13688 Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 

7 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5The Exchange is also proposing to change the 

title of Rule 6.10 to ‘‘Order Types Defined.’’ 

6The allocation algorithms include base 

execution algorithms (price-time, pro-rata, and 

price-time with primary public customer priority 

and secondary trade participation right priority) 

and an optional market turner priority overlay. See 

Rule 6.12, Order Execution and Priority. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5763 Filed 3–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64058; File No. SR–C2– 

2011–006] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Related to the Opening 

System 

March 8, 2011. 

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 March 1, 

2011, 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)(iii) 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

Rule 6.11, Openings (and sometimes 

Closings). 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 

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 

Rule 6.11 describes the Exchange’s 

procedures for conducting trading 

rotations. The Exchange is proposing to 

amend Rule 6.11 in various respects. 

First, to have more flexibility in a 

manner that is consistent with other C2 

rules with order eligibility provisions, 

the Exchange is proposing to amend 

Rule 6.11 to include an order eligibility 

provision. In particular, Rule 6.11 will 

be amended to provide that the 

Exchange shall designate the eligible 

order size, eligible order type, eligible 

order origin code (i.e., public customer 

orders, non-Market Maker broker-dealer 

orders, and Market Maker broker-dealer 

orders) that the System will accept for 

rotations on a class-by-class basis. The 

proposal would not, however, permit 

the Exchange to discriminate among 

individual market participants of the 

same type (e.g., permit certain marketmaker orders but not others to be 

eligible). The Rule will also be amended 

to delete a reference to spread orders 

and contingency orders not being 

eligible to participate in opening trades 

or in the determination of the opening 

price, expected opening price or 

expected opening size. (As revised, the 

Exchange would determine whether to 

designate these orders types as eligible 

on a class-by-class basis, just as it would 

for any other order type.) Any changes 

to the order eligibility parameters 

determined by the Exchange would be 

announced to C2 Participants via 

Regulatory Circular. 

This proposed change to include 

order eligibility requirements within 

Rule 6.11 is consistent with the order 

eligibility requirements contained in 

other rules, such as the order eligibility 

requirements for Rule 6.14, SAL (SAL is 

a feature that auctions marketable orders 

for price improvement over the national 

best bid and offer). The proposed rule 

change is also consistent with the 

provisions of Rule 6.10, Orders Types 

Defined,5 which provides that the 

classes and/or systems for which the 

orders types described in Rule 6.10 shall 

be available will be as provided in the 

Exchange Rules, as the context may 

indicate, or as otherwise specified via 

Regulatory Circular. 

Second, the Exchange is proposing to 

adopt new Interpretation and Policy .01 

to Rule 6.11 to provide that the 

Exchange may determine on a class-byclass basis which electronic allocation 

algorithm 6 would apply for rotations. 

Currently Rule 6.11(g) provides that, in 

determining priority of orders and 

quotes to be traded at a single clearing 

price, the System gives priority to 

public customer market orders first 

(with multiple orders ranked based on 

time priority), then to non-public 

customer market orders second (with 

multiple orders being ranked based on 

time priority), then to multiple quotes 

and orders whose price is better than 

the opening price (with multiple quotes 

and orders being ranked in accordance 

with the allocation algorithm in effect 

for the option class), then to limit orders 

and quotes at the opening price (with 

multiple orders and quotes ranked in 

accordance with the allocation 

algorithm in effect for the class). Any 

remaining marketable order(s) are then 

exposed and allocated in accordance 

with the matching algorithms in effect 

for the class. The Exchange is proposing 

to remove these specific allocation 

algorithm descriptions. Instead, the 

provision will be amended to provide 

that, in determining the priority of 

orders and quotes to be traded at a 

single clearing price, the System will 

give priority to market orders first, then 

to limit orders and quotes whose price 

is better than the opening price, and 

then to resting orders and quotes at the 

opening price. In addition, as indicated 

above, the Exchange is proposing to 

adopt new Interpretation and Policy .01 

to Rule 6.11. Proposed Interpretation 

and Policy .01 to Rule 6.11 will provide 

that the Exchange may determine on a 

class-by-class basis which electronic 

allocation algorithm would apply for 

rotations. This change will also provide 

the Exchange with additional flexibility 

to permit the allocation algorithm in 

effect for a rotation to be different from 

the allocation algorithm in effect for the 

option class. All pronouncements 

regarding allocation algorithm 

determinations by the Exchange will be 

announced to C2 Participants via 

Regulatory Circular. 

In conjunction with this change, the 

Exchange is also proposing to modify 

Rule 6.11 to codify and describe the 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 13689 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). 11 17 CFR 200.30–3(a)(12). 

manner in which the System handles 

opening imbalances in series that open 

at a minimum price increment (e.g., a 

series that opens at a price of $0.05 

when the series is quoted in $0.05 

increments and a series that opens at a 

price of $0.01 when the series is quoted 

in $0.01 increments). In those scenarios, 

the System opens even if a sell market 

order imbalance exists. In addition, the 

Exchange may determine to apply a 

separate electronic allocation algorithm 

for series that open at a minimum price 

increment due to a sell market order 

imbalance. As indicated above, 

pronouncements regarding allocation 

algorithm determinations will be 

announced via Regulatory Circular. 

The matching algorithm applied for 

rotations for each option class will be 

pursuant to Rule 6.12. Thus, the 

Exchange is not creating any new 

algorithms, but is amending Rule 6.11 to 

make clear that the Exchange may 

determine the applicable allocation 

algorithm for rotations as described 

above and to provide the flexibility for 

the Exchange to choose an algorithm 

from among the existing algorithms to 

be applied to rotations, rather than 

simply defaulting to the algorithm in 

effect for intra-day trading in the option 

class. 

Finally, the Exchange is proposing 

non-substantive amendments to Rule 

6.11, so that the rule text can generally 

be more consistently organized, 

numbered and worded. For example, 

the Exchange is proposing to add 

descriptive headings to sections of the 

rule that do not already have such 

headings, and to replace multiple 

references to Exchange determinations 

being announced via Regulatory 

Circular with a single reference in 

proposed Interpretation and Policy .02, 

which will provide that all 

pronouncements regarding 

determinations by the Exchange 

pursuant to Rule 6.11 and the 

Interpretations and Policies thereunder 

will be announced to Participants via 

Regulatory Circular. 

2. Statutory Basis 

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 is designed 

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. In particular, the 

Exchange believes that the proposed 

change would provide more flexibility 

and clarity in our rotations rule. The 

Exchange also believes that the 

proposed order eligibility provision is 

consistent with order eligibility 

provisions in other existing rules, such 

as the SAL and order type rules. 

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 rule 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, provided that the selfregulatory organization has given 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 proposed rule change 

has become effective pursuant to 

Section 19(b)(3)(A) of the Act 9 and Rule 

19b–4(f)(6) thereunder.10 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. 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–C2–2011–006 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–C2–2011–006. This file 

number should be included on the 

subject line if e-mail 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 

am and 3 p.m. Copies of such 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– 

2011–006 and should be submitted on 

or before April 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5762 Filed 3–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

mstockstill on DSKH9S0YB1PROD with NOTICES