Document ID: SEC-2009-0929-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Penny Pilot Program on the Boston Options Exchange Facility
Posted Date: 2009-07-09T04:00Z

[Federal Register: July 9, 2009 (Volume 74, Number 130)]
[Notices]               
[Page 32998-33000]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jy09-130]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60213; File No. SR-BX-2009-032]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Penny Pilot Program on the Boston Options Exchange Facility

July 1, 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 June 25, 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 Exchange filed the 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and 
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective 
upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 33 (Penny Pilot 
Program) of the Rules of the Boston Options Exchange Group, LLC 
(``BOX'') to extend, through October 31, 2009, the pilot program that 
permits certain classes to be quoted in penny increments on BOX 
(``Penny Pilot Program''). 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/.

[[Page 32999]]

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 proposed rule change seeks to extend the effective date of the 
Penny Pilot Program on BOX for approximately four additional months, 
through October 31, 2009.\5\ The Penny Pilot Program permits certain 
classes to be quoted in penny increments on BOX. The minimum price 
variation for all classes included in the Penny Pilot Program, except 
for the QQQQs, will continue to be $0.01 for all quotations in option 
series that are quoted at less than $3 per contract and $0.05 for all 
quotations in option series that are quoted at $3 per contract or 
greater. The QQQQs will continue to be quoted in $0.01 increments for 
all options series. The Exchange is not currently proposing any changes 
to the classes included within the Penny Pilot Program.
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    \5\ The Penny Pilot Program has been in effect on BOX since 
January 26, 2007. See Securities Exchange Act Release No. 55155 
(January 23, 2007), 72 FR 4741 (February 1, 2007) (SR-BSE-2006-49). 
The Penny Pilot Program was later extended through September 27, 
2007. See Securities Exchange Act Release No. 56149 (July 26, 2007), 
72 FR 42450 (August 2, 2007) (SR-BSE-2007-38). A subsequent rule 
filing by the Exchange on September 27, 2007 initiated a two-phased 
expansion 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). See also Securities Exchange Act Release No. 
57566 (March 26, 2008), 73 FR 18013 (April 2, 2008) (SR-BSE-2008-
20). The Penny Pilot Program was later extended and is currently set 
to expire on July 3, 2009. See Securities Exchange Act Release No. 
59629 (March 26, 2009), 74 FR 15021 (April 2, 2009) (SR-BX-2009-
017). The extension of the effective date is the only change to the 
Penny Pilot Program being proposed at this time.
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    BOX will deliver a report (``Penny Pilot Report'') to the 
Commission which will be composed of data from approximately three 
months of trading, from May 1, 2009 through July 31, 2009. This Penny 
Pilot Report will be delivered to the Commission during the month of 
August 2009. The Penny Pilot Report will analyze the impact of penny 
pricing on market quality and options system capacity.\6\
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    \6\ BOX has previously delivered several Penny Pilot Reports to 
the Commission composed of data from preceding time periods during 
which the Penny Pilot Program has been in effect on BOX.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5) of the Act,\8\ 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. 
Specifically, the proposed extension will allow the Penny Pilot Program 
to remain in effect on BOX without interruption.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) \9\ of the Act and subparagraph (f)(6) of Rule 19b-
4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent 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 date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative for 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \12\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing. The Exchange states that such 
waiver will permit the Exchange to immediately implement the proposed 
rule change without interruption of the Penny Pilot Program and allow 
BOX to remain competitive with other exchanges.
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because such waiver will allow the Penny Pilot Program to continue 
without interruption through October 31, 2009.\13\ Accordingly, the 
Commission designates the proposed rule change operative upon filing 
with the Commission.
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    \13\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78(c)(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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 rule-comments@sec.gov. Please include 
File Number SR-BX-2009-032 on the subject line.

[[Page 33000]]

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-2009-032. 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-2009-032 and should be 
submitted on or before July 30, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-16181 Filed 7-8-09; 8:45 am]

BILLING CODE 8010-01-P