Document ID: SEC-2014-1507-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2014-09-09T04:00Z

[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53490-53492]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21359]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72965; File No. SR-BX-2014-039]

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

September 3, 2014.
    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 August 20, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``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 is filing a proposed rule change to harmonize the 
process by which it collects information from its equity members and 
Options Participants for aggregating the activity of affiliated 
entities for the purposes of assessing charges or credits.
    The Exchange requests that this filing become operative on December 
1, 2014.
    The text of the proposed rule change is set forth below. Proposed 
new language is in italics; deleted text is in brackets.
* * * * *

Chapter XV Options Pricing

    BX Options Market Participants may be subject to the Charges for 
Membership, Services and Equipment in the Rule 7000 Series as well as 
the fees in this Chapter XV. For purposes of assessing fees and paying 
rebates, the following references should serve as guidance.
    The term ``Customer'' or (``C'') applies to any transaction that is 
identified by a Participant for clearing in the Customer range at The 
Options Clearing Corporation (``OCC'') which is not for the account of 
broker or dealer or for the account of a ``Professional'' (as that term 
is defined in Chapter I, Section 1(a)(48)).
    The term ``BX Options Market Maker'' or (``M'') is a Participant 
that has registered as a Market Maker on BX Options pursuant to Chapter 
VII, Section 2, and must also remain in good standing pursuant to 
Chapter VII, Section 4. In order to receive Market Maker pricing in all 
securities, the Participant must be registered as a BX Options Market 
Maker in at least one security.
    The term ``Non-BX Options Market Maker'' or (``O'') is a registered 
market maker on another options exchange that is not a BX Options 
Market Maker. A Non-BX Options Market Maker must append the proper Non-
BX Options Market Maker designation to orders routed to BX Options.
    The term ``Firm'' or (``F'') applies to any transaction that is 
identified by a Participant for clearing in the Firm range at OCC.
    The term ``Professional'' or (``P'') means any person or entity 
that (i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a calendar 
month for its own beneficial account(s) pursuant to Chapter I, Section 
1(a)(48). All Professional orders shall be appropriately marked by 
Participants.
    The term ``Broker-Dealer'' or (``B'') applies to any transaction 
which is not subject to any of the other transaction fees applicable 
within a particular category.
    The term ``Common Ownership'' shall mean Participants under 75% 
common ownership or control.
    (a) For purposes of applying any options transaction fee or rebate 
where the fee assessed, or rebate provided by BX depends upon the 
volume of an Options Participant's activity, an Options Participant may 
request that BX aggregate its activity with the activity of its 
affiliates.
    (1) An Options Participant requesting aggregation of affiliate 
activity shall be required to certify to BX the affiliate status of 
entities whose activity it seeks to aggregate prior to receiving 
approval for aggregation, and shall be required to inform BX 
immediately of any event that causes an entity to cease to be an 
affiliate. BX shall review available information regarding the 
entities, and reserves the right to request additional information to 
verify the affiliate status of an entity. BX shall approve a request 
unless it determines that the certification is not accurate.
    (2) If two or more Options Participants become affiliated on or 
prior to the sixteenth day of a month, and submit the required request 
for aggregation on or prior to the twenty-second day of the month, an 
approval of the request by BX shall be deemed to be effective as of the 
first day of that month. If two or more Options Participants become 
affiliated after the sixteenth day of a month, or submit a request for 
aggregation after the twenty-second day of the month, an approval of 
the request by BX shall be deemed to be effective as of the first day 
of the next calendar month.
    (b) For purposes of applying any options transaction fee or rebate 
where the fee assessed, or rebate provided, by BX depends upon the 
volume of an Options Participant's activity, references to an entity 
(including references to a ``Options Participant'') shall be deemed to 
include the entity and its affiliates that have been approved for 
aggregation.
    (c) For purposes of options pricing, the term ``affiliate'' of an 
Options Participant shall mean any Options Participant under 75% common 
ownership or control of that Options Participant.
    With respect to Chapter XV, Sections 2(1) and (2) the order that is 
received by the trading system first in time shall be considered an 
order adding liquidity and an order that trades against that order 
shall be considered an order removing liquidity.
* * * * *

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 Exchange is proposing to amend BX Options Rules at Chapter XV, 
entitled ``Options Pricing,'' to

[[Page 53491]]

harmonize the process by which the Exchange will collect information 
from Options Participants that desire their activity to be aggregated 
for the purposes of assessing charges or credits with the process 
currently required for equity members on BX. The Exchange proposes to 
adopt the process that is used by equity members today without changing 
that process. The Exchange believes that this filing is non-
controversial because the process, as proposed, will not change.
    Today, equity members may aggregate affiliate activity based on 
volume of activity for purposes of pricing.\3\ Today, the Exchange does 
not offer the ability to aggregate pricing to its Options Participants. 
The Exchange is proposing to define Common Ownership, in the same 
manner it is defined today for options participants at The NASDAQ 
Options Market LLC (``NOM'') and NASDAQ OMX PHLX LLC (``Phlx''). The 
term ``Common Ownership'' means Participants under 75 percent common 
ownership or control. The Exchange proposes to define Common Ownership 
in the instance that BX Options offered the ability to aggregate 
pricing. Further, the Exchange proposes to adopt the same process that 
exists today for equity members with respect to the manner in which it 
would collect information to aggregate pricing.
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    \3\ See BX Rule 7027(a).
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    Today, a BX equity member requesting aggregation of affiliate 
activity is required to certify to BX the affiliate status of entities 
whose activity it seeks to aggregate prior to receiving approval for 
aggregation, and also is required to inform BX immediately of any event 
that causes an entity to cease to be an affiliate. BX reviews available 
information regarding the entities, and reserves the right to request 
additional information to verify the affiliate status of an entity. BX 
approves a request unless it determines that the certification is not 
accurate. Further, if two or more members become affiliated on or prior 
to the sixteenth day of a month, and submit the required request for 
aggregation on or prior to the twenty-second day of the month, an 
approval of the request by BX is deemed to be effective as of the first 
day of that month. If two or more members become affiliated after the 
sixteenth day of a month, or submit a request for aggregation after the 
twenty-second day of the month, an approval of the request by BX is 
deemed to be effective as of the first day of the next calendar month.
    The Exchange proposes to amend BX Options Rules at Chapter XV to 
adopt language consistent with the requirements applied today to BX 
equity members and require BX Options Participants to provide the same 
type of information in order to receive aggregated pricing.
    The Exchange believes that harmonizing the Options Rules of BX to 
conform to those of NOM and Phlx with respect to Common Ownership and 
also requiring all BX members, equity and options, to provide 
information with respect to affiliates promotes consistency and avoids 
confusion.
    The Exchange proposes to apply this pricing as of December 1, 2014 
and issue an Options Trader Alert to its members.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \4\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \5\ in particular, that it is designed to promote 
just and equitable principles of trade, 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, 
in that the proposal will harmonize its Common Ownership Rules with 
those of NOM and Phlx and also will harmonize the process by which the 
Exchange collects information from equity members and Options 
Participants regarding the aggregation of activity of affiliated 
entities for the purpose of assessing charges or credits.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that applying the same 75% standard for 
Common Ownership as NOM and Phlx will provide consistency among these 
exchanges with respect to aggregating volume. In addition, the Exchange 
believes that harmonizing the process by which the Exchange collects 
information related to aggregation for equity members and Options 
Participants will provide consistency to market participants with 
respect to meeting the requirements to aggregate on BX. Also, the 
Exchange believes that adopting this method for collecting such 
information on aggregated pricing, with respect to Options 
Participants, will ensure proper validation for firms entitled to the 
aggregation.

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. The Exchange is merely seeking to harmonize 
the manner in which it aggregates pricing and collects information 
related to the aggregation of activity of affiliated entities for the 
purposes of assessing charges or credits for equity members and Options 
Participants. The Exchange intends to apply a uniform process to 
request such aggregation for all BX members and BX Options 
Participants.

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) \6\ of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6)(iii).
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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. If the 
Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule should be approved 
or disapproved.

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-2014-039 on the subject line.

[[Page 53492]]

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2014-039. 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-2014-039 and should be 
submitted on or before September 30, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-21359 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P