16650 Federal Register / Vol. 76, No. 57 / Thursday, March 24, 2011 / Notices 

41 15 U.S.C. 78s(b)(3)(A)(ii). 

42 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Shortly after the filing of the proposed rule 

change, the Exchange withdrew an earlier proposal 

relating to the non-anonymity of Directed Orders 

(SR–BSE–2005–52). See Securities Exchange Act 

Release No. 53357 (February 23, 2006), 71 FR 10730 

(March 2, 2006) (SR–BSE–2005–52). 

4See Securities Exchange Act Release No. 63539 

(December 14, 2010), 75 FR 79429 (‘‘Notice’’). 

5See Chapter V, Section 18 of the BOX Rules. 

6See Chapter VI, Section 5(c)(i) of the BOX Rules. 

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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.41 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. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

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–Phlx-2011–34 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–Phlx–2011–34. 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 on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will be 

available for inspection and copying at 

the principal offices 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–Phlx-2011–34, and should 

be submitted on or before April 14, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–6908 Filed 3–23–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64097; File No. SR–BX– 

2010–079] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Order 

Approving Proposed Rule Change To 

Amend Chapter IV of the BOX Rules To 

Allow Executing Participants To 

Provide BOX a List of the Order Flow 

Providers for Which the Executing 

Participants Will Provide Directed 

Order Services 

March 18, 2011. 

I. Introduction 

On December 3, 2010, NASDAQ OMX 

BX, Inc. (the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposal to amend the 

rules governing its Directed Order 

process to: (i) Allow an Executing 

Participant (‘‘EP’’) to provide BOX a list 

of the Order Flow Providers (‘‘OFPs’’) for 

which the EP will provide Directed 

Order services and (ii) provide that BOX 

would reveal to the EP the participant 

ID of the OFP sending the Directed 

Order.3 The proposed rule change was 

published for comment in the Federal 

Register on December 20, 2010.4 The 

Commission received no comments on 

the proposal. This order approves the 

proposal. 

II. Description of the Proposal 

Under the BOX’s Directed Order 

process, Market Makers on BOX are able 

to handle orders on an agency basis 

directed to them by OFPs. An OFP 

sends a Directed Order to BOX with a 

designation of the Market Maker to 

whom the order is to be directed. BOX 

then routes the Directed Order to the 

appropriate Market Maker. Under 

Chapter VI, Section 5(c)(ii) of the BOX 

Rules, a Market Maker only has two 

choices when receiving a Directed 

Order: (1) Submit the order to the Price 

Improvement Period auction process 

(‘‘PIP’’); 5 or (2) send the order back to 

BOX for placement onto the BOX Book. 

A Market Maker who desires to accept 

Directed Orders must systemically 

indicate that it is an EP whenever the 

Market Maker wishes to receive 

Directed Orders from the BOX Trading 

Host. If a Market Maker does not 

systemically indicate that it is an EP, 

then the BOX Trading Host will not 

forward any Directed Orders to that 

Market Maker. In such a case, the BOX 

Trading Host will send the order 

directly to the BOX Book. If a Market 

Maker has systemically indicated that it 

wishes to receive Directed Orders, it 

shall not, under any circumstances, 

reject the receipt of a Directed Order 

from the BOX Trading Host nor reject 

the Directed Order back to the OFP who 

sent it.6

The Exchange proposes to amend 

Chapter VI, Section 5(c)(i) of the BOX 

Rules to allow EPs to provide BOX a list 

of OFPs for which the EP will provide 

Directed Order services. Under the 

proposal, prior to accepting any 

Directed Order through the Trading 

Host, an EP must inform BOX of the 

OFPs from whom it has agreed to accept 

Directed Orders (‘‘Listed OFPs’’ or 

‘‘LOFPs’’). The Trading Host will then 

only send to the EP Directed Orders 

from LOFPs. Further, under the 

proposal, the BOX Trading Host would 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 57 / Thursday, March 24, 2011 / Notices 16651 

7Pursuant to an existing pilot program, Directed 

Orders are not anonymous. See e.g., Securities 

Exchange Act Release Nos. 63540 (December 14, 

2010), 75 FR 79432 (December 20, 2010) 

(continuing the practice of non-anonymous 

Directed Orders, originally established in SR–BSE– 

2006–14, as a pilot program until December 31, 

2010 (‘‘Directed Order Pilot Program’’)) and 63591 

(December 21, 2010), 75 FR 81687 (December 28, 

2010) (extending the date of the Directed Order 

Pilot Program until June 30, 2011). The proposed 

rule change would make permanent this feature of 

the Directed Order process. 

8 In approving the proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(5). 

11See also Rule 723 of the International 

Securities Exchange, LLC (Price Improvement 

Mechanism) and Rule 6.74A of the Chicago Board 

Options Exchange, Incorporated (Automated 

Improvement Mechanism). 12Specialists and other market makers may 

establish payment for order flow relationships with 

firms on a discretionary basis. A specialist or 

market maker may pay varying amounts for order 

flow received from different firms or different 

customers within firms. Unlike payment for order 

flow, which principally benefits intermediaries and, 

indirectly, their customers through possibly lower 

fees and better services, customers’ orders executed 

through the PIP auction directly benefit customers 

with the opportunity for an improved price. 

13See Stoll, H. R., ‘‘The supply of dealer services 

in securities of markets,’’ Journal of Finance 33 

(1978), at 1133–51; Glosten, L. and P. Milgrom, ‘‘Bid 

ask and transaction prices in a specialist market 

with heterogeneously informed agents,’’ Journal of 

Financial Economics 14 (1985), at 71–100; and 

Copeland, T., and D. Galai, ‘‘Information effects on 

the bid-ask spread,’’ Journal of Finance 38 (1983), 

at 1457–69. 

14 Id. 

reveal to the EP the participant ID of the 

OFP sending the Directed Order.7

III. Discussion 

After careful review of the proposal, 

the Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange 8 and, in 

particular, the requirements of Section 6 

of the Act.9 Specifically, as discussed 

below, the Commission finds that the 

proposed rule change is consistent with 

Section 6(b)(5) of the Act,10 which 

requires, among other things, that the 

rules of a national securities exchange 

be 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, and 

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; and 

are not designed to permit unfair 

discrimination among customers, 

issuers, brokers, or dealers. 

Section 6(b)(5) of the Act prohibits an 

exchange from establishing rules that 

treat market participants in an unfairly 

discriminatory manner. Section 6(b)(5) 

of the Act does not prohibit exchange 

members or other broker-dealers from 

discriminating, so long as their activities 

are otherwise consistent with the 

Federal securities laws. Nor does 

Section 6(b)(5) of the Act require 

exchanges to preclude discrimination by 

broker-dealers. Broker-dealers 

commonly differentiate between 

customers based on the nature and 

profitability of their business. 

Currently under BOX’s rules, an 

Options Participant that is not a Market 

Maker may provide an opportunity for 

price improvement to a customer order 

by submitting it to the PIP. An Options 

Participant may decide who to accept as 

its customers and further choose to 

provide price improvement to some 

customer orders, but not others, by 

exercising discretion as to whether it 

chooses to send a particular order to the 

PIP auction.11 An Options Participant 

would know the identity of its customer 

in deciding whether to provide this 

opportunity for price improvement. 

Market Makers may also provide an 

opportunity for price improvement to 

Directed Orders by submitting them into 

the PIP. The proposed rule change, by 

permitting a Market Maker to designate 

those OFPs from which it will accept 

Directed Orders and to be provided with 

the identity of the OFP sending a 

Directed Order, would allow a Market 

Maker to decide in advance that it will 

provide an opportunity for price 

improvement only to orders from 

certain OFPs.12 Thus, the proposal will 

provide information to Market Makers 

that are EPs that is the same information 

available to other BOX members when 

they decide whether to provide price 

improvement to a particular order. 

While customer anonymity may be 

valuable in ensuring that broker-dealers 

comply with legal obligations in a 

variety of circumstances, such as market 

makers’ firm quote obligations, 

customer anonymity is not required of 

exchanges, particularly when disclosure 

of customer identity could provide 

benefits to certain customers beyond 

those required by the Federal securities 

laws or exchange rules. In particular, 

market makers may be willing to offer 

better execution prices to certain 

customers’ orders (e.g., retail customers’ 

orders). The Commission does not 

believe that it would be inconsistent 

with the Federal securities laws for the 

Exchange to provide, under the 

circumstances set forth in this proposal, 

the means for its Market Makers to 

differentiate between customers in 

providing price improvement or other 

non-required advantages to certain 

customers. The Exchange’s proposal 

treats all Market Makers the same and 

establishes no requirements for which 

OFPs a Market Maker designates as 

LOFPs or for which orders a Market 

Maker chooses to provide an 

opportunity for price improvement. The 

Commission does not believe that the 

absence of Exchange rules specifying 

which orders a Market Maker may 

execute at prices better that its public 

quote is unfairly discriminatory. 

The Commission notes that allowing 

a Market Maker to know the identity of 

firms sending Directed Orders may 

provide further incentive to that Market 

Maker to provide price improvement. A 

Market Maker that receives a Directed 

Order would be required to decide 

whether to send the order to the PIP and 

guarantee a price equal to or better than 

the NBBO to such order, or to release 

the order to the BOX book. The Market 

Maker’s decision about whether to 

choose to guarantee a particular order at 

a price equal to or better than the NBBO 

may be affected by this proposal 

because it provides Market Makers with 

information to differentiate between 

orders from informed traders (i.e., their 

competitors) and orders from 

uninformed traders. It is well known in 

academic literature and industry 

practice that prices tend to move against 

market makers after trades with 

informed traders, often resulting in 

losses for market makers.13 Thus, there 

is a strong economic rationale for 

market makers not providing informed 

traders price improvement. Uninformed 

investors end up bearing the cost of 

these market maker losses through 

wider spreads that market makers need 

to quote to uninformed investors due to 

informed order flow.14

Accordingly, while the Exchange’s 

proposal would permit a BOX Market 

Maker to discriminate among customers 

in providing prices better than its quote, 

the Commission does not believe that 

this discrimination is inconsistent with 

Section 6(b)(5) of the Act. 

The Commission continues to believe 

that under the proposal, a Market Maker 

would maintain the incentive to quote 

aggressively to gain priority with respect 

to orders entered on the BOX book. 

Further, the Commission believes that 

there is rigorous competition for order 

flow across options exchanges, such that 

any widening of quotes on one market 

is an opportunity for another option 


emcdonald on DSK2BSOYB1PROD with NOTICES
16652 Federal Register / Vol. 76, No. 57 / Thursday, March 24, 2011 / Notices 

15See Robert Battalio, ‘‘Third Market BrokerDealers: Cost Competitors or Cream Skimmers?’’ 

Journal of Finance, 1997; and Robert Battalio, 

Robert Jason Greene, and Robert Jennings, ‘‘How do 

Competing Specialists and Preferencing Dealers 

Affect Market Quality?’’ Review of Financial 

Studies, 1997. 

16See Securities Exchange Act Release No. 60405 

(July 30, 2009), 74 FR 39362 (August 6, 2009). 

17 15 U.S.C. 78f(b)(5). 

18 15 U.S.C. 78s(b)(2). 

19 17 CFR 200.30–3(a)(12). 

market to capture order flow.15 In fact, 

the Options Order Protection and 

Locked/Crossed Market Plan provides 

protection from one exchange ignoring 

better quoted prices on another market 

and will continue to promote quote 

competition across options exchanges.16

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities exchange, and, in particular 

with Section 6(b)(5) of the Act.17

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,18 that the 

proposed rule change (File No. SR–BX– 

2010–079) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–6909 Filed 3–23–11; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice 7328] 

Defense Trade Advisory Group; Notice 

of Open Meeting 

Summary: The Defense Trade 

Advisory Group (DTAG) will meet in 

open session from 10 a.m. to 1:30 p.m. 

on Tuesday, May 3, 2011, in the Dean 

Acheson Auditorium at the U.S. 

Department of State, Harry S. Truman 

Building, Washington, DC. Entry and 

registration will begin at 9 a.m. Please 

use the building entrance located at 

23rd Street, NW., Washington, DC, 

between C & D Streets. The membership 

of this advisory committee consists of 

private sector defense trade 

representatives, appointed by the 

Assistant Secretary of State for PoliticalMilitary Affairs, who advise the 

Department on policies, regulations, and 

technical issues affecting defense trade. 

The purpose of the meeting will be to 

discuss current defense trade issues and 

topics for further study. Agenda topics 

will be posted on the Directorate of 

Defense Trade Controls’ Web site, at 

http://www.pmddtc.state.gov 

approximately 2 weeks prior to the 

meeting. Members of the public may 

attend this open session and will be 

permitted to participate in the 

discussion in accordance with the 

Chair’s instructions. Members of the 

public may, if they wish, submit a brief 

statement to the committee in writing. 

As access to the Department of State 

facilities is controlled, persons wishing 

to attend the meeting must notify the 

DTAG Alternate Designated Federal 

Officer (DFO) by close of business 

Friday, April 22, 2011. If notified after 

this date, the Department’s Bureau of 

Diplomatic Security may not be able to 

complete the necessary processing 

required to attend the plenary session. 

A person requesting reasonable 

accommodation should notify the 

Alternate DFO by the same date. Each 

non-member observer or DTAG member 

that wishes to attend this plenary 

session should provide: his/her name; 

company or organizational affiliation; 

phone number; date of birth; and 

identifying data such as driver’s license 

number, U.S. Government ID, or U.S. 

Military ID, to the DTAG Alternate DFO, 

Patricia Slygh, via e-mail at 

SlyghPC@state.gov. A RSVP list will be 

provided to Diplomatic Security. One of 

the following forms of valid photo 

identification will be required for 

admission to the Department of State 

building: U.S. driver’s license, passport, 

U.S. Government ID or other valid photo 

ID. Personal data is requested pursuant 

to Public Law 99–399 (Omnibus 

Diplomatic Security and Antiterrorism 

Act of 1986), as amended; Pub. L. 107– 

56 (USA PATRIOT Act); and Executive 

Order 13356. The purpose of the 

collection is to validate the identity of 

individuals who enter Department 

facilities. The data will be entered into 

the Visitor Access Control System 

(VACS–D) database. Please see the 

Privacy Impact Assessment for VACS–D 

at http://www.state.gov/documents/ 

organization/100305.pdf for additional 

information. 

For additional information, contact 

Patricia Slygh, PM/DDTC, SA–1, 12th 

Floor, Directorate of Defense Trade 

Controls, Bureau of Political-Military 

Affairs, U.S. Department of State, 

Washington, DC 20522–0112; telephone 

(202) 663–2830; FAX (202) 261–8199; or 

e-mail SlyghPC@state.gov. 

Dated: March 16, 2011. 

Robert S. Kovac, 

Designated Federal Officer, Defense Trade 

Advisory Group, Department of State. 

[FR Doc. 2011–6982 Filed 3–23–11; 8:45 am] 

BILLING CODE 4710–25–P 

DEPARTMENT OF STATE 

[Public Notice 7381] 

In the Matter of the Designation of 

Miguel de Garikoitz Aspiazu Rubina, 

Also Known as Miguel de Garikoitz 

Aspiazu Urbina, Also Known as 

Txeroki, Also Known as Cherokee, as 

a Specially Designated Global Terrorist 

Pursuant to Section 1(b) of Executive 

Order 13224, as Amended 

Acting under the authority of and in 

accordance with section 1(b) of 

Executive Order 13224 of September 23, 

2001, as amended by Executive Order 

13268 of July 2, 2002, and Executive 

Order 13284 of January 23, 2003, I 

hereby determine that the individual 

known as Miguel de Garikoitz Aspiazu 

Rubina, also known as Miguel de 

Garikoitz Aspiazu Urbina, also known 

as Txeroki, also known as Cherokee, 

committed, or poses a significant risk of 

committing, acts of terrorism that 

threaten the security of U.S. nationals or 

the national security, foreign policy, or 

economy of the United States. 

Consistent with the determination in 

section 10 of Executive Order 13224 that 

‘‘prior notice to persons determined to 

be subject to the Order who might have 

a constitutional presence in the United 

States would render ineffectual the 

blocking and other measures authorized 

in the Order because of the ability to 

transfer funds instantaneously,’’ I 

determine that no prior notice needs to 

be provided to any person subject to this 

determination who might have a 

constitutional presence in the United 

States, because to do so would render 

ineffectual the measures authorized in 

the Order. 

This notice shall be published in the 

Federal Register. 

Dated: February 22, 2011. 

Hillary Rodham Clinton, 

Secretary of State. 

[FR Doc. 2011–6984 Filed 3–23–11; 8:45 am] 

BILLING CODE 4710–10–P 

DEPARTMENT OF STATE 

[Public Notice 7382] 

In the Matter of the Designation of 

Jose Ignacio Reta de Frutos, Also 

Known as Joseba Inaki Reta de Frutos, 

Also Known as Joseba In ̃ aki Reta Fruit, 

as a Specially Designated Global 

Terrorist Pursuant to Section 1(b) of 

Executive Order 13224, as Amended 

Acting under the authority of and in 

accordance with section 1(b) of 

Executive Order 13224 of September 23, 

2001, as amended by Executive Order 


emcdonald on DSK2BSOYB1PROD with NOTICES