Federal Register / Vol. 79, No. 239 / Friday, December 12, 2014 / Notices 73927 

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

10 17 CFR 240.19b–4(f). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

uniformly to all Members and the ability 

of some Members to meet the tiers 

would only benefit other Members by 

contributing to increased liquidity and 

improve market quality at the Exchange. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

Members or other interested parties. 

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) 

of the Act 9 and paragraph (f) of Rule 

19b–4 thereunder.10 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 rule-comments@

sec.gov. Please include File Number SR– 

EDGA–2014–31 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–EDGA–2014–31. 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 the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–EDGA– 

2014–31, and should be submitted on or 

before January 2, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29107 Filed 12–11–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73787; File No. SR–FICC– 

2014–06] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Proposed Rule Change To 

Amend the Rules of the Government 

Securities Division and the MortgageBacked Securities Division on 

Insolvency and Ceasing To Act 

December 8, 2014. 

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 November 

25, 2014, Fixed Income Clearing 

Corporation (‘‘FICC’’) 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 clearing agency. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change consists of 

amendments to the rules of the 

Government Securities Division (‘‘GSD 

Rules’’) of FICC and the rules of the 

Mortgage-Backed Securities Division 

(‘‘MBSD Rules’’) of FICC (each of GSD 

and MBSD, a ‘‘Division’’ of FICC) on 

insolvency and ceasing to act that 

simplify in certain respects FICC’s 

process in a cease to act situation and 

provide greater legal certainty for FICC 

and its members, particularly in an 

intra-day cease to act situation. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

FICC 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. FICC has prepared 

summaries, set forth in sections A, B 

and C below, of the most significant 

aspects of such statements. 

A. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

The purpose of this filing is to amend 

the GSD Rules and the MBSD Rules on 

insolvency and ceasing to act in order 

to simplify in certain respects FICC’s 

process in a cease to act situation and 

provide greater legal certainty for FICC 

and its members, particularly in an 

intra-day cease to act situation. 

Background 

In connection with lessons learned 

from a recent close-out simulation 

exercise conducted by The Depository 

Trust & Clearing Corporation, FICC’s 

parent company, in which FICC 

participated, and related review of the 

GSD Rules and the MBSD Rules, certain 

potential challenges with administering 

certain aspects of the GSD Rules and the 

MBSD Rules on insolvency and ceasing 

to act described below, particularly in 

an intra-day cease to act situation, were 

identified. 

‘‘Time of Insolvency’’ and ‘‘Cut-Off 

Time’’ 

Currently, GSD and MBSD include in 

their insolvency rules (GSD Rule 22, 

MBSD Rule 16) and cease to act rules 

(GSD Rule 22A, MBSD Rule 17) the 

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73928 Federal Register / Vol. 79, No. 239 / Friday, December 12, 2014 / Notices 

3 It should be noted that this proposed change 

will more closely align the GSD Rules and the 

MBSD Rules with the rules of FICC’s affiliate, 

National Securities Clearing Corporation (‘‘NSCC’’). 

Under its Rule 18 (Procedures for When the 

Corporation Declines or Ceases to Act), NSCC relies 

on the time it declines or ceases to act for a member 

when determining which transactions involving 

such member will be excluded from its operations, 

rather than on a separate ‘‘Time of Insolvency’’ or 

‘‘Cut-Off Time’’, as applicable. 

concept of a ‘‘Time of Insolvency’’, 

which is defined to mean the time at 

which FICC determines to its reasonable 

satisfaction that a member is 

‘‘insolvent’’ within the meaning of GSD 

Rule 22 or MBSD Rule 16, respectively. 

This ‘‘Time of Insolvency’’ concept is 

separate from the time at which FICC 

ceases to act for a member, and such 

‘‘Time of Insolvency’’ is currently used 

in the GSD Rules and the MBSD Rules 

as a line of demarcation when 

determining FICC’s obligations with 

respect to pending transactions 

involving the insolvent member. 

Specifically, transactions with the 

insolvent member that are not compared 

or deemed compared in accordance 

with the GSD Rules or the MBSD Rules, 

respectively, prior to the ‘‘Time of 

Insolvency’’ are not eligible to be part of 

the close-out process, unless otherwise 

determined by the Board of Directors of 

FICC in order to promote orderly 

settlement. 

For a non-insolvency cease to act 

situation, the GSD Rules and the MBSD 

Rules on ceasing to act (GSD Rule 22A, 

MBSD Rule 17) currently include the 

concept of a ‘‘Cut-Off Time’’, which is 

defined to mean a time specified in 

advance by FICC in a notice to its 

membership at which it will cease to act 

for a member. Like the ‘‘Time of 

Insolvency’’ concept, ‘‘Cut-Off Time’’ is 

currently used in the GSD Rules and the 

MBSD Rules when determining FICC’s 

obligations with respect to pending 

transactions involving the defaulted 

member. 

Identifying an exact time at which a 

member has become ‘‘insolvent’’ for 

purposes of establishing a ‘‘Time of 

Insolvency’’ may pose potential 

challenges for FICC in circumstances 

where the member is deemed 

‘‘insolvent’’ based upon the 

determination or action of a third party, 

such as the member’s regulator, 

supervisory authority or a court of 

competent jurisdiction. In an intra-day 

cease to act situation where transaction 

data is being submitted to FICC in realtime, these potential challenges with 

identifying an exact ‘‘Time of 

Insolvency’’ may create a lack of legal 

certainty for FICC and its members 

regarding FICC’s obligations with 

respect to pending transactions 

involving the insolvent member. In light 

of the foregoing, FICC proposes to 

remove the ‘‘Time of Insolvency’’ 

concept from the GSD Rules and the 

MBSD Rules and instead simply rely on 

the single time it ceases to act for an 

insolvent member for purposes of 

determining its obligations with respect 

to pending transactions involving such 

insolvent member. 

In order to also simplify its process in 

non-insolvency cease to act situations, 

FICC proposes to remove the separate 

‘‘Cut-Off Time’’ concept from the GSD 

Rules and the MBSD Rules and instead 

rely on the single time it ceases to act 

for a defaulted member for purposes of 

determining its obligations with respect 

to pending transactions involving such 

defaulted member.3

Transactions Deemed Compared Based 

Solely on Non-Defaulting Member Data 

Currently, the provisions of the GSD 

Rules and the MBSD Rules on ceasing 

to act (GSD Rule 22A, MBSD Rule 17), 

and the related prongs of the 

‘‘Compared Trade’’ definition in Rule 1 

of each of the Division’s Rules, provide 

that, in the context of FICC ceasing to 

act for a member, a transaction 

involving such member that would not 

otherwise be compared or deemed 

compared under the GSD Rules or the 

MBSD Rules, respectively, may, in 

certain circumstances, be deemed a 

compared trade based solely on data 

submitted by a non-defaulting member. 

The determination of whether such a 

transaction should be deemed a 

compared trade is currently based on a 

multi-pronged facts and circumstancesbased test, including determinations as 

to whether the transaction was executed 

prior to FICC ceasing to act for the 

defaulted member, whether the 

transaction was entered into in good 

faith and not primarily in order to take 

advantage of the defaulted member’s 

financial condition and whether the 

transaction is an Off-the-Market 

Transaction as defined in Rule 1 of each 

of the Division’s Rules. 

Administering such a multi-pronged 

facts and circumstances-based test for 

individual transactions in a cease to act 

situation, particularly an intra-day cease 

to act situation where transaction data is 

being submitted to FICC in real-time, 

may pose potential challenges to FICC 

and create a lack of legal certainty for 

FICC and its members regarding FICC’s 

obligations with respect to individual 

pending transactions involving the 

insolvent or otherwise defaulted 

member. In order to simplify FICC’s 

process in a cease to act situation and 

provide FICC and its members with 

greater ex ante legal certainty regarding 

the rules applicable to pending 

transactions involving an insolvent or 

otherwise defaulted member, FICC 

proposes to remove the multi-pronged 

facts and circumstances-based test and 

the related provisions of each of the 

Division’s Rules and instead simply rely 

on the compared trade definitions under 

each of the Division’s Rules, subject to 

the discretion of the Board of Directors 

of FICC to determine otherwise in order 

to promote orderly settlement with 

respect to transactions the data on 

which have been submitted only by 

non-defaulting members. 

Proposed GSD Rule Changes 

FICC is proposing to amend the GSD 

Rules as follows: 

In Rule 1—‘‘Definitions’’, the 

following definitions have been revised: 

The term ‘‘Compared Trade’’ is 

revised to remove the prong of the 

definition which provides that, in the 

context of FICC ceasing to act for a 

member under GSD Rule 22A, a 

transaction involving such member that 

would not otherwise be a Compared 

Trade under the GSD Rules may, in 

certain circumstances, be deemed a 

Compared Trade based solely on data 

submitted by a non-defaulting member. 

The term ‘‘Off-the-Market 

Transaction’’ is revised to conform the 

text and the numbering of the definition 

with the text and numbering of the 

parallel ‘‘Off-the-Market Transaction’’ 

definition in the MBSD Rules. 

In Rule 3A—‘‘Sponsoring Members 

and Sponsored Members’’, Sections 

15(a) and 16(a) are revised to remove 

references to Rule 22, current Section 3 

(Notification of Insolvency) and related 

conforming changes to the text of such 

sections are made. Section 15(b) is 

revised to remove the reference to the 

‘‘Time of Insolvency’’ concept and to 

align the text regarding the actions taken 

by FICC in connection with the 

insolvency of a Sponsored Member with 

the parallel text included in Section 16 

relating to the actions taken by FICC in 

connection with the insolvency of a 

Sponsoring Member. Consistent with 

the numbering of Section 15, Section 

16(a) is revised to make the second 

paragraph a new subsection (b). New 

Section 16(b) is also revised to align the 

text regarding the actions taken by FICC 

in connection with the insolvency of a 

Sponsoring Member with the parallel 

text included in Section 15(b) relating to 

the actions taken by FICC in connection 

with the insolvency of a Sponsored 

Member. 

In Rule 22—‘‘Insolvency of a 

Member’’, current Section 3, which 

provides for FICC to notice its 

membership and the Securities and 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 239 / Friday, December 12, 2014 / Notices 73929 

4 15 U.S.C. 78q–1(b)(3)(F). 

Exchange Commission (SEC) regarding 

the insolvency of a member, is removed 

in order to clarify that the membership 

and the SEC will only receive one notice 

from FICC at the time it ceases to act for 

a member in accordance with the 

provisions of Section 1 of Rule 22A 

(Procedures for When the Corporation 

Ceases to Act), whether FICC ceases to 

act for the member for insolvency or 

non-insolvency related reasons. Section 

4 (Ceasing to Act for the Member) is 

renumbered as new Section 3 and 

revised to remove the reference to the 

‘‘Time of Insolvency’’ concept. 

In Rule 22A—‘‘Procedures for When 

the Corporation Ceases to Act’’, Section 

1 (Notification) is revised to clarify that 

FICC will notice the SEC as well as its 

membership of every decision to cease 

to act for a member. Section 1 is further 

revised to remove the requirement that 

FICC establish a separate ‘‘Time of 

Insolvency’’, in the event it ceases to act 

because of a member’s insolvency, or 

‘‘Cut-Off Time’’, in the event it ceases to 

act for a member for non-insolvency 

related reasons. 

Sections 2, 2(a) and 2(b) are revised 

remove the ‘‘Time of Insolvency’’ and 

‘‘Cut-Off Time’’ concepts, and instead 

rely on the time FICC ceases to act for 

a member for purposes of determining 

its obligations with respect to pending 

transactions involving such member. 

Section 2(a) is further revised to use the 

defined term ‘‘Compared Trade’’ for 

purposes of clarifying which 

transactions are eligible to be part of the 

close-out process as of the time FICC 

ceases to act for a member, subject to the 

discretion of the Board of Directors of 

FICC to determine otherwise in order to 

promote orderly settlement. 

Section 2(c), which provides that, in 

the context of FICC ceasing to act for a 

member, a transaction involving such 

member that would not otherwise be 

compared or deemed compared under 

the GSD Rules may, in certain 

circumstances, be deemed compared 

based solely on data submitted by a 

non-defaulting member, based on a 

multi-pronged facts and circumstancesbased test, is removed. FICC would 

instead rely on the ‘‘Compared Trade’’ 

definition in GSD Rule 1 when 

determining its obligations with respect 

to pending transactions involving an 

insolvent or otherwise defaulted 

member, subject to the discretion of the 

Board of Directors of FICC to determine 

otherwise in order to promote orderly 

settlement with respect to transactions 

the data on which have been submitted 

only by non-defaulting members. 

Proposed MBSD Rule Changes 

FICC is proposing to amend the 

MBSD Rules as follows: 

In Rule 1—‘‘Definitions’’, the 

following definitions have been revised: 

The term ‘‘Compared Trade’’ is 

revised to remove the prong of the 

definition which provides that, in the 

context of FICC ceasing to act for a 

member under MBSD Rule 17, a 

transaction involving such member that 

would not otherwise be compared or 

deemed compared under the MBSD 

Rules may, in certain circumstances, be 

deemed a Compared Trade based solely 

on data submitted by a non-defaulting 

member. The ‘‘Compared Trade’’ 

definition is further clarified to 

reference the specific MBSD Rules (Rule 

5 and Rule 7) pursuant to which a 

transaction would be compared or 

deemed compared by MBSD. 

In Rule 16—‘‘Insolvency of a 

Member’’, current Section 3, which 

provides for FICC to notice its 

membership and the Securities and 

Exchange Commission (SEC) regarding 

the insolvency of a member, is removed 

in order to clarify that the membership 

and the SEC will only receive one notice 

from FICC at the time it ceases to act for 

a member in accordance with the 

provisions of Section 1 of Rule 17 

(Procedures for When the Corporation 

Ceases to Act), whether FICC ceases to 

act for the member for insolvency or 

non-insolvency related reasons. Section 

4 (Ceasing to Act for the Member) is 

renumbered as new Section 3 and 

revised to remove the reference to the 

‘‘Time of Insolvency’’ concept. 

In Rule 17—‘‘Procedures for When the 

Corporation Ceases to Act’’, Section 1 

(Notification) is revised to clarify that 

FICC will notice the SEC as well as its 

membership of every decision to cease 

to act for a member. Section 1 is further 

revised to remove the requirement that 

FICC establish a separate ‘‘Time of 

Insolvency’’, in the event it ceases to act 

because of a member’s insolvency, or 

‘‘Cut-Off Time’’, in the event it ceases to 

act for a member for non-insolvency 

related reasons. 

Sections 2, 2(a), 2(d) and 2(e) are 

revised to remove the ‘‘Time of 

Insolvency’’ and ‘‘Cut-Off Time’’ 

concepts, and instead rely on the time 

FICC ceases to act for a member for 

purposes of determining its obligations 

with respect to pending transactions 

involving such member. 

Section 2(g), which provides that, in 

the context of FICC ceasing to act for a 

member, a transaction involving such 

member that would not otherwise be 

compared or deemed compared under 

the MBSD Rules may, in certain 

circumstances, be deemed compared 

based solely on data submitted by a 

non-defaulting member, based on a 

multi-pronged facts and circumstancesbased test, is removed. FICC would 

instead rely on the compared trade 

definitions in the MBSD Rules when 

determining its obligations with respect 

to pending transactions involving an 

insolvent or otherwise defaulted 

member, subject to the discretion of the 

Board of Directors of FICC to determine 

otherwise in order to promote orderly 

settlement with respect to transactions 

the data on which have been submitted 

only by non-defaulting members. 

2. Statutory Basis 

The proposed rule is consistent with 

Section 17A(b)(3)(F) 4 of the Securities 

and Exchange Act of 1934, as amended, 

and the rules and regulations 

promulgated thereunder because it will 

promote the prompt and accurate 

clearance and settlement of securities 

transactions and remove impediments 

to and perfect the mechanism of a 

national system for the prompt and 

accurate clearance and settlement of 

securities transactions in that it will 

simplify in certain respects FICC’s 

process in a cease to act situation and 

provide greater legal certainty for FICC 

and its members as to FICC’s obligations 

with respect to pending transactions 

involving an insolvent or otherwise 

defaulted member, particularly in an 

intra-day cease to act situation. 

B. Clearing Agency’s Statement on 

Burden on Competition 

FICC does not believe that the 

proposed rule change will have any 

impact, or impose any burden, on 

competition because it relates to 

changes to FICC’s insolvency and cease 

to act rules that would apply equally to 

all members of each Division of FICC. 

C. Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

Written comments relating to the 

proposed rule change have not yet been 

solicited or received. FICC will notify 

the Commission of any written 

comments received by FICC. 

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 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

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73930 Federal Register / Vol. 79, No. 239 / Friday, December 12, 2014 / Notices 

5 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See BX Options Rules at Chapter VII. 

4Options market makers receive certain benefits 

for carrying out their duties. For example, a lender 

may extend credit to a broker-dealer without regard 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 

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-comment@

sec.gov. Please include File No. SR– 

FICC–2014–06 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington DC 20549. 

All submissions should refer to File 

Number SR–FICC–2014–06. 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 the 

filing also will be available for 

inspection and copying at the principal 

office of FICC and on its Web site at 

http://www.dtcc.com/∼/media/Files/

Downloads/legal/rule-filings/2014/ficc/

SR-FICC-2014-06.pdf. 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–FICC– 

2014–06 and should be submitted on or 

before January 2, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.5

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29179 Filed 12–11–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73784; File No. SR–BX– 

2014–049] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

of Proposed Rule Change Relating to 

Directed Market Makers 

December 8, 2014. 

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 November 

25, 2014, 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, 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 add 

definitions of Directed Order and 

Directed Market Maker (‘‘DMM’’), as 

well as provisions concerning the 

designation of an order as a Directed 

Order and DMM market making 

obligations. The proposal also revises 

priority rules to provide for a DMM 

participation entitlement. Finally, the 

rule makes certain clarifications to the 

text of rules governing Lead Market 

Makers (‘‘LMMs’’). The proposal seeks 

to enable BX to compete with the many 

options exchanges that offer directed 

orders in their respective markets. 

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. 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to adopt rules to permit BX 

Market Makers to act as Designated 

Market Makers, or DMMs, in their 

appointed options classes, provided the 

DMM meets certain obligations and 

quoting requirements as provided for in 

the new proposed Exchange Rules. The 

Exchange proposes to provide DMMs 

with certain participation entitlements. 

The Exchange believes that these 

amendments, described below in greater 

detail, will enhance competition by 

affording the BX Options market the 

opportunity to compete for directed 

order flow. 

Current Categories of BX Options 

Participants 

Today on BX there are three types of 

Options Participants: Options Order 

Entry Firms, Options market makers and 

LMMs. Options Order Entry Firms, or 

OEFs, are Options Participants who 

represent customer orders as agent on 

BX Options and non-market maker 

Participants conducting proprietary 

trading as principal. 

Options market makers are Options 

Participants registered with the 

Exchange as options market makers in 

one or more listed options on BX.3 BX 

Options market makers are required to 

electronically engage in a course of 

dealing to enhance liquidity available 

on BX and to assist in the maintenance 

of fair and orderly markets.4 Among 

mstockstill on DSK4VPTVN1PROD with NOTICES