Document ID: SEC-2009-0303-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2009-03-06T05:00Z

[Federal Register: March 6, 2009 (Volume 74, Number 43)]
[Notices]               
[Page 9840-9841]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06mr09-63]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59475; File No. SR-BX-2009-014]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing of Proposed Rule Change Relating to Zero Bid Orders on the 
Boston Options Exchange Facility

February 27, 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 26, 2009, NASDAQ OMX BX, Inc. (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 self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Chapter V, Section 14 (Order Entry) 
of the Rules of the Boston Options Exchange Group, LLC (``BOX'') to 
clarify the treatment of certain Zero Bid Orders.\3\ 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/.
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    \3\ Capitalized terms not otherwise defined herein shall have 
the meanings set forth in the BOX Rules.
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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 amend Chapter V, 
Section 14 of the BOX Rules to clarify the treatment of Market Orders 
to sell and BOX-Top Orders to sell when the highest bid on BOX is zero 
in the options series for a particular order (``Zero Bid Order''). 
Currently, Section 14 states, in part, that: ``[i]n the case where the 
lowest offer for any options contract is $.05, and an Options 
Participant enters a Market Order to sell that series, any such Market 
Order shall be considered a Limit Order to sell at a price of $.05.'' 
\4\
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    \4\ See Chapter V, Section 14 of the BOX Rules.
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    The Exchange seeks to amend Chapter V, Section 14 of the BOX Rules 
to (1) clarify the specific circumstances under which an order will be 
considered a Zero Bid Order, (2) address the treatment of Zero Bid 
Orders in options classes that trade in other than $.05 increments, and 
(3) address the treatment of Zero Bid Orders that would cause a locked 
or crossed market.
    The Exchange proposes to amend Section 14 so that it will apply 
equally to Market Orders to sell and BOX-Top Orders to sell when the 
highest bid on BOX is zero in the options series. In this case such 
Zero Bid Orders shall be considered a Limit Order to sell at a price, 
above zero, that is equal to the minimum trading increment applicable 
to that particular options series.
    Consequently, where the BOX market displays a zero bid and the 
options

[[Page 9841]]

series is subject to the Penny Pilot Program,\5\ the Zero Bid Order 
will be considered a Limit Order to sell at a price of $.01. If the 
options series is not subject to the Penny Pilot Program, the Zero Bid 
Order will be considered a Limit Order to sell at a price of $.05 or 
$.10, depending upon the minimum trading increment for the specific 
options series of the Zero Bid Order.
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    \5\ BOX may trade options contracts in one-cent increments in 
certain approved issues through March 27, 2009, as part of the Penny 
Pilot Program. See Securities Exchange Act Release No. 56566 
(September 27, 2007), 72 FR 56400 (October 3, 2007) (SR-BSE-2007-
40).
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    The Exchange also seeks to clarify that if the resulting Limit 
Order would cause either a locked or crossed market, then the original 
Market Order or BOX-Top Order will be rejected by the Trading Host.
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 promote 
just and equitable principles of trade, to prevent fraudulent and 
manipulative acts, to foster cooperation and coordination with persons 
engaged in 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. The proposed amendments will give greater 
clarification to Options Participants regarding the handling of Zero 
Bid Orders and provide enhanced treatment of such orders on BOX.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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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 self-regulatory organization 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.

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 rule-comments@sec.gov. Please include 
File Number SR-BX-2009-014 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-2009-014. 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, 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-2009-014 and should be submitted on 
or before March 27, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4769 Filed 3-5-09; 8:45 am]

BILLING CODE 8011-01-P