[Federal Register Volume 75, Number 214 (Friday, November 5, 2010)]
[Notices]
[Pages 68389-68390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27945]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63220; File No. SR-BX-2010-072]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Establish 
a Revenue Sharing Program With Correlix, Inc. and Free Trial Period for 
New Users

November 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 October 26, 2010, NASDAQ OMX BX, Inc. (``BX'' or ``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 BX. The Exchange has designated the proposed rule 
change as effecting a change described under Rule 19b-4(f)(6) under the 
Act,\3\ which renders the proposal effective upon filing with the 
Commission.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    BX proposes to establish a revenue sharing program with Correlix, 
Inc. and a free trial period for new users. BX will implement the 
proposed change immediately. The text of the proposed rule change is 
available at http://nasdaqomxbx.cchwallstreet.com, at BX's principal 
office, on the Commission's Web site at http://www.sec.gov, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, BX 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. BX 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 is filing a proposed rule change to establish a 
revenue sharing program with Correlix. The Exchange has entered into an 
agreement with Correlix to provide to users of the Exchange real-time 
analytical tools to measure the latency of orders to and from its 
systems. Under the agreement, the Exchange will receive 30% of the 
total monthly subscription fees received by Correlix from parties who 
have contracted directly with Correlix to use their RaceTeam latency 
measurement service for the Exchange's systems. The Exchange will not 
bill or contract with any Correlix RaceTeam customer directly.
    Pricing for the Correlix RaceTeam product for the Exchange varies 
depending on the number of unique MPIDs and ports selected by the 
customer for monitoring by Correlix. For the Exchange, the fee will be 
an initial $1,000 monthly base fee for the first unique MPID monitored. 
For each additional unique MIPD sought to be monitored, an additional 
monthly charge of $1,000 will be assessed. The monthly price for each 
unique MPID includes the monitoring of up to 25 Exchange port 
connections associated with that particular MPID. Customers that wish 
to exceed 25 ports per MPID for monitoring can purchase additional 25 
port blocks for an additional fee of $1,000 per month per MPID.
    Under the program, Correlix will see an individualized unique 
Exchange-generated identifier that will allow Correlix RaceTeam to 
determine round trip order time,\4\ from the time the order reaches the 
Exchange extranet, through the Exchange matching engine, and back out 
of the Exchange extranet. The RaceTeam product offering does not 
measure latency outside of the Exchange extranet. The unique identifier 
serves as a technological information barrier so that the RaceTeam data 
collector will only be able to view data for Correlix RaceTeam 
subscriber firms related to latency. Correlix will not see subscriber's 
individual order detail such as security, price or size. Individual 
RaceTeam subscribers' logins will restrict access to only their own 
latency data. Correlix will see no specific information regarding the 
trading activity of non-subscribers.
---------------------------------------------------------------------------

    \4\ The product measures latency of orders whether the orders 
are rejected, executed, or partially executed.
---------------------------------------------------------------------------

    The Exchange believes that the above arrangement will provide users 
of its systems greater transparency into the processing of their 
trading activity and allow them to make more efficient trading 
decisions.
    In addition, the Exchange seeks Commission approval to establish a 
flexible 60-day free trial so parties will be eligible for one free 60-
day trial period of Correlix services whenever they initially elect to 
sign up for the service, now or in the future. The Exchange is 
proposing the flexible trial to ensure that all Correlix users have an 
equal opportunity to take advantage of an initial free trial period. 
NASDAQ also notes that the introduction of more flexibility in 
determining when to participate in the free trial period will allow 
Correlix users to introduce the product into their own technology 
infrastructure at a time of their own choosing and in coordination with 
other scheduled technology initiatives.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and with 
Section 6(b)(5) of the Act,\6\ 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

[[Page 68390]]

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. In particular, the filing 
makes transparent uniform fees imposed for latency measurement 
services.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In addition, the Exchange believes that the proposed rule change is 
consistent with the provisions of Section 6 of the Act,\7\ in general, 
and with Section 6(b)(4) of the Act,\8\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which the Exchange operates or controls. In 
particular, the Exchange notes that the use of Correlix latency 
measurement services is entirely voluntary and made available on a non-
discriminatory basis.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    BX does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) of the Act and paragraph (f)(6) of Rule 19b-4 
thereunder, in that the proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) 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; 
provided the self-regulatory organization has given 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 requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. The Commission notes that the Correlix service and its 
fee sharing model have been previously approved by the Commission for 
other markets.\9\ Waiver of the 30-day operative delay will ensure that 
the free period is made available to all interested parties without 
delay. Accordingly, the Commission designates the proposed rule change 
operative upon filing with the Commission.\10\
---------------------------------------------------------------------------

    \9\ See Exchange Act Release Nos. 62605 (July 30, 2010) 
(Approval of Correlix fee sharing for NASDAQ Exchange), 62928 
(September 17, 2010) (Approval of Correlix fee sharing for EDGEA 
Exchange), and 62929 (September 17, 2010) (Approval of Correlix fee 
sharing for EDGEX Exchange).
    \10\ 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. 
78(c)(f).
---------------------------------------------------------------------------

    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-2010-072 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-2010-072. 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, 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 
available publicly. All submissions should refer to File Number SR-BX-
2010-072, and should be submitted on or before November 26, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-27945 Filed 11-4-10; 8:45 am]
BILLING CODE 8011-01-P