Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add a Rule Regarding the Brokerplex Order Entry, Recordation, and Management System, 2103-2106 [2012-533]
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Federal Register / Vol. 77, No. 9 / Friday, January 13, 2012 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66124; File No. SR–FICC–
2008–01]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Designation of Longer Period for
Commission Action on Proposed Rule
Change To Allow the Mortgage-Backed
Securities Division To Provide
Guaranteed Settlement and Central
Counterparty Services
January 10, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder 2
on March 12, 2008, the Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), and on
November 21, 2011, amended a
proposed rule change to allow the
Mortgage-Backed Securities Division
(‘‘MBSD’’) to provide guaranteed
settlement and central counterparty
services. The proposed rule change was
published for comment in the Federal
Register on December 12, 2011.3 The
Commission received one comment
letter on the proposal.4
Prior to amendments introduced by
the Dodd-Frank Wall Street Reform and
Consumer Protection Act (‘‘Dodd-Frank
Act’’), Section 19(b)(2) of the Act 5
provided that, within thirty-five days of
the publication of notice of the filing of
a proposed rule change, or within such
longer period as the Commission may
designate up to ninety days of such date
if it finds such longer period to be
appropriate and publishes its reasons
for so finding, the Commission shall
either approve the proposed rule change
or institute proceedings to determine
whether the proposed rule change
should be disapproved.6 The thirty-fifth
day after publication of notice of this
filing is Monday, January 16, 2012, a
national holiday. The last business day
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 65899 (Dec.
6, 2011), 76 FR 77287 (Dec. 12, 2011) (‘‘Notice’’)
and Securities Exchange Act Release No. 65899A
(Dec. 12, 2011), 76 FR 77865 (Dec. 14, 2011)
(correcting a non-substantive portion of the Notice).
4 See Letter from Christopher Killian, Managing
Director, Securities Industry and Financial Markets
Association, to Elizabeth M. Murphy, Secretary,
Commission, dated December 19, 2011.
5 15 U.S.C. 78s(b)(2) (2010), amended by Section
916 of Pub. L. 111–203, 124 Stat. 1376 (2010).
6 Because the original rule proposal was received
by the Commission prior to the Dodd-Frank Act
amendments to Section 19(b)(2) of the Act, the
operative timing and procedural requirements for
Commission action are those that applied at the
time the Commission received the original rule
proposal.
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2 17
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preceding that date is Friday, January
13, 2012.
The proposed rule change would
modify the rules of FICC’s MBSD to
allow MBSD to provide guaranteed
settlement and central counterparty
(‘‘CCP’’) services to the mortgage-backed
securities market. As FICC notes in the
proposed rule change, the conversion of
the MBSD to a CCP would increase the
amount of risk to FICC because FICC
would assume risk currently borne by
bilateral counterparties in the market.
The Commission finds it appropriate to
designate a longer period within which
to take action on the proposed rule
change so that it has sufficient time to
consider the risk management
implications of the proposed rule
change in light of, among other things,
initiatives FICC proposed to develop
under the proposed rule change and any
other initiatives FICC may develop
during the extended period.
Accordingly, pursuant to Section
19(b)(2) of the Act,7 the Commission
designates March 9, 2012, as the date by
which the Commission should either
approve or institute proceedings to
determine whether to disapprove the
proposed rule change.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–587 Filed 1–12–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66118; File No. SR–CHX–
2011–33]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Add a
Rule Regarding the Brokerplex Order
Entry, Recordation, and Management
System
January 9, 2012.
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 December
28, 2011, the Chicago Stock Exchange,
Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
7 15 U.S.C. 78s(b)(2) (2010), amended by Section
916 of Pub. L. 111–203, 124 Stat. 1376 (2010).
8 17 CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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2103
Items I and II below, which Items have
been prepared by the Exchange. CHX
has filed the proposal pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) thereunder,4 which renders
the proposal effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CHX proposes to add Article 17, Rule
5 (Brokerplex) to include an explicit
description of the Exchange’s
Brokerplex order entry, recordation, and
management system. The text of this
proposed rule change is available on the
Exchange’s Web site at (www.chx.com)
and in 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
CHX included statements concerning
the purpose of and basis for the
proposed rule changes and discussed
any comments it received regarding the
proposal. The text of these statements
may be examined at the places specified
in Item IV below. The CHX 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 Exchange is proposing to add
new Rule 5 to Article 17 (Institutional
Brokers) to set forth the terms governing
the operation of the Brokerplex®
system. Brokerplex is an Exchangeowned order and trade entry,
recordation and management system
developed and operated by the CHX for
use by Participant Firms registered with
the Exchange as Institutional Brokers
under Article 17 (‘‘Institutional
Brokers’’). The Exchange provides the
Brokerplex trading system for use by
Institutional Broker Representatives
(‘‘IBRs’’), as defined in Rule 1 of this
Article and the Interpretations and
Policies thereto, who are affiliated with
Institutional Brokers. Brokerplex can be
used by IBRs to receive, transmit and
hold orders from their clients while
seeking execution within the CHX
3 15
4 17
E:\FR\FM\13JAN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
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Matching System or elsewhere in the
National Market System.5 Brokerplex
can be used to record trade executions
and send transaction reports to a Trade
Reporting Facility (‘‘TRF’’), as defined
in FINRA Rules 6300 et seq., as
amended from time-to-time. Brokerplex
can also be used by IBRs to initiate
clearing submissions to a Qualified
Clearing Agency via the Exchange’s
reporting systems. Reports of orders,
executions and clearing submissions
received, handled or submitted via
Brokerplex are kept by the system. The
Brokerplex system has been generally
described in rule filings made by the
CHX with the Commission, but the
Exchange’s rules do not contain a
comprehensive description of the
system.6 In order to remove any
potential ambiguity about the nature of
the Exchange’s technology offerings, we
are now proposing to add language to
our rules which fully describes the basic
functionality of the Brokerplex system.
Proposed new Rule 5 provides that
IBR users of the Brokerplex system are
responsible for entering all
transactional, order and other
information into the system as required
by CHX rules and in an accurate, timely
and complete manner. As the operator
of the Brokerplex system, the CHX
retains such information on behalf of
the Institutional Broker users in
conformity with applicable rules and
regulations. The Exchange provides
such information to Institutional
Brokers in a format designated by the
Exchange to assist Institutional Brokers
in processing orders and transactions,
responding to requests for information
from customers and regulatory bodies
and for other legitimate business
purposes. The Exchange charges the
Institutional Brokers the fees specified
in its published Schedule of Fees and
Assessments for the retrieval of
information.7
Brokerplex accepts and handles all of
the order types, conditions and
instructions accepted by the Matching
System as specified in Article 20, Rule
4.8 Orders may be entered into
5 The Exchange is amending Article 17, Rule 3(b)
to make explicit that use of Brokerplex satisfies the
requirement that each Institutional Broker handle
orders within an integrated system acceptable to the
Exchange.
6 See infra note 12.
7 Pursuant to Section L.2. of the Exchange’s
Schedule of Fees and Assessments, trade and order
data is rebilled to the Participant at cost.
8 Additionally, Institutional Brokers may use the
services of a layoff vendor, i.e., a broker-dealer or
routing services provider to transmit orders to other
trading centers. Those layoff vendors may offer
additional orders types beyond those in Brokerplex
and which are not part of this rule filing.
Brokerplex can be used by the Institutional Broker
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Brokerplex manually by an IBR or
submitted by an Exchange-approved
electronic connection. In addition to the
order types accepted by the Matching
System, Brokerplex permits the entry
and processing of certain additional
order types, conditions and instructions
accepted by other market centers.
Finally, Brokerplex accepts and
processes certain specified orders types,
conditions and instructions,
specifically—Quote@CHX and
Reprice@CHX.9
Quote@CHX. The Quote@CHX order type
allows the Institutional Broker to submit an
order to be priced within Brokerplex at a
defined limit price which is one minimum
price increment (normally 1 cent for most
securities) from the relevant side of the
NBBO. For buy orders, the relevant side of
the NBBO is the offer; for sell orders it is the
bid. An IBR handling a customer limit order
must enter the limit price into Brokerplex as
part of submitting a Quote@CHX order. In
pricing the Quote@CHX, Brokerplex will
reject any entries if the systematicallygenerated price would be outside the
customer’s specified limit price. The
Quote@CHX order may not be transmitted to
destinations other than the CHX Matching
System. The Matching System itself will not
be eligible to receive this order type; rather,
it will receive a standard limit order at a
price generated by Brokerplex.
Reprice@CHX. The Reprice@CHX order
type allows a Brokerplex user to cancel an
existing limit order residing in the Matching
System and replace it with an order
generated in the same manner as a
Quote@CHX order type. An IBR handling a
customer limit order must enter the limit
price into Brokerplex as part of submitting a
Reprice@CHX order. In pricing the
Reprice@CHX orders, Brokerplex will reject
any entries if the systematically-generated
price would be outside the customer’s
specified limit price. The Reprice@CHX
order type may not be transmitted to
destinations other than the CHX Matching
System. The Matching System itself will not
be eligible to receive this order type; rather,
it will receive a standard limit order at a
price generated by Brokerplex.
As permitted by CHX rules, an IBR
may make post-trade entries in
Brokerplex to transfer positions from
one Clearing Participant to one or more
other Clearing Participants or from its
own account to the account of a
Clearing Participant.10
to record the terms of those orders and any resulting
executions.
9 The existing provisions in our rules regarding
the Quote@CHX and Reprice@CHX order types are
being moved from Interpretation and Policy .03 of
Rule 3 of Article 17 to new Rule 5. Current
Interpretation and Policy .04 is being renumbered
as Interpretation and Policy .03, and certain minor
clarifying changes within are being proposed as
well.
10 See Article 21, Rule 6 (Submission of Clearing
Information for Transactions Executed OffExchange).
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Brokerplex also provides for the
transmission of orders to the Exchange’s
Matching System, another trading center
which is connected to Brokerplex, or a
systems provider which can perform
routing services. As directed by the
user, Brokerplex will either send orders
that are eligible for submission to the
Matching System under Article 20, Rule
4 first to the Matching System to
execute or display and then, if they
cannot be executed or displayed in the
Matching System, to another destination
according to the Institutional Broker’s
instructions, or to another trading center
designated by the user. Orders which
are not eligible for submission to the
Matching System will be directly sent to
another destination in accordance with
the IBR’s instructions.
Any order entered into Brokerplex
and sent through Brokerplex to another
exchange or trading center via the
provisions of this rule and which results
in an execution shall be binding on the
Participant on whose behalf such order
was entered, including any access,
transaction or other fee imposed by that
trading center. The Institutional Broker
will be responsible for ensuring that it
has a relationship with its chosen
destinations to permit the requested
access. The Exchange shall not have
responsibility for the handling of the
order by the other destination, but will
report any execution or cancellation of
the order reported by the other
destination to Brokerplex, and will
notify the other venue of any
cancellations or changes to the order
submitted by the IBR into Brokerplex.
An IBR may use Brokerplex to record
the execution of a trade in the Over-theCounter (‘‘OTC’’) marketplace using
Brokerplex.11 As directed by the IBR,
Brokerplex will transmit an execution
report to a Trade Reporting Facility
designated by the Institutional Broker,
either directly or through a service
provider designated by the Institutional
Broker.
The Exchange makes clearing
submissions for trades entered and/or
recorded in Brokerplex as directed by an
IBR to a Qualified Clearing Agency
pursuant to the provisions of Article 21,
Rules 1 (Trade Recording with a
Qualified Clearing Agency) and 6
(Submission of Clearing Information for
Transactions Executed Off-Exchange),
for CHX and non-CHX trade executions,
respectively. These submissions can be
made for trades executed by either an
Institutional Broker or a third-party
11 The Institutional Broker would retain the
responsibility for compliance with all applicable
rules of FINRA or other self-regulatory organization
with jurisdiction over that activity.
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Federal Register / Vol. 77, No. 9 / Friday, January 13, 2012 / Notices
broker dealer which in turn instructs an
Institutional Broker to make the
submission to clearing, including any
substitution of Clearing Participants and
allocation of the trade.
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act in general, and
furthers the objectives of Section 6(b)(1)
of the Act in particular, in that it allows
the Exchange to be organized and have
the capacity to be able to carry out the
purposes of the Act and to comply, and
(subject to any rule or order of the
Commission pursuant to section 17(d)
or 19(g)(2) of the Act) to enforce
compliance by its members and persons
associated with such members, with the
provisions of the Act, the rules and
regulations thereunder, and the rules of
the exchange. The Brokerplex system
has been generally described in rule
filings made by the CHX with the
Commission, but the Exchange’s rules
do not contain a comprehensive
description of the system.12 In order to
remove any potential ambiguity about
the nature of the Exchange’s technology
offerings, we are now proposing to add
language to our rules which fully
describes the basic functionality of the
Brokerplex system.
In addition, the Exchange believes
that the proposed rule change is
consistent with Section 6(b) of the Act
in general,13 and furthers the objectives
of Section 6(b)(5) in particular,14 in that
it is designed to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transaction in securities, to remove
impediments and perfect the
mechanisms of a free and open market,
and, in general, to protect investors and
the public interest by setting forth the
rules and principles governing the use
of Brokerplex by Institutional Brokers.
Brokerplex is the principal system used
by the Exchange’s Institutional Brokers
to handle orders placed by their
12 See Exchange Act Release No. 53772 (May 8,
2006), 71 FR 27758 (May 12, 2006) (SR–CHX–2004–
38). This proposal amended the Exchanges rules
regarding the required reporting of orders and
executions by CHX Participants. Footnote 6
contains a basic description of the Brokerplex
systems used at that time by CHX floor brokers to
‘‘manage their orders, route orders to the
Exchange’s co-specialists for execution and report
executed trades.’’; Exchange Act Release No. 60620
(Sept. 3, 2009), 74 FR 46814 (Sept. 11, 2009) (SR–
CHX–2009–10). This proposal added the
‘‘Quote@CHX’’ and ‘‘Reprice@CHX’’ order types as
orders which could be entered into the Brokerplex
system by Institutional Brokers in handling and
seeking execution of their customer’s orders.
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
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customers. Brokerplex has been
designed specifically for use by IBRs
and it represents a customized solution
for those firms. The adoption of rules
governing the use of Brokerplex will
help facilitate the ability of Institutional
Brokers and their IBRs to meet their
customers’ needs. The proposed
changes to Article 17, Rule 3 conform
those rules to the proposed new Rule 5
of Article 17 by transferring certain
order types currently described in Rule
3 and consolidating them with others
more fully set out in new Rule 5. The
additional language in Rule 3(b) clarifies
that use of the Brokerplex system
satisfies the requirement that
Institutional Brokers utilize an
acceptable, integrated order
management system. Proposed Rule 5(a)
provides a basic description of the
Brokerplex system and the uses of that
system. Proposed Rule 5(b) specifies the
record retention requirements regarding
the use of Brokerplex, which provides
certainty to Participants on that issue.
Proposed Rule 5(c) sets forth the order
types accepted and processed by
Brokerplex, including those order types
accepted by the Exchange’s Matching
System pursuant to Article 20, Rule 4,
as well as additional order types which
can be sent to other trading centers for
execution. The specification of these
order types helps Institutional Brokers
and Participants who may wish to have
their orders handled by Institutional
Brokers understand the conditions and
obligations associated with each
particular order type which can by
employed by Institutional Brokers and
IBRs using Brokerplex. Proposed Rule
5(d) describes the trade allocation
process within Brokerplex which allows
IBRs to make post-trade substitution of
Clearing Participants pursuant to the
provisions of CHX rules. The facilitation
of trade allocation should assist
Institutional Brokers in the handling of
customer orders, in particular the
execution and post-trade processing of
the equities component of complex
derivatives transactions. Proposed Rule
5(e) permits Institutional Brokers to
send orders to other trading centers and
destinations. By facilitating the
transmission of such orders when they
cannot be executed or displayed on the
Exchange, the proposed rule assists
customers seeking execution of their
orders in a prompt and fair manner.
Proposed Rule 5(f) permits Institutional
Brokers to use Brokerplex to execute
trades in the OTC marketplace,
provided that all FINRA requirements
are satisfied. Allowing Institutional
Brokers to use Brokerplex to execute
trades in the OTC marketplace should
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2105
give them additional flexibility and
options in handling their customer’s
orders. Brokerplex can also be used to
submit trade reports for OTC
transactions. Finally, the proposal
provides that transactions reflected in
Brokerplex be submitted to a Qualified
Clearing Agency pursuant to Exchange
rules, which should help ensure the
reliable and prompt clearance and
settlement of such transactions.
B. Self-Regulatory Organization’s
Statement of Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that its provision of
an order management system for certain
of its Participants acts as a competitive
force, since there are a number of other
private systems providers for order
routing and execution systems.
Additionally, use of an Exchangeprovided system is a benefit for smaller
firms, since they may lack the resources
to develop or lease a system specifically
tailored for their needs as CHXregistered Institutional Brokers.
C. Self-Regulatory Organization’s
Statement on Comments Regarding 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
Pursuant to Section 19(b)(3)(A) of the
Act 15 and Rule 19b–4(f)(6)
thereunder,16 CHX has designated this
proposal as one that effects a change
that (A) Does not significantly affect the
protection of investors or the public
interest; (B) does not impose any
significant burden on competition; and
(C) will not become operative for 30
days after the date of the filing, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest. CHX has provided the
Commission 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.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
15 15
16 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
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Federal Register / Vol. 77, No. 9 / Friday, January 13, 2012 / Notices
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 Exchange 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–CHX–2011–33 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–CHX–2011–33. 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 (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 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 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–CHX–
2011–33 and should be submitted on or
before February 3, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–533 Filed 1–12–12; 8:45 am]
BILLING CODE 8011–01–P
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NASDAQ Stock Market LLC
proposes to modify Rule 7050,
governing pricing for NASDAQ
members using the NASDAQ Options
Market (‘‘NOM’’), NASDAQ’s facility for
executing and routing standardized
equity and index options.
The text of the proposed rule change
is set forth below. Proposed new text is
italicized and deleted text is in brackets.
*
*
*
*
*
7050.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66121; File No. SR–
NASDAQ–2012–001]
Self-Regulatory Organizations;
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Routing Fees
January 9, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
Exchange
Customer
BATS ................................................................................................................
BOX .................................................................................................................
CBOE ...............................................................................................................
CBOE orders greater than 99 contracts in NDX, MNX ETFs, ETNs &
HOLDRs .......................................................................................................
C2 ....................................................................................................................
ISE ...................................................................................................................
ISE Select Symbols* ........................................................................................
NYSE Arca Penny Pilot ...................................................................................
NYSE Arca Non Penny Pilot ...........................................................................
NYSE AMEX ....................................................................................................
PHLX (for all options other than PHLX Select Symbols) ................................
PHLX Select Symbols** ...................................................................................
mstockstill on DSK4VPTVN1PROD with NOTICES
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 3,
2012, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the NASDAQ.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
NASDAQ Options Market
The following charges shall apply to
the use of the order execution and
routing services of the NASDAQ
Options Market for all securities.
*
*
*
*
*
(4) Fees for routing contracts to
markets other than the NASDAQ
Options Market shall be assessed as
provided below. The current fees and a
historical record of applicable fees shall
be posted on the NasdaqTrader.com
Web site.
Firm
MM
Professional
$0.[36]50
0.06
0.06
$0.55
0.55
0.55
$0.55
0.55
0.55
0.24
0.50
0.06
0.18
0.50
0.06
0.06
0.06
0.30
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
$0.[48]50
0.06
0.26
0.26
0.51
0.24
0.34
0.50
0.06
0.26
0.26
0.46
* These fees are applicable to orders routed to ISE that are subject to Rebates and Fees for Adding and Removing Liquidity in Select Symbols. See ISE’s Schedule of Fees for the complete list of symbols that are subject to these fees.
** These fees are applicable to orders routed to PHLX that are subject to Rebates and Fees for Adding and Removing Liquidity in Select Symbols. See PHLX’s Fee Schedule for the complete list of symbols that are subject to these fees.
17 17
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 77, Number 9 (Friday, January 13, 2012)]
[Notices]
[Pages 2103-2106]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-533]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66118; File No. SR-CHX-2011-33]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Add a Rule Regarding the Brokerplex Order Entry, Recordation, and
Management System
January 9, 2012.
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 December 28, 2011, the Chicago Stock Exchange, Inc. (``CHX''
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. CHX has filed
the proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule
19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\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
CHX proposes to add Article 17, Rule 5 (Brokerplex) to include an
explicit description of the Exchange's Brokerplex order entry,
recordation, and management system. The text of this proposed rule
change is available on the Exchange's Web site at (www.chx.com) and in
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 CHX included statements
concerning the purpose of and basis for the proposed rule changes and
discussed any comments it received regarding the proposal. The text of
these statements may be examined at the places specified in Item IV
below. The CHX 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 Exchange is proposing to add new Rule 5 to Article 17
(Institutional Brokers) to set forth the terms governing the operation
of the Brokerplex[reg] system. Brokerplex is an Exchange-owned order
and trade entry, recordation and management system developed and
operated by the CHX for use by Participant Firms registered with the
Exchange as Institutional Brokers under Article 17 (``Institutional
Brokers''). The Exchange provides the Brokerplex trading system for use
by Institutional Broker Representatives (``IBRs''), as defined in Rule
1 of this Article and the Interpretations and Policies thereto, who are
affiliated with Institutional Brokers. Brokerplex can be used by IBRs
to receive, transmit and hold orders from their clients while seeking
execution within the CHX
[[Page 2104]]
Matching System or elsewhere in the National Market System.\5\
Brokerplex can be used to record trade executions and send transaction
reports to a Trade Reporting Facility (``TRF''), as defined in FINRA
Rules 6300 et seq., as amended from time-to-time. Brokerplex can also
be used by IBRs to initiate clearing submissions to a Qualified
Clearing Agency via the Exchange's reporting systems. Reports of
orders, executions and clearing submissions received, handled or
submitted via Brokerplex are kept by the system. The Brokerplex system
has been generally described in rule filings made by the CHX with the
Commission, but the Exchange's rules do not contain a comprehensive
description of the system.\6\ In order to remove any potential
ambiguity about the nature of the Exchange's technology offerings, we
are now proposing to add language to our rules which fully describes
the basic functionality of the Brokerplex system.
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\5\ The Exchange is amending Article 17, Rule 3(b) to make
explicit that use of Brokerplex satisfies the requirement that each
Institutional Broker handle orders within an integrated system
acceptable to the Exchange.
\6\ See infra note 12.
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Proposed new Rule 5 provides that IBR users of the Brokerplex
system are responsible for entering all transactional, order and other
information into the system as required by CHX rules and in an
accurate, timely and complete manner. As the operator of the Brokerplex
system, the CHX retains such information on behalf of the Institutional
Broker users in conformity with applicable rules and regulations. The
Exchange provides such information to Institutional Brokers in a format
designated by the Exchange to assist Institutional Brokers in
processing orders and transactions, responding to requests for
information from customers and regulatory bodies and for other
legitimate business purposes. The Exchange charges the Institutional
Brokers the fees specified in its published Schedule of Fees and
Assessments for the retrieval of information.\7\
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\7\ Pursuant to Section L.2. of the Exchange's Schedule of Fees
and Assessments, trade and order data is rebilled to the Participant
at cost.
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Brokerplex accepts and handles all of the order types, conditions
and instructions accepted by the Matching System as specified in
Article 20, Rule 4.\8\ Orders may be entered into Brokerplex manually
by an IBR or submitted by an Exchange-approved electronic connection.
In addition to the order types accepted by the Matching System,
Brokerplex permits the entry and processing of certain additional order
types, conditions and instructions accepted by other market centers.
Finally, Brokerplex accepts and processes certain specified orders
types, conditions and instructions, specifically--Quote@CHX and
Reprice@CHX.\9\
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\8\ Additionally, Institutional Brokers may use the services of
a layoff vendor, i.e., a broker-dealer or routing services provider
to transmit orders to other trading centers. Those layoff vendors
may offer additional orders types beyond those in Brokerplex and
which are not part of this rule filing. Brokerplex can be used by
the Institutional Broker to record the terms of those orders and any
resulting executions.
\9\ The existing provisions in our rules regarding the Quote@CHX
and Reprice@CHX order types are being moved from Interpretation and
Policy .03 of Rule 3 of Article 17 to new Rule 5. Current
Interpretation and Policy .04 is being renumbered as Interpretation
and Policy .03, and certain minor clarifying changes within are
being proposed as well.
Quote@CHX. The Quote@CHX order type allows the Institutional
Broker to submit an order to be priced within Brokerplex at a
defined limit price which is one minimum price increment (normally 1
cent for most securities) from the relevant side of the NBBO. For
buy orders, the relevant side of the NBBO is the offer; for sell
orders it is the bid. An IBR handling a customer limit order must
enter the limit price into Brokerplex as part of submitting a
Quote@CHX order. In pricing the Quote@CHX, Brokerplex will reject
any entries if the systematically-generated price would be outside
the customer's specified limit price. The Quote@CHX order may not be
transmitted to destinations other than the CHX Matching System. The
Matching System itself will not be eligible to receive this order
type; rather, it will receive a standard limit order at a price
---------------------------------------------------------------------------
generated by Brokerplex.
Reprice@CHX. The Reprice@CHX order type allows a Brokerplex user
to cancel an existing limit order residing in the Matching System
and replace it with an order generated in the same manner as a
Quote@CHX order type. An IBR handling a customer limit order must
enter the limit price into Brokerplex as part of submitting a
Reprice@CHX order. In pricing the Reprice@CHX orders, Brokerplex
will reject any entries if the systematically-generated price would
be outside the customer's specified limit price. The Reprice@CHX
order type may not be transmitted to destinations other than the CHX
Matching System. The Matching System itself will not be eligible to
receive this order type; rather, it will receive a standard limit
order at a price generated by Brokerplex.
As permitted by CHX rules, an IBR may make post-trade entries in
Brokerplex to transfer positions from one Clearing Participant to one
or more other Clearing Participants or from its own account to the
account of a Clearing Participant.\10\
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\10\ See Article 21, Rule 6 (Submission of Clearing Information
for Transactions Executed Off-Exchange).
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Brokerplex also provides for the transmission of orders to the
Exchange's Matching System, another trading center which is connected
to Brokerplex, or a systems provider which can perform routing
services. As directed by the user, Brokerplex will either send orders
that are eligible for submission to the Matching System under Article
20, Rule 4 first to the Matching System to execute or display and then,
if they cannot be executed or displayed in the Matching System, to
another destination according to the Institutional Broker's
instructions, or to another trading center designated by the user.
Orders which are not eligible for submission to the Matching System
will be directly sent to another destination in accordance with the
IBR's instructions.
Any order entered into Brokerplex and sent through Brokerplex to
another exchange or trading center via the provisions of this rule and
which results in an execution shall be binding on the Participant on
whose behalf such order was entered, including any access, transaction
or other fee imposed by that trading center. The Institutional Broker
will be responsible for ensuring that it has a relationship with its
chosen destinations to permit the requested access. The Exchange shall
not have responsibility for the handling of the order by the other
destination, but will report any execution or cancellation of the order
reported by the other destination to Brokerplex, and will notify the
other venue of any cancellations or changes to the order submitted by
the IBR into Brokerplex.
An IBR may use Brokerplex to record the execution of a trade in the
Over-the-Counter (``OTC'') marketplace using Brokerplex.\11\ As
directed by the IBR, Brokerplex will transmit an execution report to a
Trade Reporting Facility designated by the Institutional Broker, either
directly or through a service provider designated by the Institutional
Broker.
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\11\ The Institutional Broker would retain the responsibility
for compliance with all applicable rules of FINRA or other self-
regulatory organization with jurisdiction over that activity.
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The Exchange makes clearing submissions for trades entered and/or
recorded in Brokerplex as directed by an IBR to a Qualified Clearing
Agency pursuant to the provisions of Article 21, Rules 1 (Trade
Recording with a Qualified Clearing Agency) and 6 (Submission of
Clearing Information for Transactions Executed Off-Exchange), for CHX
and non-CHX trade executions, respectively. These submissions can be
made for trades executed by either an Institutional Broker or a third-
party
[[Page 2105]]
broker dealer which in turn instructs an Institutional Broker to make
the submission to clearing, including any substitution of Clearing
Participants and allocation of the trade.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act in general, and furthers the objectives of
Section 6(b)(1) of the Act in particular, in that it allows the
Exchange to be organized and have the capacity to be able to carry out
the purposes of the Act and to comply, and (subject to any rule or
order of the Commission pursuant to section 17(d) or 19(g)(2) of the
Act) to enforce compliance by its members and persons associated with
such members, with the provisions of the Act, the rules and regulations
thereunder, and the rules of the exchange. The Brokerplex system has
been generally described in rule filings made by the CHX with the
Commission, but the Exchange's rules do not contain a comprehensive
description of the system.\12\ In order to remove any potential
ambiguity about the nature of the Exchange's technology offerings, we
are now proposing to add language to our rules which fully describes
the basic functionality of the Brokerplex system.
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\12\ See Exchange Act Release No. 53772 (May 8, 2006), 71 FR
27758 (May 12, 2006) (SR-CHX-2004-38). This proposal amended the
Exchanges rules regarding the required reporting of orders and
executions by CHX Participants. Footnote 6 contains a basic
description of the Brokerplex systems used at that time by CHX floor
brokers to ``manage their orders, route orders to the Exchange's co-
specialists for execution and report executed trades.''; Exchange
Act Release No. 60620 (Sept. 3, 2009), 74 FR 46814 (Sept. 11, 2009)
(SR-CHX-2009-10). This proposal added the ``Quote@CHX'' and
``Reprice@CHX'' order types as orders which could be entered into
the Brokerplex system by Institutional Brokers in handling and
seeking execution of their customer's orders.
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In addition, the Exchange believes that the proposed rule change is
consistent with Section 6(b) of the Act in general,\13\ and furthers
the objectives of Section 6(b)(5) in particular,\14\ in that it is
designed to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transaction in securities, to remove impediments and perfect the
mechanisms of a free and open market, and, in general, to protect
investors and the public interest by setting forth the rules and
principles governing the use of Brokerplex by Institutional Brokers.
Brokerplex is the principal system used by the Exchange's Institutional
Brokers to handle orders placed by their customers. Brokerplex has been
designed specifically for use by IBRs and it represents a customized
solution for those firms. The adoption of rules governing the use of
Brokerplex will help facilitate the ability of Institutional Brokers
and their IBRs to meet their customers' needs. The proposed changes to
Article 17, Rule 3 conform those rules to the proposed new Rule 5 of
Article 17 by transferring certain order types currently described in
Rule 3 and consolidating them with others more fully set out in new
Rule 5. The additional language in Rule 3(b) clarifies that use of the
Brokerplex system satisfies the requirement that Institutional Brokers
utilize an acceptable, integrated order management system. Proposed
Rule 5(a) provides a basic description of the Brokerplex system and the
uses of that system. Proposed Rule 5(b) specifies the record retention
requirements regarding the use of Brokerplex, which provides certainty
to Participants on that issue. Proposed Rule 5(c) sets forth the order
types accepted and processed by Brokerplex, including those order types
accepted by the Exchange's Matching System pursuant to Article 20, Rule
4, as well as additional order types which can be sent to other trading
centers for execution. The specification of these order types helps
Institutional Brokers and Participants who may wish to have their
orders handled by Institutional Brokers understand the conditions and
obligations associated with each particular order type which can by
employed by Institutional Brokers and IBRs using Brokerplex. Proposed
Rule 5(d) describes the trade allocation process within Brokerplex
which allows IBRs to make post-trade substitution of Clearing
Participants pursuant to the provisions of CHX rules. The facilitation
of trade allocation should assist Institutional Brokers in the handling
of customer orders, in particular the execution and post-trade
processing of the equities component of complex derivatives
transactions. Proposed Rule 5(e) permits Institutional Brokers to send
orders to other trading centers and destinations. By facilitating the
transmission of such orders when they cannot be executed or displayed
on the Exchange, the proposed rule assists customers seeking execution
of their orders in a prompt and fair manner. Proposed Rule 5(f) permits
Institutional Brokers to use Brokerplex to execute trades in the OTC
marketplace, provided that all FINRA requirements are satisfied.
Allowing Institutional Brokers to use Brokerplex to execute trades in
the OTC marketplace should give them additional flexibility and options
in handling their customer's orders. Brokerplex can also be used to
submit trade reports for OTC transactions. Finally, the proposal
provides that transactions reflected in Brokerplex be submitted to a
Qualified Clearing Agency pursuant to Exchange rules, which should help
ensure the reliable and prompt clearance and settlement of such
transactions.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement of Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
its provision of an order management system for certain of its
Participants acts as a competitive force, since there are a number of
other private systems providers for order routing and execution
systems. Additionally, use of an Exchange-provided system is a benefit
for smaller firms, since they may lack the resources to develop or
lease a system specifically tailored for their needs as CHX-registered
Institutional Brokers.
C. Self-Regulatory Organization's Statement on Comments Regarding 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
Pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) thereunder,\16\ CHX has designated this proposal as one that
effects a change that (A) Does not significantly affect the protection
of investors or the public interest; (B) does not impose any
significant burden on competition; and (C) will not become operative
for 30 days after the date of the filing, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest. CHX has provided the Commission 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.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if
[[Page 2106]]
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 Exchange 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-CHX-2011-33 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-CHX-2011-33. 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 (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 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 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-CHX-2011-33 and should be
submitted on or before February 3, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-533 Filed 1-12-12; 8:45 am]
BILLING CODE 8011-01-P
