[Federal Register Volume 78, Number 84 (Wednesday, May 1, 2013)]
[Notices]
[Pages 25510-25512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-10278]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69456; File No. SR-BX-2013-031]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a
Rule Governing Cancellation of Orders in the Event of an Issuer
Corporate Action Related to a Dividend, Payment or Distribution, and To
Make Related Clarifications to Rule Text
April 25, 2013.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on April 17, 2013, NASDAQ OMX BX, Inc. (``BX'' or
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') a proposed rule change as described in Items I, II and
III 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\ 15 U.S.C. 78a.
\3\ 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 adopt a rule governing cancellation of
orders in the event of an issuer corporate action related to a
dividend, payment or distribution, and to make related clarifications
to rule text.
The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxbx.cchwallstreet.com, at the principal
office of the Exchange, 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 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
BX is proposing to adopt Rule 4761 to address the treatment of
quotes/orders in securities that are the subject of issuer corporate
actions related to a dividend, payment or distribution (a ``corporate
action''). The rule will apply to any trading interest that is carried
on the BX Equities Market book overnight.\4\ The proposed BX rule would
provide that in the event of any corporate action, BX will cancel open
quote/orders on the ex-date of the action, thereby imposing on the
member that entered the order the responsibility for determining
whether it wishes to reenter the order and if so, at what price and
size. The cancellation would occur immediately prior to the opening of
the BX Equities Market at 7 a.m. on the ex-date of the corporate
action, and the member would receive a cancellation notice, so that it
could, if it desired, reenter the order at the commencement of trading
on the ex-date.
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\4\ BX notes that its market participants have not historically
made use of such good-`till-cancelled trading interest, but believes
that a rule should be adopted to ensure that the treatment of such
orders is clearly specified by its rules.
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In addition, BX is proposing to amend Rule 4756(b) to make it clear
that quotes do not necessarily remain open overnight and to address
several other issues. First, BX is modifying a description of open
quotes, the original intent of which is unclear and that accordingly
may result in confusion.\5\ The sentence in question appears to reflect
the idea that an open quote (i.e., a quote designated to remain open at
the end of the trading day) would be processed in the same manner as a
System Hours GTC Order. While accurate, this statement does not reflect
the fact that a quote may also accurately be described as an
Attributable Order entered by an Equities Market Maker or Equities ECN
(i.e., trading interest that is identified as having been entered by a
particular market participant). Moreover, although an Attributable
Order may be entered with a time-in-force of good-`till-cancelled and
thereby remain open overnight, such orders have not historically been
used by BX
[[Page 25511]]
market participants. Accordingly, BX believes that the focus of the
current sentence on orders remaining open might imply that all quotes
would remain open overnight, when as a factual matter this would be the
case only to the extent a quote was designated as good-`till-cancelled.
BX proposes to amend the sentence to provide that ``Quotes will be
processed as Attributable Orders, with such time-in-force designation
as the Equities Market Maker or Equities ECN may assign.'' Finally, BX
proposes to correct obvious inaccuracies in the rule text. First, the
rule incorrectly states that Order Entry Firms (as well as Equities
Market Makers and Equities ECNs) may enter quotes, a statement that is
logically inconsistent with the definition in Rule 4751 of an Order
Entry Firm as a member registered ``for purposes of entering orders.''
Second, BX proposes to correct in the rule the usage of the word ``or''
where ``of'' is intended.\6\
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\5\ It should be noted that although BX rules permit members to
register and trade as Equities Market Makers or Equities ECNs, no
member is currently registered with such a status. Accordingly, the
following discussion regarding the use and processing of quotes
should be understood as not having a direct impact on any current BX
market participants. Rather, the proposed rule change is intended to
ensure that the rules that would govern such matters are clear.
\6\ BX notes that The NASDAQ Stock Market LLC (``NASDAQ'') is
filing a similar proposed rule change to replace an existing NASDAQ
rule on modification of open orders with a rule comparable to
proposed BX Rule 4761, and to make amendments to NASDAQ Rule 4756
similar to those proposed with respect to BX Rule 4756. SR-NASDAQ-
2013-068 (April 17, 2013).
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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,\7\ in general, and with Section
6(b)(5) of the Act \8\ 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. Specifically, BX believes
that the change will simplify BX's rule governing adjustment of open
quotes/orders in the event of corporate actions by making it clear that
all such quotes/orders will be cancelled, thereby ensuring that market
participants have appropriate notice of the possibility that they may
either deem it advisable not to reenter such quotes/orders, or to
reenter them with such adjustments to price and/or size as the market
participant deems advisable to reflect the corporate action. Thus, the
change will facilitate transactions in securities and perfect the
mechanism of a free and open market by providing additional assurance
that market participants carefully manage the trading interest that
they enter into BX. In addition, the proposed changes to Rule 4756 are
designed to improve the clarity and accuracy of that rule.
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\7\ 15 U.S.C. 78f.
\8\ 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 result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. Specifically, BX
believes that the rule change does not affect the availability or
pricing of goods or services offered by the Exchange, and therefore
does not impact competition between the Exchange and others. Rather,
the change is designed to adopt and clarify rules to better describe
the operation of the Exchange's trading systems, but in a manner that
does not restrict the ability of members to enter and update trading
interest in BX.
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: (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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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.
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 summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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 email to [email protected]. Please include
File Number SR-BX-2013-031 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-2013-031. 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-2013-031 and should be
submitted on or before May 22, 2013.
[[Page 25512]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10278 Filed 4-30-13; 8:45 am]
BILLING CODE 8011-01-P