[Federal Register Volume 75, Number 67 (Thursday, April 8, 2010)]
[Notices]
[Pages 17981-17983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7976]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61829; File No. SR-BX-2010-023]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Market Maker Quoting Obligations
April 1, 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 March 26, 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 Exchange. The Exchange filed the proposed
rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and Rule
19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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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 VI, Section 6 (Market Maker
Quotations) of the Rules of the Boston Options Exchange Group, LLC
(``BOX''). 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 Exchange's Internet Web site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/, and on the
Commission's Web site at http://www.sec.gov/.
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
[[Page 17982]]
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 update certain
quoting obligations of Market Makers.
Presently, a Market Maker must participate in the pre-opening phase
and thereafter make markets such that on a daily basis a Market Maker
posts quotes at least eighty percent (80%) of the time an appointed
options class is open for trading, for at least ninety percent (90%) of
the classes to which the Market Maker is appointed and for at least
sixty percent (60%) of the time in each of its appointed classes during
the time that the class(es) are open for trading.\5\
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\5\ See Chapter VI, Section 6(d) of the BOX Rules.
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Due to the fact that all Market Makers on BOX will still have some
minimum quoting obligations and that Market Makers are not the only
source of liquidity on BOX (e.g., OFP and Public Customer Orders also
provide liquidity), the Exchange no longer believes that it is
necessary for a Market Maker to be held to this level of quoting to
ensure adequate liquidity on BOX in a particular class. Therefore, the
Exchange is proposing to update Chapter VI, Section 6(d) of the BOX
Rules such that during continuous trading, on a daily basis, a Market
Maker must post quotes at least sixty percent (60%) of the time that
its appointed class(es) are open for trading. These obligations will
apply to all of the Market Maker's appointed classes collectively,
rather than on a class-by-class basis.
The Exchange notes that no changes are being proposed regarding
Market Makers' other obligations, including obligations to participate
in the pre-opening phase. Furthermore, a Market Maker may continue to
be called upon by an Options Official\6\ to submit a single valid two-
sided quote in one or more of the series of an options class to which
the Market Maker is appointed whenever, in the judgment of such
official, it is necessary to do so in the interest of fair and orderly
markets.\7\ Because the Market Makers' remaining obligations, including
those mentioned above, will continue, the Exchange believes this
justifies any benefits they receive due to their appointment as Market
Maker on BOX.
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\6\ The term ``Options Official'' means an officer of BOX
Regulation vested by the BOX Regulation Board with certain authority
to supervise option trading on BOX. See BOX Rules Chapter I, Section
1(a)(44).
\7\ See BOX Rules Chapter VI, Section 6(b)(iv).
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The Exchange also seeks to set forth certain exemptions within
Chapter VI, Section 6(d). Specifically, when determining if a Market
Maker has met its 60% quoting obligation, the Exchange would not
consider the duration of any periods where a technical failure of the
BOX Trading Host prevents the Market Maker from providing continuous
quotations. Also, an Options Official of the Exchange would retain the
discretion to consider other exceptions to this continuous electronic
quoting obligation based on demonstrated legal or regulatory
requirements or other mitigating circumstances.
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 proposed changes will more closely align the quoting
obligations of Market Makers with the levels the Exchange deems
necessary to help ensure that there is adequate liquidity on BOX in
each of the classes to which a particular Market Maker is appointed.
Furthermore, the proposed changes will result in such quoting
obligations being closer to the quoting obligations in effect on
another options exchange.\10\
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ See Rule 6.37B (Market Maker Quotations-OX) of the Rules of
NYSE Arca, Inc (``NYSE Arca'').
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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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
This proposed rule change is filed pursuant to paragraph (A) of
section 19(b)(3) of the Exchange Act \11\ and Rule 19b-4(f)(6)
thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, as required under Rule
19b-4(f)(6)(iii), the Exchange has submitted to the Commission
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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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.
The Exchange notes that the changes proposed herein will align the
quoting percentage obligations of Market Makers, as well as exceptions
thereto, with those of market makers on NYSE Arca.\13\ In addition, the
Market Makers' other remaining obligations are substantially similar to
those for market makers on NYSE Arca. The Exchange believes that this
proposed rule change, which is essential for competitive purposes and
to promote a free and open market for the benefit of investors, does
not raise any new, unique or substantive issues from those attendant
with the approved NYSE Arca rule.
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\13\ See supra note 10.
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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-2010-023 on the subject line.
[[Page 17983]]
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-2010-023. 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
publicly available. All submissions should refer to File Number SR-BX-
2010-023 and should be submitted on or before April 29, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7976 Filed 4-7-10; 8:45 am]
BILLING CODE 8011-01-P