Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Rule 4751(f)(7) Concerning the Processing of the Price To Comply Order, 42019-42021 [2012-17335]

Download as PDF Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices Because the Equity Series do not limit their investments to eligible trust securities, however, the Equity Series will not qualify for the exemption in paragraph (c) of rule 19b–1. Applicants therefore request an exemption under section 6(c) from section 19(b) and rule 19b–1 to the extent necessary to permit capital gains earned in connection with the sale of portfolio securities to be distributed to Unitholders along with the Equity Series’ regular distributions. In all other respects, applicants will comply with section 19(b) and rule 19b– 1. 2. Applicants state that their proposal meets the standards of section 6(c). Applicants assert that any sale of portfolio securities would be triggered by the need to meet Trust expenses, Installment Payments, or by redemption requests, events over which the Depositor and the Equity Series do not have control. Applicants further state that, because principal distributions must be clearly indicated in accompanying reports to Unitholders as a return of principal and will be relatively small in comparison to normal dividend distributions, there is little danger of confusion from failure to differentiate among distributions. Applicants’ Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: tkelley on DSK3SPTVN1PROD with NOTICES A. DSC Relief and Exchange and Rollover Options 1. Whenever the Exchange Option or the Rollover Option is to be terminated or its terms are to be amended materially, any holder of a security subject to that privilege will be given prominent notice of the impending termination or amendment at least 60 days prior to the date of termination or the effective date of the amendment, provided that: (a) no such notice need be given if the only material effect of an amendment is to reduce or eliminate the sales charge payable at the time of an exchange, to add one or more new Series eligible for the Exchange Option or the Rollover Option, or to delete a Series which has terminated; and (b) no notice need be given if, under extraordinary circumstances, either (i) there is a suspension of the redemption of Units of the Series under section 22(e) of the Act and the rules and regulations promulgated thereunder, or (ii) a Series temporarily delays or ceases the sale of its Units because it is unable to invest amounts effectively in accordance with applicable investment objectives, policies and restrictions. VerDate Mar<15>2010 16:53 Jul 16, 2012 Jkt 226001 2. An investor who purchases Units under the Exchange Option or the Rollover Option will pay a lower sales charge than that which would be paid for the Units by a new investor. 3. The prospectus of each Series offering exchanges or rollovers and any sales literature or advertising that mentions the existence of the Exchange Option or Rollover Option will disclose that the Exchange Option and the Rollover Option are subject to modification, termination or suspension without notice, except in certain limited cases. 4. Any DSC imposed on a Series’ Units will comply with the requirements of subparagraphs (1), (2) and (3) of rule 6c–10(a) under the Act. 5. Each Series offering Units subject to a DSC will include in its prospectus the disclosure required by Form N–1A relating to deferred sales charges (modified as appropriate to reflect the differences between UITs and open-end management investment companies) and a schedule setting forth the number and date of each Installment Payment. 42019 consideration of the scheduled matters at the Closed Meeting. Commissioner Walter, as duty officer, voted to consider the items listed for the Closed Meeting in a closed session. The subject matter of the Closed Meeting scheduled for Thursday, July 19, 2012 will be: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; A litigation matter; An adjudicatory matter; and Other matters relating to enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551–5400. Dated: July 12, 2012. Elizabeth M. Murphy, Secretary. [FR Doc. 2012–17422 Filed 7–13–12; 11:15 am] B. Net Worth Requirement 1. Applicants will comply in all respects with the requirements of rule 14a–3 under the Act, except that the Equity Series will not restrict their portfolio investments to ‘‘eligible trust securities.’’ BILLING CODE 8011–01–P For the Commission, by the Division of Investment Management, under delegated authority. Kevin M. O’Neill, Deputy Secretary. Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Rule 4751(f)(7) Concerning the Processing of the Price To Comply Order [FR Doc. 2012–17336 Filed 7–16–12; 8:45 am] BILLING CODE 8011–01–P Sunshine Act Meeting Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, that the Securities and Exchange Commission will hold a Closed Meeting on Thursday, July 19, 2012 at 10:00 a.m. Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the Closed Meeting. Certain staff members who have an interest in the matters also may be present. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(2), (3), (5), (6), (7), 9(B) and (10) and 17 CFR 200.402(a)(2), (3), (5), (6), (7), 9(ii) and (10), permit Frm 00053 Fmt 4703 [Release No. 34–67414; File No. SR–BX– 2012–050] July 11, 2012. SECURITIES AND EXCHANGE COMMISSION PO 00000 SECURITIES AND EXCHANGE COMMISSION Sfmt 4703 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 July 2, 2012, NASDAQ OMX BX, Inc. (‘‘BX’’ 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 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 clarify how the processing of a Price to Comply Order under Rule 4751(f)(7) operates based on the method of entry. 1 15 2 17 E:\FR\FM\17JYN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 17JYN1 42020 Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices The text of the proposed rule change is below. Proposed new language is italicized; proposed deletions are in brackets. * * * * * 4751. Definitions The following definitions apply to the Rule 4600 and 4750 Series for the trading of securities listed on the Exchange or another national securities exchange. (a)–(e) (f) The term ‘‘Order Type’’ shall mean the unique processing prescribed for designated orders that are eligible for entry into the System, and shall include: (1)–(6) No change. (7) ‘‘Price to Comply Order’’ are orders that, if, at the time of entry, a Price to Comply Order would lock or cross the quotation of an external market, the order will be priced to the current low offer (for bids) or to the current best bid (for offers) and displayed at a price one minimum price increment lower than the offer (for bids) or higher than the bid (for offers). The displayed and undisplayed prices of a Price to Comply order entered through an OUCH port that crosses the market will [may] be adjusted once and, depending on the election of the member firm, either rest on the book or [multiple times depending upon the election of the member firm and changes to the prevailing NBBO] be canceled if the previously-locking price becomes available. The displayed and undisplayed prices of a Price to Comply order entered through an OUCH port that locks the market will be adjusted once and, depending on the election of the member firm, either rest on the book, be canceled, or adjusted a second time if the previously-locking price becomes available. The displayed and undisplayed prices of a Price to Comply order entered through a RASH port may be adjusted multiple times, depending upon changes to the prevailing NBBO. (8)–(10) No change. (g)–(j) No change. * * * * * tkelley on DSK3SPTVN1PROD 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 Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set VerDate Mar<15>2010 16:53 Jul 16, 2012 Jkt 226001 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 BX is proposing to modify how OUCH port-entered Price to Comply Orders 3 will operate. Price to Comply Orders, as described in Rule 4751(f)(7), allow member firms to quote aggressively and still comply with the locked and crossed markets provisions of Regulation NMS.4 BX recently amended Rule 4751(f)(7) to clarify the effect that the methods of order entry have on the processing of Price to Comply Orders.5 The rule change clarified that OUCH port-entered Price to Comply Orders are now eligible for price adjustment either once or multiple times, depending on the election of the member firm.6 The Exchange noted in the rule change that offering OUCH port users the ability to have BX reprice a Price to Comply Order multiple times will serve to reduce the excessive volume of orders entered into the System 7 and ultimately canceled.8 Accordingly, a Price to Comply Order entered through an OUCH port that a member firm has designated for multiple price adjustment will be adjusted more than once in response to changes in the prevailing National Best Bid and Offer (‘‘NBBO’’) to move the displayed price closer to the original entered price and 3 ‘‘Price to Comply Order’’ is an order such that, if, at the time of entry, it would lock or cross the quotation of an external market, the order will be priced to the current low offer (for bids) or to the current best bid (for offers) and displayed at a price one minimum price increment lower than the offer (for bids) or higher than the bid (for offers). 4 17 CFR 242.610. 5 See Securities Exchange Act Release No. 67025 (May 18, 2012), 77 FR 31413 (May 25, 2012) (SR– BX–2012–032). 6 Member firms must designate each OUCH protocol order port that it wishes to use with the multiple price adjustment functionality, and such ports will also be designated for automatic cancellation or ‘‘kick out’’ of other order types whose price was adjusted upon entry to prevent a violation of Rule 610(d) of Regulation NMS. In the absence of designation from a member firm, the Exchange will default the member’s OUCH port(s) to single price adjustment. 7 As defined by Rule 4751(a). 8 The Exchange noted that the OUCH protocol is used by member firms that are able to submit a large volume of orders. Such member firm will often submit a Price to Comply Order at an aggressive price that it anticipates will be at the NBBO, but it is not submitted at the NBBO and is not executed after repricing because the market does not move to the adjusted order price. In such cases, the member firm will typically submit additional aggressive orders, which likewise are not executed. Supra note 5. PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 display the best possible price consistent with the provisions of Regulation NMS. Prior to the clarifying rule change, OUCH port-entered Price to Comply Orders that would lock or cross the market would be adjusted once and thereafter rest on the book. The Exchange has not implemented the recently-adopted changes 9 so that it could subsequently modify how the OUCH port-entered Price to Comply Orders will operate under Rule 4751(f)(7), as described below. The Exchange has determined to modify Rule 4751(f)(7) so that a Price to Comply Order entered via an OUCH port designated for multiple price adjustment that would lock the market can be adjusted a maximum of two times—once upon entry and once again to move the displayed price to the original entered price when it becomes permissible under Regulation NMS to do so, thereby displaying the best possible price consistent with the provisions of Regulation NMS. Under the proposed rule change, such Price to Comply Orders that would cross the market upon entry would be price adjusted once upon entry to display at a permissible level and thereafter cancelled when the previously locking level becomes available. This cancellation allows the member to resubmit its order at a price more aggressive than the previously locking price should the member still desire to do so.10 As such, and unlike as described in the recent rule change, the process applied to OUCH ports designated for multiple price adjustment will be similar to, yet different than, the process applied to RASH-entered Price to Comply Orders. BX is not changing how Price to Comply Orders entered via an OUCH port not designated for multiple price adjustment operate. Such orders will continue to be adjusted once and thereafter remain on the book. Likewise, BX is not proposing to change how price adjusted orders are treated in terms of priority. Like RASH-entered Price to Comply Orders, each time the OUCHentered order is price adjusted it will receive a new timestamp for purposes of determining its price/display/time priority.11 As such, an OUCH-entered Price to Comply Order that is repriced upon entry will initially be prioritized among non-displayed orders at the 9 Supra note 5. orders other than Price to Comply Orders that are re-priced on entry due to Regulation NMS and submitted via OUCH ports designated for multiple price adjustment of Price to Comply Orders will be cancelled when the previously locking price level becomes available. 11 As described in Rule 4757(a)(1). 10 Similarly, E:\FR\FM\17JYN1.SGM 17JYN1 Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices tkelley on DSK3SPTVN1PROD with NOTICES locking price based on its time of entry. Upon the second repricing of an OUCHentered Price to Comply Order that is entered at a locking price, the order will be prioritized among displayed orders at the previously locking price based on its time of repricing and thus is treated as a new displayed order in terms of priority. There is no guarantee that the OUCH-entered Price to Comply Order will receive priority amongst displayed orders when it becomes actionable after repricing, as other displayed orders may be entered before the Price to Comply Order is repriced. This priority treatment is identical to the treatment provided to RASH-entered Price to Comply Orders that are price adjusted. The Exchange will provide public notice five business days prior to the implementation date of the changes proposed herein, together with the changes proposed in the recent rule filing 12 not modified by this proposal, and such implementation date will be no later than thirty calendar days from the date of filing this proposal with the Commission. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,13 in general, and with Section 6(b)(5) of the Act 14 in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes this proposal is consistent with the Exchange Act and, specifically, Rules 610 and 611 of Regulation NMS in that it is designed to prevent orders from locking and crossing the market or trading through protected quotes, while also promoting a more efficient market. In this regard, the Exchange believes that the proposed rule change will promote the efficient use of the Exchange by reducing the number of orders entered into the market and ultimately canceled. The proposed rule change will accomplish this by providing the member firms that tend to enter the greatest number of such orders via OUCH ports an option to have the Exchange reprice two times a single order that would lock the market upon entry. The Exchange also believes that permitting a high volume user the option to continue to have the Exchange reprice its Price to Comply Order only upon order entry, when appropriate, will ensure member firms with internal systems that act in reliance on this function will continue to operate without disruption. 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–BX–2012–050 on the subject line. Paper Comments The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others All submissions should refer to File Number SR–BX–2012–050. 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 10:00 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 publicly available. All submissions should refer to File Number SR–BX– 2012–050 and should be submitted on or before August 7, 2012. Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 15 and subparagraph (f)(6) of Rule 19b–4 thereunder.16 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. The Exchange 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. 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–17335 Filed 7–16–12; 8:45 am] BILLING CODE 8011–01–P note 5. U.S.C. 78f. 14 15 U.S.C. 78f(b)(5). 13 15 16:53 Jul 16, 2012 Comments may be submitted by any of the following methods: B. Self-Regulatory Organization’s Statement on Burden on Competition 12 Supra VerDate Mar<15>2010 15 15 U.S.C. 78s(b)(3)(A)(ii). 16 17 CFR 240.19b–4(f)(6). Jkt 226001 42021 PO 00000 Frm 00055 Fmt 4703 Sfmt 9990 17 17 E:\FR\FM\17JYN1.SGM CFR 200.30–3(a)(12). 17JYN1

Agencies

[Federal Register Volume 77, Number 137 (Tuesday, July 17, 2012)]
[Notices]
[Pages 42019-42021]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17335]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67414; File No. SR-BX-2012-050]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Rule 
4751(f)(7) Concerning the Processing of the Price To Comply Order

 July 11, 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 July 2, 2012, NASDAQ OMX BX, Inc. (``BX'' 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 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to clarify how the processing of a Price to 
Comply Order under Rule 4751(f)(7) operates based on the method of 
entry.

[[Page 42020]]

    The text of the proposed rule change is below. Proposed new 
language is italicized; proposed deletions are in brackets.
* * * * *

4751. Definitions

    The following definitions apply to the Rule 4600 and 4750 Series 
for the trading of securities listed on the Exchange or another 
national securities exchange.
    (a)-(e)
    (f) The term ``Order Type'' shall mean the unique processing 
prescribed for designated orders that are eligible for entry into the 
System, and shall include:
    (1)-(6) No change.
    (7) ``Price to Comply Order'' are orders that, if, at the time of 
entry, a Price to Comply Order would lock or cross the quotation of an 
external market, the order will be priced to the current low offer (for 
bids) or to the current best bid (for offers) and displayed at a price 
one minimum price increment lower than the offer (for bids) or higher 
than the bid (for offers). The displayed and undisplayed prices of a 
Price to Comply order entered through an OUCH port that crosses the 
market will [may] be adjusted once and, depending on the election of 
the member firm, either rest on the book or [multiple times depending 
upon the election of the member firm and changes to the prevailing 
NBBO] be canceled if the previously-locking price becomes available. 
The displayed and undisplayed prices of a Price to Comply order entered 
through an OUCH port that locks the market will be adjusted once and, 
depending on the election of the member firm, either rest on the book, 
be canceled, or adjusted a second time if the previously-locking price 
becomes available. The displayed and undisplayed prices of a Price to 
Comply order entered through a RASH port may be adjusted multiple 
times, depending upon changes to the prevailing NBBO.
    (8)-(10) No change.
    (g)-(j) No change.
* * * * *

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    BX is proposing to modify how OUCH port-entered Price to Comply 
Orders \3\ will operate. Price to Comply Orders, as described in Rule 
4751(f)(7), allow member firms to quote aggressively and still comply 
with the locked and crossed markets provisions of Regulation NMS.\4\ BX 
recently amended Rule 4751(f)(7) to clarify the effect that the methods 
of order entry have on the processing of Price to Comply Orders.\5\ The 
rule change clarified that OUCH port-entered Price to Comply Orders are 
now eligible for price adjustment either once or multiple times, 
depending on the election of the member firm.\6\ The Exchange noted in 
the rule change that offering OUCH port users the ability to have BX 
reprice a Price to Comply Order multiple times will serve to reduce the 
excessive volume of orders entered into the System \7\ and ultimately 
canceled.\8\ Accordingly, a Price to Comply Order entered through an 
OUCH port that a member firm has designated for multiple price 
adjustment will be adjusted more than once in response to changes in 
the prevailing National Best Bid and Offer (``NBBO'') to move the 
displayed price closer to the original entered price and display the 
best possible price consistent with the provisions of Regulation NMS. 
Prior to the clarifying rule change, OUCH port-entered Price to Comply 
Orders that would lock or cross the market would be adjusted once and 
thereafter rest on the book. The Exchange has not implemented the 
recently-adopted changes \9\ so that it could subsequently modify how 
the OUCH port-entered Price to Comply Orders will operate under Rule 
4751(f)(7), as described below.
---------------------------------------------------------------------------

    \3\ ``Price to Comply Order'' is an order such that, if, at the 
time of entry, it would lock or cross the quotation of an external 
market, the order will be priced to the current low offer (for bids) 
or to the current best bid (for offers) and displayed at a price one 
minimum price increment lower than the offer (for bids) or higher 
than the bid (for offers).
    \4\ 17 CFR 242.610.
    \5\ See Securities Exchange Act Release No. 67025 (May 18, 
2012), 77 FR 31413 (May 25, 2012) (SR-BX-2012-032).
    \6\ Member firms must designate each OUCH protocol order port 
that it wishes to use with the multiple price adjustment 
functionality, and such ports will also be designated for automatic 
cancellation or ``kick out'' of other order types whose price was 
adjusted upon entry to prevent a violation of Rule 610(d) of 
Regulation NMS. In the absence of designation from a member firm, 
the Exchange will default the member's OUCH port(s) to single price 
adjustment.
    \7\ As defined by Rule 4751(a).
    \8\ The Exchange noted that the OUCH protocol is used by member 
firms that are able to submit a large volume of orders. Such member 
firm will often submit a Price to Comply Order at an aggressive 
price that it anticipates will be at the NBBO, but it is not 
submitted at the NBBO and is not executed after repricing because 
the market does not move to the adjusted order price. In such cases, 
the member firm will typically submit additional aggressive orders, 
which likewise are not executed. Supra note 5.
    \9\ Supra note 5.
---------------------------------------------------------------------------

    The Exchange has determined to modify Rule 4751(f)(7) so that a 
Price to Comply Order entered via an OUCH port designated for multiple 
price adjustment that would lock the market can be adjusted a maximum 
of two times--once upon entry and once again to move the displayed 
price to the original entered price when it becomes permissible under 
Regulation NMS to do so, thereby displaying the best possible price 
consistent with the provisions of Regulation NMS. Under the proposed 
rule change, such Price to Comply Orders that would cross the market 
upon entry would be price adjusted once upon entry to display at a 
permissible level and thereafter cancelled when the previously locking 
level becomes available. This cancellation allows the member to 
resubmit its order at a price more aggressive than the previously 
locking price should the member still desire to do so.\10\ As such, and 
unlike as described in the recent rule change, the process applied to 
OUCH ports designated for multiple price adjustment will be similar to, 
yet different than, the process applied to RASH-entered Price to Comply 
Orders.
---------------------------------------------------------------------------

    \10\ Similarly, orders other than Price to Comply Orders that 
are re-priced on entry due to Regulation NMS and submitted via OUCH 
ports designated for multiple price adjustment of Price to Comply 
Orders will be cancelled when the previously locking price level 
becomes available.
---------------------------------------------------------------------------

    BX is not changing how Price to Comply Orders entered via an OUCH 
port not designated for multiple price adjustment operate. Such orders 
will continue to be adjusted once and thereafter remain on the book. 
Likewise, BX is not proposing to change how price adjusted orders are 
treated in terms of priority. Like RASH-entered Price to Comply Orders, 
each time the OUCH-entered order is price adjusted it will receive a 
new timestamp for purposes of determining its price/display/time 
priority.\11\ As such, an OUCH-entered Price to Comply Order that is 
repriced upon entry will initially be prioritized among non-displayed 
orders at the

[[Page 42021]]

locking price based on its time of entry. Upon the second repricing of 
an OUCH-entered Price to Comply Order that is entered at a locking 
price, the order will be prioritized among displayed orders at the 
previously locking price based on its time of repricing and thus is 
treated as a new displayed order in terms of priority. There is no 
guarantee that the OUCH-entered Price to Comply Order will receive 
priority amongst displayed orders when it becomes actionable after 
repricing, as other displayed orders may be entered before the Price to 
Comply Order is repriced. This priority treatment is identical to the 
treatment provided to RASH-entered Price to Comply Orders that are 
price adjusted. The Exchange will provide public notice five business 
days prior to the implementation date of the changes proposed herein, 
together with the changes proposed in the recent rule filing \12\ not 
modified by this proposal, and such implementation date will be no 
later than thirty calendar days from the date of filing this proposal 
with the Commission.
---------------------------------------------------------------------------

    \11\ As described in Rule 4757(a)(1).
    \12\ Supra note 5.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\13\ in general, and with 
Section 6(b)(5) of the Act \14\ in particular, in that the proposal is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The Exchange 
believes this proposal is consistent with the Exchange Act and, 
specifically, Rules 610 and 611 of Regulation NMS in that it is 
designed to prevent orders from locking and crossing the market or 
trading through protected quotes, while also promoting a more efficient 
market. In this regard, the Exchange believes that the proposed rule 
change will promote the efficient use of the Exchange by reducing the 
number of orders entered into the market and ultimately canceled. The 
proposed rule change will accomplish this by providing the member firms 
that tend to enter the greatest number of such orders via OUCH ports an 
option to have the Exchange reprice two times a single order that would 
lock the market upon entry. The Exchange also believes that permitting 
a high volume user the option to continue to have the Exchange reprice 
its Price to Comply Order only upon order entry, when appropriate, will 
ensure member firms with internal systems that act in reliance on this 
function will continue to operate without disruption.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is 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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \15\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. The Exchange 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.

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-BX-2012-050 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BX-2012-050. 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 
10:00 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 publicly available. All 
submissions should refer to File Number SR-BX-2012-050 and should be 
submitted on or before August 7, 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. 2012-17335 Filed 7-16-12; 8:45 am]
BILLING CODE 8011-01-P
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