Document ID: SEC-2012-1208-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2012-07-26T04:00Z

[Federal Register Volume 77, Number 144 (Thursday, July 26, 2012)]
[Notices]
[Pages 43883-43885]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18215]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67474; File No. SR-BX-2012-051]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Routing Fees

July 20, 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 July 10, 2012, NASDAQ OMX BX, Inc. (``BX'' or ``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 Exchange proposes to amend Chapter XV, Section 2 entitled ``BX 
Options Market--Fees and Rebates'' to amend a Customer fee for routing 
options to The NASDAQ Options Market (``NOM'').
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=BXRulefilings, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

[[Page 43884]]

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 Exchange recently filed a proposal to adopt fees for routing 
contracts to markets other the BX Options market.\3\ Specifically, the 
Exchange adopted the following routing fees in Chapter XV, Section 
2(4):
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    \3\ See Securities Exchange Act Release No. 67339 (July 3, 
2012), 77 FR 405688 (July 10, 2012) (SR-BX-2012-043).

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                                                                                 Firm/market
                         Exchange                               Customer        maker/broker-     Professional
                                                                                   dealer
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BATS (Penny Pilot)........................................             $0.55             $0.55             $0.55
BOX.......................................................              0.11              0.55              0.11
CBOE......................................................              0.11              0.55              0.31
CBOE orders greater than 99 contracts in ETFs, ETNs and                 0.29               N/A              0.31
 HOLDRS)..................................................
C2........................................................              0.55              0.55              0.55
ISE (Standard)............................................              0.11              0.55              0.29
ISE (Select Symbols) *....................................              0.31              0.55              0.39
NOM.......................................................              0.11              0.55              0.55
NYSE Arca (Penny Pilot)...................................              0.55              0.55              0.55
NYSE Amex.................................................              0.11              0.55              0.31
PHLX (for all options than PHLX Select Symbols)...........              0.11              0.55              0.36
PHLX Select Symbols **....................................              0.50              0.55              0.55
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    The Exchange inadvertently noted that the NOM Customer routing fee 
is $0.11 per contract. NOM assesses a Customer Fee to Remove Liquidity 
in Penny Pilot Options of $0.45 per contract.\4\ The routing fees are 
proposed to recoup costs that the Exchange incurs for routing and 
executing certain orders on away markets.
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    \4\ See NOM Rules at Chapter XV, Section 2(4).
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    BX currently recoups clearing and transaction charges incurred by 
the Exchange as well as certain other costs incurred by the Exchange 
when routing to away markets, such as administrative and technical 
costs associated with operating the order router, membership fees at 
away markets, and technical costs associated with routing.\5\ For 
example, BX incurs costs related to the Nasdaq Options Services LLC 
(``NOS''), a member of the Exchange and the Exchange's exclusive order 
router.\6\ Each time NOS routes an order to an away market, NOS is 
charged a $0.06 clearing fee and, in the case of certain exchanges, a 
transaction fee is also charged in certain symbols, which fees are 
passed through to the Exchange. The Exchange proposes to recoup a 
portion of the above costs along with the NOM Customer routing fee of 
$0.45 per contract when routing Customer orders to NOM. The Exchange is 
proposing a NOM Customer routing fee of $0.55 per contract.\7\ While 
the Exchange would incur a cost of $0.56 per contract to route a 
Customer order to NOM, the Exchange has determined to assess a fee of 
$0.55 per contract for routing Customer orders to NOM.
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    \5\ In addition to membership fees and transaction fees, the 
Exchange also incurs an Options Regulatory Fee when routing to an 
away market that assesses that fee.
    \6\ See BX Rules at Chapter VI, Section 11(e) (Order Routing).
    \7\ The Exchange calculates its routing fees by totaling its 
costs which include the remove fee at the away market ($0.45 per 
contract), a $0.06 per contract clearing fee and another $0.05 per 
contract fee associated with administrative and technical costs 
associated with operating NOS. This would total $0.56 per contract 
to route a Customer order to NOM.
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2. Statutory Basis
    BX believes that the proposed rule changes are consistent with the 
provisions of Section 6 of the Act,\8\ in general, and with Section 
6(b)(4) of the Act,\9\ in particular, in that they provide for the 
equitable allocation of reasonable dues, fees and other charges among 
members and issuers and other persons using any facility or system 
which BX operates or controls.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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    The amended NOM Customer routing fee is reasonable because it seeks 
to recoup costs that are incurred by the Exchange when routing Customer 
orders to NOM on behalf of members. Each destination market's 
transaction charge varies and there is a standard clearing charge for 
each transaction incurred by the Exchange along with other 
administrative and technical costs \10\ that are incurred by the 
Exchange. The Exchange believes that the proposed NOM Customer routing 
fee would enable the Exchange to recover the remove fee assessed to 
each market participant by NOM, plus clearing and other administrative 
and technical fees for the execution of orders routed to BX and 
executed on NOM.
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    \10\ The Exchange utilizes the Nasdaq Options Services LLC 
(``NOS''), a member of the Exchange and the Exchange's exclusive 
order router to route orders in options listed and open for trading 
on the BX to destination markets. See Securities Exchange Act 
Release No. 67256 (June 26, 2012) (SR-BX-2012-030).
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    The Exchange also believes that the amended NOM Customer routing 
fee is equitable and not unfairly discriminatory because it would be 
uniformly applied to all market participant Customer orders that are 
routed to NOM to cover the cost to route the order. The Exchange 
applied a similar methodology in calculating the routing fees for each 
market participant by adding not more than a $0.11 per contract fee to 
the away market's remove fee to determine BX routing fees.

B. Self-Regulatory Organization's Statement on Burden on Competition

    BX 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. In addition, a BX Participant may designate an 
order as not available for routing to avoid routing fees.\11\
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    \11\ See BX Rules at Chapter VI, Section 11(e).
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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.

[[Page 43885]]

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\12\ 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. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2012-051 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-2012-051. 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 
10:00 a.m. and 3:00 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-2012-051 and should be 
submitted on or before August 16, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18215 Filed 7-25-12; 8:45 am]
BILLING CODE 8011-01-P