2938 Federal Register / Vol. 76, No. 11 / Tuesday, January 18, 2011 / Notices 

23 15 U.S.C. 78s(b)(3)(A). 

24 17 CFR 240.19b–4(f)(2). 

25 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

necessary or appropriate in furtherance 

of purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

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) 

of the Act 23 and subparagraph (f)(2) of 

Rule 19b–4 24 thereunder. 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–CBOE–2010–116 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–CBOE–2010–116. 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 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of the 

CBOE. 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–CBOE–2010–116 and 

should be submitted on or before 

February 8, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–919 Filed 1–14–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63694; File No. SR–BX– 

2011–001] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

BOX Trading Rules Regarding 

Voluntary Withdrawal From Trading 

Options Classes in Which They Are 

Appointed 

January 11, 2011. 

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 7, 

2011, NASDAQ OMX BX, Inc. (the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Chapter VI, Section 4 (Appointment of 

Market Makers) of the Rules of the 

Boston Options Exchange Group, LLC 

(‘‘BOX’’) to permit the Exchange and 

Market Makers greater flexibility in 

handling Market Makers’ voluntary 

withdrawal from trading options classes 

in which they are appointed. The text of 

the proposed rule change is available 

from the principal office of the 

Exchange, at the Commission’s Public 

Reference Room and also on the 

Exchange’s Internet Web site at http:// 

nasdaqomxbx.cchwallstreet.com/ 

NASDAQOMXBX/Filings/. 

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 

self-regulatory organization 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 self-regulatory organization 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 Exchange proposes to amend 

Chapter VI, Section 4(f) of the BOX 

Rules (Appointment of Market Makers) 

to eliminate the requirement that a 

Market Maker provide three business 

days’ notice if they wish to withdraw 

from trading an options class in which 

they are appointed. The proposed rule 

change will provide that Boston Options 

Exchange Regulation, LLC (‘‘BOXR’’) (i) 

may determine an appropriate 

minimum amount of prior notice 

required for Market Makers to withdraw 

from trading; and (ii) has the authority 

to place other conditions on Market 

Maker withdrawal as may be 

appropriate in the interests of 

maintaining fair and orderly markets. 

Chapter VI, Section 4(f) of the BOX 

Trading Rules currently provides that a 

Market Maker may voluntarily 

withdraw from trading an options class 

that is within their appointment by 

providing BOX with three business 

days’ written notice of such withdrawal. 

The proposed rule change will eliminate 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 11 / Tuesday, January 18, 2011 / Notices 2939 

3 15 U.S.C. 78f(b). 

4 15 U.S.C. 78f(b)(5). 

5See Securities Exchange Act Release No. 58644 

(September 25, 2008), 73 FR 57172 (October 1, 

2008) (BATS–2008–005) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

to Amend BATS Rulebook Chapter XI to Add Four 

New Rules Regarding the Registration and 

Obligations of Market Makers). 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4(f)(6). 

this specific notice requirement and 

give BOXR the discretion to determine 

a minimum prior notice period required 

for a Market Maker’s withdrawal. 

Additionally, the proposed rule change 

will permit BOXR to place other 

conditions on Market Maker withdrawal 

as may be appropriate in the interests of 

maintaining fair and orderly markets. 

BOX believes that removing the 

requirement of three business days’ 

notice is appropriate because requests 

for withdrawal can generally be 

addressed within one business day. As 

such, three business days’ notice is 

simply unnecessary for BOX to respond 

to such requests. Market Makers’ 

requests for withdrawal from a class in 

which they are appointed will not be 

permitted intraday, but may be 

approved as soon as the opening of 

trading on the following business day. 

Under the proposed rule change, 

BOXR will also have the authority to 

place conditions on Market Maker 

withdrawal as may be appropriate in the 

interests of maintaining fair and orderly 

markets. With this discretionary 

authority, BOXR can consider the 

impact of a Market Maker’s withdrawal 

on the market’s customers, participants, 

other Market Makers, and the overall 

marketplace, and place conditions on a 

Market Maker’s withdrawal as 

appropriate and necessary. This 

authority allows BOXR to consider 

various factors, but BOXR will exercise 

its discretion to place conditions on 

Market Maker withdrawal in a nondiscriminatory manner. 

In particular, the proposed rule 

change will allow BOXR greater 

flexibility when addressing instances 

where the Market Maker requesting 

voluntary withdrawal is the only Market 

Maker appointed to such class. Chapter 

IV, Section 5(a) of the BOX Rules 

specifies that BOXR will open trading in 

a series of options in a class only if there 

is at least one Market Maker appointed 

for trading in that particular class. BOX 

believes that requiring at least one 

Market Maker to be appointed for 

trading a class provides BOX Options 

Participants with the greatest amount of 

potential liquidity. Generally, BOXR 

anticipates placing conditions on a 

Market Maker’s request for withdrawal 

when the Market Maker is the only 

Market Maker appointed to a class. For 

example, the Market Maker may be 

required to continue trading in its 

appointed class until BOXR can appoint 

another Market Maker in such options 

class, or for one or more additional 

trading days, as BOXR deems 

appropriate in the interests of 

maintaining a fair and orderly market 

and so that BOX market participants 

may continue trading without 

interruption, if possible. If BOXR is 

unable to appoint another Market Maker 

in the options class, then BOXR may, in 

accordance with the proposed rule 

change and the BOX Rules, approve the 

Market Maker withdrawal, but then be 

unable to open trading in that class the 

following day. 

BOX believes that this proposed rule 

change eliminating the specific notice 

requirement for Market Makers’ 

voluntary withdrawal from trading will 

provide BOX and its Market Makers 

greater flexibility in modifying Market 

Maker appointments in options classes 

on BOX, while retaining BOXR’s ability 

to act in the best interests of a fair and 

orderly market when a Market Maker 

requests voluntary withdrawal. BOX 

believes that all of its market 

participants benefit from continuous 

open trading on BOX, and Market 

Makers assist in the maintenance of fair 

and orderly markets and provide 

liquidity to BOX. BOX believes that 

providing potential BOX Market Makers 

greater flexibility in handling their class 

appointments for trading on BOX may 

encourage additional market 

participants to act as a Market Maker on 

BOX and allow Market Makers to better 

fulfill their role on BOX to the benefit 

of all BOX participants. BOX believes 

that additional Market Makers may add 

liquidity and result in better markets. 

Finally, Chapter VI, Section 4(f) will 

continue to specify that Market Makers 

who fail to give the required advance 

written notice of withdrawal may be 

subject to formal disciplinary action by 

the Exchange. The Exchange believes 

that this continues to be appropriate so 

that regulatory action might be taken 

against any Market Maker that fails to 

comply with the notice requirement, or 

any other conditions that BOXR may 

place on the Market Maker, for 

withdrawal. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the Act,3

in general, and Section 6(b)(5) of the 

Act,4 in particular, in that it is designed 

to prevent fraudulent and manipulative 

acts and practices, promote just and 

equitable principles of trade, facilitate 

transactions in securities, remove 

impediments to and perfect the 

mechanism for 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 this proposal will 

enhance Market Maker flexibility in 

decision-making about the options 

classes in which they are appointed and 

trade and benefit BOX market 

participants by removing impediments 

to and perfecting the mechanism for a 

free and open market and a national 

market system. Further, BOX believes 

that all of its market participants benefit 

from continuous open trading on BOX, 

and Market Makers assist in the 

maintenance of fair and orderly markets 

and provide liquidity to BOX. Moreover, 

BOX believes that providing potential 

BOX Market Makers greater flexibility in 

handling their class appointments for 

trading on BOX may encourage 

additional market participants to act as 

a Market Maker on BOX and allow 

Market Makers to better fulfill their role 

on BOX to the benefit of all BOX 

participants. BOX believes that 

additional Market Makers may add 

liquidity and result in better markets. 

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 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 has neither solicited 

nor received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

This Exchange believes that the 

proposed rule change is substantially 

similar to the rules of another selfregulatory organization that has 

previously been approved by the 

Commission.5 Accordingly, the 

Exchange has designated this rule filing 

as non-controversial under Section 

19(b)(3)(A) of the Exchange Act 6 and 

Rule 19b–4(f)(6) thereunder.7 The 

Exchange believes that the proposed 

rule change should take effect 

immediately upon filing because it will 

effect a change that: (1) Does not 

significantly affect the protection of 

investors or the public interest, (2) does 

mstockstill on DSKH9S0YB1PROD with NOTICES

2940 Federal Register / Vol. 76, No. 11 / Tuesday, January 18, 2011 / Notices 

8 17 CFR 240.19b–4(f)(6). 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 63367 

(November 23, 2010), 75 FR 74755 (‘‘Notice’’). 

4Rule 1092 provides a framework for reviewing 

the price of a transaction to determine whether that 

price was an ‘‘obvious error’’ pursuant to objective 

standards. When a participant believes he/she 

received one or more executions at an erroneous 

price, a participant may notify the Options 

Exchange Officials (‘‘OEOs’’) and request the review 

of a trade as a possible obvious error. An obvious 

error will be deemed to have occurred when the 

execution price of a transaction is higher or lower 

than the theoretical price for a series by a certain 

amount depending on the type of option. OEOs use 

one of three criteria when determining the 

theoretical price of an options execution, which are 

enumerated in Rule 1092(b). The theoretical price 

is then compared to an obvious/catastrophic error 

chart within Rule 1092(a). If the transaction price 

meets this threshold, the transaction may be 

adjusted or nullified. 

5See proposed Rule 1092(c)(v)(A). This would 

occur when a complex order executes against 

another complex order, with each piece executing 

through the System against each other. The Notice 

provides the following example of such a trade. 

Assume a customer trades a call spread at a net 

price of $0.50 by buying the January 50 calls at 

$3.00 and selling the January 55 calls at $2.50. If 

the January 50 calls should have been trading at 

$7.00 and thus met the obvious error threshold in 

Rule 1092, then the entire complex trade would be 

nullified only if the January 50 and 55 calls traded 

as a complex order against another complex order, 

rather than as two separate trades. Currently, the 

trade involving the January 50 calls is nullified and 

the January 55 Calls trade would stand, which, 

according to the Exchange, likely was not intended 

by either party. 

6 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

not impose any significant burden on 

competition, and (3) does not become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate. The 

Exchange provided the Commission 

with 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, 

or such shorter time as designated by 

the Commission.8

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 Exchange 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–BX–2011–001 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–2011–001. 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 

a.m. 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–BX– 

2011–001 and should be submitted on 

or before February 8, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–892 Filed 1–14–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63692; File No. SR–Phlx– 

2010–163] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Order 

Granting Approval of Proposed Rule 

Change Relating to Obvious Errors 

Respecting Complex Trades 

January 11, 2011. 

On November 17, 2010, NASDAQ 

OMX PHLX LLC (‘‘Phlx’’ or ‘‘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 proposed rule 

change to amend Rule 1092, Obvious 

Errors and Catastrophic Errors, to 

address obvious and catastrophic errors 

involving complex orders. The proposed 

rule change was published for comment 

in the Federal Register on December 1, 

2010.3 The Commission received no 

comment letters on the proposal. This 

order approves the proposed rule 

change. 

The proposed rule change would 

amend Rule 1092, Obvious Errors and 

Catastrophic Errors, to address obvious 

and catastrophic errors involving trades 

of one complex order against another 

complex order. Specifically, the 

proposal is designed to address a 

situation in which one component (or 

leg) of a complex order is deemed an 

obvious (or catastrophic) error, but the 

other component(s) are not. In such 

situation, the proposed rule change 

would permit all legs of a complex order 

execution to be nullified when one leg 

of such complex order can be nullified 

as an obvious or catastrophic error 

under Rule 1092,4 provided that the 

execution involved a complex order 

executing against another complex order 

(such that all of the same parties are 

involved in the trade).5 The proposed 

rule does not address complex orders 

that do not trade against other complex 

orders. 

In addition, the proposal would make 

three minor corrections: (i) A reference 

in Rule 1092(b)(ii) to Rule 

1014(c)(1)(A)(i)(a) is inverted and 

should instead say Rule 

1014(c)(i)(A)(1)(a); (ii) the words 

‘‘obvious error’’ in Rule 1092(e)(i)(B) are 

being capitalized to match the rest of the 

rule; and (iii) a reference to ‘‘AUTOM’’ 

in Rule 1092(e)(ii) is outdated and will 

be deleted, leaving reference to the 

‘‘Help Desk.’’ 

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 6 and, in particular, the 

mstockstill on DSKH9S0YB1PROD with NOTICES