments to and perfect the mechanism of a free and open market. The Commission also finds that the proposal is consistent with Section 6(b)(7) of the Act,7 in that it provides a fair procedure for the limitation by the Exchange of any person with respect to access to services offered by the Exchange. The proposed rule change permits the Exchange to remove option classes from the e-DPM Program only if certain factors no longer warrant the continued inclusion of that class in the program. The Commission notes that the factors to be considered by the Exchange (i.e., market share, number of exchanges trading the product, trading volume, and liquidity) are objective and would limit the Exchange’s ability to act in this area. The proposed factors to be considered by the Exchange in 12 17 1 15 VerDate Aug<31>2005 16:48 Sep 26, 2006 Jkt 208001 5 In approving the proposed rule change, the Commission has considered its impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 6 15 U.S.C. 78f(b)(5). 7 15 U.S.C. 78f(b)(7). PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 56571 determining whether to remove an option class from the e-DPM Program, coupled with the right to appeal the Exchange’s determination, should help to protect persons from an unfair limitation of access to services offered by the Exchange, while permitting the Exchange to further the competitive goals of the e-DPM Program. Accordingly, the Commission believes that the amended proposal is consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,8 that the proposed rule change (SR–CBOE–2005– 103), as amended, be, and it hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.9 Nancy M. Morris, Secretary. [FR Doc. E6–15794 Filed 9–26–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54477; File No. SR– NASDAQ–2006–034] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Practice of Using a Fifth Character Identifier With the Symbol of Foreign Securities September 20, 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 August 28, 2006, The NASDAQ Stock Market LLC (‘‘Nasdaq’’) 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 Nasdaq. Nasdaq filed the proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(1) thereunder,4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 8 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). 4 17 CFR 240.19b–4(f)(1). 9 17 E:\FR\FM\27SEN1.SGM 27SEN1

Agencies

[Federal Register Volume 71, Number 187 (Wednesday, September 27, 2006)]
[Notices]
[Pages 56569-56571]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-15793]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54476; File No. SR-BSE-2006-31]


Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Removing Its Short Sale Price Test Rule

September 20, 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 September 6, 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, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. BSE has designated the proposed rule change as 
constituting a ``non-controversial'' rule change under paragraph (f)(6) 
of Rule 19b-4 under the Act,\3\ which renders the proposal effective 
upon receipt of this filing by the Commission. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    BSE proposes amending its rules related to trading in Nasdaq 
securities to remove the short sale price test rule, or ``bid test'' 
rule, applicable to Nasdaq Global Market securities and Nasdaq Capital 
Market securities (``Nasdaq Securities'') traded on facilities of the 
BSE. That rule is presently set forth in Chapter XXXV, Section 26 of 
the BSE Rules.
    In addition to removing the BSE ``bid test'' rule for short sales 
of Nasdaq Securities from the BSE Rules, the proposed amendment is 
intended to clarify that all Nasdaq Securities traded on BSE facilities 
will be exempt from the requirements of any short sale price test 
applicable to Nasdaq Securities, including, but not limited to, the 
short sale price test set forth in Rule 10a-1 of the Act.
    Regulation SHO Rule 202T established procedures to allow the 
Commission to temporarily suspend short sale price tests so that the 
Commission could study the effectiveness of short sale price tests (the 
``Pilot'').\4\ The Pilot is designed to assist the Commission in 
assessing whether changes to short sale regulation are necessary in 
light of current market practices and the purposes underlying short 
sale regulation. To determine whether additional rulemaking is 
necessary, Commission staff will evaluate the results of the Pilot. 
After completion of the Pilot Program or at such other time if the 
Commission determines that such exemptions are no longer necessary or 
appropriate in the public interest or consistent with the protection of 
investors, the BSE will amend its rules accordingly, if necessary. The 
text of the proposed rule change is available from the principal office 
of the Exchange and from the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \4\ See Exchange Act Release No. 50104 (July 28, 2004), 69 FR 
48032 (August 6, 2004).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
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 self-regulatory organization 
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
    On or about August 1, 2006, The NASDAQ Stock Market LLC 
(``Nasdaq'') became a national securities exchange. As a result of 
Nasdaq becoming a national securities exchange, Nasdaq Securities 
became exchange listed securities subject to the short sale ``tick 
test'' provisions of Rule 10a-1 under the Act, which governs short 
sales of any security registered on, or admitted to, unlisted trading 
privileges on a national securities exchange if such transactions are 
made pursuant to an effective transaction reporting plan as defined in 
Rule 600 of Regulation NMS.\5\
---------------------------------------------------------------------------

    \5\ See the July 20, 2006 letter from James Brigagliano, Acting 
Associate Director, Securities and Exchange Commission, Division of 
Market Regulation to David C. Whitcomb, Jr., at the Chicago Stock 
Exchange, Inc.
---------------------------------------------------------------------------

    Both the Chicago Stock Exchange, Inc. and Nasdaq requested, and 
have been granted, an exemption from the ``tick test'' provisions of 
Rule 10a-1 for Nasdaq listed securities while the Regulation SHO Pilot 
Program (the ``Pilot Program'') remains pending or until such other 
time as the Commission determines that such exemptions are no longer 
necessary or appropriate in the public interest or consistent with the 
protection of investors.\6\ The BSE intends to rely upon the exemption 
from the ``tick test'' provisions of Rule 10a-1 set forth in the 
Commission's July 20, 2006 letter to the Chicago Stock Exchange, Inc. 
As such, transactions in Nasdaq Securities on the BSE will be exempt 
from the ``tick test'' provisions of Rule 10a-1 just as transactions in 
Nasdaq Securities on the Chicago Stock Exchange, Inc. are exempt. The 
BSE will

[[Page 56570]]

not apply a ``tick test'' for Nasdaq Securities until the Pilot Program 
is completed or the Commission directs otherwise.
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    \6\ See id.
---------------------------------------------------------------------------

    Even though the BSE will not be applying the ``tick test'' to 
Nasdaq Securities traded on the BSE, the BSE does have a short sale 
price test rule that requires Nasdaq Securities traded by specialists 
be subject to a ``bid test.'' \7\ The BSE ``bid test'' rule is 
presently set forth in Chapter XXXV, Section 26 of the BSE Rules and 
states, in relevant part, that ``No specialist shall effect a short 
sale for the account of a customer or for his own account in a Nasdaq 
security at or below the current best (inside) bid when the current 
best (inside) bid is below the preceding best (inside) bid in the 
security.'' This proposed amendment is intended to remove the short 
sale ``bid test'' rule applicable to Nasdaq Securities traded by 
specialists on the BSE. This proposed amendment would allow short sales 
of Nasdaq Securities traded by specialists on the BSE without a short 
sale price test rule until December 31, 2006, after which the BSE will 
be trading Nasdaq Securities solely on its fully electronic Boston 
Equities Exchange (``BeX''). As of January 1, 2007 there will no longer 
be any specialist traded stocks on the BSE or any of its facilities. As 
such, BeX traded securities are not subject to Chapter XXXV, Section 26 
of the BSE Rules because they are not traded by specialists.
---------------------------------------------------------------------------

    \7\ Prior to Nasdaq becoming a national securities, NASD's short 
sale ``bid test'' Rule 3350, now Rule 5100, was not applicable to a 
National Securities Exchange trading Nasdaq securities on an 
unlisted trading privileges basis. Therefore there was no 
requirement for the BSE to have a short sale ``bid test'' rule for 
Nasdaq securities.
---------------------------------------------------------------------------

    The BSE has not traded a Nasdaq security on the Exchange since or 
about September of 2004. BSE began receiving nominal specialist-traded 
Nasdaq crossing business in August 2006. In August, BSE received one 
cross transaction. BSE expects that the specialist-traded Nasdaq 
crossing business, which will conclude when BSE begins trading Nasdaq 
securities on the fully electronic BeX on January 1, 2007, will 
continue to be a nominal amount in overall Nasdaq security trading 
volume and should not have any material effect on the Pilot. The BSE 
believes if it did not remove its current short sale ``bid test'' rule 
it would be at a competitive disadvantage to other regional market 
centers.
2. Basis
    BSE states that the proposed amendment is designed to prevent the 
BSE from being at a competitive disadvantage to other regional market 
centers that may be able to attract order flow as a result of their not 
having any short sale price test applicable to Nasdaq Securities until 
completion of the Pilot Program or until such other time as the 
Commission determines that such exemptions are no longer necessary or 
appropriate in the public interest or consistent with the protection of 
investors. Except for some nominal Nasdaq crossing business that began 
in August 2006 and will conclude on January 1, 2007, BSE has not traded 
Nasdaq securities since September 2004. In addition, the proposed 
amendment will delete a rule that will be rendered obsolete on January 
1, 2007, when BSE begins trading Nasdaq securities on the BeX on a 
fully electronic basis without specialists. As such, the Exchange 
believes that the proposal is consistent with the requirements of 
Section 6(b) of the Act,\8\ in general, and Section 6(b)(5) of the 
Act,\9\ in particular, in that it is designed to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transaction in 
securities, to remove impediments to and perfect the mechanism for a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    (a) This proposed rule change is filed pursuant to paragraph (A) of 
section 19(b)(3) of the Act.
    (b) Because the foregoing rule change does not: (i) Significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; and (iii) become operative for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, it has become effective pursuant to 
Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) 
thereunder.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form https://
www.sec.gov/rules.sro.shtml; or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-BSE-2006-31 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-BSE-2006-31. 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 at the Commission's Public Reference Room. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the above-mentioned self-regulatory organization. 
All comments received will be posted without change; the Commission 
does

[[Page 56571]]

not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to the File Number SR-BSE-2006-31 and should 
be submitted on or before October 18, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-15793 Filed 9-26-06; 8:45 am]
BILLING CODE 8010-01-P
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