Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change To Amend BX Rule 4756 and Rule 4763 To Stipulate How Participants in the NASDAQ OMX BX Equities Market May Modify Previously Entered Orders and To Describe How Modified Orders Are Processed, 27457-27459 [2013-11175]
Download as PDF
Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices
required by Rule 19b–4(f)(6).17 The
proposed rule change is substantially
similar in all material respects to a
proposal submitted by Phlx that was
recently approved by the Commission.18
The Exchange believes that this
proposed rule change, which is essential
for competitive purposes and to
promote a free and open market for the
benefit of investors, does not raise any
new, unique or substantive issues from
those raised in the Phlx filing.
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:
mstockstill on DSK4VPTVN1PROD with NOTICES
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–BOX–2013–22 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–BOX–2013–22. 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–BOX–
2013–22 and should be submitted on or
before May 31, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–11140 Filed 5–9–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69525; File No. SR–BX–
2013–033]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
of Proposed Rule Change To Amend
BX Rule 4756 and Rule 4763 To
Stipulate How Participants in the
NASDAQ OMX BX Equities Market May
Modify Previously Entered Orders and
To Describe How Modified Orders Are
Processed
May 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 April 25,
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, 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 amend BX
Rule 4756 (Entry and Display of Quotes
and Orders) and Rule 4763 (Short Sale
Price Test Pursuant to Rule 201 of
Regulation SHO) to stipulate how
Participants in the NASDAQ OMX BX
Equities Market may modify previously
entered orders and to describe how
modified orders are processed.
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
17 17
CFR 240.19b–4(f)(6).
18 See supra, note 4.
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18:05 May 09, 2013
1 15
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PO 00000
Frm 00094
Fmt 4703
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27457
The text of the proposed rule change
is below; proposed new language is
italicized.
*
*
*
*
*
4756. Entry and Display of Quotes and
Orders
(a) Entry of Orders—Participants can
enter orders into the System, subject to
the following requirements and
conditions:
(1)–(2) No change.
(3) Orders can be entered into the
System (or previously entered orders
cancelled or modified) from 7:00 a.m.
until 7:00 p.m. Eastern Time.
Participants may modify a previously
entered order without cancelling it or
affecting the priority of the order on the
book solely for the purpose of modifying
the marking of a sell order as long,
short, or short exempt; provided,
however, that if an order is redesignated
as short, a Short Sale Period is in effect
under Rule 4763, and the order is not
priced at a Permitted Price or higher
under Rule 4763(d), the order will be
cancelled. In addition, a partial
cancellation of an order to reduce its
share size will not affect the priority of
the order on the book. All other
modifications of orders will result in the
replacement of the original order with a
new order with a new time stamp.
(b)–(c) No change.
*
*
*
*
*
4763. Short Sale Price Test Pursuant to
Rule 201 of Regulation SHO
(a)–(c) No change.
(d) Re-pricing of Orders during Short
Sale Period. Except as provided below,
[D]during the Short Sale Period, short
sale orders that are limited to the
national best bid or lower and short sale
market orders will be re-priced by the
System one minimum allowable price
increment above the current national
best bid (‘‘Permitted Price’’). To reflect
declines in the national best bid, the
Exchange will continue to re-price a
short sale order at the lowest Permitted
Price down to the order’s original limit
price, or if a market order, until the
order is filled. Non-displayed orders
between the BX bid and offer will also
be re-priced upward to a Permitted Price
to correspond with a rise in the national
best bid.
(1) No change.
(2) During the Short Sale Period, if an
order was entered as a long sale order
or a short sale exempt order but is
subsequently marked pursuant to Rule
4756(a)(3) as a short sale order, the
System will cancel the order unless it is
priced at a Permitted Price or higher.
(e)–(f) No change.
*
*
*
*
*
E:\FR\FM\10MYN1.SGM
10MYN1
27458
Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / 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
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
mstockstill on DSK4VPTVN1PROD with NOTICES
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 stipulate how Participants
in the NASDAQ OMX BX Equities
Market may modify previously entered
orders and to describe how modified
orders are processed. Currently, Rule
4756 permits previously entered orders
to be cancelled, a fact that has been
interpreted by BX to allow a Participant
to cancel an order in full or in part.
However, new language is being added
to the rule to make it clear that a partial
cancellation of an order (i.e., a reduction
in the share size of the order) does not
cause the order to lose priority on the
BX book. BX believes that it is
reasonable to allow the partial
cancellation of an order without the
order losing priority because the
Participant that entered the order
continues to express its willingness to
trade at the price entered when the
order first came onto the book.
Moreover, if the order is displayed,
other Participants quoting at the same
price are aware of the priority of their
orders relative to the partially cancelled
order. While a partial cancellation may
provide these other Participants with
greater opportunities to provide a fill,
BX does not believe that it would be
reasonable for the Participants to jump
ahead of an order with time priority
merely because the size of the order has
been reduced. Similarly, if the partially
cancelled order is non-displayed, other
Participants would have no awareness
of its price, its original size, or its
reduced size. Again, while other
Participants at that price may have an
increased opportunity to provide a fill
when the order’s size is reduced, they
would not have an expectation that the
priority of their orders would change
`
vis-a-vis that of an order that arrived on
the book at an earlier time. Finally, with
VerDate Mar<15>2010
18:05 May 09, 2013
Jkt 229001
respect to Participants seeking to access
liquidity, the reduced size of the order
would be disseminated (if a displayed
order) or not disseminated (if a nondisplayed order) via market data feeds,
but these Participants would be
indifferent as to the order’s priority vis`
a-vis other orders with the same price.
In addition, BX is modifying Rule
4756 to provide that a sell order may be
modified in order to change its marking
as long, short, or short exempt without
affecting its priority on the book.3
Participants sometimes wish to modify
the marking of a sell order on the book
due to changes in the Participant’s
holdings of the security in question. At
present, such a modification may only
be achieved by the cancellation of the
existing order and its replacement with
a new order with a different time stamp.
BX believes that it is reasonable to allow
the modification of an order for this
purpose without affecting its priority,
since the order’s marking has no bearing
on the timing of its entry onto the book
`
vis-a-vis other orders at the same price.4
In the event, however, that a long or
short exempt order is redesignated as a
short sale order and the security that is
the subject of the order is in a Short Sale
Period, as provided for in Rule 4763 and
Rule 201 under Regulation SHO,5 the
order will be evaluated to determine
whether its price would be a Permitted
Price within the meaning of Rule
4763(d). If not, the order will be
cancelled rather than repriced.6 BX
believes that cancelling the order under
these circumstances is preferable to
repricing it, because it alerts the
Participant entering the order to the
existence of the Short Sale Period and
forces the Participant to evaluate its
intentions with regard to the order.
Finally, BX is amending Rule 4756 to
make it clear that all other modifications
of previously submitted orders,
including increases in size 7 and
changes in price, will result in the
cancellation of the original order and its
replacement with a new order with a
new time stamp. Although the addition
3 The proposed rule does not affect Participants’
obligations contained in Regulation SHO under the
Act, and Participants must continue to comply with
such obligations, including the order marking and
locate requirements. See 17 CFR 242.200 et seq.
4 A change to the marking of the order would be
effected through the submission of a ‘‘modify
order’’ message.
5 17 CFR 242.201.
6 If an order originally marked as long or short is
marked as short exempt, the order will not be
cancelled or repriced. Rule 4763(f).
7 BX reminds Participants that if a seller increases
the size of a pending sell order, the resulting
modified order is considered a new order and must
be marked by the broker-dealer to reflect the seller’s
net position at the time of order modification
pursuant to Rule 200 of Regulation SHO.
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
of this rule language does not reflect a
change in the way the BX system
currently operates, BX believes that the
clarity of the rule will be enhanced by
including the new language. BX further
believes that the functionality described
by the rule language is important to
ensuring that Participants cannot use an
existing order unfairly to retain priority
with respect to a materially different
order.
2. Statutory Basis
BX believes that its proposal is
consistent with Section 6(b) of the Act 8
in general, and furthers the objectives of
Section 6(b)(5) of the Act 9 in particular,
in that it is designed to promote just and
equitable principles of trade, 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. Specifically, BX believes
that permitting Participants to change
the marking of sell orders without
affecting their priority on the BX book
will eliminate an aspect of the NASDAQ
OMX BX Equities Market that had
unnecessarily made it more difficult for
posted sell orders to execute. Thus, the
change will enhance the fairness and
efficiency of the BX market without
affecting the ability of Participants to
comply with applicable regulatory
requirements. In addition, the changes
to the rule that describe the effect of a
partial order cancellation promote the
clarity of the rule with respect to the
ability of a Participant to reduce the size
of an existing order without affecting its
priority. BX further believes that
allowing an order to retain priority
under these conditions is consistent
with the operation of a free and open
market and the protection of investors
and the public interest, since the
Participant that entered an order that is
partially cancelled has nevertheless
expressed a continued willingness to
trade at a specified price, and therefore
should retain priority over Participants
that joined that price at a later time.
Finally, BX believes that the proposed
addition of language to clearly stipulate
that all other order modifications will
result in the cancellation and
replacement of the original order with a
new order with new time priority is
consistent with the protection of
investors and the public interest
because the new language will make
clear an existing feature of the market
that BX believes is important to
ensuring that Participants cannot use an
existing order unfairly to retain priority
8 15
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
E:\FR\FM\10MYN1.SGM
10MYN1
Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices
with respect to a materially different
order.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
BX 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, as amended.
Specifically, BX believes that the change
with respect to allowing Participants to
modify the long, short, or short exempt
marking of a sell order without affecting
its priority will assist BX in competing
with the BATS Exchange and the BATS
Y-Exchange, which already allow their
Participants to do so. BX further
believes that the other changes will not
have any effect on competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 10 and
subparagraph (f)(6) of Rule 19b–4
thereunder.11 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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
mstockstill on DSK4VPTVN1PROD with NOTICES
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
10 15
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
11 17
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18:05 May 09, 2013
Jkt 229001
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
27459
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69524; File No. SR–
NYSEMKT–2013–35]
• 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–2013–033 on the
subject line.
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Establishing a Schedule
of the NYSE Amex Options Proprietary
Market Data Fees
Paper Comments
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on April 25,
2013, NYSE MKT LLC (the ‘‘Exchange’’
or ‘‘NYSE MKT’’) 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 self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
• 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–2013–033. 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 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–BX–2013–033 and should
be submitted on or before May 31, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–11175 Filed 5–9–13; 8:45 am]
BILLING CODE 8011–01–P
May 6, 2013.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to establish a
schedule of the NYSE Amex Options
Proprietary Market Data Fees (‘‘Market
Data Fee Schedule’’). The text of the
proposed rule change is available on the
Exchange’s Web site at www.nyse.com,
at the principal office of the Exchange,
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
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to establish a
Market Data Fee Schedule. The market
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
12 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00096
Fmt 4703
Sfmt 4703
E:\FR\FM\10MYN1.SGM
10MYN1
Agencies
[Federal Register Volume 78, Number 91 (Friday, May 10, 2013)]
[Notices]
[Pages 27457-27459]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11175]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69525; File No. SR-BX-2013-033]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing of Proposed Rule Change To Amend BX Rule 4756 and Rule 4763 To
Stipulate How Participants in the NASDAQ OMX BX Equities Market May
Modify Previously Entered Orders and To Describe How Modified Orders
Are Processed
May 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 April 25, 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, 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 amend BX Rule 4756 (Entry and Display of
Quotes and Orders) and Rule 4763 (Short Sale Price Test Pursuant to
Rule 201 of Regulation SHO) to stipulate how Participants in the NASDAQ
OMX BX Equities Market may modify previously entered orders and to
describe how modified orders are processed.
The text of the proposed rule change is below; proposed new
language is italicized.
* * * * *
4756. Entry and Display of Quotes and Orders
(a) Entry of Orders--Participants can enter orders into the System,
subject to the following requirements and conditions:
(1)-(2) No change.
(3) Orders can be entered into the System (or previously entered
orders cancelled or modified) from 7:00 a.m. until 7:00 p.m. Eastern
Time. Participants may modify a previously entered order without
cancelling it or affecting the priority of the order on the book solely
for the purpose of modifying the marking of a sell order as long,
short, or short exempt; provided, however, that if an order is
redesignated as short, a Short Sale Period is in effect under Rule
4763, and the order is not priced at a Permitted Price or higher under
Rule 4763(d), the order will be cancelled. In addition, a partial
cancellation of an order to reduce its share size will not affect the
priority of the order on the book. All other modifications of orders
will result in the replacement of the original order with a new order
with a new time stamp.
(b)-(c) No change.
* * * * *
4763. Short Sale Price Test Pursuant to Rule 201 of Regulation SHO
(a)-(c) No change.
(d) Re-pricing of Orders during Short Sale Period. Except as
provided below, [D]during the Short Sale Period, short sale orders that
are limited to the national best bid or lower and short sale market
orders will be re-priced by the System one minimum allowable price
increment above the current national best bid (``Permitted Price''). To
reflect declines in the national best bid, the Exchange will continue
to re-price a short sale order at the lowest Permitted Price down to
the order's original limit price, or if a market order, until the order
is filled. Non-displayed orders between the BX bid and offer will also
be re-priced upward to a Permitted Price to correspond with a rise in
the national best bid.
(1) No change.
(2) During the Short Sale Period, if an order was entered as a long
sale order or a short sale exempt order but is subsequently marked
pursuant to Rule 4756(a)(3) as a short sale order, the System will
cancel the order unless it is priced at a Permitted Price or higher.
(e)-(f) No change.
* * * * *
[[Page 27458]]
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
The purpose of the proposed rule change is to stipulate how
Participants in the NASDAQ OMX BX Equities Market may modify previously
entered orders and to describe how modified orders are processed.
Currently, Rule 4756 permits previously entered orders to be cancelled,
a fact that has been interpreted by BX to allow a Participant to cancel
an order in full or in part. However, new language is being added to
the rule to make it clear that a partial cancellation of an order
(i.e., a reduction in the share size of the order) does not cause the
order to lose priority on the BX book. BX believes that it is
reasonable to allow the partial cancellation of an order without the
order losing priority because the Participant that entered the order
continues to express its willingness to trade at the price entered when
the order first came onto the book. Moreover, if the order is
displayed, other Participants quoting at the same price are aware of
the priority of their orders relative to the partially cancelled order.
While a partial cancellation may provide these other Participants with
greater opportunities to provide a fill, BX does not believe that it
would be reasonable for the Participants to jump ahead of an order with
time priority merely because the size of the order has been reduced.
Similarly, if the partially cancelled order is non-displayed, other
Participants would have no awareness of its price, its original size,
or its reduced size. Again, while other Participants at that price may
have an increased opportunity to provide a fill when the order's size
is reduced, they would not have an expectation that the priority of
their orders would change vis-[agrave]-vis that of an order that
arrived on the book at an earlier time. Finally, with respect to
Participants seeking to access liquidity, the reduced size of the order
would be disseminated (if a displayed order) or not disseminated (if a
non-displayed order) via market data feeds, but these Participants
would be indifferent as to the order's priority vis-[agrave]-vis other
orders with the same price.
In addition, BX is modifying Rule 4756 to provide that a sell order
may be modified in order to change its marking as long, short, or short
exempt without affecting its priority on the book.\3\ Participants
sometimes wish to modify the marking of a sell order on the book due to
changes in the Participant's holdings of the security in question. At
present, such a modification may only be achieved by the cancellation
of the existing order and its replacement with a new order with a
different time stamp. BX believes that it is reasonable to allow the
modification of an order for this purpose without affecting its
priority, since the order's marking has no bearing on the timing of its
entry onto the book vis-[agrave]-vis other orders at the same price.\4\
In the event, however, that a long or short exempt order is
redesignated as a short sale order and the security that is the subject
of the order is in a Short Sale Period, as provided for in Rule 4763
and Rule 201 under Regulation SHO,\5\ the order will be evaluated to
determine whether its price would be a Permitted Price within the
meaning of Rule 4763(d). If not, the order will be cancelled rather
than repriced.\6\ BX believes that cancelling the order under these
circumstances is preferable to repricing it, because it alerts the
Participant entering the order to the existence of the Short Sale
Period and forces the Participant to evaluate its intentions with
regard to the order.
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\3\ The proposed rule does not affect Participants' obligations
contained in Regulation SHO under the Act, and Participants must
continue to comply with such obligations, including the order
marking and locate requirements. See 17 CFR 242.200 et seq.
\4\ A change to the marking of the order would be effected
through the submission of a ``modify order'' message.
\5\ 17 CFR 242.201.
\6\ If an order originally marked as long or short is marked as
short exempt, the order will not be cancelled or repriced. Rule
4763(f).
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Finally, BX is amending Rule 4756 to make it clear that all other
modifications of previously submitted orders, including increases in
size \7\ and changes in price, will result in the cancellation of the
original order and its replacement with a new order with a new time
stamp. Although the addition of this rule language does not reflect a
change in the way the BX system currently operates, BX believes that
the clarity of the rule will be enhanced by including the new language.
BX further believes that the functionality described by the rule
language is important to ensuring that Participants cannot use an
existing order unfairly to retain priority with respect to a materially
different order.
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\7\ BX reminds Participants that if a seller increases the size
of a pending sell order, the resulting modified order is considered
a new order and must be marked by the broker-dealer to reflect the
seller's net position at the time of order modification pursuant to
Rule 200 of Regulation SHO.
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2. Statutory Basis
BX believes that its proposal is consistent with Section 6(b) of
the Act \8\ in general, and furthers the objectives of Section 6(b)(5)
of the Act \9\ in particular, in that it is designed to promote just
and equitable principles of trade, 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.
Specifically, BX believes that permitting Participants to change the
marking of sell orders without affecting their priority on the BX book
will eliminate an aspect of the NASDAQ OMX BX Equities Market that had
unnecessarily made it more difficult for posted sell orders to execute.
Thus, the change will enhance the fairness and efficiency of the BX
market without affecting the ability of Participants to comply with
applicable regulatory requirements. In addition, the changes to the
rule that describe the effect of a partial order cancellation promote
the clarity of the rule with respect to the ability of a Participant to
reduce the size of an existing order without affecting its priority. BX
further believes that allowing an order to retain priority under these
conditions is consistent with the operation of a free and open market
and the protection of investors and the public interest, since the
Participant that entered an order that is partially cancelled has
nevertheless expressed a continued willingness to trade at a specified
price, and therefore should retain priority over Participants that
joined that price at a later time. Finally, BX believes that the
proposed addition of language to clearly stipulate that all other order
modifications will result in the cancellation and replacement of the
original order with a new order with new time priority is consistent
with the protection of investors and the public interest because the
new language will make clear an existing feature of the market that BX
believes is important to ensuring that Participants cannot use an
existing order unfairly to retain priority
[[Page 27459]]
with respect to a materially different order.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
BX 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, as amended. Specifically, BX
believes that the change with respect to allowing Participants to
modify the long, short, or short exempt marking of a sell order without
affecting its priority will assist BX in competing with the BATS
Exchange and the BATS Y-Exchange, which already allow their
Participants to do so. BX further believes that the other changes will
not have any effect on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\ 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: (i) Necessary or appropriate in the
public interest; (ii) for the protection of investors; or (iii)
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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-2013-033 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-2013-033. 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 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-BX-2013-033 and
should be submitted on or before May 31, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11175 Filed 5-9-13; 8:45 am]
BILLING CODE 8011-01-P