[Federal Register Volume 77, Number 133 (Wednesday, July 11, 2012)]
[Notices]
[Pages 40924-40926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16878]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67354; File No. SR-BX-2012-049]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Establish 
TradeInfo BX and BX Options Maintenance Tool and Related Fees

 July 5, 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 June 29, 2012, NASDAQ OMX BX, Inc. (``BX'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') a 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    BX proposes to establish two services, TradeInfo BX for Options and 
BX Options Maintenance Tool, and related fees for BX Options 
Participants.
    The text of the proposed rule change is available at http://nasdaqomxbx.cchwallstreet.com/, at BX's principal office, 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, 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 those statements may be examined at 
the places specified in Item III below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts 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 filed and received approval to operate a new options 
market.\3\ The new market, called NASDAQ OMX BX Options, or BX Options, 
is an all-electronic trading platform with no physical trading floor. 
At this time BX proposes to adopt fees associated with two services, 
TradeInfo BX for Options and BX Options Maintenance Tool.
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    \3\ See Securities Exchange Act Release No. 67256 (June 26, 
2012), 77 FR 39277 (July 2, 2012) (Order Granting Approval of a 
Proposed Rule Change Relating to the Establishment of a New Options 
Market, NASDAQ OMX BX Options).
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    TradeInfo BX will allow a BX Options Participant to scan for all 
orders it submitted to BX Options in a particular security or all 
orders of a particular type, regardless of their status (open, 
canceled, executed, etc.) Also, a BX Options Participant will be able 
to cancel open orders at the port or firm mnemonic level. For example, 
after scanning for open orders, a subscribing member is able to select 
an open order and cancel the order. TradeInfo also permits users to 
scan other order statuses, such as executed, cancelled, broken, 
rejected and suspended orders and generate reports of execution, order 
or cancel information, which can be exported into a spreadsheet for 
review. TradeInfo allows a BX Options Participant to manage its order 
flow and mitigate risk by giving users the ability to view its orders 
and executions, as well as the ability to perform cancels at the port 
or firm mnemonic level. Finally, TradeInfo BX has the ability to

[[Page 40925]]

download records of orders and executions for recordkeeping purposes. 
TradeInfo BX is similar to comparable products offered by The NASDAQ 
Options Market (``NOM'') and NASDAQ OMX PHLX, LLC (``PHLX'').\4\
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    \4\ See NOM Rules at Chapter XV at Sections 3 and PHLX's Pricing 
Schedule at Section XII.
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    The Exchange proposes to offer TradeInfo BX to BX Options 
Participants for a fee of $95 per user, per month for member's trading 
activity on the market. This is the same fee assessed to NOM 
Participants and PHLX members for this service. Use of TradeInfo by BX 
Options Participants is voluntary. The proposed fee would cover the 
costs associated with establishing the service, responding to customer 
requests, configuring BX's systems, programming to user specifications, 
and administering the service, among other things.
    The BX Options Maintenance Tool (``OMT'') is a web-based options 
back-office tool that gives users the ability to query trades, correct 
trades and/or allocate trades to the appropriate accounts and sub-
accounts for clearing. The Options Clearing Corporation (``OCC'') 
requires firms to provide certain information when submitting a trade 
for clearing. Specifically, the OMT will allow a firm to correct a 
trade's account number or designate a sub-account number, correct a 
trade's designation as opening or closing, and change the Clearing 
Member Trade Assignment clearing firm. The OMT will also allow firms to 
correct a trade's OCC designation as Customer, Firm, or Market Maker. 
Today, NOM makes similar a tool available to firms to correct trade 
clearing information that is submitted to OCC.\5\
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    \5\ See NOM Rules at Chapter XV at Section 6.
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    BX proposes to offer OMT to BX Options Participants for a 
subscription fee of $200 per month, per user. This is the same fee for 
the same service offered to NOM Participants. Use of OMT by BX Options 
Participants is voluntary. The proposed fee will cover the costs 
associated with establishing the service, responding to customer 
requests, configuring BX's systems, programming to user specifications, 
and administering the service, among other things.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \7\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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 by 
offering these products to BX Options Participants. The Exchange 
believes the proposed rule change is consistent with these requirements 
because the Trade Info offers a useful analytical tool with which 
members may access information concerning their order and trade 
activity, thus allowing such participants to make informed decisions 
concerning such activity. OMT offers the ability to correct a trade's 
account number along with other features. The Exchange notes that both 
NOM and PHLX offer Trade Info and NOM offers OMT to their options 
participants. Affording Exchange participants access to the same 
functionality promotes the goal of perfecting the mechanism of a free 
and open market by providing a subscriber clearer picture of its market 
activity and providing it the ability to quickly cancel orders should 
the participant determine it necessary to do so. Use of the products is 
voluntary and the subscription fees will be imposed on all purchasers 
equally based on the number of users. The proposed fees will cover the 
costs associated with establishing the services, responding to customer 
requests, configuring the Exchange's systems, programming to user 
specifications, and administering the service, among other things.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed fees are consistent with 
the provisions of Section 6 of the Act,\8\ in general, and with Section 
6(b)(4) of the Act,\9\ in particular, in that they provide 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.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the TradeInfo BX fee is reasonable 
because the service is voluntary and would provide BX Options 
Participants the ability to cancel orders and receive reports, among 
other things. This service is currently offered to NOM Participants and 
PHLX options members at the same price. The proposed fee would cover 
the costs associated with establishing the service, responding to 
customer requests, configuring BX's systems, programming to user 
specifications, and administering the service, among other things.
    The Exchange believes the TradeInfo BX fee is equitable and not 
unfairly discriminatory because the fee would be uniformly assessed to 
all BX Options Participants that elect to subscribe to the product. The 
fees are based on the number of users subscribed per month, so all 
similarly-situated member firms would be assessed the same amount. It 
is also important to note that BX Options Participants would only be 
able to access their own trade and order information.
    The Exchange believes that the OMT fee is reasonable because the 
service is voluntary and would provide BX Options Participants the 
ability to query trades and correct trade information for clearing 
purposes, among other things. This service is currently offered to NOM 
Participants at the same price. The proposed fee will cover the costs 
associated with establishing the service, responding to customer 
requests, configuring BX's systems, programming to user specifications, 
and administering the service, among other things.
    The Exchange believes the OMT fee is equitable and not unfairly 
discriminatory because the fee would be uniformly assessed to all BX 
Options Participants that elect to subscribe to the product. The fees 
are based on the number of subscriptions subscribed, so all similarly-
situated member firms would be assessed the same amount. It is also 
important to note that BX Options Participants would only be able to 
access their own trade and order information.

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. Specifically, BX 
believes that the fee will constrain market participants from pursuing 
certain inefficient and potentially abusive trading strategies. To the 
extent that this change may be construed as a burden on competition, BX 
believes that it is appropriate in order to further the purposes of 
Section 6(b)(5) of the Act.\10\
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    \10\ 15 U.S.C. 78f(b)(5).
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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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect

[[Page 40926]]

the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days after the date of the filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\ thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\13\ 
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay and designate the proposed 
rule change operative on July 2, 2012. The Commission notes that other 
exchanges provide similar services with similar fees as proposed 
instantly by BX.\15\ Based on the foregoing, the Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest and hereby designates 
the proposal operative on July 2, 2012.\16\
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    \13\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
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 satisfied this requirement.
    \14\ Id.
    \15\ See supra notes 4 and 5 and accompanying text.
    \16\ 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. 
78c(f).
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    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.

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-2012-049 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-2012-049. 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 such filing also will be available for 
inspection and copying at the principal offices 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-2012-049, and should be 
submitted on or before August 1, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-16878 Filed 7-10-12; 8:45 am]
BILLING CODE 8011-01-P