[Federal Register Volume 75, Number 229 (Tuesday, November 30, 2010)]
[Notices]
[Pages 74121-74123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30035]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63364; File No. SR-BX-2010-078]
Self-Regulatory Organizations; NASDAQ OMX BX; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Extending the Pilot
Period for Boston Options Exchange To Receive Inbound Routes of Orders
From Nasdaq Options Services
November 23, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on November 17, 2010, NASDAQ OMX BX (the ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II,
[[Page 74122]]
below, which Items have been prepared by the Exchange. The Exchange has
designated the proposed rule change as constituting a non-controversial
rule change under Rule 19b-4(f)(6) under the Act,\3\ which renders the
proposal effective upon filing with the Commission. 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.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange submits this proposed rule change to extend the pilot
period of the Exchange's prior approval for Boston Options Exchange
(``BOX'') to receive inbound routes of certain option orders from
Nasdaq Options Services, LLC (``NOS'') through May 18, 2011.
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
Currently, NOS is the approved outbound routing facility of the
NASDAQ Exchange for NOM, providing outbound routing from NOM to other
market centers.\4\ The Exchange and the NASDAQ Exchange have previously
adopted rules to permit BOX to receive inbound routes of certain option
orders by NOS in its capacity as an order routing facility of the
NASDAQ Exchange for NOM.\5\ The Exchange specifically has adopted a
rule to prevent potential informational advantages resulting from the
affiliation between BOX and NOS, as related to NOS's authority to route
certain orders from NOM to BOX without checking the NOM book prior to
routing.\6\ NOS's authority to route these orders to BOX is subject to
a pilot period ending November 17, 2010.\7\ The Exchange hereby seeks
to extend the previously approved pilot period (with the attendant
obligations and conditions) for an additional 6 months, through May 18,
2011.
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\4\ NOM Rule Chapter VI, Section 11(c). Under NOM Rule Chapter
VI, Section 11(c): (1) NOM routes orders in options via NOS, which
serves as the sole ``routing facility'' of NOM; (2) the sole
function of the routing facility is to route orders in options to
away markets pursuant to NOM rules, solely on behalf of NOM; (3) NOS
is a member of an unaffiliated self-regulatory organization, which
is the designated examining authority for the broker-dealer; (4) the
routing facility is subject to regulation as a facility of the
NASDAQ Exchange, including the requirement to file proposed rule
changes under Section 19 of the Act; (5) use of NOS to route order
to other market centers is optional; (6) NOM must establish and
maintain procedures and internal controls reasonably designed to
adequately restrict the flow of confidential and proprietary
information between the NASDAQ Exchange and its facilities
(including the routing facility), and any other entity; and (7) the
books, records, premises, officers, directors, agents, and employees
of the routing facility, as a facility of the NASDAQ Exchange, shall
be subject at all times to inspection and copying by the NASDAQ
Exchange and the Commission.
\5\ See Securities Exchange Act Release No. 60349 (July 20,
2009), 74 FR 37071 (July 27, 2009) (SR-BX-2009-035); Securities
Exchange Act Release No. 60354 (July 21, 2009), 74 FR 37074 (July
27, 2009) (SR-NASDAQ-2009-065).
\6\ See Chapter XXXIX, Section 2(c) of the Grandfathered Rules
of the Exchange.
\7\ See Securities Exchange Act Release No. 62555 (July 22,
2010), 75 FR 44835 (July 29, 2010) (SR-BX-2010-051).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\8\ in general, and with
Section 6(b)(5) of the Act,\9\ in particular, in that the proposal is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, 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 of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Specifically,
the proposed rule change will allow BOX to continue receiving inbound
routes of equities orders from NOS, acting in its capacity as a
facility of the NASDAQ Exchange, in a manner consistent with prior
approvals and established protections. The Exchange believes that
extending the previously approved pilot period for three [sic] months
is of sufficient length to permit both the Exchange and the Commission
to assess the impact of the Exchange's authority to permit BOX to
receive direct inbound routes of certain option orders via NOS
(including the attendant obligations and conditions).
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\8\ 15 U.S.C. 78f.
\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
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change does not: (1) Significantly
affect the protection of investors or the public interest; (2) impose
any significant burden on competition; and (3) become operative for 30
days after the date of this filing, or such shorter time as the
Commission may designate, it 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).
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A proposed rule change filed under 19b-4(f)(6) normally may not
become operative prior to 30 days after the date of filing.\12\
However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay. The Exchange notes that
the proposal will allow BOX to continue receiving inbound routes of
equities orders from NOS, in a manner consistent with prior approvals
and established protections, while also permitting the Exchange and the
Commission to assess the impact of the pilot.\14\ The Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because such waiver
would allow the
[[Page 74123]]
pilot period to be extended without interruption delay through May 18,
2011. For this reason, the Commission designates the proposed rule
change to be operative upon filing with the Commission.\15\
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\12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
the Commission written notice of its intent 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 date of filing
of the proposed rule change, or such shorter time as designated by
the Commission. The Exchange has satisfied this requirement.
\13\ Id.
\14\ See supra Section II.A.2.
\15\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such 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-2010-078 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-2010-078. 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 Web site viewing and
printing in the Commission's Public Reference Room on official business
days between the hours of 10 a.m. and 3 p.m. Copies of such filing also
will be available for inspection and copying at the principal office of
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-
2010-078 and should be submitted on or before December 21, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-30035 Filed 11-29-10; 8:45 am]
BILLING CODE 8011-01-P