[Federal Register Volume 77, Number 65 (Wednesday, April 4, 2012)]
[Notices]
[Pages 20471-20472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-8036]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66677; File No. SR-C2-2012-006]


 Self-Regulatory Organizations; C2 Options Exchange, 
Incorporated; Order Approving Proposed Rule Change Relating to Its 
Automated Improvement Mechanism

March 29, 2012.
    On January 31, 2012, the C2 Options Exchange, Incorporated 
(``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend C2 Rule 6.51, which relates to the 
Exchange's Automated Improvement Mechanism (``AIM''). The proposal 
would permit a participant (``Participant''), when submitting an agency 
order to AIM to initiate an auction against a single price submission, 
to elect to have last priority in the AIM auction's order 
allocation.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In an AIM auction, described here generally, a Participant 
submits into the mechanism an order that it represents as agent 
(``Agency Order'') along with a contra-side order at a specified 
price (which must comply with parameters set forth in Rule 6.51) and 
for the same size that either represents principal interest of the 
Participant or is a solicited order. Certain Participants, as set 
forth in Rule 6.51, then can compete with the contra-side order by 
submitting bids (offers) to execute against the Agency Order. After 
better-priced orders are filled and public customers competing at 
the best price receive their allocations, the Participant is granted 
priority ahead of other participants to execute against 40% (in some 
circumstances 50%) of the original size of the Agency Order. Under 
the proposed rule change, the initiating Participant will be able to 
elect to have last priority.
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    The proposed rule change was published for comment in the Federal 
Register on February 17, 2012.\4\ The Commission received no comments 
on the proposal.
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    \4\ See Securities Exchange Act Release No. 66384 (February 13, 
2012), 77 FR 9717.
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    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange \5\ 
and, in particular, the requirements of Section 6(b)(5) of the Act,\6\ 
in that it is designed to provide additional flexibility for 
Participants to obtain executions on behalf of their customers through 
AIM because the initiating Participants may elect to have

[[Page 20472]]

last priority. The Commission believes that, as a result of this 
flexibility, there may be increased usage of AIM auctions and the 
mechanism may attract new participants, thereby helping to further 
competition and to enhance the possibility of price improvement on 
behalf of customers.\7\
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ The Commission notes that Chapter V, Section 18(f)(v) of the 
Rules of the Boston Exchange Group, LLC, ``The Price Improvement 
Period'' (``PIP''), includes a similar provision that permits an 
options participant initiating a PIP auction to designate a lower 
amount than the 40% to which it is otherwise entitled upon the 
conclusion of the PIP auction. The Commission also recently approved 
a similar provision under Rule 6.74A of the Chicago Board of Options 
Exchange, Incorporated, with respect to its AIM auction. See 
Securities Exchange Act Release No. 66375 (February 10, 2012), 77 FR 
9274 (February 16, 2012) (SR-CBOE-2011-117).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-C2-2012-006) be, and it 
hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-8036 Filed 4-3-12; 8:45 am]
BILLING CODE 8011-01-P