Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a Market-Maker Trade Prevention Order on CBOE Stock Exchange, 68798-68800 [2011-28694]

Download as PDF 68798 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Notices are subject to the recordkeeping requirements of Rules 17a–3 and 17a–4 of the Act. Information received in response to Rule 12f–3 shall not be kept confidential; the information collected is public information. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information on respondents; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. The Commission may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number. Please direct your written comments to: Thomas Bayer, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way, Alexandria, Virginia 22312 or send an email to: PRA_Mailbox@sec.gov. Dated: November 1, 2011. Kevin M. O’Neill, Deputy Secretary. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION mstockstill on DSK4VPTVN1PROD with NOTICES Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a Market-Maker Trade Prevention Order on CBOE Stock Exchange Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 28, 2011, the Chicago Board Options 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Mar<15>2010 17:50 Nov 04, 2011 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt a Market-Maker Trade Prevention Order on CBOE Stock Exchange (‘‘CBSX’’). The text of the proposed rule change is available on the Exchange’s Web site (http://www.cboe.org/legal), at the Exchange’s Office of the Secretary, and at the Commission. 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 those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, Proposed Rule Change [FR Doc. 2011–28720 Filed 11–4–11; 8:45 am] November 1, 2011. Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1. Purpose The Exchange proposes to adopt a Market-Maker Trade Prevention (‘‘MMTP’’) Order. The proposed MMTP Order is an immediate-or-cancel order containing a designation that prevents incoming orders for a Market-Maker from executing against resting quotes and orders for the same Market-Maker. The MMTP Order type designation is intended to prevent a Market-Maker from trading on both sides of the same transaction. Orders would be marked with the MMTP designation on an order-by-order basis. An incoming MMTP Order cannot interact with interest resting on the book from the same Market-Maker. An MMTP Order 3 15 4 17 Jkt 226001 PO 00000 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). Frm 00082 Fmt 4703 Sfmt 4703 that would trade against a resting quote or order for the same Market-Maker will be cancelled, as will the resting quote or order. The MMTP Order will trade against other tradable orders and quotes entered by or on behalf of another market participant (other than those entered by or on behalf of the same Market-Maker) in accordance with the execution process described in Exchange Rule 52.1 (Matching Algorithm/Priority). When available, the MMTP Order type will be available for use by all Market-Makers in all appointments. For example, assume the Exchange’s best bid and offer is $1.00–$1.20, 1000 shares on each side. A Market-Maker marks an order to buy 1000 shares at $1.20 with the MMTP distinction, making it an MMTP Order. The MMTP Order is submitted to the Exchange and it would trade with a resting quote from the same Market-Maker for 1000 shares offered at $1.20, then both the order to buy and the resting offer quote would be canceled. However, if the resting offer quote from the same Market-Maker was for only 600 shares, then 600 shares from the order to buy would be canceled (as would the resting quote), but the other 400 shares could trade with the resting offer interest of the other market participants. At this time, the Exchange intends to identify an incoming MMTP Order as being for the same Market-Maker if the MMTP Order and resting quote or order share any of the following: (1) User acronym, (2) login ID, or (3) sub-account code. Each Market-Maker is assigned its own acronym (sometimes multiple acronyms). However, a Market-Maker may have multiple different login IDs or sub-account codes. A login ID is the session through which a Market-Maker routes orders to the Exchange. A Market-Maker may elect to use different login IDs to route different types of communications to the Exchange. For example, a Market-Maker may choose to use login ID #1 for all orders it sends to the Exchange and login ID #2 for all quotes it sends to the Exchange. Or the Market-Maker may be much more specific, and use different login IDs for different types of orders and quotes. A sub-account code is simply a field on each order or quote that lists the account into which a trade clears at the Options Clearing Corporation (‘‘OCC’’). A Market-Maker may have different subaccount codes for each trader it employs, so that the Market-Maker may track each trader’s activity. Finally, Market-Makers sometimes use different acronyms but clear into the same accounts (thereby using the same subaccounts codes). E:\FR\FM\07NON1.SGM 07NON1 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Notices Allowing Market-Makers to designate orders as MMTP Orders is intended to allow firms to better manage order flow and prevent unwanted executions resulting from the interaction of executable buy and sell trading interest for the same Market-Maker, as well as prevent the potential for (or appearance of) ‘‘wash sales’’ that may occur as a result of the velocity of trading in today’s high speed marketplace. When a Market-Maker is preparing to submit an order, the Market-Maker may not know whether or not his order is going to trade against his own resting quote. Further, many Market-Makers have multiple connections into the Exchange due to capacity- and speed-related demands. Orders routed by the same Market-Makers via different connections may, in certain circumstances, trade against each other. Finally, the Exchange notes that offering the MMTP modifiers will streamline certain regulatory functions by reducing false positive results that may occur on Exchange-generated wash trading surveillance reports when orders are executed by the same Market-Maker. For these reasons, the Exchange believes the MMTP Order provides Market-Makers enhanced order processing functionality to prevent potentially unwanted trades from occurring. The proposed rule change is based on rule changes recently proposed by the Chicago Board Options Exchange, Inc. (‘‘CBOE’’) and C2 Options Exchange, Inc. (‘‘C2’’).5 mstockstill on DSK4VPTVN1PROD with NOTICES 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act 6 and the rules and regulations thereunder and, in particular, the requirements of Section 6(b) of the Act.7 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 8 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and to perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. The proposed rule change advances these objectives by making available to Market-Makers a 5 See Securities Exchange Act Release No. 65379 (September 22, 2011), 76 FR 60108 (September 28, 2011) (SR–CBOE–2011–079) and Securities Exchange Act Release No. 65380 (September 22, 2011) 76 FR 60102 (September 28, 2011) (SR–C2– 2011–017). 6 15 U.S.C. 78s(b)(1). 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 17:50 Nov 04, 2011 Jkt 226001 type of order that will assist MarketMakers in preventing unwanted executions against themselves. The proposed rule change is based on rule changes recently proposed by the Chicago Board Options Exchange, Inc. (‘‘CBOE’’) and C2 Options Exchange, Inc. (‘‘C2’’).9 B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) 10 of the Act and Rule 19b–4(f)(6) thereunder.11 A proposed rule change filed under Rule 19b–4(f)(6) 12 normally may not become operative prior to 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) 13 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay, as specified in Rule 19b–4(f)(6)(iii),14 which would make the rule change effective and operative upon filing. As indicated above by the Exchange, the 9 See Note 5. U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to provide the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 12 17 CFR 240.19b–4(f)(6). 13 17 CFR 240.19b–4(f)(6)(iii). 14 Id. 10 15 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 68799 MMTP Order type is intended to prevent unwanted executions resulting from the interaction of executable buy and sell trading interest for the same Market-Maker in a manner that is consistent with other markets that have similar order types. Further, the Exchange stated that the rule is identical to those recently filed by CBOE and C2 (aside from CBOE and C2’s added rule text for MMTP Orders subject to auction processes, which do not exist on C2) 15 and as a result it believes that the proposed rule change does not present any new, unique or substantive issues. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because such waiver would allow the Exchange to implement the order type without delay and may assist with the maintenance of orderly markets. Accordingly, the Commission designates the proposed rule change operative upon filing with the Commission. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–CBOE–2011–102 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. All submissions should refer to File Number SR–CBOE–2011–102. 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 15 See E:\FR\FM\07NON1.SGM Note 5. 07NON1 68800 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Notices post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of CBOE. 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–CBOE–2011–102 and should be submitted on or before November 28, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2011–28694 Filed 11–4–11; 8:45 am] BILLING CODE 8011–01–P Investment Companies Rankings in Retail Communications), 2213 (Requirements for the Use of Bond Mutual Fund Volatility Ratings), 2214 (Requirements for the Use of Investment Analysis Tools), 2215 (Communications with the Public Regarding Security Futures), and 2216 (Communications with the Public About Collateralized Mortgage Obligations (CMOs)) in the Consolidated FINRA Rulebook. I. Introduction On July 14, 2011, the Financial Industry Regulatory Authority (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt NASD Rules 2210 and 2211 and NASD Interpretive Materials 2210–1 and 2210–3 through 2210–8 as FINRA Rules 2210 and 2212 through 2216, and to delete paragraphs (a)(1), (i), (j) and (l) of Incorporated NYSE Rule 472, Incorporated NYSE Rule Supplementary Material 472.10(1), (3), (4) and (5) and 472.90, and Incorporated NYSE Rule Interpretations 472/01 and 472/03 through 472/11. The proposed rule change was published for comment in the Federal Register on August 3, 2011.3 The Commission received nine comment letters in response to the proposed rule change.4 On August 31, 2011, FINRA extended the time period in which the Commission must approve 1 15 [(Release No. 34–65663; File No. SR– FINRA–2011–035)] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Partial Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, etc. mstockstill on DSK4VPTVN1PROD with NOTICES November 1, 2011. Overview Information Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Partial Amendment No. 1 and Order Instituting Proceedings to Determine Whether to Approve or Disapprove a Proposed Rule Change, as modified by Partial Amendment No. 1, to Adopt FINRA Rules 2210 (Communications with the Public), 2212 (Use of 16 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 17:50 Nov 04, 2011 Jkt 226001 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 64984 (July 28, 2011), 76 FR 46870 (August 3, 2011) (Notice of Filing of SR–FINRA–2011–035) (‘‘Notice of Filing’’). The comment period closed on August 24, 2011. 4 See letter from Oscar S. Hackett, General Counsel, BrightScope, Inc., dated August 23, 2011 (‘‘BrightScope Letter’’); letter from Alexander C. Gavis, Fidelity Investments, dated August 24, 2011 (‘‘Fidelity Letter’’); letter from David T. Bellaire, General Counsel and Director of Government Affairs, Financial Services Institute, dated August 24, 2011 (‘‘FSI Letter’’); letter from Dorothy M. Donohue, Senior Associate Counsel, Investment Company Institute, dated August 24, 2011 (‘‘ICI Letter’’); letter from Z. Jane Riley, Chief Compliance Officer, The Leaders Group, Inc., dated August 24, 2011 (‘‘TLGI Letter’’); letter from Peter J. Mougey, President, Public Investors Arbitration Bar Association, dated August 23, 2011 (‘‘PIABA Letter’’); letter from John Polanin and Clair Santaniello, Co-Chairs, Compliance and Regulatory Policy Committee 2011, Securities Industry and Financial Markets Association, dated August 25, 2011 (‘‘SIFMA Letter’’); letter from Sandra J. Burke, Principal, Vanguard, dated August 24, 2011 (‘‘Vanguard Letter’’); and letter from Yoon-Young Lee, WilmerHale, on behalf of Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co., JP Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, and UBS Securities LLC, dated August 26, 2011 (‘‘Wilmer Letter’’). Comment letters are available at http://www.sec.gov. 2 17 SECURITIES AND EXCHANGE COMMISSION PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change, to November 1, 2011. On October 31, 2011, FINRA filed Partial Amendment No. 1 to the proposed rule change and a letter responding to comments.5 The Commission is publishing this notice and order to solicit comments on Partial Amendment No. 1 to the proposed rule change from interested persons and to institute proceedings pursuant to Section 19(b)(2)(B) of the Act to determine whether to approve or disapprove the proposed rule change, as modified by Partial Amendment No. 1. Institution of these proceedings, however, does not indicate that the Commission has reached any conclusions with respect to the proposed rule change, nor does it mean that the Commission will ultimately disapprove the proposed rule change. Rather, as discussed below, the Commission seeks additional input from interested parties on the issues presented by the proposed rule change, as modified by Partial Amendment No. 1, and on FINRA’s Response Letter. II. Description of the Proposed Rule Change and Summary of Comments As part of the process of developing a new consolidated rulebook (‘‘Consolidated FINRA Rulebook’’), FINRA is proposing to adopt NASD Rules 2210 and 2211 and NASD Interpretive Materials 2210–1 and 2210– 3 through 2210–8 as FINRA Rules 2210 and 2212 through 2216 in the Consolidated FINRA Rulebook, and to delete paragraphs (a)(1), (i), (j) and (l) of Incorporated NYSE Rule 472, Incorporated NYSE Rule Supplementary Material 472.10(1), (3), (4) and (5), and 472.90, and Incorporated NYSE Rule Interpretations 472/01 and 472/03 through 472/11. The proposed rule change would renumber NASD Rules 2210 and 2211 and NASD Interpretive Materials 2210–1 and 2210–4 as FINRA Rule 2210, NASD Interpretive Material 2210–3 as FINRA Rule 2212, NASD Interpretive Material 2210–5 as FINRA Rule 2213, NASD Interpretive Material 2210–6 as FINRA Rule 2214, NASD Interpretive Material 2210–7 as FINRA 5 See letter from Joseph P. Savage, FINRA, to Elizabeth Murphy, Secretary, SEC, dated October 31, 2011 (‘‘Response Letter’’). The text of proposed Amendment No. 1 and FINRA’s Response Letter are available on FINRA’s Web site at http:// www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. FINRA’s Response Letter is also available on the Commission’s Web site at http://www.sec.gov. E:\FR\FM\07NON1.SGM 07NON1

Agencies

[Federal Register Volume 76, Number 215 (Monday, November 7, 2011)]
[Notices]
[Pages 68798-68800]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28694]


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SECURITIES AND EXCHANGE COMMISSION


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Adopt a Market-Maker Trade Prevention Order on 
CBOE Stock Exchange

November 1, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 28, 2011, the Chicago Board Options Exchange, 
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities 
and Exchange Commission (the ``Commission'') the proposed rule change 
as described in Items I and II below, which Items have been prepared by 
the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt a Market-Maker Trade Prevention 
Order on CBOE Stock Exchange (``CBSX''). The text of the proposed rule 
change is available on the Exchange's Web site (http://www.cboe.org/legal), at the Exchange's Office of the Secretary, and at the 
Commission.

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 those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, Proposed Rule Change

1. Purpose
    The Exchange proposes to adopt a Market-Maker Trade Prevention 
(``MMTP'') Order. The proposed MMTP Order is an immediate-or-cancel 
order containing a designation that prevents incoming orders for a 
Market-Maker from executing against resting quotes and orders for the 
same Market-Maker.
    The MMTP Order type designation is intended to prevent a Market-
Maker from trading on both sides of the same transaction. Orders would 
be marked with the MMTP designation on an order-by-order basis. An 
incoming MMTP Order cannot interact with interest resting on the book 
from the same Market-Maker. An MMTP Order that would trade against a 
resting quote or order for the same Market-Maker will be cancelled, as 
will the resting quote or order. The MMTP Order will trade against 
other tradable orders and quotes entered by or on behalf of another 
market participant (other than those entered by or on behalf of the 
same Market-Maker) in accordance with the execution process described 
in Exchange Rule 52.1 (Matching Algorithm/Priority). When available, 
the MMTP Order type will be available for use by all Market-Makers in 
all appointments.
    For example, assume the Exchange's best bid and offer is $1.00-
$1.20, 1000 shares on each side. A Market-Maker marks an order to buy 
1000 shares at $1.20 with the MMTP distinction, making it an MMTP 
Order. The MMTP Order is submitted to the Exchange and it would trade 
with a resting quote from the same Market-Maker for 1000 shares offered 
at $1.20, then both the order to buy and the resting offer quote would 
be canceled. However, if the resting offer quote from the same Market-
Maker was for only 600 shares, then 600 shares from the order to buy 
would be canceled (as would the resting quote), but the other 400 
shares could trade with the resting offer interest of the other market 
participants.
    At this time, the Exchange intends to identify an incoming MMTP 
Order as being for the same Market-Maker if the MMTP Order and resting 
quote or order share any of the following: (1) User acronym, (2) login 
ID, or (3) sub-account code. Each Market-Maker is assigned its own 
acronym (sometimes multiple acronyms). However, a Market-Maker may have 
multiple different login IDs or sub-account codes. A login ID is the 
session through which a Market-Maker routes orders to the Exchange. A 
Market-Maker may elect to use different login IDs to route different 
types of communications to the Exchange. For example, a Market-Maker 
may choose to use login ID 1 for all orders it sends to the 
Exchange and login ID 2 for all quotes it sends to the 
Exchange. Or the Market-Maker may be much more specific, and use 
different login IDs for different types of orders and quotes. A sub-
account code is simply a field on each order or quote that lists the 
account into which a trade clears at the Options Clearing Corporation 
(``OCC''). A Market-Maker may have different sub-account codes for each 
trader it employs, so that the Market-Maker may track each trader's 
activity. Finally, Market-Makers sometimes use different acronyms but 
clear into the same accounts (thereby using the same sub-accounts 
codes).

[[Page 68799]]

    Allowing Market-Makers to designate orders as MMTP Orders is 
intended to allow firms to better manage order flow and prevent 
unwanted executions resulting from the interaction of executable buy 
and sell trading interest for the same Market-Maker, as well as prevent 
the potential for (or appearance of) ``wash sales'' that may occur as a 
result of the velocity of trading in today's high speed marketplace. 
When a Market-Maker is preparing to submit an order, the Market-Maker 
may not know whether or not his order is going to trade against his own 
resting quote. Further, many Market-Makers have multiple connections 
into the Exchange due to capacity- and speed-related demands. Orders 
routed by the same Market-Makers via different connections may, in 
certain circumstances, trade against each other. Finally, the Exchange 
notes that offering the MMTP modifiers will streamline certain 
regulatory functions by reducing false positive results that may occur 
on Exchange-generated wash trading surveillance reports when orders are 
executed by the same Market-Maker. For these reasons, the Exchange 
believes the MMTP Order provides Market-Makers enhanced order 
processing functionality to prevent potentially unwanted trades from 
occurring.
    The proposed rule change is based on rule changes recently proposed 
by the Chicago Board Options Exchange, Inc. (``CBOE'') and C2 Options 
Exchange, Inc. (``C2'').\5\
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    \5\ See Securities Exchange Act Release No. 65379 (September 22, 
2011), 76 FR 60108 (September 28, 2011) (SR-CBOE-2011-079) and 
Securities Exchange Act Release No. 65380 (September 22, 2011) 76 FR 
60102 (September 28, 2011) (SR-C2-2011-017).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act \6\ and the rules and regulations thereunder and, in 
particular, the requirements of Section 6(b) of the Act.\7\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \8\ requirements that the rules of 
an exchange be designed to promote just and equitable principles of 
trade, to prevent fraudulent and manipulative acts, to remove 
impediments to and to perfect the mechanism for a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest. The proposed rule change advances these objectives 
by making available to Market-Makers a type of order that will assist 
Market-Makers in preventing unwanted executions against themselves.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(1).
    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change is based on rule changes recently proposed 
by the Chicago Board Options Exchange, Inc. (``CBOE'') and C2 Options 
Exchange, Inc. (``C2'').\9\
---------------------------------------------------------------------------

    \9\ See Note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6) 
thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
may not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii),\14\ which would make the rule change effective and 
operative upon filing. As indicated above by the Exchange, the MMTP 
Order type is intended to prevent unwanted executions resulting from 
the interaction of executable buy and sell trading interest for the 
same Market-Maker in a manner that is consistent with other markets 
that have similar order types. Further, the Exchange stated that the 
rule is identical to those recently filed by CBOE and C2 (aside from 
CBOE and C2's added rule text for MMTP Orders subject to auction 
processes, which do not exist on C2) \15\ and as a result it believes 
that the proposed rule change does not present any new, unique or 
substantive issues. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because such waiver would allow the Exchange to 
implement the order type without delay and may assist with the 
maintenance of orderly markets. Accordingly, the Commission designates 
the proposed rule change operative upon filing with the Commission.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ Id.
    \15\ See Note 5.
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

 IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2011-102 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.

    All submissions should refer to File Number SR-CBOE-2011-102. 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

[[Page 68800]]

post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent 
amendments, all written statements with respect to the proposed rule 
change that are filed with the Commission, and all written 
communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal office of CBOE. 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-CBOE-2011-102 and should be submitted on or before November 28, 
2011.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-28694 Filed 11-4-11; 8:45 am]
BILLING CODE 8011-01-P