[Federal Register Volume 76, Number 245 (Wednesday, December 21, 2011)]
[Notices]
[Pages 79231-79232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32661]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65966; File No. SR-BX-2011-083]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Penny Pilot Program
December 15, 2011.
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 December 2, 2011, 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 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
The Exchange proposes to amend Chapter V, Section 33 (Penny Pilot
Program) of the Rules of the Boston Options Exchange Group, LLC
(``BOX'') to extend, through June 30, 2012, the pilot program that
permits certain classes to be quoted in penny increments on BOX
(``Penny Pilot Program'').
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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to extend the effective time period of the
Penny Pilot Program on BOX that is currently scheduled to expire on
December 31, 2011, for an additional six months, through June 30,
2012.\3\ The Penny Pilot Program permits certain classes to be quoted
in penny increments on BOX. The minimum price variation for all classes
included in the Penny Pilot Program, except for the QQQQs, SPY and IWM,
will continue to be $0.01 for all quotations in option series that are
quoted at less than $3 per contract and $0.05 for all quotations in
option series that are quoted at $3 per contract or greater. The QQQQs,
SPY and IWM, will continue to be quoted in $0.01 increments for all
options series. The Exchange is not currently proposing any changes to
the classes included within the Penny Pilot Program.
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\3\ The Penny Pilot Program has been in effect on BOX since
January 26, 2007. See Securities Exchange Act Release No. 55155
(Jan. 23, 2007), 72 FR 4741 (Feb. 1, 2007) (SR-BSE-2006-49). The
Penny Pilot Program was later extended through September 27, 2007.
See Securities Exchange Act Release No. 56149 (July 26, 2007), 72 FR
42450 (Aug. 2, 2007) (SR-BSE-2007-38). A subsequent rule filing by
the Exchange on September 27, 2007 initiated a two-phased expansion
of the Penny Pilot Program. See Securities Exchange Act Release No.
56566 (Sept. 27, 2007), 72 FR 56400 (Oct. 3, 2007) (SRBSE- 2007-40).
See also Securities Exchange Act Release No. 57566 (March 26, 2008),
73 FR 18013 (April 2, 2008) (SR-BSE-2008-20). The Penny Pilot
Program was then extended and expanded a number of times and is set
to expire on December 31, 2010. See Securities Exchange Act Release
Nos. 59629 (March 26, 2009), 74 FR 15021 (April 2, 2009) (SR-BX-
2009-017); 60213 (July 1, 2009), 74 FR 32998 (July 9, 2009) (SR-BX-
2009-032); 60886 (Oct. 27, 2009), 74 FR 56897 (Nov. 3, 2009) (SR-BX-
2009-067); 60950 (Nov. 6, 2009), 74 FR 58666 (Nov. 6, 2009) (SR-BX-
2009-069); 61456 (Feb. 1, 2010), 75 FR 6235 (Feb. 8, 2010) (SR-BX-
2010-011); 62039 (May 5, 2010), 75 FR 26313 (May 11, 2010) (SR-BX-
2010-032), 62615 (July 30, 2010), 75 FR 47875 (Aug. 9, 2010) (SR-BX-
2010-052), and 63397 (Nov. 30, 2010), 75 FR 75716 (Dec. 8, 2010)
(SR-BX-2010-084). The extension of the effective date is the only
change to the Penny Pilot Program being proposed at this time.
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The Exchange may replace any Pilot Program classes that have been
delisted on the second trading day following January 1, 2012. The
replacement classes will be selected based on trading activity for the
six month period beginning June 1, 2011, and ending November 30, 2011.
The Exchange will employ the same parameters to prospective replacement
classes as approved and applicable under the Pilot Program, including
excluding high-priced underlying securities. The Exchange will
distribute Regulatory Circular notifying Participants which replacement
classes shall be included in the Penny Pilot Program. Since the
Exchange is not adding classes other than the replacement classes in
the manner described above, the Exchange is proposing to delete the
following language: ``[t]he Exchange will specify which classes shall
be included in the Penny Pilot Program by way of Regulatory Circular
filed with the Commission pursuant to Rule 19b-4 under the Exchange Act
and distributed to Participants'', as this language is no longer
necessary.
Further, BOX agrees to submit to the Commission such reports
regarding the Penny Pilot Program as the Commission may request. Such
reports may include: (1) data and analysis on the number of quotations
generated for options included in the Pilot Program; (2) an assessment
of the quotation spreads for
[[Page 79232]]
the options included in the Pilot Program; (3) an assessment of the
impact of the Pilot Program on the capacity of BOX's automated systems;
(4) data reflecting the size and depth of markets, and (5) any capacity
problems or other problems that arose related to the operation of the
Pilot Program and how the Exchange addressed them.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\4\ in general, and Section
6(b)(5) of the Act,\5\ 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
will allow the Penny Pilot Program to remain in effect on BOX without
interruption.
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\4\ 15 U.S.C. 78f(b).
\5\ 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
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\6\ and Rule 19b-
4(f)(6)(iii) thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change along with a
brief description and the 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.
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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 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 email to [email protected]. Please include
File No. SR-BX-2011-083 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 No. SR-BX-2011-083. 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
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 No. SR-BX-2011-083 and should be
submitted on or before January 11, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32661 Filed 12-20-11; 8:45 am]
BILLING CODE 8011-01-P