Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change Relating to Its Automated Improvement Mechanism, 9717-9719 [2012-3736]
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Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
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
No. SR–EDGX–2012–04 on the subject
line.
[Release No. 34–66384; File No. SR–C2–
2012–006]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing of a Proposed Rule
Change Relating to Its Automated
Improvement Mechanism
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
mstockstill on DSK4VPTVN1PROD with NOTICES
All submissions should refer to File
Number SR–EDGX–2012–04. 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 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–EDGX–
2012–04 and should be submitted by
March 9, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–3707 Filed 2–16–12; 8:45 am]
February 13, 2012.
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 January
31, 2012, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
filed with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been substantially prepared by the
Exchange. 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 the Substance
of the Proposed Rule Change
The Exchange proposes to amend its
rules relating to its Automated
Improvement Mechanism (‘‘AIM’’). The
text of the proposed rule change is
available on the Exchange’s Web site
(https://www.c2exchange.com), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and the
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to amend C2 Rule 6.51 to
permit an Initiating Participant to elect
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24 17
CFR 200.30–3(a)(12).
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to have last priority in AIM’s order
allocation. AIM allows a Participant to
submit an Agency Order along with a
contra-side second order (a principal
order or a solicited order for the same
size as the Agency Order) into an
Auction where other participants could
compete with the Initiating Participant’s
second order to execute against the
Agency Order, which guarantees that
the Agency Order will receive an
execution.3 Initiating Participants must
submit the Agency Order at the better of
the NBBO or the Agency Order’s limit
price (if the order is a limit order).4
Once an Auction commences, the
Initiating Participant cannot cancel it.5
Upon receipt of an Agency Order (and
the Initiating Participant’s second
order), the Exchange will commence the
Auction by issuing a Request For
Response (‘‘RFR’’) detailing the side and
size of the Agency Order. The RFR
period will last for one (1) second.6 At
the conclusion of an Auction, an
Agency Order will be allocated at the
best price(s) in accordance with the
applicable matching algorithm rules for
that class, subject to the allocation
provisions of Rule 6.51(b)(3).
Under this proposal, when submitting
an Agency Order to initiate an Auction
against a single-price submission, the
Initiating Participant will have the
opportunity to elect to have last priority
in AIM’s order allocation. If the
Initiating Participant makes this
election, the Initiating Participant
would be allocated only the amount of
contracts remaining, if any, after the
Agency Order is allocated to all other
Auction participants willing to trade
with the Agency Order at the singleprice submission price.7 If it makes this
election, the Initiating Participant may
not be allocated any contracts, or may
be allocated fewer contracts than it
3 See
C2 Rule 6.51.
C2 Rule 6.51(a)(2). The Commission notes
that if the Agency Order is for less than 50
contracts, the Initiating Participant must submit the
Agency Order at the better of the NBBO price
improved by one minimum price improvement
increment, which increment shall be determined by
the Exchange but may not be smaller than one cent;
or the Agency Order’s limit price (if the order is a
limit order). See C2 Rule 6.51(a)(3).
5 See C2 Rule 6.51(b)(1)(A).
6 See C2 Rule 6.51(b)(1). Several types of events
will cause an Auction to conclude. See C2 Rule
6.51(b)(2).
7 The Exchange notes that Chapter V, Section
18(f)(v), The Price Improvement Period (‘‘PIP’’), of
the Rules of the Boston Exchange Group, LLC
includes a similar provision that permits an options
participant initiating a PIP auction to designate a
lower amount for which it will retain certain
priority and trade allocation privileges upon the
conclusion of the PIP auction than the 40% of the
PIP order to which the initiating options participant
is otherwise entitled pursuant to PIP’s allocation
order.
4 See
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9718
Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices
would otherwise receive pursuant to
Rule 6.51(b)(3)(F) (generally 40%).
As an example, suppose an Initiating
Participant submits to an Auction an
Agency Order for 1,000 contracts and
makes the election described above:
• If at the conclusion of the Auction,
other Auction participants are willing to
trade with 800 of these contracts at the
single-price submission price or better
price(s) resulting from the Auction, then
the Initiating Participant will be
allocated the remaining 200 contracts
(or 20%) for execution against its
contra-side order at its specified single
price.
• If at the conclusion of the Auction,
other Auction participants are willing to
trade with 600 of these contracts at the
single-price submission price or better
price(s) resulting from the Auction, then
the Initiating Participant will be
allocated the remaining 400 contracts
(or 40%) for execution against its
contra-side order at its specified single
price.
• If at the conclusion of the Auction,
other Auction participants are willing to
trade with 400 of these contracts at the
single-price submission price or better
price(s) resulting from the Auction, then
the Initiating Participant will be
allocated 600 contracts for execution
against its contra-side order at its
specified single price.
• If at the conclusion of the Auction,
other Auction participants are willing to
trade with the entire Agency Order at
the single-price submission price or
better price(s) resulting from the
Auction, then the Initiating Participant
will be allocated no contracts.
Under this proposal, Agency Orders
submitted to AIM will continue to be
guaranteed execution at a price at least
as good as the NBBO while providing
the opportunity for execution at a price
better than the NBBO.
The Exchange believes this proposal
will incent more Participants to initiate
Auctions, because the additional
flexibility encourages increased
participation by Participants willing to
trade with Agency Orders at the NBBO
but not at a price better than the NBBO
and by Participants willing to facilitate
and stop a customer order at a particular
price even when there is not a desire to
trade against any or all of the customer
order. Additionally, this proposal
provides the possibility that other
Participants may receive increased order
allocations through AIM, which the
Exchange believes could increase
participation in Auctions. The Exchange
believes that this proposal may
ultimately provide additional
opportunities for price improvement
over the NBBO for its customers.
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2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
requirements of the Securities Exchange
Act of 1934 (the ‘‘Act’’) and the rules
and regulations thereunder applicable to
a national securities exchange and, in
particular, the requirements of Section
6(b) of the Act 8. Specifically, the
Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 9 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.
In particular, the Exchange believes
this proposed rule change is a
reasonable modification designed to
provide additional flexibility for
Participants to obtain executions on
behalf of their customers while
continuing to provide meaningful,
competitive Auctions. The Exchange
also believes that the proposed rule
change will increase the number of and
participation in Auctions, which will
ultimately enhance competition in the
AIM Auctions and provide customers
with additional opportunities for price
improvement.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
C2 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
Within 45 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 self-regulatory
organization consents, the Commission
will: (A) By order approve or disapprove
such proposed rule change, or (B)
8 15
9 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00099
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institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–C2–2012–006 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–C2–2012–006. 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 on official business
days between the hours of 10:00 a.m.
and 3:00 p.m. 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–C2–
2012–006, and should be submitted on
or before March 9, 2012.
E:\FR\FM\17FEN1.SGM
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Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–3736 Filed 2–16–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66385; File No. SR–
NYSEAmex–2012–03]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Provide for ‘‘SelfTrade Prevention’’ on the Exchange
February 13, 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 January
30, 2012, NYSE Amex LLC (the
‘‘Exchange’’ or ‘‘NYSE Amex’’) 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
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
The Exchange proposes to add new
Commentary .02 to NYSE Amex Options
Rule 964NY (Display, Priority and Order
Allocation—Trading Systems) to
provide for ‘‘Self-Trade Prevention’’ on
the Exchange. The text of the proposed
rule change is available at the Exchange,
the Commission’s Public Reference
Room, and www.nyse.com.
mstockstill on DSK4VPTVN1PROD with NOTICES
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.
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to add new
Commentary .02 to NYSE Amex Options
Rule 964NY (Display, Priority and Order
Allocation—Trading Systems) to
provide for ‘‘Self-Trade Prevention’’ on
the Exchange.3 As proposed, the
Exchange would cancel any resting
Market Maker quote(s) and order(s) 4 to
buy (sell) that are priced equal to or
higher (lower) than an incoming Market
Maker quote, order or both to sell (buy)
entered under the same trading permit
identification.5 The following examples
illustrate how Self-Trade Prevention
would function:
Example 1
D The National Best Bid and Offer
(‘‘NBBO’’) for a particular option series
is $1.15 (bid)—$1.20 (offer);
D The Exchange Best Bid and Offer
(‘‘BBO’’) is $1.15 (bid)—$1.25 (offer);
D A Market Maker has a single resting
PNP Order to buy on the Exchange’s
Consolidated Book with a price of $1.15;
3 Self-Trade Prevention would only be applicable
to electronic trading on the Exchange.
4 The Exchange will specify from time to time via
a Regulatory Information Bulletin the Market Maker
trading interest (i.e., quotes and orders) to which
Self-Trade Prevention will apply. Currently, the
Exchange plans to initially apply Self-Trade
Prevention to the following order types used by
Market Makers: ‘‘PNP Orders’’ and ‘‘PNP–Blind
Orders.’’ PNP Orders and PNP–Blind Orders are
defined in NYSE Amex Options Rule 900.3NY, and
each is a type of non-routable Limit Order that is
only executed on the Exchange. The Exchange notes
that Market Makers primarily use these order types,
as opposed to other order types offered by the
Exchange, because they are similar to quotes (i.e.,
they are non-routable Limit Orders). The Exchange
currently plans to expand Self-Trade Prevention to
other Market Maker trading interest (e.g., quotes)
when certain technology changes have been
completed, and would announce any such
expansion through a Regulatory Information
Bulletin under this proposed rule change pursuant
to Commentary .02 of NYSE Amex Options Rule
964NY. In the future, the Exchange may expand
Self-Trade Prevention to other orders used by
Market Makers (including routable orders), and it
also would announce any such changes through a
Regulatory Information Bulletin under this
proposed rule change pursuant to Commentary .02
of NYSE Amex Options Rule 964NY. The Exchange
would submit a separate proposed rule change if it
were to make Self-Trade Prevention available to
non-Market Maker trading interest.
5 The Exchange would use a Market Maker’s
trading permit identification (‘‘TPID’’) to monitor
for self-trades in the proposed Self-Trade
Prevention functionality. TPIDs are assigned to
Market Makers, as well as other ATP Holders, to
identify them in the Exchange’s systems. Market
Makers on the Exchange are not able to submit
orders on an agency basis. Thus, a Market Maker
within a firm that conducts both an agency and
market making business would have a unique TPID
that could only be used for that Market Maker’s
quotes and orders.
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9719
D If the Market Maker submits a PNP
Order to sell with a price of $1.15, the
NYSE Amex System would cancel the
Market Maker’s resting PNP Order to
buy with a price of $1.15.6
Example 2
D The NBBO and BBO are the same as
in Example 1;
D A Market Maker has two separate
resting PNP Orders to buy on the
Exchange’s Consolidated Book, with
prices of $1.15 and $1.13, respectively;
D If the Market Maker submits a PNP
Order to sell with a price of $1.14, the
NYSE Amex System would cancel the
Market Maker’s resting PNP Order to
buy with a price of $1.15, but would not
cancel the Market Maker’s resting PNP
Order to buy with a price of $1.13.7
As proposed, Self-Trade Prevention
would be in effect throughout the
trading day for all Market Markers on
the Exchange,8 but not during Trading
Auctions.9 In this regard, the Exchange
believes that it is highly unlikely that a
Market Maker would trade against its
own resting interest during a Trading
Auction. Moreover, the Exchange notes
that it would be difficult to implement
this functionality from a technological
and operational perspective because it
would require the Exchange to cancel
resting, executable Market Maker
trading interest as it is calculating the
price at which to conduct the Trading
Auction. For these reasons, the
Exchange is not applying Self-Trade
Prevention to Trading Auctions.
The Exchange also proposes that SelfTrade Prevention would not be
applicable to individual legs of Complex
Orders.10 In this regard, senders of
Complex Orders, including Market
Makers, view them as discrete orders,
serving a particular investment purpose,
that are contingent on all of the legs of
the Complex Order being executed.
Thus, they are only interested in having
all of the legs of a Complex Order
executed. Because the non-execution of
6 Example 1 illustrates that Self-Trade Prevention
would result in the cancellation of the Market
Maker’s resting order (or quote) to buy regardless
of whether the incoming order (or quote) and the
resting order (or quote) would actually execute
against each other.
7 Example 2 illustrates that Self-Trade Prevention
would not result in the cancellation of the Market
Maker’s resting order (or quote) to buy with a price
of $1.13 because the price of the resting order (or
quote) to buy is lower than the price of the
incoming order (or quote) to sell.
8 Market Markers on the Exchange would not
have the ability to deactivate Self-Trade Prevention
or change any settings related to it.
9 See, e.g., NYSE Amex Options Rule 952NY.
10 See NYSE Amex Options Rule 900.3NY(e),
which defines Complex Order. See also NYSE
Amex Options Rule 980NY, which describes
electronic Complex Order trading.
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]]>Agencies
[Federal Register Volume 77, Number 33 (Friday, February 17, 2012)]
[Notices]
[Pages 9717-9719]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-3736]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66384; File No. SR-C2-2012-006]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing of a Proposed Rule Change Relating to Its Automated
Improvement Mechanism
February 13, 2012.
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 January 31, 2012, C2 Options Exchange, Incorporated (the
``Exchange'' or ``C2'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been substantially
prepared by the Exchange. 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend its rules relating to its Automated
Improvement Mechanism (``AIM''). The text of the proposed rule change
is available on the Exchange's Web site (https://www.c2exchange.com), at
the Exchange's Office of the Secretary, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and the
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to amend C2 Rule 6.51
to permit an Initiating Participant to elect to have last priority in
AIM's order allocation. AIM allows a Participant to submit an Agency
Order along with a contra-side second order (a principal order or a
solicited order for the same size as the Agency Order) into an Auction
where other participants could compete with the Initiating
Participant's second order to execute against the Agency Order, which
guarantees that the Agency Order will receive an execution.\3\
Initiating Participants must submit the Agency Order at the better of
the NBBO or the Agency Order's limit price (if the order is a limit
order).\4\ Once an Auction commences, the Initiating Participant cannot
cancel it.\5\ Upon receipt of an Agency Order (and the Initiating
Participant's second order), the Exchange will commence the Auction by
issuing a Request For Response (``RFR'') detailing the side and size of
the Agency Order. The RFR period will last for one (1) second.\6\ At
the conclusion of an Auction, an Agency Order will be allocated at the
best price(s) in accordance with the applicable matching algorithm
rules for that class, subject to the allocation provisions of Rule
6.51(b)(3).
---------------------------------------------------------------------------
\3\ See C2 Rule 6.51.
\4\ See C2 Rule 6.51(a)(2). The Commission notes that if the
Agency Order is for less than 50 contracts, the Initiating
Participant must submit the Agency Order at the better of the NBBO
price improved by one minimum price improvement increment, which
increment shall be determined by the Exchange but may not be smaller
than one cent; or the Agency Order's limit price (if the order is a
limit order). See C2 Rule 6.51(a)(3).
\5\ See C2 Rule 6.51(b)(1)(A).
\6\ See C2 Rule 6.51(b)(1). Several types of events will cause
an Auction to conclude. See C2 Rule 6.51(b)(2).
---------------------------------------------------------------------------
Under this proposal, when submitting an Agency Order to initiate an
Auction against a single-price submission, the Initiating Participant
will have the opportunity to elect to have last priority in AIM's order
allocation. If the Initiating Participant makes this election, the
Initiating Participant would be allocated only the amount of contracts
remaining, if any, after the Agency Order is allocated to all other
Auction participants willing to trade with the Agency Order at the
single-price submission price.\7\ If it makes this election, the
Initiating Participant may not be allocated any contracts, or may be
allocated fewer contracts than it
[[Page 9718]]
would otherwise receive pursuant to Rule 6.51(b)(3)(F) (generally 40%).
---------------------------------------------------------------------------
\7\ The Exchange notes that Chapter V, Section 18(f)(v), The
Price Improvement Period (``PIP''), of the Rules of the Boston
Exchange Group, LLC includes a similar provision that permits an
options participant initiating a PIP auction to designate a lower
amount for which it will retain certain priority and trade
allocation privileges upon the conclusion of the PIP auction than
the 40% of the PIP order to which the initiating options participant
is otherwise entitled pursuant to PIP's allocation order.
---------------------------------------------------------------------------
As an example, suppose an Initiating Participant submits to an
Auction an Agency Order for 1,000 contracts and makes the election
described above:
If at the conclusion of the Auction, other Auction
participants are willing to trade with 800 of these contracts at the
single-price submission price or better price(s) resulting from the
Auction, then the Initiating Participant will be allocated the
remaining 200 contracts (or 20%) for execution against its contra-side
order at its specified single price.
If at the conclusion of the Auction, other Auction
participants are willing to trade with 600 of these contracts at the
single-price submission price or better price(s) resulting from the
Auction, then the Initiating Participant will be allocated the
remaining 400 contracts (or 40%) for execution against its contra-side
order at its specified single price.
If at the conclusion of the Auction, other Auction
participants are willing to trade with 400 of these contracts at the
single-price submission price or better price(s) resulting from the
Auction, then the Initiating Participant will be allocated 600
contracts for execution against its contra-side order at its specified
single price.
If at the conclusion of the Auction, other Auction
participants are willing to trade with the entire Agency Order at the
single-price submission price or better price(s) resulting from the
Auction, then the Initiating Participant will be allocated no
contracts.
Under this proposal, Agency Orders submitted to AIM will continue
to be guaranteed execution at a price at least as good as the NBBO
while providing the opportunity for execution at a price better than
the NBBO.
The Exchange believes this proposal will incent more Participants
to initiate Auctions, because the additional flexibility encourages
increased participation by Participants willing to trade with Agency
Orders at the NBBO but not at a price better than the NBBO and by
Participants willing to facilitate and stop a customer order at a
particular price even when there is not a desire to trade against any
or all of the customer order. Additionally, this proposal provides the
possibility that other Participants may receive increased order
allocations through AIM, which the Exchange believes could increase
participation in Auctions. The Exchange believes that this proposal may
ultimately provide additional opportunities for price improvement over
the NBBO for its customers.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the requirements of the Securities Exchange Act of 1934 (the ``Act'')
and the rules and regulations thereunder applicable to a national
securities exchange and, in particular, the requirements of Section
6(b) of the Act \8\. Specifically, the Exchange believes the proposed
rule change is consistent with the Section 6(b)(5) \9\ 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.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes this proposed rule change is a
reasonable modification designed to provide additional flexibility for
Participants to obtain executions on behalf of their customers while
continuing to provide meaningful, competitive Auctions. The Exchange
also believes that the proposed rule change will increase the number of
and participation in Auctions, which will ultimately enhance
competition in the AIM Auctions and provide customers with additional
opportunities for price improvement.
B. Self-Regulatory Organization's Statement on Burden on Competition
C2 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
Within 45 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 self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or (B)
institute proceedings to determine whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-C2-2012-006 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-C2-2012-006. 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 on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
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-C2-2012-006, and should be submitted on
or before March 9, 2012.
[[Page 9719]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3736 Filed 2-16-12; 8:45 am]
BILLING CODE 8011-01-P
