Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Notices 59305 

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

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission written 

notice of its intention to file the proposed rule 

change, along with a brief description and text of 

the proposed rule change, at least five business days 

prior to the filing of the proposed change, or such 

shorter time as designated by the Commission. The 

Commission notes that the Exchange has satisfied 

this requirement. 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

automatically cancelled for an Options 

Participant that lost its connection to 

BOX, and upon a reconnection between 

the Options Participant and the Trading 

Host on the same trading day, the 

Options Participant will be able to 

retrieve any Session Order cancellation 

notices when it reconnects. 

BOX will inform Options Participants 

via Information Circular about the 

functionality and use of the Session 

Order duration type and the 

implementation date prior to its 

implementation in the BOX trading 

system. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the Act,8

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

Act,9 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 for a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. In particular, the 

Exchange believes that this proposed 

rule change will benefit the marketplace 

and protect investors because it will 

reduce the risk of erroneous or stale 

orders on the BOX Book in the event 

that an Options Participant loses 

connectivity with the Trading Host. 

Furthermore, the proposed Session 

Order will provide for the protection of 

Options Participants and their 

customers, who must bear the burden of 

market risk for stale orders caused by 

circumstances outside of their control, 

as well as for the protection of investors 

and the efficiency and fairness of the 

market as a whole. 

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. Basis for Summary Effectiveness 

Pursuant to Section 19(b)(3) or for 

Accelerated Effectiveness Pursuant to 

Section 19(b)(2) 

Because the foregoing rule 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, provided that the selfregulatory organization has given 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 proposed rule change 

has become effective pursuant to 

Section 19(b)(3)(A) of the Act 10 and 

Rule 19b–4(f)(6) thereunder.11

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

Number SR–BX–2010–065 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–2010–065. 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 website viewing and 

printing in the Commission’s Public 

Reference Room, located at 100 F Street, 

NE., Washington, DC 20549, on 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 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–2010–065 and should 

be submitted on or before October 18, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–24077 Filed 9–24–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62954; File No. SR–BX– 

2010–066] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

of a Proposed Rule Change To 

Enhance Quotation Requirements for 

Market Makers 

September 20, 2010. 

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 

September 17, 2010, NASDAQ OMX 


srobinson on DSKHWCL6B1PROD with NOTICES
59306 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Notices 

3Changes are marked to the rule text that appears 

in the electronic manual of Nasdaq found at http:// 

nasdaqomxbx.cchwallstreet.com. 

BX, Inc. (‘‘BX’’ 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 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 is filing with the 

Commission a proposed rule change to 

enhance quotation requirements for 

market makers. The text of the proposed 

rule change is below. Proposed new 

language is in italics; proposed 

deletions are in [brackets].3

* * * * * 

[4613. Character of Quotations] 

A member registered as an Equities 

Market Maker shall engage in a course 

of dealings for its own account to assist 

in the maintenance, insofar as 

reasonably practicable, of fair and 

orderly markets in accordance with this 

Rule. 

(a) Quotation Requirements and 

Obligations 

(1) Two-Sided Quote Obligation. For 

each security in which a member is 

registered as an Equities Market Maker, 

the member shall be willing to buy and 

sell such security for its own account on 

a continuous basis and shall enter and 

maintain a two-sided quotation 

(‘‘Principal Quote’’), which is attributed 

to the market maker by a special market 

participant identifier (‘‘MPID’’) and is 

displayed in the NASDAQ OMX BX 

Equities Market at all times, subject to 

the procedures for excused withdrawal 

set forth in Rule 4619. 

(A) A registered Equities Market 

Maker must display a quotation size for 

at least one normal unit of trading (or 

a larger multiple thereof) when it is not 

displaying a limit order in compliance 

with SEC Rule 604, provided, however, 

that a registered Equities Market Maker 

may augment its displayed quotation 

size to display limit orders priced at the 

Equities Market Maker’s quotation. 

Unless otherwise designated, a ‘‘normal 

unit of trading’’ shall be 100 shares. 

(B) The minimum quotation 

increment for quotations of $1.00 or 

above in all System Securities shall be 

$0.01. The minimum quotation 

increment in the System for quotations 

below $1.00 in System Securities shall 

be $0.0001. 

(2) The first MPID issued to a member 

pursuant to subparagraph (1) of this 

rule, or Rule 4623, shall be referred to 

as the member’s ‘‘Primary MPID.’’ 

Market makers and ECNs may request 

the use of additional MPIDs that shall 

be referred to as ‘‘Supplemental MPIDs.’’ 

A market maker may request the use of 

a Supplemental MPIDs for displaying 

Attributable Quotes/Orders in the 

Exchange’s Quotation Montage for any 

security in which it is registered and 

meets the obligations set forth in 

subparagraph (1) of this rule. An ECN 

may request the use of Supplemental 

MPIDS for displaying Attributable 

Quotes/Orders in the Exchange’s 

Quotation Montage for any security in 

which it meets the obligations set forth 

in Rule 4623. A market maker or ECN 

that ceases to meet the obligations 

appurtenant to its Primary MPID in any 

security shall not be permitted to use a 

Supplemental MPID for any purpose in 

that security. 

(3) Market makers and ECNs that are 

permitted the use of Supplemental 

MPIDs for displaying Attributable 

Quotes/Orders pursuant to 

subparagraph (2) of this rule are subject 

to the same rules applicable to the 

member’s first quotation, with two 

exceptions: (a) The continuous twosided quote requirement and excused 

withdrawal procedures described in 

subparagraph (1) above do not apply to 

market maker’s Supplemental MPIDs; 

and (b) Supplemental MPIDs may not be 

used by market makers to enter 

stabilizing bids pursuant to Equity Rule 

4614.] 

4613. Market Maker Obligations 

A member registered as an Equities 

Market Maker shall engage in a course 

of dealings for its own account to assist 

in the maintenance, insofar as 

reasonably practicable, of fair and 

orderly markets in accordance with this 

Rule. 

(a) Quotation Requirements and 

Obligations 

(1) Two-Sided Quote Obligation. For 

each security in which a member is 

registered as a Equities Market Maker, 

the member shall be willing to buy and 

sell such security for its own account on 

a continuous basis during regular 

market hours and shall enter and 

maintain a two-sided trading interest 

(‘‘Two-Sided Obligation’’) that is 

identified to the Exchange as the 

interest meeting the obligation and is 

displayed in the Exchange’s quotation 

montage at all times. Interest eligible to 

be considered as part of an Equities 

Market Maker’s Two-Sided Obligation 

shall have a displayed quotation size of 

at least one normal unit of trading (or 

a larger multiple thereof); provided, 

however, that an Equities Market Maker 

may augment its Two-Sided Obligation 

size to display limit orders priced at the 

same price as the Two-Sided Obligation. 

Unless otherwise designated, a ‘‘normal 

unit of trading’’ shall be 100 shares. 

After an execution against its TwoSided Obligation, Equities a Market 

Maker must ensure that additional 

trading interest exists in the Exchange 

to satisfy its Two-Sided Obligation 

either by immediately entering new 

interest to comply with this obligation to 

maintain continuous two-sided 

quotations or by identifying existing 

interest on the Exchange book that will 

satisfy this obligation. 

(2) Pricing Obligations. For NMS 

stocks (as defined in Rule 600 under 

Regulation NMS) an Equities Market 

Maker shall adhere to the pricing 

obligations established by this Rule 

during Regular Market Hours. 

(A) Bid Quotations. At the time of 

entry of bid interest satisfying the TwoSided Obligation, the price of the bid 

interest shall be not more than the 

Designated Percentage away from the 

then current National Best Bid, or if no 

National Best Bid, not more than the 

Designated Percentage away from the 

last reported sale from the responsible 

single plan processor. In the event that 

the National Best Bid (or if no National 

Best Bid, the last reported sale) 

increases to a level that would cause the 

bid interest of the Two-Sided Obligation 

to be more than the Defined Limit away 

from the National Best Bid (or if no 

National Best Bid, the last reported 

sale), or if the bid is executed or 

cancelled, the Equities Market Maker 

shall enter new bid interest at a price 

not more than the Designated 

Percentage away from the then current 

National Best Bid (or if no National Best 

Bid, the last reported sale), or identify 

to the Exchange current resting interest 

that satisfies the Two-Sided Obligation. 

(B) Offer Quotations.—At the time of 

entry of offer interest satisfying the TwoSided Obligation, the price of the offer 

interest shall be not more than the 

Designated Percentage away from the 

then current National Best Offer, or if no 

National Best Offer, not more than the 

Designated Percentage away from the 

last reported sale received from the 

responsible single plan processor. In the 

event that the National Best Offer (or if 

no National Best Offer, the last reported 

sale) decreases to a level that would 

cause the offer interest of the Two-Sided 

Obligation to be more than the Defined 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Notices 59307 

4See Exchange Act Release No. 62884 (September 

10, 2010). 

Limit away from the National Best Offer 

(or if no National Best Offer, the last 

reported sale), or if the offer is executed 

or cancelled, the Equities Market Maker 

shall enter new offer interest at a price 

not more than the Designated 

Percentage away from the then current 

National Best Offer (or if no National 

Best Offer, the last reported sale), or 

identify to the Exchange current resting 

interest that satisfies the Two-Sided 

Obligation. 

(C) The National Best Bid and Offer 

shall be determined by the Exchange in 

accordance with its procedures for 

determining protected quotations under 

Rule 600 under Regulation NMS. 

(D) For purposes of this Rule, the term 

‘‘Designated Percentage’’ shall mean the 

individual stock pause trigger 

percentage under Rule 4120(a)(11) (or 

comparable rule of another exchange) 

less two (2) percentage points. For times 

during regular market hours when stock 

pause triggers are not in effect under 

Rule 4120(a)(11) (or comparable rule of 

another exchange), the Designated 

Percentage calculation will assume a 

trigger percentage of 22%. For NMS 

stocks that are not subject to such stock 

pause triggers the Designated 

Percentage will assume a trigger 

percentage of 32%. 

(E) For purposes of this Rule, the term 

‘‘Defined Limit’’ shall mean the 

individual stock pause trigger 

percentage under Rule 4120(a)(11) (or 

comparable rule of another exchange) 

less one-half (1⁄2) percentage point. For 

times during regular market hours when 

stock pause triggers are not in effect 

under Rule 4120(a)(11) (or comparable 

rule of another exchange), the Defined 

Limit calculation will assume a trigger 

percentage of 22%. For NMS stocks that 

are not subject to such stock pause 

triggers the Defined Limit calculation 

will assume a trigger percentage of 32%. 

(F) Quotation Creation and 

Adjustment. For each Issue in which an 

Equities Market Maker is registered, the 

System shall automatically create a 

quotation for display to comply with 

this Rule. System-created compliant 

displayed quotations will thereafter be 

allowed to rest and not be further 

adjusted by the System unless the 

relationship between the quotation and 

its related National Best Bid or National 

Best Offer, as appropriate, shrinks to the 

greater of: (a) 4 percentage points, or, (b) 

one-quarter the applicable percentage 

necessary to trigger an individual stock 

trading pause as described in NASDAQ 

OMX BX Rule 4120(a)(11), or expands 

to within that same percentage less 

0.5%, whereupon the System will 

immediately re-adjust and display the 

Equities Market Maker’s quote to the 

appropriate Designated Percentage set 

forth in section (D) above. As the System 

allows for multiple attributable 

quotations by a Equities Market Maker 

in an issue, quotations originally 

entered by Equities Market Makers shall 

be allowed to move freely towards or 

away from the National Best Bid or 

National Best Offer, as appropriate, for 

potential execution. 

(G) Quotation Refresh After 

Execution. In the event of an execution 

against a System-created compliant 

quotation, the Equities Market Maker 

shall have its quote refreshed by the 

System on the executed side of the 

market at the applicable Designated 

Percentage away from the then National 

Best Bid (Offer) (or if no National Best 

Bid (Offer), the last reported sale). 

(H) Nothing in this Rule shall 

preclude an Equities Market Maker from 

quoting at price levels that are closer to 

the National Best Bid and Offer than the 

levels required by this Rule. 

(I) The minimum quotation increment 

for quotations of $1.00 or above in all 

System Securities shall be $0.01. The 

minimum quotation increment in the 

System for quotations below $1.00 in 

System Securities shall be $0.0001. 

(J) The individual Market Participant 

Identifier (‘‘MPID’’) assigned to a 

member to meet its Two-Sided 

Obligation pursuant to subparagraph 

(a)(1) of this Rule, or Rule 4623, shall be 

referred to as the member’s ‘‘Primary 

MPID.’’ Equities Market Makers and 

ECNs may request the use if additional 

MPIDs that shall be referred to as 

‘‘Supplemental MPIDs.’’ An Equities 

Market Maker may request the use of 

Supplemental MPIDs for displaying 

Attributable Quotes/Orders in the 

Quotation Montage for any security in 

which it is registered and meets the 

obligations set forth in subparagraph (1) 

of this rule. An ECN may request the use 

of Supplemental MPIDs for displaying 

Attributable Quotes/Orders in the 

Quotation Montage for any security in 

which it meets the obligations set forth 

in Rule 4623. An Equities Market Maker 

or ECN that ceases to meet the 

obligations appurtenant to its Primary 

MPID in any security shall not be 

permitted to use a Supplemental MPID 

for any purpose in that security. 

(K) Equities Market Makers and ECNs 

that are permitted the use of 

Supplemental MPIDs for displaying 

Attributable Quotes/Orders pursuant to 

subparagraph (2) of this rule are subject 

to the same rules applicable to the 

members’ first quotation, with two 

exceptions: (a) The continuous twosided quote requirement and excused 

withdrawal procedures described in 

subparagraph (1) above do not apply to 

Equities Market Makers’ Supplemental 

MPIDs; and (b) Supplemental MPIDs 

may not be used by Equities Market 

Makers to engage in passive market 

making or to enter stabilizing bids 

pursuant to Rule 4614. 

(b)–(e) No Change. 

* * * * * 

(b) Not applicable. 

(c) Not applicable. 

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 

Market Maker Quote Obligations: 

The Exchange proposes to adopt rules 

to enhance minimum quotation 

requirements for market makers. Under 

the proposal, the Exchange will require 

market makers for each stock in which 

they are registered to continuously 

maintain a two-sided quotation within a 

designated percentage of the National 

Best Bid and National Best Offer as 

appropriate. These enhanced market 

maker quotation requirements are 

intended to eliminate trade executions 

against market maker placeholder 

quotations traditionally priced far away 

from the inside market, commonly 

known as ‘‘stub quotes.’’ They are also 

intended to augment and work in 

relation to the single stock pause 

standards already in place on a pilot 

basis for stocks in the S&P 500, Russell 

1000, and specified ETFs.4 Under the 

proposal, the Exchange will require 

registered market makers to enter and 

maintain quotes priced at no more than 

a certain percentage away from the 

national inside bid and offer. 

Permissible quotes are determined by 

the individual character of the security, 

the time of day in which the quote is 

entered, and other factors which are 

summarized below: 


srobinson on DSKHWCL6B1PROD with NOTICES
59308 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Notices 

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

6 15 U.S.C. 78k–1(a)(1). 

For issues subject to an individual 

stock trading trigger pause, a 

permissible quote is determined by first 

looking at the applicable stock trading 

pause trigger percentage of the security 

and then reducing that number by 2%. 

Since currently the stock pause trigger 

percentage across all exchanges is 10%, 

a market maker’s quote in such a 

security may not be more than 8% away 

from the national best bid or best offer 

as appropriate. Once a compliant quote 

is entered, it may rest without 

adjustment until such time as it moves 

to within 1⁄2 of 1% of the applicable 

trigger pause percentage (i.e., currently 

9.5%) whereupon the market maker 

must immediately move its quote back 

to at least the permissible default level 

of 8% away from the national best bid 

or best offer. During times in which a 

trigger pause percentage is not 

applicable (e.g. before 9:45 a.m. and 

after 3:35 p.m.), a market maker must 

maintain a quote no further than 20% 

away from the inside (i.e. it may rest 

without adjustment until it reaches 

21.5%). In the absence of national best 

or best offer, the above calculations will 

remain the same, but will use the 

national last sale instead of the absent 

bid or offer. 

For securities not subject to any 

individual stock pause trigger, the 

proposal will a [sic] assume a 

hypothetical 32% trigger pause, apply a 

2% reduction, and require market 

makers in those issues to maintain 

quotes no more than 30% away from the 

national best and national best offer. 

Like securities subject to stock trading 

pauses, once a compliant quote is 

entered, it may rest without adjustment 

until such time as it moves to within 1⁄2

of 1% of its applicable trigger pause 

percentage (31.5%) whereupon the 

market maker must immediately move 

its quote back to at least the permissible 

default level of 30%. These 

requirements shall apply to Regulation 

NMS securities during normal market 

hours. 

Nothing in the above precludes a 

market maker from voluntarily quoting 

at price levels that are closer to the 

national best bid and best offer than 

required under the proposal. 

Automated Quote Management: 

In order to assist market makers in 

meeting their enhanced quotation 

obligations, the Exchange will also 

provide automated quote management 

functionality. For each issue in which a 

market maker is registered, the 

Exchange will automatically create a 

quotation for display to comply with 

this standard set forth in this proposal. 

Compliant displayed quotations will 

thereafter be allowed to rest and not be 

further adjusted by the Exchange unless 

the relationship between the quotation 

and its related national best bid or 

national best offer, as appropriate, 

shrinks to the greater of: (a) 4 percentage 

points, or, (b) one-quarter the applicable 

percentage necessary to trigger an 

individual stock trading pause as 

described in NASDAQ OMX BX Rule 

4120(a)(11), or expands to within that 

same percentage less 0.5%, whereupon 

the Exchange will immediately re-adjust 

and display the market maker’s quote to 

the appropriate designated percentage. 

Quotations originally entered by market 

makers shall be allowed to move freely 

towards the national best bid or national 

best offer, as appropriate, for potential 

execution. 

In the event of an execution against a 

System-created compliant quotation, the 

market maker shall have its quote 

refreshed by the System on the executed 

side of the market at the applicable 

designated percentage away from the 

then national best bid (offer), or if no 

national best bid (offer), the last 

reported sale. 

Previously Approved Rule Text: 

Finally, the sections (I), (J) and (K) of 

the proposed rule are portions of 

previously approved text of Rule 4613 

that have moved so as to group the 

proposed market making standard 

sections together within the rule. 

2. Statutory Basis 

The statutory basis for the proposed 

rule change is Section 6(b)(5) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),5 which requires the rules of an 

exchange to promote just and equitable 

principles of trade, 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. The proposed rule 

change also is designed to support the 

principles of Section 11A(a)(1) 6 of the 

Act in that it seeks to assure fair 

competition among brokers and dealers 

and among exchange markets. The 

Exchange believes that the proposed 

rule meets these requirements in that it 

promotes transparency and uniformity 

across markets concerning minimum 

market maker quotation requirements. 

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. 

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 

Within 45 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 shall: (a) By order 

approve or disapprove such proposed 

rule change, or (b) institute proceedings 

to determine whether the proposed rule 

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

Number SR–BX–2010–066 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BX–2010–066. 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 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Notices 59309 

7 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange notes that no change is necessary 

to the text related to CBSX LMM obligations as 

existing Rule 53.51, CBSX LMM Defined, already 

provides that CBSX LMMs will have the same 

obligations of CBSX Remote Market-Makers plus 

those additional obligations of CBSX DPMs. 

4A CBSX Remote Market-Maker would be 

obligated to provide continuous quotes only when 

the CBSX Remote Market-Maker is quoting in a 

particular security during CBSX Regular Trading 

Hours after the primary listing market has 

disseminated an opening quote in the stock on a 

given trading day. See proposed Rule 53.23.01(a), 

which is similar to CBOE’s existing rule for options 

Market-Makers, Rule 8.7(d)(iii). A CBSX DPM or 

CBSX LMM would be obligated to provide 

continuous quotes during the CBSX Regular 

Trading Hours after the primary listing market has 

disseminated an opening quote in the stock on a 

given trading day. See proposed Rule 53.56.01(a), 

which is similar to CBOE’s existing rules for 

options DPMs and LMMs, Rules 8.85(a)(i) and 

8.15A(b)(i). 

5See Exchange Act Release Nos. 62252 (June 10, 

2010), 75 FR 34186 (June 16, 2010) and 62886 

(September 10, 2010). 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying 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 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 publicly available. All 

submissions should refer to File 

Number SR–BX–2010–066 and should 

be submitted on or before October 18, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–24059 Filed 9–24–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62951; File No. SR–CBOE– 

2010–087] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of a 

Proposed Rule Change Related to 

CBSX Market-Maker Obligations 

September 20, 2010. 

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 

September 17, 2010, Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’ 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 

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 is proposing to amend 

CBOE Stock Exchange’s (‘‘CBSX’’, the 

CBOE’s stock trading facility) rules to 

enhance quotation requirements. The 

text of the rule proposal is available on 

the Exchange’s Web site (http:// 

www.cboe.org/legal), 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 

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 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 

The Exchange proposes to adopt rules 

to enhance minimum quotation 

requirements for CBSX Remote MarketMakers, CBSX Designated Primary 

Market-Makers (‘‘CBSX DPMs’’), and 

CBSX Lead Market-Makers (‘‘CBSX 

LMMs’’) (collectively ‘‘CBSX MarketMakers’’). Under the proposal, the 

Exchange will amend Rules 53.23, 

Obligations of CBSX Remote MarketMakers, and Rule 53.56, CBSX DPM 

Obligations,3 to require CBSX MarketMakers for each stock in which they are 

registered to continuously maintain a 

two-sided quotation within a designated 

percentage of the National Best Bid and 

National Best Offer as appropriate 

during CBSX Regular Trading Hours 

after the primary listing market has 

disseminated an opening quote in the 

stock on a given trading day.4 These 

enhanced market maker quotation 

obligations and [sic] are intended to 

eliminate trade executions against 

market maker placeholder quotations 

traditionally priced far away from the 

inside market, commonly known as 

‘‘stub quotes.’’ They are also intended to 

augment and work in relation to the 

single stock pause standards already in 

place on a pilot basis for stocks in the 

S&P 500, the Russell 1000 and certain 

exchange-trade products.5

Under the proposal, the Exchange will 

require CBSX Market-Makers to enter 

and maintain quotes priced at no more 

than a certain percentage away from the 

national inside bid and offer. 

Permissible quotes are determined by 

the individual character of the security, 

the time of day in which the quote is 

entered, and other factors which are 

summarized below: 

For issues subject to an individual 

stock trading trigger pause, a 

permissible quote is determined by first 

looking at the applicable stock trading 

pause trigger percentage of the security 

and then reducing that number by 2%. 

Since currently the stock pause trigger 

percentage across all exchanges is 10%, 

a CBSX Market-Maker’s quote in a such 

a security may not be more than 8% 

away from the national best bid or best 

offer as appropriate. Once a compliant 

quote is entered, it may rest without 

adjustment until such time as it moves 

to within 1⁄2 of 1% of the applicable 

trigger pause percentage (i.e., currently 

9.5%) whereupon the CBSX MarketMaker must immediately move its quote 

back to at least the permissible default 

level of 8% away from the national best 

bid or best offer. During times in which 

a trigger pause percentage is not 

applicable (e.g., before 8:45 a.m. and 

after 2:35 p.m. Chicago Time), a market 

maker must maintain a quote no further 

than 20% away from the inside (i.e., it 

may rest without adjustment until it 

reaches 21.5%). In the absence of 

national best or best offer, the above 

calculations will remain the same, but 

will use the national last sale instead of 

the absent bid or offer. 

For securities not subject to any 

individual stock pause trigger, the 

proposal will a [sic] assume a 

hypothetical 32% trigger pause, apply a 

2% reduction, and require CBSX 

Market-Makers in those issues to 

maintain quotes no more than 30% 

away from the national best and 

national best offer. Like securities 

subject to stock trading pauses, once a 

compliant quote is entered, it may rest 

without adjustment until such time as it 

moves to within 1⁄2 of 1% of its 


srobinson on DSKHWCL6B1PROD with NOTICES