80 FR 48590 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to a Delay of Implementation Relate to the Volume-Based and Multi-Trigger Threshold

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 156 (August 13, 2015)

[Federal Register Volume 80, Number 156 (Thursday, August 13, 2015)]
[Notices]
[Pages 48590-48592]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-19873]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75643; File No. SR-BX-2015-049]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
a Delay of Implementation Relate to the Volume-Based and Multi-Trigger 
Threshold

August 7, 2015.
    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 6, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``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

    The Exchange proposes to extend the implementation timeframe for 
adopting

[[Page 48591]]

two new BX Market Maker \3\ risk protections, a volume-based threshold 
and a multi-trigger threshold.
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    \3\ The term ``BX Market Maker'' means a Participant that has 
registered as a Market Maker on BX pursuant to Chapter VII, Section 
2, and which remains in good standing pursuant to Chapter VII, 
Section 4.
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    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
    The purpose of the proposal is to extend the implementation of the 
timeframe for the Exchange's amendments to BX's Rules at Chapter VII, 
Section 6(f) entitled ``Market Maker Quotations.'' \4\ In its rule 
change adopting the two new risk protections in Chapter VII, Section 
6(f), the Exchange stated that it proposed to ``. . . implement this 
rule within thirty (30) days of the operative date.'' The Exchange 
stated that it would issue an Options Trader Alert in advance to inform 
market participants of such date.\5\ At this time, the Exchange desires 
to extend the implementation of this rule change to within (60) days of 
the operative date. The Exchange will announce the date of 
implementation by issuing an Options Trader Alert.
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    \4\ This rule became immediately effective on June 23, 2015. 
Securities Exchange Release No. 75392 (July 8, 2015), 80 FR 41114 
(July 14, 2015) (SR-BX-2015-036).
    \5\ See note 4.
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    By way of background, the risk protections provided for in Chapter 
VII, Section 6(f) are intended to assist BX Market Makers in 
controlling their trading risks.\6\ Specifically, the risk protections 
establish: (1) A threshold used to calculate each BX Market Maker's 
total volume executed in all series of an underlying security within a 
specified time period and to compare that to a pre-determined threshold 
(``Volume-Based Threshold''), and (2) a threshold used to measure the 
number of times the System has triggered \7\ based on the Risk Monitor 
Mechanism (``Percentage-Based Threshold'') pursuant to Chapter VI, 
Section 19 and Volume-Based Thresholds within a specified time period 
and to compare that total to a pre-determined threshold (``Multi-
Trigger Threshold'').\8\
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    \6\ Pursuant to BX Rules at Chapter VII, Section 5, entitled 
``Obligations of Market Makers'', in registering as a market maker, 
an Options Participant commits himself to various obligations. 
Transactions of a BX Market Maker must constitute a course of 
dealings reasonably calculated to contribute to the maintenance of a 
fair and orderly market, and Market Makers should not make bids or 
offers or enter into transactions that are inconsistent with such 
course of dealings. Further, all Market Makers are designated as 
specialists on BX for all purposes under the Act or rules 
thereunder. See Chapter VII, Section 2.
    \7\ A trigger is defined as the event which causes the System to 
automatically remove all quotes in all options series in an 
underlying issue.
    \8\ The details of the two risk protections are described in the 
initial filing. See Securities Exchange Release No. 75392 (July 8, 
2015), 80 FR 41114 (July 14, 2015) (SR-BX-2015-036).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \10\ in particular, in that it is designed to 
promote just and equitable principles of trade, 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, by enhancing the risk protections available to Exchange 
members. The proposal promotes policy goals of the Commission, which 
has encouraged execution venues, exchange and non-exchange alike, to 
enhance risk protection tools and other mechanisms to decrease risk and 
increase stability.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The delay of the implementation of BX Rules at Chapter VII, Section 
6(f) will permit the Exchange an additional thirty days within which to 
implement these risk protections that will be utilized by BX Market 
Makers.

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. With respect to the risk 
protections, the proposal will not impose a burden on intra-market or 
inter-market competition; rather it provides BX Market Makers with the 
opportunity to avail themselves of similar risk tools that are 
currently available on other exchanges.\11\ The proposal does not 
impose a burden on inter-market competition, because members may choose 
to become market makers on a number of other options exchanges, which 
may have similar but not identical features.\12\ The proposed rule 
change is meant to protect BX Market Makers from inadvertent exposure 
to excessive risk. Accordingly, the proposed rule change will have no 
impact on competition.
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    \11\ See Section 8 of Form 19b-4, infra.
    \12\ See BATS Rule 21.16, BOX Rules 8100 and 8110, C2 Rule 8.12, 
CBOE Rule 8.18, ISE Rule 804(g), MIAX Rule 612, NYSE MKT Rule 928NY 
and NYSE Arca Rule 6.40.
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    The delay of the implementation of BX Rules at Chapter VII, Section 
6(f) will permit the Exchange additional time to implement these risk 
protections that will be utilized by BX Market Makers.

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) 
by its terms, 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)(ii) of the Act \13\ 
and subparagraph (f)(6) of Rule 19b-4 thereunder.\14\ The Exchange has 
requested that the Commission waive the thirty-day operative delay so 
that the proposal may become operative immediately. The Exchange states 
that waiving the thirty-day operative delay will enable it to implement 
these risk protections within the new timeframe. The Commission 
believes that waiving the thirty-day operative delay is

[[Page 48592]]

consistent with the protection of investors and the public interest. 
Therefore, the Commission hereby waives the thirty-day operative delay 
and designates the proposal effective upon filing.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \14\ 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.
    \15\ For purposes of waiving the 30-day operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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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. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

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-2015-049 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BX-2015-049. 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 3:00 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-2015-049 and should be 
submitted on or before September 3, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-19873 Filed 8-12-15; 8:45 am]
BILLING CODE 8011-01-P