Document ID: SEC-2011-0771-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX
Posted Date: 2011-06-06T04:00Z

[Federal Register Volume 76, Number 108 (Monday, June 6, 2011)]
[Notices]
[Pages 32383-32385]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-13903]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64570; File No. SR-BX-2011-029]

Self-Regulatory Organizations; NASDAQ OMX BX; Notice of Filing 
and Immediate Effectiveness of a Proposal To Permit the Exchange To 
List Series With Additional Expiration Months If Such Series Are Listed 
on Another Exchange

May 31, 2011.
    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 May 23, 2011, NASDAQ OMX BX (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 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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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 the Rules of the Boston Options 
Exchange Group, LLC (``BOX'') to permit the Exchange to list additional 
expiration months if such expiration months are listed on another 
exchange. The text of the proposed rule change is available at the 
Exchange's principal office, at http://www.nasdaqomxbx.cchwallstreet.com, the Commission's Public Reference Room, and at the 
Commission's Web site at http://www.sec.gov.

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 the proposed rule change is to amend the BOX Trading 
Rules to permit the Exchange to list additional expiration months if 
such expiration months are listed on another exchange. This filing is 
based on a filing previously submitted by the International Securities 
Exchange, LLC.\4\
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    \4\ See Securities Exchange Act Release No. 64343 (April 26, 
2011) 76 FR 24546 (May 2, 2011) (SR-ISE-2011-26).
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    Under current Chapter IV, Section 6 of the BOX Trading Rules, the 
Exchange usually will open four (4) Expiration months for each type of 
option of a class of options open for trading on BOX: the first two (2) 
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 by the Exchange for that 
specific class. For example, if the Exchange listed in late September a 
new stock option on a January-April-July-October quarterly cycle, the 
Exchange would list the two nearest-term months (October and November) 
and the next two expiration months of the cycle (January and April). 
Further, when the October series expire, the Exchange would add the 
December series as the next nearest month. And when the November series 
expire, the Exchange would add the July series as the next month of the 
cycle.

[[Page 32384]]

    In 2010, the Exchange established a pilot program to add up to two 
additional expiration months for each class of options opened for 
trading on BOX (the ``Additional Expiration Months Pilot'').\5\ Under 
the Additional Expiration Months Pilot, the Exchange lists expiration 
months that are considered ``mid-month.'' For example, for options 
classes that have expiration months of October, November, January, and 
April, the Exchange lists the December series. For options classes that 
have expiration months of October, November, February and May, the 
Exchange lists the December and January series. The listing of 
additional expiration months has been well-received by BOX Options 
Participants and has had a very limited impact on system resources.
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    \5\ See Securities Exchange Act Release No. 63321 (November 16, 
2010) 75 FR 71163 (November 22, 2010) (SR-BX-2010-077).
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    ISE submitted a similar filing to one submitted by NASDAQ OMX PHLX, 
Inc. (``PHLX'').\6\ PHLX recently submitted a filing to adopt rules 
that permit it to list an unlimited number of expiration months and 
series for each class of standard options opened for trading on that 
exchange. Specifically, PHLX amended its rules so that it can open ``at 
least one expiration month'' for each class of standard options open 
for trading on that exchange. Consequently, while the Exchange is 
currently restricted to listing a limited number of expiration months 
that are permissible under its rules and the Additional Expiration 
Months Pilot, PHLX has the ability to list an unlimited number of 
expiration months, including those that the Exchange would not be able 
to currently list under its rules. Indeed, PHLX has listed additional 
expiration months that no other market, including the Exchange, could 
list at the time they were added. For example, in February 2011, PHLX 
listed the October 2011 expiration in Omnicare, Inc. (ticker: OCR). 
PHLX was able to list that expiration month based on its amended rule. 
Meanwhile, the Exchange could not list the October 2011 series under 
Chapter IV, Section 6(a) of the BOX Trading Rules because the standard 
expiration months for OCR in February are March, April, June, and 
September. The Exchange also could not list the October 2011 series as 
part of the Additional Expiration Months Pilot because OCR is not one 
of the classes selected by BOX to participate in the Additional 
Expiration Months Pilot. As a result, PHLX was the only exchange that 
listed the October 2011 series in OCR and traded that series without 
any competition until recently when other options exchanges amended 
their rules to permit its listing.
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    \6\ See Securities Exchange Act Release No. 63700 (January 11, 
2011) 76 FR 2931 (January 18, 2011) (SR-PHLX-2011-04). In its 
filing, PHLX cites to the Commission's approval of the NASDAQ 
Options Market and rules pertaining thereto as the basis for making 
the change to its rules.
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    For competitive reasons, the Exchange now proposes to add new 
Supplementary Material .09 to its Chapter IV, Section 6 and 
Supplementary Material .03 to Chapter XIV, Section 10 of the BOX 
Trading Rules to permit the Exchange to list additional expiration 
months on options classes opened for trading on BOX if such expiration 
months are opened for trading on at least one other national securities 
exchange. This proposed rule change will allow the Exchange to match 
the listing of expiration months that PHLX, NOM, ISE, or other 
exchanges list in the event the Exchange is not able to list those 
expiration months because they do not comport to BOX Trading Rules or 
the Additional Expiration Months Pilot.
    BOX notes that the proposed rule change affords additional 
flexibility in that it will permit listing those additional expiration 
months that have an actual demand from market participants, thereby 
potentially reducing the proliferation of classes and series. The 
Exchange believes the proposed rule change is proper, and indeed 
necessary, in light of the need to have rules that permit the listing 
of identical expiration months across exchanges for products that are 
multiply-listed and fungible with one another.
    BOX believes that the proposed rule change should encourage 
competition and be beneficial to traders and market participants by 
providing them with a means to trade on BOX securities that are listed 
and traded on other exchanges.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5) of the Act,\8\ 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, the proposed rule change will permit the Exchange to 
accommodate requests made by BOX Option Participants and other market 
participants to list the additional expiration months and thus 
encourage competition without harming investors or the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    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 \9\ and Rule 19b-
(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 prefiling 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 should promote competition by allowing 
the Exchange, without undue delay, to list and trade option series that 
are trading on other options exchanges. Therefore, the Commission 
designates the proposal operative upon filing.\11\
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    \11\ 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

[[Page 32385]]

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-2011-029 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-2011-029. 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 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-2011-029 and should be 
submitted on or before June 27, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\

    \12\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-13903 Filed 6-3-11; 8:45 am]
BILLING CODE 8011-01-P