Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Implement a Pilot Program To Trade Certain Options in Pennies, 68654-68655 [E6-19979]

Download as PDF 68654 Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Amex–2006–89 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 Number SR-Amex-2006–89. 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 Amex. 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–Amex–2006–89 and should be submitted on or before December 18, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority.16 Nancy M. Morris, Secretary. [FR Doc. E6–19980 Filed 11–24–06; 8:45 am] sroberts on PROD1PC70 with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54789; File No. SR–BSE– 2006–49] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Implement a Pilot Program To Trade Certain Options in Pennies November 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 November 17, 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 substantially 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 proposes to amend the Boston Options Exchange (‘‘BOX’’) Rules to reflect BOX’s participation in a six-month Penny Pilot Program, which will commence on January 26, 2007. The text of the proposed rule change is available on the BSE’s Web site at https://www.bostonstock.com, at the 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 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 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 purpose of this proposed rule change is to amend the BOX Rules to reflect BOX’s participation in a six1 15 16 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 17:53 Nov 24, 2006 2 17 Jkt 211001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00126 Fmt 4703 Sfmt 4703 month Penny Pilot Program, which will commence on January 26, 2007. The Exchange proposes to amend Section 6 (‘‘Minimum Trading Increments’’) and to add a new section, Section 33, (‘‘Penny Pilot Program’’) to Chapter V (‘‘Doing Business on BOX’’) of the BOX Rules. All six options exchanges, including BOX, currently quote options in nickel and dime increments. Once the Penny Pilot Program commences in January, investors will be able to begin quoting in pennies in a limited number of option classes. The thirteen (13) classes represented in the Penny Pilot Program include: IWM (Ishares Russell 2000), QQQQ (NASDAQ–100 Index Tracking Stock), SMH (Semiconductor Holders), GE (General Electric), AMD (Advanced Micro Devices), MSFT (Microsoft), INTC (Intel), CAT (Caterpillar), WFMI (Whole Foods), TXN (Texas Instruments), FLEX (Flextronics International), and SUNW (Sun Microsystems).3 These classes represent a diverse group of options with various trading characteristics. This diversity will allow for broadbased reporting, which will enable analysis on the impact of penny quoting on options with different volumes, liquidity, and strike prices. All classes contained in the Penny Pilot Program, except for the QQQQs will be quoted in the following manner: If the options contract trades below $3, one (1) cent; and if the options contract trades at $3 or above, five (5) cents. The QQQQs will be quoted in one (1) cent increments for all options series. The Exchange believes that this change in minimum increments should help investors by providing more competitive pricing, reducing payment for order flow, reducing costs, and tightening spreads. BOX will deliver a report, which will be comprised of data from the first three months of trading, to the Commission during the fourth month of the pilot. The report will detail the impact of quote updating to the Options Price Reporting Authority (‘‘OPRA’’), the effect the Penny Pilot Program has on price improvement, and data on average spreads. BOX anticipates that this report will be used in conjunction with the reports from the other five exchanges to analyze the impact that the penny quoting would have on the options industry. 3 The Exchange understands that another options class will be added to the Penny Pilot Program to bring the total number of classes in the Penny Pilot Program to thirteen. Telephone Conversation between Lisa J. Fall, General Counsel, BOX, and Johnna B. Dumler, Special Counsel, Division of Market Regulation, Commission, on November 20, 2006. E:\FR\FM\27NON1.SGM 27NON1 Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,4 in general, and furthers the objectives of Section 6(b)(5) of the Act,5 in particular, in that the proposed rule change is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 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 Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. 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: • Send an e-mail to rulecomments@sec.gov. Please include File No. SR–BSE–2006–49 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–2006–49. 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 at 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 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 No. SR–BSE–2006–49 and should be submitted on or before December 18, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.6 Nancy M. Morris, Secretary. [FR Doc. E6–19979 Filed 11–24–06; 8:45 am] BILLING CODE 8011–01–P 68655 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54779; File No. SR–BSE– 2006–48] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Implement a Quote Mitigation Plan November 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 November 15, 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 substantially 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 proposes to amend the Boston Options Exchange (‘‘BOX’’) Rules to add a Quote Mitigation Plan. The text of the proposed rule change is available on the 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 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 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 sroberts on PROD1PC70 with NOTICES Electronic Comments Background and Introduction • Use the Commission’s Internet comment form https://www.sec.gov/ rules/sro.shtml; or The U.S. options industry has witnessed an explosion in market broadcast data traffic over the past six 4 15 5 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:58 Nov 24, 2006 1 15 6 17 Jkt 211001 PO 00000 CFR 200.30–3(a)(12). Frm 00127 Fmt 4703 2 17 Sfmt 4703 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\27NON1.SGM 27NON1

Agencies

[Federal Register Volume 71, Number 227 (Monday, November 27, 2006)]
[Notices]
[Pages 68654-68655]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-19979]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54789; File No. SR-BSE-2006-49]


Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change To Implement a Pilot Program 
To Trade Certain Options in Pennies

November 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 November 17, 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 substantially prepared by the BSE. 
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.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend the Boston Options Exchange 
(``BOX'') Rules to reflect BOX's participation in a six-month Penny 
Pilot Program, which will commence on January 26, 2007. The text of the 
proposed rule change is available on the BSE's Web site at https://
www.bostonstock.com, at the 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 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 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 purpose of this proposed rule change is to amend the BOX Rules 
to reflect BOX's participation in a six-month Penny Pilot Program, 
which will commence on January 26, 2007. The Exchange proposes to amend 
Section 6 (``Minimum Trading Increments'') and to add a new section, 
Section 33, (``Penny Pilot Program'') to Chapter V (``Doing Business on 
BOX'') of the BOX Rules.
    All six options exchanges, including BOX, currently quote options 
in nickel and dime increments. Once the Penny Pilot Program commences 
in January, investors will be able to begin quoting in pennies in a 
limited number of option classes. The thirteen (13) classes represented 
in the Penny Pilot Program include: IWM (Ishares Russell 2000), QQQQ 
(NASDAQ-100 Index Tracking Stock), SMH (Semiconductor Holders), GE 
(General Electric), AMD (Advanced Micro Devices), MSFT (Microsoft), 
INTC (Intel), CAT (Caterpillar), WFMI (Whole Foods), TXN (Texas 
Instruments), FLEX (Flextronics International), and SUNW (Sun 
Microsystems).\3\ These classes represent a diverse group of options 
with various trading characteristics. This diversity will allow for 
broad-based reporting, which will enable analysis on the impact of 
penny quoting on options with different volumes, liquidity, and strike 
prices.
---------------------------------------------------------------------------

    \3\ The Exchange understands that another options class will be 
added to the Penny Pilot Program to bring the total number of 
classes in the Penny Pilot Program to thirteen. Telephone 
Conversation between Lisa J. Fall, General Counsel, BOX, and Johnna 
B. Dumler, Special Counsel, Division of Market Regulation, 
Commission, on November 20, 2006.
---------------------------------------------------------------------------

    All classes contained in the Penny Pilot Program, except for the 
QQQQs will be quoted in the following manner: If the options contract 
trades below $3, one (1) cent; and if the options contract trades at $3 
or above, five (5) cents. The QQQQs will be quoted in one (1) cent 
increments for all options series. The Exchange believes that this 
change in minimum increments should help investors by providing more 
competitive pricing, reducing payment for order flow, reducing costs, 
and tightening spreads.
    BOX will deliver a report, which will be comprised of data from the 
first three months of trading, to the Commission during the fourth 
month of the pilot. The report will detail the impact of quote updating 
to the Options Price Reporting Authority (``OPRA''), the effect the 
Penny Pilot Program has on price improvement, and data on average 
spreads. BOX anticipates that this report will be used in conjunction 
with the reports from the other five exchanges to analyze the impact 
that the penny quoting would have on the options industry.

[[Page 68655]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\5\ in particular, in that the 
proposed rule change is designed to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to facilitating transactions in securities, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 No. SR-BSE-2006-49 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-2006-49. 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 at 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 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 No. SR-BSE-2006-49 and should be submitted on or before December 
18, 2006.
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
Nancy M. Morris,
Secretary.
[FR Doc. E6-19979 Filed 11-24-06; 8:45 am]
BILLING CODE 8011-01-P
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