[Federal Register: August 16, 2006 (Volume 71, Number 158)]
[Notices]
[Page 47264-47276]
[DOCID:fr16au06-140]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54291; File No. SR-BSE-2006-30]

 Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change Relating to the Implementation
of the Second Phase of the Boston Equities Exchange (``BeX'') Trading
System

August 8, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 3, 2006, the Boston Stock Exchange (``BSE'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the BSE. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    In previous rule filings, BSE proposed to establish the governance
framework for a new electronic trading facility, as that term is
defined in Section 3(a)(2) of the Act,\3\ which is to be called BeX,\4\
and to propose rules that pertain to the first phase of BeX.\5\ The
first phase of the BeX trading system involves a fully automated
electronic book for the display and execution of orders in securities
listed otherwise than on The Nasdaq Stock Market for which the BSE
obtains unlisted trading privileges (``UTP'') after June 30, 2006.
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    \3\ Under the Act, the ``term `facility' when used with respect
to an exchange includes its premises, tangible or intangible
property whether on the premises or not, any right to the use of
such premises or property or any service thereof for the purpose of
effecting or reporting a transaction on an exchange (including,
among other things, any system of communication to or from the
exchange, by ticker or otherwise, maintained by or with the consent
of the exchange), and any right of the exchange to the use of any
property or service.'' See 15 U.S.C. 78c(a)(2).
    \4\ See Securities Exchange Act Release No. 54035 (June 22,
2006), 71 FR 37135 (June 29, 2006) (SR-BSE-2006-20) (``BeX
Governance Filing'').
    \5\ See Securities Exchange Act Release No. 54034 (June 22,
2006), 71 FR 37140 (June 29, 2006) (SR-BSE-2006-22) (``BeX Facility
Filing'').
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    The proposed rules set forth below are being filed in connection
with the implementation of the second phase of the BeX trading system.
As of January 1, 2007, there will no longer be any specialist
participation in any transactions on the BSE or otherwise.
Additionally, in connection with satisfying the requirements of
Regulation NMS, the BSE is proposing eight new order types; rules to
prevent locked or crossed quotations; a new order routing system; and
an order protection rule. The text of the proposed rule change is
available on Exchange's Web site (https://www.bostonstock.com), at the

Exchange's Office of the Secretary, and at the Commission's Public
Reference Room.
    The text of the proposed rule change also appears below. Proposed
new language is italicized; deleted language is in [brackets].\6\
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    \6\ For clarity, the rule text below treats the rule text
proposed in the BeX Facility Filing as existing rule text even
though that filing has not been approved by the Commission.
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Rules of the Boston Stock Exchange

Chapter XXXVII--Boston Equities Exchange (``BeX'') Trading System

    The Boston Equities Exchange (``BeX'') trading system is a fully-
automated facility of the Exchange, which allows eligible orders in
eligible securities to electronically match and execute against one
another.

Section 1. BeX Eligible Securities

    (a) Eligible Securities. All securities eligible for trading on the
Exchange [that are listed otherwise than on The Nasdaq Stock Market for
which the BSE obtains unlisted trading privileges (``UTP'') after June
30, 2006] shall be eligible for trading through BeX. Any specialist
request to remove a security from BeX shall be considered by the
appropriate Board Committee.

Section 2. Eligible Orders

    Subsections (a) through (b)--no change.
    (c) Eligible order types:
    (i) Orders eligible for execution in BeX may be designated as one
of the following existing BSE order types as defined in Chapter I,
Section 3 except that any reference in the existing BSE Rules to the
execution of Orders as soon as ``represented at the specialist's post''
shall for purposes of this Section be understood to mean ``entered in
BeX'':

(A) At the Opening or At the Opening Only Order.
(B) Day Order.
(C) Do Not Increase (DNI).
(D) Do Not Reduce (DNR).
(E) Fill or Kill.
(F) Good `Till Cancel Order.
(G) Immediate or Cancel.
(H) Limit, Limited Order or Limited Price Order.
(I) At the Close.
(J) Market Order.
(K) Stop Limit Order.
(L) Stop Order.

    With the exception of Fill or Kill and Immediate or Cancel Orders,
a customer may append to an Order an instruction that the Order be
routed to the market(s) displaying the National Best Bid or Offer if
the Order would trade through the National Best Bid or Offer if
executed on the BeX. Absent such an instruction, the order will be
cancelled.
    (ii) Orders eligible for execution in BeX may also be designated as
one of the following additional order types:
    (A) ``Cross'': An order to buy and sell the same security at a
specific price better than the best bid and offer displayed in BeX and
equal to or better than the National Best Bid and Offer. A Cross Order
may represent interest of one or more BSE Members.
    (B) ``Cross with Size'': A Cross Order to buy and sell at least
5,000 shares of the same security with a market value of at least
$100,000.00 (i) at a price equal to or better than the best bid or
offer displayed in BeX and the National Best Bid or Offer and (ii)
where the size of the order is larger than the largest order [aggregate
size of all interest] displayed in BeX at that price.[; and (iii) where
neither side of the order is for the account of the BSE Member sending
the order to BeX.]
    (C) ``Good `Till Date (GTD)'': An order to buy or sell that, if not
executed, expires at the end of date specified in the order.
    (D) ``Good `Till Time (GTT)'': An order to buy or sell that, if not
executed, expires at the time specified in the order.
    (E) ``Limit or Close'': A limit order to buy or sell that if not
executed prior to the Market on Close cutoff time of 3:40 p.m.,
pursuant to Chapter II, Section 22, will automatically convert to an At
the Close Order for inclusion in the closing process and if not so
executed, at the close, will be cancelled.
    (F) ``Mid-Point Cross '': A two-sided order with both a buy and
sell component combined that executes at the midpoint of the National
Best Bid or Offer. A Mid-point Cross Order will be rejected when a
locked or crossed

market exists in that security at the time the Order is received.
Midpoint Cross Orders may be entered, quoted, executed and reported in
increments as small as one-half of the Minimum Price Variation.
    (G) ``Reserve'': A Limit Order with a portion of the size displayed
and with a reserve portion of the size that is not displayed. A Reserve
Order cannot be an IOC Order or Market Order.
    (H) ``Minimum Quantity'': A Minimum Quantity Order is an order
subject to the provisions of Chapter XXXVII, Section 6, that, upon
entry, must be executed at least at its minimum quantity or it will be
cancelled. If executed in part, the remaining quantity remains in the
book and follows the execution rule of the order type. A Stop Limit
Order can be a Minimum Quantity Order and, at the election of the
order, will be handled pursuant to subsection (j) of Section 3.
    (I) ``Preferred Price Cross'': A Two-Sided Cross Order with a
preferred limit price and an optional preferred tick, both set by the
Member. A preferred limit price is the limit price the two-sided cross
order will be executed at if it is equal to or better than the National
Best Bid or National Best Offer (``Preferred Limit Price''). The
optional preferred tick is the amount of ticks beyond the preferred
limit price at which the two-sided cross order may be executed
(``Optional Preferred Tick''). The Preferred Price Cross order cannot
be executed at a price that is more than the preferred limit price plus
the amount of optional preferred ticks or less than the preferred limit
price minus the amount of optional preferred ticks. If the Preferred
Price Cross cannot be executed at the Preferred Limit Price the
execution price of the Cross will be determined by the Trading System
to be the closest price to the Preferred Limit Price, respecting the
Optional Preferred Tick and the National Best Bid or National Best
Offer.
    (J) Best Price Intermarket Sweep Order (``BPISO''): A Best Price
Intermarket Sweep Order (BPISO) is an order marked as required by SEC
Rule 600(b)(30) that is to be executed against any orders at the
Exchange's Best Bid or Best Offer (including any undisplayed orders at
that price) as soon as the order is received by BSE, with any
unexecuted balance of the order to be immediately cancelled. BSE, in
executing the BPISO, shall not take any of the actions described in
Chapter XXXVIII, Section 4 to prevent an improper trade through.
    (K) Automated Immediate or Cancel (``AIOC''): An automated
immediate or cancel order received on BSE will execute immediately and
automatically, either in whole or in part, at or better than its limit
price, with any unexecuted balance of the order to be immediately
cancelled. The unexecuted portion of the order will not be routed to
another Trading Center.
    (L) ``Price-Penetrating ISO'': An order marked as required by SEC
Rule 600(b)(30) that is to be executed at or better than its limit
price as soon as the order is received by BSE, with any unexecuted
balance of the order to be immediately cancelled. Orders marked as
price-penetrating ISO shall be executed against any eligible orders in
BSE (including any undisplayed orders, through multiple price points).
BSE, in executing these orders, shall not take any of the actions
described in Chapter XXXVIII, Section 4 to prevent an improper trade-
through.
    (M) ISO Cross Order: A two sided order that, upon receipt, will be
executed without any action on the part of the Exchange to prevent an
improper trade through. The Member submitting an ISO Cross is
responsible for checking all protected quotes and must send one or more
ISO orders to other Trading Centers displaying a price better than the
cross price.
    (N) Cancel on Corporate Action: In the event of a dividend,
distribution or stock split (``Corporate Action''), the order in the
limit book will be cancelled.
    Subsection (d)--no change.
* * * Interpretations and Policies
    .01 The terms ``Best Bid'' and ``Best Offer'' shall mean,
respectively, the highest and lowest priced order to buy and sell an
eligible security in BeX.
    .02 The terms ``National Best Bid'' and ``National Best Offer''
shall mean, respectively, the highest and lowest priced order or quote
to buy and sell a BeX eligible security displayed in the consolidated
quotation system for the security.

Section 3. Operation of BeX

    Subsections (a)-(f)--no change.
    (g) Post-Primary Trading Session (PPS). The BeX PPS will operate
from the time when the primary market disseminates its closing price
until [4:30] 6:30 p.m. During the BeX PPS only cross orders at a
specific price may be submitted.
    Subsection (h)--no change.
    (i) Ranking and Display of Orders
    (i)-(ii)--no change
    (iii) The displayed portion of Reserve Orders (not the reserve
portion) shall be ranked at the specified limit price and the time of
order entry. If the displayed portion of the Reserve Order is
decremented such that fewer than 100 shares are displayed, the
displayed portion of the Reserve Order shall be replenished for: a) The
displayed amount; or b) the entire reserve amount, if the remaining
reserve amount is smaller than the displayed amount. Upon replenishment
the reserve portion shall be submitted and ranked at the specified
limit price and time of replenishment.
    (iv) Except as otherwise permitted by Section 3, paragraphs (v)-
(vi) below, all orders at all price levels on BeX shall be displayed to
all Members on an anonymous basis and transactions executed on BeX will
be processed anonymously. The transaction reports will indicate the
details of the transaction, but will not reveal contra party
identities.
    (v) BeX will reveal the identity of a Member in the following
circumstances:
    (A) For regulatory purposes or to comply with an order of a court
or arbitrator;
    (B) When the National Securities Clearing Corporation (``NSCC'')
ceases to act for a Member or the Member's clearing firm, and NSCC
determines not to guarantee the settlement of the Member's trades; or
    (C) On risk management reports provided to the contra party of the
Member or Member's clearing firm each day by 4 p.m. (E.S.T.) which
disclose trading activity on the aggregate dollar value basis.
    (vi) In order to satisfy Members' record keeping obligations under
SEC Rules 17a-3(a)(1) and 17a-4(a), BSE shall retain for the period
specified in Rule 17a-4(a) the identity of each Member that executes an
anonymous transaction described in paragraph (i)(iii) of this rule. The
information shall be retained by BeX in its original form or a form
approved under Rule 17a-6. Members shall retain the obligation to
comply with SEC Rule 17a-3(a)(1) and 17a-4(a) whenever they possess the
identity of their contra party.

Interpretations and Policies:

    .01 No Member having the right to trade through the facilities of
BeX and who has been a party to or has knowledge of an execution shall
be under obligation to divulge the name of the buying or selling firm
in any transaction.
    .02 Except as required by paragraphs (v)-(vi), no Member shall
transmit through the facilities of BeX any information regarding a bid,
offer, other indication of an order, or the Member's identity, to
another Member until permission to disclose and transmit such bid,
offer, other indication of an order, or the Member 's identity has been
obtained from the originating

Member or the originating Member affirmatively elects to disclose its
identity.
    Subsections (j) through (k)--no change.

Section 4. Cancellation of Transactions

    Subsection (a)--no change.

Section 5. Handling of Clearly Erroneous Transactions

    Subsection (a)--no change.

Section 6. Orders To Be Reduced and Increased on Ex-Date

    Subsections (a) through (d)--no change.

Section 7. Application of BSE Rules

    Subsection (a)--no change.

Section 8. Approval of Market Makers

    (a) No Member shall act as a Market Maker in any security unless
such Member has been approved as a Market Maker in such security by the
Exchange pursuant to this Section and the Exchange has not suspended or
canceled such approval. Approved Market Makers are designated as
dealers on the Exchange for all purposes under the Securities Exchange
Act of 1934 and the rules and regulations thereunder.
    (b) An applicant shall file an application for Market Maker status
on such form as the Exchange may prescribe. Applications shall be
reviewed by the Exchange, which shall consider such factors including,
but not limited to capital operations, personnel, technical resources,
and disciplinary history.
    (c) An applicant's Market Maker status shall become effective upon
receipt by the Member of notice of an approval by the Exchange. In the
event that an application is disapproved by the Exchange, the applicant
shall have an opportunity to be heard upon the specific grounds for the
denial, in accordance with the provisions of Chapter XXX of the BSE
Rules.
    (d) A Market Maker may be suspended or terminated by the Exchange
upon a determination of any substantial or continued failure by such
Market Maker to engage in dealings in accordance with Section 10,
below.
    (e) Any Market Maker may withdraw its Market Maker status by giving
written notice to the Exchange. Such withdrawal shall become effective
on the tenth business day following the Exchange's receipt of the
notice. A Market Maker who fails to give a ten-day written notice of
withdrawal to the Exchange may be subject to formal disciplinary action
pursuant to Chapter XXX. Subsequent to withdrawal, the Member shall not
be permitted to re-apply as a Market Maker for a period of six months.

Section 9. Assignments of Market Maker in a Security

    (a) A Market Maker may be assigned a newly authorized security or
in a security already admitted to dealings on the BeX by filing an
assignment request form with the Exchange. Assignment of the security
shall become effective on the first business day following the
Exchange's approval of the assignment. In considering the approval of
the assignment of the Market Maker in a security, the Exchange may
consider:
    (1) the financial resources available to the Market Maker;
    (2) the Market Maker's experience, expertise and past performance
in making markets, including the Market Maker's performance in other
securities;
    (3) the Market Maker's operational capability;
    (4) the maintenance and enhancement of competition among Market
Makers in each security in which they are assigned;
    (5) the existence of satisfactory arrangements for clearing the
Market Maker's transactions;
    (6) the character of the market for the security, e.g., price,
volatility, and relative liquidity.
    (b) A Market Maker's assignment in a security may be terminated by
the Exchange if the Market Maker fails to enter quotations in the
security within five (5) business days after the Market Maker's
assignment in the security becomes effective.
    (c) The Exchange may limit the number of Market Makers in a
security upon prior written notice to Members.
    (d) Market Makers shall be selected by the Exchange. Such selection
shall be based on, but is not limited to, the following: experience
with making markets in equities; adequacy of capital; willingness to
promote the BeX as a marketplace; issuer preference; operational
capacity; support personnel; and history of adherence to Exchange rules
and securities laws.
    (e) Voluntary Termination of Security Registration. A Market Maker
may voluntarily terminate its assignment in a security by providing the
Exchange with a one-day written notice of such termination. A Market
Maker that fails to give advanced written notice of termination to the
Exchange may be subject to formal disciplinary action pursuant to
Chapter XXX.
    (f) The Exchange may suspend or terminate any assignment of a
Market Maker in a security or securities under this Section whenever,
in the Exchange's judgment, the interests of a fair and orderly market
are best served by such action.
    (g) A Member may seek review of any action taken by the Exchange
pursuant to this Rule, including the denial of the application for, or
the termination or suspension of, a Market Maker's assignment in a
security or securities, in accordance with Chapter XXX.

Section 10. Obligations of Market Makers

    (a) General. Members who are assigned as Market Makers in one or
more securities traded on the BeX must engage in a course of dealings
for their own account to assist in the maintenance, insofar as
reasonably practicable, of fair and orderly markets on the BeX in
accordance with this Section. The responsibilities and duties of a
Market Maker specifically include, but are not limited to, the
following:
    (1) Maintain continuous, two-sided quotes in those securities in
which the Market Maker is assigned to trade;
    (2) Maintain adequate minimum capital in accordance with Rule
15(c)3-1 promulgated under the Securities Exchange Act of 1934;
    (3) Remain in good standing with the Exchange;
    (4) Inform the Exchange of any material change in financial or
operational condition or in personnel; and
    (5) Clear and settle transactions through the facilities of a
registered clearing agency. This requirement may be satisfied by direct
participation, use of direct clearing services, or by entry into a
correspondent clearing arrangement with another Member that clears
trades through such agency.
    (b) A Market Maker must satisfy the responsibilities and duties as
set forth in paragraph (a) of this Section during the Primary Trading
Session on all days in which the Exchange is open for business.
    (c) If the Exchange finds any substantial or continued failure by a
Market Maker to engage in a course of dealings as specified in
paragraph (a) of this Rule, such Market Maker will be subject to
disciplinary action or suspension or revocation of the assignment by
the Exchange in one or more of the securities in which the Market Maker
is assigned. Nothing in this Section will limit any other power of the
Board of Directors under the Bylaws, Rules, or procedures of the
Exchange with respect to the Market Maker's Membership status or in
respect of any violation by a Market Maker of the provisions of this
Rule. In accordance with Chapter XXX, a

Member may seek review of actions taken by the Exchange pursuant to
this Section.
    (d) Temporary Withdrawal. A Market Maker may apply to the Exchange
to withdraw temporarily from its Market Maker status in the securities
in which it is assigned. The Market Maker must base its request on
demonstrated legal or regulatory requirements that necessitate its
temporary withdrawal, or provide the Exchange an opinion of counsel
certifying that such legal or regulatory basis exists. The Exchange
will act promptly on such request and, if the request is granted, the
Exchange may temporarily reassign the securities to another Market
Maker.
    (e) Market Makers will be required to maintain minimum performance
standards the levels of which may be determined from time to time by
the Exchange. Such levels will vary depending on the price, liquidity,
and volatility of the security in which the Market Maker is assigned.
The performance measurements will include (i) percent of time at the
National Best Bid or National Best Offer; (ii) percent of executions
better than the National Best Bid or National Best Offer; (iii) average
displayed size; (iv) average quoted spread; and (v) in the event the
security is a derivative security, the ability of the Market Maker to
transact in underlying markets.

Section 11. Limitations on Dealings

    (a) General. A Market Maker on the Exchange may engage in Other
Business Activities, or it may be affiliated with a broker-dealer that
engages in Other Business Activities, only if there is an Information
Barrier (also commonly referred to as ``Chinese Wall'') between the
market making activities and the Other Business Activities. ``Other
Business Activities'' mean:
    (1) conducting an investment banking or public securities business;
or
    (2) making markets in the options overlying the security in which
it makes markets.
    (b) Information Barrier. For the purposes of this rule, an
Information Barrier is an organizational structure in which:
    (1) The market making functions are conducted in a physical
location separate from the locations in which the Other Business
Activities are conducted, in a manner that effectively impedes the free
flow of communications between persons engaged in the market making
functions and persons conducting the Other Business Activities.
However, upon request and not on his/her own initiative, a person
engaged in the market making functions may furnish to persons at the
same firm or an affiliated firm (``affiliated persons''), the same sort
of market information that the person engaged in the market making
function would make available in the normal course of its market making
activity to any other person. The person engaged in the market making
function must provide such information to affiliated persons in the
same manner that he/she would make such information available to a non-
affiliated person.
    (2) There are procedures implemented to prevent the use of material
non-public corporate or market information in the possession of persons
on one side of the barrier from influencing the conduct of persons on
the other side of the barrier.
    These procedures, at a minimum, must provide that:
    (A) the person performing the function of a Market Maker does not
take advantage of knowledge of pending transactions, order flow
information, corporate information or recommendations arising from the
Other Business Activities; and
    (B) all information pertaining to the Market Maker's positions and
trading activities is kept confidential and not made available to
persons on the other side of the Information Barrier.
    (3) Persons on one side of the barrier may not exercise influence
or control over persons on the other side of the barrier, provided
that:
    (A) the market making function and the Other Business Activities
may be under common management as long as any general management
oversight does not conflict with or compromise the Market Maker's
responsibilities under the Rules of the Exchange.
    (c) Documenting and Reporting of Information Barrier Procedures. A
Member implementing an Information Barrier pursuant to this Section
shall submit to the Exchange a written statement setting forth:
    (1) The manner in which it intends to satisfy the conditions in
paragraph (b) of this Section, and the compliance and audit procedures
it proposes to implement to ensure that the Information Barrier is
maintained;
    (2) The names and titles of the person or persons responsible for
maintenance and surveillance of the procedures;
    (3) A commitment to provide the Exchange with such information and
reports as the Exchange may request relating to its transactions;
    (4) A commitment to take appropriate remedial action against any
person violating this Section or the Member's internal compliance and
audit procedures adopted pursuant to subparagraph (c)(1) of this
Section, and that it recognizes that the Exchange may take appropriate
remedial action, including (without limitation) reallocation of
securities in which it serves as a Market Maker, in the event of such a
violation;
    (5) Whether the Member or an affiliate intends to clear its
proprietary trades and, if so, the procedures established to ensure
that information with respect to such clearing activities will not be
used to compromise the Member's Information Barrier, which procedures,
at a minimum, must be the same as those used by the Member or the
affiliate to clear for unaffiliated third parties; and
    (6) That it recognizes that any trading by a person while in
possession of material, non-public information received as a result of
the breach of the internal controls required under this Rule may be a
violation of Rules 10b-5 and 14e-3 under the Exchange Act or one or
more other provisions of the Exchange Act, the rules thereunder or the
Rules of the Exchange, and that the Exchange intends to review
carefully any such trading of which it becomes aware to determine
whether a violation has occurred.
    (d) Approval of Information Barrier Procedures. The written
statement required by paragraph (c) of this Section must detail the
internal controls that the Member will implement to satisfy each of the
conditions stated in that Section, and the compliance and audit
procedures proposed to implement and ensure that the controls are
maintained. If the Exchange determines that the organizational
structure and the compliance and audit procedures proposed by the
Member are acceptable under this Section, the Exchange shall so inform
the Member, in writing. Absent the Exchange finding a Member's
Information Barrier procedures acceptable, a Market Maker may not
conduct Other Business Activities.
    (e) Clearing Arrangements. Subparagraph (c)(5) permits a Member or
an affiliate of the Member to clear the Member's Market Maker
transactions if it establishes procedures to ensure that information
with respect to such clearing activities will not be used to compromise
the Information Barrier. In this regard:
    (1) The procedures must provide that any information pertaining to
Market Maker securities positions and trading activities, and
information derived from any clearing and margin financing
arrangements, may be made available only to those employees (other than
employees actually performing clearing and margin functions)
specifically

authorized under this Rule to have access to such information or to
other employees in senior management positions who are involved in
exercising general managerial oversight with respect to the market
making activity.
    (2) Any margin financing arrangements must be sufficiently flexible
so as not to limit the ability of any Market Maker to meet market
making or other obligations under the Exchange's Rules.

Chapter XXXVIII--Regulation NMS

Section 1. Definitions

    (a) ``Automated Quotation'' means a quotation displayed by a
trading center that:
    (i) Permits an incoming order to be marked as immediate-or-cancel;
    (ii) Immediately and automatically executes an order marked as
immediate-or-cancel against the displayed quotation up to its full
size;
    (iii) Immediately and automatically cancels any unexecuted portion
of an order marked as immediate-or-cancel without routing the order
elsewhere;
    (iv) Immediately and automatically transmits a response to the
sender of an order marked as immediate-or-cancel indicating the action
taken with respect to such order; and
    (v) Immediately and automatically displays information that updates
the displayed quotation to reflect any change to its material terms.
    (b) ``Manual Quotation'' means any quotation other than an
automated quotation.
    (c) ``Protected Bid'' or ``Protected Offer'' means a quotation in
an NMS stock that:
    (i) Is displayed by an automated trading center;
    (ii) Is disseminated pursuant to an effective national market
system plan; and
    (iii) Is an automated quotation that is the best bid or best offer
of a national securities exchange, the best bid or best offer of The
Nasdaq Stock Market Inc., or the best bid or best offer of a national
securities association other than the best bid or best offer of The
Nasdaq Stock Market, Inc.
    (d) ``Protected Quotation'' means a Protected Bid or a Protected
Offer.
    (e) ``Regular Way'' means bids, offers, and transactions that
embody the standard terms and conditions of a market.
    (f) ``Trading Center'' means a national securities exchange or
national securities association that operates an SRO trading facility,
an alternative trading system, an exchange market maker, an OTC market
maker, or any other broker or dealer that executes orders internally by
trading as principal or crossing orders as agent.

Section 2. Locking or Crossing Quotations in NMS Stocks.

    (a) Definitions. For purposes of this Rule, the following
definitions shall apply:
    (i) The terms automated quotation, effective national market system
plan, intermarket sweep order, manual quotation, NMS stock, protected
quotation, regular trading hours, and trading center shall have the
meanings set forth in SEC Rule 600(b) of Regulation NMS under the
Securities Exchange Act of 1934.
    (ii) The term crossing quotation shall mean the display of a bid
for an NMS stock during regular trading hours at a price that is higher
than the price of an offer for such NMS stock previously disseminated
pursuant to an effective national market system plan, or the display of
an offer for an NMS stock during regular trading hours at a price that
is lower than the price of a bid for such NMS stock previously
disseminated pursuant to an effective national market system plan.
    (iii) The term locking quotation shall mean the display of a bid
for an NMS stock during regular trading hours at a price that equals
the price of an offer for such NMS stock previously disseminated
pursuant to an effective national market system plan, or the display of
an offer for an NMS stock during regular trading hours at a price that
equals the price of a bid for such NMS stock previously disseminated
pursuant to an effective national market system plan.
    (b) Prohibition. Except for quotations that fall within the
provisions of paragraph (d) of this Rule, members of the Exchange shall
reasonably avoid displaying, and shall not engage in a pattern or
practice of displaying, any quotations that lock or cross a protected
quotation, and any manual quotations that lock or cross a quotation
previously disseminated pursuant to an effective national market system
plan.
    (c) Manual quotations. If a member of the Exchange displays a
manual quotation that locks or crosses a quotation previously
disseminated pursuant to an effective national market system plan, such
member of the Exchange shall promptly either withdraw the manual
quotation or route an intermarket sweep order to execute against the
full displayed size of the locked or crossed quotation.
    (d) Exceptions.
    (i) The locking or crossing quotation was displayed at a time when
the trading center displaying the locked or crossed quotation was
experiencing a failure, material delay, or malfunction of its systems
or equipment.
    (ii) The locking or crossing quotation was displayed at a time when
a protected bid was higher than a protected offer in the NMS stock.
    (iii) The locking or crossing quotation was an automated quotation,
and the member of the Exchange displaying such automated quotation
simultaneously routed an intermarket sweep order to execute against the
full displayed size of any locked or crossed protected quotation.
    (iv) The locking or crossing quotation was a manual quotation that
locked or crossed another manual quotation, and the member of the
Exchange displaying the locking or crossing manual quotation
simultaneously routed an intermarket sweep order to execute against the
full displayed size of the locked or crossed manual quotation.

Section 3. Order Routing

    (a) Eligible Orders are any orders that are designated by the
customer to execute or route. IOC, AIOC, all ISO order types and FOK
orders shall not be designated to execute or route.
    (b) If any Eligible Order requiring routing to another Trading
Center has not been executed in its entirety and the terms of the order
require that it be routed to another Trading Center for execution it
shall be routed as follows:
    (i) Limit Orders shall be routed either in their entirety or as
component orders to an away Trading Center(s) as limit orders. Limit
Orders will be routed to the Trading Center(s) publishing the best
Protected Bid or Protected Offer and will execute against the best
Protected Bid or Protected Offer superior or equal to the limit price
for the full number of available shares at the away Trading Center(s).
The remaining portion of the order, if any, shall be ranked and
displayed on the BSE book in accordance with the terms of such order.
Market Orders shall be routed in their entirety or as component orders
to an away Trading Center(s) as IOC Market Orders. If the Market Order
routed to an away Trading Center is not executed in its entirety at the
away Trading Center, the BSE would attempt to match the residual or
declined Market Order against then available trading interest on the
BSE book. Any remaining unmatched trading interest would then be
handled in the manner described in Chapter XXXVIII, Section 3 of these
proposed rules.
    (ii) If the BSE system cannot execute or book an Eligible Order it
will route the Eligible Order to another Trading

Center on behalf of the Member who submitted the Eligible Order if that
Member is a member or subscriber of the away Trading Center, or in the
case where the Member is not a member or subscriber of the away Trading
Center the order will be routed on behalf of that Member through a
third-party broker dealer, or ``give up,'' that is a member or
subscriber of the away Trading Center and, if not executed in its
entirety at the away Trading Center, would be handled in the manner
described in subsection (b)(i), above.

Commentary:

    As described above, the Exchange will route orders to other trading
centers under certain circumstances (``Routing Services''). The
Exchange will provide its Routing Services pursuant to the terms of
three separate agreements: (1) An agreement between the Exchange and
each Member on whose behalf orders will be routed (``Member-Exchange
Agreement''); (2) an agreement between the Exchange and each third-
party broker-dealer that will serve as a ``give-up'' on an away Trading
Center when the Member on whose behalf an order is routed is not also a
member or subscriber of the away Trading Center (``Give-Up
Agreement''); and (3) an agreement between the Exchange and a third-
party service provider (``Technology Provider'') pursuant to which the
Exchange licenses the routing technology used by the Exchange for its
Routing Services (``Exchange-Technology Provider Agreement'').
    .01 (a) The Exchange will provide its Routing Services in
compliance with these rules and with the provisions of the Act and the
rules thereunder, including, but not limited to, the requirements in
Section 6(b)(4) and (5) of the Act that the rules of a national
securities exchange provide for the equitable allocation of reasonable
dues, fees, and other charges among its members and issuers and other
persons using its facilities, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
    (b) As provider of the Routing Services, the Exchange will license
the necessary routing technology for use within its own systems and
accordingly will control the logic that determines when, how, and where
orders are routed away to other Trading Centers.
    (c) The Exchange will establish and maintain procedures and
internal controls reasonably designed to adequately restrict the flow
of confidential and proprietary information between the Exchange
(including its facilities) and the Technology Provider, and, to the
extent the Technology Provider reasonably receives confidential and
proprietary information, that adequately restrict the use of such
information by the Technology Provider to legitimate business purposes
necessary for the licensing of routing technology.
    (d) The Exchange-Technology Provider Agreement will include terms
and conditions that enable the Exchange to comply with this Commentary
.01.
* * * * *
    (iii) The order that is routed away shall remain outside the BSE
for a prescribed period of time and may be executed in whole or in part
subject to the applicable trading rules of the relevant Trading Center.
While an order remains outside the Exchange, it shall have no time
standing, relative to other orders received from BSE Members at the
same price which may be executed against orders in the BSE book.
Requests from Members to cancel their orders while the order is routed
away to another Trading Center and remains outside the Exchange shall
be processed, subject to the applicable trading rules of the relevant
Trading Center.
    (iv) Where an order or portion of an order is routed away and is
not executed either in whole or in part at the other Trading Center
(i.e., all attempts at the fill are declined or timed out), the order
shall be ranked, displayed and eligible for execution on the BSE book
in accordance with the terms of such order.

Section 4. Order Protection Requirements

    (a) An order is not eligible for execution on the BSE if its
execution is at a price that is lower than a Protected Bid or higher
than a Protected Offer (``Trade-Through''), or if its execution would
be improper under SEC Rule 611 of Regulation NMS (together an
``improper trade-through''). If the execution of an order on the
Exchange would cause an improper trade-through, that order shall be
routed to another appropriate market or, if not designated to route,
automatically cancelled.
    (b) Exceptions. Purchases and sales of NMS stocks will be excepted
from Section 4, paragraph (a) above, and an appropriate modifier
approved by the operating committee of the relevant national market
system plan for an NMS stock will be attached to the trade before it is
publicly reported, in the following circumstances that are exceptions
under Rule 611 of Regulation NMS:
    (i) Crossed markets. If a trade is executed on the BSE while the
National Best Bid or National Best Offer is crossed;
    (ii) Other exceptions.
    (1) a non-regular way cross, (2) a single-price opening, reopening
or closing trade;
    (3) an inbound ISO; or
    (4) a benchmark order is executed at the BSE.
    (c) In any transaction for or with a customer, a Member and persons
associated with a Member shall use reasonable diligence to ascertain
the best market for the subject security and buy or sell in such market
so that the resultant price to the customer is as favorable as possible
under prevailing market conditions. In all customer transactions, a
Member and persons associated with a Member shall comply with all
applicable best execution requirements.
    (d) Trade-through policies and procedures. In determining whether a
trade on the BSE would create an improper trade-through, the BSE will
adhere to the terms of the ITS Plan (so long as it is in effect and is
applicable to the BSE) and the applicable provisions of Reg NMS (when
it takes effect), as well as to the following policies and procedures
to the extent the policies and procedures are consistent with the terms
of the ITS Plan and Reg NMS:
    (i) Clock synchronization and timing of the determination of
improper trade-throughs. The BSE's systems shall routinely, throughout
the trading day, use processes that capture the time reflected on the
atomic clock operated by the National Institute of Standards and
Technology and shall automatically make adjustments to the time
recorded in the BSE to ensure that the period between the two times
will not exceed 500 milliseconds. The BSE shall determine whether a
trade would create an improper trade-through based on the most recent
National Best Bid and National Best Offer that has been received and
processed by the BSE's systems.
    (ii) Manual quotations of other markets. The BSE shall disregard
another Trading Center's bid or offer if it is identified by the other
Trading Center as a manual quotation.
    (iii) Self-help exception. The BSE will apply the self-help
exception to SEC Rule 611, and the BSE will disregard a Trading
Center's bid and offer, if:
    (A) The other Trading Center has publicly announced that it is not
disseminating automated quotations;
    (B) The other Trading Center has repeatedly failed to respond
within one second to an incoming AIOC or ISO

order (after adjusting for order transmission time);
    (C) The BSE will notify the other Trading Center immediately after
having made use of the self-help exception by using an appropriate
mechanism for communicating with other Trading Centers. The BSE will
continue to apply the self-help exception until the other Trading
Center has provided reasonable assurance to the BSE or, more generally,
to the public that the problems have been corrected.
    (e) The BSE is designed, under the rules set out in this Chapter,
to display bids and offers that qualify as automated quotations under
the definition set out in SEC Rule 600(b)(3). The BSE shall use the
following procedures for determining whether the quotes should be
identified as ``manual'':
    (i) Periodic testing. The Market Operations Center (``MOC'') will
have a real time monitoring tool, which will check the elapsed time
between receipt of every AIOC order (any order type) and the
corresponding response to each AIOC order by the trading system. A
predetermined threshold will be set to generate an alert for any
instances where the elapsed time between order receipt and response
exceeds the preset limit.
    (ii) Adding the ``manual'' identifier. Immediately upon receiving
an alert from the processes described above in subparagraph (e)(i) that
the Exchange's trading system has not accepted and properly handled two
or more AIOC orders in a symbol sent as sequential messages the MOC
shall append a ``manual'' identifier to the bids and offers it makes
publicly available in that symbol.
    (iii) Returning to automated quotations. Once the Exchange has made
any required systems changes, or has otherwise determined that its
quotations satisfy the requirements of SEC Rule 600(b)(3), and has
conducted the applicable test(s) set out above to confirm that the
Exchange's quotes qualify as ``automated quotations,'' the Exchange
shall remove the ``manual'' identifier from the bids and offers that
are made publicly available. The Exchange also shall notify other
Trading Centers that its quotations are automated by announcing that
fact over the squawk box or other similar functionality available for
communications with other Trading Centers.

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

    In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change, and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.

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

1. Purpose
    In the BeX Facility Filing, the BSE proposed rules to implement the
first phase of a new electronic trading facility, called BeX. BeX,
which was developed by and is owned and operated by BSX Group, LLC
(``BSX''), is an electronic securities communications and trading
facility intended for the use of BSE Members, including Electronic
Access Members, and their customers.\7\ In this rule filing, the
Exchange proposes to implement the second phase of the BeX as a fully-
automated electronic book for the display and execution of orders in
securities listed on any Exchange through the introduction of new rules
as well as by amending certain existing rules (``BeX Phase II''). All
such issues would not be assigned to a specialist. The new rules will
be located in Chapter XXXVII of the Exchange's Rules of the Board of
Governors (``BSE Rules''). The BSE also proposes to implement rules to
satisfy the requirements of Regulation NMS. These rules will be located
in Chapter XXXVIII of the BSE Rules.
---------------------------------------------------------------------------

    \7\ See BeX Governance Filing, nogte 4, supra.
---------------------------------------------------------------------------

    The Exchange previously proposed to institute rules governing BeX
as a new fully-automated electronic book that would display and match
eligible orders in these securities, without the participation of a
specialist.\8\ As of January 1, 2007, there will no longer be any
specialist participation in any transactions on the BSE or otherwise.
For competitive reasons, the Exchange considered that proposal to be
vitally important to its ability to attract and retain order flow to
the BSE and continues in that belief.\9\
---------------------------------------------------------------------------

    \8\ See BeX Facility Filing, note 5, supra.
    \9\ The BSE intends to request from the staff of the Commission
a limited exemption from paragraph (a)(2)(i)(A) of Rule 10b-10 under
the Act on its own behalf and/or on behalf of its Members who
execute trades on the BeX. The exemption request will be limited to
those trades that BSE Members execute on BeX with other BSE Members
when using the anonymous feature of BeX's electronic trading system.
The BSE also intends to request assurance that the Commission staff
will not recommend enforcement action to the Commission if, in lieu
of making and preserving a separate record, BSE Members rely on
BSE's retention of the identities of the BSE Members that execute
anonymous trades through BeX to satisfy the requirements of Rules
10a-3(a)(1) and 17a-4(a) under the Act.
---------------------------------------------------------------------------

    Prior to implementation of the first phase of the BeX, BSE
Specialists would quote and trade approximately 300 securities. The BSE
Floor Broker community would routinely receive baskets of securities
that contained orders and cross trades in securities which were not
quoted by BSE Specialists. As such, the orders and cross trades for
securities not traded on the BSE would have to be routed to other
trading centers (``Trading Centers'') for execution. Thus, the Exchange
was not able to retain order flow that had been directed to the BSE.
Moreover, BSE Floor Brokers were hampered in their ability to attract
more sources of order flow to the Exchange, because a percentage of the
order flow they do attract was eventually routed to other Trading
Centers for execution. The other Trading Centers include those that
have the capability to post and execute orders in securities that are
not continuously quoted or traded by any Member in a market making
capacity, including other exchanges that have rules governing the same
type of electronic book functionality that the BSE is now seeking to
employ.\10\ BeX allows Exchange Members, whether or not they are on the
Exchange's floor, to enter orders into the BeX for possible execution.
---------------------------------------------------------------------------

    \10\ See, e.g., Chicago Stock Exchange (``Chx'') Rules, Article
XXA.
---------------------------------------------------------------------------

    Additionally, in connection with satisfying the requirements of
Regulation NMS, the Exchange proposes to offer several execution
enhancements, such as eight additional order types, a rule aimed at the
prevention of locked or crossed markets, electronic order routing, and
an order protection rule as it transitions to a fully electronic
trading venue with its proposed BeX facility and in accordance with the
implementation of Regulation NMS. Under the BeX facility, the BSE
expects that the current trading rules of the BSE will remain largely
intact, with the exception of certain rule proposal changes filed with
the Commission

regarding the BeX facility and the rule changes contained herein
related to the BeX facility and required under Regulation NMS. The
additional order types, rule aimed at prevention of locked and crossed
markets, electronic order routing, and order protection rule proposed
herein would be options available to BSE members in addition to that
which is currently available under the Exchange's existing rule set.
    Eligible securities and eligible orders. Under the proposed rules
submitted in connection with the first phase of the BeX,\11\ all
securities eligible for trading on the Exchange that are not assigned
to a specialist would be traded in the BeX. Orders sent to the BeX
would be required to be specifically designated for handling in the
BeX. The BeX accepts only round-lot market and limit orders.
---------------------------------------------------------------------------

    \11\ See BeX Facility Filing, note 5, supra.
---------------------------------------------------------------------------

    Orders eligible for execution in the BeX may be designated as one
of the following existing BSE order types: ``at the close,'' ``at the
opening or at the opening only,'' ``day,'' ``do not increase (DNI),''
``do not reduce (DNR),'' ``fill or kill,'' ``good `till cancel,''
``immediate or cancel,'' ``limit, limited or limited price,''
``market,'' ``stop limit,'' or ``stop,'' ``cross,'' ``cross with
size,'' ``good `till date (GTD),'' ``good `till time (GTT),'' ``limit
or close,'' or ``mid-point cross.'' In addition to the existing order
types set forth above, orders may also be designated as one of the
following new order types: ``reserve order'', ``minimum quantity
order,'' ``preferred price cross,'' ``automatic immediate or cancel
(``AIOC''), ``best price intermarket sweep'' (``BPISO''), ``ISO cross
orders,'' ``price-penetrating orders'' and ``cancel on corporate action
orders.'' It should be noted that AIOC, BPISO, ISO cross and price-
penetrating orders are being proposed in connection with the proposed
rules related to Regulation NMS but will be located in the same chapter
as the new order types being proposed in connection with BeX Phase II.
Descriptions of the proposed order types are as follows:
    ``Reserve Order'': A Limit Order with a portion of the size
displayed and with a reserve portion of the size that is not displayed.
The displayed portion of Reserve Orders (not the reserve portion) shall
be ranked at the specified limit price and the time of order entry. If
the displayed portion of the Reserve Order is decremented such that
fewer than 100 shares are displayed, the displayed portion of the
Reserve Order shall be replenished for: (a) The displayed amount; or
(b) the entire reserve amount, if the remaining reserve amount is
smaller than the displayed amount. Upon replenishment the reserve
portion shall be submitted and ranked at the specified limit price and
time of replenishment. A Reserve Order cannot be an IOC Order or Market
Order.
    ``Minimum Quantity'': A Minimum Quantity Order is an Order subject
to the provisions of Chapter XXXVII, Section 6, that, upon entry, must
be executed at least at its minimum quantity or it will be cancelled.
If executed in part, the remaining quantity remains in the book and
follows the execution rule of the order price type. A Stop Limit Order
can be a minimum quantity and execution possibility will be checked at
the election of the Order.
    ``Preferred Price Cross'': A Cross Order with a preferred limit
price and an optional preferred tick, both set by the Member.\12\ A
preferred limit price is the limit price the cross order will be
executed at if it is equal to or better than the National Best Bid or
Offer (``Preferred Limit Price''). The optional preferred tick is the
amount of ticks beyond the preferred limit price at which the two-sided
cross order may be executed (``Optional Preferred Tick''). The
Preferred Price Cross order cannot be executed at a price that is more
than the preferred limit price plus the amount of optional preferred
ticks or less than the preferred limit price minus the amount of
optional preferred ticks. If the Preferred Price Cross cannot be
executed at the Preferred Limit Price, the execution price of the Cross
will be determined by the Trading System to be the closest price to the
Preferred Limit Price, respecting the Optional Preferred Tick and the
National Best Bid or Offer.
---------------------------------------------------------------------------

    \12\ The Exchange represents that a Preferred Price Cross Order
must satisfy the conditions of either a Cross Order or a Cross with
Size Order. Telephone call between Brian D. Donnelly, Assistant Vice
President of Regulation & Compliance, and Dan Hamm, Vice President
of Trading Systems, BSE, and Nancy Sanow, Assistant Director, and
Ira Brandriss, Special Counsel, Division of Market Regulation,
Commission on August 4, 2006.
---------------------------------------------------------------------------

    AIOC Order: An automatic immediate or cancel order is an order
received on BeX that will execute immediately and automatically, either
in whole or in part, at or better than its limit price, with any
unexecuted balance of the order to be immediately cancelled. The
unexecuted portion of the order will not be routed to another Trading
Center.
    Best Price ISO: A best price intermarket sweep order is an order
marked as required by Rule 600(b)(30) under the Act that is to be
executed against any orders at the Exchange's Best Bid or Best Offer
(including any undisplayed orders at that price) as soon as the order
is received by the BSE, with any unexecuted balance of the order to be
immediately cancelled. The BSE, in executing the Best Price ISO, shall
not take any of the actions described in Chapter XXXVIII, Section 4 to
prevent an improper trade through.
    Price-Penetrating ISO: An order marked as required by Rule
600(b)(30) under the Act that is to be executed at or better than its
limit price as soon as the order is received by the BSE, with any
unexecuted balance of the order to be immediately cancelled. Orders
marked as price-penetrating ISO shall be executed against any eligible
orders at the BSE (including any reserve size or other undisplayed
orders, through multiple price points). The BSE, in executing these
orders, shall not take any of the actions described in Chapter XXXVIII,
Section 4 to prevent an improper trade-through.
    ISO Cross: A two sided order that, upon receipt, will be executed
without any action on the part of the Exchange to prevent an improper
trade through. The Member submitting an ISO Cross is responsible for
checking all protected quotes and must send one or more ISO orders to
other Trading Centers displaying a price better than the cross price.
    Cancel on Corporate Action: In the event of a dividend,
distribution or stock split (``Corporate Action''), the order in the
limit book will be cancelled.
    Compliance with Intermarket Trading System (``ITS'') Plan. As set
forth in the BeX Facility Filing, to ensure compliance with the ITS
Plan (as long as it remains in effect), otherwise eligible orders would
be cancelled or routed away in certain circumstances. Specifically, if
an order in an ITS eligible security crosses or locks the National Best
Bid or National Best Offer at the time that it is received, the order
would be immediately cancelled to ensure compliance with the ITS Plan's
rules relating to locked markets.\13\ Marketable orders that would
trade-though the National Best Bid or National Best Offer would either
be cancelled or be routed to the market(s) showing the National Best
Bid or National Best Offer at the order-entering firm's
instructions.\14\
---------------------------------------------------------------------------

    \13\ Similarly, if an order in a listed security locks or
crosses the Best Bid or Best Offer in BeX at the time it is
received, but not the National Best Bid or National Best Offer, the
order would be executed according to BeX's matching algorithm, and
any remaining portion would be immediately cancelled, if it would
lock or cross the National Best Bid or National Best Offer.
    \14\ See BeX Facility Filing, proposed BSE Rule, Chapter XXXVII,
Section 3, Paragraph (j)(i) and (iii).

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

Ranking and Display of Orders

    Except as otherwise permitted by Section 3, paragraphs (v)-(vi) of
the BSE Rules, all orders at all price levels on the BeX shall be
displayed to all Members on an anonymous basis and transactions
executed on the BeX will be processed anonymously.\15\ The transaction
reports will indicate the details of the transaction, but will not
reveal contra party identities. No Member having the right to trade
through the facilities of BeX and who has been a party to or has
knowledge of an execution shall be under obligation to divulge the name
of the buying or selling firm in any transaction. Except as otherwise
permitted by the supplementary material in Section 3, no Member shall
transmit through the facilities of BeX any information regarding a bid,
offer, other indication of an order, or the Member's identity, to
another Member until permission to disclose and transmit such bid,
offer, other indication of an order, or the Member's identity has been
obtained from the originating Member or the originating Member
affirmatively elects to disclose its identity.
---------------------------------------------------------------------------

    \15\ See note 9, supra.
---------------------------------------------------------------------------

    The BeX will reveal the identity of a Member in the following
circumstances: (1) For regulatory purposes or to comply with an order
of a court or arbitrator; (2) when the National Securities Clearing
Corporation (``NSCC'') ceases to act for a Member or the Member's
clearing firm, and NSCC determines not to guarantee the settlement of
the Member's trades; or (3) on risk management reports provided to the
contra party of the Member or Member's clearing firm each day by 4 p.m.
(E.S.T.) which disclose trading activity on the aggregate dollar value
basis.
    In order to satisfy Members' record keeping obligations under Rules
17a-3(a)(1) and 17a-4(a) under the Act, BSE shall retain for the period
specified in Rule 17a-4(a) the identity of each Member that executes an
anonymous transaction described in paragraph (i)(iii) of this rule. The
information shall be retained by the BeX in its original form or a form
approved under Rule 17a-6. Members shall retain the obligation to
comply with Rules 17a-3(a)(1) and 17a-4(a) under the Act whenever they
possess the identity of their contra party.

Market Makers

    BSE Members may apply for Market Maker status. An applicant shall
file an application for Market Maker status on such form as the
Exchange may prescribe. Applications shall be reviewed by the Exchange,
which shall consider such factors including, but not limited to capital
operations, personnel, technical resources, and disciplinary history.
No Member shall act as a Market Maker in any security unless such
Member has been approved as a Market Maker in a security by the
Exchange pursuant to the BSE Rules and the Exchange has not suspended
or canceled such approval. Approved Market Makers are designated as
dealers on the Exchange for all purposes under the Act the rules and
regulations thereunder.
    An applicant's Market Maker status shall become effective upon
receipt by the Member of notice of an approval by the Exchange. In the
event that an application is disapproved by the Exchange, the applicant
shall have an opportunity to be heard upon the specific grounds for the
denial, in accordance with the provisions of Chapter XXX of the BSE
Rules.
    Market Maker status may be suspended or terminated by the Exchange
upon a determination of any substantial or continued failure by such
Market Maker to engage in dealings in accordance with the BSE Rules.
Likewise, any Market Maker may withdraw its Market Maker status by
giving written notice to the Exchange. Such withdrawal shall become
effective on the tenth business day following the Exchange's receipt of
the notice. A Market Maker who fails to give a ten-day written notice
of withdrawal to the Exchange may be subject to formal disciplinary
action pursuant to Chapter XXX. Subsequent to withdrawal, the Member
shall not be permitted to re-apply as a Market Maker for a period of
six months.
    A Market Maker may be assigned a newly authorized security or a
security already admitted to dealings on the BeX by filing an
assignment request form with the Exchange. Assignment of the security
shall become effective on the first business day following the
Exchange's approval of the assignment. In considering the approval of
the assignment of the Market Maker in a security, the Exchange may
consider: (1) The financial resources available to the Market Maker;
(2) the Market Maker's experience, expertise and past performance in
making markets, including the Market Maker's performance in other
securities; (3) the Market Maker's operational capability; (4) the
maintenance and enhancement of competition among Market Makers in each
security in which they are assigned; (5) the existence of satisfactory
arrangements for clearing the Market Maker's transactions; (6) the
character of the market for the security, e.g., price, volatility, and
relative liquidity. A Market Maker's assignment in a security may be
terminated by the Exchange if the Market Maker fails to enter
quotations in the security within five (5) business days after the
Market Maker's assignment in the security becomes effective. Moreover,
the Exchange may limit the number of Market Makers in a security upon
prior written notice to Members.
    Market Makers shall be selected by the Exchange based on, but is
not limited to, the following: Experience with making markets in
equities; adequacy of capital; willingness to promote the BeX as a
marketplace; issuer preference; operational capacity; support
personnel; and history of adherence to Exchange rules and securities
laws.
    A Market Maker may voluntarily terminate its assignment in a
security by providing the Exchange with a one-day written notice of
such termination. A Market Maker that fails to give advanced written
notice of termination to the Exchange may be subject to formal
disciplinary action pursuant to Chapter XXX. Furthermore, the Exchange
may suspend or terminate any assignment of a Market Maker in a security
or securities under Chapter XXXVII, Section 9 whenever, in the
Exchange's judgment, the interests of a fair and orderly market are
best served by such action. A Member may seek review of any action
taken by the Exchange pursuant to this Rule, including the denial of
the application for, or the termination or suspension of, a Market
Maker's assignment in a security or securities, in accordance with
Chapter XXX.
    Members who are assigned as Market Makers in one or more securities
traded on the BeX must engage in a course of dealings for their own
account to assist in the maintenance, insofar as reasonably
practicable, of fair and orderly markets on the BeX in accordance with
this Section. The responsibilities and duties of a Market Maker
specifically include, but are not limited to, the following: (1)
Maintain continuous, two-sided quotes in those securities in which the
Market Maker is assigned to trade; (2) maintain adequate minimum
capital in accordance with Rule 15(c)3-1 promulgated under Act; (3)
remain in good standing with the Exchange; (4) inform the Exchange of
any material change in financial or operational condition or in
personnel; (5) clear and settle transactions through the facilities of
a registered clearing agency. This requirement may be

satisfied by direct participation, use of direct clearing services, or
by entry into a correspondent clearing arrangement with another Member
that clears trades through such agency. A Market Maker must satisfy the
responsibilities and duties during the Primary Trading Session on all
days in which the Exchange is open for business.
    If the Exchange finds any substantial or continued failure by a
Market Maker to engage in a course of dealings as specified in the
applicable BSE Rules, such Market Maker will be subject to disciplinary
action or suspension or revocation of the assignment by the Exchange in
one or more of the securities in which the Market Maker is assigned.
Nothing in this Section will limit any other power of the Board of
Directors under the Bylaws, Rules, or procedures of the Exchange with
respect to the Market Maker's Membership status or in respect of any
violation by a Market Maker of the provisions of this Rule. In
accordance with Chapter XXX, a Member may seek review of actions taken
by the Exchange pursuant to this Section.
    A Market Maker may apply to the Exchange to withdraw temporarily
from its Market Maker status in the securities in which it is assigned.
The Market Maker must base its request on demonstrated legal or
regulatory requirements that necessitate its temporary withdrawal, or
provide the Exchange an opinion of counsel certifying that such legal
or regulatory basis exists. The Exchange will act promptly on such
request and, if the request is granted, the Exchange may temporarily
reassign the securities to another Market Maker.
    Market Makers will be required to maintain minimum performance
standards the levels of which may be determined from time to time by
the Exchange. Such levels will vary depending on the price, liquidity,
and volatility of the security in which the Market Maker is assigned.
The performance measurements will include (i) percent of time at the
National Best Bid or National Best Offer; (ii) percent of executions
better than the National Best Bid or National Best Offer; (iii) average
displayed size; (iv) average quoted spread; and (v) in the event the
security is a derivative security, the ability of the Market Maker to
transact in underlying markets.
    A Market Maker on the Exchange may engage in Other Business
Activities, or it may be affiliated with a broker-dealer that engages
in Other Business Activities, only if there is an Information Barrier
(also commonly referred to as ``Chinese Wall'') between the market
making activities and the Other Business Activities. ``Other Business
Activities'' mean: (1) Conducting an investment banking or public
securities business; or (2) making markets in the options overlying the
security in which it makes markets.
    A Member or an affiliate of the Member may clear the Member's
Market Maker transactions if it establishes procedures to ensure that
information with respect to such clearing activities will not be used
to compromise the Information Barrier. In this regard: (1) The
procedures must provide that any information pertaining to Market Maker
securities positions and trading activities, and information derived
from any clearing and margin financing arrangements, may be made
available only to those employees (other than employees actually
performing clearing and margin functions) specifically authorized under
this Rule to have access to such information or to other employees in
senior management positions who are involved in exercising general
managerial oversight with respect to the market making activity; and
(2) any margin financing arrangements must be sufficiently flexible so
as not to limit the ability of any Market Maker to meet market making
or other obligations under the Exchange's Rules.

Locked and Crossed

    BSE Members would have an obligation to reasonably avoid
displaying, and avoid engaging in a pattern or practice of displaying
any quotations that lock or cross a protected quotation, and any manual
quotations that lock or cross a quotation previously disseminated
pursuant to an effective national market system plan. This rule would
be contained in new Chapter XXXVIII, Section 2 of the BSE Rules.
    For purposes of this rule a ``crossing quotation'' would mean the
display of a bid for a NMS stock during regular trading hours at a
price that is higher than the price of an offer for such NMS stock
previously disseminated pursuant to an effective national market system
plan, or the display of an offer for a NMS stock during regular trading
hours at a price that is lower than the price of a bid for such NMS
stock previously disseminated pursuant to an effective national market
system plan. For purposes of this rule, a ``locking quotation'' would
mean the display of a bid for a NMS stock during regular trading hours
at a price that equals the price of an offer for such NMS stock
previously disseminated pursuant to an effective national market system
plan, or the display of an offer for a NMS stock during regular trading
hours at a price that equals the price of a bid for such NMS stock
previously disseminated pursuant to an effective national market system
plan.
    The rule would provide for four exceptions from the prohibition on
locking or crossing protected quotations. First, the rule would except
those quotations displayed at a time when the trading customer
displaying the locked or crossed quotation was experiencing a failure,
material delay or malfunction of its systems or equipment. Second, the
rule would also except those quotations displayed at a time when the
protected bid was higher than a protected offer in the NMS stock.
Third, the rule would except those automated quotations where the BSE
member displaying such automated quotation simultaneously routed an
intermarket sweep order to execute against the full displayed size of
any locked or crossed protected quotation. For example, if there is a
reserve size behind the displayed size of the previously displayed
protected quotation, its price may not change even after execution of
the intermarket sweep order. Fourth, the rule would except those manual
quotations that locked or crossed another manual quotation, and the BSE
member displaying the locking or crossing manual quotation
simultaneously routed an intermarket sweep order to execute against the
full displayed size of the locked or crossed manual quotation.
    The rule does not specify any procedures for reconciling
unintentional locks/crosses when both quotations are automated as
trading should continue and market forces will reconcile the lock/
cross. Market forces are likely to generate orders that will quickly
resolve the lock/cross quotations.

Order Routing

    The BSE is proposing a rule, in accordance with Regulation NMS,
that would govern the order routing process. The rules on electronic
order routing would be contained in new Chapter XXXVIII, Section 3.
    The BSE will only route an Eligible Order when the order has not
been executed in its entirety and the terms of the order require
routing to another Trading Center for execution. The BSE has determined
that Eligible Orders are orders that are designated by the customer to
execute or route. IOC, AIOC, all ISO order types and FOK orders shall
not be designated to execute or route.
    Limit Orders shall be routed either in their entirety or as
component orders to an away Trading Center(s). Limit Orders will be
routed to the Trading Center(s)

publishing the best Protected Bid or Protected Offer and will execute
against the best Protected Bid or Protected Offer superior or equal to
the limit price for the full number of available shares at the away
Trading Center(s). The remaining portion of the order, if any, shall be
ranked and displayed on the BSE book in accordance with the terms of
such order. Market Orders shall be routed in their entirety or as
component orders to an away Trading Center(s) as IOC Market Orders. If
a Market Order routed to an away Trading Center is not executed in its
entirety at the away Trading Center, the BSE would attempt to match the
residual or declined Market Order against then available trading
interest on the BSE book. Any remaining unmatched trading interest
would then be handled in the manner described in Chapter XXXVIII,
Section 3 of these proposed rules.\16\
---------------------------------------------------------------------------

    \16\ The Exchange has advised that it intends to file an
amendment to the proposed rule change that sets forth more clearly
the handling by BeX of the remainder of an order that has been
routed to an away Trading Center. Telephone call between Brian D.
Donnelly, Assistant Vice President of Regulation & Compliance, and
Dan Hamm, Vice President of Trading Systems, BSE, and Nancy Sanow,
Assistant Director, and Ira Brandriss, Special Counsel, Division of
Market Regulation, Commission on August 4, 2006.
---------------------------------------------------------------------------

    Eligible Orders will be routed on behalf of the Member who
submitted the Eligible Order if that Member is a member or subscriber
of the away Trading Center or, in the case where the Member is not a
member or subscriber of the away Trading Center, the order will be
routed through a third party broker dealer, or ``give up,'' that is a
member or subscriber of the away Trading Center pursuant to the terms
of an agreement entered into between the BSE and that third party
broker dealer which agreement is described below. The Eligible Order
would route to another Trading Center as a limit order priced at the
quote published by the Trading Center (an ISO).
    As stated above, the Exchange will route orders to other trading
centers under certain circumstances (``Routing Services''). The
Exchange will provide its Routing Services pursuant to the terms of
three separate agreements: (1) An agreement between the Exchange and
each Member on whose behalf orders will be routed (``Member-Exchange
Agreement''); (2) an agreement between the Exchange and each third-
party broker-dealer that will serve as a ``give-up'' on an away trading
center when the Member on whose behalf an order is routed is not also a
member or subscriber of the away trading center (``Give-Up
Agreement''); and (3) an agreement between the Exchange and a third-
party service provider (``Technology Provider'') pursuant to which the
Exchange licenses the routing technology used by the Exchange for its
Routing Services (``Exchange-Technology Provider Agreement'').
    The Exchange will provide its Routing Services in compliance with
these rules and with the provisions of the Act and the rules
thereunder, including, but not limited to, the requirements in Section
6(b)(4) and (5) of the Act that the rules of a national securities
exchange provide for the equitable allocation of reasonable dues, fees,
and other charges among its members and issuers and other persons using
its facilities, and not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
    As provider of the Routing Services, the Exchange will license the
necessary routing technology for use within its own systems and
accordingly will control the logic that determines when, how, and where
orders are routed away to other trading centers.
    The Exchange will establish and maintain procedures and internal
controls reasonably designed to adequately restrict the flow of
confidential and proprietary information between the Exchange
(including its facilities) and the Technology Provider, and, to the
extent the Technology Provider reasonably receives confidential and
proprietary information, that adequately restrict the use of such
information by the Technology Provider to legitimate business purposes
necessary for the licensing of routing technology. The Exchange-
Technology Provider Agreement will include terms and conditions that
enable the Exchange to comply with all of its applicable Rules.
    As stated above, if an Eligible Order has not been executed in its
entirety on the BSE, the order would route to another Trading Center as
a limit order priced at the quote published by the Trading Center (an
ISO). ISOs Orders routed to other Trading Centers would remain outside
the BSE for a prescribed time period during which such orders could be
executed (in whole or in part) or declined. While an order remains
outside the BSE, it would have no time standing relative to others
received from BSE Members at the same price that could be executed
against interest on the BSE book. Requests from BSE Members to cancel
their orders while the ISO is routed away to another Trading Center and
remains outside the BSE would be processed subject to applicable
trading rules of the relevant away Trading Center. When routing an
order away to another Trading Center, the BSE would utilize such
electronic intermarket linkages and order delivery facilities as could
be approved by the BSE Board from time to time, subject to such
applicable requirements as could be agreed to with the relevant Trading
Center, subject to Commission approval or a proposed rule change
submitted in accordance with Rule 19b-4 under the Act.
    Where an order or portion of an order is routed away and is not
executed either in whole or in part at the other Trading Center (i.e.,
all attempts at the fill are declined or timed out), the order shall be
ranked, displayed and eligible for execution on the BSE book in
accordance with the terms of such order. In the event that a marketable
order routed from the BSE to another Trading Center is not executed in
its entirety at the other Trading Center's quote, the BSE would attempt
to match the residual or declined market order against then available
trading interest on the BSE book. Any remaining unmatched trading
interest would then be handled in the manner described in Chapter
XXXVIII, Section 3 of these proposed rules.

Order Protection Rule

    The BSE, in accordance with the requirements of Regulation NMS, is
proposing an order protection rule that would be contained in new
Chapter XXXVIII, Section 4. The proposed rule would prohibit trades
from being executed on the BSE if the execution would result in an
improper trade-through, i.e., at a price lower than a Protected Bid or
higher than a Protected Offer. If the execution of an order on the
Exchange would cause an improper trade-through, that order would be
routed to another appropriate market or, if designated as ``do not
route,'' automatically cancelled. Members, however, would still be
subject to all applicable best execution requirements.
    The BSE does provide for several exceptions to the trade-through
rule. Some of the exceptions include: a crossed markets exception, a
non-regular way cross exception, a single priced opening, reopening or
closing trade exception, an inbound ISO exception, a stop order
exception and a benchmark order executed at the BSE exception. If a
purchase or sale of an NMS stock does qualify for an exception to the
order protection rule, an appropriate modifier approved by the
operating committee of the relevant national market system plan for an
NMS stock will be attached to the trade before it is publicly reported.

    The BSE would be an automated trading system which displays bids
and offers that qualify as automated quotations under the definition
set out in Rule 600(b)(3) under the Act, with manual capabilities in
the event the automated trading feature is not available.
    In order to determine whether a trade would constitute an improper
trade-through the BSE's systems would routinely, throughout the trading
day, synchronize their time clocks and would immediately make
adjustments to the time recorded in the BSE to ensure that the period
between the two times would not exceed 500 milliseconds.
    If another market is displaying a manual quotation, the BSE would
be able to disregard that market's bid or offer. The BSE would also be
able to disregard another Trading Center's bid and offer if: the other
market has publicly announced that it is not disseminating automated
quotations and/or the other market has repeatedly failed to respond
within one second to an incoming AIOC or ISO order (after adjusting for
order transmission time).
    If the BSE bypassed another Trading Center's quote it would
immediately notify the Trading Center after having used the ``self-
help'' exception through an appropriate mechanism for communicating
with other Trading Centers. The BSE would be able to avail itself of
the self-help exception until the other Trading Center has provided
reasonable assurance to the BSE or to the public that the problems have
been corrected.
    If the BSE has not accepted two or more AIOC orders sent as
sequential test messages, the BSE will attach a ``manual'' identifier
to its bids and offers it makes publicly available. Additionally,
immediately upon receiving an alert from the processes that the
Exchange's trading system has taken more than 2 seconds to process any
one AIOC order, the MOC shall automatically attach a ``manual''
identifier to the bids and offers it makes publicly available. If for
some reason the MOC is unable to attach a manual identifier, the
Exchange shall announce that its quotes are manual through an
appropriate mechanism for communicating with other Trading Centers.
    Once the BSE has made any required systems changes, or has
otherwise determined that its quotations satisfy the requirements of
Rule 600(b)(3) under the Act, and has conducted applicable tests set
out above to confirm that the Exchange's quotes qualify as ``automatic
quotations,'' the Exchange would remove the ``manual'' identifier from
the bids and offers that are made publicly available. The Exchange
would also have to notify other Trading Centers that its quotations are
automated by announcing that fact through an appropriate mechanism for
communicating with other Trading Centers.

Conclusion

    The Exchange represents that it has designed the BeX to be a fully-
automated system that would permit eligible orders in eligible
securities to match against one another, without the required
participation of a specialist. The Exchange believes that this system
functionality would provide all Exchange Members with an efficient way
to trade securities that would protect investors and the public
interest by automatically handling orders in a fair and reasonable
manner. Additionally, the BSE believes that the changes proposed herein
are designed to enhance competition in the U.S. equities markets,
particularly given the electrification of the marketplace and other
fundamental changes that are rapidly taking place. The Exchange submits
that the changes proposed herein are, among other things, intended to
bring the BSE into compliance with the requirements of Regulation NMS.
2. Statutory Basis
    The basis for this proposed rule and proposed rule change is that
Exchange believes its proposals are consistent with Section 6(b) \17\
of the Act and further the objectives of Section 6(b)(5) \18\ of the
Act in particular, because they are 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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the
proposed rule change.

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

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

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. 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-2006-30 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 No. SR-BSE-2006-30. 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 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 above-mentioned self-regulatory
organization. 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 with to make
available publicly. All submissions should refer to the file number in
the caption above and should be submitted on or before September 6,
2006.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
 [FR Doc. E6-13400 Filed 8-15-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 81, Number 135 (Thursday, July 14, 2016)]
[Notices]
[Page 45473]
[FR Doc No: 2016-16649]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP15-551-001]

TransCameron Pipeline, LLC; Notice of Amendment to Application
for Certificate of Public Convenience and Necessity

    Take notice that on June 28, 2016, TransCameron Pipeline, LLC
(TransCameron), 2200 Pennsylvania Ave. NW., Suite 600 West, Washington,
DC 20037, filed in the above referenced docket an amendment to the
certificate application in Docket No. CP15-551-000, pursuant to section
7(c) of the Natural Gas Act (NGA) and Part 157 of the Commission's
regulations. TransCameron proposes to (1) remove the Western Lateral
from its original TransCameron Pipeline Project, (2) modify the
capacity of its East Lateral without any facility changes, and (3)
update East Lateral alignment and workspace for minor modifications, as
was originally proposed in Cameron Parish, Louisiana, all as more fully
set forth in the application which is on file with the Commission and
open to public inspection.
    The filing may also be viewed on the web at http://www.ferc.gov
using the ``eLibrary'' link. Enter the docket number excluding the last
three digits in the docket number field to access the document. For
assistance, please contact FERC Online Support at
<EMAIL_ADDRESS>or toll free at<PHONE_NUMBER>, or TTY,
contact<PHONE_NUMBER>.
    Any questions concerning this amendment may be directed to Fory
Musser, Senior Vice President, Corporate Development, Venture Global
LNG, Inc., 2200 Pennsylvania Ave. NW., Suite 600 West, Washington, DC
20037.
    Specifically, TransCameron originally proposed to construct, own,
and operate the 23.5-mile-long East Lateral and 19.2-mile-long West
Lateral, both 42-inch-diameter pipelines designed to deliver
approximately 1,900,000 Dth/d of firm transportation service. However,
Venture Global Calcasieu Pass--TransCameron's sole customer--optimized
their LNG Terminal design and updated their natural gas transportation
requirements. To comply with these changes, TransCameron now proposes
to construct the 42-inch-diameter 23.5 mile-long pipeline (formerly
referred to as East Lateral) that will have transmission capacity of
approximately 2,125,000 Dth/d. TransCameron also requests approval of
proposed initial recourse rates for transportation service and its pro
forma FERC Gas Tariff. Amended cost of the pipeline is estimated at
$198.1 million.
    Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9,
within 90 days of this Notice the Commission staff will either:
Complete its environmental assessment (EA) and place it into the
Commission's public record (eLibrary) for this proceeding; or issue a
Notice of Schedule for Environmental Review. If a Notice of Schedule
for Environmental Review is issued, it will indicate, among other
milestones, the anticipated date for the Commission staff's issuance of
the final environmental impact statement (FEIS) or EA for this
proposal. The filing of the EA in the Commission's public record for
this proceeding or the issuance of a Notice of Schedule for
Environmental Review will serve to notify federal and state agencies of
the timing for the completion of all necessary reviews, and the
subsequent need to complete all federal authorizations within 90 days
of the date of issuance of the Commission staff's FEIS or EA.
    There are two ways to become involved in the Commission's review of
this project. First, any person wishing to obtain legal status by
becoming a party to the proceedings for this project should, on or
before the comment date stated below, file with the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426, a
motion to intervene in accordance with the requirements of the
Commission's Rules of Practice and Procedure (18 CFR 385.214 or
385.211) and the Regulations under the NGA (18 CFR 157.10). A person
obtaining party status will be placed on the service list maintained by
the Secretary of the Commission and will receive copies of all
documents filed by the applicant and by all other parties. A party must
submit 7 copies of filings made with the Commission and must mail a
copy to the applicant and to every other party in the proceeding. Only
parties to the proceeding can ask for court review of Commission orders
in the proceeding.
    However, a person does not have to intervene in order to have
comments considered. The second way to participate is by filing with
the Secretary of the Commission, as soon as possible, an original and
two copies of comments in support of or in opposition to this project.
The Commission will consider these comments in determining the
appropriate action to be taken, but the filing of a comment alone will
not serve to make the filer a party to the proceeding. The Commission's
rules require that persons filing comments in opposition to the project
provide copies of their protests only to the party or parties directly
involved in the protest.
    Persons who wish to comment only on the environmental review of
this project should submit an original and two copies of their comments
to the Secretary of the Commission. Environmental commentors will be
placed on the Commission's environmental mailing list, will receive
copies of the environmental documents, and will be notified of meetings
associated with the Commission's environmental review process.
Environmental commentors will not be required to serve copies of filed
documents on all other parties. However, the non-party commentors will
not receive copies of all documents filed by other parties or issued by
the Commission (except for the mailing of environmental documents
issued by the Commission) and will not have the right to seek court
review of the Commission's final order.
    The Commission strongly encourages electronic filings of comments,
protests and interventions in lieu of paper using the ``eFiling'' link
at http://www.ferc.gov. Persons unable to file electronically should
submit an original and 14 copies of the protest or intervention to the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426.
    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive email
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please email
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.
    Comment Date: July 29, 2016.

    Dated: July 8, 2016.
Kimberly D. Bose,
Secretary.
[FR Doc. 2016-16649 Filed 7-13-16; 8:45 am]
 BILLING CODE 6717-01-P