10634 Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 

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. 53854; 

(May 24, 2006), 71 FR 30975 (May 31, 2006) (SR– 

BSE–2006–23). 

FINRA–2008–052) be and hereby is 

approved. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–5212 Filed 3–10–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59497; File No. SR–BX– 

2009–015] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

of Proposed Rule Change Relating to 

Order Handling and Exposure Periods 

on the Boston Options Exchange 

Facility 

March 4, 2009. 

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 

27, 2009, NASDAQ OMX BX, Inc. (the 

‘‘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 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

certain Rules of the Boston Options 

Exchange (‘‘BOX’’) to reduce the order 

handling and exposure periods 

contained within the BOX Rules from 

three seconds to one second. 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 purpose of the proposed rule 

change is to reduce the order handling 

and exposure periods from three 

seconds to one second in the 

Supplementary Material to Section 17 

(Customer Orders and Order Flow 

Providers) and in Section 18 (The Price 

Improvement Period (‘‘PIP’’)) of Chapter 

V (Doing Business on BOX) of the BOX 

Rules. These sections require that orders 

entered into the BOX limit order book 

(‘‘BOX Book’’), or the PIP, respectively, 

are currently exposed to all market 

participants for three seconds before the 

orders are automatically executed, 

giving Options Participants 

(‘‘Participants’’) an opportunity to enter 

additional trading interests. 

Chapter V of the BOX Rules outlines 

certain requirements related to order 

handling by BOX Options Participants 

and Market Makers. A Participant may 

not execute an order it represents as 

agent with a facilitation or a solicited 

order unless it complies with the order 

exposure requirements contained in 

Chapter V, Section 17, Supplementary 

Materials .02 and .03. Specifically, 

Supplementary Material .02 to Section 

17 provides that an Options Participant 

may not cause the execution of an order 

it represents as agent on BOX through 

the use of orders it solicited unless the 

agency order is first exposed to the BOX 

Book for at least three seconds. 

Furthermore, Supplementary Material 

.03 to Section 17 provides that an order 

flow provider (‘‘OFP’’) may not execute 

as principal an order it represents as 

agent unless the OFP (i) exposes the 

order to the BOX Book for three 

seconds; (ii) has been bidding or 

offering on BOX for at least three 

seconds prior to receiving an agency 

order that is executable against such bid 

or offer; or (iii) sends the agency order 

to the PIP or Universal Price 

Improvement Period (‘‘UPIP’’). Under 

the proposal, these time periods would 

be reduced to one second. 

The Exchange is also proposing to 

reduce the PIP in Section 18 of Chapter 

V from three seconds to one second. 

Currently the PIP allows Participants to 

designate certain customer orders for 

price improvement and submit such 

orders to the PIP with a matching contra 

order (‘‘Primary Improvement Order’’). 

Once an order is submitted to the PIP, 

BOX broadcasts a message to Options 

Participants that commences the PIP 

and (1) states that a Primary 

Improvement Order has been processed; 

(2) contains information concerning 

series, size, price and side of the market 

of the order; and (3) states when the PIP 

will conclude. This proposal would 

reduce the PIP to one second. 

When approving the existing three 

second order handling and exposure 

periods, the Commission concluded 

that, in the electronic environment of 

BOX, reducing these time periods to 

three seconds was fully consistent with 

the electronic nature of the BOX 

market.3 BOX recognized that three 

seconds would not be long enough to 

allow human interaction with orders. 

Rather, Participants have been operating 

with sufficiently automated electronic 

systems so that they can react and 

respond to orders in a meaningful way 

within three seconds and BOX fully 

anticipates that this will continue 

within the proposed one second time 

frame. BOX believes that further 

reducing its order handling and 

exposure periods from three seconds to 

one second will benefit all market 

participants. BOX believes it is in all 

participants’ best interests to minimize 

the time of the exposure period while 

continuing to allow Participants 

adequate time to electronically respond, 

as both the order being exposed and 

Participants responding are subject to 

market risk during the exposure period. 

Indeed, most participants wait until the 

end of the last second of the current 

three second period before responding 

to exposed orders so as to minimize 

market risk. BOX believes that one 

second will continue to provide market 

participants with sufficient time to 

respond, compete, and provide price 

improvement for orders and will 

provide investors and other market 

participants with more timely 

executions, thereby reducing their 

market risk. 

Recently, BOX distributed a survey to 

Participants that regularly participate in 

the PIP or would otherwise be affected 

by this proposal. To substantiate that its 

Participants could receive, process, and 

communicate a response back to BOX 

within one second, the survey asked 

Participants to identify (i) 

approximately how many milliseconds 

it takes for an order broadcast from BOX 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 10635 

4Seventeen firms responded to the survey. 

Thirteen of the seventeen responded to the specific 

timing questions. 

5All of the thirteen Participants that responded 

to the specific timing questions, and two of the four 

Participants that did not answer the specific timing 

questions, indicated that reducing the exposure 

time periods to one second would not impair their 

ability to participate in BOX PIPs or facilitation or 

crossing orders. 

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

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

to reach their systems; (ii) 

approximately how many milliseconds 

it takes their systems to generate a 

response to an order broadcast; (iii) 

approximately how many milliseconds 

it takes their response to an order 

broadcast to reach BOX; and (iv) 

whether or not a reduction of the PIP 

and facilitation and solicitation order 

exposure time periods to one second 

would impair their ability to participate 

in BOX PIPs or facilitation or 

solicitation orders. The survey results 

indicate that the time it takes a message 

to travel between BOX and its 

Participants typically is not more than 

fifty milliseconds each way.4 The 

survey also indicated that it typically 

takes not more than ten milliseconds for 

Participant systems to process the 

information and generate a response. 

Thus, the survey indicated that it 

typically takes at most 110 milliseconds 

for Participants to receive, process, and 

respond to broadcast messages related to 

the PIP or facilitation or solicitation 

related broadcasts and for such 

responses to reach BOX. Additionally, 

Participants indicated that reducing the 

exposure period to one second would 

not impair their ability to participate in 

orders executed through the PIP or 

facilitation or solicitation orders.5 The 

Exchange believes that this information 

provides additional support for its 

assertion that reducing the exposure 

periods from three seconds to one 

second will continue to provide 

Participants with sufficient time to 

ensure effective interaction with orders. 

BOX Participants are able to respond 

to PIP orders in less than one second 

and this rule change could provide 

additional customer orders an 

opportunity for price improvement 

because it will reduce the market risk 

for Participants that are required to 

guarantee an execution at the National 

Best Bid/Offer (‘‘NBBO’’) or better. 

Accordingly, BOX does not believe it is 

necessary or beneficial to the orders 

being exposed to continue to subject 

them to market risk for a full three 

seconds. 

After Commission approval of the 

proposal, and at least one week prior to 

implementation of the rule change, 

BOXR will issue a regulatory circular to 

Participants. The regulatory circular 

will inform Participants of the 

implementation date of the reduction of 

the order handling and exposure 

periods from three seconds to one 

second. This will give Participants an 

opportunity to make any necessary 

modifications to coincide with the 

implementation date. 

2. Basis 

The Exchange believes that the 

proposal is consistent with the 

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

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

Act,7 in particular, in that it is designed 

to foster cooperation and coordination 

with persons engaged in regulating, 

clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, 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 

proposed rule change will provide 

investors with more timely execution of 

their options orders, while ensuring that 

there is an adequate exposure of all 

crossing orders on BOX. 

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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding, or 

(ii) as to which the Exchange consents, 

the Commission will: 

(A) By order approve such proposed 

rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The Exchange has requested 

accelerated approval of this proposed 

rule change prior to the 30th day after 

the date of publication of the notice in 

the Federal Register. The Commission 

is considering granting accelerated 

approval of the proposed rule change at 

the end of a 15-day comment period. 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–BX–2009–015 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–2009–015. This file 

number should be included on the 

subject line if e-mail 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 inspection and copying in 

the Commission’s Public Reference 

Room, on business days between the 

hours of 10 a.m. and 3 p.m., located at 

100 F Street, NE., Washington, DC 

20549. 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–2009–015 and should 


rwilkins on PROD1PC63 with NOTICES
10636 Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 

8 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). 

4Section 802.01C provides that a company will 

be considered to be below compliance standards if 

the average closing price of a security as reported 

on the consolidated tape is less than $1.00 over a 

consecutive 30 trading day period. Once notified, 

the company must bring its share price and average 

share price back above $1.00 by six months 

following receipt of the notification. A company is 

not eligible to follow the cure procedures outlined 

in Sections 802.02 and 802.03 with respect to this 

criteria. The company must, however, notify the 

Exchange, within 10 business days of receipt of the 

notification, of its intent to cure this deficiency or 

be subject to suspension and delisting procedures. 

In the event that at the expiration of the six-month 

cure period, both a $1.00 share price and a $1.00 

average share price over the preceding 30 trading 

days are not attained, the Exchange will commence 

suspension and delisting procedures. 

Notwithstanding the foregoing, if a company 

determines that, if necessary, it will cure the price 

condition by taking an action that will require 

approval of its shareholders, it must so inform the 

Exchange in the above referenced notification, must 

obtain the shareholder approval by no later than its 

next annual meeting, and must implement the 

action promptly thereafter. The price condition will 

be deemed cured if the price promptly exceeds 

$1.00 per share, and the price remains above the 

level for at least the following 30 trading days. 

5See, e.g., Securities Exchange Act Release No. 

58588 (September 18, 2008), 73 FR 55174 

(September 24, 2008) (‘‘The Commission is aware 

of the continued potential of sudden and excessive 

fluctuations of securities prices and disruption in 

the functioning of the securities markets that could 

threaten fair and orderly markets. Given the 

importance of confidence in our financial markets 

as a whole, we have also become concerned about 

sudden and unexplained declines in the prices of 

securities. Such price declines can give rise to 

questions about the underlying financial condition 

of an issuer, which in turn can create a crisis of 

confidence without a fundamental underlying basis. 

This crisis of confidence can impair the liquidity 

and ultimate viability of an issuer, with potentially 

broad market consequences.’’). 

6The Exchange notes that there are not currently 

any companies in the Exchange’s delisting appeal 

process that have been sent a delisting notification 

for noncompliance with the dollar price continued 

listing requirement. The Exchange also notes that it 

would continue to identify companies in a 

compliance period as below compliance for price, 

including by continuing to append an indicator to 

the company’s stock ticker to identify it as being 

below compliance for price and including the 

company on a list of companies that are below 

compliance for price posted to the Exchange’s Web 

site, unless the company regains compliance during 

the suspension. A company would continue to be 

subject to delisting for failure to comply with other 

listing requirements. 

be submitted on or before March 26, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–5130 Filed 3–10–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59510; File No. SR–NYSE– 

2009–21] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by New York 

Stock Exchange LLC To Temporarily 

Suspend Its Price Continued Listing 

Standard and Extend the Period of the 

Temporary Lowering of Its Average 

Global Market Capitalization Continued 

Listing Standard 

March 4, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’),1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on February 26, 2009, New York Stock 

Exchange, LLC (the ‘‘NYSE’’ or the 

‘‘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 Exchange. The Exchange has 

designated this proposal eligible for 

immediate effectiveness pursuant to 

Rule 19b–4(f)(6) 3 under the Exchange 

Act. 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 (i) suspend 

until June 30, 2009, the application of 

its price criteria for capital and common 

stock set forth in Section 802.01C of the 

Exchange’s Listed Company Manual 

(the ‘‘Manual’’), and (ii) extend until the 

same date the temporary lowering of the 

average market capitalization 

requirement of Section 802.01B of the 

Manual. The text of the proposed rule 

change is available on the Exchange’s 

Web site (http://www.nyse.com), at the 

Exchange’s Office of the Secretary 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 

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 NYSE 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 recent months, the U.S. and global 

equities markets have experienced 

extreme volatility and a precipitous 

decline in trading prices of many 

securities. As a consequence of these 

market conditions, the Exchange has 

experienced an unusually high number 

(as compared to historical levels) of 

listed companies having stock prices 

that have either fallen below the 

Exchange’s $1.00 price requirement for 

capital and common stock set forth in 

Section 802.01C of the Manual (i.e., the 

average closing price of their stock has 

fallen below $1.00 over a consecutive 30 

trading day period) 4 or having an 

average closing stock price that is below 

$2.00. In response, the Exchange 

proposes to suspend the application of 

the stock price requirement of Section 

802.01C until June 30, 2009. This 

proposed suspension will provide 

temporary relief to companies in 

response to the extreme volatility and a 

precipitous decline in trading prices of 

many securities experienced in the U.S. 

and global equities markets, which the 

Commission had acknowledged 

constituted a threat to the fair and 

orderly functioning of the securities 

markets and could lead to a crisis of 

confidence among investors regarding 

the viability of companies whose stock 

prices have declined significantly.5

Under the proposed suspension of the 

Exchange’s stock price continued listing 

standard, companies will not be notified 

of new events of noncompliance with 

the price requirement during the 

suspension period. Companies that are 

in a compliance period at the time of 

commencement of the suspension 6 will 

still be deemed to have regained 

compliance during the rule suspension 

period if, at the expiration of their 

respective six-month cure periods 

established prior to the commencement 

of the rule suspension, they have a 

$1.00 closing share price on the last 

trading day of the period and a $1.00 

average share price based on the 

preceding 30 trading days. In addition, 

any company that is in a compliance 

period at the time of commencement of 

the rule suspension can return to 

compliance during the suspension if at 

the end of any calendar month during 

the suspension such company has a 

$1.00 closing share price on the last 


rwilkins on PROD1PC63 with NOTICES