Document ID: SEC-2013-0906-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2013-05-15T04:00Z

[Federal Register Volume 78, Number 94 (Wednesday, May 15, 2013)]
[Notices]
[Pages 28678-28679]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11558]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69549; File No. SR-BX-2013-035]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Correct 
BX Rule 2140(c)

May 9, 2013.
    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 6, 2013, NASDAQ OMX BX, Inc. (the ``Exchange'' or ``BX'') 
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 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 proposes to correct BX Rule 2140(c) to reference 
NASDAQ Options Services LLC (``NOS'').
    The text of the proposed rule change is below; proposed new 
language is in italics.
* * * * *
NASDAQ OMX BX
Equity Rules
* * * * *
2140. Restrictions on Affiliation
    (a)-(b) No change.
    (c) The NASDAQ OMX Group, Inc., which is the holding company owning 
[both] the Exchange, [and] NASDAQ Execution Services, LLC, and NASDAQ 
Options Services LLC, shall establish and maintain procedures and 
internal controls reasonably designed to ensure that neither NASDAQ 
Execution Services, LLC nor NASDAQ Options Services LLC [does not] 
develops or implements changes to its system on the basis of non-public 
information regarding planned changes to Exchange systems, obtained as 
a result of its affiliation with the Exchange, until such information 
is available generally to similarly situated members of the Exchange in 
connection with the provision of inbound routing to the Exchange.
* * * * *

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 proposal is to correct Rule 2140(c) to refer to 
NOS, in addition to NASDAQ Execution Services, LLC (``NES'').
    NOS is owned by The NASDAQ OMX Group, Inc., which also owns three 
registered securities exchanges--the Exchange, The NASDAQ Stock Market 
LLC (``NASDAQ'') (and its facility, the NASDAQ Options Market), and 
NASDAQ OMX PHLX LLC (``PHLX'').\3\ Therefore, NOS is an affiliate of 
these exchanges. The Exchange adopted Rule 2140(c) to prevent potential 
informational advantages resulting from the affiliation between BX and 
NES, as related to NES's authority to route equities orders from PHLX's 
PSX facility and NASDAQ. The Exchange intended to add NOS to this rule, 
as related to NOS' authority to route options orders from PHLX and NOM 
to BX Options. This intention was expressed in the proposed rule change 
where BX received approval to permit BX Options to receive inbound 
routes of options orders by NOS in its capacity as an order routing 
facility of PHLX and NOM, as part of the approval of the proposed rule 
change establishing BX Options, but the rule text was inadvertently not 
amended accordingly.\4\ In that proposed rule change, BX agreed to 
certain conditions and obligations, which it has adopted. Specifically, 
it stated that the Exchange

[[Page 28679]]

has in place BX Rule 2140(c), which requires NASDAQ OMX, as the holding 
company owning both the Exchange and NOS, to establish and maintain 
procedures and internal controls reasonably designed to ensure that NOS 
does not develop or implement changes to its system, based on nonpublic 
information obtained regarding planned changes to the Exchange's 
systems as a result of its affiliation with the Exchange, until such 
information is available generally to similarly situated Exchange 
members, in connection with the provision of inbound order routing to 
the Exchange. Although the Exchange did not have that provision in 
place, the Exchange intended to and has complied with it as though it 
had properly been included at the time of adoption.
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    \3\ See Securities Exchange Act Release Nos. 58324 (August 7, 
2008), 73 FR 46936 (August 12, 2008) (SR-BSE-2008-02; SR-BSE-2008-
23; SR-BSE-2008-25; SR-BSECC-2008-01) (order approving NASDAQ OMX's 
acquisition of BX); and 58179 (July 17, 2008) (SR-PHLX-2008-31), 73 
FR 42874 (July 23, 2008) (order approving NASDAQ OMX's acquisition 
of PHLX).
    \4\ Securities Exchange Act Release No. 67256 (June 26, 2012), 
77 FR 39277 (July 2, 2012) (SR-BX-2012-030).
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2. Statutory Basis
    BX believes that its proposal is consistent with Section 6(b) of 
the Act \5\ in general, and furthers the objectives of Section 6(b)(5) 
of the Act \6\ in particular, in that it is designed to promote just 
and equitable principles of trade, and, in general, to protect 
investors and the public interest, by correcting the rule text, 
consistent with the intention and description in a prior proposed rule 
change.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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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. It does not raise any issues of intra-market 
competition because it involves correcting a rule pertaining to inbound 
routing from an affiliated exchange. Nor does it result in a burden on 
competition among exchanges, because there are many competing exchanges 
that provide routing services, including through an affiliate.

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 \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 
Exchange has satisfied this requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Doing so will allow the proposal to become operative 
immediately in order to avoid confusion, consistent with the protection 
of investors and the public interest.\9\ Therefore, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing.\10\
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    \9\ The Commission notes that it previously approved the 
condition (See Securities Exchange Act Release No. 67256, 77 FR 
39277), and that the Exchange represents that it has complied with 
the terms of such condition.
    \10\ 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 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 under 
Section 19(b)(2)(B) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 15 U.S.C. 78s(b)(2)(B).
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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-2013-035 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-2013-035. 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-2013-035 and should be 
submitted on or before June 5, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11558 Filed 5-14-13; 8:45 am]
BILLING CODE 8011-01-P