[Federal Register Volume 77, Number 149 (Thursday, August 2, 2012)]
[Notices]
[Pages 46139-46141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-18892]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67517; File No. SR-BX-2012-057]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
the Post-Only Order Type on BX Options

July 27, 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 July 24, 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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[[Page 46140]]

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

    A proposal for the BX Options market (``BX Options'') to add an 
additional feature to the Post-Only Order type.
    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
    A Post-Only Order is an order that will not remove liquidity from 
the System and is to be ranked and executed on the Exchange or 
cancelled, as appropriate, without routing away to another market.\3\ 
Currently, Post-Only Orders are evaluated at the time of entry with 
respect to locking or crossing other orders as follows: (i) If a Post-
Only Order would lock or cross an order on the System, the order will 
be re-priced to $.01 below the current low offer (for bids) or above 
the current best bid (for offers) and displayed by the System at one 
minimum price increment below the current low offer (for bids) or above 
the current best bid (for offers); and (ii) if a Post-Only Order would 
not lock or cross an order on the System but would lock or cross the 
National Best Bid or Offer (``NBBO'') as reflected in the protected 
quotation of another market center, the order will be handled pursuant 
to Chapter VI, Section 7(b)(3)(C).\4\ Post-Only Orders received prior 
to the opening cross or after market close will be rejected. Post-Only 
Orders may not have a time-in-force designation of Good Til Cancelled 
or Immediate or Cancel.
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    \3\ See BX Options Rules, Chapter VI, Section 1(e)(11). 
Securities Exchange Act Release No. 67256 (June 26, 2012), 77 FR 
39277 (July 2, 2012) (SR-BX-2012-030) (Approving the establishment 
of the BX Options market).
    \4\ An order will not be executed at a price that trades through 
another market or displayed at a price that would lock or cross 
another market. An order that is designated by the member as 
routable will be routed in compliance with applicable Trade-Through 
and Locked and Crossed Markets restrictions. An order that is 
designated by a member as non-routable will be re-priced in order to 
comply with applicable Trade-Through and Locked and Crossed Markets 
restrictions.
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    At this time, the Exchange proposes to permit firms to have their 
Post-Only Orders returned whenever the order would lock or cross the 
NBBO.\5\ Similarly, if the Post-Only Order would be placed on the book 
at a price other than its limit price, if the Participant so chooses, 
it will be returned. This includes situations where the Post-Only Order 
would lock or cross another order on the System, but also covers any 
situation where order is placed on the book at a price other than its 
limit price. The Exchange believes that this implementation will 
satisfy the needs of its Participants, because it will give them 
greater control over the circumstances in which their orders are 
executed. The Exchange will announce the implementation date to its 
membership by Options Trader Alert.
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    \5\ If the Participant does not affirmatively elect the return 
feature, the default setting is that the Post-Only Order will not be 
returned by the new feature, but will instead be handled under the 
existing rule.
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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 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. BX believes that permitting 
Participants to have Post-Only Orders returned is consistent with just 
and equitable principles of trade and protects investors and the public 
interest, because Participants, who have requested this feature, may 
prefer to submit the order to another options exchange, for fee or 
other reasons, rather than leave the order on BX Options. Additionally, 
a Participant may expect the order to post at its limit price based on 
its view of the current state of the market. Due to its dynamic nature, 
however, the state of the market may change by the time the order is 
received by BX Options, resulting in the order being placed on the book 
at a price other than its limit price. In this case, the Participant 
would rather have the order returned so that it can reevaluate the 
market and make a new routing decision. In order to accommodate this 
request, BX is proposing the new feature for returning Post-Only 
Orders. The purpose of the Post-Only Order is to avoid removing 
liquidity and the resulting execution costs; with the proposed ability 
to have the order returned, Participants should have greater control 
over the execution and display of such order.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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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

    Written comments were neither solicited nor received.

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

    Because the proposed rule change does not (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
thereunder.\9\ At any time within 60 days of the filing of such 
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.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change along with a 
brief description and the 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.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and

[[Page 46141]]

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-2012-057 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-2012-057. 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-2012-057 and should be 
submitted on or before August 23, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18892 Filed 8-1-12; 8:45 am]
BILLING CODE 8011-01-P