Document ID: SEC-2009-1793-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2009-12-22T05:00Z

[Federal Register: December 22, 2009 (Volume 74, Number 244)]
[Notices]               
[Page 68082-68084]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22de09-73]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61169; File No. SR-BX-2009-078]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend BOX 
Trading Rules Chapters III and XIV

December 15, 2009.
    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 1, 2009, 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 Exchange filed the 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and 
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective 
upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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 add BOX Trading Rules Chapter III, Section 
8(e) and Chapter XIV (Index Rules), Section 7(c) (Exemptions from 
Position Limits) to allow Options Participants to rely upon exemptions 
granted by other exchanges; amend Chapter III, Section 9 (Exercise 
Limits) to clarify that exercise limit exemption [sic] will apply to 
all Options Participants; and add Chapter III, Section 10 (Reports 
Related to Position Limits) to clarify how an Options Participant may 
aggregate its long or short positions for purposes of filing its 
reports of these limits with the Exchange. The text of the proposed 
rule change is available from the principal office of the Exchange, at 
the Commission's Public Reference Room and also on the Exchange's 
Internet Web

[[Page 68083]]

site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.

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
Exercise Limit Exemptions
    The Exchange proposes to modify Chapter III, Section 9 (Exercise 
Limits) to change ``Market Maker'' to ``Options Participant'', in order 
to provide that all Options Participants may utilize applicable 
exemptions granted under Section 8 regarding an Exercise Limit. Other 
exchanges, such as the International Securities Exchange (``ISE''), 
allow all members to utilize approved exempted position limit [sic] in 
calculating an option's exercise limits.\5\
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    \5\ See Securities Exchange Act Release No. 34-60500 (August 13, 
2009), 74 FR 42345 (August 21, 2009) (SR-ISE-2009-62); See also 
Chicago Board Options Exchange (``CBOE'') Rule 4.12, NYSEAmex, LLC 
(``AMEX'') Rule 905(a).
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Exemptions Granted by Other Exchanges
    As proposed, Chapter III, Section 8 and Chapter XIV, Section 7, 
will allow Options Participants to rely upon exemptions granted by 
other exchanges. Specifically, proposed Chapter III, Section 8(e) and 
proposed Chapter XIV, Section 7(c) would provide that an Options 
Participant may rely upon any available exemptions from applicable 
position limits that are granted by another options exchange for any 
options contract traded on the Exchange, provided that the Options 
Participant provides the Exchange either with a copy of any written 
exemption issued by another options exchange or with a written 
description of any exemption issued by another options exchange that is 
not in writing, where such description contains sufficient detail for 
BOXR staff to verify the validity of that exemption with the issuing 
options exchange. In addition, the Options Participant must fulfill all 
conditions precedent for such exemption and comply at all times with 
the requirements of such exemption with respect to the Options 
Participant's trading on BOX. This proposed change is based on Chapter 
III, Section 8 and Chapter XIV Section 8 of Options Rules of the NASDAQ 
Stock Market, LLC (``NOM'') and recently filed proposals by NYSE ARCA, 
Inc. (``ARCA'') and NYSEAmex which were effective upon filing.\6\
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    \6\ See Securities Exchange Act Release No. 34-61033 (November 
19, 2009), 74 FR 62614 (November 30, 2009) (SR-NYSEArca-2009-100); 
Securities Exchange Act Release No. 34-61034 (November 19, 2009), 74 
FR 62625 (November 30, 2009) (SR-NYSEAmex-2009-80).
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    The Exchange notes that position limits are similar across options 
exchanges. Because Options Participants frequently have membership and/
or trading privileges on other exchanges, it is important that ad hoc 
position limit exemptions granted by other options exchanges 
(``exemption grants'') are available to Options Participants to the 
extent that such exemption grants are reduced to writing and verifiable 
by BOXR staff pursuant to the proposed changes to Chapter III Section 
8(e) and Chapter XIV, Section 7(c). The proposed rule change does not 
give the Exchange the ability to expand the exemption grants but only 
to recognize the exemption so that the position limit process would be 
the same across the exchanges.
    The Exchange believes that by adding uniformity and predictability 
to the position limit process, the proposed rule change should be 
beneficial to the Exchange, its Options Participants, and their 
customers. Moreover, the proposed rule change should promote 
competition by allowing trades across options exchanges that are 
similar with respect to position limits.\7\
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    \7\ The Exchange notes that all reporting requirements pursuant 
to Chapter III, Section 10 (Reports Related to Position Limits) 
remain in force.
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Reports Related to Position Limits
    As proposed, Supplementary Material .01 to Chapter III, Section 10, 
will specify that when calculating an aggregate long or short position 
in options, Options Participants need to combine (i) long positions in 
put options with short positions in call options, and (ii) short 
positions in put options with long positions in call options.
2. Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\8\ in general, and Section 
6(b)(5) of the Act,\9\ in particular, in that it is 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 proposed rule change will 
promote consistency between the BOX Rules and those of other options 
exchanges with respect to position limit and exercise limit procedures.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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

    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

    This 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 after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. As such, the Exchange requests 
that the Commission waive the 30-day operative delay period for ``non-
controversial'' proposals and make the proposed rule change effective 
and operative upon filing.\10\ The proposed rule change is based upon 
the rules of other options exchanges, and as such is not in any way 
novel or controversial. The Commission believes that waiving the

[[Page 68084]]

30-day operative delay is consistent with the protection of investors 
and the public interest because such waiver will bring uniformity and 
predictability to the position limit process. Accordingly, the 
Commission hereby grants the Exchange's request and designates the 
proposal operative upon filing.\11\
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    \10\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
provided the Commission with written notice of its intent to file 
the proposed rule change at least five business days before doing 
so.
    \11\ For the 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 may summarily abrogate 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-2009-078 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-2009-078. 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,\12\ 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 inspection 
and copying in the Commission's Public Reference Room, on business days 
between the hours of 10 a.m. and 3 p.m., located at 100 F Street, NE., 
Washington, DC 20549. 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 available publicly. All 
submissions should refer to File Number SR-BX-2009-078 and should be 
submitted on or before January 12, 2010.
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    \12\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov/.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30337 Filed 12-21-09; 8:45 am]

BILLING CODE 8011-01-P