80 FR 37698 - Self-Regulatory Organizations; NASDAQ OMX BX Inc.; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, To Amend and Restate Certain Rules That Govern the NASDAQ OMX BX Equities Market

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 126 (July 1, 2015)

[Federal Register Volume 80, Number 126 (Wednesday, July 1, 2015)]
[Notices]
[Pages 37698-37700]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-16083]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75291; File No. SR-BX-2015-015]


Self-Regulatory Organizations; NASDAQ OMX BX Inc.; Notice of 
Filing of Amendment No. 1 and Order Granting Accelerated Approval of 
Proposed Rule Change, as Modified by Amendment No. 1, To Amend and 
Restate Certain Rules That Govern the NASDAQ OMX BX Equities Market

June 24, 2015.

I. Introduction

    On March 20, 2015, NASDAQ OMX BX, Inc. (``BX'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
amend and restate certain BX rules that govern the NASDAQ OMX BX 
Equities Market in order to provide a clearer and more detailed 
description of certain aspects of its functionality. The proposed rule 
change was published for comment in the Federal Register on April 6, 
2015.\3\ The Commission received no comment letters regarding the 
proposed rule change. On May 12, 2015, the Commission extended to July 
5, 2015, the time period in which to approve the proposed rule change, 
disapprove the proposed rule change, or institute proceedings to 
determine whether the proposed rule change should be disapproved.\4\ On 
June 22, 2015, the Exchange filed Amendment No. 1 to the proposed rule 
change.\5\ This order approves the proposed rule change, as amended, on 
an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 74617 (March 31, 
2015), 80 FR 18473 (``Notice'').
    \4\ See Securities Exchange Act Release No. 74934, 80 FR 28325 
(May 18, 2015).
    \5\ In Amendment No. 1, the Exchange proposed to correct 
typographical errors in the original filing, further improve the 
clarity of certain rule language, and include additional explanation 
with regard to the purpose of the proposed rule change.
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II. Description of the Amended Proposal

    The Exchange proposes to amend and restate certain rules governing 
the NASDAQ OMX BX Equities Market in order to provide additional detail 
and clarity regarding its order type functionality.\6\ This proposed 
rule change is a response to Chair White's request that each equities 
exchange conduct a comprehensive review of the operation of each of the 
order types that it offers to members.\7\
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    \6\ See Notice 80 FR at 18473.
    \7\ See id.; see also Mary Jo White, Chair, Commission, Speech 
at the Sandler O'Neill & Partners, L.P. Global Exchange and 
Brokerage Conference (June 5, 2014), available at http://www.sec.gov/News/Speech/Detail/Speech/1370542004312.
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    While the Exchange believes that its current rules and other public 
disclosures provide a comprehensive description of the operation of the 
NASDAQ OMX BX Equities Market and are sufficient for members and the 
investing public to have an accurate understanding of its market 
structure, it also acknowledges that a restatement of certain rules 
will further clarify the operation of its system.\8\ For instance, BX 
believes that adding examples of order type operation to its rules will 
promote greater understanding of the Exchange's market structure.\9\ In 
addition, BX asserts that certain functionality previously described as 
an ``order type'' is more precisely characterized as an attribute that 
may be added to a particular order.\10\ Accordingly, this proposed rule 
change distinguishes between ``Order Types'' and ``Order Attributes,'' 
and provides descriptions of the Order Attributes that may be attached 
to particular Order Types.\11\
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    \8\ See Notice, 80 FR at 18474.
    \9\ Id.
    \10\ Id.
    \11\ Id.
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    Currently, BX Rule 4751 sets forth most of the rules governing 
NASDAQ OMX BX Equities Market Order Types and Order Attributes, as well 
as other defined terms that pertain to trading securities on the NASDAQ 
OMX BX Equities Market.\12\ BX proposes to restate and amend Rule 4751 
as new Rule 4701.\13\ BX also proposes to amend the definitions 
pertaining to Order Types and Order Attributes and to relocate them 
from Rule 4751 to new Rules 4702 (Order Types) and 4703 (Order 
Attributes), respectively.\14\ In addition, BX proposes to delete Rule 
4755 as the information contained therein is superseded by proposed 
Rules 4702 and 4703.\15\ Lastly, BX proposes certain conforming and 
technical changes to Rules 4756, 4757, and 4780.\16\
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    \12\ See Rule 4751.
    \13\ See proposed Rule 4701.
    \14\ See proposed Rules 4702 and 4703.
    \15\ See Rule 4755.
    \16\ BX states that, in subsequent proposed rule changes, it 
plans to restate the remainder of its Rules numbered 4752 through 
4780 so that they appear sequentially following Rule 4703. See. 
Notice, 80 FR at 18474.
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    BX represents that, except where specifically stated otherwise, all 
proposed rules are restatements of existing rules and are not intended 
to reflect substantive changes to rule text or the operation of the 
NASDAQ OMX BX Equities Market.\17\ Proposed Rule 4702 related to Order 
Types contains definitions and descriptions of Price to Comply Orders, 
Price to Display Orders (referred to as ``Price to Comply Post Orders'' 
in current Rule 4751),\18\ Non-Displayed Orders, Post-Only Orders, 
Retail Price Improving Orders, and Retail Orders. Proposed Rule 4703 
related to Order Attributes contains definitions and descriptions of 
time-in-force (``TIF'') modifiers, order size, order price, pegging, 
minimum quantity, routing, discretion, reserve size, attribution, 
intermarket sweep order designation, and display.\19\
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    \17\ See. Notice, 80 FR at 18474.
    \18\ See Notice, 80 FR at 18477 n.29.
    \19\ The Notice contains additional details related to proposed 
Rules 4702 and 4703. See Notice, 80 FR at 18473-90.
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    In Amendment No. 1, the Exchange proposes to add language further 
explaining the operation of the following order types: Post-Only 
Orders, orders with a TIF of IOC, including Routable Orders and Post-
Only Orders; orders with Midpoint Pegging, Primary Pegging or Market 
Pegging; and orders designated with both Pegging and Routing 
attributes.\20\ For example, the Exchange states that for Order Types 
that list both Pegging and Routing as possible Order Attributes, the 
two Order Attributes may be combined since Pegging serves to establish 
the price of the order, while Routing establishes the market center(s) 
to which the system's routing functionality may direct a routed order 
if liquidity is available at that price.\21\ The Exchange also proposes 
to add further specification regarding the availability of certain 
order types only through certain communication protocols by stating 
that a Post-Only Order with a TIF of IOC may not be entered through the 
RASH or FIX protocols.\22\ In addition, the Exchange proposes to add 
language stating that one or more Order

[[Page 37699]]

Attributes may be assigned to a single order, but if the use of 
multiple Order Attributes would result in contradictory instructions, 
the system will reject the order or remove non-conforming Order 
Attributes.\23\
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    \20\ See Amendment No. 1.
    \21\ Id.
    \22\ Id.
    \23\ Id.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\24\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\25\ which 
requires, among other things, that the rules of a national securities 
exchange be 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 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; and are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \24\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \25\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the Exchange believes that the proposal 
is consistent with Section 6(b)(5) of the Act because the reorganized 
and enhanced descriptions of its Order Types, Order Attributes, and 
related System functionality should promote just and equitable 
principles of trade and perfect the mechanisms of a free and open 
market and the national market system by providing greater clarity 
concerning certain aspects of the System's operations.\26\ In addition, 
the Commission notes that BX believes that the proposed rule change 
should contribute to the protection of investors and the public 
interest by making BX's rules easier to understand.\27\ Further, BX 
believes that additional specificity in its rules will promote a better 
understanding of the Exchange's operation, thereby facilitating fair 
competition among brokers and dealers and among markets.\28\
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    \26\ See Notice, 80 FR at 18488.
    \27\ Id.
    \28\ Id.
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    The Commission notes that, according to the Exchange, the proposal 
does not add any new functionality but instead re-organizes the 
Exchange's order type rules and provides additional detail regarding 
the order type functionality currently offered by the Exchange. Based 
on the Exchange's representation, the Commission believes that the 
proposed rule change does not raise any novel regulatory considerations 
and should provide greater specificity, clarity and transparency with 
respect to the order type functionality available on the Exchange. In 
addition, the Commission notes that the Exchange's proposed rule 
changes provide additional detail related to functionality for certain 
order types and the handling of orders during initial entry and after 
posting to the NASDAQ OMX BX Equities Market Book. Accordingly, the 
Commission believes that this proposed rule change should provide 
greater transparency with respect to the Exchange's order type 
functionality. For these reasons, the Commission believes that the 
proposal should help to prevent fraudulent and manipulative acts and 
practices, promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, protect investors and the 
public interest.
    The Commission finds good cause to approve the filing, as amended 
by Amendment No. 1 to the proposed rule change, prior to the thirtieth 
day after the date of publication of notice of filing thereof in the 
Federal Register. The proposed amendments should further increase the 
Exchange's transparency with respect to the operation of various order 
types and modifiers, and serve to enhance investors' understanding of 
the tools available with respect to the handling of their orders. 
Accelerated approval would allow the Exchange to update its rule text 
immediately, thus providing users with greater clarity with respect to 
the use and potential use of functionality offered by the Exchange. In 
addition, the initial proposal was open for comment for twenty-one days 
after publication and generated no comment. Accordingly, the Commission 
believes that good cause exists, consistent with Sections 6(b)(5) and 
19(b) of the Act,\29\ to approve the filing, as amended by Amendment 
No. 1 to the proposed rule change, on an accelerated basis.
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    \29\ 15 U.S.C. 78f(b)(5); 15 U.S.C. 78s(b).
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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, as amended, 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-2015-015 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BX-2015-015. 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-2015-015 and should be 
submitted on or before July 22, 2015.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\30\ that the proposed rule change (SR-BX-2015-015) be, and it 
hereby is, approved on an accelerated basis, as amended.
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    \30\ 15 U.S.C. 78s(b)(2).
    \31\ 17 CFR 200.30-3(a)(12).


[[Page 37700]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-16083 Filed 6-30-15; 8:45 am]
BILLING CODE 8011-01-P