[Federal Register Volume 77, Number 191 (Tuesday, October 2, 2012)]
[Notices]
[Pages 60163-60165]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-24170]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67929; File No. SR-C2-2012-034]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Related to AIM and SAM

September 26, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 21, 2012, the C2 Options Exchange, Incorporated 
(``Exchange'' or ``C2'') 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 proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of 
the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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 is proposing to make amendments to its rules 
pertaining to certain auction mechanisms. The text of the proposed rule 
change is available on the Exchange's Web site (http://www.c2exchange.com/Legal/RuleFilings.aspx), at the Exchange's Office of 
the Secretary and at the Commission.

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

[[Page 60164]]

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 IV 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Under Rule 6.51, Automated Improvement Mechanism (``AIM''), a 
Trading Permit Holder that represents agency orders may electronically 
execute an order it represents as agency (an ``Agency Order'') against 
principal interest and/or against solicited orders provided it submits 
the Agency Order for execution into the AIM auction process. Under Rule 
6.52, Solicitation Auction Mechanism (``SAM''), a Trading Permit Holder 
that represents agency orders may electronically execute an Agency 
Order against solicited orders provided it submits the Agency Order for 
electronic execution into the SAM auction process, under which both the 
Agency Order and the solicited order will be designated in the C2 
System as all-or-none. The Exchange is proposing to make certain 
changes detailed below to these auction trading rules.
    First, currently the AIM and SAM auctions each in relevant part 
provide that auction responses may be modified or canceled during the 
auction response period. The only way to modify a response would be for 
a Trading Permit Holder to cancel a prior response then submit a new 
response. As a result, the Exchange believes that the references to 
modifying responses in the rule text are unnecessary. Therefore, the 
Exchange is proposing to delete references to modifying responses in 
Rules 6.51(b)(1) and 6.52(b)(1), respectively.
    Second, normally an auction would conclude after 1 second in the 
case of an AIM or SAM auction. In addition, respective AIM and SAM 
auction provisions set out various circumstances during which an 
auction would conclude early. Currently, the provisions are silent on 
what would happen in the event the option series is subject to a 
trading halt while an auction is ongoing. In such an event, the 
relevant auction would conclude early and the Agency Order would 
execute (or not execute) in accordance with the allocation provisions 
set out in the relevant rules. Therefore, the Exchange is proposing to 
amend Rules 6.51(b)(2) and 6.52(b)(2), respectively, to indicate that 
an auction would conclude early in the event of a trading halt in the 
series on the Exchange and the Agency Order would execute (or not 
execute) in accordance with the allocation provisions set out in the 
relevant rules.\5\
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    \5\ The Exchange notes that NASDAQ OMX PHLX LLC (``Phlx'') has a 
similar provision within its electronic auction rules related to the 
early conclusion of an auction due to a trading halt. See Phlx Rule 
1080(n).
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(b) Statutory Basis \6\
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    \6\ The Commission notes that the Exchange has repeated this 
paragraph under Section I.A.2 (Statutory Basis).
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    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \7\ in general and furthers the objectives of 
Section 6(b)(5) of the Act \8\ in particular in that it should promote 
just and equitable principles of trade, serve to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest. In 
particular, the Exchange believes that the refinements being proposed 
in this rule change filing should serve to further those objectives by 
more clearly and fully describing certain aspects of the operation of 
the AIM and SAM auction processes.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \9\ in general and furthers the objectives of 
Section 6(b)(5) of the Act \10\ in particular in that it should promote 
just and equitable principles of trade, serve to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest. In 
particular, the Exchange believes that the refinements being proposed 
in this rule change filing should serve to further those objectives by 
more clearly and fully describing certain aspects of the operation of 
the AIM and SAM auction processes.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 that is 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 neither solicited nor received comments on the 
proposal.

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 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 Section 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).
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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-C2-2012-034 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-C2-2012-034. 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

[[Page 60165]]

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 10:00 a.m. and 3:00 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-C2-2012-034 and should be submitted on or before October 
23, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-24170 Filed 10-1-12; 8:45 am]
BILLING CODE 8011-01-P