Federal Register / Vol. 77, No. 56 / Thursday, March 22, 2012 / Notices 16877 

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). 

5Note that BOX does not route broker-dealer 

proprietary orders and thus does not assess them 

any routing fees. Based on BOX market data, BOX 

believes certain Participants are intentionally 

submitting orders to BOX when limited liquidity is 

on BOX at the national best bid or offer (‘‘NBBO’’). 

This limited liquidity is not enough to fill the 

orders submitted, and thus, BOX is required, in 

accordance with its obligations to customer orders 

under the national market system plan for Options 

Order Protection, to route such orders to a market 

that is displaying liquidity at the NBBO. 

6For the purposes of the discussion in this 

proposed rule change, these non-Professional, 

Public Customer Orders will be referred to as Public 

Customer Orders. 

acquire those Shares from the Fund and 

tender those Shares for redemption to 

the Fund in Creation Units only. 

3. The Web site for the Funds, which 

is and will be publicly accessible at no 

charge, will contain, on a per Share 

basis for each Fund, the prior Business 

Day’s NAV and the market closing price 

or Bid/Ask Price, and a calculation of 

the premium or discount of the market 

closing price or Bid/Ask Price against 

such NAV. 

4. On each Business Day, before 

commencement of trading in Shares on 

the Stock Exchange, the Fund will 

disclose on its Web site the identities 

and quantities of the Portfolio Securities 

and other assets held by the Fund that 

will form the basis for the Fund’s 

calculation of NAV at the end of the 

Business Day. 

5. The Advisor or Fund Subadvisor (if 

any), directly or indirectly, will not 

cause any Authorized Participant (or 

any investor on whose behalf an 

Authorized Participant may transact 

with the Fund) to acquire any Deposit 

Instrument for the Fund through a 

transaction in which the Fund could not 

engage directly. 

6. The requested order will expire on 

the effective date of any Commission 

rule under the Act that provides relief 

permitting the operation of actively 

managed exchange-traded funds. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6865 Filed 3–21–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66615; File No. SR–BX– 

2012–019] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

BOX Fee Schedule 

March 16, 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 March 12, 

2012, NASDAQ OMX BX, Inc. (the 

‘‘Exchange’’) 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 filed the proposed rule change 

pursuant to Section 19(b)(3)(A)(ii) of the 

Act,3 and Rule 19b–4(f)(2) thereunder,4

which renders the proposal effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Fee Schedule of the Boston Options 

Exchange Group, LLC (‘‘BOX’’). The 

changes to the BOX Fee Schedule 

pursuant to this proposal will be 

effective upon filing for March 2012; 

Participants will only be assessed any 

applicable routing fee for orders on the 

effective date and thereafter. 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 

self-regulatory organization 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to implement 

a change to the BOX routing fees. BOX 

believes the proposed structure will 

provide an incentive to BOX Options 

Participants (‘‘Participants’’) to submit 

their customer orders for execution on 

BOX and will discourage potentially 

abusive and predatory order routing 

practices to evade fees on other 

exchanges.5 BOX proposes to continue 

to provide routing to away exchanges at 

no charge to Participants that execute 

more than 40% of their nonProfessional, Public Customer 

transactions 6 on BOX, rather than those 

orders being executed at other 

exchanges after BOX routes them to an 

away exchange. 

If BOX does not have sufficient 

liquidity at the NBBO to execute Public 

Customer Orders on BOX, such orders 

are routed to an away exchange for 

execution. Currently, BOX does not 

assess any fee to Participants for doing 

so. BOX, however, believes that 

exempting all outbound Public 

Customer Orders from routing fees is 

resulting in some Participants sending 

an increasing amount of orders to BOX 

when BOX is not at the NBBO, so that 

the orders will be routed to an away 

exchange; and BOX believes this 

activity pattern is designed to evade 

transaction fees on other exchanges. In 

order to curtail this activity that BOX 

believes is designed to take advantage of 

BOX routing Public Customer order at 

no charge, BOX proposes a routing fee 

structure that provides an incentive to 

Participants whom execute their Public 

Customer transactions on BOX. The 

proposed change will have no effect on 

the billing of orders of non-Participants, 

including any orders routed to BOX 

from away exchanges. 

The Exchange proposes that BOX will 

continue to route Public Customer 

Orders to an away exchange without 

imposing any fee, to the extent that 

more than 40% of the Participants’ 

Public Customer Orders sent to BOX 

each month execute on BOX. Executions 

on BOX would include orders executing 

on the BOX Book, or through any other 

BOX mechanism that may be available 

to execute Public Customer Orders (e.g., 

Price Improvement Period, Solicitation 

or Facilitation Auction Mechanisms). If 

60% or more of a Participants’ Public 

Customer Orders executed through BOX 

each month are routed to and executed 

at an away exchange, BOX will assess a 

$0.50 per contract routing fee to all of 

a Participants’ Public Customer orders 

routed to an away exchange for 

execution for the month. BOX will 

calculate the percentage of contracts 

executed on BOX compared to the 


tkelley on DSK3SPTVN1PROD with NOTICES
16878 Federal Register / Vol. 77, No. 56 / Thursday, March 22, 2012 / Notices 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(4). 

9 15 U.S.C. 78s(b)(3)(A)(ii). 

10 17 CFR 240.19b–4(f)(2). 

percentage routed and executed away at 

the end of each month. 

Instructing BOX to route orders away 

if they are not able to be executed on 

BOX is voluntary for BOX Participants. 

Participants may choose not to route 

their Public Customer Orders to another 

exchange. Participants may also avoid 

paying the proposed routing fee by 

choosing to designate their orders as Fill 

and Kill (‘‘FAK’’). FAK orders are not 

eligible for routing to away exchanges. 

FAK orders are executed on BOX, if 

possible, and then cancelled. Imposing 

a routing fee structure that provides a 

benefit to Participants for trading on 

BOX will allow BOX to recoup a portion 

of the costs incurred for providing 

routing services, while also providing 

an incentive to Participants to trade on 

BOX and benefit from BOX routing 

services for Public Customer Orders at 

no charge. 

While the changes to the BOX Fee 

Schedule pursuant to this proposal will 

be effective upon filing, for March 2012, 

Participants will only be assessed any 

applicable routing fee for orders on the 

effective date and thereafter. In 

determining a Participant’s percentage 

of Public Customer Orders executed on 

BOX for March 2012, BOX will only 

consider orders submitted to BOX on 

the effective date and thereafter, and 

will not consider orders submitted prior 

to the filing date of this proposed fee 

change. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

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

in general, and Section 6(b)(4) of the 

Act,8 in particular, in that it provides for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

members and other persons using its 

facilities. The Exchange believes the 

changes proposed are an equitable 

allocation of reasonable fees and charges 

among BOX Options Participants. 

BOX believes that the proposed 

routing fee structure for routing nonProfessional, Public Customer Orders to 

other market venues is reasonable 

because the fee will allow BOX to 

recoup its transaction costs attendant 

with offering routing services. BOX uses 

third-party broker-dealers to route 

orders to other exchanges and incurs 

charges for each order routed to and 

executed at an away market, in addition 

to the transaction fees charged by other 

exchanges. BOX has been providing its 

routing services to Participants for 

Public Customer Orders at no cost and 

has been able to cover such costs with 

revenue generated from transactions on 

BOX. In order to better recover costs for 

routing such orders, the Exchange is 

proposing a routing fee structure to 

continue to provide these routing 

services to Participants at no charge if 

the Participants trade on BOX a certain 

percentage of their Public Customer 

volume traded through BOX each 

month, as opposed to BOX routing those 

orders away for execution. 

BOX also believes that assessing its 

routing fees to Participants based on the 

percentage of Public Customer Orders 

traded on BOX is an equitable allocation 

of a reasonable fee. Based on BOX 

market data, BOX believes certain 

Participants are intentionally submitting 

orders to BOX when limited liquidity is 

on BOX at the NBBO. This limited 

liquidity is not enough to fill the orders 

submitted, and thus, BOX is required, in 

accordance with its obligations to 

customer orders under the national 

market system plan for Options Order 

Protection, route such orders to a market 

that is displaying liquidity at the NBBO. 

BOX data indicates that BOX generally 

routes significantly less than 60% of a 

Participant’s Public Customer Orders to 

BOX to an away exchange for execution. 

Additionally, BOX believes that 

permitting a Participant to have up to 

60% of such orders routed to an away 

exchange for execution without being 

assessed any routing fee is reasonable 

and appropriate. 

The Exchange believes the proposed 

routing fee structure is equitable and not 

unfairly discriminatory because the 

incentive to trade on BOX it is available 

to all Participants on an equal basis. The 

Exchange believes it is reasonable and 

equitable to provide Participants (A) an 

incentive to trade on BOX, and (B) the 

ability to route customer orders at no 

cost, because transactions executed on 

BOX increase BOX market activity and 

market quality. Greater liquidity and 

additional volume executed on BOX 

aids the price and volume discovery 

process. Participant trading on BOX also 

results in revenue that BOX is able to 

use to provide routing services at no 

cost to Participants. Accordingly, the 

Exchange believes that the proposal is 

not unfairly discriminatory because it 

promotes enhancing BOX market 

quality. The changes proposed by this 

filing are intended to provide an 

incentive to BOX Participants to submit 

orders for execution on BOX and not 

engage in abusive and predatory 

practices to evade fees on other 

exchanges. 

Further, BOX operates within a highly 

competitive market. BOX, however, 

does not assess ongoing fees for access 

to BOX market data, or fees related to 

order cancellation. As stated, BOX 

incurs costs, including transaction fees 

at other exchanges, every time it routes 

a customer order to an away exchange 

for execution. Providing routing services 

draws on BOX system resources and 

routing more and more orders results in 

greater ongoing operational costs to 

BOX. As such, BOX aims to recover its 

costs by assessing Participants fees for 

routing Public Customer Orders to away 

exchanges, if those Participants are 

submitting such orders to BOX so as to 

evade other exchanges’ fees and take 

advantage of BOX routing services. BOX 

therefore believes that assessing the fee 

only to those Participants that have 60% 

or more of their Public Customer Orders 

routed to an away exchange for 

execution is reasonable, and an 

equitable allocation of its fees for 

providing routing services. 

Finally, the Exchange notes that 

although routing is available to BOX 

Participants for customer orders, 

Participants are not required to use the 

routing services, but instead, BOX 

routing services are entirely voluntary. 

As discussed above, BOX Participants 

can manage their own routing to 

different options exchanges or can 

utilize a myriad of other routing 

solutions that are available to market 

participants. 

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 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Exchange Act 9 and 

Rule 19b–4(f)(2) thereunder,10 because 

it establishes or changes a due, fee, or 

other charge applicable only to a 

member. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend the rule change if 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 56 / Thursday, March 22, 2012 / Notices 16879 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 66257 

(January 26, 2012), 77 FR 5073 (‘‘Notice’’). 

4Specifically, the Exchange proposes to amend 

Advice F–6 to reflect ‘‘expressed as’’ pricing for 

maximum quotes spread parameters in light of bid 

and ask differentials. The Exchange notes that this 

change will harmonize Advice F–6 with its 

corresponding proposed rule 1003C, so that the 

same pricing is reflected in the rule and the Advice. 

5The Exchange also proposes to amend Advice 

F–15, which discusses minor infractions of 

position/exercise limits and hedge exemptions, to 

reflect the addition of proposed Rules 1008C and 

1009C. The Exchange notes that this will harmonize 

Advice F–15 with its corresponding proposed Rules 

1008C and 1009C, and thereby include minor 

violations of the proposed rules in the Exchange’s 

Minor Rule Plan as reflected in the Advices. 

6The product specifications for the current FCOs 

can be found at http://www.nasdaqomxtrader.com/ 

wco. The Exchange currently lists eleven FCOs that 

trade in the manual auction market as well as 

electronically. The currencies underlying these 

FCOs include: the Australian dollar, the British 

pound, the Canadian dollar, the Euro, the Japanese 

yen, the Mexican peso, the New Zealand dollar, the 

Norwegian krone, the South African rand, the 

Swedish krona, and the Swiss franc. 

7However, Phlx proposes to amend the FCO rules 

in one respect to provide that, for purposes of 

determining position and exercise limits, FCO 

options will be aggregated with PHLX FOREX 

Options that are listed on the same underlying 

currency. See infra note 30. 

8See Exchange Rules 101, 1014, 721, 1003, 1053, 

and 1079, respectively. In its filing, the Exchange 

notes that other Exchange rules that are applicable 

to the trading of foreign currency options products 

include Rules 1006 (Other Restrictions on Exchange 

Options Transactions and Exercises); 1014 

(Obligations and Restrictions Applicable to 

Continued 

it appears to the Commission that the 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or would otherwise further 

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 rulecomments@sec.gov. Please include File 

Number SR–BX–2012–019 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–2012–019. 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– 

2012–019 and should be submitted on 

or before April 12, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6866 Filed 3–21–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66616; File No. SR–Phlx– 

2012–11] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Order 

Granting Approval of Proposed Rule 

Change Regarding the Listing and 

Trading of PHLX FOREX OptionsTM

March 16, 2012. 

I. Introduction 

On January 23, 2012, NASDAQ OMX 

PHLX LLC (‘‘Exchange’’ or ‘‘Phlx’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade U.S. dollarsettled foreign currency options known 

as PHLX FOREX Options on the British 

pound, the Swiss franc, the Canadian 

dollar, the Australian dollar, the New 

Zealand dollar, and the Euro (‘‘PHLX 

FOREX Options’’). The proposed rule 

change was published for comment in 

the Federal Register on February 1, 

2012.3 The Commission received no 

comment letters on the proposed rule 

change. This order approves the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

The Exchange proposes to list and 

trade foreign currency options known as 

PHLX FOREX Options on the British 

pound, the Swiss franc, the Canadian 

dollar, the Australian dollar, the New 

Zealand dollar, and the Euro. The 

proposal establishes new Rules 1000C 

through 1009C that would, in 

conjunction with current Exchange 

trading rules, allow listing and trading 

of PHLX FOREX Options. The Exchange 

also is amending Phlx Option Floor 

Procedure Advices F–6 4 and F–15 5

(‘‘OFPAs or Advices’’) to harmonize the 

Exchange Advices and the proposed 

PHLX FOREX Options rules. 

The proposal allows the listing and 

trading of PHLX FOREX Options on six 

of the same foreign currencies that 

underlie another type of foreign 

currency option that is currently listed 

and traded on the Exchange (referred to 

as either ‘‘FCOs’’ or World Currency 

Options, ‘‘WCOs’’), including the British 

pound, the Swiss franc, the Canadian 

dollar, the Australian dollar, the New 

Zealand dollar, and the Euro.6 The 

proposal does not affect the continued 

listing and trading of FCOs on the 

Exchange, as PHLX FOREX Options will 

be eligible to list and trade in parallel 

to current FCOs.7

PHLX FOREX Options will be similar, 

and in many respects identical, to FCOs. 

As such, the proposed rules provide that 

the Exchange’s existing rules and 

procedures will be applicable to PHLX 

FOREX Options, and the proposed 

PHLX FOREX Options rules will 

supplement existing rules. For example, 

PHLX FOREX Options will follow the 

rules that are currently applicable to 

FCOs that pertain to areas such as hours 

of trading, quoting and market making 

requirements, margin requirements, 

reporting options positions, filing trade 

information, and FLEX trading.8


tkelley on DSK3SPTVN1PROD with NOTICES