Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto Relating to Position and Exercise Limits, 69720-69723 [E7-23816]

Download as PDF rmajette on PROD1PC64 with NOTICES 69720 Federal Register / Vol. 72, No. 236 / Monday, December 10, 2007 / Notices hours. We estimate that 25% of .24 hours per response (.06 hours) is prepared by the company for a total annual burden of 3 hours (.06 hours per response × 53 responses). Rule 173 (17 CFR 230.173) provides a notice of registration to investors who purchased securities in a registered offering under the Securities Act of 1933 (15 U.S.C. 77a et seq.). The Rule 173 notice must be provided by each underwriter or dealer to each purchaser of securities. It is not publicly available. We estimate that it takes approximately .01 hour per response to provide the information required under Rule 173 and that the information is filed by 5,338 companies approximately 43,546 times a year for a total of 232,448,548 responses. We estimate that the total annual reporting burden for Rule 173 is 2,324,485 hours (.01 hours per response × 232,448,548 responses). Rule 433 (17 CFR 230.433) governs the use and filing of free writing prospectuses under the Securities Act of 1933 (15 U.S.C. 77a et seq.). The purpose of Rule 433 is to reduce restrictions on communications that companies can make to investors during a registered offering, while still maintaining a high level of investor protection. A free writing prospectus meeting the conditions of Rule 433(d)(1) must be filed with the Commission and is publicly available. We estimate that it takes approximately 1.3 burden hours per response to prepare a free writing prospectus and that the information is filed by 2,906 companies approximately 1.25 times a year for a total of 3,633 responses. We estimate that 25% of the 1.3 burden hours per response (.32 hours) is prepared by the company for total annual reporting burden of 1,163 hours (.32 hours × 3,633 responses). Written comments are invited on: (a) Whether these proposed collections of information are necessary for the performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency’s estimate of the burden imposed by the collections of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comment to R. Corey Booth, Director/Chief Information Officer, Securities and VerDate Aug<31>2005 15:35 Dec 07, 2007 Jkt 214001 Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, Virginia 22312; or send an e-mail to: PRA_Mailbox@sec.gov. November 27, 2007. Florence E. Harmon, Deputy Secretary. [FR Doc. E7–23873 Filed 12–7–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] In the Matter of Roanoke Technology, Corp.; Order of Suspension of Trading December 6, 2007. It appears to the Securities and Exchange Commission (‘‘Commission’’) that there is a lack of current and accurate information concerning the securities of Roanoke Technology, Corp. (‘‘Roanoke’’), because it is delinquent in its periodic filing obligations under Section 13(a) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) and Rules 13a–1 and 13a–13 thereunder, having not filed a periodic report after its Form 10–Q for the quarter ended July 31, 2005. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above listed company. Therefore, it is ordered pursuant to Section 12(k) of the Exchange Act, that trading in the above listed company is suspended for the period from 9:30 a.m. EST on Thursday, December 6, 2007, through 11:59 p.m. EST on Wednesday, December 19, 2007. By the Commission. Nancy M. Morris, Secretary. [FR Doc. 07–6005 Filed 12–6–07; 10:04 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 9, 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 BSE. On November 20, 2007, BSE submitted Amendment No. 1 to the proposed rule change. The Exchange has filed the proposal pursuant to section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to eliminate position and exercise limits for options on the Russell 2000 Index (‘‘RUT’’), to increase the standard position and exercise limits for options on the Russell 2000 Growth Index (‘‘IWO’’), and to specify that reduced-value options on broad-based security indices for which full-value options have no position and exercise limits will similarly have no position and exercise limits. The text of the proposed rule change is available at BSE, the Commission’s Public Reference Room, and http://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, 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. BSE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. [Release No. 34–56889; File No. SR–BSE– 2007–49] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto Relating to Position and Exercise Limits A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes changes to section 5 (Position Limits for BroadBased Index Options) and section 7 1 15 December 3, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 2 17 E:\FR\FM\10DEN1.SGM 10DEN1 Federal Register / Vol. 72, No. 236 / Monday, December 10, 2007 / Notices (Exemptions from Position Limits) of Chapter XIV of the Boston Options Exchange (‘‘BOX’’) Trading Rules. The purpose of the proposed changes is to eliminate position and exercise limits for options on RUT, a broad-based securities index that is multiply-listed and heavily traded,5 to increase the standard position and exercise limits for options on IWO,6 and to amend Section 5 of Chapter XIV of the BOX Trading Rules to specify that reduced-value options on broad-based security indices for which full-value options have no position and exercise limits will similarly have no position and exercise limits. Currently, the Full Size Nasdaq 100 Index Options (‘‘NDX’’) has no position limits for option contracts overlying NDX. In this regard, the Exchange proposes to eliminate position limits on the Mini Nasdaq 100 Index Options (‘‘MNX’’). Eliminate Position and Exercise Limits for RUT Options rmajette on PROD1PC64 with NOTICES The Exchange believes that the circumstances and considerations relied upon in approving the elimination of position and exercise limits for other heavily traded broad-based index options (e.g., options on NDX) equally apply to the current proposal relating to RUT position and exercise limits.7 In approving the elimination of position limits for NDX options, the Commission considered the capitalization of this index and the deep and liquid markets for the securities underlying the index significantly reduced concerns of market manipulation or disruption in the underlying markets. The Commission also noted the active trading volume for options on the index. The Exchange believes that RUT shares these factors in common with NDX. As of July 31, 2007, the approximate market capitalization of NDX was $2.28 trillion, the average daily trading volume (‘‘ADTV’’) for the components of NDX was 572 million, and the ADTV for options on NDX was 64,003 contracts per day. The Exchange believes RUT has very comparable characteristics. The market capitalization for RUT is $1.73 trillion dollars, the ADTV for the underlying 5 The current position and exercise limits under Chapter XIV, Sections 5 and 7, respectively, of the BOX Trading Rules for RUT options are 25,000 contracts. 6 The current position and exercise limits under Chapter XIV, Sections 5 and 7, respectively, of the BOX Trading Rules for IWO options are 25,000 contracts. 7 See Securities Exchange Act Release No. 54397 (August 31, 2006), 71 FR 53142 (September 8, 2006) (SR–BSE–2005–11) (‘‘NDX/MNX Approval Order’’). VerDate Aug<31>2005 15:35 Dec 07, 2007 Jkt 214001 securities is 535 million shares, and the ADTV for the option is 79,000 contracts. In approving the elimination of position and exercise limits for NDX, the Commission also noted the financial requirements imposed by both the Exchange and the Commission serve to address any concerns that an Exchange Participant or its customer(s) may try to maintain an inordinately large unhedged position in options on NDX. The Exchange notes that these financial requirements also apply to RUT options. Under Exchange rules, the Exchange also has the authority to impose additional margin upon accounts maintaining underhedged positions, and is further able to monitor account to determine when such action is warranted. As noted in the Exchange’s rules, the clearing firm carrying such an account would be subject to capital charges under Rule 15c3–1 under the Act 8 to the extent of any resulting margin deficiency.9 In approving the elimination of position and exercise limits for NDX, the Commission relied heavily on the Exchange’s ability to provide surveillance and reporting safeguards to detect and deter trading abuses arising from the elimination of position and exercise limits in options on the index. The Exchange represents that it monitors the trading in RUT options in the same manner as trading in NDX options and that the current BOX surveillance procedures are adequate to continue monitoring RUT options. In addition, the Exchange intends to impose a reporting requirement on Exchange Participants who trade RUT or NDX options. This reporting requirement will require Participants who maintain in excess of 100,000 RUT option contracts on the same side of the market, for their own accounts or for the account of customers, to report information as to whether the positions are hedged and provide documentation as to how such contracts are hedged, in a manner and form required by the Exchange. The Exchange may also specify other reporting requirements, as well as the limit at which the reporting requirement may be triggered. The Exchange believes that eliminating position and exercise limits for RUT options is consistent with rules relating to similar broad-based indices and also allows Exchange Participants and their customers greater hedging and investment opportunities. Elimination of Position Limits for Reduced-Value Options on BroadBased-Indices for Which There Are No Position and Exercise Limits for FullValue Options The Exchange lists and trades reduced-value options on broad-based indices for which the Exchange also lists and trades full-value options (e.g., MNX Options). When the Exchange received approval to list and trade MNX options, the proscribed position and exercise limits were equivalent to the reduced-value contract factor (e.g., 10) multiplied by the applicable position and exercise limits for the full-value options on the same broad-based index on other exchanges.10 For example, when the Exchange received approval to list and trade NDX and MNX options,11 the position and exercise limits for MNX (1/10th NDX value) options were 750,000 contracts, which was equal to the applicable factor (10) multiplied by the original position limit for NDX options (75,000 contracts) on other exchanges. However, since position and exercise limits do not apply for NDX,12 the Exchange now proposes to eliminate position and exercise limits for MNX. The Exchange further proposes to amend section 5 of Chapter XIV of the BOX Trading Rules to state that reduced-value options on broad-based security indices for which full-value options have no position and exercise limits, will similarly have no position and exercise limits. In addition, because position and exercise limits for reduced-value options are aggregated with full-value options for purposes of determining compliance with position and exercise limits, the Exchange proposes amending section 7, Subsection 13 of Chapter XIV of the BOX Trading Rules to reflect that such aggregation will apply when calculating reporting requirements (e.g., 10 MNX options equal 1 NDX full-value contract). Further, the Exchange proposes to delete rule text from Section 7(a)(5) of Chapter XIV of the BOX Trading Rules because, pursuant to this proposed rule change, there is no longer a need for an exemption from position limits for MNX options. Increase Position and Exercise Limits for IWO Options The Exchange believes that increasing position and exercise limits for IWO options is consistent with Exchange rules relating to similar broad-based indices. According to Chapter XIV, Section 5 of the BOX Trading Rules, the 8 17 10 See 9 See 11 Id. CFR 240.15c3–1. Chapter XIV, Section 7(a)(14) of the BOX Trading Rules. PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 69721 NDX/MNX Approval Order, supra note 7. 12 Id. E:\FR\FM\10DEN1.SGM 10DEN1 69722 Federal Register / Vol. 72, No. 236 / Monday, December 10, 2007 / Notices position limit for a broad-based index option shall be 25,000 contracts on the same side of the market unless specified otherwise. The proposed change will increase these limits for IWO to 50,000 contracts, with no more than 30,000 near-term. Such a change will allow Exchange Participants and their customers greater hedging and investment opportunities. In addition, an increase in the position and exercise limits for IWO creates uniformity with such limits for IWO on other exchanges 13 and is necessary to eliminate any confusion among members of multiple exchanges regarding which position and exercise limits apply to them. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act,14 in general, and furthers the objectives of section 6(b)(5) of the Act,15 in particular, because 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 and 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. Further, the Exchange notes that this proposed rule change is similar to proposals filed by the American Stock Exchange LLC (‘‘Amex’’) and the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’) that were recently approved by the Commission.16 B. Self-Regulatory Organization’s Statement on Burden on Competition rmajette on PROD1PC64 with NOTICES 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. 13 See, e.g., International Securities Exchange Rule 2004(a); Chicago Board Options Exchange Rule 24.4(a); and American Stock Exchange Rule 904C. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(5). 16 See Securities Exchange Act Release Nos. 56351 (September 4, 2007), 72 FR 51875 (September 11, 2007) (SR–Amex–2007–81); and 56350 (September 4, 2007), 72 FR 51878 (September 11, 2007) (SR–CBOE–2007–79). VerDate Aug<31>2005 15:35 Dec 07, 2007 Jkt 214001 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the forgoing rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 17 and Rule 19b– 4(f)(6) thereunder.18 A proposed rule change filed under 19b–4(f)(6) normally may not become operative prior to 30 days after the date of filing.19 However, Rule 19b– 4(f)(6)(iii) 20 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because such waiver will allow BSE members and their customers greater hedging and investment opportunities in RUT and IWO options without further delay. The Commission notes that it recently approved similar proposals filed by CBOE and Amex to eliminate position and exercise limits for RUT options.21 Moreover, the Commission previously approved position and exercise limits of 50,000 contracts, with no more than 30,000 contracts near-term, for IWO options on other exchanges. 22 The Commission believes that BSE’s proposal to eliminate position and exercise limits for RUT options and to increase position 17 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 19 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 19b–4(f)(6)(iii) requires that a self-regulatory organization submit to the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has requested the Commission to waive this five-day pre-filing notice requirement. The Commission hereby grants this request. 20 Id. 21 See supra note 16. 22 See supra note 13. 18 17 PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 and exercise limits for IWO options raises no new issues. For these reasons, the Commission designates the proposed rule change to be operative upon filing with the Commission.23 At any time within 60 days of the filing of such proposed rule change the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors or otherwise in furtherance of the purposes of the Act.24 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–BSE–2007–49 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 Number SR–BSE–2007–49. 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 (http://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 23 For the purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 24 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposal, the Commission considers the period to commence on November 20, 2007, the date on which the Exchange submitted Amendment No. 1. E:\FR\FM\10DEN1.SGM 10DEN1 Federal Register / Vol. 72, No. 236 / Monday, December 10, 2007 / Notices 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 the filing also will be available for inspection and copying at the principal office of 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– 2007–49 and should be submitted on or before December 31, 2007. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–23816 Filed 12–7–07; 8:45 am] BILLING CODE 8011–01–P SOCIAL SECURITY ADMINISTRATION Privacy Act of 1974, as Amended; Alteration to Existing Systems of Records AGENCY: (SSA). Proposed New Routine Use for Existing Systems of Records. rmajette on PROD1PC64 with NOTICES SUMMARY: As mandated by the Office of Management and Budget (OMB) in Memorandum M–07–16, recommended by the President’s Identity Theft Task Force, and in accordance with the Privacy Act (5 U.S.C. 552a(e)(4) and (11)), we are issuing public notice of our intent to establish a new routine use disclosure applicable to SSA’s systems of records listed below under section I of the Supplementary Information section. The proposed routine use specifically permits the disclosure of SSA information in connection with response and remediation efforts in the event of an unintentional release of Agency information, otherwise known as a ‘‘data security breach.’’ Such a routine use would serve to protect the interests of the people whose information is at risk by allowing us to take appropriate steps to facilitate a timely and effective response to a data breach. It would also help us to improve our ability to prevent, minimize, or remedy any harm that may result from a compromise of data maintained in our CFR 200.30–3(a)(12). VerDate Aug<31>2005 15:35 Dec 07, 2007 consent if the disclosure is ‘‘for a routine use as defined in subsection (a)(7) of this section and described under subsection (e)(4)(D) of this section.’’ 5 U.S.C. 552a(b)(3). Subsection (a)(7) of the Act states that ‘‘the term ‘routine use’ means, with respect to the disclosure of a record, the use of such record for a purpose which is compatible with the purpose for which it was collected.’’ 5 U.S.C. 552a(a)(7). Providing information to help respond to and remediate a breach of Federal data qualifies as a necessary and proper use of information. Such a use is in the best interest of both the individual whose record is at issue and the public. The Privacy Act requires that agencies publish notification in the Federal Register of ‘‘each routine use of the records contained in the system, including the categories of users and the purpose of such use.’’ 5 U.S.C. 552a(e)(4)(D). Based on OMB’s recommended language, we have developed the following routine use that we will apply to nearly all of our Privacy Act systems of records,1 and that will allow for disclosure to appropriate agencies, entities, and persons under the following circumstances: Jkt 214001 I. Discussion of the Proposed New Routine Use We may disclose information to appropriate Federal, State, and local agencies, entities, and persons when (1) we suspect or confirm that the security or confidentiality of information in this system of records has been compromised; (2) we determine that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs of SSA that rely upon the compromised information; and (3) we determine that disclosing the information to such agencies, entities, and persons is necessary to assist in our efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm. SSA will use this routine use to respond only to those incidents involving an unintentional release of its records. OMB has mandated and the President’s Identity Theft Task Force recommended that Federal agencies develop and publish a routine use for appropriate systems of records that allows for the disclosure of information in connection with the response and remedial efforts in the event of a data breach. Subsection (b)(3) of the Privacy Act provides that information from an agency’s system of records may be disclosed without a subject individual’s In nearly all cases, we will immediately notify affected individuals before informing any other entity. In the rare event that law enforcement needs require us to delay consumer notification, this delay will be limited to the minimum amount of time needed. Timely notification allows individuals the opportunity to minimize or prevent the occurrence of harm. SSA will establish a new routine use to be included in the following systems of records: 1 Our Privacy Act systems of records that contain data protected under the Internal Revenue Code (IRC) will not contain this routine use as the IRC Social Security Administration ACTION: 25 17 systems of records. We invite public comment on this proposal. DATES: We filed a report of the proposed new routine use disclosure with the Chairman of the Senate Committee on Homeland Security and Governmental Affairs, the Chairman of the House Committee on Oversight and Government Reform, and the Director, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB) on November 19, 2007. The proposed routine use will become effective on December 24, 2007, unless we receive comments warranting it not to become effective. ADDRESSES: Interested individuals may comment on this publication by writing to the Executive Director, Office of Public Disclosure, Office of the General Counsel, Social Security Administration, Room 3–A–6 Operations Building, 6401 Security Boulevard, Baltimore, Maryland 21235– 6401. All comments received will be available for public inspection at the above address. FOR FURTHER INFORMATION CONTACT: Ms. Margo Wagner, Social Insurance Specialist, Disclosure Policy Development and Services Division 2, Office of Public Disclosure, Office of the General Counsel, Social Security Administration, Room 3–A–6 Operations Building, 6401 Security Boulevard, Baltimore, Maryland 21235– 6401, telephone: (410) 965–1482, e-mail: margo.wagner@ssa.gov or Mr. Neil Etter, Social Insurance Specialist, Disclosure Policy Development and Services Division 1, Office of Public Disclosure, Office of the General Counsel, Social Security Administration, Room 3–A–6 Operations Building, 6401 Security Boulevard, Baltimore, Maryland 21235– 6401, telephone: (410) 965–8028, e-mail: neil.etter@ssa.gov. SUPPLEMENTARY INFORMATION: 69723 does not contain a provision that permits disclosure for this purpose. PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\10DEN1.SGM 10DEN1

Agencies

[Federal Register Volume 72, Number 236 (Monday, December 10, 2007)]
[Notices]
[Pages 69720-69723]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-23816]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56889; File No. SR-BSE-2007-49]


Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
and Amendment No. 1 Thereto Relating to Position and Exercise Limits

December 3, 2007.
    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 9, 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 BSE. On 
November 20, 2007, BSE submitted Amendment No. 1 to the proposed rule 
change. The Exchange has filed the proposal pursuant to section 
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 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.
---------------------------------------------------------------------------

    \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)(6).
---------------------------------------------------------------------------

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

    The Exchange proposes to eliminate position and exercise limits for 
options on the Russell 2000 Index (``RUT''), to increase the standard 
position and exercise limits for options on the Russell 2000 Growth 
Index (``IWO''), and to specify that reduced-value options on broad-
based security indices for which full-value options have no position 
and exercise limits will similarly have no position and exercise 
limits. The text of the proposed rule change is available at BSE, the 
Commission's Public Reference Room, and http://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, 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. BSE has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes changes to section 5 (Position Limits for 
Broad-Based Index Options) and section 7

[[Page 69721]]

(Exemptions from Position Limits) of Chapter XIV of the Boston Options 
Exchange (``BOX'') Trading Rules. The purpose of the proposed changes 
is to eliminate position and exercise limits for options on RUT, a 
broad-based securities index that is multiply-listed and heavily 
traded,\5\ to increase the standard position and exercise limits for 
options on IWO,\6\ and to amend Section 5 of Chapter XIV of the BOX 
Trading Rules to specify that reduced-value options on broad-based 
security indices for which full-value options have no position and 
exercise limits will similarly have no position and exercise limits.
---------------------------------------------------------------------------

    \5\ The current position and exercise limits under Chapter XIV, 
Sections 5 and 7, respectively, of the BOX Trading Rules for RUT 
options are 25,000 contracts.
    \6\ The current position and exercise limits under Chapter XIV, 
Sections 5 and 7, respectively, of the BOX Trading Rules for IWO 
options are 25,000 contracts.
---------------------------------------------------------------------------

    Currently, the Full Size Nasdaq 100 Index Options (``NDX'') has no 
position limits for option contracts overlying NDX. In this regard, the 
Exchange proposes to eliminate position limits on the Mini Nasdaq 100 
Index Options (``MNX'').
Eliminate Position and Exercise Limits for RUT Options
    The Exchange believes that the circumstances and considerations 
relied upon in approving the elimination of position and exercise 
limits for other heavily traded broad-based index options (e.g., 
options on NDX) equally apply to the current proposal relating to RUT 
position and exercise limits.\7\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 54397 (August 31, 
2006), 71 FR 53142 (September 8, 2006) (SR-BSE-2005-11) (``NDX/MNX 
Approval Order'').
---------------------------------------------------------------------------

    In approving the elimination of position limits for NDX options, 
the Commission considered the capitalization of this index and the deep 
and liquid markets for the securities underlying the index 
significantly reduced concerns of market manipulation or disruption in 
the underlying markets. The Commission also noted the active trading 
volume for options on the index. The Exchange believes that RUT shares 
these factors in common with NDX. As of July 31, 2007, the approximate 
market capitalization of NDX was $2.28 trillion, the average daily 
trading volume (``ADTV'') for the components of NDX was 572 million, 
and the ADTV for options on NDX was 64,003 contracts per day. The 
Exchange believes RUT has very comparable characteristics. The market 
capitalization for RUT is $1.73 trillion dollars, the ADTV for the 
underlying securities is 535 million shares, and the ADTV for the 
option is 79,000 contracts.
    In approving the elimination of position and exercise limits for 
NDX, the Commission also noted the financial requirements imposed by 
both the Exchange and the Commission serve to address any concerns that 
an Exchange Participant or its customer(s) may try to maintain an 
inordinately large unhedged position in options on NDX. The Exchange 
notes that these financial requirements also apply to RUT options. 
Under Exchange rules, the Exchange also has the authority to impose 
additional margin upon accounts maintaining underhedged positions, and 
is further able to monitor account to determine when such action is 
warranted. As noted in the Exchange's rules, the clearing firm carrying 
such an account would be subject to capital charges under Rule 15c3-1 
under the Act \8\ to the extent of any resulting margin deficiency.\9\
---------------------------------------------------------------------------

    \8\ 17 CFR 240.15c3-1.
    \9\ See Chapter XIV, Section 7(a)(14) of the BOX Trading Rules.
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    In approving the elimination of position and exercise limits for 
NDX, the Commission relied heavily on the Exchange's ability to provide 
surveillance and reporting safeguards to detect and deter trading 
abuses arising from the elimination of position and exercise limits in 
options on the index. The Exchange represents that it monitors the 
trading in RUT options in the same manner as trading in NDX options and 
that the current BOX surveillance procedures are adequate to continue 
monitoring RUT options. In addition, the Exchange intends to impose a 
reporting requirement on Exchange Participants who trade RUT or NDX 
options. This reporting requirement will require Participants who 
maintain in excess of 100,000 RUT option contracts on the same side of 
the market, for their own accounts or for the account of customers, to 
report information as to whether the positions are hedged and provide 
documentation as to how such contracts are hedged, in a manner and form 
required by the Exchange. The Exchange may also specify other reporting 
requirements, as well as the limit at which the reporting requirement 
may be triggered.
    The Exchange believes that eliminating position and exercise limits 
for RUT options is consistent with rules relating to similar broad-
based indices and also allows Exchange Participants and their customers 
greater hedging and investment opportunities.
Elimination of Position Limits for Reduced-Value Options on Broad-
Based-Indices for Which There Are No Position and Exercise Limits for 
Full-Value Options
    The Exchange lists and trades reduced-value options on broad-based 
indices for which the Exchange also lists and trades full-value options 
(e.g., MNX Options). When the Exchange received approval to list and 
trade MNX options, the proscribed position and exercise limits were 
equivalent to the reduced-value contract factor (e.g., 10) multiplied 
by the applicable position and exercise limits for the full-value 
options on the same broad-based index on other exchanges.\10\ For 
example, when the Exchange received approval to list and trade NDX and 
MNX options,\11\ the position and exercise limits for MNX (1/10th NDX 
value) options were 750,000 contracts, which was equal to the 
applicable factor (10) multiplied by the original position limit for 
NDX options (75,000 contracts) on other exchanges. However, since 
position and exercise limits do not apply for NDX,\12\ the Exchange now 
proposes to eliminate position and exercise limits for MNX. The 
Exchange further proposes to amend section 5 of Chapter XIV of the BOX 
Trading Rules to state that reduced-value options on broad-based 
security indices for which full-value options have no position and 
exercise limits, will similarly have no position and exercise limits.
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    \10\ See NDX/MNX Approval Order, supra note 7.
    \11\ Id.
    \12\ Id.
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    In addition, because position and exercise limits for reduced-value 
options are aggregated with full-value options for purposes of 
determining compliance with position and exercise limits, the Exchange 
proposes amending section 7, Subsection 13 of Chapter XIV of the BOX 
Trading Rules to reflect that such aggregation will apply when 
calculating reporting requirements (e.g., 10 MNX options equal 1 NDX 
full-value contract). Further, the Exchange proposes to delete rule 
text from Section 7(a)(5) of Chapter XIV of the BOX Trading Rules 
because, pursuant to this proposed rule change, there is no longer a 
need for an exemption from position limits for MNX options.
Increase Position and Exercise Limits for IWO Options
    The Exchange believes that increasing position and exercise limits 
for IWO options is consistent with Exchange rules relating to similar 
broad-based indices. According to Chapter XIV, Section 5 of the BOX 
Trading Rules, the

[[Page 69722]]

position limit for a broad-based index option shall be 25,000 contracts 
on the same side of the market unless specified otherwise. The proposed 
change will increase these limits for IWO to 50,000 contracts, with no 
more than 30,000 near-term. Such a change will allow Exchange 
Participants and their customers greater hedging and investment 
opportunities. In addition, an increase in the position and exercise 
limits for IWO creates uniformity with such limits for IWO on other 
exchanges \13\ and is necessary to eliminate any confusion among 
members of multiple exchanges regarding which position and exercise 
limits apply to them.
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    \13\ See, e.g., International Securities Exchange Rule 2004(a); 
Chicago Board Options Exchange Rule 24.4(a); and American Stock 
Exchange Rule 904C.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\14\ in general, and furthers the 
objectives of section 6(b)(5) of the Act,\15\ in particular, because 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 and 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. 
Further, the Exchange notes that this proposed rule change is similar 
to proposals filed by the American Stock Exchange LLC (``Amex'') and 
the Chicago Board Options Exchange, Incorporated (``CBOE'') that were 
recently approved by the Commission.\16\
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ See Securities Exchange Act Release Nos. 56351 (September 
4, 2007), 72 FR 51875 (September 11, 2007) (SR-Amex-2007-81); and 
56350 (September 4, 2007), 72 FR 51878 (September 11, 2007) (SR-
CBOE-2007-79).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

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

    Because the forgoing rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) become operative for 30 days 
after the date of this filing, or such shorter time as the Commission 
may designate, it has become effective pursuant to Section 19(b)(3)(A) 
of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\19\ 
However, Rule 19b-4(f)(6)(iii) \20\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
will allow BSE members and their customers greater hedging and 
investment opportunities in RUT and IWO options without further delay. 
The Commission notes that it recently approved similar proposals filed 
by CBOE and Amex to eliminate position and exercise limits for RUT 
options.\21\ Moreover, the Commission previously approved position and 
exercise limits of 50,000 contracts, with no more than 30,000 contracts 
near-term, for IWO options on other exchanges. \22\ The Commission 
believes that BSE's proposal to eliminate position and exercise limits 
for RUT options and to increase position and exercise limits for IWO 
options raises no new issues. For these reasons, the Commission 
designates the proposed rule change to be operative upon filing with 
the Commission.\23\
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    \19\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
the Commission written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change, at least five business days prior to the date of filing 
of the proposed rule change, or such shorter time as designated by 
the Commission. The Exchange has requested the Commission to waive 
this five-day pre-filing notice requirement. The Commission hereby 
grants this request.
    \20\ Id.
    \21\ See supra note 16.
    \22\ See supra note 13.
    \23\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors or otherwise in 
furtherance of the purposes of the Act.\24\
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    \24\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on 
November 20, 2007, the date on which the Exchange submitted 
Amendment No. 1.
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-BSE-2007-49 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 Number SR-BSE-2007-49. 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 (http://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

[[Page 69723]]

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 the 
filing also will be available for inspection and copying at the 
principal office of 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-2007-49 and should be submitted on or before December 31, 2007.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-23816 Filed 12-7-07; 8:45 am]
BILLING CODE 8011-01-P