Self-Regulatory Organizations; Notice of Withdrawal of Proposed Rule Change and Amendment No. 1 Thereto by the Boston Stock Exchange, Inc. Relating to Its Specialist Performance Evaluation Program and Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change by the Boston Stock Exchange, Inc. Relating to Its Specialist Performance Evaluation Program

[Federal Register Volume 64, Number 127 (Friday, July 2, 1999)]
[Notices]
[Pages 36058-36059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16868]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41563; File Nos. SR-BSE-97-07 and SR-BSE-99-09]


Self-Regulatory Organizations; Notice of Withdrawal of Proposed 
Rule Change and Amendment No. 1 Thereto by the Boston Stock Exchange, 
Inc. Relating to Its Specialist Performance Evaluation Program and 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change by the Boston Stock Exchange, Inc. Relating to Its 
Specialist Performance Evaluation Program

June 25, 1999.
    On October 8, 1998, the Boston Stock Exchange, Inc. (``BSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (SR-BSE-98-07), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ 
and Rule 19b-4 thereunder,\2\ to amend the depth measure calculations 
in its Specialist Performance Evaluation Program (``SPEP'') pilot 
program. The Exchange submitted Amendment No. 1 to its proposed rule 
change (SR-BSE-98-07) on November 13, 1998.\3\ Notice of the proposed 
rule change, as amended, was published on December 11, 1998, in the 
Federal Register, to solicit comment from interested persons.\4\ On 
December 17, 1998, the Exchange submitted Amendment No. 2 to its 
proposal.\5\ On December 28, 1998, the Commission noticed and granted 
accelerated approval of Amendment No. 2.\6\ On June 10, 1999, the 
Exchange withdrew those portions of its proposed rule change relating 
to permanent approval of the SPEP pilot program and to the proposed 
changes to its depth measures.\7\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange requested permanent 
approval of the SPEP pilot program and deleted its request for 
accelerated approval and retroactive implementation of the proposed 
rule change. See Rule 19b-4 filing, SR-BSE-98-07, dated November 6, 
1998 (``Amendment No. 1'').
    \4\ Securities Exchange Act Release No. 40746 (December 3, 
1998), 63 FR 68490 (December 11, 1998).
    \5\ In Amendment No. 2, the Exchange (1) requested an extension 
of the SPEP pilot program for a six-month period ending on June 30, 
1999, or until the Commission approves the Exchange's proposal to 
make it permanent, whichever occurred first, and (2) made a 
technical change to its rule. See Letter From Karen A. Aluise, Vice 
President, Exchange, to Richard Strasser, Assistant Director, 
Division of Market Regulation (``Division''), Commission, dated 
December 14, 1998 (``Amendment No. 2'')
    \6\ Securities Exchange Act Release No. 40844 (December 28, 
1998), 64 FR 1041 (January 7, 1999).
    \7\ See Letter from Karen A. Aluise, Vice President, Exchange, 
to Richard Strasser, Assistant Director, Division, Commission, dated 
June 9, 1999.
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    Pursuant to Section 19(b)(1) of the Act,\8\ and Rule 19b-4 
thereunder,\9\ notice is hereby given that on June 10, 1999, the 
Exchange filed with the Commission the proposed rule change (SR-BSE-99-
09), which requests that the Commission approve an extension of the 
SPEP pilot until March 31, 2000. The proposed rule change is described 
in Items I and II below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons and to grant 
accelerated approval to this rule proposal.
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    \8\ 15 U.S.C. 78s(b)(1).
    \9\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend its SPEP pilot program until March 
31, 2000.\10\
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    \10\ Telephone conversation between Karen A. Aluise, Vice 
President, Exchange, and Terri Evans, Attorney, Division, 
Commission, on June 17, 1999.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the 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 Exchange regularly evaluates the performance of its specialists 
under the SPEP pilot program. Under the SPEP

[[Page 36059]]

pilot, specialists are evaluated based on objective measures, such as 
turnaround time, price improvements, depth and added depth. Generally, 
any specialist who receives a deficient score in one or more objective 
measures may be required to attend a meeting with the Performance 
Improvement Action Committee or the Market Performance Committee.\11\
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    \11\ Id.
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    The current pilot program will expire on June 30, 1999. The 
Exchange seeks to extend its SPEP pilot until March 31, 2000, while the 
Exchange considers revising its depth measure calculations.\12\
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    \12\ The Exchange plans on seeking permanent approval of the 
SPEP pilot at the same time that it submits its revised depth 
measure calculations. Id.
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2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act,\13\ in that it is designed 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; and is not designed to 
permit unfair discrimination between customers, issuers, brokers and 
dealers.
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    \13\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden of 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 written 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 
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 in Washington, DC. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the Exchange. All submissions should refer to File 
No. SR-BSE-99-09 and should be submitted by July 23, 1999.

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

    The Commission finds that the BSE's proposal to extend the SPEP 
pilot program until March 31, 2000, is consistent with the requirements 
of the Act and the rules and regulation thereunder. Specifically, the 
Commission finds that the amendment is consistent with Section 6(b)(5) 
of the Act,\14\ which requires that the rules of the 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 proposed nine-month 
extension of the pilot program should allow the Exchange to continue to 
assess specialist performance while allowing the Exchange adequate time 
to consider amending its two depth measure calculations.
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    \14\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for granting the Exchanges' request 
for a nine-month extension of the SPEP pilot prior to the thirtieth day 
after the date of publication of notice of filing thereof in the 
Federal Register. Among the obligations imposed upon specialists by the 
Exchange, and by the Act and the rules promulgated thereunder, is the 
maintenance of fair and orderly markets in their securities. To ensure 
that specialists fulfill these obligations, it is important that the 
Exchange be able to evaluate specialist performance. The BSE's SPEP 
pilot assists the Exchange in conducting its evaluation. Therefore, the 
Commission believes good cause exists to approve the extension of the 
pilot program until March 31, 2000, on an accelerated basis. 
Accordingly, the Commission believes that granting accelerated approval 
of the requested extension is appropriate and consistent with Sections 
6(b)(5) and 19(b)(2) of the Act.\15\
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    \15\ 15 U.S.C. 78f(b)(5) and 78s(b)(2).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-BSE-99-09) is hereby 
approved on an accelerated basis until March 31, 2000.\17\

    \16\ 15 U.S.C. 78s(b)(2).
    \17\ In approving the proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-16868 Filed 7-1-99; 8:45 am]
BILLING CODE 8010-01-M