Document ID: SEC-2012-0166-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2012-01-31T05:00Z

[Federal Register Volume 77, Number 20 (Tuesday, January 31, 2012)]
[Notices]
[Pages 4850-4851]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-2037]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66238; File No. SR-BX-2012-005]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Expand 
the Short Term Option Series Program

January 25, 2012.
    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 January 17, 2012, NASDAQ OMX BX, Inc. (the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Exchange has designated the 
proposed rule change as constituting a non-controversial rule change 
under Rule 19b-4(f)(6) under the Act,\3\ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Trading Rules of the Boston 
Options Exchange Group, LLC (``BOX'') to expand the Short Term Option 
Series Program.

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 this proposed rule change is to amend Supplementary 
Material .07 to Chapter IV, Section 6 (Series of Options Open for 
Trading) and Supplementary Material .02 to Chapter XIV, Section 10 
(Terms of Index Options Contracts) to expand the Short Term Option 
Series Program (``Weeklys Program'').\4\ Currently, BOX may select up 
to 25 currently listed option classes on which Weekly options may be 
opened in the Weeklys Program. The Exchange proposes to increase this 
to thirty option classes to participate in the Weeklys Program. This is 
a competitive filing and is based on recently approved filings 
submitted by The NASDAQ Stock Market LLC for the NASDAQ Options Market 
(``NOM'') and NASDAQ OMX PHLX, Inc. (``PHLX'').\5\
---------------------------------------------------------------------------

    \4\ The Exchange adopted the Weeklys Program on July 15, 2010. 
See Securities Exchange Act Release No. 62505 (July 15, 2010), 75 FR 
42792 (July 22, 2010) (SR-BX-2010-047).
    \5\ See Securities Exchange Act Release Nos. 65775 (November 17, 
2011), 76 FR 72473 (November 23, 2011) (SR-NASDAQ-2011-138) and 
65776 (November 17, 2011), 76 FR 72482 (November 23, 2011) (SR-PHLX-
2011-131).
---------------------------------------------------------------------------

    On November 17, 2011, the Exchange amended the BOX Weeklys Program 
by increasing the number of strikes that may be listed per class (from 
20 to 30) that participates in the Weeklys Program, and by increasing 
the number of classes (from 15 to 25) that are eligible to participate 
in the BOX Weeklys Program.\6\ On that same day, NOM and PHLX each 
increased the number of classes that are eligible to participate in 
their Weeklys Programs from 15 classes to 30 classes. As a result, BOX 
is competitively disadvantaged since it operates a substantially 
similar Weeklys Program as NOM and PHLX but is limited to selecting 
only 25 classes that may participate in its Weeklys Program (whereas 
PHLX and NOM may each select 30 classes).\7\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 65773 (November 17, 
2011), 76 FR 72490 (November 23, 2011) (SR-BX-2011-075).
    \7\ BOX is permitted to list Weekly options ``on any option 
classes that are selected by other securities exchanges that employ 
a similar program under their respective rules.'' See Supplementary 
Material .07 to Chapter IV, Section 6, and Supplementary Material 
.02 to Chapter XIV, Section 10 of the BOX Trading Rules.
---------------------------------------------------------------------------

    The Exchange is not proposing any changes to these additional 
Weeklys Program limitations other than to increase from 25 to 30 the 
number of option classes that may participate in the Weeklys Program.
    BOX notes that the Weeklys Program has been well-received by market 
participants, in particular by retail investors. BOX believes a modest 
increase to the number of classes that may participate in the Weeklys 
Program, such as the one proposed in this rule filing, will permit BOX 
to meet increased customer demand and provide market participants with 
the ability to hedge in a greater number of option classes.
    With regard to the impact of this proposal on system capacity, BOX 
has analyzed its capacity and represents that it and the Options Price 
Reporting Authority (``OPRA'') have the necessary systems capacity to 
handle the potential additional traffic associated with trading of an 
expanded number of classes that participate in the Weeklys Program.
    The proposed increase to the number of classes eligible to 
participate in the

[[Page 4851]]

Weeklys Program is required for competitive purposes as well as to 
ensure consistency and uniformity among the competing options exchanges 
that have adopted similar Weeklys Programs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 \8\ (the 
``Act'') in general, and furthers the objectives of Section 6(b)(5) of 
the Act \9\ 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. The Exchange believes that expanding the current short 
term options program will result in a continuing benefit to investors 
by giving them more flexibility to closely tailor their investment 
decisions and hedging decisions in greater number of securities. The 
Exchange believes that expanding the current program would provide the 
investing public and other market participants increased opportunities 
because an expanded program would provide market participants 
additional opportunities to hedge their investment thus allowing these 
investors to better manage their risk exposure. While the expansion of 
the Weeklys Program will generate additional quote traffic, the 
Exchange does not believe that this increased traffic will become 
unmanageable since the proposal remains limited to a fixed number of 
classes. Further, the Exchange does not believe that the proposed rule 
change will result in a material proliferation of additional series 
because it [sic] the number of series per class remains limited, and 
the Exchange does not believe that the additional price points will 
result in fractured liquidity.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
---------------------------------------------------------------------------

    \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 the Exchange to give the Commission written notice of the 
Exchange's 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 the five-day prefiling requirement.
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal is substantially similar to those of 
other exchanges that have been approved by the Commission that permit 
such exchanges to select up to 30 classes to participate in their 
respective short term option series programs.\12\ Therefore, the 
Commission designates the proposal operative upon filing.\13\
---------------------------------------------------------------------------

    \12\ See supra note 5.
    \13\ For 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. 
78c(f).
---------------------------------------------------------------------------

    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-BX-2012-005 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-2012-005. 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 
a.m. and 3 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-BX-2012-005 and should be 
submitted on or before February 21, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-2037 Filed 1-30-12; 8:45 am]
BILLING CODE 8011-01-P