Document ID: SEC-2009-1189-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Boston Stock Exchange, Incorporated [sic]; Notice of Filing of Proposed Rule Change To Further Extend the Temporary Cap on Certain Fees for Members
Posted Date: 2009-08-21T04:00Z

[Federal Register: August 21, 2009 (Volume 74, Number 161)]
[Notices]               
[Page 42346-42348]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21au09-109]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60503; File No. SR-BX-2009-046]

 
Self-Regulatory Organizations; Boston Stock Exchange, 
Incorporated [sic]; Notice of Filing of Proposed Rule Change To Further 
Extend the Temporary Cap on Certain Fees for Members

August 14, 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 August 3, 2009, NASDAQ OMX BX, Inc. (``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.

[[Page 42347]]

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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    BX proposes to extend the temporary cap on fees charged for OUCH 
ports to the Equities Market due to unanticipated delays in developing 
and implementing an anti-internalization function. The text of the 
proposed rule change is below. Proposed new language is italicized.
* * * * *

7015. Access Services

    The following charges are assessed by the Exchange for ports to 
establish connectivity to the NASDAQ OMX BX Equities Market, as well 
as ports to receive data from the NASDAQ OMX BX Equities Market:
     $400 per month for each port pair, other than Multicast 
ITCH[reg] data feed pairs, for which the fee is $1000 per month. 
Additional OUCH port pairs beyond 15 are at no cost for the months 
of May, June and July 2009. For August 2009, OUCH port pairs beyond 
15 will be assessed a pro rata charge on the basis of the number of 
trading days during the month during which the anti-internalization 
functionality introduced by Equity Rule 4757(a)(3) is available to 
market participants.
     Internet Ports: An additional $200 per month for each 
Internet port that requires additional bandwidth.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, BX 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. BX 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
    BX is proposing to extend the temporary modification to its pricing 
for OUCH ports, which provide connectivity to the NASDAQ OMX BX 
Equities Market. In SR-BX-2009-023 and SR-BX-2009-036,\3\ BX filed 
immediately effective rule changes to eliminate fees for a member 
firm's OUCH ports in excess of 15 for the months of May, June, and July 
2009. In those filings, BX noted member firms had complained that, 
because BX does not have an anti-internalization capability, they must 
purchase additional OUCH ports that they would otherwise not need to 
purchase solely to avoid unwanted execution against their customer 
orders. Internalization occurs when a member firm's customer order is 
posted on the market and executed all or in part by the same member 
firm. Member firms must avoid internalization of certain customer 
orders to avoid violating rules and regulations of the Employee 
Retirement Income Security Act that preclude and/or limit managing 
broker-dealers of such customer accounts from trading as principal with 
orders generated for those accounts. Currently, some member firms are 
only able to avoid internalization by purchasing additional OUCH ports 
through which they place all order flow that must not be internalized. 
Such additional ports have discrete MPID numbers, which allow these 
member firms to identify the orders and avoid internalization.
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    \3\ Securities Exchange Act Release No. 59894 (May 8, 2009), 74 
FR 23000 (May 15, 2009) (SR-BX-2009-023); Securities Exchange Act 
Release No. 60257 (July 7, 2009), 74 FR 34060 (July 14, 2009) (SR-
BX-2009-036).
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    BX determined to limit the number of OUCH port pairs that a member 
is charged monthly to 15 for the months of May, June, and July 2009, so 
that those firms affected by BX's lack of an anti-internalization 
function were provided relief until BX could implement such a function. 
BX noted in its rule change that it would either seek to remove the cap 
language from the rule upon its expiration or alternatively would seek 
to extend the cap until such time the anti-internalization function 
could be implemented. BX has now adopted Equity Rule 4757(a)(3),\4\ 
through which BX will provide anti-internalization functionality, and 
expects to implement that functionality on or about August 10, 2009. As 
such, BX is proposing to further extend the temporary modification of 
its OUCH port pair pricing into August 2009, assessing a pro rata 
charge on the basis of the number of trading days during the month 
during which the anti-internalization functionality introduced by 
Equity Rule 4757(a)(3) is available to market participants. BX will 
then seek to remove the cap language from the rule. Thus, if the 
functionality is introduced on August 10, the fee for August would be 
76.19% of the fee otherwise assessable, reflecting that the 
functionality would be available for 16 out of the 21 trading days 
during the month.
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    \4\ Securities Exchange Act Release No. 60383 (July 24, 2009), 
74 FR 38065 (July 30, 2009) (SR-BX-2009-042).
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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 Section 
6(b)(4) of the Act,\6\ in particular, in that it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
members and issuers and other persons using any facility or system 
which BX operates or controls. The proposed fee change applies 
uniformly to all BX members. BX has determined that temporarily 
instituting a cap on fees for OUCH ports in excess of 15 will provide 
relief to member firms required to purchase additional ports solely due 
to BX's lack of an anti-internalization function.
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    \5\ 15 U.S.C. 78f.
    \6\ 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 
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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \7\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\8\ 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.
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    \7\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
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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:

[[Page 42348]]

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-2009-046 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-2009-046. 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 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-2009-046 and should be submitted on 
or before September 11, 2009.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20063 Filed 8-20-09; 8:45 am]

BILLING CODE 8010-01-P