[Federal Register Volume 80, Number 183 (Tuesday, September 22, 2015)]
[Rules and Regulations]
[Pages 57272-57275]
[FR Doc No: 2015-24051]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2015-0313; FRL-9934-50-Region 4]

Approval and Promulgation of Implementation Plans for the State
of Alabama: Cross-State Air Pollution Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is taking final
action to approve the State of Alabama's March 27, 2015, State
Implementation Plan (SIP) revision, submitted by the Alabama Department
of Environmental Management (ADEM). This SIP revision provides
Alabama's state-determined allowance allocations for existing electric
generating units (EGUs) in the State for the 2016 control periods and
replaces the allowance allocations for the 2016 control periods
established by EPA under the Cross-State Air Pollution Rule (CSAPR).
The CSAPR addresses the ``good neighbor'' provision of the Clean Air
Act (CAA or Act) that requires states to reduce the transport of
pollution that significantly affects downwind air quality. In this
final action, EPA is approving Alabama's SIP revision, incorporating
the state-determined allocations for the 2016 control periods into the
SIP, and amending the regulatory text of the CSAPR Federal
Implementation Plan (FIP) to reflect this approval and inclusion of the
state-determined allocations. EPA's allocations of CSAPR trading
program allowances for Alabama for control periods in 2017 and beyond
remain in place until the State submits and EPA approves state-
determined allocations for those control periods through another SIP
revision. The CSAPR FIPs for Alabama remain in place until such time as
the State decides to replace the FIPs with a SIP revision.

DATES: This rule will be effective September 22, 2015.

ADDRESSES: EPA has established a docket for this action under Docket
Identification No. EPA-R04-OAR-2015-0313. All documents in the docket
are listed on the www.regulations.gov Web site. Although listed in the
index, some information may not be publicly available, i.e.,
Confidential Business Information or other information whose disclosure
is restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available either electronically through www.regulations.gov or in hard
copy at the Air Regulatory Management Section, Air Planning and
Implementation Branch, Air, Pesticides and Toxics Management Division,
U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW.,
Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section to schedule your inspection. The Regional Office's official
hours of business are Monday through Friday 8:30 a.m. to 4:30 p.m.,
excluding Federal holidays.

FOR FURTHER INFORMATION CONTACT: Twunjala Bradley, Air Regulatory
Management Section, Air Planning and Implementation Branch, Air,
Pesticides and Toxics Management Division, U.S. Environmental
Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia
30303-8960. Ms. Twunjala Bradley can be reached by phone at (404) 562-
9352 or via electronic mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    EPA is taking final action to approve Alabama's March 27, 2015, SIP
revision

submitted by ADEM that modifies the allocations of allowances
established by EPA under the CSAPR FIPs for existing EGUs for the 2016
control periods.\1\ The CSAPR allows a subject state, instead of EPA,
to allocate allowances under the sulfur dioxide (SO2)
annual, nitrogen oxides (NOX) annual, and NOX
ozone season trading programs to existing EGUs in the State for the
2016 control periods provided that the state meets certain regulatory
requirements.\2\ EPA issued the CSAPR on August 8, 2011, to address CAA
section 110(a)(2)(D)(i)(I) requirements concerning the interstate
transport of air pollution and to replace the Clean Air Interstate
Rule,\3\ which the United States Court of Appeals for the District of
Columbia Circuit (DC Circuit) remanded to EPA for replacement.\4\ EPA
found that emissions of SO2 and NOX in 28
eastern, midwestern, and southern states contribute significantly to
nonattainment or interfere with maintenance in one or more downwind
states with respect to one or more of three air quality standards--the
annual PM2.5 NAAQS promulgated in 1997 \5\ (15 micrograms
per cubic meter ([micro]g/m\3\)), the 24-hour PM2.5 NAAQS
promulgated in 2006 \6\ (35 [micro]g/m\3\), and the 8-hour ozone NAAQS
promulgated in 1997 \7\ (0.08 parts per million). The CSAPR identified
emission reduction responsibilities of upwind states, and also
promulgated enforceable FIPs to achieve the required emission
reductions in each of these states through cost effective and flexible
requirements for power plants.
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    \1\ Federal Implementation Plans: Interstate Transport of Fine
Particulate Matter and Ozone and Correction of SIP Approvals; August
8, 2011 (76 FR 48208).
    \2\ The CSAPR is implemented in two Phases (I and II) with Phase
I referring to 2015 and 2016 control periods, and Phase II
consisting of 2017 and beyond control periods.
    \3\ Rule To Reduce Interstate Transport of Fine Particulate
Matter and Ozone Clean Air Interstate Rule; Revisions to Acid Rain
Program; Revisions to the NOX SIP Call; May 12, 2005 (70
FR 25162).
    \4\ North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008),
modified on reh'g, 550 F.3d 1176 (D.C. Cir. 2008).
    \5\ National Ambient Air Quality Standards for Particulate
Matter; July 18, 1997 (62 FR 36852).
    \6\ National Ambient Air Quality Standards for Particulate
Matter; October 17, 2006 (71 FR 61144).
    \7\ National Ambient Air Quality Standards for Ozone; July 18,
1997 (62 FR 38856).
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    Alabama is subject to the FIPs that implement the CSAPR and require
certain EGUs to participate in the EPA-administered federal
SO2 annual, NOX annual, and NOX ozone
season cap-and trade programs.\8\ Alabama's March 27, 2015, SIP
revision allocates allowances under the CSAPR to existing EGUs in the
State for the 2016 control periods only. Alabama's SIP revision
includes state-determined allocations for the CSAPR NOX
annual, NOX ozone season, and SO2 Group 2 annual
trading programs, and complies with the 2016 NOX allowance
allocation SIP requirements and the 2016 SO2 allowance
allocation SIP requirements set forth at 40 CFR 52.38 and 52.39,
respectively. Pursuant to these regulations, a state may replace EPA's
CSAPR allowance allocations for existing EGUs for the 2016 control
periods provided that the state submits a timely SIP revision
containing those allocations to EPA that meets the requirements in 40
CFR 52.38 and 52.39.
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    \8\ On July 28, 2015, the DC Circuit issued an opinion upholding
CSAPR but remanding without vacatur certain state emissions budgets
to EPA for reconsideration. EME Homer City Generation, L.P. v. EPA,
No. 11-1302, slip op. CSAPR implementation at this time remains
unaffected by the court decision, and EPA will address the remanded
emissions budgets in a separate rulemaking. While Alabama's
SO2 emissions budget for phase 2 (i.e., control periods
in 2017 and subsequent years) was among the budgets remanded to EPA
for reconsideration, this SIP revision concerns allowance
allocations only for the 2016 control periods, which are part of
phase 1.
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    On July 27, 2015, EPA published direct final and proposed
rulemaking notices to approve Alabama's March 27, 2015, SIP revision.
See 80 FR 44292 and 80 FR 44320.\9\ In these notices, EPA stated that
if adverse comments were received by August 26, 2015, EPA would publish
a notice in the Federal Register withdrawing the final rule and
informing the public that the rule would not take effect. EPA received
a single adverse comment on August 26, 2015, and has withdrawn the
direct final rule. In the July 27, 2015, notices, EPA informed the
public that adverse comments would be addressed in a final action based
upon the proposed rule published on July 27, 2015 (80 FR 44320). EPA is
responding to the adverse comment in this final action.
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    \9\ As noted in the July 27, 2015, notice of proposed rulemaking
(80 FR 44320), EPA's detailed analysis of Alabama's SIP revision is
provided in the direct final rulemaking published on July 27, 2015
(80 FR 44292). EPA incorporates that analysis herein by reference.
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II. Response to Comment

    EPA received one adverse comment on its July 27, 2015, proposed
rule. This anonymous comment is located in the docket for this final
action. See Docket ID: EPA-R04-OAR-2015-0275. A summary of the adverse
comment and EPA's response are provided below.
    Comment: The Commenter states that ``these proposed regulations
have not adequately considered the cost of implementation and, as such,
should not be implemented. Implementation of these regulations would
almost certainly create additional costs for Alabama based
electric[i]ty producers which would be passed along to residential and
commer[ci]al customers and to additional consumers from the greater
cost of producing goods and services. Until the EPA properly quantifies
the additional cost from this implementation and performs the cost
benefit analysis required by law the implementation of this rule should
not occur.''
    Response: EPA disagrees with the Commenter because the comments are
beyond the scope of this action. Pursuant to CAA section 110(k)(3),
EPA's role in reviewing SIP submissions is to review state choices for
consistency with the applicable requirements of the CAA, and EPA must
approve a SIP revision that meets all applicable requirements of the
CAA. The Commenter has not identified any aspect of the Alabama SIP
submission that is inconsistent with the applicable CAA requirements,
whether CAA section 110(a)(2)(D)(i)(I) or any other provision of the
Act. EPA notes that it evaluated the costs and benefits of the
implementation of CSAPR during its rulemaking process, which was
conducted in 2010 and 2011. The Commenter's concerns regarding the
costs of implementing CSAPR are therefore untimely because the public
comment periods regarding the CSAPR and its implementation requirements
have long since closed. The present action is limited to the state's
modification of the allowance allocations under CSAPR to sources within
the state and does not otherwise modify the emission reduction
obligations (i.e. the emission budgets) or implementation requirements
finalized in CSAPR.

III. Effective Date of This Action

    EPA is making September 22, 2015 the effective date of this final
action. In accordance with 5 U.S.C. 553(d), EPA finds there is good
cause for this action to become effective on September 22, 2015. The
September 22, 2015, effective date for this action is authorized under
5 U.S.C. 553(d)(3), which provides that rulemaking actions may become
effective less than 30 days after publication, ``as otherwise provided
by the agency for good cause found and published with the rule.'' The
purpose of the 30-day waiting period prescribed in section 553(d) is to
give affected parties a reasonable time to adjust their behavior and
prepare before the final rule takes effect. This rule, however, does
not create any new regulatory requirements such that affected parties
would need time to prepare before the

rule takes effect. Rather, this final rule establishes state-determined
allocations of allowances for the control periods in 2016 to existing
EGUs in the State under the CSAPR's NOX annual and ozone
season and SO2 Group 2 trading programs. The EGUs whose
allowance allocations may be changed by this rule are already regulated
under the CSAPR FIPs and do not face any new regulatory requirements
under this rule. Furthermore, EPA must approve Alabama's SIP submission
by October 1, 2015, to ensure that recordation of the 2016 allowances
in the Allowance Management System is based on the state-determined
allocations. For these reasons, EPA finds good cause under 5 U.S.C.
553(d)(3) for this action to become effective on September 22, 2015.

IV. Final Action

    EPA is taking final action to approve Alabama's March 27, 2015,
CSAPR SIP revision that provides Alabama's state-determined allocations
of allowances for existing EGUs in the State for the 2016 control
periods to replace the allowance allocations for the 2016 control
periods established by EPA under CSAPR. Consistent with the flexibility
given to states in the CSAPR FIPs at 40 CFR 52.38 and 52.39, Alabama's
SIP revision establishes state-determined allocations of allowances to
existing EGUs in the State under the CSAPR's NOX annual and
ozone season and SO2 Group 2 annual trading programs.
Alabama's SIP revision meets the applicable requirements in 40 CFR
52.38(a)(3) and (b)(3) for allocations of NOX annual and
NOX ozone season allowances, respectively, and 40 CFR
52.39(g) for allocations of SO2 Group 2 annual allowances.
EPA is amending the CSAPR FIP's regulatory text for Alabama at 40 CFR
52.54 and 52.55 to reflect this approval and inclusion of the state-
determined allocations of allowances for the 2016 control periods. EPA
is not making any other changes to the CSAPR FIPs for Alabama in this
action. EPA's allocations of CSAPR trading program allowances for
Alabama for control periods in 2017 and beyond remain in place until
the State submits and EPA approves state-determined allocations for
those control periods through another SIP revision. The CSAPR FIPs for
Alabama remain in place until such time the State decides to replace
the FIPs with a SIP revision. EPA is approving Alabama's SIP revision
because it is in accordance with the CAA and its implementing
regulations.

V. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
Federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. Accordingly, this
action merely approves state law as meeting Federal requirements and
does not impose additional requirements beyond those imposed by state
law. For that reason, this action:
     Is not a significant regulatory action subject to review
by the Office of Management and Budget under Executive Orders 12866 (58
FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
     does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L.104-4);
     does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA; and
     does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    The SIP is not approved to apply on any Indian reservation land or
in any other area where EPA or an Indian tribe has demonstrated that a
tribe has jurisdiction. In those areas of Indian country, the rule does
not have tribal implications as specified by Executive Order 13175 (65
FR 67249, November 9, 2000), nor will it impose substantial direct
costs on tribal governments or preempt tribal law.
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by November 23, 2015. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this action for the purposes of judicial review nor
does it extend the time within which a petition for judicial review may
be filed, and shall not postpone the effectiveness of such rule or
action. This action may not be challenged later in proceedings to
enforce its requirements. See section 307(b)(2).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen
dioxide, Ozone, Particulate matter, Reporting and recordkeeping
requirements, Sulfur oxides, Volatile organic compounds.

    Dated: September 11, 2015.
Heather McTeer Toney,
Regional Administrator, Region 4.
    40 CFR part 52 is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart B--Alabama

0
2. Section 52.50(e) is amended by adding an entry for ``Cross State Air
Pollution Rule--State-Determined Allowance Allocations for the 2016

control periods'' at the end of the table to read as follows:

Sec.  52.50  Identification of plan.

* * * * *
    (e) * * *

                                 EPA Approved Alabama Non-Regulatory Provisions
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                                         Applicable            State
     Name of nonregulatory SIP          geographic or     submittal date/  EPA approval         Explanation
             provision               nonattainment area   effective date       date
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                                                  * * * * * * *
Cross State Air Pollution Rule--    Alabama.............       3/27/2014       9/22/2015  ......................
 State-Determined Allowance
 Allocations for the 2016 control
 periods.
----------------------------------------------------------------------------------------------------------------

0
3. Section 52.54 is amended by adding paragraphs (a)(3) and (b)(3) to
read as follows:

Sec.  52.54  Interstate pollutant transport provisions; What are the
FIP requirements for decreases in emissions of nitrogen oxides?

    (a) * * *
    (3) Pursuant to Sec.  52.38(a)(3), Alabama's state-determined TR
NOX Annual allowance allocations established in the March
27, 2015, SIP revision replace the unit-level TR NOX Annual
allowance allocation provisions of the TR NOX Annual Trading
Program at 40 CFR 97.411(a) for the State for the 2016 control period
with a list of TR NOX Annual units that commenced operation
prior to January 1, 2010, in the State and the state-determined amount
of TR NOX Annual allowances allocated to each unit on such
list for the 2016 control period, as approved by EPA on September 22,
2015.
    (b) * * *
    (3) Pursuant to Sec.  52.38(b)(3), Alabama's state-determined TR
NOX Ozone Season allowance allocations established in the
March 27, 2015, SIP revision replace the unit-level TR NOX
Ozone Season allowance allocation provisions of the TR NOX
Ozone Season Trading Program at 40 CFR 97.511(a) for the State for the
2016 control period with a list of TR NOX Ozone Season units
that commenced operation prior to January 1, 2010, in the State and the
state-determined amount of TR NOX Ozone Season allowances
allocated to each unit on such list for the 2016 control period, as
approved by EPA on September 22, 2015.

0
4. Section 52.55 is amended by adding paragraph (c) to read as follows:

Sec.  52.55  Interstate pollutant transport provisions; What are the
FIP requirements for decreases in emissions of sulfur dioxide?

* * * * *
    (c) Pursuant to Sec.  52.39(g), Alabama's state-determined TR
SO2 Group 2 allowance allocations established in the March
27, 2015, SIP revision replace the unit-level TR SO2 Group 2
allowance allocation provisions of the TR SO2 Group 2
Trading Program at 40 CFR 97.711(a) for the State for the 2016 control
period with a list of TR SO2 Group 2 units that commenced
operation prior to January 1, 2010, in the State and the state-
determined amount of TR SO2 Group 2 allowances allocated to
each unit on such list for the 2016 control period, as approved by EPA
on September 22, 2015.

[FR Doc. 2015-24051 Filed 9-21-15; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register: April 30, 2010 (Volume 75, Number 83)]
[Notices]
[Page 22814-22815]
[DOCID:fr30ap10-93]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2005-D-0140] (formerly Docket No. FDA-2005D-0261)

Guidance for Industry: Nucleic Acid Testing (NAT) for Human
Immunodeficiency Virus Type 1 (HIV-1) and Hepatitis C Virus (HCV):
Testing, Product Disposition, and Donor Deferral and Reentry;
Availability

AGENCY:  Food and Drug Administration, HHS.

ACTION:  Notice.

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SUMMARY:  The Food and Drug Administration (FDA) is announcing the
availability of a document entitled ``Guidance for Industry: Nucleic
Acid Testing (NAT) for Human Immunodeficiency Virus Type 1 (HIV-1) and
Hepatitis C Virus (HCV): Testing, Product Disposition, and Donor
Deferral and Reentry'' dated May 2010. The guidance document provides
recommendations to blood and plasma establishments, manufacturers, and
testing laboratories that are implementing a licensed method for Human
Immunodeficiency Virus Type 1 (HIV-1) Nucleic Acid Test (NAT) and
Hepatitis C Virus (HCV) NAT, on testing individual samples or pooled
samples from donors of human blood and blood components for HIV-1
ribonucleic acid (RNA) and HCV RNA. This guidance also contains
recommendations regarding product disposition and donor management
based on the results of NAT and serologic testing for markers of HIV-1
and HCV infection on samples, collected at the time of donation, from
donors of human blood and blood components. The guidance announced in
this notice finalizes the draft guidance of the same title, dated July
2005. This guidance also supersedes the recommendations for reentry of
donors deferred because of anti-HIV-1 test results, HIV-1 p24 antigen
test results, and anti-HCV test results that were provided in the FDA
memoranda entitled ``Revised Recommendations for the Prevention of
Human Immunodeficiency Virus (HIV-1) Transmission by Blood and Blood
Products,'' April 23, 1992; ``Revised Recommendations for Testing Whole
Blood, Blood Components, Source Plasma and Source Leukocytes for
Antibody to Hepatitis C Virus Encoded Antigen (Anti-HCV),'' August 5,
1993; ``Recommendations for Donor Screening with a Licensed Test for
HIV-1 Antigen,'' August 8, 1995.

DATES:  Submit electronic or written comments on agency guidances at
any time.

ADDRESSES:  Submit written requests for single copies of the guidance
to the Office of Communication, Outreach and Development (HFM-40),
Center for Biologics Evaluation and Research (CBER), Food and Drug
Administration, 1401 Rockville Pike, suite 200N, Rockville, MD 20852-
1448. Send one self-addressed adhesive label to assist the office in
processing your requests. The guidance may also be obtained by mail by
calling CBER at 1-800-835-4709 or<PHONE_NUMBER>. See the SUPPLEMENTARY
INFORMATION section for electronic access to the guidance document.
    Submit electronic or written comments on the guidance. Submit
electronic comments to http://www.regulations.gov. Submit written
comments to the Division of Dockets Management (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Paul Levine, Center for Biologics
Evaluation and Research (HFM-17), Food and Drug Administration, 1401
Rockville Pike, suite 200N, Rockville, MD 20852-1448,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    FDA is announcing the availability of a document entitled
``Guidance for Industry: Nucleic Acid Testing (NAT) for Human
Immunodeficiency Virus Type 1 (HIV-1) and Hepatitis C Virus (HCV):
Testing, Product Disposition, and Donor Deferral and Reentry,'' dated
May 2010. The guidance document provides recommendations to blood and
plasma establishments, manufacturers, and testing laboratories that are
implementing a licensed method for Human Immunodeficiency Virus Type 1
(HIV-1) Nucleic Acid Test (NAT) and Hepatitis C Virus (HCV) NAT, on
testing individual samples or pooled samples from donors of human blood
and blood components for HIV-1 ribonucleic acid (RNA) and HCV RNA. This
guidance also contains recommendations regarding product disposition
and donor management based on the results of NAT and serologic testing
for markers of HIV-1 and HCV infection on samples, collected at the
time of donation, from donors of human blood and blood components. The
guidance announced in this notice finalizes the draft guidance of the
same title, dated July 19, 2005. This guidance also supersedes the
recommendations for reentry of donors deferred because of anti-HIV-1
test results, HIV-1 p24 antigen test results, and anti-HCV test results
that were provided in the FDA memoranda entitled, ``Revised
Recommendations for the Prevention of Human Immunodeficiency Virus
(HIV-1) Transmission by Blood and Blood Products,'' April 23, 1992;
``Revised Recommendations for Testing Whole Blood, Blood Components,
Source Plasma and Source Leukocytes for Antibody to Hepatitis C Virus
Encoded Antigen (Anti-HCV),'' August 5, 1993; ``Recommendations for
Donor Screening with a Licensed Test for HIV-1 Antigen,'' August 8,
1995.
    In the Federal Register of July 27, 2005 (70 FR 43439), FDA
announced the availability of the draft guidance of the same title. FDA
received several comments on the draft guidance and those comments were
considered as the guidance was finalized. The guidance announced in
this notice finalizes the draft guidance dated July 2005.
    The guidance is being issued consistent with FDA's good guidance
practices regulation (21 CFR 10.115). The guidance represents FDA's
current thinking on this topic. It does not create or confer any rights
for or on any person and does not operate to bind FDA or the public. An
alternative approach may be used if such approach satisfies the
requirements of the applicable statutes and regulations.

II. Comments

    Interested persons may, at any time, submit to the Division of
Dockets Management (see ADDRESSES) written or electronic comments
regarding the guidance. Submit a single copy of electronic comments or
two paper copies of any mailed comments, except

that individuals may submit one paper copy. Comments are to be
identified with the docket number found in brackets in the heading of
this document. A copy of the guidance and received comments are
available for public examination in the Division of Dockets Management
between 9 a.m. and 4 p.m., Monday through Friday.

III. Electronic Access

    Persons with access to the Internet may obtain the guidance at
either: http://www.fda.gov/BiologicsBloodVaccines/
GuidanceComplianceRegulatoryInformation/Guidances/default.htm or http:/
/www.regulations.gov.

    Dated: April 16, 2010.
Leslie Kux,
Acting Assistant Commissioner for Policy.
[FR Doc. 2010-10048 Filed 4-29-10; 8:45 am]
BILLING CODE 4160-01-S


[Federal Register: January 23, 2008 (Volume 73, Number 15)]
[Notices]
[Page 4028-4035]
[DOCID:fr23ja08-96]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57157; File No. SR-BSE-2006-16]

Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing of Amendment No. 3 to the Proposed Rule Change and
Order Granting Accelerated Approval of Proposed Rule Change, as
Modified by Amendments No. 1 and 3 Thereto, To Adopt a Universal Price
Improvement Period for Public Customer Orders

January 15, 2008.

I. Introduction

    On December 11, 2006, the Boston Stock Exchange, Inc. (``BSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposal to amend the rules of the Boston Options Exchange (``BOX'') to
adopt a Universal Price Improvement Period (``UPIP''), an auction that
offers the opportunity for price improvement for eligible Public
Customer orders. On February 1, 2007, BSE filed Amendment No. 1 to the
proposed rule change. The proposed rule change, as amended, was
published for comment in the Federal Register on February 9, 2007.\3\
The Commission received three comment letters regarding the
proposal.\4\ BSE filed Amendment No. 2 to the proposed rule change and
a response to the comment letters on November 19, 2007.\5\ On December
13, 2007, BSE withdrew Amendment No. 2 and filed Amendment No. 3 to the
proposed rule change. The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons and is simultaneously approving the proposed

rule change, as modified by Amendments No. 1 and 3, on an accelerated
basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55230 (February 2,
2007), 72 FR 6302 (``Notice'').
    \4\ See letter from Michael T. Bickford, Senior Vice President,
American Stock Exchange LLC (``Amex''), to Nancy M. Morris,
Secretary, Commission, dated March 2, 2007 (``Amex Letter''); letter
from Michael J. Simon, Secretary, International Securities Exchange,
LLC (``ISE''), to Nancy M. Morris, Secretary, Commission, dated
March 5, 2007 (``ISE Letter''); and letter from Matthew B.
Hinerfeld, Managing Director and Deputy General Counsel, Citadel
Investment Group, L.L.C. (``Citadel''), to Nancy Morris, Secretary,
Commission, dated March 6, 2007 (``Citadel Letter'').
    \5\ See letter to Nancy M. Morris, Secretary, Commission, from
John Katovich, Chief Legal Officer, BSE, dated November 19, 2007
(``BSE Letter'').
---------------------------------------------------------------------------

II. Description of the Proposal

A. UPIP Eligibility

    BOX will automatically initiate a UPIP auction for Public Customer
orders \6\ (``Eligible Orders'') provided certain conditions have been
satisfied.\7\ For example, the Eligible Order must be a Limit, Market,
or BOX-Top Order that is marketable against the National Best Bid or
Offer (``NBBO'').\8\ Further, a Price Improvement Period (``PIP'')
auction or UPIP auction in the same series cannot already be underway
and, if the NBBO is locked or crossed, the BOX Best Bid or Offer
(``BBO'') on the same side of the market as the Eligible Order must not
equal the NBBO.
---------------------------------------------------------------------------

    \6\ ``Public Customer'' means a person that is not a broker or
dealer in securities. See Section 1(a)(50), Chapter I of the BOX
Rules.
    \7\ See proposed Section 29(e), Chapter V of the BOX Rules.
    \8\ An Eligible Order also must be for a series of options that
is open for trading and cannot indicate a minimum quantity condition
or be an Inbound Inter-Market Linkage P/A order. See proposed
Section 29(e)(v), Chapter V of the BOX Rules. In Amendment No. 3,
the Exchange clarified that a ``Fill and Kill'' order is not
included in the definition of an Eligible Order. See proposed
Section 29(e)(vi), Chapter V of the BOX Rules.
---------------------------------------------------------------------------

B. The UPIP Auction

    The UPIP will be three seconds or less, as determined by BOX on a
class-by-class basis.\9\ BOX will inform Options Participants as to the
duration of the UPIP auctions by publishing a Regulatory Circular. Upon
initiation of a UPIP auction, the Box Trading Host will transmit a
broadcast message (``Broadcast Message'') to Options Participants
informing them of the auction's initiation, the relevant details of the
UPIP Order \10\ (i.e., the UPIP Order's series, size, and side of the
market), the end time of the auction, and the applicable Start
Price.\11\ The Start Price will be one improvement increment (e.g., a
penny) better than the NBBO if the BBO is equal to the NBBO. If the BBO
does not equal the NBBO, the Start Price will be the NBBO. The same
conditions apply with respect to the Start Price whether or not the
NBBO is locked or crossed.
---------------------------------------------------------------------------

    \9\ The Exchange clarified in Amendment No. 3 that the UPIP
auction shall be permitted on a class-by-class basis. See proposed
Section 29(f), Chapter V of the BOX Rules. Amendment No. 3 also
amends proposed Section 29(g), Chapter V of the BOX Rules to provide
that if a UPIP Order was previously processed as a Directed Order
accompanied by a Guaranteed Directed Order (``GDO'') pursuant to
Chapter VI, Section 5(c)(iii)(2) of BOX Rules, the duration of the
UPIP will not be less than the time the GDO is required to be
withheld from trading with the Directed Order as provided in Chapter
VI, Section 5(c)(iii)(2)(b)(4) of the BOX Rules. See proposed
Section 29(g), Chapter V of the BOX Rules.
    \10\ Upon commencement of the UPIP auction the ``Eligible
Order'' is referred to as the ``UPIP Order.''
    \11\ The Start Price is defined as the minimum/maximum (buy/
sell) price at which an Improvement Order must be submitted. See
proposed Section 29(h), Chapter V of the BOX Rules.
---------------------------------------------------------------------------

    UPIP Orders can be modified and cancelled at any time prior to the
conclusion of the UPIP auction. The cancellation of a UPIP Order will
result in the subsequent cancellation of all related Improvement Orders
and the UPIP auction.\12\ Certain modifications of a UPIP Order will
not result in the termination of the UPIP auction.\13\
---------------------------------------------------------------------------

    \12\ In Amendment No. 3, the Exchange clarified that the
cancellation of a UPIP Order will result in the cancellation of the
related Improvement Orders and the UPIP auction itself.
    \13\ Such modifications are: The reduction of a UPIP Order
quantity; the recharacterization of the UPIP Order type from a Limit
Order to a BOX Top or Market Order; and an improvement of the UPIP
Order's original limit price. Any other modification will result in
the termination of the UPIP auction. See proposed Section 29(n),
Chapter V of the BOX Rules.
---------------------------------------------------------------------------

    The UPIP Order will be ``stopped'' against any quote(s) or order(s)
on the BOX Book that is marketable against the UPIP Order at the time
the UPIP Order is received by the Trading Host (``Initial BOX Book
Quote'') up to the aggregate size of the Initial Box Book Quote
(``Initial Aggregate Quote Size'').\14\
---------------------------------------------------------------------------

    \14\ The Initial BOX Book Quote is defined as the quote(s) and/
or order(s) on the BOX Book at the best price, on the opposite side,
and in the same series as the Eligible Order at the time the Trading
Host receives it. The Initial Aggregate Quote Size is defined as the
aggregate size of the Initial BOX Book Quote. See proposed Section
29(o), Chapter V of the BOX Rules.
---------------------------------------------------------------------------

    A modification or cancellation of the Initial BOX Book Quote during
the UPIP auction that would decrease the Initial Aggregate Quote Size
below the size of the UPIP Order, at the commencement of the UPIP
auction, will cause the UPIP auction to immediately terminate. Such
modification or cancellation will only be processed after the UPIP
Order has been executed. An Options Participant who is part of the
Initial Box Book Quote, and whose cancellation or modification of its
order or quote causes the UPIP auction to terminate, will have its
order or quote placed at the end of the quote and order queue at the
applicable price level on the BOX Book. Any modification or
cancellation of the Initial BOX Book Quote that does not cause the
Initial Aggregate Quote Size to decrease below the size of the UPIP
Order, however, will be processed immediately by the Trading Host
without penalty and the UPIP auction will continue.\15\
---------------------------------------------------------------------------

    \15\ Any orders or quotes on the opposite side of the UPIP Order
that are received by the BOX Book after the UPIP auction has
commenced (i.e., orders that are not otherwise part of the Initial
BOX Book Quote) may be cancelled or modified without causing the
UPIP auction to terminate. See proposed Section 29(o), Chapter V of
the BOX Rules.
---------------------------------------------------------------------------

C. Improvement Orders

    Any Options Participant may submit an Improvement Order in response
to a Broadcast Message for an impending UPIP auction.\16\ Improvement
Orders will be visible to all Options Participants, can be submitted in
increments of one cent, and must equal or improve the Start Price.
Improvement Orders may be cancelled or modified by the Options
Participant prior to the conclusion of the UPIP auction. An increase in
the quantity of the Improvement Order or modification of the
Improvement Order's limit price will result in the creation of a new
Improvement Order reflecting the revised terms and the cancellation of
the original Improvement Order. At the conclusion of a UPIP auction,
the unexecuted portion of an Improvement Order will be cancelled by the
Trading Host.\17\
---------------------------------------------------------------------------

    \16\ Improvement Orders are those orders submitted to a UPIP
auction in response to a Broadcast Message by Options Participants
that are on the opposite side of the market as the UPIP Order. See
proposed Section 29(j), Chapter V of the BOX Rules.
    \17\ See Amendment No. 3.
---------------------------------------------------------------------------

1. Proprietary Improvement Orders
    An Options Participant who submits an Eligible Order to BOX, which
order starts a UPIP, and subsequently submits a Proprietary Improvement
Order will be last in time priority at all price levels in the relevant
UPIP auction. However, if the Proprietary Improvement Order is
generated by an automated quotation system that operates independently
from the existence or non-existence of the pending Eligible Order prior
to its submission to BOX, the Options Participant's Proprietary
Improvement Order will be treated like an ordinary Improvement Order
and qualify for execution at each price level without prejudice.\18\
---------------------------------------------------------------------------

    \18\ See proposed Section 29(k), Chapter V of the BOX Rules.
---------------------------------------------------------------------------

    UPIP will default any Proprietary Improvement Order to the end of
the priority queue in the UPIP.\19\ If an Options Participant desires
to have its status in the queue changed and be exempted from the rule,
then the Options Participant would need to affirmatively identify its
orders from an automated quotation system as the Exchange deems
necessary.\20\
---------------------------------------------------------------------------

    \19\ See BSE Letter, supra note 5, at 7.
    \20\ Id.

---------------------------------------------------------------------------

2. Executing Participant Improvement Orders
    An Executing Participant is a Market Maker that systemically
indicates its willingness to accept and receive Directed Orders.\21\ An
Executing Participant that receives a Directed Order that is released
to the BOX Book will be last in priority at all price levels for any
Improvement Order or quote submitted to a subsequent UPIP auction
related to that Directed Order.\22\ Time priority will prevail between
a Proprietary Improvement Order and an Improvement Order submitted by
an Executing Participant.\23\
---------------------------------------------------------------------------

    \21\ See Section 5(c)(i), Chapter VI of the BOX Rules.
    \22\ See proposed Section 29(l), Chapter V of the BOX Rules.
    \23\ See Amendment No. 3 and proposed Sections 29(o)(i) and
29(s)(ii) of the Box Rules.
---------------------------------------------------------------------------

    In Amendment No. 3, BSE addressed the instance in which a Directed
Order with an attached GDO has been entered into the UPIP auction and
the UPIP auction is prematurely terminated because of a modification to
or cancellation of an order or quote that is a component of the Initial
BOX Book Quote or the receipt of a same side, executable order. When a
UPIP auction is prematurely terminated in such circumstances,
subsequent to the execution of the UPIP Order pursuant to Chapter V,
section 29(p) of the BOX Rules, the GDO will be permitted to
immediately execute directly against the remaining size of the UPIP
Order.\24\ This means that a GDO will be permitted to execute against
the remaining size of the UPIP Order prior to three seconds having
elapsed, but only if there is no other interest on BOX at the same (or
better) price as the GDO.\25\ It will be considered conduct
inconsistent with just and equitable principles of trade for an
Executing Participant to directly or indirectly enter, modify or cancel
quotes or orders on BOX for the purpose of disrupting, prematurely
terminating or manipulating any Improvement Auction, including a UPIP
auction.\26\
---------------------------------------------------------------------------

    \24\ See proposed Section 5(c)(iii)(2)(b)(4), Chapter VI of the
BOX Rules and Amendment No. 3.
    \25\ See telephone conference among William Easley, Vice
Chairman, BOX; Lisa Fall, General Counsel, BOX; Wayne Pestone,
Bingham McCutchen LLP; and Heather Seidel, Assistant Director,
Division of Trading and Markets (``Division''), Commission, on
January 11, 2008.
    \26\ See proposed Section 5(c)(iii)(2)(b)(4), Chapter VI of the
BOX Rules and Amendment No. 3.
---------------------------------------------------------------------------

3. Customer Price Improvement Orders (``CPOs'')
    Similar to the CPO in the PIP, OFPs may provide Public Customers
with access to the UPIP auction through a CPO, provided certain
conditions have been met. The CPO must indicate the price at which the
order will be placed in the BOX Book (``BOX Book Reference Price'') as
well as the price at which the Public Customer would like to
participate in any UPIP that may occur while the order is on the BOX
Book (``CPO Auction Reference Price'').\27\ Further, the terms of the
CPO shall include the size of the order. In order for the CPO to be
eligible for participation in a UPIP auction, the BOX Book Reference
Price must equal the BBO at the commencement of a UPIP auction.\28\ The
CPO may also benefit from enhanced time priority pursuant to NBBO
Prime.
---------------------------------------------------------------------------

    \27\ The BOX Book reference price must be stated in standard
five-cent or ten-cent increments, and the CPO Auction Reference
Price must be stated in one-cent increments. See proposed Section
29(m)(i), Chapter V of the BOX Rules.
    \28\ A CPO must be in the same series and on opposite side of
the UPIP Order. See proposed Section 29(m)(iii), (iv), Chapter V of
the BOX Rules.
---------------------------------------------------------------------------

4. NBBO Prime
    An Improvement Order or multiple Improvement Orders may be
designated as NBBO Prime (``NBBO Prime Order'') in a particular UPIP
auction. The NBBO Prime designation is only applicable for a UPIP
auction, not the PIP, and generally confers time priority to a
particular Improvement Order over other Improvement Orders and
Unrelated Orders with the same price.\29\ Any Improvement Order may be
eligible for the NBBO Prime designation in a UPIP auction.
---------------------------------------------------------------------------

    \29\ See proposed Section 30, Chapter V of the BOX Rules.
---------------------------------------------------------------------------

    In order to be designated as NBBO Prime, the same beneficial
account \30\ for whom the Options Participant is submitting the NBBO
Prime Order must have quotes or orders on the BOX Book that are on the
opposite side of the UPIP Order (``NBBO Prime Participant Quote''). The
NBBO Prime Participant Quote must be equal to the NBBO and must have
been on the BOX Book prior to the time the Eligible Order was presented
to the Trading Host. An NBBO Prime Order will only have enhanced time
priority for size of its NBBO Prime Participant Quote. Any residual
quantity of the NBBO Prime Order will be handled in accordance with the
normal time priority rules. Priority among NBBO Prime Orders at the
same price will be based on the relevant Trading Host order receipt
time stamp of each NBBO Prime Participant Quote. NBBO Prime Orders
retain their priority even if the NBBO Prime Participant's Quote is
subsequently modified or cancelled during the relevant UPIP auction.
---------------------------------------------------------------------------

    \30\ For purposes of NBBO Prime, a ``beneficial account'' means
the underlying type of account (e.g., customer, broker-dealer,
market maker, etc.) on whose behalf the Participant is trading. See
Notice, supra note 3, at note 14.
---------------------------------------------------------------------------

    An Options Participant seeking priority through the NBBO Prime
designation must indicate to the Trading Host the order number of the
NBBO Prime Participant Quote when the Options Participant submits the
Improvement Order for the same beneficial account. In addition, the
Options Participant may indicate whether the NBBO Prime Participant
Quote size should be decremented to reflect any execution of the NBBO
Prime Order. In the absence of such an indication, the Trading Host
will not decrement the NBBO Prime Participant Quote. Market Makers will
not be required to identify their relevant order number but will need
to indicate to the Trading Host that their applicable NBBO Prime
Participation Quote size should be decremented; otherwise their NBBO
Prime Participation Quote size will remain unchanged on the BOX
Book.\31\
---------------------------------------------------------------------------

    \31\ See proposed Section 29(j)(iv), Chapter V of the BOX Rules.
---------------------------------------------------------------------------

D. Execution in the UPIP

    At the conclusion of the UPIP auction, including in the event of a
premature termination, the UPIP Order will be matched against the best
prevailing orders (including Improvement Orders, CPOs, and Unrelated
Orders) and quotes (including the Initial Box Book Quote) submitted
during the UPIP auction that are equal to or better than the Start
Price, in accordance with the price/time algorithm in section 16(a) of
Chapter V, with the following exceptions to time priority: (1) As
provided in proposed paragraphs (k), (l), and (o) of section 29,
Chapter V, regarding Proprietary Improvement Orders and Improvement
Orders submitted by Executing Participants; \32\ and (2) as provided in
proposed paragraphs (b) to (d) of section 30, Chapter V, regarding NBBO
Prime Orders.\33\ Further, in no circumstances will an order for a non-
market maker broker-dealer account of an Options Participant be
executed ahead of a Public Customer order(s) or a non-BOX Options
Participant broker-dealer order(s) at the same price within the UPIP
auction. This means that no order for the account of a non-market maker
Options Participant will be executed

ahead of the order(s) of any Public Customers or non-members of
BOX.\34\
---------------------------------------------------------------------------

    \32\ See supra notes 18 through 23 and accompanying text.
    \33\ See proposed Section 29(p), Chapter V of the BOX Rules. See
also Amendment No. 3, which clarifies these exceptions in proposed
Section 29(p), Chapter V, the substance of which were discussed in
the Notice, supra note 3.
    \34\ See proposed Section 29(p), Chapter V of the BOX Rules and
Amendment No. 3.
---------------------------------------------------------------------------

    At the conclusion of the UPIP auction, the UPIP Order will be
filtered to prevent a trade-through of the NBBO at the conclusion of
the auction and will not execute against orders or quotes at prices
inferior to the NBBO except in the following circumstances: (1) In
accordance with Chapter XII, section 3(e) of BOX Rules; \35\ or (2) the
away options exchange posting the NBBO is conducting a trading rotation
in that options class.\36\ If the UPIP Order cannot be executed on BOX
at or better than the NBBO, it will be routed to another market
center(s) posting the NBBO.
---------------------------------------------------------------------------

    \35\ Chapter XII, Section 3(e) of the BOX Rules states that
``[u]nder circumstances where the Options Official determines that
quotes from one or more particular away markets in one or more
classes of options are not reliable, the Options Official may direct
the Market Operations Center (`MOC') to exclude the unreliable
quotes from the determination of the NBBO in the particular
class(es).''
    \36\ The original filing provided that only the quantity of the
UPIP Order that exceeded the Initial Aggregate Quote Size was
filtered at the conclusion of the UPIP auction. The Exchange
modified the rule text in Amendment No. 3 to apply the NBBO trade-
through filter to the entire size of the UPIP Order.
---------------------------------------------------------------------------

    Any unexecuted portion of the UPIP Order not executed in the UPIP
auction will be released to the Box Book and handled as provided in
section 16, Chapter V of the BOX Rules, except that a quote or order on
the BOX Book that is for the same beneficial account as an Improvement
Order that executed against the UPIP Order in the UPIP auction and that
was on the BOX Book before the UPIP Order was received by BOX will have
time priority over other quotes and orders on the BOX Book (except
customer orders).\37\
---------------------------------------------------------------------------

    \37\ See proposed Section 16(a)(iv), Chapter V of the BOX Rules.
In Amendment No. 3, BSE clarified that such order on the BOX Book
will receive only time priority. See Amendment No. 3.
---------------------------------------------------------------------------

E. Treatment of Unrelated Orders in the UPIP

    Unrelated Orders that are submitted to the Trading Host during a
UPIP auction that are on the opposite side of the market from a UPIP
Order and are executable against the NBBO will be executed immediately
against the UPIP Order at the mid-point of the (i) NBBO and (ii) the
best of the UPIP Improvement Order, the UPIP Start Price or the
NBBO.\38\ If the Unrelated Order on the opposite side of the market as
the UPIP Order has a quantity equal to or greater than the UPIP Order,
the UPIP auction will terminate. Otherwise, the immediate execution of
the Unrelated Order against the UPIP Order will not cause the
termination of the UPIP auction and the auction will continue.
Conversely, an Unrelated Order that is on the same side of the market
as the UPIP Order that is executable against the NBBO will cause the
UPIP to immediately terminate and the UPIP Order will be executed
pursuant to proposed section 29(p) of Chapter V of the BOX Rules.\39\
---------------------------------------------------------------------------

    \38\ See proposed Section 29(s)(i), Chapter V of the BOX Rules.
Any rounding required will be to the benefit of the Unrelated Order.
Id.
    \39\ If the Unrelated Order is still UPIP eligible, a new UPIP
will commence. If the Unrelated Order is no longer UPIP eligible,
the order will go on the BOX Book. See telephone conference among
William Easley, Vice Chairman, BOX; Lisa Fall, General Counsel, BOX;
and Heather Seidel, Division, Commission, on December 21, 2007.
---------------------------------------------------------------------------

    In Amendment No. 3, BSE amended paragraph (s) of section 29,
Chapter V of the BOX Rules to emphasize that it will be considered
conduct inconsistent with just and equitable principles of trade for
any Options Participant to enter Unrelated Orders into BOX for the
purpose of disrupting or manipulating any UPIP auction, including
purposely causing premature termination.\40\
---------------------------------------------------------------------------

    \40\ See Amendment No. 3.
---------------------------------------------------------------------------

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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<EMAIL_ADDRESS>Please include

File Number SR-BSE-2006-16 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 BSE-2006-16. 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-2006-16 and should be
submitted on or before February 13, 2008.

IV. Discussion

    After careful consideration of the amended proposal and the comment
letters, 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
\41\ and, in particular, the requirements of section 6 of the Act.\42\
Specifically, the Commission finds that the proposed rule change is
consistent with section 6(b)(5) of the Act,\43\ which requires, among
other things, that the rules of a national securities 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. Significant aspects of the proposal are discussed below.
---------------------------------------------------------------------------

    \41\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
    \42\ 15 U.S.C. 78f.
    \43\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that the UPIP is similar to BOX's existing
price improvement auction, the PIP, and other price improvement
mechanisms, such as the Price Improvement Mechanism (``PIM'') of the
ISE, that initiate auctions in penny increments through which exchange
participants compete to potentially price improve a customer order.
However, unlike the PIP, in the UPIP customer orders do not depend on

the ability of at least one party to guarantee price improvement for
the full size of the Customer Order.\44\
---------------------------------------------------------------------------

    \44\ The Commission notes that the Simple Auction Liaison System
of the Chicago Board Options Exchange, Incorporated (``CBOE''),
which provides for the automatic initiation of an auction process in
certain circumstances for any order that is eligible for automatic
execution by the Hybrid System, also does not depend on a contra-
side order. See Securities Exchange Act Release No. 54229 (July 27,
2006), 71 FR 44058 (August 3, 2006) (SR-CBOE-2005-90).
---------------------------------------------------------------------------

A. Price Competition

    One commenter believes that the UPIP auction would encourage Market
Makers to post wide and shallow quotes and discourage Market Makers
from quoting aggressively until the UPIP auction begins because: (1)
The most desirable orders will bypass the centralized auction; (2)
after a UPIP auction is completed, the centralized auction will be
exposed to UPIP ``rejects;'' and (3) the UPIP Order can be cancelled or
modified but orders on the top of the BOX Book when the auction starts
cannot.\45\ This commenter also believes that transparency will suffer
because market participants will hide their true trading interest until
a UPIP auction begins.\46\
---------------------------------------------------------------------------

    \45\ See Citadel Letter, supra note 4, at 1 to 2 and 4.
    \46\ Id. at 4.
---------------------------------------------------------------------------

    Another commenter believes that the ability of a Participant to
modify or cancel a UPIP Order, while the quotes and orders on the top
of the BOX Book will essentially be frozen, will provide a three-second
option or ``second-look'' opportunity for the Participant that
submitted the UPIP Order to the detriment of the quotes and orders at
the top of the book.\47\ The commenter believes that this could
severely limit the amount of liquidity Market Makers would be willing
to provide on BOX. This commenter further believes that the
dissemination of Improvement Orders during the UPIP auction, which
allows the Participant that entered the UPIP Order to monitor the
amount of price improvement being offered (if any), compounds the
``second look'' problem.\48\ This commenter also believes that this
inability to cancel or modify an order at the top of the BOX Book
raises customer protection issues, and that customers and their brokers
should be made aware that cancelling or modifying their orders on the
BOX Book may actually cause them to be executed at an undesirable
price.\49\
---------------------------------------------------------------------------

    \47\ See ISE Letter, supra note 4, at 1 to 2. See also Citadel
Letter, supra note 4, at 4 (stating that the ability of the UPIP
Order to cancel will give investors a free option to cancel their
orders based on intervening market movements, while orders at the
top of the book are frozen).
    \48\ See ISE Letter, supra note 4, at 2-3.
    \49\ Id. at 1 to 2.
---------------------------------------------------------------------------

    In response, BSE notes that in general BOX Market Makers have
several meaningful incentives to consistently quote at or establish the
NBBO, including: (1) An open and competing market maker structure with
no specialist/designated primary market maker and no regulatory limits
to the number of market makers appointed in a given class; (2) low
costs to enter the market; (3) low transaction costs; (4) price and
time priority on the BOX Book; and (5) anonymous trading on the BOX
Book.\50\ Further, BSE notes that the UPIP rules allow certain
Improvement Order to be designated as NBBO Prime Orders. An NBBO Prime
designation confers time priority in a UPIP auction to a particular
Improvement Order over other Improvement Orders and Unrelated Orders
with the same price upon satisfaction of certain conditions. To be
eligible to be designated NBBO Prime, the same beneficial account for
whom the Options Participant is acting and that is seeking the NBBO
Prime designation must have had a quote or order on the BOX Book on the
opposite side of the UPIP Order equal to the NBBO prior to receipt of
the UPIP Order by the Trading Host. BSE believes that this requirement
will encourage all Options Participants to compete aggressively to
match or establish a new NBBO. \51\
---------------------------------------------------------------------------

    \50\ See BSE Letter, supra note 5, at 2.
    \51\ Id. NBBO Prime is similar to the ``Market Maker Prime''
(``MMP'') designation in a PIP auction that is awarded to a Market
Maker that is first to establish a quote on BOX equal to the NBBO or
establish a new NBBO.
---------------------------------------------------------------------------

    The Commission does not believe that, given the overall structure
of BOX and the NBBO Prime functionality, the UPIP auction will
discourage aggressive quoting on BOX. The availability of the NBBO
Prime functionality is designed to encourage market makers and other
market participants to aggressively post quotes or limit orders on the
BOX Book, to be the first to match the NBBO, or to establish a new
NBBO, because those participants will have time priority in the UPIP
auction. Further, because NBBO Prime Orders only receive enhanced time
priority for the quantity that does not exceed the size of the related
order that was on the BOX Book, market participants may be incented to
post greater size in order to receive priority on a larger allocation.
Finally, with regard to BSE's proposal to allow Public Customers to
cancel UPIP Orders, BSE states that, because the UPIP does not
guarantee price improvement, the ability to cancel a UPIP Order is
necessary to allow an OFP to manage an order that has not been executed
and for which no trade confirmation has been issued.\52\ The Commission
believes that the ability for UPIP Orders to be cancelled is consistent
with the Act.
---------------------------------------------------------------------------

    \52\ See BSE Letter, supra note 5, at 4.
---------------------------------------------------------------------------

B. NBBO Prime Requirements

    One commenter doubts the technological feasibility of the NBBO
Prime functionality because firms seeking NBBO Prime status will be
required to specify the number of their order on the BOX Book that was
first in time priority at the top of the BOX Book.\53\ BSE represents
that the requirement to provide the unique order identifier to BOX for
the appropriate order on the BOX Book utilizes the same technology that
firms currently use to cancel or modify orders on BOX and that an OFP
cannot be certified to trade on BOX unless it can perform this
task.\54\ The Commission therefore does not believe this requirement
should place an unreasonable burden on Options Participants to be able
to avail themselves of the NBBO Prime functionality.
---------------------------------------------------------------------------

    \53\ See Citadel Letter, supra note 4, at note 12.
    \54\ See BSE Letter, supra note 5, at note 10.
---------------------------------------------------------------------------

C. ``Freezing'' Top of the Book Quotes and Orders

    As noted above, two commenters expressed concerns about BSE's
proposal to prohibit orders and quotes at the top of the BOX Book at
the commencement of a UPIP auction to be cancelled.\55\ In response,
BSE stated that ``freezing'' certain quotes and orders on the BOX Book
at the start of a UPIP auction is necessary to comply with the Quote
Rule,\56\ and disagrees that quotes or orders on the BOX Book held firm
in this manner will be disadvantaged. BSE believes such orders and
quotes will be treated as the entering participant intends--i.e.,
executable at the limit price when matched with a contra-side order and
cancellable only when there is no pending execution.
---------------------------------------------------------------------------

    \55\ See supra note 47 and accompanying text.
    \56\ 17 CFR 242.602.
---------------------------------------------------------------------------

    Rule 602 under the Act requires a responsible broker or dealer to
execute orders to buy or sell a security presented to it by another
broker or dealer, or any other person belonging to a category of
persons with whom such responsible broker or dealer customarily deals,
at a price at least as favorable to such buyer or seller as the
responsible broker's or dealer's published bid or published offer in
any amount up to its published

quotation size.\57\ Therefore, the Commission agrees that the ``stop''
feature is necessary to ensure market participants' compliance with
Rule 602 under the Act and believes that it is consistent with the Act.
The Commission notes, however, that BOX Participants should, as with
any order type or exchange functionality, take steps necessary to
ensure their customers understand the operation of the UPIP auction
with respect to incoming orders and orders resting on the BOX Book.
---------------------------------------------------------------------------

    \57\ Id.
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D. Private Auctions

    One commenter argues that, because the broadcast message commencing
a UPIP auction and the responding Improvement Orders will only be
accessible to BOX participants and will not be publicly disseminated,
only BOX Participants will know the ``true'' BOX market.\58\
---------------------------------------------------------------------------

    \58\ See Citadel Letter, supra note 4, at 4.
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    Under the Commission's Quote Rule, an exchange is required to
collect, process, and make available to quotation vendors the best bid,
the best offer, and aggregate quotation sizes for each subject security
listed or admitted to unlisted trading privileges which is communicated
on any national securities exchange by any responsible broker or
dealer.\59\ The Commission believes that because the UPIP auction is at
most only 3 seconds in length, it is analogous to the open outcry
auctions conducted on floor-based exchanges, where auction prices are
not widely disseminated and are available only for the order that
initiated the auction and other orders in the crowd at that particular
time.\60\ Accordingly, the Commission finds the UPIP auction to be
consistent with the Quote Rule.
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    \59\ 17 CFR 242.602(a)(i).
    \60\ See Securities Exchange Act Release Nos. 49068 (January 14,
2003), 68 FR 3062 (January 22, 2003) (Commission approval
establishing trading rules for BOX, including rules for the PIP);
49323 (February 26, 2004), 69 FR 10087 (March 3, 2004) (Commission
approval establishing rules for PIM); and 53222 (February 3, 2006),
71 FR 7089 (February 10, 2006) (Commission approval establishing
rules for CBOE's Automated Improvement Mechanism (``AIM'')).
---------------------------------------------------------------------------

    One commenter notes that unlike the PIP, the proposed UPIP auction
does not require at least three market makers to quote in an options
series before a UPIP may be initiated.\61\ The Commission does not
believe that the Act requires an exchange to have market makers in an
auction. Although Market Makers could be an important source of
liquidity in the UPIP auction, they likely will not be the only source.
Any Options Participant can submit an Improvement Order in a UPIP
Auction, on its own behalf or on behalf of a customer. Further, the
Auto Auction Order (``AAO'') \62\ and CPO are specifically designed to
allow customers to more easily participate in an Improvement Auction,
including the UPIP. The Commission therefore believes that the proposal
not to require minimum market maker participation in the UPIP is
consistent with the Act.
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    \61\ See ISE Letter, supra note 4, at 3.
    \62\ See Securities Exchange Act Release No. 56186 (August 2,
2007), 72 FR 44593 (August 8, 2007) (approving the AAO functionality
on BOX).
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    Another commenter notes that the proposal provides that the
duration of the UPIP will be 3 seconds or less as determined by the
Board on a case-by-case basis and questions whether a UPIP duration of
less than 3 seconds would result in a meaningful auction.\63\ This
commenter also inquires how Options Participants will be informed about
the exposure time of UPIP auctions if they are reduced. The Commission
believes that BSE's response that BOX will inform Options Participants
regarding the duration of the UPIP auctions by publishing a Regulatory
Circular is consistent with the Act.\64\ The Commission also notes that
the UPIP auction is designed to provide an opportunity for price
improvement for certain orders, without a guarantee to a facilitating
firm. Thus, the Commission does not believe that the UPIP auction
raises the same potential conflict concerns as an auction where there
is a guarantee from a facilitating firm. The Commission therefore
believes that the duration of the UPIP auction, as proposed, is
consistent with the Act.
---------------------------------------------------------------------------

    \63\ See Amex Letter, supra note 4, at 4.
    \64\ See BSE Letter, supra note 5, at 6.
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E. NBBO Protection

    A commenter requested clarification as to what would occur in a
UPIP auction if the BBO does not equal the NBBO and there are no
Improvement Orders entered during the UPIP auction. Specifically, this
commenter asked if the UPIP Order would be executed at the NBBO, or if
the UPIP Order would be routed through the Options Intermarket Linkage
to a better away market.\65\ This commenter further asked at what price
the UPIP Order is executed if the NBBO changes during the UPIP
auction.\66\ Similarly, another commenter noted that the UPIP Order
would not execute against a better price if the NBBO changes during the
UPIP Auction.\67\
---------------------------------------------------------------------------

    \65\ See Amex Letter, supra note 4, at 2.
    \66\ Id.
    \67\ See Citadel Letter, supra note 4, at 6.
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    BSE responded that the UPIP Order is not guaranteed an execution at
the NBBO.\68\ At the conclusion of the UPIP auction, the UPIP Order
will be matched against the best prevailing orders or quotes, whether
Improvement Orders, Unrelated Orders, or the Initial BOX Book Quote,
that are equal to or better than the Start Price, which is at least as
good a price as the NBBO at the commencement of the auction.\69\ In
addition, at the conclusion of the UPIP auction the entire UPIP Order
will be filtered to prevent BOX from executing any portion of the UPIP
Order at a price inferior to the NBBO at the end of the UPIP auction.
If the UPIP Order cannot be executed on BOX at or better than the NBBO,
then the UPIP Order will be routed through Intermarket Linkage to
another market displaying the NBBO at the conclusion of the UPIP
auction.\70\ The Commission believes that BSE adequately clarified this
aspect of the proposal, as amended, and that it is consistent with the
Act.
---------------------------------------------------------------------------

    \68\ See BSE Letter, supra note 5, at 5.
    \69\ Such matching shall occur in compliance with the priority
provisions of proposed Chapter V, Section 29(p) of the BOX Rules.
    \70\ See BSE Letter, supra note 5, at 5 and Chapter V, Section
29(q) of the BOX Rules.
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F. Compliance With the Act

1. Quote Rule
    One commenter believes that the ability to cancel Improvement
Orders during a UPIP auction is inconsistent with the purpose and
intent of BOX's firm quote rule. This commenter argues that an Options
Participant would have a free look at the UPIP Order during the auction
and could withdraw its Improvement Order if the market moved
unfavorably.\71\
---------------------------------------------------------------------------

    \71\ See Amex Letter, supra note 4, at 3.
---------------------------------------------------------------------------

    The Commission's Quote Rule requires a responsible broker or dealer
to execute any order presented to it at its published price and up to
the full amount of its published size.\72\ Because no order would be
presented to execute against an Improvement Order until the end of the
UPIP auction, the Commission believes that the ability to cancel an
Improvement Order prior to the termination of the UPIP auction does not
violate the Quote Rule.
---------------------------------------------------------------------------

    \72\ 17 CFR 242.602(b)(2).
---------------------------------------------------------------------------

2. Section 11(a) of the Act
    Section 11(a) of the Act prohibits a member of a national
securities exchange from effecting transactions on that exchange for
its own account, the account of an associated person, or an account
over which it or its associated person exercises discretion, unless an

exception applies.\73\ Section 11(a)(1)(G) and Rule 11a1-1(T) under the
Act provide an exception to the general prohibition in section 11(a) on
an exchange member effecting transactions for its own account.
Specifically, a member that ``is primarily engaged in the business of
underwriting and distributing securities by other persons, selling
securities to customer, and acting as broker, or any one or more of
such activities, and whose gross income normally is derived principally
from such business and related activities'' \74\ and effects a
transaction in compliance with the requirements in Rule 11a1-1(T)(a)
\75\ may effect a transaction for its own account. Among other things,
Rule 11a1-1(T)(a)(3) requires that an exchange member presenting a bid
or offer for its own account or the account of another member shall
grant priority to any bid or offer at the same price for the account of
a non-member of the exchange.\76\
---------------------------------------------------------------------------

    \73\ 15 U.S.C. 78k(a).
    \74\ 15 U.S.C. 78k(a)(1)(G)(i). Paragraph (b) of Rule 11a1-1(T)
under the Act provides that the requirements of Section
11(a)(1)(G)(i) of the Act are met if during its preceding fiscal
year more than 50% of the member's gross revenues was derived from
one or more of the sources specified in that section. In addition to
any revenue which independently meets the requirements of Section
11(a)(1)(G)(i), revenue derived from any transaction specified in
paragraph (A), (B), or (D) of Section 11(a)(1) of the Act or
specified in Rule 11a1-4(T) shall be deemed to be revenue derived
from one or more of the sources specified in Section 11(a)(1)(G)(i).
    \75\ 15 U.S.C. 78k(a)(1)(G)(ii).
    \76\ 17 CFR 240.11a1-1(T)(a)(3).
---------------------------------------------------------------------------

    BSE's proposal provides that ``no order for a non-market maker
broker-dealer account of an Options Participant will be executed before
Public Customer order(s) and non-BOX Options Participant broker-dealer
order(s) at the same price.'' \77\ Because BSE's proposed rules will
require Options Participants that are not Market Makers to yield
priority in the UPIP auction to all non-member orders,\78\ the
Commission believes that the proposal is consistent with the yielding
requirements in section 11(a)(1)(G) and Rule 11a1-1(T) under the Act.
However, the Commission notes that, in addition to yielding priority to
non-member orders at the same price, members also must meet the other
requirements under section 11(a)(1)(G) and Rule 11a1-1(T) to effect
transactions for their own accounts in reliance on this exception (or
satisfy the requirements of another exception).
---------------------------------------------------------------------------

    \77\ See proposed Section 29(p), Chapter V of the BOX Rules.
    \78\ See Amendment No. 3.
---------------------------------------------------------------------------

G. Surveillance

    The proposal provides that the UPIP will default any Proprietary
Improvement Order to the end of the priority queue in the UPIP unless
the Options Participant affirmatively identifies that its order was
generated by an automated quotation system that operates independently
from the existence or non-existence of a pending UPIP Order. A
commenter questioned how the BOX system will differentiate between
proprietary orders that have or have not been generated by automated
quotation systems, and what standard (if any) will be used for making a
determination that a particular system is an automated quotation
system.\79\ BSE has represented that it will surveil for compliance
with this rule through its current examination program.\80\ BSE also
notes that ISE uses a similar mechanism for its Directed Order
process.\81\
---------------------------------------------------------------------------

    \79\ See Amex Letter, supra note 4, at 3 to 4.
    \80\ See BSE Letter, supra note 5, at 7.
    \81\ Id.
---------------------------------------------------------------------------

H. Interaction Among UPIP and PIP

    One commenter asks for more clarity on the interaction of the PIP,
UPIP, and directed order functionalities.\82\ In response, BSE noted
that a PIP or a UPIP auction will not run simultaneously with another
PIP or UPIP auction in the same series, nor will PIP or UPIP auctions
interact, queue, or overlap in any manner.\83\ BSE states that any
order that is received while a UPIP is underway for the same series,
which would otherwise meet the price conditions to initiate a UPIP
auction, will cause the UPIP auction to immediately terminate.\84\
Further, any order that is received while a PIP auction is underway,
that would otherwise meet the price conditions to initiate a UPIP will
interact with the PIP as an Unrelated Order under the PIP rules.\85\
Any request to initiate a PIP (including from a market maker that has
received a directed order) while a PIP or UPIP is already in progress
in the same series will be rejected.\86\ The Commission believes that
BSE has adequately clarified the interaction among the UPIP, PIP, and
directed orders.\87\
---------------------------------------------------------------------------

    \82\ See ISE Letter, supra note 4, at 3. For example, this
commenter noted that when a market maker receives a directed order
on BOX, it must either initiate a PIP or release the order to the
market within three seconds. Therefore, if there is a UPIP in
progress at the time the directed order is received, the market
maker cannot initiate a PIP. Id. at note 3.
    \83\ See proposed Section 18, Chapter V, Supplementary Material
.02 and proposed Section 29, Chapter V, Supplementary Material .01
of the BOX Rules.
    \84\ See proposed Section 29(s), Chapter V of the BOX Rules.
    \85\ See proposed Chapter V, Section 18(i) of the BOX Rules.
    \86\ Id. and BSE Letter, supra note 5, at 6.
    \87\ Another commenter believes that the Commission should not
approve the proposed rule change until it has addressed the issue of
whether market makers will be able to unfairly discriminate against
certain customers when the UPIP or PIP auctions are used in
conjunction with a Directed Order process without anonymity. See
Amex Letter, supra note 4, at 2-3. The Commission believes that the
issue of anonymity in the Directed Order process is more
appropriately addressed in the context of the BSE proposed rule
change on that issue. See Securities Exchange Act Release Nos. 56014
(July 5, 2007), 72 FR 38104 (July 12, 2007) (SR-BSE-2007-31)
(extending to January 31, 2008 the effective date of Section
5(c)(i), Chapter 6 of the BOX Rules, which allows the BOX Trading
Host to identify to an Executing Participant the identity of the
firm entering a Directed Order); and 53357 (February 23, 2006), 71
FR 10730 (March 2, 2006) (SR-BSE-2005-52) (notice of proposed rule
change to permit Executing Participants to choose the firms from
which they will accept Directed Orders while providing complete
anonymity for Directed Orders that are passed on to the Executing
Participant for possible representation in a PIP auction).
---------------------------------------------------------------------------

    One commenter questioned whether the AAO would interact in a UPIP
Auction.\88\ In response, BSE clarifies that the recently approved AAO
will be able to interact in a UPIP.\89\
---------------------------------------------------------------------------

    \88\ See ISE Letter, supra note 4, at 3.
    \89\ See BSE Letter, supra note 5, at note 26.
---------------------------------------------------------------------------

    BSE also notes that the Limit Order that is associated with the AAO
that is priced at the standard minimum trading increment of five or ten
cents can start a UPIP if, at its rounded price, it would be executable
at the NBBO.\90\
---------------------------------------------------------------------------

    \90\ Id.
---------------------------------------------------------------------------

I. Penny Pilot

    One commenter argues that the Penny Pilot Program \91\ initiative
should prohibit the approval of the UPIP. This commenter believes that
the UPIP will distort Penny Pilot data.\92\ Another commenter believes
that the Penny Pilot is the appropriate method to approach penny
pricing in the options market because it is a fair and transparent
environment.\93\
---------------------------------------------------------------------------

    \91\ The Penny Pilot was approved by the Commission to allow BOX
to quote certain options series in pennies on a pilot basis. See
e.g., Securities Exchange Act Release No. 55155 (January 23, 2007),
72 FR 4741 (February 1, 2007) (SR-BSE-2006-49).
    \92\ See Citadel Letter, supra note 4, at 7.
    \93\ See ISE Letter, supra note 4, at 3 to 4.
---------------------------------------------------------------------------

    As discussed above, with respect to the commenters' substantive
arguments, the Commission believes the proposed rule change is
consistent with the Act. The Commission has previously approved
exchange proposals to trade in penny increments, including BSE's
PIP.\94\ The Commission believes it is consistent with the Act to
approve the

BSE's initiative designed to allow trading in penny increments.\95\
---------------------------------------------------------------------------

    \94\ See Securities Exchange Act Release Nos. 49068 (PIP); 49323
(PIM); and 53222 (AIM), supra note 60.
    \95\ The Exchange has represented that it will provide the
Commission with statistics regarding the UPIP for those classes
included in the Penny Pilot. See BSE Letter, supra note 5, at 8.
---------------------------------------------------------------------------

J. Acceleration of Proposed Rule Change as Amended

    The Commission finds good cause to approve the proposal prior to
the thirtieth day after the proposal was published for comment in the
Federal Register. The proposed rule change, as modified by Amendment
No. 1, was published for full notice and comment.\96\ The Commission
believes that the changes made in Amendment No. 3 generally strengthen
the proposal. In Amendment No. 3, BSE made several changes to clarify
its rules,\97\ respond to commenters,\98\ and comply with the
requirements of the Act.\99\ The Commission believes that it has
received and fully considered substantial, meaningful comments with
respect to the BSE's proposal, as amended, and that Amendment No. 3
does not raise issues that warrant further delay. For these reasons,
the Commission finds good cause, consistent with section 19(b)(2) of
the Act,\100\ to grant accelerated approval of the proposed rule
change, as amended.
---------------------------------------------------------------------------

    \96\ See Notice, supra note 3.
    \97\ See, e.g., BSE clarifies that: The definition of an
Eligible Order does not include ``fill or kill'' orders; the UPIP
auction will only be available for certain classes of options as
determined from time-to-time by BOX; the cancellation of the UPIP
Order will result in the cancellation of the related Improvement
Orders and the UPIP auction itself; any unexecuted portion of an
Improvement Order will be cancelled; time priority will prevail
between a Proprietary Improvement Order and an Improvement Order
submitted by an Executing Participant; and in the instance when a
UPIP is concluded, only time priority will be granted to an order on
the BOX Book that executes against the remaining portion of a UPIP
Order if that order has been placed for the same beneficial account
as an Improvement Order in the UPIP auction.
    \98\ See, e.g., BSE revises the proposal to apply its NBBO
trade-through filter at the conclusion of the UPIP auction.
    \99\ See, e.g., BSE revises the proposal to provide that: In no
circumstances will the orders for a non-market maker broker-dealer
account of an Options Participant be executed before a Public
Customer or non-BOX Options Participant at the same price in the
UPIP; and it will be conduct inconsistent with just and equitable
principles of trade for (1) any Options Participant to enter
Unrelated Orders into BOX for the purpose of disrupting or
manipulating any UPIP auction, including purposely causing premature
termination or (2) for an Executing Participant to directly or
indirectly enter, modify, or cancel quotes or orders on BOX for the
purpose of disrupting, prematurely terminating or manipulating any
Improvement Auction.
    \100\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\101\ that the proposed rule change (SR-BSE-2006-16), as amended,
be, and it hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \101\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\102\
---------------------------------------------------------------------------

    \102\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-1037 Filed 1-22-08; 8:45 am]

BILLING CODE 8011-01-P