[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