[Federal Register Volume 76, Number 178 (Wednesday, September 14, 2011)]
[Notices]
[Pages 56845-56847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23384]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65293; File No. SR-BX-2011-063]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
BOX Fee Schedule

September 8, 2011.
    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 August 31, 2011, 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. The Exchange 
filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of 
the Act,\3\ and Rule 19b-4(f)(2) 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ OMX BX, Inc. (the ``Exchange'') proposes to amend the Fee 
Schedule of the Boston Options Exchange Group, LLC (``BOX''). While 
changes to the BOX Fee Schedule pursuant to this proposal will be 
effective upon filing, the changes will become operative on September 
1, 2011. The text of the proposed changes is attached as Exhibit 5. The 
text of the proposed rule change is available from the principal office 
of the Exchange, at the Commission's Public Reference Room, 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
Section 1 Trading Fees for Public Customer Accounts
    Currently, the trading fee for Public Customers is $0.10 per 
executed contract for all non-PIP \5\ transactions. The Exchange 
proposes to reduce this fee to $0.07.
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    \5\ See Price Improvement Period (``PIP'') in Chapter V, Section 
18 of the BOX Trading Rules.
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Section 2 Trading Fees for Broker-Dealer Proprietary Accounts
    Currently, the trading fee for broker-dealer proprietary accounts 
is $0.25 per contract traded for all classes and all transactions. The 
Exchange proposes to increase this fee to $0.40 per contract traded for 
all non-PIP transactions.
Fees and Credits in Section 7a
    Currently, Section 7a of the BOX Fee Schedule specifies a $0.55 
credit for removing liquidity and $0.55 fee for adding liquidity for 
transactions in options classes not in the Penny Pilot program (``Non-
Penny classes'') on the BOX Book, and a $0.15 credit for removing 
liquidity and $0.15 fee for adding liquidity for transactions in Penny 
Pilot classes. These credits and fees apply equally to all account 
types, whether Public Customer, Broker Dealer, or Market Maker, and are 
in addition to any applicable trading fees, as described in Sections 1 
through 3 of the BOX Fee Schedule.
    The Exchange proposes to increase the existing credits and fees 
within Section 7a for transactions in Non-Penny classes on the BOX Book 
from $0.55 to $0.65, and in Penny Pilot classes, from $0.15 to $0.22.

[[Page 56846]]

Correction to QQQ Symbol in Section 7d
    The Exchange also proposes a technical correction to the symbol for 
the QQQQs referenced in various provisions of Section 7d of the BOX Fee 
Schedule. The correct symbol is QQQ and was previously incorrectly 
referenced as QQQQ.
    The proposed decrease in transaction fees for Public Customers, 
increase in fees for broker-dealer proprietary accounts, and increase 
in the credit for removing liquidity and fee for adding liquidity on 
BOX are generally intended to attract additional order flow and 
increase liquidity for the benefit of all BOX market participants. 
Additionally, BOX notes that it is one of nine options markets in the 
national market system for standardized options. Sending orders to and 
trading on BOX is entirely voluntary. Under these circumstances, BOX 
transaction fees must be competitive to attract order flow, execute 
orders, and grow its market. As such, BOX believes its fees are fair 
and reasonable.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\6\ in general, and Section 
6(b)(4) of the Act,\7\ in particular, in that it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and other persons using its facilities. The Exchange 
believes the changes proposed are an equitable allocation of reasonable 
fees and charges among BOX Options Participants. The Exchange also 
believes that there is an equitable allocation of reasonable credits 
among BOX Options Participants.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is equitable to provide a credit to 
any Participant that removes liquidity from the BOX Book. The Exchange 
further believes an increase in this credit may attract additional 
order flow to BOX, resulting in greater liquidity to the benefit of all 
market participants. The Exchange believes that the proposed fee for 
adding liquidity and credit for removing liquidity in non-PIP 
transactions are equitable and non-discriminatory because such fees and 
credits apply uniformly to all categories of participants, across all 
account types and options classes. Further, the Exchange believes the 
proposed fees and credits related to non-PIP transactions to be 
reasonable. BOX operates within a highly competitive market in which 
market participants can readily direct order flow to any of eight other 
competing venues if they deem fees at a particular venue to be 
excessive. The changes proposed by this filing are intended to attract 
order flow to BOX by offering incentives to all market participants to 
submit their orders to BOX.
    The Exchange notes that this proposed rule change will increase 
both the fees and credit for non-PIP transactions. The result is that 
BOX will collect an increased fee from Participants that add liquidity 
on BOX and credit another Participant an equal amount for removing 
liquidity. Stated otherwise, the collection of the increased fees will 
not result in additional revenue to BOX, but will simply allow BOX to 
provide the credit incentive to Participants to attract additional 
order flow. The Exchange believes it is appropriate to provide 
incentives to market participants to direct order flow to remove 
liquidity from BOX, similar to various and widely-used payment for 
order flow programs used by other options exchanges. While BOX provides 
incentives to market participants to remove liquidity from BOX, the 
cumulative effect of the changes proposed will be an increase in fees 
for those participants that add liquidity in non-PIP transactions. The 
Exchange believes that incentives provided to those that remove 
liquidity will attract additional order flow to BOX. Further, the 
Exchange believes that a cumulative increase in transaction fees will 
not deter participants from adding liquidity on BOX, and that they will 
be more likely to add more liquidity to the BOX market so that they may 
interact with those participants seeking to remove liquidity.
    The Exchange believes the transaction fees proposed for non-PIP 
transactions in broker-dealer proprietary accounts are reasonable. As 
stated above, BOX operates within a highly competitive business. The 
proposed increase in fees charged to broker-dealer proprietary accounts 
is designed to be comparable to the costs that such accounts would be 
charged at competing venues. Further, and as stated above, the Exchange 
believes that participants that add liquidity on BOX will not be 
impaired by the cumulative increase to fees on broker-dealer 
proprietary accounts proposed.
    Moreover, the Exchange believes it is equitable and not unfairly 
discriminatory to charge broker-dealer proprietary accounts comparably 
higher fees than BOX Market Makers. Market Makers have obligations that 
other Participants do not. In particular, they must maintain active 
two-sided markets in the classes in which they are appointed, and must 
meet certain minimum quoting requirements. As such, the Exchange 
believes it is appropriate that Market Makers be charged lower 
transaction fees on BOX. The Exchange also believes it is equitable and 
not unfairly discriminatory that Public Customer be charged lower 
transaction fees than broker-dealers on BOX. The securities markets 
generally, and BOX in particular, have historically aimed to improve 
markets for investors and develop various features within the market 
structure for customer benefit. As such, the Exchange believes the 
proposed reduction in Public Customer transaction fees is appropriate 
and not unfairly discriminatory.
    The Exchange believes the proposed reduction in Public Customer 
transaction fees is reasonable. The Exchange believes it promotes the 
best interests of investors to have lower transaction costs for Public 
Customers, and that the proposed reduction in fees will attract 
additional Public Customer order flow to BOX. Additionally and as 
previously stated, the Exchange believes the proposed increase in the 
credit for removing liquidity will attract additional order flow to 
BOX, providing greater liquidity to the benefit of all market 
participants.
    The proposed changes will allow the fees charged on BOX to remain 
competitive with other exchanges as well as apply such fees in a manner 
which is equitable among all BOX Participants. The Exchange believes 
the proposed transaction fees and credits are fair and reasonable and 
must be competitive with fees and credits in place on other exchanges. 
Further, the Exchange believes that this competitive marketplace 
impacts the fees and credits present on BOX today and influences the 
proposal set forth above.

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.

[[Page 56847]]

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Exchange Act \8\ and Rule 19b-4(f)(2) 
thereunder,\9\ because it establishes or changes a due, fee, or other 
charge applicable only to a member.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend the rule 
change if it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
would otherwise further 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-2011-063 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-2011-063. 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, NW., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. The text of the proposed rule change is available on 
the Commission's Web site at http://www.sec.gov. 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-2011-063 and should be submitted on or before October 5, 2011.

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-23384 Filed 9-13-11; 8:45 am]
BILLING CODE 8011-01-P