Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Boston Stock Exchange, Inc., Implementing a Post Primary Session

[Federal Register Volume 64, Number 173 (Wednesday, September 8, 1999)]
[Notices]
[Pages 48885-48887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23240]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41814; File No. SR-BSE-99-11]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Boston Stock Exchange, Inc., Implementing a Post Primary 
Session

August 31, 1999.
    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 July 13, 1999, the Boston Stock Exchange, Inc. (``BSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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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 extend the close of trading on the BSE 
from 4:00 p.m.\3\ to 4:15 p.m., creating a new Post Primary Session 
(``PPS'') . The text of the proposed rule is available at the BSE, and 
at the Commission.
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    \3\ All references to time are Eastern Time.
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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 IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 48886]]

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

1. Purpose
    The purpose of the proposed rule change is to extend the close of 
trading on the BSE from 4:00 p.m. to 4:15 p.m., creating a new PPS. 
Pursuant to Chapter I-B Section 1 (Primary Session), the current 
trading hours at the Exchange are from 9:30 a.m. until 4:00 p.m. The 
PPS will extend these house for an additional fifteen minutes until 
4:15 p.m. Under the proposal, all Exchange rules applicable to floor 
trading during the Exchange's Primary Session will continue to apply 
during the PPS, with the following exceptions: (1) only orders that are 
designated ``PPS'' will be eligible for execution; (2) limit orders on 
the book from the Primary Session will not be eligible for execution, 
but will carry over to the next day; (3) there will be no automated 
executions; (4) there will be no application of the Execution Guarantee 
Rule;\4\ and (5) GTX\5\ orders will be executable after the close of 
the PPS (i.e., GTX orders are executable after 415 p.m. instead of 4:00 
p.m.). Accordingly, the Exchange proposed to amend the following rules: 
(1) Chapter I-B, Sections 2 and 3, and (2) Chapter IIB, Sections 1 and 
3.
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    \4\ See BSE Rules, Paragraph 2039A, Section 33.
    \5\ For a description of GTX Orders, See ``GTX Orders'' infra.
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    PPS Eligible Securities. Pursuant to the proposed amendment of 
Chapter IIB, Section 3, only orders designated ``PPS'' will be eligible 
for execution during the PPS. Since the PPS is merely an extension of 
the Exchange's auction market, wherein bids and offers are continuously 
updated for trading under normal auction market principles, Exchange 
rules will continue to apply. Thus, to be designated PPS eligible, a 
market, limit, or contingent order must be acceptable under current 
Exchange rules.
    The Exchange notes that, under the proposal, limit orders on the 
book from the Primary Session are not eligible for the PPS, and must be 
carried over to the next day. Also, those limit orders re received 
during the PPS (and thus PPS eligible) remain subject to the Limit 
Order Display Rule.\6\
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    \6\ See Chapter IIB, Section 3(c)(i)-(ii)).
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    GTX Orders. GTX Order is an agency limit order that is good until 
canceled, and is eligible for primary market protection based on the 
volume that prints on the after hours trading session of the New York 
Stock Exchange or the American Stock Exchange. Thus, a GTX Order may be 
executed during regular trading hours or after the PPS, at 5:00 p.m., 
but no GTX Order may be executed during the PPS.
    BEACON as a Routing System. ``BEACON'' is the acronym for the 
Boston Exchange Automated Communication Order-routing Network. It 
provides a system for the automated execution of orders on the Exchange 
under predetermined conditions. Orders accepted under the system may be 
executed on a fully automated or manual basis. The Exchange proposes to 
amend Chapter IIB, Section 3(b), to indicate that BEACON will continue 
to operate as a routing system for PPS eligible orders, but will not 
provide an automatic execution mechanism.
    Operation of the ITS System During the PPS. In the amendment to 
Chapter IIB, Section 3(a), the BSE represents that ITS will be 
available for both inbound and outbound commitments during the PPS to 
the extent that other market centers (i.e., the Pacific Exchange, Inc. 
(``PCX''),\7\ the Philadelphia Stock Exchange, Inc. (``PHLX'') \8\ and 
the Chicago Stock Exchange, Inc. (``CHX'')) \9\ are open for trading. 
The BSE also represents that it will perform surveillance during the 
PPS in the same manner and using the same techniques as those used 
during the Primary Session. To facilitate the surveillance of the PPS, 
BSE's surveillance staff will remain on-site during the PPS and for any 
necessary additional time period after the close of the PPS.
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    \7\ PCX's regular equity session closes at 4:30 p.m. During the 
crossing session, PCX does not utilize ITS. See PCX Rule 4.2, 
Commentary .02.
    \8\ PHLX operates a Post Primary Session from 4:00 p.m. until 
4:15 p.m. which is an extension of its regular auction market. 
During the Post Primary Session, PHLX utilizes ITS to the same 
extent it does during regular trading hours. See PHLX Rule 101.
    \9\ CHX's primary session closes at 4:00 p.m. CHX conducts an 
Extended Session from 4:00 p.m. until 4:30 p.m. Both sessions 
utilize ITS. See generally Article 20, CHX Rules 20, 37, 39, 40 and 
41.
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    Execution Guarantee Does Not Apply. The Execution Guarantee 
provides that Specialists must guarantee execution on all agency market 
and marketable limit orders from 100 up to and including 1,299 shares. 
According to the proposed amendment to Chapter IIB, Section 3(d), the 
Execution Guarantee will not be available in any form during the PPS.
2. Statutory Basis
    The BSE believes that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\10\ in that it is designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities; and is not designed to permit 
unfair discrimination between customers, issuers, brokers or dealers.
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    \10\ 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 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

    No written comments were either solicited or received.

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

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

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., 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. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
BSE. All submissions should refer to file number SR-BSE-99-11 and 
should be submitted by September 29, 1999.


[[Page 48887]]


    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-23240 Filed 9-7-99; 8:45 am]
BILLING CODE 8010-01-M