[Federal Register Volume 75, Number 243 (Monday, December 20, 2010)]
[Notices]
[Pages 79432-79433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31827]
[[Page 79432]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63540; File No. SR-BX-2010-080]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Continue
the Practice Governing the Exchange's Directed Order Process on BOX and
Maintain the Effective Date Until December 31, 2010
December 14, 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 December 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to continue the practice governing the
Exchange's Directed Order \3\ process (``Pilot Program'') on the Boston
Options Exchange (``BOX'') and maintain the effective date until
December 31, 2010. The text of the proposed rule change is available on
the Exchange's Web site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/, on the Commission's Web site at http://www.sec.gov, at the Exchange, and at the Commission's Public Reference
Room.
---------------------------------------------------------------------------
\3\ Capitalized terms not otherwise defined herein shall have
the meanings prescribed within the BOX Rules.
---------------------------------------------------------------------------
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 continue the practice governing the
Exchange's Directed Order \4\ process (``Pilot Program'') on the Boston
Options Exchange (``BOX'') and maintain the effective date until
December 31, 2010. On December 3, 2010 the Exchange proposed an
amendment to the BOX Rules governing the Directed Order process on BOX
to permit Executing Participants (``EPs'') to only receive Directed
Orders through the Trading Host from Order Flow Providers (``OFPs'')
whom the EP has designated.\5\ Shortly thereafter, the original
corresponding proposal (``BSE-2005-52'') will be withdrawn.\6\ Upon the
withdrawal of BSE-2005-52, the original Pilot Program (``BSE-2006-
14''), which clarified that Directed Orders on BOX are not anonymous
and has been operating successfully for over four-and-a-half years,\7\
will automatically expire.\8\ BSE-2006-14 has been in effect since
March 14, 2006 as the Securities and Exchange Commission
(``Commission'') solicited comments and considered its effect on price
improvement.\9\ So as to allow BOX's current Directed Order rule and
process to continue on an uninterrupted basis, this new proposed Pilot
Program is designed to function in exactly the same manner as under
BSE-2006-14.\10\ The Exchange believes that the proposal does not raise
any additional or substantive issues from those raised when the
Exchange sought to implement BSE-2006-14. Additionally, the expiration
date will remain December 31, 2010.
---------------------------------------------------------------------------
\4\ Capitalized terms not otherwise defined herein shall have
the meanings prescribed within the BOX Rules.
\5\ See Securities Exchange Act Release No. 63539 (December 3,
2010) (SR-BX-2010-079).
\6\ See Securities Exchange Act Release No. 53357 (February 23,
2006), 71 FR 10730 (March 2, 2006) (SR-BSE-2005-52). Shortly after
the posting of the proposed new Pilot Program and BX-2010-079 on the
Commission's Web site, the Exchange plans to withdraw BSE-2005-52.
\7\ See Securities Exchange Act Release Nos. 34-53516 (March 20,
2006), 71 FR 15232 (March 27, 2006) (SR-BSE-2006-14); 54082 (June
30, 2006), 71 FR 38913 (July 10, 2006) (SR-BSE-2006-29); 54469
(September 19, 2006), 71 FR 56201 (September 26, 2006) (SR-BSE-2006-
38); 55139 (January 19, 2007), 72 FR 3448 (January 25, 2007) (SR-
BSE-2007-01); 56014 (July 5, 2007), 72 FR 38104 (July 12, 2007) (SR-
BSE-2007-31); 57195 (January 24, 2008), 73 FR 5610 (January 30,
2008) (SR-BSE-2008-04); 59311 (January 28, 2009), 74 FR 6071
(February 4, 2009) (SR-BX-2009-007); 59983 (May 27, 2009), 74 FR
26445 (June 2, 2009) (SR-BX-2009-027); 61065 (November 25, 2009), 74
FR 62860 (December 1, 2009) (SR-BX-2009-076); 61577 (February 24,
2010), 75 FR 9464 (March 2, 2010) (SR-BX-2010-017); and 61929 (April
16, 2010), 75 FR 21085 (April 22, 2010) (SR-BX-2010-031).
\8\ See Securities Exchange Act Release Nos. 62366 (June 23,
2010), 75 FR 37863 (June 30, 2010) (SR-BX-2010-041).
\9\ See BSE-2006-14.
\10\ See Securities Exchange Act Release No. 61929 (April 16,
2010), 75 FR 21085 (April 22, 2010) (SR-BX-2010-031).
---------------------------------------------------------------------------
This pilot period will afford the Commission the necessary time to
consider the Exchange's corresponding proposal to amend the BOX Rules
to permit EPs to only receive Directed Orders through the Trading Host
from OFPs whom the EP has designated.\11\ In the event the Commission
reaches a decision with respect to the corresponding Exchange proposal
to amend the BOX Rules before December 31, 2010, the proposed Pilot
Program governing the Directed Order process on BOX will cease to be
effective at the time of that decision.
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 63539 (December 3,
2010) (SR-BX-2010-079).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\12\ in general, and Section
6(b)(5) of the Act,\13\ 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, in order to continue the Directed Order process on an
uninterrupted basis, the proposal is designed to function in exactly
the same manner as BOX's current Directed Order process under BSE-2006-
14, clarifying that Directed Orders on BOX are not anonymous.\14\ This
proposed rule filing seeks to maintain the rule's effectiveness until
December 31, 2010. This pilot period will afford the Commission the
necessary time to consider the Exchange's corresponding proposal to
amend the BOX Rules to permit EPs to only receive Directed Orders
through the Trading Host from OFPs whom the EP has designated.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ See supra note 10.
---------------------------------------------------------------------------
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
[[Page 79433]]
necessary or appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments Regarding 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
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(6)
thereunder.\16\
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with 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 met this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
may not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \18\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange requests that the
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii),\19\ which would make the rule change effective and
operative upon filing. 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 continue the pilot for
Directed Orders that has operated under BSE-2006-14. The Pilot Program
is designed to function in exactly the same manner as under BSE-2006-
14. A waiver would therefore continue to conform the BOX rules to BOX's
current practice without interruption and clarify that Directed Orders
on BOX are not anonymous.\20\ Accordingly, the Commission designates
the proposed rule change operative upon filing with the Commission.
---------------------------------------------------------------------------
\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ Id.
\20\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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-2010-080 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-2010-080. 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 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, 100 F Street, NE., Washington,
DC 20549, 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 publicly available. All submissions
should refer to File Number SR-BX-2010-080 and should be submitted on
or before January 10, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------
\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31827 Filed 12-17-10; 8:45 am]
BILLING CODE 8011-01-P