[Federal Register Volume 78, Number 29 (Tuesday, February 12, 2013)]
[Notices]
[Pages 9961-9963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03099]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68840; File No. SR-BX-2013-008]


Self-Regulatory Organizations; NASDAQ OMS BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Add 
Routing Functionality to the NASDAQ OMX BX Equities Market

February 6, 2013.
    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 January 23, 2013, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the 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

    The Exchange proposes to add routing functionality to the NASDAQ 
OMX BX Equities Market.
    The text of the proposed rule change is below; proposed new 
language is italicized.

* * * * *

4700. The NASDAQ OMX BX Equities Market

* * * * *

4750. Execution Services

* * * * *

4758. Order Routing

    (a) Order Routing Process
    (1) No change.
    (A) No change.
    (i)-(vii) No change.
    (viii) BDRK is a routing option under which orders check the 
System for available shares and simultaneously route the remaining 
shares to destinations on the System routing table that are not 
posting Protected Quotations within the meaning of Regulation NMS. 
If shares remain un-executed after routing, they are posted on the 
book. Once on the book, should the order subsequently be locked or 
crossed by another market center, the System will not route the 
order to the locking or crossing market center.
    (ix) BCST is a routing option under which orders check the 
System for available shares and simultaneously route the remaining 
shares to destinations on the System routing table that are not 
posting Protected Quotations within the meaning of Regulation NMS 
and to certain, but not all, exchanges. If shares remain un-executed 
after routing, they are posted on the book. Once on the book, should 
the order subsequently be locked or crossed by another market 
center, the System will not route the order to the locking or 
crossing market center.
    (B) No change.
    (b)-(d) No change.
* * * * *

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 purpose of the proposed rule change is to attract additional 
business to and enhance the functionality offered by the Exchange's 
NASDAQ OMX BX Equities Market by providing additional optional outbound 
routing services. Most equities exchanges today provide routing 
services and the Exchange offers a variety of routing strategies. 
Currently, Rule 4758, Order Routing, describes the order routing 
process and states that all routing shall be in compliance with Rule 
611 of Regulation NMS under the Act.\3\ Furthermore, it enumerates BX's 
routing strategies: BSTG, BSKN, BSCN, BSKP, BTFY, BMOP and BCRT.
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    \3\ 17 CFR 242.611.
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    Proposed Rule 4758(a)(1)(A)(viii) will provide that BDRK is a 
routing option under which orders check the System for available shares 
and simultaneously route to certain destinations on the System routing 
table that are not posting Protected Quotations within the meaning of 
Regulation NMS (i.e. ``dark venues'' or ``dark pools''). If shares 
remain un-executed after routing, they are posted on the book. Once on 
the book, should the order subsequently be locked or crossed by another 
market center, the System will not route the order to the locking or 
crossing market center. This strategy is intended to attract market 
participants that seek to execute on BX or on dark pools without 
executing on another exchange. Members may seek to execute in this 
manner to interact with resting liquidity in addition to that available 
on BX, while also minimizing market impact and transaction fees.
    For example, if the National Best Bid/Offer (``NBBO'') is $10.00-
$10.01, and BX, DarkVenueA and ARCA each offer 100 shares at $10.01, a 
BDRK order to buy 1000 shares at $10.01 IOC will be handled as follows: 
100 shares for execution on BX and 100 shares routed to DarkVenue A 
simultaneously at $10.01; the remaining 800 shares are not routed and 
not executed, and cancelled back to the entering participant because it 
was an IOC order. The order did not route to ARCA because it is not a 
dark venue. As a second example, if the NBBO is $10.00-$10.01, and BX, 
DarkVenueA and ARCA each offer 100 shares at $10.01, a BDRK order to 
buy 1000 shares at $10.01 DAY will be

[[Page 9962]]

handled as follows: 100 shares for execution on BX and 100 shares 
routed to DarkVenue A simultaneously at $10.01; the remaining 800 
shares are posted on the BX book (because it is a DAY order). Once 
again, the order did not route to ARCA because it is not a dark venue.
    Proposed Rule 4758(a)(1)(A)(ix) will provide that BCST is a routing 
option under which orders check the System for available shares and 
simultaneously route to select dark venues and to certain low cost 
exchanges. If shares remain un-executed after routing, they are posted 
on the book. Once on the book, should the order subsequently be locked 
or crossed by another market center, the System will not route the 
order to the locking or crossing market center. This strategy is also 
intended to attract market participants who seek to save on trading 
fees by only executing on the Exchange, on dark venues, or on no cost 
and low cost exchanges.
    For example, if the NBBO is $10.00-$10.01, and BX, DarkVenueA and 
ARCA each offer 100 shares at $10.01, a BCST order to buy 1000 shares 
at $10.01 DAY will be handled as follows: 100 shares for execution on 
BX and 100 shares routed to DarkVenue A simultaneously at $10.01; the 
remaining 800 shares are posted on the BX book (because it is a DAY 
order). The order did not route to ARCA because it is neither a dark 
venue nor a no cost or low cost exchange. As a second example, if the 
NBBO is $9.90-$10.00, with BYX offering 100 shares at $10.00 and BX, 
DarkVenueA and ARCA each offer 100 shares at $10.01, a BCST order to 
buy 1000 shares at $10.01 DAY will be handled as follows: 100 shares 
routed to BYX at $10.00, 100 shares for execution on BX and 100 shares 
routed to DarkVenue A simultaneously at $10.01; the remaining shares 
are posted on the BX book (because it is a DAY order). The order did 
not route to ARCA because it is neither a dark venue nor a no cost or 
low cost exchange.
    In all cases, these routing strategies are designed to comply with 
SEC Rule 611 and the other provisions of Regulation NMS.\4\ 
Accordingly, both BDRK and BCST will honor Protected Quotations within 
the meaning of Regulation NMS and will not route to any market centers 
included in their respective routing table at a price inferior to an 
available Protected Quotation. For example, if the NBBO is $9.90-
$10.00, with NYSE offering 100 shares at $10.00 and BX, DarkVenueA and 
ARCA each offering 100 shares at $10.01, a BCST order to buy 1000 
shares at $10.01 DAY will not be routed because NYSE's Protected 
Quotation is not included in the routing table, by definition, for 
BCST.
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    \4\ 17 CFR 242.611.
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    The Exchange will notify its membership of the implementation date, 
which the Exchange expects will be on or about the 30th day after this 
filing.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and with 
Sections 6(b)(5) of the Act,\6\ in particular, in that the proposal 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 regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, 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, because BX 
will be better able to serve its customers and compete with other 
markets by offering additional optional routing services. Specifically, 
the two new routing strategies will provide market participants with 
greater flexibility in routing orders without developing order routing 
strategies on their own.
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    \5\ 15 U.S.C. 78f.
    \6\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. BX 
competes with many exchanges and other execution venues for the 
execution of orders in equities. Market participants can choose where 
to send their orders. Accordingly, the proposal is pro-competitive in 
that it affords the Exchange the opportunity to compete with other 
exchanges in terms of offering new routing strategies.

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: (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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \7\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
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    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. The Exchange has 
provided 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.

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-2013-008 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-2013-008. 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

[[Page 9963]]

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 10:00 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-BX-2013-008 and should be 
submitted on or before March 5, 2013.

    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. 2013-03099 Filed 2-11-13; 8:45 am]
BILLING CODE 8011-01-P