Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change Relating to Order Handling and Exposure Periods on the Boston Options Exchange Facility, 10634-10636 [E9-5130]

Download as PDF 10634 Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices FINRA–2008–052) be and hereby is approved. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.11 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–5212 Filed 3–10–09; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59497; File No. SR–BX– 2009–015] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change Relating to Order Handling and Exposure Periods on the Boston Options Exchange Facility March 4, 2009. 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 February 27, 2009, NASDAQ OMX BX, Inc. (the ‘‘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 self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. rwilkins on PROD1PC63 with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend certain Rules of the Boston Options Exchange (‘‘BOX’’) to reduce the order handling and exposure periods contained within the BOX Rules from three seconds to one second. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s Internet Web site at https:// nasdaqomxbx.cchwallstreet.com/ NASDAQOMXBX/Filings/. 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 self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Nov<24>2008 17:01 Mar 10, 2009 Jkt 217001 on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization 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 proposed rule change is to reduce the order handling and exposure periods from three seconds to one second in the Supplementary Material to Section 17 (Customer Orders and Order Flow Providers) and in Section 18 (The Price Improvement Period (‘‘PIP’’)) of Chapter V (Doing Business on BOX) of the BOX Rules. These sections require that orders entered into the BOX limit order book (‘‘BOX Book’’), or the PIP, respectively, are currently exposed to all market participants for three seconds before the orders are automatically executed, giving Options Participants (‘‘Participants’’) an opportunity to enter additional trading interests. Chapter V of the BOX Rules outlines certain requirements related to order handling by BOX Options Participants and Market Makers. A Participant may not execute an order it represents as agent with a facilitation or a solicited order unless it complies with the order exposure requirements contained in Chapter V, Section 17, Supplementary Materials .02 and .03. Specifically, Supplementary Material .02 to Section 17 provides that an Options Participant may not cause the execution of an order it represents as agent on BOX through the use of orders it solicited unless the agency order is first exposed to the BOX Book for at least three seconds. Furthermore, Supplementary Material .03 to Section 17 provides that an order flow provider (‘‘OFP’’) may not execute as principal an order it represents as agent unless the OFP (i) exposes the order to the BOX Book for three seconds; (ii) has been bidding or offering on BOX for at least three seconds prior to receiving an agency order that is executable against such bid or offer; or (iii) sends the agency order to the PIP or Universal Price Improvement Period (‘‘UPIP’’). Under the proposal, these time periods would be reduced to one second. The Exchange is also proposing to reduce the PIP in Section 18 of Chapter V from three seconds to one second. Currently the PIP allows Participants to designate certain customer orders for PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 price improvement and submit such orders to the PIP with a matching contra order (‘‘Primary Improvement Order’’). Once an order is submitted to the PIP, BOX broadcasts a message to Options Participants that commences the PIP and (1) states that a Primary Improvement Order has been processed; (2) contains information concerning series, size, price and side of the market of the order; and (3) states when the PIP will conclude. This proposal would reduce the PIP to one second. When approving the existing three second order handling and exposure periods, the Commission concluded that, in the electronic environment of BOX, reducing these time periods to three seconds was fully consistent with the electronic nature of the BOX market.3 BOX recognized that three seconds would not be long enough to allow human interaction with orders. Rather, Participants have been operating with sufficiently automated electronic systems so that they can react and respond to orders in a meaningful way within three seconds and BOX fully anticipates that this will continue within the proposed one second time frame. BOX believes that further reducing its order handling and exposure periods from three seconds to one second will benefit all market participants. BOX believes it is in all participants’ best interests to minimize the time of the exposure period while continuing to allow Participants adequate time to electronically respond, as both the order being exposed and Participants responding are subject to market risk during the exposure period. Indeed, most participants wait until the end of the last second of the current three second period before responding to exposed orders so as to minimize market risk. BOX believes that one second will continue to provide market participants with sufficient time to respond, compete, and provide price improvement for orders and will provide investors and other market participants with more timely executions, thereby reducing their market risk. Recently, BOX distributed a survey to Participants that regularly participate in the PIP or would otherwise be affected by this proposal. To substantiate that its Participants could receive, process, and communicate a response back to BOX within one second, the survey asked Participants to identify (i) approximately how many milliseconds it takes for an order broadcast from BOX 3 See Securities Exchange Act Release No. 53854; (May 24, 2006), 71 FR 30975 (May 31, 2006) (SR– BSE–2006–23). E:\FR\FM\11MRN1.SGM 11MRN1 Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices rwilkins on PROD1PC63 with NOTICES to reach their systems; (ii) approximately how many milliseconds it takes their systems to generate a response to an order broadcast; (iii) approximately how many milliseconds it takes their response to an order broadcast to reach BOX; and (iv) whether or not a reduction of the PIP and facilitation and solicitation order exposure time periods to one second would impair their ability to participate in BOX PIPs or facilitation or solicitation orders. The survey results indicate that the time it takes a message to travel between BOX and its Participants typically is not more than fifty milliseconds each way.4 The survey also indicated that it typically takes not more than ten milliseconds for Participant systems to process the information and generate a response. Thus, the survey indicated that it typically takes at most 110 milliseconds for Participants to receive, process, and respond to broadcast messages related to the PIP or facilitation or solicitation related broadcasts and for such responses to reach BOX. Additionally, Participants indicated that reducing the exposure period to one second would not impair their ability to participate in orders executed through the PIP or facilitation or solicitation orders.5 The Exchange believes that this information provides additional support for its assertion that reducing the exposure periods from three seconds to one second will continue to provide Participants with sufficient time to ensure effective interaction with orders. BOX Participants are able to respond to PIP orders in less than one second and this rule change could provide additional customer orders an opportunity for price improvement because it will reduce the market risk for Participants that are required to guarantee an execution at the National Best Bid/Offer (‘‘NBBO’’) or better. Accordingly, BOX does not believe it is necessary or beneficial to the orders being exposed to continue to subject them to market risk for a full three seconds. After Commission approval of the proposal, and at least one week prior to implementation of the rule change, BOXR will issue a regulatory circular to Participants. The regulatory circular 4 Seventeen firms responded to the survey. Thirteen of the seventeen responded to the specific timing questions. 5 All of the thirteen Participants that responded to the specific timing questions, and two of the four Participants that did not answer the specific timing questions, indicated that reducing the exposure time periods to one second would not impair their ability to participate in BOX PIPs or facilitation or crossing orders. VerDate Nov<24>2008 17:01 Mar 10, 2009 Jkt 217001 will inform Participants of the implementation date of the reduction of the order handling and exposure periods from three seconds to one second. This will give Participants an opportunity to make any necessary modifications to coincide with the implementation date. 2. Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,6 in general, and Section 6(b)(5) of the Act,7 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 of a free and open market and a national market system, and, in general, to protect investors and the public interest. In particular, the proposed rule change will provide investors with more timely execution of their options orders, while ensuring that there is an adequate exposure of all crossing orders on BOX. 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 The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or (ii) as to which the Exchange consents, the Commission will: (A) By order approve such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. The Exchange has requested accelerated approval of this proposed 6 15 7 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00108 Fmt 4703 Sfmt 4703 10635 rule change prior to the 30th day after the date of publication of the notice in the Federal Register. The Commission is considering granting accelerated approval of the proposed rule change at the end of a 15-day comment period. 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 (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–BX–2009–015 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–2009–015. This file number should be included on the subject line if e-mail 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 (https://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 inspection and copying in the Commission’s Public Reference Room, on business days between the hours of 10 a.m. and 3 p.m., located at 100 F Street, NE., Washington, DC 20549. 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 Number SR–BX–2009–015 and should E:\FR\FM\11MRN1.SGM 11MRN1 10636 Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices be submitted on or before March 26, 2009. at the Commission’s Public Reference room. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–5130 Filed 3–10–09; 8:45 am] 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 self-regulatory organization 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 NYSE has prepared summaries, set forth in Sections A, B and C below, of the most significant aspects of such statements. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59510; File No. SR–NYSE– 2009–21] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC To Temporarily Suspend Its Price Continued Listing Standard and Extend the Period of the Temporary Lowering of Its Average Global Market Capitalization Continued Listing Standard March 4, 2009. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 26, 2009, New York Stock Exchange, LLC (the ‘‘NYSE’’ or the ‘‘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 Exchange has designated this proposal eligible for immediate effectiveness pursuant to Rule 19b–4(f)(6) 3 under the Exchange Act. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. rwilkins on PROD1PC63 with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to (i) suspend until June 30, 2009, the application of its price criteria for capital and common stock set forth in Section 802.01C of the Exchange’s Listed Company Manual (the ‘‘Manual’’), and (ii) extend until the same date the temporary lowering of the average market capitalization requirement of Section 802.01B of the Manual. The text of the proposed rule change is available on the Exchange’s Web site (https://www.nyse.com), at the Exchange’s Office of the Secretary and 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 1 15 VerDate Nov<24>2008 17:01 Mar 10, 2009 Jkt 217001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In recent months, the U.S. and global equities markets have experienced extreme volatility and a precipitous decline in trading prices of many securities. As a consequence of these market conditions, the Exchange has experienced an unusually high number (as compared to historical levels) of listed companies having stock prices that have either fallen below the Exchange’s $1.00 price requirement for capital and common stock set forth in Section 802.01C of the Manual (i.e., the average closing price of their stock has fallen below $1.00 over a consecutive 30 trading day period) 4 or having an average closing stock price that is below $2.00. In response, the Exchange 4 Section 802.01C provides that a company will be considered to be below compliance standards if the average closing price of a security as reported on the consolidated tape is less than $1.00 over a consecutive 30 trading day period. Once notified, the company must bring its share price and average share price back above $1.00 by six months following receipt of the notification. A company is not eligible to follow the cure procedures outlined in Sections 802.02 and 802.03 with respect to this criteria. The company must, however, notify the Exchange, within 10 business days of receipt of the notification, of its intent to cure this deficiency or be subject to suspension and delisting procedures. In the event that at the expiration of the six-month cure period, both a $1.00 share price and a $1.00 average share price over the preceding 30 trading days are not attained, the Exchange will commence suspension and delisting procedures. Notwithstanding the foregoing, if a company determines that, if necessary, it will cure the price condition by taking an action that will require approval of its shareholders, it must so inform the Exchange in the above referenced notification, must obtain the shareholder approval by no later than its next annual meeting, and must implement the action promptly thereafter. The price condition will be deemed cured if the price promptly exceeds $1.00 per share, and the price remains above the level for at least the following 30 trading days. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 proposes to suspend the application of the stock price requirement of Section 802.01C until June 30, 2009. This proposed suspension will provide temporary relief to companies in response to the extreme volatility and a precipitous decline in trading prices of many securities experienced in the U.S. and global equities markets, which the Commission had acknowledged constituted a threat to the fair and orderly functioning of the securities markets and could lead to a crisis of confidence among investors regarding the viability of companies whose stock prices have declined significantly.5 Under the proposed suspension of the Exchange’s stock price continued listing standard, companies will not be notified of new events of noncompliance with the price requirement during the suspension period. Companies that are in a compliance period at the time of commencement of the suspension 6 will still be deemed to have regained compliance during the rule suspension period if, at the expiration of their respective six-month cure periods established prior to the commencement of the rule suspension, they have a $1.00 closing share price on the last trading day of the period and a $1.00 average share price based on the preceding 30 trading days. In addition, any company that is in a compliance period at the time of commencement of the rule suspension can return to compliance during the suspension if at the end of any calendar month during the suspension such company has a $1.00 closing share price on the last 5 See, e.g., Securities Exchange Act Release No. 58588 (September 18, 2008), 73 FR 55174 (September 24, 2008) (‘‘The Commission is aware of the continued potential of sudden and excessive fluctuations of securities prices and disruption in the functioning of the securities markets that could threaten fair and orderly markets. Given the importance of confidence in our financial markets as a whole, we have also become concerned about sudden and unexplained declines in the prices of securities. Such price declines can give rise to questions about the underlying financial condition of an issuer, which in turn can create a crisis of confidence without a fundamental underlying basis. This crisis of confidence can impair the liquidity and ultimate viability of an issuer, with potentially broad market consequences.’’). 6 The Exchange notes that there are not currently any companies in the Exchange’s delisting appeal process that have been sent a delisting notification for noncompliance with the dollar price continued listing requirement. The Exchange also notes that it would continue to identify companies in a compliance period as below compliance for price, including by continuing to append an indicator to the company’s stock ticker to identify it as being below compliance for price and including the company on a list of companies that are below compliance for price posted to the Exchange’s Web site, unless the company regains compliance during the suspension. A company would continue to be subject to delisting for failure to comply with other listing requirements. E:\FR\FM\11MRN1.SGM 11MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 74, Number 46 (Wednesday, March 11, 2009)]
[Notices]
[Pages 10634-10636]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-5130]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59497; File No. SR-BX-2009-015]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing of Proposed Rule Change Relating to Order Handling and Exposure 
Periods on the Boston Options Exchange Facility

March 4, 2009.
    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 February 27, 2009, NASDAQ OMX BX, Inc. (the ``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 self-regulatory organization. The Commission is 
publishing this notice to solicit comments on the proposed rule 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 certain Rules of the Boston Options 
Exchange (``BOX'') to reduce the order handling and exposure periods 
contained within the BOX Rules from three seconds to one second. The 
text of the proposed rule change is available from the principal office 
of the Exchange, at the Commission's Public Reference Room and also on 
the Exchange's Internet Web site at https://
nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.

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 self-regulatory organization 
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 self-regulatory organization 
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 proposed rule change is to reduce the order 
handling and exposure periods from three seconds to one second in the 
Supplementary Material to Section 17 (Customer Orders and Order Flow 
Providers) and in Section 18 (The Price Improvement Period (``PIP'')) 
of Chapter V (Doing Business on BOX) of the BOX Rules. These sections 
require that orders entered into the BOX limit order book (``BOX 
Book''), or the PIP, respectively, are currently exposed to all market 
participants for three seconds before the orders are automatically 
executed, giving Options Participants (``Participants'') an opportunity 
to enter additional trading interests.
    Chapter V of the BOX Rules outlines certain requirements related to 
order handling by BOX Options Participants and Market Makers. A 
Participant may not execute an order it represents as agent with a 
facilitation or a solicited order unless it complies with the order 
exposure requirements contained in Chapter V, Section 17, Supplementary 
Materials .02 and .03. Specifically, Supplementary Material .02 to 
Section 17 provides that an Options Participant may not cause the 
execution of an order it represents as agent on BOX through the use of 
orders it solicited unless the agency order is first exposed to the BOX 
Book for at least three seconds. Furthermore, Supplementary Material 
.03 to Section 17 provides that an order flow provider (``OFP'') may 
not execute as principal an order it represents as agent unless the OFP 
(i) exposes the order to the BOX Book for three seconds; (ii) has been 
bidding or offering on BOX for at least three seconds prior to 
receiving an agency order that is executable against such bid or offer; 
or (iii) sends the agency order to the PIP or Universal Price 
Improvement Period (``UPIP''). Under the proposal, these time periods 
would be reduced to one second.
    The Exchange is also proposing to reduce the PIP in Section 18 of 
Chapter V from three seconds to one second. Currently the PIP allows 
Participants to designate certain customer orders for price improvement 
and submit such orders to the PIP with a matching contra order 
(``Primary Improvement Order''). Once an order is submitted to the PIP, 
BOX broadcasts a message to Options Participants that commences the PIP 
and (1) states that a Primary Improvement Order has been processed; (2) 
contains information concerning series, size, price and side of the 
market of the order; and (3) states when the PIP will conclude. This 
proposal would reduce the PIP to one second.
    When approving the existing three second order handling and 
exposure periods, the Commission concluded that, in the electronic 
environment of BOX, reducing these time periods to three seconds was 
fully consistent with the electronic nature of the BOX market.\3\ BOX 
recognized that three seconds would not be long enough to allow human 
interaction with orders. Rather, Participants have been operating with 
sufficiently automated electronic systems so that they can react and 
respond to orders in a meaningful way within three seconds and BOX 
fully anticipates that this will continue within the proposed one 
second time frame. BOX believes that further reducing its order 
handling and exposure periods from three seconds to one second will 
benefit all market participants. BOX believes it is in all 
participants' best interests to minimize the time of the exposure 
period while continuing to allow Participants adequate time to 
electronically respond, as both the order being exposed and 
Participants responding are subject to market risk during the exposure 
period. Indeed, most participants wait until the end of the last second 
of the current three second period before responding to exposed orders 
so as to minimize market risk. BOX believes that one second will 
continue to provide market participants with sufficient time to 
respond, compete, and provide price improvement for orders and will 
provide investors and other market participants with more timely 
executions, thereby reducing their market risk.
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    \3\ See Securities Exchange Act Release No. 53854; (May 24, 
2006), 71 FR 30975 (May 31, 2006) (SR-BSE-2006-23).
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    Recently, BOX distributed a survey to Participants that regularly 
participate in the PIP or would otherwise be affected by this proposal. 
To substantiate that its Participants could receive, process, and 
communicate a response back to BOX within one second, the survey asked 
Participants to identify (i) approximately how many milliseconds it 
takes for an order broadcast from BOX

[[Page 10635]]

to reach their systems; (ii) approximately how many milliseconds it 
takes their systems to generate a response to an order broadcast; (iii) 
approximately how many milliseconds it takes their response to an order 
broadcast to reach BOX; and (iv) whether or not a reduction of the PIP 
and facilitation and solicitation order exposure time periods to one 
second would impair their ability to participate in BOX PIPs or 
facilitation or solicitation orders. The survey results indicate that 
the time it takes a message to travel between BOX and its Participants 
typically is not more than fifty milliseconds each way.\4\ The survey 
also indicated that it typically takes not more than ten milliseconds 
for Participant systems to process the information and generate a 
response. Thus, the survey indicated that it typically takes at most 
110 milliseconds for Participants to receive, process, and respond to 
broadcast messages related to the PIP or facilitation or solicitation 
related broadcasts and for such responses to reach BOX. Additionally, 
Participants indicated that reducing the exposure period to one second 
would not impair their ability to participate in orders executed 
through the PIP or facilitation or solicitation orders.\5\ The Exchange 
believes that this information provides additional support for its 
assertion that reducing the exposure periods from three seconds to one 
second will continue to provide Participants with sufficient time to 
ensure effective interaction with orders.
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    \4\ Seventeen firms responded to the survey. Thirteen of the 
seventeen responded to the specific timing questions.
    \5\ All of the thirteen Participants that responded to the 
specific timing questions, and two of the four Participants that did 
not answer the specific timing questions, indicated that reducing 
the exposure time periods to one second would not impair their 
ability to participate in BOX PIPs or facilitation or crossing 
orders.
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    BOX Participants are able to respond to PIP orders in less than one 
second and this rule change could provide additional customer orders an 
opportunity for price improvement because it will reduce the market 
risk for Participants that are required to guarantee an execution at 
the National Best Bid/Offer (``NBBO'') or better. Accordingly, BOX does 
not believe it is necessary or beneficial to the orders being exposed 
to continue to subject them to market risk for a full three seconds.
    After Commission approval of the proposal, and at least one week 
prior to implementation of the rule change, BOXR will issue a 
regulatory circular to Participants. The regulatory circular will 
inform Participants of the implementation date of the reduction of the 
order handling and exposure periods from three seconds to one second. 
This will give Participants an opportunity to make any necessary 
modifications to coincide with the implementation date.
2. Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\6\ in general, and Section 
6(b)(5) of the Act,\7\ 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 of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
In particular, the proposed rule change will provide investors with 
more timely execution of their options orders, while ensuring that 
there is an adequate exposure of all crossing orders on BOX.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The Exchange has requested accelerated approval of this proposed 
rule change prior to the 30th day after the date of publication of the 
notice in the Federal Register. The Commission is considering granting 
accelerated approval of the proposed rule change at the end of a 15-day 
comment period.

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 (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-BX-2009-015 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-2009-015. This file 
number should be included on the subject line if e-mail 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 (https://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 inspection and 
copying in the Commission's Public Reference Room, on business days 
between the hours of 10 a.m. and 3 p.m., located at 100 F Street, NE., 
Washington, DC 20549. 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 Number SR-BX-2009-015 and should

[[Page 10636]]

be submitted on or before March 26, 2009.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-5130 Filed 3-10-09; 8:45 am]
BILLING CODE 8011-01-P

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