Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Notices 8307 

18The Commission also believes that the 

amended priority and allocation rules for electronic 

FLEX trading are consistent with Section 11(a) of 

the Act. 15 U.S.C. 78k(a) Section 11(a)(1) prohibits 

a member of a national securities exchange from 

effecting transactions on that exchange for its own 

account, the account of an associated person, or an 

account over which it or its associated person 

exercises discretion unless an exception applies. 

The Commission believes, however, that neither a 

Submitting Trading Permit Holder who trades 

against an electronic RFQ Market nor any other 

FLEX Trader who itself submits an RFQ Quote 

electronically qualifies for the ‘‘effect-versus 

execute’’ exception to Section 11(a). 17 CFR 

240.11a2–2(T). Nevertheless, the Commission 

believes that other exceptions may apply. FLEX 

Market-Makers qualify for the market-maker 

exception. With respect to non-market-maker 

members, the new System appears reasonably 

designed to cause RFQ Quotes constituting the RFQ 

Market and the RFQ Order that trades against the 

RFQ Market to yield to non-member interest, 

consistent with the ‘‘G’’ exception. See 15 U.S.C. 

78k(a)(1)(G) (setting forth all requirements for the 

‘‘G’’ exception). 

19See e.g., Securities Exchange Act Release Nos. 

51822 (June 10, 2005), 70 FR 35321 (June 17, 2005) 

(SR–CBOE–2004–87) (Adopting rules pertaining to 

priority and allocation of trades for index options) 

and 56792 (November 15, 2007), 72 FR 65776 

(November 23, 2007) (SR–CBOE–2006–99) 

(Adopting rules providing for the trading of FLEX 

Options on an electronic platform). 

20See supra note 4. 

21 Id. 

22See Securities Exchange Act Release No. 56792, 

supra note 19. 

23See SR–CBOE–2006–99 Amendment No. 2, 

http://www.cboe.com/publish/RuleFilingsSEC/SRCBOE-2006-099.a2.pdf. 

24 15 U.S.C. 78s(b)(2). 

25 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The purpose of the fidelity bond is to protect a 

member against certain types of losses, including, 

Continued 

processing of complex orders. The 

Commission believes that such a 

provision will clarify application of 

Exchange rules and processes for CBOE 

Trading Permit Holders and investors. 

The Exchange further proposes to 

modify the priority algorithms 

applicable to the FLEX electronic book 

and to the FLEX electronic RFQ process. 

The Commission believes that the 

proposed changes will simplify the 

allocation algorithms for FLEX Traders 

and investors. Under the proposal, 

allocation will be based on price-time 

priority, subject to public customer and 

non-TPH broker-dealer priority and, if 

applicable, any applicable entitlement 

priority. The Commission believes that 

the priority and allocation rules are 

reasonable and consistent with the Act 

and applies a more consistent allocation 

algorithm across these FLEX electronic 

processes.18 Moreover, the proposed 

changes regarding public customer 

priority/non-TPH broker-dealer priority 

and price-time priority have previously 

been found consistent with the Act.19

The Commission received one 

comment letter regarding the proposed 

rule change.20 The comment suggested 

that there be an additional phase, the 

Decision Phase, in the RFQ process. 

During this Decision Phase, the initiator 

of an RFQ would have a brief period of 

time, during which no changes of any 

type to market quotes would be 

permitted, in order to decide to trade or 

cancel their RFQ.21 According to the 

Exchange, it previously proposed an 

RFQ process with a ‘‘locked up RFQ 

Market,’’ similar to the one suggested in 

the comment letter, during the Reaction 

Phase. However the Exchange amended 

the process to allow FLEX Quotes and 

FLEX Orders to be entered, modified or 

cancelled during the Reaction Phase.22

The Exchange stated that the 

amendment was the result of feedback 

received concerning the risk of market 

movements that might occur during the 

‘‘locked up RFQ Market.’’ 23 The 

Commission agrees with the Exchange 

that the five-minute RFQ Reaction 

Period should be sufficient time for the 

Submitting Trading Permit Holder to 

determine whether to trade against the 

RFQ Market while at the same time not 

exposing those who respond to an RFQ 

to any unreasonable risks of market 

movements that may occur during the 

RFQ Reaction Period. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,24 that the 

proposed rule change (File No. SR– 

CBOE–2011–122), as amended by 

Amendment No. 1, be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3328 Filed 2–13–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66359; File No. SR–BX– 

2012–008] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change by NASDAQ 

OMX BX, Inc. Relating to Fidelity 

Bonds 

February 8, 2012. 

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 February 

1, 2012, NASDAQ OMX BX, Inc. 

(‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Exchange Rule 3020 to reflect recent 

changes to a corresponding rule of the 

Financial Industry Regulatory Authority 

(‘‘FINRA’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nasdaqtrader.com/ 

micro.aspx?id=BXRulefilings, 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 

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 

Many of BX’s rules are based on rules 

of FINRA (formerly the National 

Association of Securities Dealers 

(‘‘NASD’’)). Beginning in 2008, FINRA 

embarked on an extended process of 

moving rules formerly designated as 

‘‘NASD Rules’’ into a consolidated 

FINRA rulebook. In most cases, FINRA 

has renumbered these rules, and in 

some cases has substantively amended 

them. Accordingly the Exchange also 

has initiated a process of modifying its 

rulebook to ensure that the Exchange 

rules corresponding to FINRA/NASD 

rules continue to mirror them as closely 

as practicable. 

This proposed rule change concerns 

BX Rule 3020 entitled ‘‘Fidelity Bonds,’’ 

which follows and incorporates by 

reference former NASD Rule 3020.3

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8308 Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Notices 

but not limited to, those caused by the malfeasance 

of its officers and employees, and the effect of such 

losses on the member’s capital. 4See Securities Exchange Act Release No. 63961 

(February 24, 2011), 76 FR 11542 (March 2, 2011) 

(SR–FINRA–2010–059) (a rule change to adopt a 

rule of the National Association of Securities 

Dealers, Inc. (‘‘NASD’’) as part of the consolidation 

of the FINRA rulebook). This new rule took into 

account Incorporated NYSE Rule 319 (Fidelity 

Bonds) and its Interpretation. 

5Members may elect to carry additional, optional 

Insuring Agreements not required by FINRA Rule 

4360 for an amount less than 100 percent of the 

minimum required bond coverage. 6NYSE Rule 319 defines the term ‘‘substantially 

modified’’ as any change in the type or amount of 

fidelity bonding coverage, or in the exclusions to 

which the bond is subject, or any other change in 

the bond such that it no longer complies with the 

requirements of the rule. 

7Under NYSE Rule 319(b), each member 

organization may self-insure to the extent of 

$10,000 or 10% of its minimum insurance 

requirement as fixed by the NYSE, whichever is 

greater, for each type of coverage required by the 

rule. Self-insurance in amounts exceeding the above 

maximum may be permitted by the NYSE provided 

the member or member organization certifies to the 

satisfaction of the NYSE that it is unable to obtain 

greater bonding coverage, and agrees to reduce its 

self-insurance so as to comply with the above stated 

limits as soon as possible, and appropriate charges 

to capital are made pursuant to Exchange Act Rule 

15c3–1. This provision also contains identical 

language to the NASD rule regarding net worth 

deductions for subsidiaries. 

FINRA recently amended its rules to 

adopt former NASD Rule 3020, relating 

to Fidelity Bonds, with certain changes, 

into the consolidated FINRA rulebook 

as FINRA Rule 4360.4 Exchange Rule 

3020 provides that a ‘‘A member 

designated to the Exchange for oversight 

pursuant to SEC Rule 17d–1 shall 

comply with NASD Rule 3020 as if such 

Rule were part of the Rules of the 

Exchange.’’ The Exchange proposes to 

amend this text to reference new FINRA 

Rule 4360, which replaced NASD Rule 

3020. 

NASD Rule 3020(a) generally 

provides that each member required to 

join the Securities Investor Protection 

Corporation (‘‘SIPC’’) that has 

employees and that is not a member in 

good standing of one of the enumerated 

national securities exchanges must 

maintain fidelity bond coverage. FINRA 

Rule 4360 requires each member that is 

required to join SIPC to maintain 

blanket fidelity bond coverage with 

specified amounts of coverage based on 

the member’s net capital requirement, 

with certain exceptions. NASD Rule 

3020(a)(1) requires members to maintain 

a blanket fidelity bond in a form 

substantially similar to the standard 

form of Brokers Blanket Bond 

promulgated by the Surety Association 

of America. New FINRA Rule 4360 

requires members to maintain fidelity 

bond coverage that provides for per loss 

coverage without an aggregate limit of 

liability. Also, pursuant to FINRA Rule 

4360, a member’s fidelity bond must 

provide against loss and have Insuring 

Agreements covering at least the 

following: Fidelity, on premises, in 

transit, forgery and alteration, securities 

and counterfeit currency. The rule 

change modified the descriptive 

headings for these Insuring Agreements, 

in part, from NASD Rule 3020(a)(1) and 

NYSE Rule 319(d) to align them with 

the headings in the current bond forms 

available to broker-dealers. FINRA Rule 

4360 also eliminates the specific 

coverage provisions in NASD Rule 

3020(a)(4) and (a)(5), and NYSE Rule 

319(d)(ii)(B) and (C), and (e)(ii)(B) and 

(C), that permit less than 100 percent of 

coverage for certain Insuring 

Agreements (i.e., fraudulent trading and 

securities forgery) to require that 

coverage for all Insuring Agreements be 

equal to 100 percent of the firm’s 

minimum required bond coverage.5

Further, FINRA Rule 4360 requires 

that a member’s fidelity bond include a 

cancellation rider providing that the 

insurer will use its best efforts to 

promptly notify FINRA in the event the 

bond is cancelled, terminated or 

‘‘substantially modified.’’ Also, the rule 

change adopted the definition of 

‘‘substantially modified’’ in NYSE Rule 

319 and would incorporate NYSE Rule 

319.12’s standard that a firm must 

immediately advise FINRA in writing if 

its fidelity bond is cancelled, terminated 

or substantially modified.6 FINRA 

added supplementary material to FINRA 

Rule 4360 requiring members that do 

not qualify for a bond with per loss 

coverage without an aggregate limit of 

liability to secure alternative coverage. 

Specifically, a member that does not 

qualify for blanket fidelity bond 

coverage as required by FINRA Rule 

4360(a)(3) is required to maintain 

substantially similar fidelity bond 

coverage in compliance with all other 

provisions of the rule, provided that the 

member maintains written 

correspondence from two insurance 

providers stating that the member does 

not qualify for the coverage required by 

FINRA Rule 4360(a)(3). 

FINRA Rule 4360 requires each 

member to maintain, at a minimum, 

fidelity bond coverage for any person 

associated with the member, except 

directors or trustees of a member who 

are not performing acts within the scope 

of the usual duties of an officer or 

employee. As further detailed below, 

the rule change eliminated the 

exemption in NASD Rule 3020 for sole 

stockholders and sole proprietors. The 

rule change also increased the minimum 

required fidelity bond coverage for 

members, while continuing to base the 

coverage on a member’s net capital 

requirement. To that end, FINRA Rule 

4360 required a member with a net 

capital requirement that is less than 

$250,000 to maintain minimum 

coverage of the greater of 120 percent of 

the firm’s required net capital under 

Exchange Act Rule 15c3–1 or $100,000. 

The increase to $100,000 modifies the 

present minimum requirement of 

$25,000. 

Under the new FINRA Rule 4360, 

members with a net capital requirement 

of at least $250,000 must use a table in 

the rule to determine their minimum 

fidelity bond coverage requirement. The 

table is a modified version of the tables 

in NASD Rule 3020(a)(3) and NYSE 

Rule 319(e)(i). The identical NASD and 

NYSE requirements for members that 

have a minimum net capital 

requirement that exceeds $1 million are 

retained in the new Rule; however, the 

rule adopts the higher requirements in 

NYSE Rule 319(e)(i) for a member with 

a net capital requirement of at least 

$250,000, but less than $1 million. 

Under the new rule, the entire amount 

of a member’s minimum required 

coverage must be available for covered 

losses and may not be eroded by the 

costs an insurer may incur if it chooses 

to defend a claim. Specifically, any 

defense costs for covered losses must be 

in addition to a member’s minimum 

coverage requirements. A member may 

include defense costs as part of its 

fidelity bond coverage, but only to the 

extent that it does not reduce a 

member’s minimum required coverage 

under the rule. 

Under prior NASD Rule 3020(b), a 

deductible provision may be included 

in a member’s bond of up to $5,000 or 

10% of the member’s minimum 

insurance requirement, whichever is 

greater. If a member desires to maintain 

coverage in excess of the minimum 

insurance requirement, then a 

deductible provision may be included 

in the bond of up to $5,000 or 10% of 

the amount of blanket coverage 

provided in the bond purchased, 

whichever is greater. The excess of any 

such deductible amount over the 

maximum permissible deductible 

amount based on the member’s 

minimum required coverage must be 

deducted from the member’s net worth 

in the calculation of the member’s net 

capital for purposes of Exchange Act 

Rule 15c3–1. Where the member is a 

subsidiary of another member, the 

excess may be deducted from the 

parent’s rather than the subsidiary’s net 

worth, but only if the parent guarantees 

the subsidiary’s net capital in writing.7

FINRA Rule 4360 provides for an 

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Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Notices 8309 

8FINRA notes that a member may elect, subject 

to availability, a deductible of less than 10 percent 

of the coverage purchased. 

9NASD Rule 3020 bases the deduction from net 

worth for an excess deductible on a firm’s 

minimum required coverage, while FINRA Rule 

4360 would base such deduction from net worth on 

coverage purchased by the member. 

10See Exchange Act Release No. 58845 (Oct. 24, 

2008), 73 FR 64379 (Oct. 29, 2008) (Order 

Approving File No. SR–NYSE–2008–46). In this 

rule filing, the role of the specialist was altered in 

certain respects and the term ‘‘specialist’’ was 

replaced with the term ‘‘Designated Market Maker.’’ 

11A one-person member (that is, a firm owned by 

a sole proprietor or stockholder that has no other 

associated persons, registered or unregistered) has 

no ‘‘employees’’ for purposes of NASD Rule 3020, 

and therefore such a firm currently is not subject 

to the fidelity bonding requirements. Conversely, a 

firm owned by a sole proprietor or stockholder that 

has other associated persons has ‘‘employees’’ for 

purposes of NASD Rule 3020, and currently is, and 

will continue to be, subject to the fidelity bonding 

requirements. 

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

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

allowable deductible amount of up to 

25% of the fidelity bond coverage 

purchased by a member. Any deductible 

amount elected by the firm that is 

greater than 10% of the coverage 

purchased by the member 8 would be 

deducted from the member’s net worth 

in the calculation of its net capital for 

purposes of Exchange Act Rule 15c3–1.9

Like the NASD and NYSE rules, if the 

member is a subsidiary of another 

FINRA member, this amount may be 

deducted from the parent’s rather than 

the subsidiary’s net worth, but only if 

the parent guarantees the subsidiary’s 

net capital in writing. 

Consistent with NASD Rule 3020(c) 

and NYSE Rule 319.10, FINRA Rule 

4360 requires a member (including a 

firm that signs a multi-year insurance 

policy), annually as of the yearly 

anniversary date of the issuance of the 

fidelity bond, to review the adequacy of 

its fidelity bond coverage and make any 

required adjustments to its coverage, as 

set forth in the rule. Under FINRA Rule 

4360(d), a member’s highest net capital 

requirement during the preceding 12- 

month period, based on the applicable 

method of computing net capital (dollar 

minimum, aggregate indebtedness or 

alternative standard), is used as the 

basis for determining the member’s 

minimum required fidelity bond 

coverage for the succeeding 12-month 

period. The ‘‘preceding 12-month 

period’’ includes the 12-month period 

that ends 60 days before the yearly 

anniversary date of a member’s fidelity 

bond. This would give a firm time to 

determine its required fidelity bond 

coverage by the anniversary date of the 

bond. 

Further, FINRA Rule 4360 allows a 

member that has only been in business 

for one year and elected the aggregate 

indebtedness ratio for calculating its net 

capital requirement to use, solely for the 

purpose of determining the adequacy of 

its fidelity bond coverage for its second 

year, the 15 to 1 ratio of aggregate 

indebtedness to net capital in lieu of the 

8 to 1 ratio (required for broker-dealers 

in their first year of business) to 

calculate its net capital requirement. 

Notwithstanding the above, such 

member would not be permitted to carry 

less minimum fidelity bond coverage in 

its second year than it carried in its first 

year. 

Based in part on NASD Rule 3020(a), 

FINRA Rule 4360 exempts from the 

fidelity bond requirements members in 

good standing with a national securities 

exchange that maintain a fidelity bond 

subject to the requirements of such 

exchange that are equal to or greater 

than the requirements set forth in Rule 

4360. Additionally, consistent with 

NYSE Rule Interpretation 319/01, 

FINRA Rule 4360 continues to exempt 

from the fidelity bond requirements any 

firm that acts solely as a Designated 

Market Maker (‘‘DMM’’),10 floor broker 

or registered floor trader and does not 

conduct business with the public. 

FINRA Rule 4360 does not maintain the 

exemption in NASD Rule 3020(e) for a 

one-person firm.11 Historically, a sole 

proprietor or sole stockholder member 

was excluded from the fidelity bond 

requirements based upon the 

assumption that such firms were oneperson shops and, therefore, could not 

obtain coverage for their own acts. 

FINRA has determined that sole 

proprietors and sole stockholder firms 

can and often do acquire fidelity bond 

coverage, even though it is currently not 

required, since all claims (irrespective 

of firm size) are likely to be paid or 

denied on a facts-and-circumstances 

basis. Also, certain coverage areas of the 

fidelity bond benefit a one-person shop 

(e.g., those covering customer property 

lost in transit). 

The Exchange also proposes to delete 

text [sic] the following text from 

Exchange Rule 3020, ‘‘FINRA is in the 

process of consolidating certain NASD 

rules into a new FINRA rulebook. If the 

provisions of NASD Rule 3020 are 

transferred into the FINRA rulebook, 

then Equity Rule 3020 shall be 

construed to require Exchange members 

designated to the Exchange for oversight 

pursuant to SEC Rule 17d–1 to comply 

with the FINRA rule corresponding to 

NASD Rule 3010 (regardless of whether 

such rule is renumbered or amended) as 

if such rule were part of the Rules of the 

Exchange.’’ The text is not necessary as 

the Exchange is proposing to update the 

text to reflect the current FINRA Rule. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 12 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 13

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, by 

updating and clarifying the 

requirements governing fidelity bonds. 

The Exchange believes that the 

proposed requirements of Rule 4360, 

including, but not limited to, requiring 

each member that is required to join 

SIPC to maintain blanket fidelity bond 

coverage, increasing the minimum 

requirement fidelity bond coverage and 

maintaining a fidelity bond that 

provides for per loss coverage without 

an aggregate limit of liability promotes 

investor protection by protecting firms 

from unforeseen losses. The proposed 

amendments will conform BX Rule 3020 

to recent changes made to a 

corresponding FINRA rule, to promote 

application of consistent regulatory 

standards. 

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 

The Commission believes that BX 

members are currently subject to FINRA 

Rule 4360 because of the text of the rule 

as written. 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 Section 19(b)(3)(A) of the 

mstockstill on DSK4VPTVN1PROD with NOTICES

8310 Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Notices 

14 15 U.S.C. 78s(b)(3)(A). 

15 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. 

16For 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). 

17 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5A Member is any registered broker or dealer that 

has been admitted to membership in the Exchange. 

6See Securities Exchange Act Release No. 66100 

(January 4, 2012), 77 FR 1532 (January 10, 2012) 

(SR–Phlx–2011–185) (notice of filing and 

immediate effectiveness of proposal to modify fees, 

including an increase to the Customer Fee for 

Removing Liquidity from $0.29 per contract to 

$0.31 per contract); Securities Exchange Act Release 

No. 65940 (December 12, 2011), 76 FR 78322 

(December 16, 2011) (SR–Phlx–2011–162) (notice of 

filing and immediate effectiveness of proposal to 

modify fees, including an increase to the Customer 

Act 14 and Rule 19b–4(f)(6) 15

thereunder. 

The Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiver of the operative delay is 

consistent with the protection of 

investors and the public interest 

because the proposed rule change 

presents no novel issues, and the BX 

members are currently subject to FINRA 

Rule 4360. Therefore, the Commission 

designates the proposal operative upon 

filing.16

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 email to rule-comments@

sec.gov. Please include File Number SR– 

BX–2012–008 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–2012–008. 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, 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– 

2012–008 and should be submitted on 

or before March 6, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3333 Filed 2–13–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66358; File No. SR–BATS– 

2012–006] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Related to Fees for Use 

of BATS Exchange, Inc. 

February 8, 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 February 

1, 2012, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) 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 Exchange. The 

Exchange has designated the proposed 

rule change as one establishing or 

changing a member due, fee, or other 

charge imposed by the Exchange under 

Section 19(b)(3)(A)(ii) of the Act 3 and 

Rule 19b–4(f)(2) thereunder,4 which 

renders the proposed rule change 

effective upon filing with the 

Commission. 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 [sic] amend 

the fee schedule applicable to 

Members 5 and non-members of the 

Exchange pursuant to BATS Rules 

15.1(a) and (c). Changes will become 

operative on February 1, 2012. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.com, 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 

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 parts 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 modify the 

‘‘Options Pricing’’ section of its fee 

schedule to change pricing with respect 

to orders routed to NASDAQ OMX 

PHLX LLC (‘‘PHLX’’). PHLX has 

recently introduced increases to its rates 

to remove liquidity in specified 

symbols 6 identified by the Exchange as 

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