Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to Proposed Rule Change, as Modified by Amendments No. 1, 2, and 3 Thereto, Relating to Registration Filing Requirements and Reporting Requirements, 57617-57619 [E7-19906]
Download as PDF
Federal Register / Vol. 72, No. 195 / Wednesday, October 10, 2007 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56594; File No. SR–BSE–
2007–25]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Notice of Filing
and Order Granting Accelerated
Approval to Proposed Rule Change, as
Modified by Amendments No. 1, 2, and
3 Thereto, Relating to Registration
Filing Requirements and Reporting
Requirements
October 1, 2007.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (‘‘Act’’)
and Rule 19b–4 thereunder,2 notice is
hereby given that on June 19, 2007, 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
substantially prepared by the Exchange.
On August 7, 2007, BSE filed
Amendment No. 1 to the proposed rule
change.3 On September 7, 2007, BSE
filed Amendment No. 2 to the proposed
rule change.4 On September 26, 2007,
BSE filed Amendment No. 3 to the
proposed rule change.5 The Commission
is publishing this notice to solicit
comments on the proposed rule change,
as modified by Amendments No. 1, 2,
and 3 thereto, from interested persons
and approve the proposed rule change
on an accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The BSE proposes to: (1) Amend BSE
Rules Chapter I–B Sections 4, 5, and 6
and Chapter XVIII Section 4 and Boston
Options Exchange (‘‘BOX’’) Rules
Chapter II Sections 1(b)(i) and Section
4(b), Chapter XI Sections 2(b), 3(a), and
4(c) and Chapter X Section 2(e), to
require all members, and member and
participant organizations, that do not
already participate in Web Central
Registration Depository (‘‘Web CRD’’) as
a member of a participating exchange or
the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) to submit
Forms U4, U5, BD and amendments
thereto as well as fingerprints, to the
rwilkins on PROD1PC63 with NOTICES
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1 superseded and replaced the
original rule filing in its entirety.
4 Amendment No. 2 superseded and replaced
Amendment No. 1 in its entirety.
5 Amendment No. 3 superseded and replaced
Amendment No. 2 in its entirety.
2 17
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17:08 Oct 09, 2007
Jkt 214001
Web CRD; 6 (2) amend Exchange Rules
Chapter I–B Sections 4, 5, and 6 and
Chapter XVIII Section 4 to add language
specifying a timeframe in which to
amend Form U4, Form U5, and Form
BD; and (3) amend its Minor Rule
Violation Plan (‘‘MRVP’’) by adopting
new provisions for failures to submit
amendments to Form U4, Form U5, and
Form BD.7
The text of the proposed rule change
is available at the principal office of the
BSE, the Commission’s Public Reference
Room, and https://www.bostonstock.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item III 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 the proposed rule
change is to create a more efficient,
centralized registration process by
migrating from a manual paper-based
Exchange procedure to Web CRD for
registration and fingerprinting, with
more defined deadlines and a more
streamlined disciplinary process.
Web CRD
The Web CRD process would assist in
maintaining all historical information
related to associated persons of member,
and participant organizations in one
central repository, as well as creating
efficient disclosure utilizing an online
6 Web CRD is a Web-based system that provides
broker-dealers and their associated persons ‘‘onestop filing’’ with the Commission, FINRA, and other
self-regulatory organizations and regulators. Web
CRD is operated by FINRA and is utilized by
participating securities regulators in connection
with registering and licensing broker-dealers and
their associated persons.
7 Rule 19d–1(c)(1) under the Act, 17 CFR
240.19d–1(c)(1), requires any self-regulatory
organization, for which the Commission is the
appropriate regulatory agency, that takes any final
disciplinary action with respect to any person to
promptly file a notice thereof with the Commission.
However, rule violations resulting in a fine not
exceeding $2,500 are not deemed final and
therefore not subject to the same reporting
requirements.
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Fmt 4703
Sfmt 4703
57617
database, which can be accessed by
other exchanges and regulators.
Additionally, the Web CRD process
would track and capture information
related to registration and continuing
education. Finally, the Web CRD system
would capture information related to
fingerprinting and statutory
disqualification.
Members, and member and/or
participant organizations, would be
required to submit Forms U4 and U5
(and amendments thereto) through the
Web CRD system rather than in paper
form to the Exchange. Currently,
members, and member and/or
participant organizations, submit Forms
U4 and U5 in paper form to the
Exchange. Although Form BD is
required to be submitted to Web CRD,
the proposed rule change codifies this
requirement into BSE Rules Chapter I–
B Sections 4, 5, and 6 and Chapter XVIII
Section 4 and BOX Rules Chapter II
Sections 1(b)(i) and Section 4(b),
Chapter XI Sections 2(b), 3(a), and 4(c)
and Chapter X Section 2(e), and applies
to amendments as well.8
Members, and member and/or
participant organizations, also currently
file manual rolled fingerprint cards 9
with the Exchange, which the Exchange
then forwards to the FBI, the fingerprint
processing arm of the Office of the
Attorney General of the United States.
The FBI identifies submitted
fingerprints, retrieves relevant criminal
history information, and returns
fingerprint reports (including the
original fingerprint cards) to the
Exchange. Upon receipt of the approved
fingerprint cards, the Exchange sends
this information to the member
organization and keeps a copy for its
records. This proposed rule change
would require the members, and
member and/or participant
organizations, to send the fingerprint
cards to FINRA for processing. All
trading personnel and other associated
persons of members, and member or
participant organizations, who are not
registered and only submit fingerprint
cards to FINRA, will be classified as
Non-Registered Fingerprint (‘‘NRF’’)
filers.
The Exchange anticipates that the
proposed migration to Web CRD will
take place on October 1, 2007. The
Exchange will provide notification in
writing to the membership of the
effective date of the rule change.
Additionally, the Exchange is
amending the language in BOX Chapter
8 17
CFR 240.15b–1.
will accept Federal Bureau of
Investigation (‘‘FBI’’) fingerprint results in lieu of
fingerprint cards.
9 FINRA
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57618
Federal Register / Vol. 72, No. 195 / Wednesday, October 10, 2007 / Notices
XI Doing Business With The Public,
Section 2(b) to clarify the registration
obligations of Options Principals.
Minor Rule Violation Plan
The Exchange is adding language to
BSE’s and BOX’s MRVPs to clarify the
timeframe within which members, and
member and/or participant
organizations, must amend Forms U4,
U5, and BD to allow for prompt
disclosure. The Exchange proposes a
timeframe of thirty days from the time
the filer knew of or should have known
of the facts which gave rise to the need
for an amendment, to submit amended
Forms U4, U5, and BD. By including
this language in the Exchange Rules,
Boston Stock Exchange Regulation
(‘‘BSER’’) would retain the discretion to
initiate formal disciplinary
proceedings.10 The Exchange believes
that the proposed change should
encourage member organizations and
participant organizations to timely file
Forms U4, U5, and BD and thereby
timely disclose the information
contained in those forms. The
disclosure of this information should
enable the Exchange and the public to
receive current information on
registered persons and entities.
Specifically, the proposed changes to
the MRVP would authorize the
Exchange to impose a fine on any
member or participant organization
without formal disciplinary action. As
proposed, BSER would review the
number and seriousness of the
violation(s), as well as the previous
disciplinary history of the violator, to
determine if a matter is appropriate for
disposition under the MRVP. Once a
member or participant organization is
fined under the MRVP, BSER may issue
progressively higher fines for all
subsequent violations within a rolling
twelve-month period, or it may choose
to initiate formal disciplinary
proceedings. The addition of these
changes to the Exchange’s MRVP should
allow BSER to impose more meaningful
sanctions for violations that would
otherwise receive a cautionary letter, for
example, but do not necessarily rise to
the level of a formal disciplinary
proceeding.
Additionally, the proposed changes
would allow for disposition of minor or
rwilkins on PROD1PC63 with NOTICES
10 Section
6(b)(6) requires an exchange to have
rules that provide for members and associated
persons to be appropriately disciplined for
violations of the Act, the rules thereunder, and the
Exchange’s rules. 15 U.S.C. 78f(b)(6). Inclusion of
a rule in an MRVP permits an exchange to impose
a fine, under appropriate circumstances under the
MRVP. However, including a rule in an MRVP does
not limit an exchange’s ability to bring a formal
disciplinary action against a member or an
associated person.
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17:08 Oct 09, 2007
Jkt 214001
technical violations of Exchange rules
by means of a less costly and less time
consuming process as compared to a
formal disciplinary process. Expediting
resolutions for technical violations,
while retaining the discretion to bring
formal disciplinary action, should allow
for efficient dispositions of rule
violations.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 11 in general, and furthers the
objectives of Section 6(b)(5) of the Act 12
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest, by
providing information to a central
repository.
Importantly, the Exchange believes,
moving to Web CRD provides a central
location where information is available.
This enables easier access to all
members and member and/or
participant organizations. Further, most
other exchanges participate in Web CRD
registration.
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. 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:
U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
Frm 00106
Fmt 4703
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–BSE–2007–25. 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, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
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–2007–25 and should
be submitted on or before October 31,
2007.
IV. Commission’s Findings and Order
Granting Accelerated Approval of the
Proposed Rule Change
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange.13 In particular, the
Commission finds that the proposed
13 In approving this proposal, the Commission has
considered its impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
11 15
PO 00000
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–2007–25 on the
subject line.
Sfmt 4703
E:\FR\FM\10OCN1.SGM
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rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 72, No. 195 / Wednesday, October 10, 2007 / Notices
rule change is consistent with Section
6(b)(5) of the Act,14 which requires,
among other things, that the Exchange’s
rules be designed to prevent fraudulent
and manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
The Commission believes that the
changes proposed by BSE should result
in a more efficient process for members
to register and to keep information
current and should make regulatory
information with respect to members
and their associated persons more
readily available to regulators as well as
the public. Furthermore, it will align the
rules of the Exchange regarding
electronic registration more closely with
those at other exchanges.
In addition, the Commission believes
the proposed rule change is consistent
with the Act because it is designed to
allow BSE to discipline or sanction
members under its MRVP for violation
of the provisions of the rules of the
Exchange for these rules. In approving
the proposed rule change, the
Commission in no way minimizes the
importance of compliance with
Exchange rules and all other rules
subject to the imposition of fines under
the MRVP. The Commission believes
that the violation of a self-regulatory
organization’s rules, as well as
Commission rules, is a serious matter.
However, in an effort to provide the
Exchange with greater flexibility in
addressing certain violations of its rules,
the MRVP provides a reasonable means
to address violations that do not rise to
the level of requiring formal BSE
disciplinary proceedings. The
Commission expects that BSE will
continue to conduct surveillance with
due diligence, and make a
determination based on its findings
whether fines of more or less than the
recommended amount are appropriate
for violations of Exchange rules under
the MRVP, on a case by case basis, or
if a violation requires formal
disciplinary action.
BSE has requested that the
Commission find good cause for
approving the proposed rule change
before the thirtieth day after publication
of the notice in the Federal Register.
The Commission believes that granting
accelerated approval of the proposal
will allow the Exchange to migrate to
Web CRD on its intended date, October
1, 2007. The Commission notes that it
has approved similar proposals to
14 15
U.S.C. 78f(b)(5).
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17:08 Oct 09, 2007
Jkt 214001
implement electronic registration for
Chicago Board Options Exchange,
Incorporated 15 and the Philadelphia
Stock Exchange.16 The Commission
believes that BSE’s proposal raises no
new regulatory issues, and it should
make regulatory information with
respect to its members and their
associated persons more readily
available without further delay.
Accordingly, the Commission finds
good cause, consistent with Section
19(b)(2) of the Act,17 to grant accelerated
approval to the proposed rule change
before the thirtieth day after the
publication of notice thereof in the
Federal Register.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,18 that the
proposed rule change (SR–BSE–2007–
25), as modified by Amendments No. 1,
2, and 3, be, and it hereby is, approved
on an accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.19
Nancy M. Morris,
Secretary.
[FR Doc. E7–19906 Filed 10–9–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56600; File No. SR-CBOE–
2007–88]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Granting Approval
of Proposed Rule Change To Amend
the Hybrid Opening System Opening
Rotations Rules
October 2, 2007.
On July 25, 2007, the Chicago Board
Options Exchange, Incorporated
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),1 and Rule 19b-4
thereunder,2 a proposed rule change to
amend its opening rotations rules
conducted via the Hybrid Opening
System (‘‘HOSS’’). The proposed rule
15 See Securities Exchange Act Release No. 46308
(August 2, 2002), 67 FR 51905 (August 9, 2002)
(SR–CBOE–2001–66).
16 See Securities Exchange Act Release No. 54960
(December 12, 2006), 71 FR 77851 (December 27,
2006) (SR–Phlx–2006–83).
17 15 U.S.C. 78s(b)(2).
18 Id.
19 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
PO 00000
Frm 00107
Fmt 4703
Sfmt 4703
57619
change was published in the Federal
Register on August 29, 2007.3 The
Commission received no comments on
the proposal. This order approves the
proposed rule change.
HOSS is the Exchange’s automated
system for initiating trading at the
beginning of each trading day. The
Exchange proposes to amend HOSS
procedures contained in CBOE Rule
6.2B. HOSS procedures currently
provide that HOSS initiates an opening
rotation for an options class at a
randomly selected time within a
number of seconds after the primary
market 4 for the underlying security
opens (or after 8:30 a.m. (Central Time)
for index options).5
The Exchange proposes to permit
HOSS to initiate the opening rotation for
an options class after the opening of the
underlying security on: (1) The primary
listing market; (2) the primary volume
market,6 or (3) the first market to open
the underlying security. Determinations
on the particular configuration for the
market for the underlying security
would be made on a class-by-class basis
by the appropriate Exchange Procedure
Committee and announced to the
membership via a Regulatory Circular.
After a careful review of the proposed
rule change, the Commission finds that
the proposed rule change is consistent
with the requirements of the Act and the
regulations thereunder applicable to a
national securities exchange.7 In
particular, the Commission believes that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,8 which
requires that the rules of an exchange be
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. The Commission
believes that the proposal will provide
3 See Securities Exchange Act Release No. 56302
(August 22, 2007), 72 FR 49752.
4 According to the Exchange, for purposes of
CBOE Rule 6.2B, the Exchange has interpreted the
‘‘primary market’’ to be the primary listing market.
5 According to the Exchange, for purposes of
CBOE Rule 6.2B, the Exchange determines when
the underlying market ‘‘opens’’, on a class-by-class
basis, to be either the opening trade and/or opening
quote (or whichever occurs first). Once the
underlying market opens, HOSS initiates the
overlying option class opening and sends a Rotation
Notice to market participants. Thereafter, HOSS
would open the series of a class in a random order.
6 Proposed CBOE Rule 6.2B(b) would define the
primary volume market as the market with the most
liquidity in that underlying security for the
previous two calendar months.
7 In approving the proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
8 15 U.S.C. 78f(b)(5).
E:\FR\FM\10OCN1.SGM
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Agencies
[Federal Register Volume 72, Number 195 (Wednesday, October 10, 2007)]
[Notices]
[Pages 57617-57619]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-19906]
[[Page 57617]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56594; File No. SR-BSE-2007-25]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing and Order Granting Accelerated Approval to Proposed
Rule Change, as Modified by Amendments No. 1, 2, and 3 Thereto,
Relating to Registration Filing Requirements and Reporting Requirements
October 1, 2007.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 19, 2007, 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 substantially prepared by the Exchange.
On August 7, 2007, BSE filed Amendment No. 1 to the proposed rule
change.\3\ On September 7, 2007, BSE filed Amendment No. 2 to the
proposed rule change.\4 \On September 26, 2007, BSE filed Amendment No.
3 to the proposed rule change.\5\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as modified by
Amendments No. 1, 2, and 3 thereto, from interested persons and approve
the proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 superseded and replaced the original rule
filing in its entirety.
\4\ Amendment No. 2 superseded and replaced Amendment No. 1 in
its entirety.
\5\ Amendment No. 3 superseded and replaced Amendment No. 2 in
its entirety.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The BSE proposes to: (1) Amend BSE Rules Chapter I-B Sections 4, 5,
and 6 and Chapter XVIII Section 4 and Boston Options Exchange (``BOX'')
Rules Chapter II Sections 1(b)(i) and Section 4(b), Chapter XI Sections
2(b), 3(a), and 4(c) and Chapter X Section 2(e), to require all
members, and member and participant organizations, that do not already
participate in Web Central Registration Depository (``Web CRD'') as a
member of a participating exchange or the Financial Industry Regulatory
Authority, Inc. (``FINRA'') to submit Forms U4, U5, BD and amendments
thereto as well as fingerprints, to the Web CRD; \6\ (2) amend Exchange
Rules Chapter I-B Sections 4, 5, and 6 and Chapter XVIII Section 4 to
add language specifying a timeframe in which to amend Form U4, Form U5,
and Form BD; and (3) amend its Minor Rule Violation Plan (``MRVP'') by
adopting new provisions for failures to submit amendments to Form U4,
Form U5, and Form BD.\7\
---------------------------------------------------------------------------
\6\ Web CRD is a Web-based system that provides broker-dealers
and their associated persons ``one-stop filing'' with the
Commission, FINRA, and other self-regulatory organizations and
regulators. Web CRD is operated by FINRA and is utilized by
participating securities regulators in connection with registering
and licensing broker-dealers and their associated persons.
\7\ Rule 19d-1(c)(1) under the Act, 17 CFR 240.19d-1(c)(1),
requires any self-regulatory organization, for which the Commission
is the appropriate regulatory agency, that takes any final
disciplinary action with respect to any person to promptly file a
notice thereof with the Commission. However, rule violations
resulting in a fine not exceeding $2,500 are not deemed final and
therefore not subject to the same reporting requirements.
---------------------------------------------------------------------------
The text of the proposed rule change is available at the principal
office of the BSE, the Commission's Public Reference Room, and https://
www.bostonstock.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item III 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 the proposed rule change is to create a more
efficient, centralized registration process by migrating from a manual
paper-based Exchange procedure to Web CRD for registration and
fingerprinting, with more defined deadlines and a more streamlined
disciplinary process.
Web CRD
The Web CRD process would assist in maintaining all historical
information related to associated persons of member, and participant
organizations in one central repository, as well as creating efficient
disclosure utilizing an online database, which can be accessed by other
exchanges and regulators. Additionally, the Web CRD process would track
and capture information related to registration and continuing
education. Finally, the Web CRD system would capture information
related to fingerprinting and statutory disqualification.
Members, and member and/or participant organizations, would be
required to submit Forms U4 and U5 (and amendments thereto) through the
Web CRD system rather than in paper form to the Exchange. Currently,
members, and member and/or participant organizations, submit Forms U4
and U5 in paper form to the Exchange. Although Form BD is required to
be submitted to Web CRD, the proposed rule change codifies this
requirement into BSE Rules Chapter I-B Sections 4, 5, and 6 and Chapter
XVIII Section 4 and BOX Rules Chapter II Sections 1(b)(i) and Section
4(b), Chapter XI Sections 2(b), 3(a), and 4(c) and Chapter X Section
2(e), and applies to amendments as well.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 240.15b-1.
---------------------------------------------------------------------------
Members, and member and/or participant organizations, also
currently file manual rolled fingerprint cards \9\ with the Exchange,
which the Exchange then forwards to the FBI, the fingerprint processing
arm of the Office of the Attorney General of the United States. The FBI
identifies submitted fingerprints, retrieves relevant criminal history
information, and returns fingerprint reports (including the original
fingerprint cards) to the Exchange. Upon receipt of the approved
fingerprint cards, the Exchange sends this information to the member
organization and keeps a copy for its records. This proposed rule
change would require the members, and member and/or participant
organizations, to send the fingerprint cards to FINRA for processing.
All trading personnel and other associated persons of members, and
member or participant organizations, who are not registered and only
submit fingerprint cards to FINRA, will be classified as Non-Registered
Fingerprint (``NRF'') filers.
---------------------------------------------------------------------------
\9\ FINRA will accept Federal Bureau of Investigation (``FBI'')
fingerprint results in lieu of fingerprint cards.
---------------------------------------------------------------------------
The Exchange anticipates that the proposed migration to Web CRD
will take place on October 1, 2007. The Exchange will provide
notification in writing to the membership of the effective date of the
rule change.
Additionally, the Exchange is amending the language in BOX Chapter
[[Page 57618]]
XI Doing Business With The Public, Section 2(b) to clarify the
registration obligations of Options Principals.
Minor Rule Violation Plan
The Exchange is adding language to BSE's and BOX's MRVPs to clarify
the timeframe within which members, and member and/or participant
organizations, must amend Forms U4, U5, and BD to allow for prompt
disclosure. The Exchange proposes a timeframe of thirty days from the
time the filer knew of or should have known of the facts which gave
rise to the need for an amendment, to submit amended Forms U4, U5, and
BD. By including this language in the Exchange Rules, Boston Stock
Exchange Regulation (``BSER'') would retain the discretion to initiate
formal disciplinary proceedings.\10\ The Exchange believes that the
proposed change should encourage member organizations and participant
organizations to timely file Forms U4, U5, and BD and thereby timely
disclose the information contained in those forms. The disclosure of
this information should enable the Exchange and the public to receive
current information on registered persons and entities.
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\10\ Section 6(b)(6) requires an exchange to have rules that
provide for members and associated persons to be appropriately
disciplined for violations of the Act, the rules thereunder, and the
Exchange's rules. 15 U.S.C. 78f(b)(6). Inclusion of a rule in an
MRVP permits an exchange to impose a fine, under appropriate
circumstances under the MRVP. However, including a rule in an MRVP
does not limit an exchange's ability to bring a formal disciplinary
action against a member or an associated person.
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Specifically, the proposed changes to the MRVP would authorize the
Exchange to impose a fine on any member or participant organization
without formal disciplinary action. As proposed, BSER would review the
number and seriousness of the violation(s), as well as the previous
disciplinary history of the violator, to determine if a matter is
appropriate for disposition under the MRVP. Once a member or
participant organization is fined under the MRVP, BSER may issue
progressively higher fines for all subsequent violations within a
rolling twelve-month period, or it may choose to initiate formal
disciplinary proceedings. The addition of these changes to the
Exchange's MRVP should allow BSER to impose more meaningful sanctions
for violations that would otherwise receive a cautionary letter, for
example, but do not necessarily rise to the level of a formal
disciplinary proceeding.
Additionally, the proposed changes would allow for disposition of
minor or technical violations of Exchange rules by means of a less
costly and less time consuming process as compared to a formal
disciplinary process. Expediting resolutions for technical violations,
while retaining the discretion to bring formal disciplinary action,
should allow for efficient dispositions of rule violations.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \11\ in general, and furthers the objectives of Section
6(b)(5) of the Act \12\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest, by providing information to
a central repository.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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Importantly, the Exchange believes, moving to Web CRD provides a
central location where information is available. This enables easier
access to all members and member and/or participant organizations.
Further, most other exchanges participate in Web CRD registration.
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. 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-2007-25 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-BSE-2007-25. 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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. 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-2007-25 and should be
submitted on or before October 31, 2007.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\13\ In
particular, the Commission finds that the proposed
[[Page 57619]]
rule change is consistent with Section 6(b)(5) of the Act,\14\ which
requires, among other things, that the Exchange's rules be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general, to protect investors and the public interest.
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\13\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. See 15
U.S.C. 78c(f).
\14\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the changes proposed by BSE should
result in a more efficient process for members to register and to keep
information current and should make regulatory information with respect
to members and their associated persons more readily available to
regulators as well as the public. Furthermore, it will align the rules
of the Exchange regarding electronic registration more closely with
those at other exchanges.
In addition, the Commission believes the proposed rule change is
consistent with the Act because it is designed to allow BSE to
discipline or sanction members under its MRVP for violation of the
provisions of the rules of the Exchange for these rules. In approving
the proposed rule change, the Commission in no way minimizes the
importance of compliance with Exchange rules and all other rules
subject to the imposition of fines under the MRVP. The Commission
believes that the violation of a self-regulatory organization's rules,
as well as Commission rules, is a serious matter. However, in an effort
to provide the Exchange with greater flexibility in addressing certain
violations of its rules, the MRVP provides a reasonable means to
address violations that do not rise to the level of requiring formal
BSE disciplinary proceedings. The Commission expects that BSE will
continue to conduct surveillance with due diligence, and make a
determination based on its findings whether fines of more or less than
the recommended amount are appropriate for violations of Exchange rules
under the MRVP, on a case by case basis, or if a violation requires
formal disciplinary action.
BSE has requested that the Commission find good cause for approving
the proposed rule change before the thirtieth day after publication of
the notice in the Federal Register. The Commission believes that
granting accelerated approval of the proposal will allow the Exchange
to migrate to Web CRD on its intended date, October 1, 2007. The
Commission notes that it has approved similar proposals to implement
electronic registration for Chicago Board Options Exchange,
Incorporated \15\ and the Philadelphia Stock Exchange.\16\ The
Commission believes that BSE's proposal raises no new regulatory
issues, and it should make regulatory information with respect to its
members and their associated persons more readily available without
further delay.
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\15\ See Securities Exchange Act Release No. 46308 (August 2,
2002), 67 FR 51905 (August 9, 2002) (SR-CBOE-2001-66).
\16\ See Securities Exchange Act Release No. 54960 (December 12,
2006), 71 FR 77851 (December 27, 2006) (SR-Phlx-2006-83).
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Accordingly, the Commission finds good cause, consistent with
Section 19(b)(2) of the Act,\17\ to grant accelerated approval to the
proposed rule change before the thirtieth day after the publication of
notice thereof in the Federal Register.
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\17\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\18\ that the proposed rule change (SR-BSE-2007-25), as modified by
Amendments No. 1, 2, and 3, be, and it hereby is, approved on an
accelerated basis.
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\18\ Id.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-19906 Filed 10-9-07; 8:45 am]
BILLING CODE 8011-01-P