Document ID: SEC-2009-1463-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Potential Payment Amounts Available Under Rule 4626
Posted Date: 2009-10-14T04:00Z

[Federal Register: October 14, 2009 (Volume 74, Number 197)]
[Notices]               
[Page 52832-52834]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14oc09-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60793; File No. SR-BX-2009-059]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Potential Payment Amounts Available Under Rule 4626

October 6, 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 September 25, 2009, 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, II, and III 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 the 
Substance of the Proposed Rule Change

    The Exchange is filing with the Commission a proposed rule change 
to modify potential payment amounts available under Rule 4626. BX will 
implement the proposed rule change effective November 1, 2009. The text 
of the proposed rule change is below. Proposed new language is 
italicized and proposed deletions are in brackets.
* * * * *
4626. Limitation of Liability
    (a) No Change.
    (b) The Exchange, subject to the express limits set forth below, 
may compensate users of the NASDAQ OMX BX Equities Market for losses 
directly resulting from the System's actual failure to correctly 
process an order, Quote/Order, message, or other data, provided the 
NASDAQ OMX BX Equities Market has acknowledged receipt of the order, 
Quote/Order, message, or data.
    [(1) For one or more claims made by a single market participant 
related to the use of the NASDAQ OMX BX Equities Market on a single 
trading day, the Exchange's liability shall not exceed the larger of 
$100,000, or the amount of any recovery obtained by the Exchange under 
any applicable insurance policy.]
    [(2) For the aggregate of all claims made by all market 
participants related to the use of the NASDAQ OMX BX Equities Market on 
a single trading day, the Exchange's liability shall not exceed the 
larger of $250,000, or the amount of the recovery obtained by the 
Exchange under any applicable insurance policy.]
    [(3)] (1) For the aggregate of all claims made by all market 
participants related to the use of the NASDAQ OMX BX Equities Market 
during a single calendar month, the Exchange's liability shall not 
exceed the larger of $500,000, or the amount of the recovery obtained 
by the Exchange under any applicable insurance policy.
    [(4)] (2) In the event all of the claims arising out of the use of 
the NASDAQ OMX BX Equities Market cannot be fully satisfied because in 
the aggregate they exceed the maximum amount of liability provided for 
in this Rule, then the maximum amount will be proportionally allocated 
among all such claims arising [on a single trading day, or] during a 
single calendar month [, as applicable].

[[Page 52833]]

    (5) All claims for compensation pursuant to this Rule shall be in 
writing and must be submitted no later than [the opening of trading] 
12:00 p.m. ET on the next business day following the day on which the 
use of the NASDAQ OMX BX Equities Market gave rise to such claims. 
Nothing in this rule shall obligate the Exchange to seek recovery under 
any applicable insurance policy.
* * * * *

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
    Currently, BX provides a limited exception to its general 
limitation of liability rules that allows for the payment of claims to 
users for order processing failures in the NASDAQ OMX BX Equities 
Market. BX proposes to modify its process for allocating such payments 
and extend the time period for users to submit such claims. Under the 
proposal, BX will eliminate the $100,000 and $250,000 daily caps on 
liability and consider all such claims on a monthly basis subject to 
the already existing $500,000 monthly liability cap. If the total 
amount of all claims from all users in calendar month exceeds the 
$500,000 monthly liability cap, the $500,000 maximum monthly dollar 
amount will be proportionally allocated among all such claims as set 
forth in the current rule.
    BX is also proposing to extend, until 12 noon ET on the next 
business day following the day on which the use of the Nasdaq OMX BX 
Equities Market gives rise to a claim, the time period during which 
claims seeking compensation must be submitted.
    As BX analyzes total eligible liability claims on a per-month look-
back basis, the proposal, in effect, would allow BX an increased 
capability to compensate a market participant(s) up to the monthly cap 
of $500,000 even though the losses occurred on a single day or were 
across multiple days for a single participant. The expansion of time to 
make such compensation claims likewise increases the ability of market 
participants to submit claims in a timely manner. Finally, BX notes 
that other market centers have rules in place to provide limited 
compensation for system malfunctions.\4\
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    \4\ See NYSE Arca Equities Rule 13.2. and ISE Rule 705.
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2. Statutory Basis
    BX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\5\ in general, and with Sections 
6(b)(5) of the Act,\6\ in particular, in that the proposal 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 regulating, clearing, settling, 
processing information with respect to, and 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. As BX analyzes total 
eligible liability claims on a per-month look-back basis, the proposal, 
in effect, would allow BX an increased capability to compensate a 
market participant(s) up to the monthly cap of $500,000 even though the 
losses occurred on a single day or were across multiple days for a 
single participant. The expansion of time to make such compensation 
claims likewise increases the ability of market participants to submit 
claims in a timely manner.
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    \5\ 15 U.S.C. 78f.
    \6\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
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) \8\ thereunder.
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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) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
BX has satisfied this requirement.
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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-2009-059 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-2009-059. 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

[[Page 52834]]

provisions of 5 U.S.C. 552, will be available for inspection and 
copying 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-2009-059 and should be 
submitted on or before November 4, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-24615 Filed 10-13-09; 8:45 am]

BILLING CODE 8011-01-P