Document ID: SEC-2009-0772-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Order Approving Proposed Rule Change Regarding Market Maker Obligations
Posted Date: 2009-06-09T04:00Z

[Federal Register: June 9, 2009 (Volume 74, Number 109)]
[Notices]
[Page 27374-27375]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jn09-155]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60026; File No. SR-BX-2009-020]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Order
Approving Proposed Rule Change Regarding Market Maker Obligations

June 2, 2009.
    On April 8, 2009, NASDAQ OMX BX, Inc. (``Exchange'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder,\2\ a proposed rule change regarding market
maker obligations. The proposal was published in the Federal Register
on April 28, 2009.\3\ The Commission received no comments on the
proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59804 (April 21,
2009), 74 FR 19256 (April 28, 2009).
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    The Exchange proposes to amend Chapter VI, Section 6 (Market Maker
Quotations) of the BOX Rules to change certain obligations of a Market
Maker regarding the Request for Quote (``RFQ'') process. The proposed
rule change in Section 6(b)(ii) clarifies that within three seconds of
receiving an RFQ, a Market Maker must continuously maintain, without
interruption, a valid two-sided quotation for at least thirty seconds.
If however, during that thirty second time span, the quotation becomes
invalid, the Market Maker must post a valid two sided quotation as soon
as practicable, but within five seconds. The Exchange also proposes to
remove Section 6(d)(ii), which provided that a Market Maker may be
required to submit a single quotation or maintain continuous quotations
in one or more series when called upon by an Options Official, if the
official believes it is necessary to do so in the interest of a fair
and orderly market, and replace it with Section 6(b)(iv). As proposed,
Section 6(b)(iv) will provide that an Options Official may, in the
interest of a fair and orderly market, call upon Market Makers to post
a quotation in the same manner as if an RFQ was issued by an Options
Participant.
    Finally, the Exchange proposes to amend Section 6(d) to establish
market maker quoting standards based upon a percentage of time
measurement. As proposed, the section will clarify that ``continuous
quoting'' reflects quoting parameters based on a daily time measurement
and will remove

[[Page 27375]]

references to series and replace them with class. Specifically, a
Market Maker will be required to submit valid quotations on a daily
basis for at least eighty percent (80%) of the time that a class is
open for trading in at least ninety percent (90%) of its appointed
classes. Further, on a daily basis, a Market Maker will be required to
post valid quotations at least sixty percent (60%) of the time in each
of its appointed classes during the time that the class is open for
trading. The Exchange states that this proposed change should allow
Market Makers to focus their strategy on the entire class to which it
is appointed, rather than implementing a strategy utilizing each series
within a class. At the same time, the proposal 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.
    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\4\
In particular, the Commission finds that the proposal is consistent
with Section 6(b)(5) of the Act,\5\ which requires that an exchange
have rules 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
Commission notes that under the proposal, Market Maker quoting
obligations will be based on a daily time measurement, as opposed to a
requirement to continuously provide quotations in a specified
percentage of appointed options. Market Makers will, however, still be
subject to requirements on how often they must quote. Specifically,
Market Makers will be required to submit valid quotations on a daily
basis for at least 80% of the time that a class is open in 90% of their
appointed classes and be required to post valid quotations at least 60%
of the time in each of its appointed classes during the time that the
class is open for trading. The Commission also notes that the proposal
helps to clarify Market Maker quoting obligations in response to an RFQ
or a request by an Options Official to quote in the interest of a fair
and orderly market. The Commission believes these changes are
consistent with the Act.
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    \4\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
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Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\6\ that the proposed rule change (SR-BX-2009-020) be, and it
hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13396 Filed 6-8-09; 8:45 am]

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