[Federal Register Volume 75, Number 233 (Monday, December 6, 2010)]
[Notices]
[Pages 75716-75718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30432]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63397; File No. SR-BX-2010-084]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change as Modified
by Amendment No. 1 To Extend, Through December 31, 2011, the Pilot
Program That Permits Certain Classes To Be Quoted in Penny Increments
on BOX
November 30, 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 November 24, 2010, NASDAQ OMX BX, Inc. (the ``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 self-regulatory organization. On November 30,
2010, the Exchange submitted Amendment No. 1 to the proposed rule
change. 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 33 (Penny Pilot
Program) of the Rules of the Boston Options Exchange Group, LLC
(``BOX'') to extend, through December 31, 2011, the pilot program that
permits certain classes to be quoted in penny increments on BOX
(``Penny Pilot Program''). The text of the proposed rule change is
available from the principal office of the Exchange, at the
Commission's Public Reference Room, on the Commission's Web site at
http://www.sec.gov, 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 Exchange proposes to extend the effective time period of the
Penny Pilot Program on BOX that is currently scheduled to expire on
December 31, 2010, for an additional year, through December 31,
2011.\3\ The Penny Pilot Program permits certain classes to be
[[Page 75717]]
quoted in penny increments on BOX. The minimum price variation for all
classes included in the Penny Pilot Program, except for the QQQQs, SPY
and IWM, will continue to be $0.01 for all quotations in option series
that are quoted at less than $3 per contract and $0.05 for all
quotations in option series that are quoted at $3 per contract or
greater. The QQQQs, SPY and IWM, will continue to be quoted in $0.01
increments for all options series. The Exchange is not currently
proposing any changes to the classes included within the Penny Pilot
Program.
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\3\ The Penny Pilot Program has been in effect on BOX since
January 26, 2007. See Securities Exchange Act Release No. 55155
(Jan. 23, 2007), 72 FR 4741 (Feb. 1, 2007) (SR-BSE-2006-49). The
Penny Pilot Program was later extended through September 27, 2007.
See Securities Exchange Act Release No. 56149 (July 26, 2007), 72 FR
42450 (Aug. 2, 2007) (SR-BSE-2007-38). A subsequent rule filing by
the Exchange on September 27, 2007 initiated a two-phased expansion
of the Penny Pilot Program. See Securities Exchange Act Release No.
56566 (Sept. 27, 2007), 72 FR 56400 (Oct. 3, 2007) (S-aRBSE-2007-
40). See also Securities Exchange Act Release No. 57566 (March 26,
2008), 73 FR 18013 (April 2, 2008) (SR-BSE-2008-20). The Penny Pilot
Program was then extended and expanded a number of times and is set
to expire on December 31, 2010. See Securities Exchange Act Release
Nos. 59629 (March 26, 2009), 74 FR 15021 (April 2, 2009) (SR-BX-
2009-017); 60213 (July 1, 2009), 74 FR 32998 (July 9, 2009) (SR-BX-
2009-032); 60886 (Oct. 27, 2009), 74 FR 56897 (Nov. 3, 2009) (SR-BX-
2009-067); 60950 (Nov. 6, 2009), 74 FR 58666 (Nov. 6, 2009) (SR-BX-
2009-069); 61456 (Feb. 1, 2010), 75 FR 6235 (Feb. 8, 2010) (SR-BX-
2010-011); 62039 (May 5, 2010), 75 FR 26313 (May 11, 2010) (SR-BX-
2010-032) and 62615 (July 30, 2010), 75 FR 47875 (Aug. 9, 2010) (SR-
BX-2010-052). The extension of the effective date is the only change
to the Penny Pilot Program being proposed at this time.
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Additionally, the Exchange proposes to amend Chapter V, Section
33(b) of the BOX Rules to continue to be able to replace, on a semi-
annual basis, any Pilot Program classes that have been delisted. These
delisted classes will be replaced by the next most actively traded
multiply listed options classes that are not yet included in the Pilot
Program, based on trading activity in the previous six months. The
replacement classes may be added to the Pilot Program on the second
trading day following January 1, 2011 and July 1, 2011.\4\ The
replacement issues will be selected based on trading activity for the
six-month period beginning June 1, 2010 and ending November 30, 2010,
for the January 2011 replacement, and the six month period beginning
December 1, 2010 and ending May 31, 2011 for the July 2011
replacements. The Exchange will employ the same parameters to
prospective replacement classes as approved and applicable under the
Pilot Program, including excluding high-priced underlying securities.
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\4\ The replacement classes will be announced to BOX
Participants via Regulatory Circular and published by the Exchange
on its Web site.
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Further, BOX agrees to submit to the Commission such reports
regarding the Penny Pilot Program as the Commission may request. Such
reports may include: (1) Data and analysis on the number of quotations
generated for options included in the Pilot Program; (2) an assessment
of the quotation spreads for the options included in the Pilot Program;
(3) an assessment of the impact of the Pilot Program on the capacity of
BOX's automated systems; (4) data reflecting the size and depth of
markets; and (5) any capacity problems or other problems that arose
related to the operation of the Pilot Program and how the Exchange
addressed them.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\5\ in general, and Section
6(b)(5) of the Act,\6\ 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 proposed extension will allow the Penny Pilot
Program to remain in effect on BOX without interruption.
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\5\ 15 U.S.C. 78f(b).
\6\ 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)
This proposed rule change is filed pursuant to paragraph (A) of
section 19(b)(3) of the Exchange Act \7\ and Rule 19b-4(f)(6)
thereunder.\8\ This proposed rule change does not significantly affect
the protection of investors or the public interest, does not impose any
significant burden on competition, and, by its terms, does not become
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest.\9\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ As required under Rule 19b-4(f)(6)(iii), BOX provided the
Commission with written notice of its intent to file the proposed
rule change along with a brief description and the 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.
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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-2010-084 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-2010-084. 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 business days
between the hours of 10 a.m. and 3 p.m., located at 100 F Street, NE.,
Washington, DC 20549. 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-2010-084 and should be
submitted on or before December 27, 2010.
[[Page 75718]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-30432 Filed 12-3-10; 8:45 am]
BILLING CODE 8011-01-P