76768 Federal Register / Vol. 75, No. 236 / Thursday, December 9, 2010 / Notices 

6 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4http://www.sec.gov. 

5The Anti-Internalization Group identifier is a 

unique two character ID that an Exchange Member 

selects. 

6Any Exchange Member that has an MPID issued 

by FINRA is identified in the Exchange’s internal 

systems by that MPID. 

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–2010–107 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. 

All submissions should refer to File 

Number SR–CBOE–2010–107. 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 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–2010–107 and 

should be submitted on or before 

December 30, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–30945 Filed 12–8–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63427; File No. SR–EDGA– 

2010–19] 

Self-Regulatory Organizations; EDGA 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend EDGA Rule 

11.9 To Offer Anti-Internalization 

Qualifier (‘‘AIQ’’) Functionality to 

Exchange Users 

December 3, 2010. 

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 November 

30, 2010, EDGA Exchange, Inc. (the 

‘‘Exchange’’ or the ‘‘EDGA’’) 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 proposed 

rule change as constituting a ‘‘noncontroversial’’ rule change under 

paragraph (f)(6) of Rule 19b–4 under the 

Act.3 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 offer AntiInternalization Qualifier (‘‘AIQ’’) 

functionality to Exchange Users 

pursuant to proposed Rule 11.9(f). The 

text of the proposed rule change is 

available on the Exchange’s Web site at 

http://www.directedge.com, at the 

Exchange’s principal office, at the 

Public Reference Room of the 

Commission, and the Commission’s 

Web site.4

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 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to offer AntiInternalization Qualifier (‘‘AIQ’’) 

functionality to Exchange Users 

pursuant to proposed Rule 11.9(f). 

Background 

The proposed AIQ modifiers are 

designed to prevent two orders with the 

same Unique Identifier (as defined 

below) from executing against each 

other. The Exchange proposes to offer 

five AIQ modifiers that will be 

implemented and can be set at the 

market participant identifier (‘‘MPID’’), 

the Exchange Member identifier or the 

Anti-Internalization Group identifier 

level 5 (any such identifier, a ‘‘Unique 

Identifier’’).6 With one exception, 

described below, the AIQ modifier on 

the incoming order controls the 

interaction between two orders marked 

with AIQ modifiers from the same 

Unique Identifier. The five AIQ 

modifiers are discussed more 

thoroughly below. 

AIQ Cancel Newest (‘‘CN’’) 

An incoming order marked with the 

CN modifier will not execute against 

opposite side resting interest marked 

with any AIQ modifier originating from 

the same Unique Identifier. The 

incoming order marked with the CN 

modifier will be cancelled back to the 

originating User. The resting order 

marked with an AIQ modifier, which 

otherwise would have interacted with 

the incoming order from the same 

Unique Identifier, will remain on the 

EDGA book (‘‘Book’’). 

AIQ Cancel Oldest (‘‘CO’’) 

An incoming order marked with the 

CO modifier will not execute against 

opposite side resting interest marked 

with any AIQ modifier originating from 

the same Unique Identifier. The resting 

order marked with the AIQ modifier, 

which otherwise would have interacted 

with the incoming order by the same 

Unique Identifier, will be cancelled 

back to the originating User. The 

incoming order marked with the CO 

modifier will remain on the Book. 


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Federal Register / Vol. 75, No. 236 / Thursday, December 9, 2010 / Notices 76769 

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). In addition, Rule 19b– 

4(f)(6)(iii) requires the self-regulatory organization 

to submit to 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, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this requirement. 

AIQ Decrement and Cancel (‘‘DC’’) 

An incoming order marked with the 

DC modifier will not execute against 

opposite side resting interest marked 

with any AIQ modifier originating from 

the same Unique Identifier. If both 

orders are equivalent in size, both 

orders will be cancelled back to the 

originating User. If the orders are not 

equivalent in size, the smaller order will 

be cancelled back to the originating User 

and the larger order will be 

decremented by the size of the smaller 

order, with the balance remaining on 

the Book. 

AIQ Cancel Both (‘‘CB’’) 

An incoming order marked with the 

CB modifier will not execute against 

opposite side resting interest marked 

with any AIQ modifier originating from 

the same Unique Identifier. The entire 

size of both orders will be cancelled 

back to the originating User. 

AIQ Cancel Smallest (‘‘CS’’) 

An incoming order marked with the 

CS modifier will not execute against 

opposite side resting interest marked 

with any AIQ modifier originating from 

the same Unique Identifier. If both 

orders are equivalent in size, both 

orders will be cancelled back to the 

originating User. If the orders are not 

equivalent in size, the smaller of the two 

orders will be cancelled back to the 

originating User and the larger order 

will remain on the Book. 

Additional Discussion 

AIQ modifiers are intended to prevent 

interaction between the same Unique 

Identifier. AIQ modifiers must be 

present on both the buy and the sell 

order in order to prevent a trade from 

occurring and to effect a cancel 

instruction. AIQ modifiers are available 

for orders entered in either an agency or 

principal capacity. An incoming AIQ 

order cannot cancel through resting 

orders that have price and/or time 

priority. When an order with an AIQ 

modifier is entered it will first interact 

with all available interest in accordance 

with the execution process described in 

Exchange Rules 11.8 and 11.9. If there 

is a remaining balance on the order after 

trading with all orders with higher 

priority, it may then interact with an 

opposite side AIQ order in accordance 

with the rules established above. 

Incoming AIQ orders that are priced 

through the price of a resting AIQ order 

may cancel the resting order as long as 

no other non-AIQ orders have priority. 

The Exchange believes that adding 

this functionality will allow Exchange 

Users to better manage order flow and 

prevent undesirable executions with 

themselves or the potential for (or the 

appearance of) ‘‘wash sales’’ that may 

occur as a result of the velocity of 

trading in today’s high speed 

marketplace. Many Exchange Users 

have multiple connections into the 

Exchange due to capacity and speed 

related demands. Orders routed by the 

same User via different connections 

may, in certain circumstances, trade 

against each other. The new AIQ 

modifiers provide Users the opportunity 

to prevent these potentially undesirable 

trades occurring under the same Unique 

Identifier on both the buy and sell side 

of the execution. The Exchange also 

believes that this functionality will 

allow firms to better internalize agency 

order flow which in turn may decrease 

the costs to its customers. The Exchange 

notes that the AIQ modifiers do not 

alleviate, or otherwise exempt, brokerdealers from their best execution 

obligations. As such, broker-dealers 

using the AIQ modifiers will be 

obligated to internally cross agency 

orders at the same price, or a better 

price than they would have received 

had the orders been executed on the 

Exchange. Additionally, the AIQ 

modifiers will assist market participants 

in complying with certain rules and 

regulations of the Employee Retirement 

Income Security Act (‘‘ERISA’’) that 

preclude and/or limit managing brokerdealers of such accounts from trading as 

principal with orders generated for 

those accounts. Finally, the Exchange 

notes that offering the AIQ modifiers 

will streamline certain regulatory 

functions by reducing false positive 

results that may occur on Exchange 

generated wash trading surveillance 

reports when orders are executed under 

the same Unique Identifier. For these 

reasons, the Exchange believes the AIQ 

modifiers offer users enhanced order 

processing functionality that may 

prevent potentially undesirable 

executions without negatively 

impacting broker-dealer best execution 

obligations. 

2. Statutory Basis 

The rule change proposed in this 

submission is consistent with the 

requirements of the Securities Exchange 

Act of 1934 (the ‘‘Act’’), and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) 7 of the Act. 

Specifically, the proposed change is 

consistent with Section 6(b)(5) 8 of the 

Act, because it is 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 facilitating transactions in securities, 

and to remove impediments to, and 

perfect the mechanism of, a free and 

open market and a national market 

system. Specifically, the AIQ 

functionality allows firms to better 

manage order flow and prevent 

undesirable executions against 

themselves, and the proposed change 

described herein enhances the choices 

available to such firms in how they do 

so. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

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 has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not significantly affect the 

protection of investors or the public 

interest, does not impose any significant 

burden on competition, and, by its 

terms, does not 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) of the Act 9 and Rule 19b– 

4(f)(6) thereunder.10

The Exchange has requested that the 

Commission waive the 30-day preoperative delay so that the Exchange 

may immediately offer Exchange users 

the ability to better manage order flow 

and prevent undesirable executions 

with themselves or the potential for or 

the appearance of wash sales that may 

occur as a result of the velocity of 

trading in today’s high speed 

marketplace. The Commission notes 


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76770 Federal Register / Vol. 75, No. 236 / Thursday, December 9, 2010 / Notices 

11See Securities Exchange Act Release No. 60182 

(June 26, 2009), 74 FR 32014 (July 6, 2009) (SR– 

NASDAQ–2009–057); Securities Exchange Act 

Release No. 60191 (June 30, 2009) (SR–NYSEArca– 

2009–058); Securities Exchange Act Release No. 

60266 (July 9, 2009), 74 FR 34380 (July 15, 2009) 

(SR–BATS–2009–022); Securities Exchange Act 

Release No. 62102 (May 13, 2010), 75 FR 28670 

(May 21, 2010) (SR–BATS–2010–011). 

12For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 13 17 CFR 200.30–3(a)(12). 

1See Securities Exchange Act Release No. 34– 

62902 (September 14, 2010), 75 FR 57313 

(September 20, 2010), and CBOE Fees Schedule, 

footnote 8. AIM is an electronic auction system that 

exposes certain orders electronically in an auction 

to provide such orders with the opportunity to 

receive an execution at an improved price. AIM is 

governed by CBOE Rule 6.74A. 

2The Exchange notes that transaction fees are 

also currently waived for customer orders of 99 

contracts or less in ETF (including SPDR options), 

ETN and HOLDRs options. See CBOE Fees 

Schedule, footnote 9. 

that the proposal is based on similar 

rules of other exchanges 11 and believes 

that waiver of the operative delay is 

consistent with the protection of 

investors and the public interest. 

Therefore, the Commission designates 

the proposal operative upon filing.12

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–EDGA–2010–19 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–EDGA–2010–19. 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 the 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–EDGA– 

2010–19 and should be submitted on or 

before December 30, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–30943 Filed 12–8–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63422; File No. SR–CBOE– 

2010–105] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated: Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Extension of 

Waiver of Transaction Fee for Public 

Customer Orders in SPDR Options 

Executed in Open Outcry or in the 

Automated Improvement Mechanism 

December 3, 2010. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934, 15 

U.S.C. 78s(b)(1), notice is hereby given 

that on November 30, 2010, Chicago 

Board Options Exchange, Incorporated 

(‘‘CBOE’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by CBOE. 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 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) 

proposes to amend its Fees Schedule to 

extend through March 31, 2011, a 

waiver of the transaction fee for public 

customer orders in options on Standard 

& Poor’s Depositary Receipts that are 

executed in open outcry or in the 

Automated Improvement Mechanism. 

The text of the proposed rule change is 

available on the Exchange’s Web site 

(http://www.cboe.org/legal), 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, 

CBOE 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. CBOE 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, Proposed Rule 

Change 

1. Purpose 

Effective September 7, 2010, the 

Exchange waived the $.18 per contract 

transaction fee for public customer (‘‘C’’ 

origin code) orders in options on 

Standard & Poor’s Depositary Receipts 

(‘‘SPDR options’’) that are executed in 

open outcry or in the Automated 

Improvement Mechanism (‘‘AIM’’).1 This 

fee waiver is due to expire on November 

30, 2010. The Exchange proposes to 

extend the fee waiver through March 31, 

2011.2 The proposed fee waiver is 

intended to attract more customer 

volume on the Exchange in this product. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 


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