[Federal Register Volume 78, Number 38 (Tuesday, February 26, 2013)]
[Notices]
[Pages 13105-13107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04350]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68950; File No. SR-BX-2013-014]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
a Pricing Clarification

February 19, 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 February 7, 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, II, and III 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 references to certain terms in Chapter 
XV, entitled ``Options Pricing.'' The Exchange also proposes to make a 
technical amendment to Section 2 entitled ``BX Options Market--Fees and 
Rebates.''
    The text of the proposed rule change is also available on the 
Exchange's Web site at http://nasdaqomxbx.cchwallstreet.com, at the 
principal office of the Exchange, 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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to add certain references to Chapter 
XV in order to provide greater clarity to the terms used throughout 
this Chapter for the purpose of assessing fees and paying rebates.
    Specifically, the Exchange proposes to add the terms ``Customer,'' 
``BX Options Market Maker,'' ``Non-BX Options Market Maker,'' ``Firm,'' 
``Professional,'' and ``Broker-Dealer'' to Chapter XV to provide 
guidance on how the Exchange applies the fees and rebates in Chapter XV 
to these categories of market participants. The Exchange proposes to 
state that the term ``Customer'' or (``C'') applies to any transaction 
that is identified by a Participant for clearing in the Customer range 
at The Options Clearing Corporation (``OCC'') which is not for the 
account of a broker or dealer or for the account of a ``Professional'' 
(as that term is defined in Chapter I, Section 1(a)(48)). The Exchange 
proposes to state that the term ``BX Options Market Maker'' or (``M'') 
is a Participant that has registered as a Market Maker on BX Options 
pursuant

[[Page 13106]]

to Chapter VII, Section 2, and must also remain in good standing 
pursuant to Chapter VII, Section 4. In order to receive BX Options 
Market Maker pricing in all securities, the Participant must be 
registered as a BX Options Market Maker in at least one security. The 
Exchange proposes to state that the term ``Non-BX Options Market 
Maker'' or (``O'') is a registered market maker on another options 
exchange that is not a BX Options Market Maker. A Non-BX Options Market 
Maker must append the proper Non-BX Options Market Maker designation to 
orders routed to BX Options. The Exchange proposes to state that the 
term ``Firm'' or (``F'') applies to any transaction that is identified 
by a BX Options Participant for clearing in the Firm range at OCC. The 
Exchange proposes to state that the term ``Professional'' or (``P'') 
means any person or entity that (i) is not a broker or dealer in 
securities, and (ii) places more than 390 orders in listed options per 
day on average during a calendar month for its own beneficial 
account(s) pursuant to Chapter I, Section 1(a)(48). All Professional 
orders shall be appropriately marked by BX Options Participants. 
Finally, the Exchange proposes to state that the term ``Broker-Dealer'' 
or (``B'') applies to any transaction which is not subject to any of 
the other transaction fees applicable within a particular category. The 
order capacity codes, ``C,'' ``M,'' ``O,'' ``F,'' ``P,'' and ``B'' are 
codes that have been established by the Exchange related to the order 
entry ports using the Financial Information Exchange (``FIX'') 
protocol.
    The Exchange also proposes to define the terms ``adding liquidity'' 
and ``removing liquidity'' for purposes of Chapter XV, Section 2(1) 
pricing. Specifically, the Exchange proposes to state that ``[w]ith 
respect to Chapter XV, Sections 2(1) and (2), the order that is 
received by the trading system first in time shall be considered an 
order adding liquidity and an order that trades against that order 
shall be considered an order removing liquidity.'' The Exchange 
believes that specifying which orders are considered adding and which 
orders are considered removing liquidity would further clarify BX 
Options' pricing. The Exchange also proposes to remove Section 2(3) of 
Chapter XV, which is currently reserved, and renumber Section 2(4) as 
Section 2(3).
2. Statutory Basis
    BX believes that its proposal to amend Chapter XV of the Rules to 
add references to various terms is consistent with Section 6(b) of the 
Act \3\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act \4\ in particular. The Exchange's proposal to clarify its 
pricing is intended to provide additional guidance to market 
participants with respect to the application of fees and rebates in 
Chapter XV, similar to other options exchanges.\5\ Further, the 
Exchange also proposes to provide clarification regarding the manner in 
which the Exchange applies fee and rebates for adding and removing. The 
Exchange believes the addition of these references will provide 
additional transparency to Chapter XV of the Exchange's Rules.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4) and (5) [sic].
    \5\ See NASDAQ OMX PHLX LLC's Pricing Schedule. See also the 
International Securities Exchange, LLC's Fee Schedule.
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    The Exchange does not believe that there is confusion among market 
participants with respect to the terms described herein, but rather 
that the addition of these terms to Chapter XV would serve to provide 
transparency and guidance to the benefit of all market participants. 
The Exchange believes that the proposal is consistent with Section 
6(b)(5) 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 clarifying what fees and 
rebate in Chapter XV apply to certain transactions and market 
participants.
    The Exchange is not amending the manner in which it applies pricing 
to various Participants. The proposed terms merely codify the manner in 
which the Exchange assesses fees and pays rebates today. Similarly, the 
manner in which fees and rebates for adding and removing liquidity are 
applied is not changing but merely codified by the addition of the 
terms to Chapter XV.
    The Exchange's renumbering of Section 2(4) is merely a technical 
amendment to the pricing.

B. Self-Regulatory Organization's Statement on Burden on Competition

    BX 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. The Exchange is merely filing this 
clarification to specify how certain fees and rebates in Chapter XV are 
applied to market participants. The Exchange believes that this 
clarification will provide greater transparency to market participants. 
The Exchange does not believe that this amendment creates intramarket 
competition among Participants as it is applied uniformly to all 
Participants. The Exchange believes that clarifying the applicability 
of certain fees and rebates for adding and removing liquidity within 
the Pricing Schedule provides market participants clear guidance.

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)(ii) of the Act \6\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \7\ 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved. 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:

[[Page 13107]]

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-2013-014 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-2013-014. 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 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office 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-2013-014, and should be 
submitted on or before March 19, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04350 Filed 2-25-13; 8:45 am]
BILLING CODE 8011-01-P