Federal Register / Vol. 77, No. 66 / Thursday, April 5, 2012 / Notices 20671 

13 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). 

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. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

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– 

NASDAQ–2012–045 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–NASDAQ–2012–045. 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– 

NASDAQ–2012–045 and should be 

submitted on or before April 26, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8205 Filed 4–4–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66698; File No. SR–BX– 

2012–022] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Related to NonDisplay of Primary Pegged Orders With 

an Offset Amount 

March 30, 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 23, 

2012, NASDAQ OMX BX, Inc. (‘‘BX’’ or 

‘‘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 has designated the proposed 

rule change as constituting a 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 

The Exchange proposes to amend 

Exchange Rule 4751(f)(4) to provide that 

Primary Pegged Orders with an offset 

amount will never be displayed. The 

text of the proposed rule change is 

available at 

nasdaqomxbx.cchwallstreet.com, at the 

Exchange’s principal office, 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 those 

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 

BX proposes to amend Rule 4751(f)(4) 

to provide that Primary Pegged Orders 

with an offset amount will be nondisplayed, a change that will improve 

system and inter-market price stability. 

Pegged Orders are orders that, once 

entered, adjust in price automatically, in 

response to changes in the inside bids 

or offers of the BX Equities Market or 

the national market system, depending 

upon the type of pegged order. A 

Primary Pegged Order specifies that its 

price will equal the inside quote on the 

same side of the market; a Market 

Pegged Order will equal the inside 

quote on the opposite side of the 

market. A Midpoint Peg Order will 

equal the midpoint of the national best 

bid and offer (‘‘NBBO’’), excluding the 

effect that the Midpoint Peg Order itself 

has on the inside bid or inside offer. As 

the bids and offers change, so move the 

pegged orders. A Pegged Order may 

have a limit price beyond which the 

order shall not be executed. Primary 

Pegged Orders and Market Pegged 

Orders may establish their pricing 

relative to the appropriate bids or offers 

by selecting one or more offset amounts 

that will adjust the price of the order by 

the offset amount selected. 

Under the Exchange’s current rule, 

Midpoint Pegged Orders are not 

displayed, while Primary and Market 

Pegged Orders may be displayed or not 

displayed, at the option of the person 

placing the order. The display of 

Primary Pegged Orders with an offset 

amount can potentially result in 

excessive messaging when multiple 

venues display pegged non-marketable 

orders. In these scenarios, it is possible 

for the Primary Pegged Orders on each 

venue to react to and change in relation 

to each other, resulting in excessive 

messaging and ‘‘quote flickering.’’ A 


Tkelley on DSK3SPTVN1PROD with NOTICES
20672 Federal Register / Vol. 77, No. 66 / Thursday, April 5, 2012 / Notices 

4Securities Exchange Act Release No. 58375 

(August 18, 2008) 73 FR 49498 (August 21, 2008); 

see also Securities Exchange Act Release No. 57322 

(February 13, 2008), 73 FR 9370 (February 20, 

2008). 

5BATS Rule 11.9(c)(8). 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 Id. 

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

10 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. 11 17 CFR 200.30–3(a)(12). 

rule change to eliminate display of 

Primary Pegged Orders with an offset 

amount will prevent this feedback loop, 

adding to system stability and 

improving market quality. 

Market participants retain the ability 

to display orders through other order 

options available under the Exchange 

rules, including by using Primary 

Pegged Orders without an offset amount 

or Market Pegged Orders. Because 

Primary Pegged orders without an offset 

amount are priced at the inside quote, 

they do not present the same messaging 

problem. Rapid updates to displayed 

Primary Pegged Orders may still occur, 

but are more likely to be the result of 

rapid trading. Market Pegged Orders, in 

contrast to Primary Pegs with an offset 

amount, are typically priced to execute 

and rarely post, and thus also do not 

present the excessive messaging 

problem. 

The Commission approved the nondisplay of Pegged Orders when it 

approved the application of BATS 

Exchange, Inc. (‘‘BATS’’), for 

registration as a national securities 

exchange and found BATS’ proposed 

rules consistent with Section 6 of the 

Act.4 BATS Rule 11.9(c)(8) provides that 

Pegged Orders ‘‘are not displayed on the 

Exchange.’’ 5

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act,6

in general, and furthers the objectives of 

Section 6(b)(5),7 in particular, in that 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. Non-display of Primary Pegged 

Orders with an offset amount will 

minimize excess messaging that 

distracts from, rather than improves 

transparency and stability. Market 

participants can elect to display orders 

by using other available order types. 

The Exchange believes that the 

proposed change to Rule 4751(f)(4) 

meets the requirements of Section 

6(b)(5) of the Act 8 in that it will 

improve the stability, quality and 

transparency of the national market 

system. 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Specifically, 

the Exchange believes that providing for 

non-display of Primary Pegged Orders 

will not burden competition since at 

least one other exchange currently offers 

the same attribute for pegged orders. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments 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: (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 Act 9 and Rule 19b– 

4(f)(6) 10 thereunder. 

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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

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–2012–022 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–2012–022. 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–2012–022 and should 

be submitted on or before April 26, 

2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8169 Filed 4–4–12; 8:45 am] 

BILLING CODE 8011–01–P 


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