14452 Federal Register / Vol. 77, No. 47 / Friday, March 9, 2012 / Notices 

10 15 U.S.C. 78s(b)(3)(A)(ii). 

11 17 CFR 240.19b–4. 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The proposed rule change has taken 

effect upon filing pursuant to Section 

19(b)(3)(A)(ii) of the Act 10 and 

subparagraph (f)(2) of Rule 19b–4 11

thereunder, because, as provided in 

(f)(2), it changes ‘‘a due, fee or other 

charge applicable only to a member’’ 

(known on the Exchange as an ETP 

Holder). 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– 

NSX–2012–04 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–NSX–2012–04. 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 such filing 

will also 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 No. SR–NSX–2012– 

04 and should be submitted on or before 

March 30, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–5730 Filed 3–8–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66512; File No. SR–BX– 

2012–011] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Chapter V, Section 26 of the BOX 

Rules 

March 5, 2012. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on February 

22, 2012, NASDAQ OMX BX, Inc. 

(‘‘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 the self-regulatory organization. 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 

Chapter V, Section 26 (Limitation of 

Liability) of the Rules of the Boston 

Options Exchange Group, LLC (‘‘BOX’’). 

The text of the proposed rule change is 

available from the principal office of the 

Exchange, at the Commission’s Public 

Reference Room and also on the 

Exchange’s Internet Web site at http:// 

nasdaqomxbx.cchwallstreet.com/ 

NASDAQOMXBX/Filings/. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

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 

Chapter V, Section 26 of the BOX 

Trading Rules provides, in general, that 

neither the Exchange, BOXR, BOX, nor 

any of their respective affiliates with 

regard to BOX will be liable to BOX 

Options Participants for any losses 

arising from the use of BOX or the BOX 

Trading Host. The Exchange is 

proposing to codify provisions within 

the BOX Trading Rules that permit 

BOX, for customer service reasons, to 

compensate an Options Participant, 

within specified limits as proposed, for 

certain identified losses. Additionally, 

the Exchange is proposing to clarify 

certain provisions within Section 26 

regarding to whom it is applicable. 

Accordingly, the Exchange proposes 

to amend Chapter V, Section 26 of the 

BOX Trading Rules to (1) clarify certain 

provisions within Section 26 regarding 

to whom the liability limitation applies; 

(2) codify provisions within the BOX 

Rules to permit BOX to compensate 

Participants for losses under certain 

circumstances; and (3) establish the 

maximum amount of such 

compensation that BOX may provide 

during a calendar month pursuant to 

Section 26. 

The Exchange proposes to clarify 

Section 26(a) by adding the respective 

directors, officers, committee members, 

employees, contractors, agents, and 

other persons acting on the behalf of the 

Exchange, BOXR, BOX and any of their 

respective affiliates to the paragraph 

that identifies the persons to which the 

limitation of liability is applicable. The 

Exchange proposes that ‘‘Exchange 

Related Persons and/or Entities’’ be 

defined to include the Exchange, BOXR, 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 47 / Friday, March 9, 2012 / Notices 14453 

3See proposed Section 26(a) of Chapter V of the 

BOX Rules. 

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

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

6See EDGA Exchange, Inc. (‘‘EDGA’’) Rule 11.12, 

NASDAQ Stock Market LLC (‘‘NASDAQ’’) Rule 

4626, Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’), Rule 6.7, NYSE Arca, Inc. 

(‘‘NYSE Arca’’). Options Rule 14.2, International 

Securities Exchange, LLC (‘‘ISE’’), Rule 705, and 

BATS Exchange, Inc. (‘‘BATS’’) Rule 11.16. 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

provide the Commission with written notice of its 

intent to file the proposed rule change, along with 

a brief description and text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has fulfilled this requirement. 

9For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

BOX, and any of their respective 

affiliates, and their respective directors, 

officers, committee members, 

employees, contractors, and agents or 

other persons acting on their behalf.3

The Exchange proposes corresponding 

changes in Sections 26(a)(ii), 26(a)(iii), 

and in Sections 26(b), 26(c) and 26(d) to 

add references to the defined term 

Exchange Related Persons and/or 

Entities. Additionally, the Exchange 

proposes to add terrorism to the list of 

items beyond the control of Exchange 

Related Persons and/or Entities for 

which liability is limited. 

The Exchange proposes adding new 

Section 26(e) to establish, subject to the 

express limits set forth in Section 

26(e)(1) through 26(e)(3), that BOX may 

compensate Options Participants for 

losses resulting directly from the 

malfunction of the physical equipment, 

devices, or programming of Exchange 

Related Persons and/or Entities, or from 

the negligent acts or omissions of 

employees of the Exchange, BOXR or 

BOX. 

Under the proposal, BOX’s payments 

for the aggregate of all claims made by 

all Options Participants during a single 

calendar month would not exceed the 

larger of $500,000, or the amount of any 

recovery obtained by BOX under any 

applicable insurance maintained by 

BOX. Additionally, in the event that all 

of the claims made during a single 

calendar month cannot be fully satisfied 

because they exceed the applicable 

maximum limitation, then the 

maximum permitted amount will be 

proportionally allocated among all such 

claims. Finally, the Exchange proposes 

that all claims for compensation under 

the new proposed provisions must be 

submitted in writing no later than 12 

p.m. ET on the next business day 

following the day on which the use of 

BOX gave rise to such claims. Once in 

receipt of a claim, BOX will verify that: 

(i) a valid order was accepted into BOX; 

and (ii) any loss claimed resulted 

directly from the malfunction of the 

physical equipment, devices, or 

programming of Exchange Related 

Persons and/or Entities, or from the 

negligent acts or omissions of 

employees of the Exchange, BOXR or 

BOX during the execution or handling 

of that order. BOX will only compensate 

Participants for valid claims, and will 

compensate such Participants at the end 

of the month. 

BOX represents that the 

determination to compensate a BOX 

Options Participant will be made on an 

equitable and non-discriminatory basis 

without regard to whether the 

Participant is a Market Maker or Order 

Flow Provider on BOX, and that such 

determinations will be made pursuant 

to procedures of BOX Market 

Operations Center (‘‘MOC’’) with 

regulatory oversight established by 

BOXR. Additionally, BOX represents 

that BOX will maintain a record of 

Participant claims including 

documentation detailing its findings 

and details for approving or denying 

claims in accordance with its 

obligations under Section 17 of the Act. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the Act,4

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

Act,5 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. In 

particular, the proposal will amend 

Chapter V, Section 26 of the BOX 

Trading Rules to codify provisions 

within the BOX Rules to permit BOX to 

compensate Participants for losses 

resulting directly from the malfunction 

of the physical equipment, devices, and/ 

or programming of Exchange Related 

Persons and/or Entities, or from the 

negligent acts or omissions of 

employees of the Exchange, BOXR or 

BOX, and to establish the maximum 

amount of such compensation that BOX 

may provide during a calendar month. 

Additionally, the Exchange believes 

that the codification of these policies 

should add transparency to the BOX 

Rules and that its proposal to amend 

Chapter V, Section 26 will promote 

fairness in the national market system. 

The proposed change will allow BOX to 

address Participant claims under 

various circumstances, and allow BOX 

to act in a similar fashion as many of its 

competitors. Several exchanges have 

substantially similar rules and the 

Exchange believes that the proposed 

rule change would place BOX in a 

similar position to address Participant 

claims.6

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: (1) Does not significantly affect 

the protection of investors or the public 

interest; (2) does not impose any 

significant burden on competition; and 

(3) by its terms, does not become 

operative for 30 days after the date of 

this filing, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest, the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 7 and Rule 

19b–4(f)(6) thereunder.8

The Exchange requested that the 

Commission waive the 30-day operative 

delay so that the proposed rule change 

would become effective and operative 

upon filing. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest.9 The 

Commission notes that the waiver will 

allow the Exchange to immediately 

implement the proposed rule change, 

which should promote fairness in the 

market by allowing BOX to compensate 

Options Participants for losses resulting 

directly from the malfunctions of the 

physical equipment, devices, or 

programming of Exchange Related 

Persons and/or Entities, or from the 

negligent acts or omissions of 

employees of the Exchange, BOXR, or 

BOX. The Commission also notes that 

the proposal is substantially similar to 

rules of other registered national 


srobinson on DSK4SPTVN1PROD with NOTICES
14454 Federal Register / Vol. 77, No. 47 / Friday, March 9, 2012 / Notices 

10See supra note 6. 

11 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). 

4See Rule 6730(a). In transactions between 

members, each member must report the trade, and 

for transactions between a member and a customer, 

the member must report the trade. 

5Under Rule 6710(e), ‘‘customer’’ includes a 

broker-dealer that is not a FINRA member. 

6See www.finra.org/Industry/Compliance/ 

MarketTransparency/TRACE/FAQ/ 

P125244#reporting (FAQ: Who reports trades 

executed through electronic trading systems that are 

themselves broker-dealers? All FINRA members 

that are ‘‘parties to a transaction’’ have a trade 

reporting obligation under TRACE Rules. Where 

two FINRA members effect/execute a transaction 

through an electronic trading system that is 

registered as a broker-dealer, both members, as well 

as the electronic trading system would have a trade 

reporting obligation). 

securities exchanges and does not raise 

any new regulatory issues.10 For these 

reasons, the Commission designates the 

proposed rule change as operative upon 

filing. 

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–2012–011 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–2012–011. 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/vsro.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– 

2012–011 and should be submitted on 

or before March 30, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–5731 Filed 3–8–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66513; File No. SR–FINRA– 

2012–016] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Allow FINRA To 

Exempt Certain Alternative Trading 

Systems From the Trade Reporting 

Obligation Under the Trade Reporting 

and Compliance Engine (‘‘TRACE’’) 

Reporting Rules 

March 5, 2012. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on February 

28, 2012, the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

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 FINRA. FINRA 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to adopt new 

Rule 6731 to provide FINRA with 

authority to exempt a member 

alternative trading system (‘‘ATS’’) that 

meets the specified criteria from the 

trade reporting obligation under the 

Rule 6700 Series. In addition, FINRA is 

proposing a conforming change to Rule 

9610 to specify that FINRA has 

exemptive authority under proposed 

Rule 6731. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 

A member that is a ‘‘Party to a 

Transaction’’ as defined in FINRA Rule 

6710(e) in a transaction in a TRACEEligible Security must report the trade 

to TRACE under Rule 6730(a).4 ‘‘Party 

to a Transaction’’ is defined as ‘‘an 

introducing broker-dealer, if any, an 

executing broker-dealer, or a 

customer.’’ 5 An ATS, which term 

includes electronic communications 

networks, is a Party to a Transaction and 

has a trade reporting obligation when a 

transaction in a TRACE-Eligible 

Security is executed through the ATS.6

FINRA is proposing to adopt new 

Rule 6731 to provide FINRA with 

authority to exempt, upon application 

and subject to specified terms and 

conditions, a member ATS from the 


srobinson on DSK4SPTVN1PROD with NOTICES