Document ID: SEC-2010-1776-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2010-11-22T05:00Z

[Federal Register Volume 75, Number 224 (Monday, November 22, 2010)]
[Notices]
[Pages 71163-71164]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-29352]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63321; File No. SR-BX-2010-077]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Establish 
a Pilot Program to List Series With Additional Expiration Months for 
Each Class of Options Opened for Trading on BOX

November 16, 2010.
    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 10, 2010, 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 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 Exchange proposes to amend Chapter IV, Section 6 (Series of 
Options Contracts Open for Trading) of the Rules of the Boston Options 
Exchange Group, LLC (``BOX'') to adopt a Pilot Program to list 
additional expiration months for each class of options opened for 
trading on BOX. The text of the proposed rule change is available from 
the principal office of the Exchange, on the Commission's Web site at 
http://www.sec.gov, 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 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 Exchange proposes to adopt a Pilot Program to list additional 
expiration months for each class of options opened for trading on BOX, 
by adding proposed Supplementary Material .08 in Chapter IV, Section 6 
of the BOX Rules.
    Pursuant to Chapter IV, Section 6(e) of the BOX Rules, BOX 
currently opens four expiration months for each class of options open 
for trading on BOX, the first two being the two nearest months, 
regardless of the quarterly cycle on which that class trades; the third 
and fourth being the next two months of the quarterly cycle previously 
designated for that specific class. For example, if BOX listed in late 
May a new equity option on a January-April-July-October quarterly 
cycle, BOX would list the two nearest term months (June and July) and 
the next two months of the cycle (October and January). When the June 
series expires, BOX would add the August series as the next nearest 
month. And when the July series expires, BOX would add the September 
series.
    BOX believes that there is market demand for a greater number of 
expiration months. The Exchange therefore proposes to adopt a Pilot 
Program pursuant to which it will list up to an additional two 
expiration months, for a total of six expiration months for each class 
of options open for trading on BOX. The program will be effective on a 
pilot basis immediately after approval is received to establish the 
pilot program, and expiring on October 31, 2011. Under the proposal, 
the additional months listed pursuant to the pilot program will result 
in four consecutive expiration months plus two months from the 
quarterly cycle. For example, for option classes in the January cycle 
that have expiration months of June, July, October, and January, BOX 
would additionally list the August and September series. For options 
classes in the February quarterly cycle that have expiration months of 
October, November, February, and May, BOX would additionally list the 
December and January series. Under the proposal, no additional LEAP 
Series will be created.
    BOX seeks to limit the proposed rule change to 20 actively traded 
options classes. By limiting the pilot to a small number of classes, 
BOX will be able to gauge interest in the pilot while limiting any 
additional demands on system resources. It has been estimated that this 
pilot could add up to six or seven percent to current quote traffic, 
although changes in market maker quoting behavior may reduce that 
increase by up to half. BOX believes that a limited pilot is a prudent 
step to determine actual market demand for additional expiration 
months.
    If the Exchange were to propose an extension or an expansion of the 
pilot program, or should the Exchange propose to make the pilot program 
permanent, BOX will submit, along with any filing proposing such 
amendments to the pilot program, a pilot program report (``Report'') 
that will provide an analysis of the Pilot Program covering the first 
nine months of the pilot program and shall submit the Report to the 
Commission at least sixty (60) days prior to the expiration date of the 
pilot program. The Report will include, at a minimum: (1) Data and 
written analysis on the open interest and trading volume in the classes 
for which additional expiration months were opened; (2) an assessment 
of the appropriateness of the options classes selected for the pilot 
program; (3) an assessment of the impact of the pilot program on the 
capacity on BOX, OPRA, and on market data vendors (to the extent data 
from market data vendors is available); (4) any capacity problems or 
other problems that arose during the operation of the pilot program and 
how BOX addressed such problems; (5) any complaints that BOX or the 
Exchange received during the operation of the pilot program and how BOX 
and the Exchange addressed them; and (6) any additional information 
that would assist the Commission in assessing the operation of the 
Pilot Program.
    Finally, BOX represents that it has the necessary systems capacity 
to support new options series that will result from the introduction of 
additional expiration months listed pursuant to this proposed rule 
change.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\3\

[[Page 71164]]

in general, and Section 6(b)(5) of the Act,\4\ in particular, in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, promote just and equitable principles of trade, foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and 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. In 
particular, the Exchange believes listing additional near-term 
expiration months will offer investors more variety in trading options 
series that were previously not available. The Exchange believes this 
proposal will also generate additional volume in these options classes 
without significantly taxing system resources.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 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 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 \5\ and Rule 19b-
4(f)(6) thereunder.\6\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 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 
Commission has waived the five-day pre-filing requirement in this 
case.
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    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 that of 
another exchange that has been approved by the Commission.\7\ 
Therefore, the Commission designates the proposal operative upon 
filing.\8\
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    \7\ See Securities Exchange Act Release No. 63104 (October 14, 
2010), 75 FR 64773 (October 20, 2010) (Approving Additional 
Expiration Months Pilot Program).
    \8\ 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).
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    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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-BX-2010-077 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-2010-077. 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 website 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-2010-077 and should be 
submitted on or before December 13, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-29352 Filed 11-19-10; 8:45 am]
BILLING CODE 8011-01-P