Document ID: SEC-2010-1204-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2010-08-09T04:00Z

[Federal Register: August 9, 2010 (Volume 75, Number 152)]
[Notices]               
[Page 47869-47871]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09au10-89]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62632; File No. SR-BX-2010-049]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Fee Schedule of the Boston Options Exchange Facility

August 3, 2010.
    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 July 16, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'') 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 self-regulatory organization. The Exchange filed 
the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the 
Act,\3\ and Rule 19b-4(f)(2) 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 Fee Schedule of the Boston 
Options Exchange Group, LLC (``BOX''). 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 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
    (a) Changes to Trading Fees:
    The BOX Fee Schedule currently lists certain execution fees as 
`standard' trading fees, meaning that these execution fees are not 
dependent upon whether the transaction added or removed liquidity on 
BOX.\5\ These standard fees, specifically within Sections 1-3 of the 
BOX Fee Schedule, are applicable to certain Public Customer PIP 
Improvement Orders,\6\ Broker Dealer proprietary accounts and Market 
Maker accounts, respectively. The standard fees are currently set at 
$0.20 per contract executed for Broker Dealer proprietary accounts and 
Market Maker accounts. The Exchange proposes to make the following 
adjustments to trading fees effective Monday, July 19, 2010; with the 
exception of the Public Customer Trading Fees, which will be effective 
August 1, 2010:
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    \5\ See Section 7 of the BOX Fee Schedule which sets forth any 
applicable `liquidity fees and credits'.
    \6\ According to Section 1 of the BOX Fee Schedule a Public 
Customer is charged $0.15 per executed contract of an Improvement 
Order on its behalf in the PIP where that order is not submitted as 
a Customer PIP Order (``CPO'') whereby it is labeled as a ``non-
CPO''.
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Public Customer Trading Fees
    The Exchange proposes to amend Section 1 of the BOX Fee Schedule 
relating to standard transaction fees applicable to Public Customers. 
Currently, except for non-CPO, there are no standard trading fees for 
any Public Customer Orders which may be executed on BOX, including CPOs 
and Public Customer Orders on the Book.\7\ The Exchange proposes to add 
to the standard transaction fees for Public Customer accounts a $0.25 
per executed contract charge for a Primary Improvement Order for a 
Public Customer and, effective August 1, 2010, for all non-PIP 
transactions, a $0.10 charge per executed contract.\8\
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    \7\ Applicable charges and credits described in Section 7 of the 
BOX Fee Schedule also apply to Public Customer Orders.
    \8\ The above fees are in addition to any applicable charges and 
credits described in Section 7 of the BOX Fee Schedule.
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Fees and Charges to SPY, QQQQ, and IWM
    Currently, the standard fee for transactions in the Exchange Traded 
Fund Shares (``ETFs'') Standard & Poor's Depositary Receipts[reg] 
(``SPY''), Powershares[reg] QQQ Trust Series 1 (``QQQQ'') and iShares 
Russell 2000[reg]

[[Page 47870]]

Index Fund (``IWM'') are set at $0.10 per contract for Broker Dealers 
and at $0.05 per contract for BOX Market Makers. In addition, the 
credits and fees of Section 7 of the BOX Fee Schedule currently apply 
equally for these three classes at $0.05 for both the fees and credits. 
The Exchange proposes to remove the different fees for transactions in 
SPY, QQQQ, and IWM throughout the BOX Fee Schedule so that transactions 
in these three classes will no longer be treated separately from other 
classes.
Transactions in the PIP
    Currently, the standard fee for transactions within the PIP, 
including transactions in SPY, QQQQ and IWM, is set at $0.20 per 
contract, both for Broker Dealers and for BOX Market Makers. The 
Exchange proposes to amend Sections 2 and 3 to raise the standard 
transaction fee for PIP executions from $0.20 to $0.25 both for Broker 
Dealers and for BOX Market Makers.
Fees and Credits in Section 7
    Currently, the existing credits and fees within Section 7 for 
transactions in the PIP are $0.15. These credits and fees apply equally 
to all account types, whether Public Customer, Broker Dealer or Market 
Maker and are in addition to any applicable trading fees, as described 
in Sections 1 through 3 of the BOX Fee Schedule. The Exchange proposes 
to increase the existing credits and fees within Section 7 for 
transactions in the PIP, from $0.15 to $0.25.
    Currently, the volume discount for the fees charged to Initiating 
Participants only applies to executions in PIP auctions initiated by 
the particular Initiating Participant which occur at a price at least 
better than the NBBO and after a threshold average daily volume 
(``ADV'') of 50,000 contracts per month is reached. Any PIP executions 
of the Initiating Participant above this threshold receive a $0.05 
discount. The Exchange proposes to replace the volume discount with a 
per contract execution fee based upon a tiered fee schedule to apply to 
executions in PIP auctions initiated by the particular Initiating 
Participant.\9\ Each Initiating Participant's ADV for executions in PIP 
auctions will be calculated. All PIP executions by the Initiating 
Participant for that month will be charged the same per contract fee 
according to the respective PIP auction ADV pursuant to the following 
table:
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    \9\ This tiered fee schedule shall apply to the standard 
transaction fee for PIP trades charged to Public Customers pursuant 
to Section 1(b), Broker-Dealers pursuant to Section 2(a) or Market 
Makers pursuant to Section 3(a) of the Fee Schedule. For example, a 
Broker-Dealer Primary Improvement Order submitted by an Initiating 
Participant who has reached the highest ADV tier of over 150,001 
contracts executed in PIP auctions for the month will be charged a 
$0.10 standard transaction fee plus a provide liquidity fee of 
$0.25, for a total fee of $0.35 on his Primary Improvement Order.

------------------------------------------------------------------------
   Average daily volume for initiating participant      Fee per contract
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ADV of 150,001 contracts and greater.................              $0.10
ADV of 100,001 contracts to 150,000 contracts........               0.12
ADV of 50,001 contracts to 100,000 contracts.........               0.15
ADV of 20,001 contracts to 50,000 contracts..........               0.17
ADV of 0 contracts to 20,000 contracts...............               0.25
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    This proposed tiered fee schedule is designed to incent BOX 
Participants to submit their Public Customer Orders into the PIP for 
the possibility of price improvement. As a BOX Participant's monthly 
PIP initiated trading volume increases, the per-contract fee that an 
Initiating Participant is charged for such executions is decreased.
2. Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\10\ in general, and Section 
6(b)(5) of the Act,\11\ in particular, as well as Section 6(b) of the 
Act,\12\ in general, and Section 6(b)(4) of the Act,\13\ in particular, 
in that it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members and issuers and other persons 
using its facilities. In particular, the proposed change will allow the 
fees charged on BOX to remain competitive with other exchanges as well 
as apply such fees in a manner which is equitable based upon the 
particular account type, e.g. Public Customer, Market Maker or Broker 
Dealer, for which such transactions are executed. The obligations of 
Public Customers, Market Makers on BOX and Brokers Dealers that execute 
transactions on BOX are different. For example, BOX Market Makers must 
maintain active two-sided markets in options classes to which they are 
assigned and also have certain restrictions regarding trading activity 
in classes outside of their assignment, both of which do not apply to 
Public Customers or Broker Dealers on BOX.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
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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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Exchange Act \14\ and Rule 19b-4(f)(2) 
thereunder,\15\ because it establishes or changes a due, fee, or other 
charge applicable only to a member.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may abrogate the rule change if it 
appears to the Commission that the action is necessary or appropriate 
in the public interest, for the protection of investors, or would 
otherwise further 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:

[[Page 47871]]

Electronic Comment

     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-2010-049 on the subject line.

Paper Comment

     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-2010-049. 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, located at 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 
available publicly. All submissions should refer to File Number SR-BX-
2010-049 and should be submitted on or before August 30, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19607 Filed 8-6-10; 8:45 am]
BILLING CODE 8010-01-P