80 FR 76052 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Market Order Spread Protection

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 234 (December 7, 2015)

Page Range		76052-76053
FR Document		2015-30720
Federal Register, Volume 80 Issue 234 (Monday, December 7, 2015)
[Federal Register Volume 80, Number 234 (Monday, December 7, 2015)]
[Notices]
[Pages 76052-76053]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-30720]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76531; File No. SR-BX-2015-074]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Market Order Spread Protection

December 1, 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 November 20, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``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 amend the BX rules at Chapter VI, Section 
6, entitled ``Acceptance of Quotes and Orders,'' specifically at 
Section 6(c) concerning Market Order Spread Protection.
    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 this filing is to amend Chapter VI, Section 6 
entitled ``Acceptance of Quotes and Orders,'' specifically, at 
paragraph (c) related to Market Order Spread Protection. This feature 
was adopted in 2012.\3\ The Market Order Spread Protection was designed 
to protect Market Orders \4\ from being executed in very wide markets. 
This feature is not optional and is set at the same threshold for all 
options traded on BX. The Market Order Spread Protection is applicable 
to all Participants submitting Market Orders.
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    \3\ See Securities Exchange Act Release No. 67256 (June 26, 
2012), 77 FR 39277 (July 2, 2012) (SR-BX-2012-030) (Order Granting 
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 
and 2, Relating to the Establishment of a New Options Market, NASDAQ 
OMX BX Options).
    \4\ ``Market Orders'' are orders to buy or sell at the best 
price available at the time of execution. Participants can designate 
that their Market Orders not executed after a pre-established period 
of time, as established by the Exchange, will be cancelled back to 
the Participant. See BX Rules at Chapter VI, Section 1(e)(5).
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    At this time, the Exchange is proposing to amend Section 6(c) which 
currently states, ``System Orders that are Market Orders will be 
rejected if the NBBO is wider than a preset threshold at the time the 
order is received by the System.'' The Exchange proposes to amend this 
sentence as follows: ``System Orders that are Market Orders will be 
rejected if the best of the NBBO and the internal market BBO \5\ (the 
``Reference BBO'') is wider than a preset threshold at the time the 
order is received by the System.'' The Exchange is amending this rule 
text to account for orders which would lock or cross another market,\6\ 
could result in non-displayed pricing and would result in the internal 
market BBO being better than the NBBO.
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    \5\ Best Bid or Best Offer on BX.
    \6\ Options Order Protection and Locked and Crossed Market Rules 
are located in Chapter XII of BX Rules. In the event of a locked and 
crossed market, the BBO will be repriced and displayed in accordance 
with BX Rules at Chapter VI, Section 7(b)(3)(C).
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    The current rule text does not reflect the possibility that orders 
will be re-priced to the current national best offer (for bids) or the 
current national best bid (for offers) and displayed at one minimum 
price variance above (for offers) or below (for bids) the national best 
price. The proposed rule text amends the current rule text to account 
for the results of repricing.
    This rule change will correct the existing rule text to reflect 
current practice which accounts for repricing due to trade-through and 
locked and crossed market restrictions.\7\ Participants were notified 
via an Options Trader Alert of this rule text error.\8\
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    \7\ See Chapter XII of BX Rules.
    \8\ See Options Regulatory Alert 2015-28 dated September 4, 
2015.
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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 amending the rule text to reflect the impact of repricing 
due to trade-through and locked and crossed market restrictions.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    Amending the current BX rule text for Market Order Spread 
Protection to account for repricing due to trade-through and locked and 
crossed market restrictions would provide Participants with the 
expected results of the Market Order Spread Protection feature. The 
Exchange believes that it is consistent with the Act to amend the rule 
text to reflect the possibility that orders will be re-priced to the 
current national best offer (for bids) or the current national best bid 
(for offers) and displayed at one

[[Page 76053]]

minimum price variance above (for offers) or below (for bids) the 
national best price.
    The Exchange believes that the amendment to the Market Order Spread 
Protection language does not otherwise create an impediment to a free 
and open market because the repricing due to trade throughs and locked 
and crossed markets exists today and serve to protect against trading 
through or locking or crossing another market. This proposal reflects 
the impact of repricing due to trade-through and locked and crossed 
market restrictions on the Market Order Spread Protection feature.
    By reflecting the proper rule text to account for trade-through and 
locked and crossed market restrictions, the Exchange is providing 
Participants with additional information with which to anticipate the 
impact of the Market Order Spread Protection feature.

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. The Exchange does not believe 
that the proposal to amend the Market Order Spread Protection rule text 
to account [sic] repricing due to trade-through and locked and crossed 
market restrictions creates an undue burden on competition because it 
will serve to provide Participants with greater information to 
anticipate the impact of the Market Order Spread Protection feature. 
Today, Participants' orders are repriced due to trade-through and 
locked and crossed market restrictions. The purpose of this rule change 
is to protect market orders resting on the Order Book when the market 
is wide. This feature will be applied in a similar manner to all 
Participants on 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 significantly 
affect the protection of investors or the public interest; does not 
impose any significant burden on competition; and by its terms does not 
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) \11\ of the Act and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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: Necessary 
or appropriate in the public interest; for the protection of investors; 
or 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-2015-074 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-2015-074. 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-2015-074 and should be 
submitted on or before December 28, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Robert W. Errett,
Deputy Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-30720 Filed 12-4-15; 8:45 am]
 BILLING CODE 8011-01-P
76052 Federal Register / Vol. 80, No. 234 / Monday, December 7, 2015 / Notices

Notification Requirements (29 CFR part entitled ‘‘Acceptance of Quotes and and the internal market BBO 5 (the
4043) to modify the system of waivers Orders,’’ specifically at Section 6(c) ‘‘Reference BBO’’) is wider than a preset
from reporting, implement provisions of concerning Market Order Spread threshold at the time the order is
the Pension Protection Act of 2006, and Protection. received by the System.’’ The Exchange
make other changes. PBGC made The text of the proposed rule change is amending this rule text to account for
changes to two collections of is available on the Exchange’s Web site orders which would lock or cross
information: at http://nasdaqomxbx. another market,6 could result in non-
• Reportable Events, OMB control cchwallstreet.com, at the principal displayed pricing and would result in
number, 1212–0013 (covering subparts office of the Exchange, and at the the internal market BBO being better
B and C of 29 CFR part 4043). Commission’s Public Reference Room. than the NBBO.
• Notice of Failure to Make Required The current rule text does not reflect
Contributions, OMB control number II. Self-Regulatory Organization’s
the possibility that orders will be re-
1212–0041 (covering subpart D of 29 Statement of the Purpose of, and
priced to the current national best offer
CFR part 4043). Statutory Basis for, the Proposed Rule
(for bids) or the current national best bid
PBGC submitted the revised Change
(for offers) and displayed at one
collections of information for review by In its filing with the Commission, the minimum price variance above (for
OMB under the Paperwork Reduction Exchange included statements offers) or below (for bids) the national
Act. On November 24, 2015, OMB concerning the purpose of and basis for best price. The proposed rule text
approved the revised collections of the proposed rule change and discussed amends the current rule text to account
information through November 30, any comments it received on the for the results of repricing.
2018. An agency may not conduct or proposed rule change. The text of these This rule change will correct the
sponsor, and a person is not required to statements may be examined at the existing rule text to reflect current
respond to, a collection of information places specified in Item IV below. The practice which accounts for repricing
unless it displays a currently valid OMB Exchange has prepared summaries, set due to trade-through and locked and
control number. forth in sections A, B, and C below, of crossed market restrictions.7
Issued in Washington, DC, this 2nd day of the most significant aspects of such Participants were notified via an
December, 2015. statements. Options Trader Alert of this rule text
Judith Starr, A. Self-Regulatory Organization’s error.8
General Counsel, Pension Benefit Guaranty Statement of the Purpose of, and 2. Statutory Basis
Corporation. Statutory Basis for, the Proposed Rule The Exchange believes that its
[FR Doc. 2015–30771 Filed 12–4–15; 8:45 am] Change proposal is consistent with Section 6(b)
BILLING CODE 7709–02–P
1. Purpose of the Act 9 in general, and furthers the
The purpose of this filing is to amend objectives of Section 6(b)(5) of the Act 10
Chapter VI, Section 6 entitled in particular, in that it is designed to
SECURITIES AND EXCHANGE promote just and equitable principles of
COMMISSION ‘‘Acceptance of Quotes and Orders,’’
specifically, at paragraph (c) related to trade, to remove impediments to and
[Release No. 34–76531; File No. SR–BX– Market Order Spread Protection. This perfect the mechanism of a free and
2015–074] feature was adopted in 2012.3 The open market and a national market
Market Order Spread Protection was system, and, in general to protect
Self-Regulatory Organizations; investors and the public interest, by
NASDAQ OMX BX, Inc.; Notice of Filing designed to protect Market Orders 4
from being executed in very wide amending the rule text to reflect the
and Immediate Effectiveness of impact of repricing due to trade-through
Proposed Rule Change Relating to markets. This feature is not optional and
is set at the same threshold for all and locked and crossed market
Market Order Spread Protection restrictions.
options traded on BX. The Market Order
Amending the current BX rule text for
December 1, 2015. Spread Protection is applicable to all
Market Order Spread Protection to
Pursuant to Section 19(b)(1) of the Participants submitting Market Orders.
At this time, the Exchange is account for repricing due to trade-
Securities Exchange Act of 1934
proposing to amend Section 6(c) which through and locked and crossed market
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
currently states, ‘‘System Orders that are restrictions would provide Participants
notice is hereby given that on November
Market Orders will be rejected if the with the expected results of the Market
20, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’
NBBO is wider than a preset threshold Order Spread Protection feature. The
or ‘‘Exchange’’) filed with the Securities
at the time the order is received by the Exchange believes that it is consistent
and Exchange Commission
with the Act to amend the rule text to
(‘‘Commission’’) the proposed rule System.’’ The Exchange proposes to
reflect the possibility that orders will be
change as described in Items I and II amend this sentence as follows:
re-priced to the current national best
below, which Items have been prepared ‘‘System Orders that are Market Orders
offer (for bids) or the current national
by the Exchange. The Commission is will be rejected if the best of the NBBO
best bid (for offers) and displayed at one
publishing this notice to solicit
comments on the proposed rule change 3 See Securities Exchange Act Release No. 67256
5 Best Bid or Best Offer on BX.
from interested persons. (June 26, 2012), 77 FR 39277 (July 2, 2012) (SR–BX–
6 Options Order Protection and Locked and
2012–030) (Order Granting Approval of a Proposed
Crossed Market Rules are located in Chapter XII of
I. Self-Regulatory Organization’s Rule Change, as Modified by Amendment Nos. 1
mstockstill on DSK4VPTVN1PROD with NOTICES

and 2, Relating to the Establishment of a New BX Rules. In the event of a locked and crossed
Statement of the Terms of Substance of market, the BBO will be repriced and displayed in
Options Market, NASDAQ OMX BX Options).
the Proposed Rule Change 4 ‘‘Market Orders’’ are orders to buy or sell at the accordance with BX Rules at Chapter VI, Section
7(b)(3)(C).
The Exchange proposes to amend the best price available at the time of execution. 7 See Chapter XII of BX Rules.
Participants can designate that their Market Orders
BX rules at Chapter VI, Section 6, not executed after a pre-established period of time,
8 See Options Regulatory Alert 2015–28 dated

as established by the Exchange, will be cancelled September 4, 2015.
1 15 U.S.C. 78s(b)(1). 9 15 U.S.C. 78f(b).
back to the Participant. See BX Rules at Chapter VI,
2 17 CFR 240.19b–4. Section 1(e)(5). 10 15 U.S.C. 78f(b)(5).

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Federal Register / Vol. 80, No. 234 / Monday, December 7, 2015 / Notices 76053

minimum price variance above (for pursuant to Section 19(b)(3)(A) 11 of the printing in the Commission’s Public
offers) or below (for bids) the national Act and Rule 19b–4(f)(6) thereunder.12 Reference Room, 100 F Street NE.,
best price. At any time within 60 days of the Washington, DC 20549, on official
The Exchange believes that the filing of the proposed rule change, the business days between the hours of
amendment to the Market Order Spread Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the
Protection language does not otherwise temporarily suspend such rule change if filing also will be available for
create an impediment to a free and open it appears to the Commission that such inspection and copying at the principal
market because the repricing due to action is: Necessary or appropriate in office of the Exchange. All comments
trade throughs and locked and crossed the public interest; for the protection of received will be posted without change;
markets exists today and serve to protect investors; or otherwise in furtherance of the Commission does not edit personal
against trading through or locking or the purposes of the Act. If the identifying information from
crossing another market. This proposal Commission takes such action, the submissions. You should submit only
reflects the impact of repricing due to Commission shall institute proceedings information that you wish to make
trade-through and locked and crossed to determine whether the proposed rule available publicly. All submissions
market restrictions on the Market Order should be approved or disapproved. should refer to File Number SR–BX–
Spread Protection feature. 2015–074 and should be submitted on
By reflecting the proper rule text to IV. Solicitation of Comments
or before December 28, 2015.
account for trade-through and locked Interested persons are invited to
and crossed market restrictions, the submit written data, views, and For the Commission, by the Division of
Exchange is providing Participants with arguments concerning the foregoing, Trading and Markets, pursuant to delegated
additional information with which to including whether the proposed rule authority.13
anticipate the impact of the Market change is consistent with the Act. Robert W. Errett,
Order Spread Protection feature. Comments may be submitted by any of Deputy Secretary.
B. Self-Regulatory Organization’s the following methods: [FR Doc. 2015–30720 Filed 12–4–15; 8:45 am]
Statement on Burden on Competition Electronic Comments BILLING CODE 8011–01–P

The Exchange does not believe that • Use the Commission’s Internet
the proposed rule change will impose comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE
any burden on competition not rules/sro.shtml); or COMMISSION
necessary or appropriate in furtherance • Send an email to rule-comments@
of the purposes of the Act. The sec.gov. Please include File Number SR–
Exchange does not believe that the BX–2015–074 on the subject line. [Release No. 34–76532; File No. SR–FINRA–
proposal to amend the Market Order 2015–050]
Spread Protection rule text to account Paper Comments
[sic] repricing due to trade-through and • Send paper comments in triplicate Self-Regulatory Organizations;
locked and crossed market restrictions to Secretary, Securities and Exchange Financial Industry Regulatory
creates an undue burden on competition Commission, 100 F Street NE., Authority, Inc.; Notice of Filing and
because it will serve to provide Washington, DC 20549–1090. Immediate Effectiveness of a Proposed
Participants with greater information to Rule Change To Update Rule Cross-
All submissions should refer to File
anticipate the impact of the Market References and Make Non-Substantive
Number SR–BX–2015–074. This file
Order Spread Protection feature. Today, Technical Changes to Certain FINRA
number should be included on the
Participants’ orders are repriced due to Rules
subject line if email is used. To help the
trade-through and locked and crossed Commission process and review your December 1, 2015.
market restrictions. The purpose of this comments more efficiently, please use
rule change is to protect market orders only one method. The Commission will Pursuant to Section 19(b)(1) of the
resting on the Order Book when the post all comments on the Commission’s Securities Exchange Act of 1934
market is wide. This feature will be Internet Web site (http://www.sec.gov/ (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
applied in a similar manner to all rules/sro.shtml). Copies of the notice is hereby given that on November
Participants on BX. submission, all subsequent 24, 2015, Financial Industry Regulatory
amendments, all written statements Authority, Inc. (‘‘FINRA’’) filed with the
C. Self-Regulatory Organization’s Securities and Exchange Commission
Statement on Comments on the with respect to the proposed rule
change that are filed with the (‘‘SEC’’ or ‘‘Commission’’) the proposed
Proposed Rule Change Received From rule change as described in Items I and
Members, Participants, or Others Commission, and all written
communications relating to the II below, which Items have been
No written comments were either proposed rule change between the prepared by FINRA. FINRA has
solicited or received. Commission and any person, other than designated the proposed rule change as
those that may be withheld from the constituting a ‘‘non-controversial’’ rule
III. Date of Effectiveness of the
public in accordance with the change under paragraph (f)(6) of Rule
Proposed Rule Change and Timing for
provisions of 5 U.S.C. 552, will be 19b–4 under the Act,3 which renders
Commission Action
available for Web site viewing and the proposal effective upon receipt of
Because the foregoing proposed rule this filing by the Commission. The
mstockstill on DSK4VPTVN1PROD with NOTICES

change does not significantly affect the 11 15 Commission is publishing this notice to
U.S.C. 78s(b)(3)(A).
protection of investors or the public 12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– solicit comments on the proposed rule
interest; does not impose any significant 4(f)(6) requires a self-regulatory organization to give change from interested persons.
burden on competition; and by its terms the Commission written notice of its intent to file
does not become operative for 30 days the proposed rule change at least five business days 13 17
prior to the date of filing of the proposed rule CFR 200.30–3(a)(12).
from the date on which it was filed, or change, or such shorter time as designated by the
1 15 U.S.C. 78s(b)(1).
such shorter time as the Commission Commission. The Exchange has satisfied this 2 17 CFR 240.19b–4.

may designate, it has become effective requirement. 3 17 CFR 240.19b–4(f)(6).

VerDate Sep<11>2014 18:36 Dec 04, 2015 Jkt 238001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\07DEN1.SGM 07DEN1
Document Created: 2015-12-14 13:30:34
Document Modified: 2015-12-14 13:30:34
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 76052