From: Wilbur Su [wilbur.su@verizon.net]
Sent: Saturday, September 06, 2003 6:40 PM
To: rule-comments@sec.gov
Subject: BOX - SR-BSE-2002-15

September 6, 2003

Via Electronic Mail

Jonathan G. Katz, Secretary 
Securities and Exchange Commission 
450 Fifth Street, N.W. 
Washington, D.C. 20549 

Re: Boston Options Exchange, File No. SR-BSE-2002-15

Dear Mr. Katz,

I am writing to urge the Securities and Exchange Commission to approve the 
Boston Options Exchange.

The Boston Options Exchange ("BOX") is a significant improvements over the 
existing U.S. options markets in terms of fairness and equity.  For example:

  1.. There will be no order cancellation fees that are charged to customers 
  when they change their order prices when the market is moving in the wrong 
  direction.  These order cancellation fees are charged even if the specialist 
  or market maker does not honor its quotes.  
  
  2.. Anybody, whether it is a public customer, global investment bank, or
  market maker, can place two sided option quotes at anytime. 
  
  3.. Low barriers to entry where market makers and member firms do not have 
  to purchase or lease a seat. 
  
  4.. Elimination of other trading rules that restrict fair and open markets 
  such as (a) 15 second speed bump rules, (b) customers may not computer 
  generate orders, (c) customers may only manually transmit orders, and (d) 
  customers may not engage in market making even if they would provide the 
  best two sided quote. 
  
  5.. No turning off of automatic execution systems.  Currently, various U.S. 
  option markets have no set standards for turning off the automatic execution 
  systems for customer orders.  Imagine if the NASDAQ turned off SUPERSOES 
  arbitrarily and orders would have to be phoned into brokers like during the 
  1987 stock market crash. 
  
  6.. Eliminating different sets of quotes for a public customer versus a 
  broker/dealer. 
  
  7.. No more fading of customer orders in locked or crossed markets.  Currently, 
  some of the specialists and market makers on some of the U.S. option markets 
  do not have to honor their markets during locked and crossed markets.  Everybody 
  from finance knows that under option pricing models, different market participants 
  will have different inputs and will use different models in computing their own 
  fair values.  It is absurd that market makers and specialists do not have to 
  honor their markets when they believe that "smart order flow" wants to trade 
  against them. 
  
  8.. Time and price priority regardless of who the market participant is.  Thus, 
  there is an incentive for quoting the highest bid and the lowest offer. 
  
  9.. Elimination of the human element in trading which can and does lead to 
  mischief.  Currently, some specialists and market makers on some of the U.S. 
  option markets will fade an order, trade ahead of an order or delay execution 
  of an order because of the manual process.  With a fully computerized market 
  model, the BOX will eliminate these questionable trading practices.
  
The Securities and Exchange Commission should approve the BOX.  Markets and market 
participants that promote tighter markets, eliminate absurd rules that benefit their 
member organizations at the expense of other market participants, eliminate 
questionable trading practices, and promote low barriers to entry should be given 
the opportunity to operate.  The Securities and Exchange Commission should reward 
people and organizations that are innovative.  In turn, the market forces will punish 
U.S. option markets that are afraid of change and want the status quo.  These U.S. 
option markets will lose volume and will maybe go out of business.  

Thank you very much for reading my comments.  As a public customer, I can only benefit 
from the BOX and hope that you will approve this options exchange as soon as possible.

 

Sincerely,

 

Wilbur Su