10526 Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Notices 

6 17 CFR 200.30–3(a)(6) and (9). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release Nos. 69140 

(March 15, 2013), 78 FR 17255 (March 20, 2013); 

and 69343 (April 8, 2013), 78 FR 21982 (April 2, 

2013) (SR–BX–2013–026). 

4Securities Exchange Act Release No. 69343 

(April 8, 2013), 78 FR 21982 (April 12, 2013) (SR– 

BX–2013–026). 

5The Plan was extended until February 20, 2015. 

The Plan was initially approved for a one-year pilot 

period, which began on April 8, 2013. Securities 

Exchange Act Release No. 71649 (March 5, 2014), 

79 FR 13696 (March 11, 2014). 

6Unless otherwise specified, capitalized terms 

used in this rule filing are based on the defined 

terms of the Plan. 

7Securities Exchange Act Release No. 71900 

(April 8, 2014), 79 FR 20951 (April 14, 2014) (SR– 

BX–2014–017). 

Conclusion 

It is hereby ordered, pursuant to Rule 

101(d) of Regulation M, that the Trust, 

based on the representations and facts 

presented in the Letter, is exempt from 

the requirements of Rule 101 with 

respect to the Funds, thus permitting 

persons who may be deemed to be 

participating in a distribution of Shares 

of the Funds to bid for or purchase such 

Shares during their participation in 

such distribution. 

It is further ordered, pursuant to Rule 

102(e) of Regulation M, that the Trust, 

based on the representations and the 

facts presented in the Letter, is exempt 

from the requirements of Rule 102 with 

respect to the Funds, thus permitting 

the Funds to redeem Shares of the 

Funds during the continuous offering of 

such Shares. 

It is further ordered, pursuant to Rule 

10b–17(b)(2), that the Trust, based on 

the representations and the facts 

presented in the Letter, subject to the 

conditions that the Funds will provide 

at least three business days’ notice in 

advance of the related record date for 

Special Distributions and any Exempted 

Accompanying Distribution and that the 

Funds will otherwise comply with Rule 

10b–17 with regard to any distributions 

except Special Distributions and 

Exempted Accompanying Distributions 

as described above and in the Letter, is 

exempt from the requirements of Rule 

10b–17 with respect to Special 

Distributions and any Exempted 

Accompanying Distribution. 

This exemptive relief is subject to 

modification or revocation at any time 

the Commission determines that such 

action is necessary or appropriate in 

furtherance of the purposes of the 

Exchange Act. This exemption is based 

on the facts presented and the 

representations made in the Letter. Any 

different facts or representations may 

require a different response. In the event 

that any material change occurs in the 

facts or representations in the Letter, 

transactions in Shares of the Funds 

must be discontinued, pending 

presentation of the facts for our 

consideration. In addition, persons 

relying on this exemption are directed 

to the anti-fraud and anti-manipulation 

provisions of the Exchange Act, 

particularly Sections 9(a) and 10(b), and 

Rule 10b–5 thereunder. Responsibility 

for compliance with these and any other 

applicable provisions of the federal 

securities laws must rest with the 

persons relying on this exemption. This 

order should not be considered a view 

with respect to any other question that 

the proposed transactions may raise, 

including, but not limited to the 

adequacy of the disclosure concerning, 

and the applicability of other federal or 

state laws to, the proposed transactions. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–03967 Filed 2–25–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74334; File No. SR–BX– 

2015–012] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

BX Options Rules To Extend the Pilot 

Program Under Chapter V, Section 

3(d)(iv) 

February 20, 2015. 

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 

19, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’ 

or ‘‘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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend the 

BX Options Rules to extend the pilot 

program under Chapter V, Section 

3(d)(iv), which provides for how the 

Exchange treats obvious and 

catastrophic options errors in response 

to the Plan to Address Extraordinary 

Market Volatility Pursuant to Rule 608 

of Regulation NMS under the Act (the 

‘‘Limit Up-Limit Down Plan’’ or the 

‘‘Plan’’).3 The Exchange proposes to 

extend the pilot period until October 23, 

2015. 

The text of the proposed rule 

change is available on the Exchange’s 

Web site at http://

nasdaqomxbx.cchwallstreet.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room.] [sic] 

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 

In April 2013,4 the Commission 

approved a proposal, on a one year pilot 

basis, to adopt Chapter V, Section 

3(d)(iv) to provide for how the Exchange 

will treat obvious and catastrophic 

options errors in response to the Plan, 

which is applicable to all NMS stocks, 

as defined in Regulation NMS Rule 

600(b)(47).5 The Plan is designed to 

prevent trades in individual NMS stocks 

from occurring outside of specified 

Price Bands.6 The requirements of the 

Plan are coupled with Trading Pauses to 

accommodate more fundamental price 

moves (as opposed to erroneous trades 

or momentary gaps in liquidity). 

The Exchange extended the operation 

of Chapter V, Section 3(d)(iv), which 

provides that trades are not subject to an 

obvious error or catastrophic error 

review pursuant to Chapter V, Sections 

6(b) or 6(f) during a Limit State or 

Straddle State in 2014.7 The Exchange 

now proposes to extend the pilot 

program for an additional pilot period 

ending October 23, 2015. The Exchange 

believes conducting an obvious error or 

catastrophic error review is 

impracticable given the lack of a reliable 

National Best Bid/Offer (‘‘NBBO’’) in the 


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Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Notices 10527 

8The Exchange submitted a pilot report on 

September 30, 2014. 

9The Exchange agreed to provide similar data in 

the original proposal. See Securities Exchange Act 

Release No. 69343 (April 8, 2013), 78 FR 21982 

(April 12, 2013) (SR–BX–2013–026) at notes 4 and 

11. However, that data included two additional 

filters pertaining to the top 10 options and an inthe-money amount, which no longer apply. The 

Exchange provided historical data in the new form 

pursuant to this proposed rule change, going back 

to the beginning of the original pilot period. 

10 15 U.S.C. 78f. 

11 15 U.S.C. 78f(b)(5). 

options market during Limit States and 

Straddle States, and that the resulting 

actions (i.e., nullified trades or adjusted 

prices) may not be appropriate given 

market conditions. Under the pilot, 

limit orders that are filled during a 

Limit State or Straddle State have 

certainty of execution in a manner that 

promotes just and equitable principles 

of trade, and removes impediments to, 

and perfects the mechanism of a free 

and open market and a national market 

system. Moreover, given that options 

prices during brief Limit States or 

Straddle States may deviate 

substantially from those available 

shortly following the Limit State or 

Straddle State, the Exchange believes 

giving market participants time to reevaluate a transaction would create an 

unreasonable adverse selection 

opportunity that would discourage 

participants from providing liquidity 

during Limit States or Straddle States. 

On balance, the Exchange believes that 

removing the potential inequity of 

nullifying or adjusting executions 

occurring during Limit States or 

Straddle States outweighs any potential 

benefits from applying those provisions 

during such unusual market conditions. 

The Exchange believes the benefits to 

market participants from the pilot 

program should continue on a pilot 

basis to coincide with the operation of 

the Limit Up-Limit Down Plan. The 

Exchange believes that continuing the 

pilot will protect against any 

unanticipated consequences and permit 

the industry to gain further experience 

operating the Plan. 

The Exchange will conduct an 

analysis concerning the elimination of 

obvious and catastrophic error 

provisions during Limit States and 

Straddle States and agrees to provide 

the Commission with relevant data to 

assess the impact of this proposed rule 

change. As part of its analysis, the 

Exchange will: (1) Evaluate the options 

market quality during Limit States and 

Straddle States; (2) assess the character 

of incoming order flow and transactions 

during Limit States and Straddle States; 

and (3) review any complaints from 

members and their customers 

concerning executions during Limit 

States and Straddle States. Additionally, 

the Exchange agrees to provide to the 

Commission data requested to evaluate 

the impact of the elimination of the 

obvious and catastrophic error 

provisions, including data relevant to 

assessing the various analyses noted 

above. By May 29, 2015, the Exchange 

shall provide to the Commission and the 

public assessments relating to the 

impact of the operation of the obvious 

error rules during Limit and Straddle 

States as follows: 8

1. Evaluate the statistical and 

economic impact of Limit and Straddle 

States on liquidity and market quality in 

the options markets. 

2. Assess whether the lack of obvious 

error rules in effect during the Straddle 

and Limit States are problematic. 

Each month the Exchange shall 

provide to the Commission and the 

public a dataset containing the data for 

each Straddle and Limit State in 

optionable stocks that had at least one 

trade on the Exchange during a Straddle 

or Limit State. For each of those options 

affected, each data record should 

contain the following information: 

• Stock symbol, option symbol, time 

at the start of the Straddle or Limit 

State, an indicator for whether it is a 

Straddle or Limit State, 

• For activity on the Exchange: 

• Executed volume, time-weighted 

quoted bid-ask spread, time-weighted 

average quoted depth at the bid, timeweighted average quoted depth at the 

offer, 

• high execution price, low execution 

price, 

• number of trades for which a 

request for review for error was received 

during Straddle and Limit States, 

• an indicator variable for whether 

those options outlined above have a 

price change exceeding 30% during the 

underlying stock’s Limit or Straddle 

State compared to the last available 

option price as reported by OPRA before 

the start of the Limit or Straddle State 

(1 if observe 30% and 0 otherwise). 

Another indicator variable for whether 

the option price within five minutes of 

the underlying stock leaving the Limit 

or Straddle State (or halt if applicable) 

is 30% away from the price before the 

start of the Limit or Straddle State.9

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,10 in 

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

Act,11 in particular, which requires that 

the rules of an exchange be designed to 

promote just and equitable principles of 

trade, remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and protect investors and the 

public interest, because it should 

continue to provide certainty about how 

errors involving options orders and 

trades will be handled during periods of 

extraordinary volatility in the 

underlying security. The Exchange 

believes that it continues to be 

necessary and appropriate in the 

interest of promoting fair and orderly 

markets to exclude transactions 

executed during a Limit State or 

Straddle State from certain aspects of 

Chapter V, Section 6. 

Although the Limit Up-Limit Down 

Plan is operational, the Exchange 

believes that maintaining the pilot will 

help the industry gain further 

experience operating the Plan as well as 

the pilot provisions. 

Based on the foregoing, the Exchange 

believes the benefits to market 

participants should continue on a pilot 

basis to coincide with the operation of 

the Limit Up-Limit Down Plan. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

Specifically, the proposal does not 

impose an intra-market burden on 

competition, because it will apply to all 

members. Nor will the proposal impose 

a burden on competition among the 

options exchanges, because, in addition 

to the vigorous competition for order 

flow among the options exchanges, the 

proposal addresses a regulatory 

situation common to all options 

exchanges. To the extent that market 

participants disagree with the particular 

approach taken by the Exchange herein, 

market participants can easily and 

readily direct order flow to competing 

venues. The Exchange believes this 

proposal will not impose a burden on 

competition and will help provide 

certainty during periods of 

extraordinary volatility in an NMS 

stock. 

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. 


rmajette on DSK2VPTVN1PROD with NOTICES
10528 Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Notices 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6)(iii). As required under 

Rule 19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the 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. 

14For 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). 15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Exchange Act Release No. 73622 (Nov. 18, 

2014); 79 FR 69939 (Nov. 24, 2014) (‘‘Notice’’). On 

January 6, 2015, FINRA consented to extending the 

time period for the Commission to either approve 

or disapprove the proposed rule change, or to 

institute proceedings to determine whether to 

approve or disapprove the proposed rule change, to 

February 20, 2015. 

4See Letter from Kevin Zambrowicz, Associate 

General Counsel & Managing Director and Sean 

Davy, Managing Director, SIFMA, dated Dec. 15, 

2014 (‘‘SIFMA’’), Letter from Hugh D. Berkson, 

President-Elect, Public Investors Arbitration Bar 

Association, dated Dec. 15, 2014 (‘‘PIABA Equity’’), 

Letter from Stephanie R. Nicholas, WilmerHale, 

dated Dec. 16, 2014 (‘‘WilmerHale Equity’’), and 

Letter from William Beatty, President and 

Washington (State) Securities Administrator, North 

American Securities Administrators Association, 

Inc., dated Dec. 19, 2014 (‘‘NASAA Equity’’). 

5 15 U.S.C. 78s(b)(2)(B). 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the 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 from the date on 

which it was filed, 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 12 and Rule 19b–4(f)(6)(iii) 

thereunder.13

The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest, as it 

will allow the obvious error pilot 

program to continue uninterrupted 

while the industry gains further 

experience operating under the Plan, 

and avoid any investor confusion that 

could result from a temporary 

interruption in the pilot program. For 

this reason, the Commission designates 

the proposed rule change to be operative 

upon filing.14

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 rule-comments@

sec.gov. Please include File Number SR– 

BX–2015–012 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BX–2015–012. 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 

10:00 a.m. and 3:00 p.m. Copies of such 

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– 

2015–012, and should be submitted on 

or before March 19, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–03957 Filed 2–25–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74339; File No. SR–FINRA– 

2014–047] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change To Adopt FINRA Rule 

2241 (Research Analysts and Research 

Reports) in the Consolidated FINRA 

Rulebook 

February 20, 2015. 

I. Introduction 

On November 14, 2014, Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘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 to adopt 

NASD Rule 2711 (Research Analysts 

and Research Reports) as a FINRA rule, 

with several modifications, amend 

NASD Rule 1050 (Registration of 

Research Analysts) and Incorporated 

NYSE Rule 344 to create an exception 

from the research analyst qualification 

requirement, and renumber NASD Rule 

2711 as FINRA Rule 2241 in the 

consolidated FINRA rulebook. The 

proposal was published for comment in 

the Federal Register on November 24, 

2014.3 The Commission received four 

comments on the proposal.4 This order 

institutes proceedings under Section 

19(b)(2)(B) of the Act 5 to determine 

whether to approve or disapprove the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

As described more fully in the Notice, 

FINRA proposed to adopt in the 


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