Document ID: SEC-2010-0987-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2010-07-02T04:00Z

[Federal Register Volume 75, Number 127 (Friday, July 2, 2010)]
[Notices]
[Pages 38572-38574]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-16124]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62373; File No. SR-BX-2010-038]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate 
Certain Rule Text Which Has Been Made Unnecessary Due to the 
Decommissioning of the OCC Hub

June 24, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on June 21, 2010, NASDAQ OMX BX, Inc. (``BX'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``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

    NASDAQ OMX BX, Inc. (the ``Exchange'') proposes to amend the Rules 
of the Boston Options Exchange

[[Page 38573]]

Group, LLC (``BOX'') to eliminate certain rule text which has been made 
unnecessary due to the decommissioning of the Options Clearing 
Corporation (``OCC'') Hub. The text of the proposed rule change is 
available on BX's Web site, on the Commission's Web site, at BX, and at 
the Commission's Public Reference Room.

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 those 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 parts 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 was previously a party to the Plan for the Purpose of 
Creating and Operating an InterMarket Option Linkage (``Linkage 
Plan'').\3\ One of the essential aspects of the Linkage Plan was the 
central data and communications network (``Hub''), operated and 
maintained by the OCC that electronically linked the several options 
exchanges. The Linkage Plan was recently replaced by the Options Order 
Protection and Locked/Crossed Market Plan (``Decentralized Plan'').\4\
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    \3\ See Securities Exchange Act Release No. 43086 (July 28, 
2000), 65 FR 48023 (August 4, 2000) (File No. 4-429) (Order 
approving the Linkage Plan and the original parties thereto). The 
Exchange became a party to the Linkage Plan on January 14, 2004 by 
executing a copy of said Linkage Plan with the Commission as well as 
completing the other steps required. Terms not otherwise defined 
herein shall have the meaning assigned to them in the BOX Rules, the 
Decentralized Plan, or the Linkage Plan, respectively.
    \4\ See Securities Exchange Act Release No. 60405 (July 30, 
2009), 74 FR 39362 (August 6, 2009) (File No. 4-546) (Order 
Approving the National Market System Plan Relating to Options Order 
Protection and Locked/Crossed Market Plan). The Exchange amended the 
BOX Rules to reflect the Exchange's filing to become a participant 
in the Decentralized Plan. See Securities Exchange Act Release No. 
60530 (August 18, 2009), 74 FR 43200 (August 26, 2009) (SR-BX-2009-
028).
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    Unlike the Linkage Plan, which exclusively required use of the OCC 
Hub, the Decentralized Plan enables the Plan Participants thereto to 
act jointly in establishing a framework for a non-exclusive method of 
providing and achieving order protection and addressing Locked and 
Crossed Markets in Eligible Options Classes. Upon the migration from 
the Linkage Plan to the Decentralized Plan, and for a short period 
thereafter, BOX and BOX Options Participants continued to utilize the 
sending of P and P/A Orders via the OCC Hub to fulfill their 
obligations to seek the best price available for their customers and to 
prevent Trade-Throughs. Thus the Exchange maintained and enforced 
certain rule text regarding the sending and receipt of P and P/A Orders 
and use of the OCC Hub.
    BOX has not utilized the sending of P and P/A Orders or the OCC Hub 
since it began using non-affiliated third party routing (``TPR'') 
broker/dealers (``Routing Broker(s)'') to route options Eligible Orders 
to one or more Away Exchange(s) when such Away Exchange(s) display the 
Best Bid or Best Offer in accordance with the Decentralized Plan.\5\ 
The recent decommissioning of the OCC Hub has rendered the legacy rule 
text pertaining to the Linkage Plan obsolete, including rule text 
regarding P and P/A Orders and the OCC Hub. This proposal seeks to 
remove such rule text, and make such other changes to the BOX Rules, as 
necessary, so as to render the BOX Rules consistent with current 
Exchange practices.
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    \5\ See Securities Exchange Act Release No. 60832 (October 16, 
2009), 74 FR 54607 (October 22, 2009) (SR-BX-2009-066) (Notice of 
Filings and Order Granting Accelerated Approval of Proposed Rule 
Change Relating to Chapter XII of the BOX Rules). See also 
Securities Exchange Act Release No. 61399 (January 22, 2010), 75 FR 
54607 (January 28, 2010) (SR-BX-2010-007) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Relating to the 
Order Routing Pilot on the Boston Options Exchange Facility). See 
also Securities Exchange Act Release No. 61536 (February 18, 2010), 
75 FR 8763 (February 25, 2010) (SR-BX-2010-014) (Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to 
Order Routing on the Boston Options Exchange Facility). Chapter XII, 
Section 5, describes Eligible Orders, as ``orders that are 
specifically designated by Options Participants as eligible for 
routing will be routed to an Away Exchange.''
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\6\ in general, and Section 
6(b)(5) of the Act,\7\ in particular, in that it is designed 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 for a free and open market and a national market 
system and, in general, to protect investors and the public interest. 
In particular, the proposed changes will render the BOX Rules 
consistent with current Exchange practices and provide great clarity to 
BOX Options Participants.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    Because the foregoing proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) 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, if consistent with the protection of investors and the 
public interest, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to the 
Commission written notice of its 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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    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.

[[Page 38574]]

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-2010-038 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-2010-038. 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, 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-2010-038 and should be 
submitted on or before July 23, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
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    \10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-16124 Filed 7-1-10; 8:45 am]
BILLING CODE 8010-01-P