

[Federal Register: February 21, 2008 (Volume 73, Number 35)]
[Notices]               
[Page 9607-9609]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21fe08-114]                         


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57324; File No. SR-BSE-2008-07]

 
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change To List and Trade Options Already Listed on Another 
National Securities Exchange

February 13, 2008.
    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 January 28, 2008, the Boston Stock Exchange (``BSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. This order 
provides notice of the proposal and approves the proposal on an 
accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend BOX Rule Ch. IV, Sec. 3(b)(v) to 
enable it to list and trade equity options that are otherwise 
ineligible for listing and trading on the Exchange if such options are 
listed and traded on another national securities exchange and the 
security or securities underlying such options meet BSE's continued 
listing requirements.
    The text of the proposed rule change is available on BSE's Web site 
(http://www.bse.com), at BSE's principal office, 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 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 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 purpose of this proposed rule change is to revise the 
Exchange's options listing standards so that as long as the options 
maintenance listing standards as set forth in Ch. IV, Sec. 4 of the BOX 
Rules are met and the option is listed and traded on another national 
securities exchange, the Exchange will be able to list and trade the 
option. Ch. IV, Sec. 3(b) of the BOX Rules sets forth the requirements 
that an underlying equity security must meet before the Exchange may 
initially list options on that security. The BSE notes that the 
requirements that an underlying equity security must meet for initial 
listing of options on that security are uniform among all the options 
exchanges.
    BOX Rule Ch. IV, Sec. 3(b)(v) applies to the listing of individual 
equity options on both ``covered'' and ``uncovered'' underlying 
securities, and sets forth the minimum market price at which an 
underlying security must trade for an option to be listed. In the case 
of an underlying security that is a ``covered security'' as defined 
under section 18(b)(1)(A) of the Securities Act of 1933 (``1933 
Act''),\3\ the closing market price of the underlying security must be 
at least $3 per share for five previous consecutive business days prior 
to the date on which the Exchange submits an option class certification 
to The Options Clearing Corporation (``OCC''). In connection with 
underlying securities deemed to be ``uncovered,'' BOX rules require 
that such underlying security be at least $7.50 for the majority of 
business days during the three calendar months preceding the date of 
selection for such listing. In addition, an alternative listing 
procedure for ``uncovered'' securities also permits the listing of such 
options so long as: (1) The underlying security meets the guidelines 
for continued approval contained in Ch. IV, Sec. 4 of the BOX Rules; 
(2) options on such underlying security are traded on at least one 
other registered national securities exchange; and (3) the average 
daily volume (``ADV'') for such options over the last three calendar 
months preceding the date of selection has been at least 5,000 
contracts. Subparagraphs (i) through (iv) of Ch. IV, Sec. 3(b) of the 
BOX Rules further set forth minimum requirements for an underlying 
security such as shares outstanding, number of holders and trading 
volume.
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    \3\ Section 18(b)(1)(A) of the 1933 Act provides that ``[a] 
security is a covered security if such security is* * *listed, or 
authorized for listing, on the New York Stock Exchange or the 
American Stock Exchange, or listed or authorized for listing on the 
National Market System of the Nasdaq Stock Market (or any successor 
to such entities)* * *'' See, 15 U.S.C. 77r(b)(1)(A).
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    Under this proposed rule change, an option may be multiply-listed 
and traded as long as one other options exchange is trading the 
particular option and such underlying security of the option meets the 
Exchange's continued listing requirements. The BSE notes that the 
requirements for listing additional series of an existing listed option 
(i.e., continued listing guidelines) are less stringent, largely 
because, in total, the Exchange's guidelines assure that options will 
be listed and traded on securities of companies that are financially 
sound and subject to adequate minimum standards.
    The Exchange believes that although the continued listing 
requirements are uniform among the other options exchanges, the 
application of both the original and continued listing standard in the 
current market environment have had an anti-competitive effect. 
Specifically, the Exchange notes that on several occasions it has been 
unable to list and trade options classes that trade elsewhere because 
the underlying security of such option did not at that time meet 
original listing standards. However, the other options exchange(s) may 
continue to trade such options (and list additional series) based on 
the lower maintenance listing standards, while the Exchange is 
precluded from listing any options on such underlying security. The 
Exchange believes this is anti-competitive and inconsistent with the 
aims and goals of a national market system in options.
    To address this situation, the Exchange proposes to add a new rule 
to the BOX Rules and to amend the current listing requirements. 
Specifically, the proposed addition of Ch. IV, Sec. 3(b)(vi) of the BOX 
Rules provides that notwithstanding that a particular underlying 
security may not meet the requirements set forth in Ch. IV, Sec. 
3(b)(i), (ii), (iv) and (v), the Exchange nonetheless could list and 
trade an option on such underlying security if (i) the underlying 
security meets continued listing requirements under Ch. IV, Sec. 4 of 
the BOX Rules; and (ii) options on such underlying security are listed 
and traded on at least one other registered national securities 
exchange.\4\ In

[[Page 9608]]

connection with the proposed changes, the Exchange represents that the 
procedures currently employed to determine whether a particular 
underlying security meets the initial listing criteria will similarly 
be applied to the continued listing criteria.
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    \4\ Telephone conversation between John Katovich, Executive Vice 
President and Chief Legal Officer, BSE and Mitra Mehr, Special 
Counsel, Division of Trading and Markets, Commission on February 12, 
2008 to conform this sentence to the text of the proposed rule 
change.
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    The Exchange believes that this proposal is narrowly tailored to 
address the circumstances where an options class is currently 
ineligible for listing on the Exchange while at the same time, such 
option is trading on another options exchange(s). The BSE notes that 
when an underlying security meets the maintenance listing requirements 
and at least one other exchange lists and trades options on the 
underlying security, the option is available to the investing public. 
Therefore, the Exchange notes that the current proposal will not 
introduce any inappropriate additional listed options classes. The BSE 
submits that the adoption of the proposal is essential for competitive 
purposes and to promote a free and open market for the benefit of 
investors.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\5\ in general, and Section 
6(b)(5) of the Act,\6\ in particular, in that it will serve to remove 
impediments to and perfect the mechanisms 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition 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 (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-BSE-2008-07 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-2008-07. 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 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 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-2008-07 and should be 
submitted on or before March 13, 2008.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, 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 finds 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 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 proposal is narrowly tailored to 
address the circumstances where an equity option class is currently 
ineligible for initial listing on the Exchange even though it meets the 
Exchange's continued listing standards and is trading on another 
options exchange. Allowing BSE to list and trade options on such 
underlying securities should help promote competition among the 
exchanges that list and trade options. The Commission notes, and the 
Exchange represents, that the procedures that the Exchange currently 
employs to determine whether a particular underlying security meets the 
initial equity option listing criteria for the Exchange will similarly 
be applied when determining whether an underlying security meets the 
Exchange's continued listing criteria.
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    \7\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause, pursuant to Section 19(b)(2)(B) of 
the Act,\9\ for approving the proposed rule change prior to the 30th 
day after the publication of the notice of the filing thereof in the 
Federal Register. The Commission notes that the proposed rule change is 
substantially identical to a proposed rule change submitted by the 
American Stock Exchange LLC,\10\ which was previously approved by the 
Commission after an opportunity for notice and comment, and therefore 
does not raise any new regulatory issues.
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    \9\ 15 U.S.C. 78s(b)(2)(B).
    \10\ See, Securities Exchange Act Release No. 56598 (October 2, 
2007), 72 FR 57615 (October 10, 2007) (SR-Amex-2007-48) (Order 
Approving Proposed Rule Change Modifying the Options Listing 
Criteria for Underlying Securities). See also, Securities Exchange 
Act Release Nos. 56647 (October 11, 2007), 72 FR 58702 (October 16, 
2007) (SR-ISE-2007-80) (Notice of Filing and Order Granting 
Accelerated Approval of Proposed Rule Change); 56774 (November 8, 
2007), 72 FR 64694 (November 16, 2007) (SR-CBOE-2007-114) (Notice of 
Filing and Order Granting Accelerated Approval of Proposed Rule 
Change); 56797 (November 15, 2007), 72 FR 65798 (November 23, 2007) 
(SR-NYSEArca-2007-106) (Notice of Filing and Order Granting 
Accelerated Approval of Proposed Rule Change); and 56717 (October 
29, 2007), 72 FR 62508 (November 5, 2007) (SR-Phlx-2007-73) (Notice 
of Filing and Order Granting Accelerated Approval of Proposed Rule 
Change).

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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-BSE-2008-07) be, and it 
hereby is, approved on an accelerated basis.
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    \11\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-3167 Filed 2-20-08; 8:45 am]

BILLING CODE 8011-01-P
