[Federal Register Volume 75, Number 240 (Wednesday, December 15, 2010)]
[Notices]
[Pages 78312-78313]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31474]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63499; File No. SR-BX-2010-087]


Self-Regulatory Organizations; NASDAQ OMX BX; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Clarify Quote 
Management Procedures

December 9, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on December 6, 2010, NASDAQ OMX BX (``BX'' or ``Exchange'') 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 non-controversial rule change 
under Rule 19b-4(f)(6) under the Act,\3\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposed rule change 
to clarify quote management procedures.
    The text of the proposed rule change is below. Proposed new 
language is in italics and proposed deletions are in brackets.\4\
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    \4\ Changes are marked to the rule text that appears in the 
electronic manual of NASDAQ found at http://nasdaqomx.cchwallstreet.com.
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* * * * *
4613. Market Maker Obligations
    A member registered as an Equities Market Maker shall engage in a 
course of dealings for its own account to assist in the maintenance, 
insofar as reasonably practicable, of fair and orderly markets in 
accordance with this Rule.
    (a) Quotation Requirements and Obligations
    (1) No Change.
    (2) Pricing Obligations. For NMS stocks (as defined in Rule 600 
under Regulation NMS) an Equities Market Maker shall adhere to the 
pricing obligations established by this Rule during Regular Market 
Hours.
    (A)-(E) No Change.
    (F) [Quotation Creation and Adjustment. For each Issue in which an 
Equities Market Maker is registered, the System shall automatically 
create a quotation for display to comply with this Rule. System-created 
compliant displayed quotations will thereafter be allowed to rest and 
not be further adjusted by the System unless the relationship between 
the quotation and its related National Best Bid or National Best Offer, 
as appropriate, shrinks to the greater of: (a) 4 percentage points, or 
(b) one-quarter the applicable percentage necessary to trigger an 
individual stock trading pause as described in NASDAQ OMX BX Rule 
4120(a)(11), or expands to within that same percentage less 0.5%, 
whereupon the System will immediately re-adjust and display the 
Equities Market Maker's quote to the appropriate Designated Percentage 
set forth in section (D) above. As the System allows for multiple 
attributable quotations by a Equities Market Maker in an issue, 
quotations originally entered by Equities Market Makers shall be 
allowed to move freely towards or away from the National Best Bid or 
National Best Offer, as appropriate, for potential execution.] 
Reserved.
    (G) [Quotation Refresh After Execution. In the event of an 
execution against a System-created compliant quotation, the Equities 
Market Maker shall have its quote refreshed by the System on the 
executed side of the market at the applicable Designated Percentage 
away from the then National Best Bid (Offer) (or if no National Best 
Bid (Offer), the last reported sale).] Reserved.
    (H)-(K) No Change.
    (b)-(e) No Change.
* * * * *
4752. Opening Process; Opening and Closing Price
    (a) Trading Prior To Normal Market Hours. The system shall process 
all eligible Quotes/Orders at 8 a.m.:
    (1) At 8 a.m., the system shall add in time priority all eligible 
Orders in accordance with each order's defined characteristics.
    (2) Quoting Market Participants must enter quotations in compliance 
with Rule 4613 at 9:25 a.m. until market open, and at all times 
thereafter during Regular Market Hours. [may instruct the Exchange to 
open their Quotes at 9:25 a.m. at price of $0.01 (bid) and $999,999 
(offer) and a size of one round lot in order to provide a two-sided 
quotation. In all other cases, the quote of a participant shall be at 
the price and size entered by the participant]
    (3) No Change.
    (b) No Change.
* * * * *
    (b) Not applicable.
    (c) Not applicable.

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 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Recently, the Exchange adopted rules enhancing market maker 
quotation obligations. In connection with the implementation with these 
new standards, the Exchange proposes to clarify quote management 
procedures. Under the proposal, market makers themselves will be 
responsible for maintaining quotations at prices that comply with the 
new minimum standards set forth in Rule 4613. The Exchange will provide 
no automated system to create or adjust market maker quotes to ensure 
compliance, and the responsibility to maintain required quote prices 
will be responsibility of the market maker. In addition, the Exchange 
is removing and updating language from Rule 4752 to make explicit the 
requirement to comply with minimum quote prices.
    The Exchange believes that the proposal will enhance compliance 
with the new market maker quotation standards.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with

[[Page 78313]]

the provisions of Section 6 of the Act,\5\ in general, and with 
Sections 6(b)(5) of the Act,\6\ in particular, in that the proposal 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 regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The Exchange 
believes that the proposed rule meets these requirements in that it 
enhances compliance with the new market maker quotation standards.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in 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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (1) 
Significantly affect the protection of investors or the public 
interest; (2) impose any significant burden on competition; and (3) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). When filing a proposed rule change 
pursuant to Rule 19b-4(f)(6) under the Act, an exchange is required 
to give 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\9\ 
However, Rule 19b-4(f)(6) \10\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay.
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    \9\ 17 CFR 240.19b-4(f)(6)(iii).
    \10\ Id.
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    The Commission has considered the Exchange's request to waive the 
30-day operative delay. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest, as it will enable the Exchange to implement the 
proposed change consistent with the implementation date for the new 
market maker pricing obligations.\11\ Therefore, the Commission 
designates the proposed rule change to be operative upon filing.
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    \11\ For the purposes only of waiving the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#7301061f165e101c1e1e161d0700330016105d141c05"><span class="__cf_email__" data-cfemail="7d0f081118501e1210101813090e3d0e181e531a120b">[email protected]</span></a>. Please include 
File Number SR-BX-2010-087 on the subject line.

Paper Comments

    <bullet> 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-2010-087. 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-BX-
2010-087 and should be submitted on or before January 5, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31474 Filed 12-14-10; 8:45 am]
BILLING CODE 8011-01-P


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