Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), and Rule 19b-4 thereunder, notice is hereby given that on October 12, 2000, the Boston Stock Exchange, Inc. (“BSE” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as 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 of the proposed rule change.
17 CFR 240.19b-4.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The BSE intends to trade, via Unlisted Trading Privileges (“UTP”), Index Fund Shares based on the Fortune 500 and Fortune e-50 Indexes pursuant to Rule 19b-4(e) under the Act. Accordingly, the BSE proposes to amend Chapter XXIV-B, Index Fund Shares, by adding Section 6, Fortune Indexes, to set forth various disclaimers of liability and warranties in connection with these Indexes and trading in Index Fund Shares. The text of the proposed rule change is available at the principal office of the BSE and at the Commission.
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 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 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 BSE intends to trade, via UTP, Index Fund Shares based on the Fortune 500 and Fortune e-50 Indexes (“Indexes”), pursuant to rule 19b-4(e) under the Act. Therefore, the BSE proposes to amend Chapter XXIV-B, Index Fund Shares, by adding Section 6, Fortune Indexes, to set forth various disclaimers of liability and warranties in connection with the Indexes and trading in Index Fund Shares. The proposed rule would state, among other things, that the Indexes are licensed for use by the Exchange in connection with the Index fund Shares; that the Index Fund Shares have not been passed on by Fortune for suitability for a particular use; and that the Index Fund Shares are not sponsored, endorsed, sold, or promoted by Fortune. The proposed rule would also state that Fortune does not warranty the accuracy or completeness of the Indexes or the data included therein, results to be obtained from use of the Indexes or such data, or fitness for a particular use with respect to the Indexes or such data.
2. Statutory Basis
The BSE believes that the proposed rule change is consistent with Section 6(b) of the Act in general, and furthers the objectives of Sections 6(b)(5) in particular, in that it is 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 BSE also states that the proposed rule change is not designed to permit unfair discrimination between customers, issuers, brokers, and dealers.
15 U.S.C. 78f(b)(5).
B. Self-Regulatory Organization's Statement on Burden on Competition
The BSE does not believe that the proposed rule would impose any burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
No written comments were solicited or received.
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 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. 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-00-17 and should be submitted by November 24, 2000.
IV. Commission's Findings and Order Granting Acceleratred Approval of Proposed Rule Change
A. Generally
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. Specifically, the Commission believes that the proposal is consistent with section 6(b)(5) of the Act because it will facilitate transactions in securities by setting forth certain disclaimers of liability with respect to Index Fund Shares based on the Fortune 500 and Fortune e-50 Indexes that will trade on the Exchange.
In reviewing the proposed rule change, the Commission considered its potential impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
15 U.S.C. 78f(b)(5).
The Commission notes that it has previously approved a proposed rule change submitted by the BSE under Exchange Act Rule 19b-4, 17 CFR 240.19b-4(e), that established generic listing standards for Index Fund Shares that would permit the trading of, among other things, shares of the Fortune 500 and FORTUNE e-50 Indexes funds pursuant to UTP. See Exchange Act Release No. 34-42988 (June 28, 2000), 65 FR 42021 (July 7, 2000).
The BSE has requested that the Commission find good cause pursuant to Section 19(b)(2) of the Act for approving the proposed rule change prior to the thirtieth day after publication of the proposal in the Federal Register. The Commission does not believe that this proposal raises any new regulatory issues and notes that the proposed rule change is nearly identical to others that have been previously approved by the Commission. Therefore, the Commission finds that there is good cause for approving the proposed rule change prior to the thirtieth day after publication of the proposal in the Federal Register.
In its initial submission to the Commission, the BSE inadvertently requested that the Commission grant accelerated effectiveness to the proposed rule change. The BSE has indicated that, instead, it requested accelerated approval of the proposal. Telephone conversation between Esther Radovsky, Listings Analyst, BSE, and Michael Gaw, Attorney-Adviser, Division of Market Regulation, Commission, on October 24, 2000.
See, e.g., Exchange Act Release No. 34-41664 (July 27, 1999), 64 FR 42424 (August 4, 1999) (approval of BSE rule change to, among other things, adopt certain disclaimers of liability with respect to Nasdaq-100 Index Fund Shares); Exchange Act Release NO. 34-41119 (February 26, 1999), 64 FR 11510 (March 9, 2000) (approval of Amex rule change to, among other things, adopt certain disclaimers of liability with respect to Nasdaq-100 Index Fund Shares); Exchange Act Release No. 34-35534 (March 24, 1995), 60 FR 16686 (March 31, 1995) (approval of Amex rule change to, among other things, adopt certain disclaimers of liability with respect to S&P MidCap 400 Index Fund Shares).
It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR-BSE-00-17), is hereby approved on an accelerated basis.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-28223 Filed 11-2-00; 8:45 am]
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