Document ID: SEC-2010-1954-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2010-12-20T05:00Z

[Federal Register: December 20, 2010 (Volume 75, Number 243)]
[Notices]               
[Page 79432-79433]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de10-976]                         

[[Page 79432]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63540; File No. SR-BX-2010-080]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Continue 
the Practice Governing the Exchange's Directed Order Process on BOX and 
Maintain the Effective Date Until December 31, 2010

December 14, 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 December 13, 2010, 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 Commission is 
publishing this notice to solicit comments on the proposed rule 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 continue the practice governing the 
Exchange's Directed Order \3\ process (``Pilot Program'') on the Boston 
Options Exchange (``BOX'') and maintain the effective date until 
December 31, 2010. The text of the proposed rule change is available on 
the Exchange's Web site at http://nasdaqomxbx.cchwallstreet.com/
NASDAQOMXBX/Filings/, on the Commission's Web site at http://
www.sec.gov, at the Exchange, and at the Commission's Public Reference 
Room.
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    \3\ Capitalized terms not otherwise defined herein shall have 
the meanings prescribed within the BOX Rules.
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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 continue the practice governing the 
Exchange's Directed Order \4\ process (``Pilot Program'') on the Boston 
Options Exchange (``BOX'') and maintain the effective date until 
December 31, 2010. On December 3, 2010 the Exchange proposed an 
amendment to the BOX Rules governing the Directed Order process on BOX 
to permit Executing Participants (``EPs'') to only receive Directed 
Orders through the Trading Host from Order Flow Providers (``OFPs'') 
whom the EP has designated.\5\ Shortly thereafter, the original 
corresponding proposal (``BSE-2005-52'') will be withdrawn.\6\ Upon the 
withdrawal of BSE-2005-52, the original Pilot Program (``BSE-2006-
14''), which clarified that Directed Orders on BOX are not anonymous 
and has been operating successfully for over four-and-a-half years,\7\ 
will automatically expire.\8\ BSE-2006-14 has been in effect since 
March 14, 2006 as the Securities and Exchange Commission 
(``Commission'') solicited comments and considered its effect on price 
improvement.\9\ So as to allow BOX's current Directed Order rule and 
process to continue on an uninterrupted basis, this new proposed Pilot 
Program is designed to function in exactly the same manner as under 
BSE-2006-14.\10\ The Exchange believes that the proposal does not raise 
any additional or substantive issues from those raised when the 
Exchange sought to implement BSE-2006-14. Additionally, the expiration 
date will remain December 31, 2010.
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    \4\ Capitalized terms not otherwise defined herein shall have 
the meanings prescribed within the BOX Rules.
    \5\ See Securities Exchange Act Release No. 63539 (December 3, 
2010) (SR-BX-2010-079).
    \6\ See Securities Exchange Act Release No. 53357 (February 23, 
2006), 71 FR 10730 (March 2, 2006) (SR-BSE-2005-52). Shortly after 
the posting of the proposed new Pilot Program and BX-2010-079 on the 
Commission's Web site, the Exchange plans to withdraw BSE-2005-52.
    \7\ See Securities Exchange Act Release Nos. 34-53516 (March 20, 
2006), 71 FR 15232 (March 27, 2006) (SR-BSE-2006-14); 54082 (June 
30, 2006), 71 FR 38913 (July 10, 2006) (SR-BSE-2006-29); 54469 
(September 19, 2006), 71 FR 56201 (September 26, 2006) (SR-BSE-2006-
38); 55139 (January 19, 2007), 72 FR 3448 (January 25, 2007) (SR-
BSE-2007-01); 56014 (July 5, 2007), 72 FR 38104 (July 12, 2007) (SR-
BSE-2007-31); 57195 (January 24, 2008), 73 FR 5610 (January 30, 
2008) (SR-BSE-2008-04); 59311 (January 28, 2009), 74 FR 6071 
(February 4, 2009) (SR-BX-2009-007); 59983 (May 27, 2009), 74 FR 
26445 (June 2, 2009) (SR-BX-2009-027); 61065 (November 25, 2009), 74 
FR 62860 (December 1, 2009) (SR-BX-2009-076); 61577 (February 24, 
2010), 75 FR 9464 (March 2, 2010) (SR-BX-2010-017); and 61929 (April 
16, 2010), 75 FR 21085 (April 22, 2010) (SR-BX-2010-031).
    \8\ See Securities Exchange Act Release Nos. 62366 (June 23, 
2010), 75 FR 37863 (June 30, 2010) (SR-BX-2010-041).
    \9\ See BSE-2006-14.
    \10\ See Securities Exchange Act Release No. 61929 (April 16, 
2010), 75 FR 21085 (April 22, 2010) (SR-BX-2010-031).
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    This pilot period will afford the Commission the necessary time to 
consider the Exchange's corresponding proposal to amend the BOX Rules 
to permit EPs to only receive Directed Orders through the Trading Host 
from OFPs whom the EP has designated.\11\ In the event the Commission 
reaches a decision with respect to the corresponding Exchange proposal 
to amend the BOX Rules before December 31, 2010, the proposed Pilot 
Program governing the Directed Order process on BOX will cease to be 
effective at the time of that decision.
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    \11\ See Securities Exchange Act Release No. 63539 (December 3, 
2010) (SR-BX-2010-079).
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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,\12\ in general, and Section 
6(b)(5) of the Act,\13\ 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. 
In particular, in order to continue the Directed Order process on an 
uninterrupted basis, the proposal is designed to function in exactly 
the same manner as BOX's current Directed Order process under BSE-2006-
14, clarifying that Directed Orders on BOX are not anonymous.\14\ This 
proposed rule filing seeks to maintain the rule's effectiveness until 
December 31, 2010. This pilot period will afford the Commission the 
necessary time to consider the Exchange's corresponding proposal to 
amend the BOX Rules to permit EPs to only receive Directed Orders 
through the Trading Host from OFPs whom the EP has designated.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ See supra note 10.
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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

[[Page 79433]]

necessary or appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments Regarding 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) \15\ of the Act and Rule 19b-4(f)(6) 
thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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 met this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
may not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \18\ 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, as specified in Rule 19b-
4(f)(6)(iii),\19\ which would make the rule change effective and 
operative upon filing. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because such waiver would continue the pilot for 
Directed Orders that has operated under BSE-2006-14. The Pilot Program 
is designed to function in exactly the same manner as under BSE-2006-
14. A waiver would therefore continue to conform the BOX rules to BOX's 
current practice without interruption and clarify that Directed Orders 
on BOX are not anonymous.\20\ Accordingly, the Commission designates 
the proposed rule change operative upon filing with the Commission.
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ Id.
    \20\ For purposes only of waiving the operative delay for this 
proposal, 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 such 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-2010-080 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-2010-080. 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 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 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 publicly available. All submissions 
should refer to File Number SR-BX-2010-080 and should be submitted on 
or before January 10, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31827 Filed 12-17-10; 8:45 am]
BILLING CODE 8011-01-P