[Federal Register Volume 77, Number 49 (Tuesday, March 13, 2012)]
[Notices]
[Pages 14845-14847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6033]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66526); File No. SR-BX-2012-017]


Self-Regulatory Organizations; NASDAQ OMX BX; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Identify the 
Proprietary Data Feed of BOX Market Information That BOX Makes 
Available to Its Options Participants at No Charge

March 7, 2012.
    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 2, 2012, NASDAQ OMX BX (the ``Exchange'') filed with the 
Securities and Exchange Commission (the ``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the Exchange. The Exchange has designated the proposed rule 
change as constituting a non-controversial rule change under Rule 19b-
4(f)(6) under the Act,\3\ which renders the proposal effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 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 Trading Rules of the Boston Options 
Exchange Group, LLC (``BOX'') to identify the proprietary data feed of 
BOX market information that BOX makes available to its Options 
Participants at no charge. 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 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 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 proposing to amend subsection 16(a) to Chapter V of 
the BOX Trading Rules to specify the name and content of the BOX market 
trading data feed containing information that BOX makes available to 
BOX Options Participants without charge and to restructure the current 
subsection to provide more clarity.
    BOX provides the BOX High Speed Vendor Feed (``HSVF'') as an 
alternative for BOX Options Participants to receive BOX market data 
directly from BOX rather than via a commercial data vendor (which 
receives data from the Options Price Reporting Authority (``OPRA'')). 
The HSVF is available to all BOX Participants.
    Current subsection 16(a)ii will be removed and replaced with 
language which specifies that the HSVF contains the following 
information:
    (1) Trades and trade cancellation information;
    (2) Best-ranked price level to buy and the best ranked price level 
to sell;
    (3) Instrument summaries (including information such as high, low, 
and last trade price and traded volume);
    (4) The five best limit prices for each option instrument;
    (5) Request for Quote messages (see Chapter I, Section 1(a)(58), 
Chapter V, Section 9(h) and Chapter VI, Section 6); \4\
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    \4\ RFQ messages are defined in Chapter I, Section 1(a)(58); 
Chapter V, Section 9(h) provides that the Market Regulation Center 
may send an RFQ to aid in the opening under certain conditions; and 
Chapter VI, Section 6 requires a market maker to post a valid two-
sided quote that meets certain size and spread requirements within 3 
seconds of receiving any RFQ message or when called up on to submit 
a quote by an Options Official.
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    (6) PIP Order, Improvement Order and Block Trade Order 
(Facilitation and Solicitation) information (as set forth in Sections 
18 and 31 of Chapter V of the BOX Rules, respectively);
    (7) Orders exposed at NBBO (as set forth in Chapter V, Section 
16(b)iii and Chapter VI, Section 5(c)iii of the BOX Rules, 
respectively); \5\
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    \5\ See Chapter V, Section 16(b)iii, providing that where an 
order is received which is executable against the NBBO and there is 
not a quote on BOX that is equal to the NBBO, that the order is 
exposed on the BOX Book at the NBBO for a period of one second. If 
the order is not executed during the one second exposure period, 
then the order is either routed or cancelled. See also Chapter VI, 
Section 5(c)iii setting forth, among other matters, the rules 
regarding exposure within the Directed Order process.

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[[Page 14846]]

    (8) Instrument dictionary (e.g. strike price, expiration date, 
underlying symbol, price threshold, and minimum trading increment for 
instruments traded on BOX);
    (9) Options class and instrument status change notices (e.g., 
whether an instrument or class is in pre-opening, continuous trading, 
closed, halted, or whether prohibited from trading); and
    (10) Options class opening time.

    The proposed change identifies the BOX proprietary data feed 
containing market information that BOX makes available to its Options 
Participants and sets forth in the BOX Rules that the HSVF is provided 
at no charge.\6\ As will be set forth in more detail below, all orders 
and executions displayed through the HSVF are anonymous and do not 
contain the identity of the party submitting the order.
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    \6\ As noted, BOX does not charge any fee directly for the HSVF. 
BOX does charge an initial setup fee, and a monthly maintenance fee, 
for physical connections to BOX, as set forth in Section 5.a., of 
the BOX Fee Schedule. A physical connection enables Participants to 
submit quotes or orders to BOX, and receive the HSVF if they choose. 
All BOX Market Makers must accept the HSVF. However, BOX Order Flow 
Providers are not obligated to accept the HSVF.
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    The Exchange also proposes to restructure subsection 16(a). 
Specifically, the Exchange proposes to remove the introductory language 
to 16(a). The current introductory language of subsection 16(a) does 
not fully describe the entire subsection. The removal of ``Order 
Ranking and Display'' should eliminate any potential for confusion 
regarding information that is set forth in that subsection. In 
addition, as proposed, the new first sentence sets forth that the rules 
regarding the manner in which BOX displays market information are 
provided in subsection (a)ii. The current language modifies current 
subsection 16(a)ii, and provides, that except as provided for in 
Section 18 (the Price Improvement Period), BOX shall display all non-
marketable Limit Orders in a manner described below. This language is 
no longer applicable, because, as previously described, proposed 
subsection (a)ii completely replaces current subsection 16(a)ii and 
will now set forth the content of the HSVF in this portion of the rule. 
A reference to subsection (a)iii is being provided to add more clarity 
to the introductory paragraph. The language referencing that the 
information is being displayed on an anonymous basis is being removed, 
as it is duplicative and can be found in Chapter V, Section 14(e) which 
provides that, ``[t]he identity of Options Participants who submit 
orders to the Trading Host will remain anonymous to market participants 
at all times, except orders submitted through the Directed Order 
process, during error resolution or through the normal clearing process 
as set forth in Chapter V, Section 16(a)(vi) of these Rules.'' Finally, 
a reference to Rule 11Ac-1 is being replaced with a reference to Rule 
602. Rule 11Ac-1 was re-designated as Rule 602 as part of the adoption 
of Regulation NMS.
2. Statutory Basis
    The Exchange believes that this proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (``Act''),\7\ 
in general, and furthers the objectives of Section 6(b)(5) of the Act, 
in particular, in that it 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 facilitating transactions in securities, and to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public. It was believed that 
this authority would expand the amount of data available to consumers, 
and also spur innovation and competition for the provision of market 
data. The Exchange believes that the proposal is in keeping with those 
principles by promoting increased transparency through the 
dissemination of more useful proprietary data and also by clarifying 
its availability to market participants.
    Additionally, the Exchange is making a voluntary decision to make 
this data available, unlike the best bid and offer which must be made 
available under the Act. The Exchange chooses to make the data 
available as proposed in order to improve market quality, to attract 
order flow, and to increase transparency. Once this proposed change 
becomes effective, the Exchange will continue making the data available 
until such time as the Exchange changes its rule.

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

    The Exchange 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. To 
the contrary, offering a voluntary and free data feed promotes 
competition among trading platforms by advertising available trading 
interest and enabling BOX to attract additional liquidity.

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

    No written comments were either solicited or received.

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

    Because the foregoing 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 from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 satisfied this requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay to allow the Exchange to continue to provide the HSVF 
that it already makes freely available and on a voluntary basis. The 
Commission believes that waiver of the operative delay is consistent 
with the protection of investors and the public interest because the 
proposal is designed to promote increased transprancy through the 
dissemination of proprietary data.\10\ Therefore, the Commission 
designates the proposal operative upon filing.\11\
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    \10\ See, e.g., Securitites Exchange Act Release Nos. 64445 (May 
9, 2011), 76 FR 28108 (May 13, 2011) (SR-BATS-2011-017); 63983 
(February 25, 2011), 76 FR 12178 (March 4, 2011) (SR-NASDAQ-2011-
032).
    \11\ For 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. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may

[[Page 14847]]

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 email to [email protected]. Please include 
File Number SR-BX-2012-017 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-2012-017. This file 
number should be included on the subject line if email 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 the 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-2012-017 and should be 
submitted on or before April 3, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6033 Filed 3-12-12; 8:45 am]
BILLING CODE 8011-01-P