Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Notices 1095 

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

2 17 CFR 240.19b–4. 

spouse annuity the RRB uses Form AA– 

3, Application for Spouse/Divorced 

Spouse Annuity, and electronic Form 

AA–3cert, Application Summary and 

Certification. 

The AA–3 application process gathers 

information from an applicant about 

their marital history, work history, 

benefits from other government 

agencies, railroad pensions and 

Medicare entitlement for a spouse 

annuity. An RRB representative 

interviews the applicant either at a field 

office (preferred), an itinerant point, or 

by telephone. During the interview, the 

RRB representative enters the 

information obtained into an on-line 

information system. Upon completion of 

the interview, the system generates, for 

the applicant’s review and traditional 

pen and ink ‘‘wet’’ signature, Form AA– 

3cert, Application Summary and 

Certification, which is a summary of the 

information that the applicant provided 

or verified. When the RRB 

representative is unable to contact the 

applicant in person or by telephone, for 

example, the applicant lives in another 

country, a manual version of Form AA– 

3 is used. 

Consistent with 20 CFR 217.17, upon 

completion of the AA–3 interview 

process, the RRB proposes to provide, in 

addition to the current Form AA–3cert 

pen and ink ‘‘wet’’ signature, an 

alternate signing method called 

‘‘Attestation,’’ which will be 

documented by new Form AA–3sum. 

Attestation refers to an action taken by 

the RRB representative to confirm and 

annotate in the RRB records (1) the 

applicant’s intent to file an application; 

(2) the applicant’s affirmation under 

penalty of perjury that the information 

provided is correct; and (3) the 

applicant’s agreement to sign the 

application by proxy. The information 

collected as part of the AA–3 interview 

process will be the same irrespective of 

whether the application is signed by a 

pen and ink ‘‘wet’’ signature or by 

attestation. The only difference will be 

the method of signature. 

In addition, consistent with 

Department of Treasury guidelines, the 

RRB proposes revisions to Forms AA–3 

and AA–3cert, to provide claimants a 

Direct Express® Master Card® Debit 

Card payment option. Other nonburden-impacting editorial and 

formatting changes are proposed. One 

response is requested of each 

respondent. Completion of the forms is 

required to obtain a benefit. 

ESTIMATE OF ANNUAL RESPONDENT BURDEN

[The estimated annual respondent burden is as follows] 

Form No. Annual 

responses 

Time 

(minutes) 

Burden 

(hours) 

AA–3 (without assistance) ........................................................................................................... 250 58 242 

AA–3cert (with assistance) .......................................................................................................... 3,700 30 1,850 

AA–3sum (with assistance) ......................................................................................................... 7,100 29 3,432 

Total ...................................................................................................................................... 11,050 ........................ 5,524 

Additional Information or Comments: 

To request more information or to 

obtain a copy of the information 

collection justification, forms, and/or 

supporting material, contact Charles 

Mierzwa, the RRB Clearance Officer, at 

(312) 751–3363 or 

Charles.Mierzwa@RRB.GOV. Comments 

regarding the information collection 

should be addressed to Patricia 

Henaghan, Railroad Retirement Board, 

844 North Rush Street, Chicago, Illinois 

60611–2092 or emailed to 

Patricia.Henaghan@RRB.GOV. Written 

comments should be received within 60 

days of this notice. 

Charles Mierzwa, 

Clearance Officer. 

[FR Doc. 2012–190 Filed 1–6–12; 8:45 am] 

BILLING CODE 7905–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold an Open Meeting 

on Wednesday, January 11, 2012 at 10 

a.m., in the Auditorium, Room L–002. 

The subject matter of the Open 

Meeting will be: 

The Commission will consider 

whether to approve the 2012 budget of 

the Public Company Accounting 

Oversight Board and will consider the 

related annual accounting support fee 

for the Board under Section 109 of the 

Sarbanes-Oxley Act of 2002. 

Commissioner Paredes, as duty 

officer, determined that no earlier notice 

thereof was possible. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: January 5, 2012. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–282 Filed 1–5–12; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66087; File No. SR–Phlx– 

2011–182] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

PHLX Market Exhaust Functionality 

January 3, 2012. 

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 December 

22, 2011, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’ 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. 


tkelley on DSK3SPTVN1PROD with NOTICES
1096 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Notices 

3This proposal refers to ‘‘PHLX XL’’ as the 

Exchange’s automated options trading system. In 

May 2009 the Exchange enhanced the system and 

adopted corresponding rules referring to the system 

as ‘‘Phlx XL II.’’ See Securities Exchange Act 

Release No. 59995 (May 28, 2009), 74 FR 26750 

(June 3, 2009) (SR–Phlx–2009–32). The Exchange 

intends to submit a separate technical proposed 

rule change that would change all references to the 

system from ‘‘Phlx XL II’’ to ‘‘PHLX XL’’ for 

branding purposes. 

4See Securities Exchange Act Release No. 59995 

(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR– 

Phlx–2009–32). 

5See Securities Exchange Act Release No. 60951 

(November 6, 2009), 74 FR 59275 (November 17, 

2009) (SR–Phlx–2009–95). 

6See Securities Exchange Act Release No. 63024 

(September 30, 2010), 75 FR 61799 (October 6, 

2010) (SR–Phlx–2010–134). 

7 Id. 

8See Securities Exchange Act Release No. 63350 

(November 19, 2010), 75 FR 73150 (November 29, 

2010) (SR–Phlx–2010–156). 

9See Securities Exchange Act Release No. 64056 

(March 8, 2011), 76 FR 13678 (March 14, 2011) (SR– 

Phlx–2011–29). 

10See Securities Exchange Act Release No. 64833 

(July 7, 2011), 76 FR 41317 (July 13, 2011) (SR– 

Phlx–2011–95). 

11See Securities Exchange Act Release No. 65670 

(November 2, 2011), 76 FR 69308 (November 8, 

2011) (SR–Phlx–2011–144). 

12See Exchange Rule 1082(a)(ii)(B)(4). 

13See, e.g., Exchange Rules 1014, 1051, 1080, and 

1082. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend 

Exchange Rule 1082, Firm Quotations, 

by modifying Exchange Rule 

1082(a)(ii)(B)(4), Market Exhaust, to 

reflect the Exchange’s discontinuation 

of the Market Exhaust functionality 

(hereinafter, ‘‘Market Exhaust’’), a 

feature of the Exchange’s PHLX XL®

automated options trading system.3

The Exchange also proposes to amend 

Exchange Rule 1080 by deleting a 

reference to ‘‘Market Exhaust’’ from 

Rule 1080(c). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nasdaqtrader.com/ 

micro.aspx?id=PHLXRulefilings, 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 the 

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 the proposed rule 

change is to reflect in the Exchange 

rules the discontinuation of the PHLX 

XL Market Exhaust functionality. 

In June, 2009, the Exchange added 

several significant enhancements to its 

automated options trading platform 

(now known as PHLX XL), and adopted 

rules to reflect those enhancements.4 As 

part of the system enhancements, the 

Exchange proposed, among other things, 

Market Exhaust, which is defined 

below. Several elements of Market 

Exhaust have been part of a pilot (the 

‘‘pilot’’) which was originally scheduled 

to expire November 30, 2009, and later 

extended through September 30, 2010.5

The Exchange subsequently modified 

the pilot to address the manner in 

which the PHLX XL system 

disseminates quotes during and after the 

Market Exhaust process.6 That 

modification was implemented on a 

pilot basis, scheduled to expire 

November 30, 2010,7 and the pilot was 

then extended through March 31, 2011.8

The pilot was then extended through 

July 31, 2011,9 November 30, 2011,10

and its current expiration date of 

February 29, 2012.11

Market Exhaust Functionality 

The PHLX XL system initiates Market 

Exhaust when there are no PHLX XL 

participant quotations in the Exchange’s 

disseminated market for a particular 

series and an initiating order in the 

series is received.12 The PHLX XL 

system initiates a ‘‘Market Exhaust 

Auction’’ for the initiating order, and 

then goes through a series of steps 

depending on the market conditions 

present for the affected series, including 

a broadcast to PHLX XL participants, 

execution of all or part of the initiating 

order, routing the initiating order (or 

remaining contracts following 

execution) to better priced away 

markets, and a ‘‘Provisional Auction,’’ 

after which any unexecuted contracts 

from the initiating order will be subject 

to, and not executable outside of, an 

Auction Quote Range (‘‘AQR’’). During 

the Provisional Auction, any 

unexecuted contracts from the initiating 

order are displayed in the Exchange 

quote for the remaining size for a brief 

period not to exceed ten seconds and 

subsequently cancelled back to the 

entering participant if they remain 

unexecuted, unless the member that 

submitted the original order has 

instructed the Exchange in writing to reenter the remaining size, in which case 

the remaining size will be automatically 

submitted as a new order. 

Discontinuation of Market Exhaust 

The Exchange proposes to 

discontinue the application of Market 

Exhaust on PHLX XL. The Exchange has 

determined that Market Exhaust has 

only affected a small number of orders, 

given the specific set of circumstances 

that must occur in order for Market 

Exhaust to be initiated. Market Exhaust, 

which was originally intended to 

protect against erroneous executions 

when there are no participant quotes on 

the Exchange, may actually result in a 

customer missing the opportunity to 

access liquidity present on the order 

book and/or on other exchanges while 

their order is involved in the Market 

Exhaust process. Once Market Exhaust 

is discontinued on the Exchange, orders 

received when there are no PHLX XL 

participant quotations in the Exchange’s 

disseminated market for the affected 

series will be handled in accordance 

with existing Exchange rules regarding 

electronic order entry, execution, 

routing, trade reporting, and firm 

quotations.13

The Exchange proposes to amend 

Rule 1082(a)(ii)(B)(4) by adopting Rule 

1082(a)(ii)(B)(4)(a), which would state 

that, if there are no offers both on the 

Exchange and on away markets in the 

affected series, market orders to buy in 

the affected series will be cancelled 

immediately, and an electronic report of 

such cancellation will be transmitted to 

the sender. The Exchange would cancel 

such a market order because in this rare 

circumstance there would be no 

disseminated market on the Exchange 

and no disseminated market on any 

away market against which such market 

order could be routed and executed, and 

there would be no price at which the 

Exchange could place such a market 

order on the Exchange’s limit order 

book. 

Upon the discontinuation of Market 

Exhaust, orders that would have been 

handled under Market Exhaust will be 

handled according to Exchange rules 

that address specific market conditions. 

Proposed Rule 1082(a)(ii)(B)(4)(b) would 

address the PHLX XL system’s 

functionality in the circumstance where 

there are no offers on the Exchange and 

there are offers on away markets in the 

affected series. In such a circumstance, 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Notices 1097 

14Rule 1080(m), Order Routing, describes the 

PHLX XL functionality by which eligible orders are 

routed to away markets for possible execution. 

15Rule 1080(i) states that the system will convert 

market orders to sell a particular option series to 

limit orders to sell with a limit price of the 

minimum trading increment applicable to such 

series that are received when: (A) For options listed 

only on the Exchange: (1) The Exchange’s 

disseminated bid price in such option series is zero; 

and (2) the Exchange’s disseminated quotation in 

the series has a bid/ask differential less than or 

equal to $0.25; or (B) For options that are listed on 

multiple exchanges: (1) The disseminated NBBO 

includes a bid price of zero in the series; and (2) 

the Exchange’s disseminated quotation in the series 

has a bid/ask differential less than or equal to $0.25. 

Such orders will be automatically placed on the 

limit order book in price-time priority. 

16Additionally, the Exchange notes that the 

deletion of the rules concerning Market Exhaust 

effects consistency between the rules and the PHLX 

XL functionality in compliance with the Act. 

17The Exchange will issue a circular to 

membership describing the discontinuation of 

Market Exhaust prior to the effectiveness of such 

discontinuation. 

18 15 U.S.C. 78f(b). 

19 15 U.S.C. 78f(b)(5). 

20 15 U.S.C. 78s(b)(3)(A). 

21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

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 Exchange has satisfied this 

requirement. 

market orders to buy will be handled 

pursuant to Exchange Rule 1080(m).14

Proposed Rule 1082(a)(ii)(B)(4)(c) 

would address the PHLX XL system’s 

functionality in the circumstance where 

there are no bids or a zero priced bid on 

the Exchange and there are no bids on 

away markets in the affected series. In 

such a circumstance, the Exchange will 

disseminate a bid price of zero, and 

market orders to sell will be handled 

pursuant to Exchange Rule 1080(i).15

Proposed Rule 1082(a)(ii)(B)(4)(d) 

would address the PHLX XL system’s 

functionality in the circumstance where 

there are no bids or a zero priced bid on 

the Exchange and there are bids on 

away markets in the affected series. In 

such a circumstance, market orders to 

sell will be handled pursuant to 

Exchange Rule 1080(m). 

The Exchange believes that the 

proposed rule change benefits 

customers and the marketplace as a 

whole by simplifying the order handling 

process and enabling customers to 

immediately access posted liquidity on 

the Exchange and away markets even 

when there may not be PHLX 

participant quotes present.16

The Exchange also proposes to amend 

Exchange Rule 1080 by deleting a 

reference to ‘‘Market Exhaust’’ from 

Rule 1080(c). 

The Exchange will complete the 

discontinuation of the Market Exhaust 

functionality on or before January 31, 

2012.17

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 18 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 19

in particular, 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. 

Specifically, the Exchange believes 

that the proposed discontinuation of 

Market Exhaust protects investors and 

the public interest by ensuring that 

customers have the opportunity to 

access liquidity present on the order 

book and/or on other exchanges quickly, 

instead of foregoing such opportunity 

while their order is involved in the 

Market Exhaust process. In the rare set 

of circumstances that give rise to Market 

Exhaust, investors should continue to 

receive quality executions on PHLX and 

at away markets (following routing if 

appropriate). 

Moreover, the proposed 

discontinuation of Market Exhaust 

removes impediments and perfects the 

mechanism of a free and open market 

and a national market system by 

expediting the PHLX execution, routing 

and trade reporting process, all to the 

benefit of the markets as a whole. 

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 

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 after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to 19(b)(3)(A) 

of the Act 20 and Rule 19b–4(f)(6) 21

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. 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 email to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2011–182 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–2011–182. 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 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 


tkelley on DSK3SPTVN1PROD with NOTICES
1098 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Notices 

22 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). 

5See BOX Rules Chapter V, Section 18. 

6See ISE Rule 723. 

7AIM, PIP and PIM have certain characteristics in 

common with each other. All three mechanisms (a) 

Provide for the opportunity for customer price 

improvement, (b) have certain periods where the 

initial orders are exposed for potential price 

improvement, (c) have certain guidelines regarding 

the types of orders that may be eligible for price 

improvement, and (d) have certain defined rules 

related to the allocation of trades within price 

improvement auctions, although there are 

differences in the way orders are allocated. 

8See C2 Rule 6.51(b)(1)(A). 

9See supra note 5; see also Securities Exchange 

Act Release No. 34–58999 (November 21, 2008), 73 

FR 72536 (November 28, 2008) (SR–BSE–2008–54) 

(order approving proposed rule change to eliminate 

requirement that there be at least three marketmakers quoting in the relevant series for an auction 

to commence). 

10See supra note 6; see also Securities Exchange 

Act Release No. 34–58710 (October 1, 2008), 73 FR 

59008 (October 8, 2008) (SR–ISE–2008–63) (order 

approving proposed rule change to eliminate 

requirement that there be at least three marketmakers quoting in the relevant series for an auction 

to commence). 

11 15 U.S.C. 78s(b)(1). 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–Phlx–2011–182, and should 

be submitted on or before January 30, 

2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–101 Filed 1–6–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66075; File No. SR–C2– 

2011–042] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change Related to the Exchange’s 

Automated Improvement Mechanisms 

December 30, 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 December 

22, 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, II, and III 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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend C2 

Rules 6.51, Automated Improvement 

Mechanism. 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’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

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 

The purpose of the proposed rule 

change is to amend C2 Rule 6.51 to 

eliminate the requirement that there be 

at least three market-makers quoting in 

the relevant series in order for an 

Auction to commence. 

This proposed rule change is based on 

the current rules of the Boston Options 

Exchange Group, LLC (‘‘BOX’’) 5 and the 

International Securities Exchange, LLC 

(‘‘ISE’’) 6 relating to the Price 

Improvement Period (‘‘PIP’’) and Price 

Improvement Mechanism (‘‘PIM’’), 

respectively, which are automated price 

improvement mechanisms similar to 

AIM.7

AIM allows a TPH to submit an 

Agency Order along with a contra-side 

second order (a principal order or a 

solicited order for the same size as the 

Agency Order) into an Auction where 

other participants could compete with 

the Initiating TPH’s second order to 

execute against the Agency Order, 

which guarantees that the Agency Order 

will receive an execution. Once an 

Auction commences, the Initiating TPH 

cannot cancel it.8

C2 Rule 6.51(a)(4) currently requires 

that there be at least three marketmakers quoting in the relevant series for 

an Auction to commence. The Exchange 

is proposing to eliminate this 

requirement. The Exchange does not 

believe that customer orders should be 

denied the benefits of AIM simply 

because there may be less than three 

market-makers quoting in a relevant 

options class at a specific point in time. 

Any concern regarding an Auction 

starting with a lower number of marketmakers quoting in a relevant series is 

offset by the broad participation and 

competition that would be present once 

an Auction commenced. 

In support of this proposal, the 

Exchange notes that both PIP 9 and 

PIM 10 permit auctions to commence 

without the condition that there be a 

minimum number of market-makers 

quoting in the particular series. Further, 

like PIP and PIM, responding to C2 AIM 

auctions is open to all permit holders. 

The Exchange believes that AIM, and in 

turn the customers that benefit from 

AIM, would be disadvantaged if the 

three market-maker requirement 

remained as a condition to start an 

Auction because this requirement 

potentially reduces the number of 

Auctions and, as a result, opportunities 

for price improvement. Because BOX 

and ISE are currently able to offer their 

customers price improvement without a 

minimum quoter requirement in PIP 

and PIM, respectively, the Exchange 

believes it is important for competitive 

purposes that it be able to offer the same 

opportunities for price improvement on 

C2 through AIM. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 11 and the rules and regulations 

thereunder and, in particular, the 

requirements of Section 6(b) of the 

Act.12 Specifically, the Exchange 

believes the proposed rule change is 

consistent with the Section 6(b)(5) 13

requirements that the rules of an 

exchange be designed to promote just 

and equitable principles of trade, to 

prevent fraudulent and manipulative 

acts, to remove impediments to and to 

perfect the mechanism for a free and 


tkelley on DSK3SPTVN1PROD with NOTICES