Document ID: SEC-2009-0586-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change Regarding Market Maker Obligations
Posted Date: 2009-04-28T04:00Z

[Federal Register Volume 74, Number 80 (Tuesday, April 28, 2009)]
[Notices]
[Pages 19256-19257]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-9558]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59804; File No. SR-BX-2009-020]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing of Proposed Rule Change Regarding Market Maker Obligations

April 21, 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 April 8, 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 Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change 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 purpose of the proposed rule change is to amend Chapter VI, 
Section 6 (Market Maker Quotations) of the BOX Rules to amend certain 
Market Maker obligations. 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 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
    The purpose of the proposed rule change is to amend Chapter VI, 
Section 6 (Market Maker Quotations) of the BOX Rules to amend certain 
Market Maker obligations. As proposed, the Exchange will amend the 
obligations of a Market Maker regarding the Request for Quote (``RFQ'') 
process. The new language found in section 6(b) clarifies that within 
three seconds of receiving an RFQ that a Market Maker must continuously 
maintain, without interruption, a valid two-sided quote for at least 
thirty seconds. However, if during that thirty second time span, the 
quote becomes invalid,\3\ the Market Maker must as soon as practicable, 
but within five seconds, post a valid two sided quote. In addition, 
current section 6(d)(ii), which provided for a Market Maker to submit a 
quote in the interests of a fair and orderly market when called upon by 
Options Official will be removed. Instead, as proposed, section 
6(b)(iv) will be used for circumstances where an Options Official 
determines, that a Market Maker should be called upon to quote in the 
interests of a fair and orderly market. Specifically, this new section 
will provide that an Options Official may, whenever on the judgment of 
such official, in the interest of a fair and orderly market, call upon 
Market Makers to post a quote in the

[[Page 19257]]

same manner as if an RFQ was issued by an Options Participant. Options 
Participants will receive the message in the same manner whether the 
request is issued by a Participant or an Options Official. Similarly, a 
Market Maker is required to continuously maintain, without 
interruption, a valid two-sided quote for at least thirty seconds. 
However, if during that thirty second time span, the quote becomes 
invalid, the Market Maker must, as soon as practicable, but within five 
seconds post a valid two sided quote.
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    \3\ One example of such a circumstance is an execution resulting 
from that quote.
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    In addition, as proposed, section 6(d) will establish quoting 
standards based upon a percentage of time measurement. The proposal 
will clarify that this section entitled ``continuous quoting'' reflects 
quoting parameters based on a daily time measurement. The proposal also 
seeks to remove references to series and replace them with class. 
Consequently, under the proposal, Market Makers will be required to 
submit valid quotes on a daily basis for at least 80% of the time that 
a class is open in 90% of their appointed classes. In addition, on a 
daily basis, a Market Maker shall post valid quotes at least sixty 
percent (60%) of the time in each of its appointed classes during the 
time that the class is open for trading. Thus, allowing a Market Maker 
to focus their strategy on the entire class to which it was appointed, 
rather than implementing a strategy utilizing each series within a 
class. This allows a Market Maker, if it chooses, to bring more 
liquidity to the more actively traded series, rather than focusing on 
series with less activity.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\4\ in general, and Section 
6(b)(5) of the Act,\5\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, 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. Specifically, the proposal will 
simplify the rule.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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 
result in any burden on competition that is 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-2009-020 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-2009-020. 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 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 available publicly. All 
submissions should refer to File No. SR-BX-2009-020 and should be 
submitted on or before May 19, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-9558 Filed 4-27-09; 8:45 am]
BILLING CODE 8010-01-P