22828 Federal Register / Vol. 77, No. 74 / Tuesday, April 17, 2012 / Notices 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Fees Schedule, Section 20.I. 4 15 U.S.C. 78f(b). 

5 15 U.S.C. 78f(b)(4). 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4(f). [sic] 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Kevin M. O’Neill, 

Deputy Secretary . 

[FR Doc. 2012–9142 Filed 4–16–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66781; File No. SR–CBOE– 

2012–036 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the Fees 

Schedule 

April 11, 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 April 2, 

2012, the Chicago Board Options 

Exchange, Incorporated (the ‘‘Exchange’’ 

or ‘‘CBOE’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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 its 

Fees Schedule. The text of the proposed 

rule change is available on the 

Exchange’s Web site (http:// 

www.cboe.com/AboutCBOE/ 

CBOELegalRegulatoryHome.aspx), at 

the Exchange’s Office of the Secretary, 

and at the Commission. 

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, Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Fees Schedule. Specifically, the 

Exchange proposes to exclude 

executions related to contracts that are 

routed to one or more exchanges in 

connection with the Options Order 

Protection and Locked/Crossed Market 

Plan referenced in CBOE Rule 6.80 

(‘‘Linkage’’) from counting towards the 

Exchange’s Volume Incentive Program 

(the ‘‘Program’’), through which Trading 

Permit Holders (‘‘TPHs’’) are credited 

increasing per contract amounts for 

electronically executing increasing 

numbers of public customer contracts in 

multiply-listed classes. The Exchange 

does not benefit from transactions 

revenue resulting from the execution of 

public customer contracts that are 

routed to other exchanges through 

Linkage,3 so providing a credit for such 

executions means that the Exchange is 

paying out monies for such executions 

without taking in any net revenue. The 

Exchange cannot continue to subsidize 

Linkage-related transactions in this 

manner, and therefore proposes to 

exclude such transactions from the 

Program. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.4 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,5 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

Trading Permit Holders and other 

persons using its facilities. The 

proposed change to exclude Linkagerelated executions from the Program is 

reasonable because the Exchange does 

not generally take in revenue for such 

customer transactions, and therefore it 

is not currently economically logical to 

provide a credit for such executions. 

This change is equitable and not 

unfairly discriminatory for similar 

reasons; it is certainly equitable to not 

provide a credit in circumstances 

wherein the Exchange does not collect 

a fee (otherwise, the recipients of said 

credits would be collecting ‘‘free 

money’’ from the Exchange), and it is 

not unfairly discriminatory as this 

exclusion applies to all parties to whom 

the Program applies. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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) 6 of the Act and paragraph (f) 

of Rule 19b–4 7 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. 

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–CBOE–2012–036 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. 

All submissions should refer to File 

Number SR–CBOE–2012–036. This file 

number should be included on the 

subject line if email is used. To help the 


wreier-aviles on DSK5TPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 74 / Tuesday, April 17, 2012 / Notices 22829 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Changes are marked to the rule text that appears 

in the electronic Nasdaq Manual found at http:// 

nasdaqomx.cchwallstreet.com. 

4Time-in-Force denotes the period of time that 

the Nasdaq Market Center will hold an order for 

potential execution. See NASDAQ Rule 4751(h). 

5See Securities Exchange Act Release No. 58546 

(September 15, 2008), 73 FR 54440 (September 19, 

2008) (SR–BATS–2008–003). See BATS Rule 

11.9(c)(13). 

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 

also will be available for inspection and 

copying at the principal office of CBOE. 

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–CBOE–2012–036 and 

should be submitted on or before May 

8, 2012.8

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–9140 Filed 4–16–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66780; File No. SR– 

NASDAQ–2012–049] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend Rule 

4751 

April 11, 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 April 5, 

2012, The NASDAQ Stock Market LLC 

(‘‘NASDAQ’’ or 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 NASDAQ. 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 

NASDAQ is filing this proposed rule 

change to amend the definition of 

‘‘Directed Orders’’ in Rule 4751(f)(9). 

The text of the proposed rule change 

is below. Proposed new language is 

italicized; proposed deletions are in 

brackets.3

* * * * * 

4751. Definitions 

(a)–(e) No change. 

(f) The term ‘‘Order Type’’ shall mean 

the unique processing prescribed for 

designated orders that are eligible for 

entry into the System, and shall include: 

(1)–(8) No change. 

(9) ‘‘Directed Orders’’ are orders that 

are directed to an exchange other than 

Nasdaq as directed by the entering party 

without checking the Nasdaq book. If 

unexecuted, the order (or unexecuted 

portion thereof) shall be returned to the 

entering party. [This option may only be 

used for orders with time-in-force 

parameters of IOC.] 

Directed Orders may be designated as 

intermarket sweep orders by the 

entering party to execute against the full 

displayed size of any protected bid or 

offer (as defined in Rule 600(b) of 

Regulation NMS under the Act). A 

broker-dealer that designates an order as 

an intermarket sweep order has the 

responsibility of complying with Rules 

610 and 611 of Regulation NMS. 

Directed Orders marked as intermarket 

sweep may only be used with time-inforce parameters of IOC. 

Directed Orders may not be directed 

to a facility of an exchange that is an 

affiliate of Nasdaq except for Directed 

Orders directed to the NASDAQ OMX 

BX Equities Market or to the NASDAQ 

OMX PSX facility of NASDAQ OMX 

PHLX. 

(10)–(13) No change. 

(g)–(i) No change. 

* * * * * 

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 

Rule 4751(f)(9) defines a ‘‘Directed 

Order’’ as an order that is directed to an 

exchange other than NASDAQ as 

directed by the entering party without 

checking the NASDAQ book and, if 

unexecuted, the order (or unexecuted 

portion thereof) must be returned to the 

entering party. Currently, however, this 

option is only available for Directed 

Orders with time-in-force (‘‘Time-inForce’’) 4 parameters of immediate or 

cancel (‘‘IOC’’). 

NASDAQ proposes to modify Rule 

4751(f)(9) by removing the above 

restriction. The elimination of this 

restriction would then allow the Nasdaq 

Market Center (‘‘System’’) via its brokerdealer, NASDAQ Execution Services 

(‘‘NES’’), to direct customer orders that 

would post liquidity to particular away 

markets. This would further enable 

members to specify the maximum 

length of time to allow these orders to 

remain booked in accordance with any 

applicable rules of the away market. The 

proposed rule change would enhance 

order execution opportunities for 

market participants by increasing the 

mobility of liquidity, augmenting 

liquidity at less liquid venues and 

generally increasing the 

interconnectedness of the exchanges. 

Additionally, Rule 4751(f)(9) would 

be clarified to specifically state that a 

Directed Order that is marked as an 

intermarket sweep order must be 

marked as IOC. By making this 

clarification, NASDAQ will prevent its 

routing broker from locking or crossing 

an away market because of customer 

instructions. 

The proposed rule change, in essence, 

makes the Exchange’s Directed Order 

similar to the BATS Exchange’s 

‘‘Modified Destination Specific 

Order.’’ 5 The remaining difference 


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