[Federal Register Volume 75, Number 186 (Monday, September 27, 2010)]
[Notices]
[Pages 59304-59305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24077]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62959; File No. SR-BX-2010-065]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Provide
an Additional Order Type Which Will Give Options Participants Greater
Control Over the Circumstances in Which Their Orders Are Executed
September 21, 2010.
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 September 13, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Chapter V, Section 14 (Order Entry)
of the Rules of the Boston Options Exchange Group, LLC (``BOX'') to
provide an additional order type which will give Options Participants
greater control over the circumstances in which their orders are
executed. The text of the proposed rule change is available from the
principal office of the Exchange, at the Commission's Public Reference
Room and also on the Exchange's Internet Web site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.
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 self-regulatory organization
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 self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to provide an
additional order type, the ``Session Order'', which will give Options
Participants greater control over the circumstances in which their
orders are cancelled or executed. By designating the Session Order
duration type for an order, an Options Participant will be able to
specify on an order by order basis that the designated Session Order it
has sent to BOX should be cancelled as soon as the Options Participant
loses its connection to the BOX system and its ability to either
directly modify or cancel the order.\3\ The proposal will offer
protection to Options Participants' orders in the event that they lose
communication with the BOX Trading Host \4\ due to a loss of
connectivity between their system and BOX or when there is a
disconnection between internal BOX components.
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\3\ Session Order duration type is not available for PIP Orders,
Primary Improvement Orders or Improvement Orders. See proposed
Section 16(d)(3) of Chapter V of the BOX Rules.
\4\ References herein to the term Trading Host will have the
meaning as set forth in Section 1(a)(67) of Chapter I of the BOX
Rules.
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An order sent to BOX with this Session Order duration type will
remain active in the BOX trading system until one of the following
events (``Triggering Event'') occurs:
The connection between the Options Participant and BOX
that was used to enter the order is interrupted;
There is a disconnection between internal BOX components
used to process orders, causing a component to lose its connection to
the Options Participant or the Trading Host while in possession of the
Session Order;
A component of the Trading Host experiences a system error
in which it is unable to process open orders while in possession of the
Session Order.
Upon the occurrence of one of these Triggering Events, meaning the
Options Participant has lost its ability to either directly modify or
cancel the order, only those Session Orders residing in the affected
BOX internal system(s) will be automatically cancelled by BOX. Any
Triggering Events are connection or component specific. Therefore, when
a particular external connection between BOX and the Options
Participant is interrupted, only those Session Orders that came through
the interrupted connection will be automatically cancelled by BOX.
Similarly, when the Triggering Event is a disconnection between
internal BOX components, the BOX system will only automatically cancel
Session Orders related to the component that is not ``responding''. The
cancellation of the Session Orders from an affected connection will
neither impact nor determine the treatment of the orders of the same or
other Options Participants entered into the Trading Host via a separate
and distinct connection. All Session Orders will be cancelled at the
end of the normal trading day.
A Session Order will not be cancelled and shall remain active in
the BOX market if the order is not allowed to be cancelled pursuant to
another BOX Rule or it is in one of the following BOX system processes
when a Triggering Event occurs:
The order is being exposed to the BOX market pursuant to
the NBBO trade through filter process; \5\
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\5\ See Section 16(b) of Chapter V of the BOX Rules.
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The order is a Directed Order to which the Executing
Participant has not yet responded; \6\
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\6\ See Section 5(c)(ii) of Chapter VI of the BOX Rules.
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The order has been routed to an away exchange pursuant to
the Routing Rules.\7\
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\7\ See Section 5 of Chapter XII of the BOX Rules.
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When a Session Order is automatically cancelled, BOX will
immediately generate a cancellation message to notify the Options
Participant that its order is no longer active. After the Session
Order(s) are
[[Page 59305]]
automatically cancelled for an Options Participant that lost its
connection to BOX, and upon a reconnection between the Options
Participant and the Trading Host on the same trading day, the Options
Participant will be able to retrieve any Session Order cancellation
notices when it reconnects.
BOX will inform Options Participants via Information Circular about
the functionality and use of the Session Order duration type and the
implementation date prior to its implementation in the BOX trading
system.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\8\ in general, and Section
6(b)(5) of the Act,\9\ in particular, in that it is designed to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism for a free and open market and a national market
system and, in general, to protect investors and the public interest.
In particular, the Exchange believes that this proposed rule change
will benefit the marketplace and protect investors because it will
reduce the risk of erroneous or stale orders on the BOX Book in the
event that an Options Participant loses connectivity with the Trading
Host. Furthermore, the proposed Session Order will provide for the
protection of Options Participants and their customers, who must bear
the burden of market risk for stale orders caused by circumstances
outside of their control, as well as for the protection of investors
and the efficiency and fairness of the market as a whole.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition 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. Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or
for Accelerated Effectiveness Pursuant to Section 19(b)(2)
Because the foregoing rule does not (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, provided that the self-regulatory organization
has given the Commission written notice of its intent to file the
proposed rule change at least five business days prior to the date of
filing of the proposed rule change or such shorter time as designated
by the Commission, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6)
thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires that a self-regulatory organization submit to the
Commission written notice of its intention to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the filing of the
proposed change, or such shorter time as designated by the
Commission. The Commission notes that the Exchange has satisfied
this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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 protected]. Please include
File Number SR-BX-2010-065 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2010-065. 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 website viewing and
printing in the Commission's Public Reference Room, located at 100 F
Street, NE., Washington, DC 20549, on business days between the hours
of 10 a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BX-2010-065 and should be
submitted on or before October 18, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-24077 Filed 9-24-10; 8:45 am]
BILLING CODE 8010-01-P