Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to the Opening of the Complex Order Book, 9959-9961 [2013-03102]
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Federal Register / Vol. 78, No. 29 / Tuesday, February 12, 2013 / Notices
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 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–
NASDAQ–2013–014 and should be
submitted on orbefore March 5, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–03098 Filed 2–11–13; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
The Exchange is proposing to amend
its complex order rules. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.c2exchange.com/Legal/
RuleFilings.aspx), 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
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 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.
1. Purpose
[Release No. 34–68843; File No. SR–C2–
2013–003]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Related to the Opening of the
Complex Order Book
February 6, 2013.
tkelley on DSK3SPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
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
28, 2013, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange has designated the proposal as
a ‘‘non-controversial’’ proposed rule
change pursuant to Section 19(b)(3)(A)
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
of the Act 3 and Rule 19b–4(f)(6)
thereunder, which renders it effective
upon filing with the Commission.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
The purpose of this proposed rule
change is to include a description in
Rule 6.13 of the manner in which
complex orders are currently processed
through the Exchange’s complex order
book (‘‘COB’’) when the COB opens for
trading. Currently the rule does not
include this level of detail, so the
Exchange is proposing to include this
information within the rule to provide
additional clarity on the current
operation of the COB in response to
Trading Permit Holder inquiries about
its operation. The Exchange notes that it
is simply including additional detail in
its rules on the existing process when
the COB opens. No changes to the
process are being contemplated by this
rule change filing.
In particular, the proposed rule
change will provide that complex
orders, including stock-option orders,
do not participate in opening rotations
conducted pursuant to Rule 6.11 for
9 17
1 15
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16:40 Feb 11, 2013
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4 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
Frm 00077
Fmt 4703
Sfmt 4703
9959
individual option series.5 When the last
of the individual component option
series legs that make up a complex order
strategy has opened (and, in the case of
a stock-option strategy, when the
underlying stock has opened), the COB
for that strategy will then open for
trading. The COB for a given complex
order strategy will open with no trade,6
except as follows:
First, the COB will open with a trade
against the individual component
option series legs if there are complex
orders on only one side of the COB that
are marketable against the opposite side
of the derived net market. The resulting
execution will occur at the derived net
market price to the extent marketable.
Any remaining balance would be
processed as it would on an intra-day
basis as set forth in Rule 6.13 (including
being subject to the applicable complex
order priority and price check parameter
provisions set forth in Rule 6.13). This
provision for ‘‘legging’’ against the
individual series legs is not applicable
to stock-option order strategies. (Stockoption orders processed through COB
generally only trade against other stockoption orders. Stock-option orders
processed through COB generally do not
trade against individual component
option series legs, except in one limited
circumstance for market orders at the
conclusion of a complex order RFQ
auction (‘‘COA’’).7)
For example, if the derived net market
for a given complex order strategy is
$1.00–$1.20 for 100 units and the only
interest in the COB is a complex order
to buy the strategy at a net debit price
5 The Exchange notes that, under the current
provisions of Rule 6.11, the Exchange could
determine whether to designate various complex
order types as eligible for the Rule 6.11 opening
process on a class-by-class basis (just as it would
for any other order type). See Rule 6.11(a)(1). To
date, the Exchange has not determined to include
complex orders (including stock-option orders) in
the Rule 6.11 opening process (this process has
instead been limited to simple orders). With this
proposed rule change, SR–C2–2013–003, the
Exchange would no longer be permitted to
designate complex order (including stock-option
order) order types as eligible for the Rule 6.11
opening process. If, in the future, the Exchange
would desire to designate certain complex order
(including stock-option order) order types as being
eligible to participate in the Rule 6.11 opening
process, such a determination would be subject to
a separate rule change filing.
6 For example, the COB would move to an open
state with no trade if there are no complex orders
resting for the strategy or if there are complex
orders on only one side of the COB at a net price(s)
that does not touch or cross the derived net market.
The ‘‘derived net market’’ for a stock-option order
strategy will be calculated using the Exchange’s best
bid or offer in the individual option series leg(s)
and the NBBO in the stock leg. The ‘‘derived net
market’’ for any other complex order strategy will
be calculated using the Exchange’s best bid or offer
in the individual series legs.
7 See Rule 6.13.06.
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9960
Federal Register / Vol. 78, No. 29 / Tuesday, February 12, 2013 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
of $1.21 for 120 units, then 100 units of
the complex order would trade at a net
price of $1.20 against the individual
component series legs and the
remaining 20 units of the complex order
would be subject to processing under
Rule 6.13 (e.g., remain in the COB if not
marketable against the individual orders
and quotes in the electronic book or
other complex orders in the COB,
execute or cancel if marketable subject
the applicable priority and price check
parameters).
Second, the COB will open with a
trade against complex orders if there are
complex orders on both sides of the
COB that are marketable against each
other and that are priced within the
derived net market. The resulting
execution will occur at a market
clearing price that is inside the derived
net market and that matches complex
orders to the extent marketable. In
determining the priority, the COB gives
priority to complex orders whose net
price is better than the market clearing
price first, and then to complex orders
at the market clearing price.8 This
provision for complex orders to trade
against each other is applicable to stockoption order strategies.
For example, assume the derived net
market for a given complex order
strategy is $1.00–$1.20 for 100 units and
there is a complex order in the COB to
sell the strategy at a net credit price of
$1.19 for 20 units, a complex order in
the COB to sell the strategy at a net
credit price of $1.18 for 10 units, and a
complex order in COB to buy the
strategy at a net debit price of $1.19 for
50 units. When the COB opens, 30 units
of the buy strategy would trade at a net
price of $1.19 against the two sell
strategies. The remaining 20 units of the
buy strategy would be subject to
processing under Rule 6.13 (e.g., remain
in the COB if not marketable against the
individual orders and quotes in the
electronic book or other complex orders
in the COB, execute or cancel if
marketable subject the applicable
priority and price check parameters).
As another example, if the derived net
market for a given stock-option order
strategy is $5.00—$5.20 for 100 units
and there is a stock-option order in the
COB to sell the strategy at a net credit
price of $5.19 for 20 units, a stockoption order in the COB to sell the
8 This ‘‘market clearing price’’ process for
executing complex orders when the COB opens is
similar to the process for executing simple orders
when an individual component options series
opens. See Rule 6.11(g)(1) (‘‘In determining the
priority of orders and quotes to be traded at a single
clearing price, the System gives priority to market
orders first, then to limit orders and quotes whose
price is better than the opening price, and then to
resting orders and quotes at the opening price.’’)
VerDate Mar<15>2010
16:40 Feb 11, 2013
Jkt 229001
strategy at a net credit price of $5.18 for
10 units, and a stock-option order in
COB to buy the strategy at a net debit
price of $5.19 for 50 units, then 30 units
of the buy strategy would trade at a net
price of $5.19 against the two sell
strategies. The remaining 20 units of the
buy strategy would be subject to
processing under Rule 6.13 (e.g., remain
in the COB if not marketable against the
derived net market (considering the
individual orders and quotes in the
electronic book for the component
options series legs and the NBBO in the
stock leg) or other stock-option orders in
the COB, or execute or route for manual
processing if marketable subject the
applicable priority and price check
parameters).
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the Act 9
in general and furthers the objectives of
Section 6(b)(5) of the Act 10 in particular
in that it should promote just and
equitable principles of trade, serve to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest.
In particular, the Exchange believes that
including detail within the rules should
provide additional clarity and avoid any
confusion on the current operation of
the COB open. The Exchange also
believes that the operation of the COB
increases opportunities for all types of
market participants (e.g., public
customers, broker-dealers and marketmakers) to participate in the trading of
complex orders. This participation may
promote liquidity and result in better
prices for customers throughout the
trading day, including when the COB
opens.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. As noted
above, the Exchange believes that
including detail within the rules should
provide additional clarity and avoid any
confusion on the current operation of
the COB open. The Exchange also
believes that the operation of the COB
increases opportunities for all types of
market participants (e.g., public
customers, broker-dealers and marketmakers) to participate in the trading of
complex orders. This participation may
promote liquidity and result in better
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00078
Fmt 4703
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposal.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule 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, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 11 and Rule 19b–4(f)(6)
thereunder.12
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–C2–2013–003 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–C2–2013–003. 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
11 15
10 15
PO 00000
prices for customers throughout the
trading day, including when the COB
opens.
12 17
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E:\FR\FM\12FEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12FEN1
Federal Register / Vol. 78, No. 29 / Tuesday, February 12, 2013 / Notices
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 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–C2–
2013–003 and should be submitted on
or before March 5, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–03102 Filed 2–11–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68840; File No. SR–BX–
2013–008]
Self-Regulatory Organizations;
NASDAQ OMS BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Add
Routing Functionality to the NASDAQ
OMX BX Equities Market
tkelley on DSK3SPTVN1PROD with NOTICES
February 6, 2013.
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
23, 2013, NASDAQ OMX BX, Inc. (‘‘BX’’
or ‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Mar<15>2010
16:40 Feb 11, 2013
Jkt 229001
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 routing
functionality to the NASDAQ OMX BX
Equities Market.
The text of the proposed rule change
is below; proposed new language is
italicized.
*
*
*
*
*
4700. The NASDAQ OMX BX Equities
Market
*
*
*
*
*
4750. Execution Services
*
*
*
*
*
4758. Order Routing
(a) Order Routing Process
(1) No change.
(A) No change.
(i)–(vii) No change.
(viii) BDRK is a routing option under which
orders check the System for available shares
and simultaneously route the remaining
shares to destinations on the System routing
table that are not posting Protected
Quotations within the meaning of Regulation
NMS. If shares remain un-executed after
routing, they are posted on the book. Once
on the book, should the order subsequently
be locked or crossed by another market
center, the System will not route the order to
the locking or crossing market center.
(ix) BCST is a routing option under which
orders check the System for available shares
and simultaneously route the remaining
shares to destinations on the System routing
table that are not posting Protected
Quotations within the meaning of Regulation
NMS and to certain, but not all, exchanges.
If shares remain un-executed after routing,
they are posted on the book. Once on the
book, should the order subsequently be
locked or crossed by another market center,
the System will not route the order to the
locking or crossing market center.
(B) No change.
(b)–(d) 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
PO 00000
Frm 00079
Fmt 4703
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9961
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to attract additional business
to and enhance the functionality offered
by the Exchange’s NASDAQ OMX BX
Equities Market by providing additional
optional outbound routing services.
Most equities exchanges today provide
routing services and the Exchange offers
a variety of routing strategies. Currently,
Rule 4758, Order Routing, describes the
order routing process and states that all
routing shall be in compliance with
Rule 611 of Regulation NMS under the
Act.3 Furthermore, it enumerates BX’s
routing strategies: BSTG, BSKN, BSCN,
BSKP, BTFY, BMOP and BCRT.
Proposed Rule 4758(a)(1)(A)(viii) will
provide that BDRK is a routing option
under which orders check the System
for available shares and simultaneously
route to certain destinations on the
System routing table that are not posting
Protected Quotations within the
meaning of Regulation NMS (i.e. ‘‘dark
venues’’ or ‘‘dark pools’’). If shares
remain un-executed after routing, they
are posted on the book. Once on the
book, should the order subsequently be
locked or crossed by another market
center, the System will not route the
order to the locking or crossing market
center. This strategy is intended to
attract market participants that seek to
execute on BX or on dark pools without
executing on another exchange.
Members may seek to execute in this
manner to interact with resting liquidity
in addition to that available on BX,
while also minimizing market impact
and transaction fees.
For example, if the National Best Bid/
Offer (‘‘NBBO’’) is $10.00–$10.01, and
BX, DarkVenueA and ARCA each offer
100 shares at $10.01, a BDRK order to
buy 1000 shares at $10.01 IOC will be
handled as follows: 100 shares for
execution on BX and 100 shares routed
to DarkVenue A simultaneously at
$10.01; the remaining 800 shares are not
routed and not executed, and cancelled
back to the entering participant because
it was an IOC order. The order did not
route to ARCA because it is not a dark
venue. As a second example, if the
NBBO is $10.00–$10.01, and BX,
DarkVenueA and ARCA each offer 100
shares at $10.01, a BDRK order to buy
1000 shares at $10.01 DAY will be
3 17
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CFR 242.611.
12FEN1
]]>Agencies
[Federal Register Volume 78, Number 29 (Tuesday, February 12, 2013)]
[Notices]
[Pages 9959-9961]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-03102]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68843; File No. SR-C2-2013-003]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Related to the Opening of the Complex Order Book
February 6, 2013.
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 28, 2013, C2 Options Exchange, Incorporated (the
``Exchange'' or ``C2'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Exchange has designated the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and
Rule 19b-4(f)(6) thereunder, which renders it effective upon filing
with the Commission.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend its complex order rules. The
text of the proposed rule change is available on the Exchange's Web
site (https://www.c2exchange.com/Legal/RuleFilings.aspx), 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
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 those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to include a
description in Rule 6.13 of the manner in which complex orders are
currently processed through the Exchange's complex order book (``COB'')
when the COB opens for trading. Currently the rule does not include
this level of detail, so the Exchange is proposing to include this
information within the rule to provide additional clarity on the
current operation of the COB in response to Trading Permit Holder
inquiries about its operation. The Exchange notes that it is simply
including additional detail in its rules on the existing process when
the COB opens. No changes to the process are being contemplated by this
rule change filing.
In particular, the proposed rule change will provide that complex
orders, including stock-option orders, do not participate in opening
rotations conducted pursuant to Rule 6.11 for individual option
series.\5\ When the last of the individual component option series legs
that make up a complex order strategy has opened (and, in the case of a
stock-option strategy, when the underlying stock has opened), the COB
for that strategy will then open for trading. The COB for a given
complex order strategy will open with no trade,\6\ except as follows:
---------------------------------------------------------------------------
\5\ The Exchange notes that, under the current provisions of
Rule 6.11, the Exchange could determine whether to designate various
complex order types as eligible for the Rule 6.11 opening process on
a class-by-class basis (just as it would for any other order type).
See Rule 6.11(a)(1). To date, the Exchange has not determined to
include complex orders (including stock-option orders) in the Rule
6.11 opening process (this process has instead been limited to
simple orders). With this proposed rule change, SR-C2-2013-003, the
Exchange would no longer be permitted to designate complex order
(including stock-option order) order types as eligible for the Rule
6.11 opening process. If, in the future, the Exchange would desire
to designate certain complex order (including stock-option order)
order types as being eligible to participate in the Rule 6.11
opening process, such a determination would be subject to a separate
rule change filing.
\6\ For example, the COB would move to an open state with no
trade if there are no complex orders resting for the strategy or if
there are complex orders on only one side of the COB at a net
price(s) that does not touch or cross the derived net market. The
``derived net market'' for a stock-option order strategy will be
calculated using the Exchange's best bid or offer in the individual
option series leg(s) and the NBBO in the stock leg. The ``derived
net market'' for any other complex order strategy will be calculated
using the Exchange's best bid or offer in the individual series
legs.
---------------------------------------------------------------------------
First, the COB will open with a trade against the individual
component option series legs if there are complex orders on only one
side of the COB that are marketable against the opposite side of the
derived net market. The resulting execution will occur at the derived
net market price to the extent marketable. Any remaining balance would
be processed as it would on an intra-day basis as set forth in Rule
6.13 (including being subject to the applicable complex order priority
and price check parameter provisions set forth in Rule 6.13). This
provision for ``legging'' against the individual series legs is not
applicable to stock-option order strategies. (Stock-option orders
processed through COB generally only trade against other stock-option
orders. Stock-option orders processed through COB generally do not
trade against individual component option series legs, except in one
limited circumstance for market orders at the conclusion of a complex
order RFQ auction (``COA'').\7\)
---------------------------------------------------------------------------
\7\ See Rule 6.13.06.
---------------------------------------------------------------------------
For example, if the derived net market for a given complex order
strategy is $1.00-$1.20 for 100 units and the only interest in the COB
is a complex order to buy the strategy at a net debit price
[[Page 9960]]
of $1.21 for 120 units, then 100 units of the complex order would trade
at a net price of $1.20 against the individual component series legs
and the remaining 20 units of the complex order would be subject to
processing under Rule 6.13 (e.g., remain in the COB if not marketable
against the individual orders and quotes in the electronic book or
other complex orders in the COB, execute or cancel if marketable
subject the applicable priority and price check parameters).
Second, the COB will open with a trade against complex orders if
there are complex orders on both sides of the COB that are marketable
against each other and that are priced within the derived net market.
The resulting execution will occur at a market clearing price that is
inside the derived net market and that matches complex orders to the
extent marketable. In determining the priority, the COB gives priority
to complex orders whose net price is better than the market clearing
price first, and then to complex orders at the market clearing
price.\8\ This provision for complex orders to trade against each other
is applicable to stock-option order strategies.
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\8\ This ``market clearing price'' process for executing complex
orders when the COB opens is similar to the process for executing
simple orders when an individual component options series opens. See
Rule 6.11(g)(1) (``In determining the priority of orders and quotes
to be traded at a single clearing price, the System gives priority
to market orders first, then to limit orders and quotes whose price
is better than the opening price, and then to resting orders and
quotes at the opening price.'')
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For example, assume the derived net market for a given complex
order strategy is $1.00-$1.20 for 100 units and there is a complex
order in the COB to sell the strategy at a net credit price of $1.19
for 20 units, a complex order in the COB to sell the strategy at a net
credit price of $1.18 for 10 units, and a complex order in COB to buy
the strategy at a net debit price of $1.19 for 50 units. When the COB
opens, 30 units of the buy strategy would trade at a net price of $1.19
against the two sell strategies. The remaining 20 units of the buy
strategy would be subject to processing under Rule 6.13 (e.g., remain
in the COB if not marketable against the individual orders and quotes
in the electronic book or other complex orders in the COB, execute or
cancel if marketable subject the applicable priority and price check
parameters).
As another example, if the derived net market for a given stock-
option order strategy is $5.00--$5.20 for 100 units and there is a
stock-option order in the COB to sell the strategy at a net credit
price of $5.19 for 20 units, a stock-option order in the COB to sell
the strategy at a net credit price of $5.18 for 10 units, and a stock-
option order in COB to buy the strategy at a net debit price of $5.19
for 50 units, then 30 units of the buy strategy would trade at a net
price of $5.19 against the two sell strategies. The remaining 20 units
of the buy strategy would be subject to processing under Rule 6.13
(e.g., remain in the COB if not marketable against the derived net
market (considering the individual orders and quotes in the electronic
book for the component options series legs and the NBBO in the stock
leg) or other stock-option orders in the COB, or execute or route for
manual processing if marketable subject the applicable priority and
price check parameters).
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the Act
\9\ in general and furthers the objectives of Section 6(b)(5) of the
Act \10\ in particular in that it should promote just and equitable
principles of trade, serve to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
protect investors and the public interest. In particular, the Exchange
believes that including detail within the rules should provide
additional clarity and avoid any confusion on the current operation of
the COB open. The Exchange also believes that the operation of the COB
increases opportunities for all types of market participants (e.g.,
public customers, broker-dealers and market-makers) to participate in
the trading of complex orders. This participation may promote liquidity
and result in better prices for customers throughout the trading day,
including when the COB opens.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. As noted above, the Exchange
believes that including detail within the rules should provide
additional clarity and avoid any confusion on the current operation of
the COB open. The Exchange also believes that the operation of the COB
increases opportunities for all types of market participants (e.g.,
public customers, broker-dealers and market-makers) to participate in
the trading of complex orders. This participation may promote liquidity
and result in better prices for customers throughout the trading day,
including when the COB opens.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule 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, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6)
thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-C2-2013-003 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-C2-2013-003. 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
[[Page 9961]]
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 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-C2-2013-003 and should be
submitted on or before March 5, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03102 Filed 2-11-13; 8:45 am]
BILLING CODE 8011-01-P
