Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to a Proposal To Amend Chapter VI, Section 18 of the Exchange's Options Rules, 36870-36872 [2015-15692]

Download as PDF 36870 Federal Register / Vol. 80, No. 123 / Friday, June 26, 2015 / Notices prompt and accurate clearance and settlement of securities transactions. This proposed rule change is also consistent with Rule 17Ad–22(d)(8) 10 because it would promote the effectiveness of OCC’s risk management procedures by better ensuring that the Risk Committee is provided with appropriate information in a timely manner to discharge its responsibilities as a committee of OCC’s Board of Directors.11 The proposed rule change is not inconsistent with the existing rules of OCC, including any other rules proposed to be amended. (B) Clearing Agency’s Statement on Burden on Competition OCC does not believe that the proposed rule change would impose any burden on competition.12 OCC believes that the proposed rule change would not unfairly inhibit access to OCC’s services or disadvantage or favor any particular user in relationship to another user because the proposed rule solely concerns administrative matters, mainly the manner in which Dashboard Reports are disseminated to OCC’s senior management and Risk Committee, and does not concern any particular user, or clearing member, of OCC. For the foregoing reasons, OCC believes that the proposed rule change is in the public interest, would be consistent with the requirements of the Act applicable to clearing agencies, and would not impose a burden on competition. tkelley on DSK3SPTVN1PROD with NOTICES (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments on the proposed rule change were not and are not intended to be solicited with respect to the proposed rule change and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act and paragraph (f) of Rule 19b–4 thereunder. 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. 10 17 CFR 240.17Ad–22(d)(8). Footnote 7. 12 15 U.S.C. 78q–1(b)(3)(I). 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: 18:15 Jun 25, 2015 [FR Doc. 2015–15688 Filed 6–25–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– OCC–2015–012 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–OCC–2015–012. 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 OCC and on OCC’s Web site at https://www.theocc.com/components/ docs/legal/rules_and_bylaws/sr_occ_15_ 012.pdf. 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–OCC–2015–012 and should be submitted on or before July 17, 2015. 11 See VerDate Sep<11>2014 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Robert W. Errett, Deputy Secretary. [Release No. 34–75259; File No. SR–BX– 2015–034] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to a Proposal To Amend Chapter VI, Section 18 of the Exchange’s Options Rules June 22, 2015. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 2 thereunder, notice is hereby given that, on June 12, 2015, 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 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 chapter VI, section 18 of the Exchange’s options rules. The text of the proposed rule change is set forth below. Proposed new language is italicized. Proposed deletions are enclosed in [brackets]. * * * * * NASDAQ OMX BX Rules * * Jkt 235001 PO 00000 CFR 200.30–3(a)(12). Frm 00114 Fmt 4703 Sfmt 4703 * * * * Options Rules * * * Chapter VI * * Sec. 18 Trading Systems * * * Order Price Protection Order Price Protection (‘‘OPP’’) is a feature of the System that prevents certain day limit, good til cancelled, and immediate or cancel orders at prices outside of pre-set standard limits from being accepted by the System. OPP 1 15 13 17 * 2 17 E:\FR\FM\26JNN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 26JNN1 Federal Register / Vol. 80, No. 123 / Friday, June 26, 2015 / Notices applies to all options but does not apply to market orders or Intermarket Sweep Orders. (a) OPP is operational each trading day after the opening until the close of trading, except during trading halts. [The Exchange may also temporarily deactivate OPP from time to time on an intraday basis at its discretion if it determines that volatility warrants deactivation. Participants will be notified of intraday OPP deactivation due to volatility and any subsequent intraday reactivation by the Exchange through the issuance of system status messages.] (b) OPP will reject incoming orders that exceed certain parameters according to the following algorithm: (i) If the better of the NBBO or the internal market BBO (the ‘‘Reference BBO’’) on the contra-side of an incoming order is greater than $1.00, orders with a limit more than 50% through such contra-side [NBBO] Reference BBO will be rejected by the System upon receipt. For example, if the [NBBO] Reference BBO on the offer side is $1.10, an order to buy options for more than $1.65 would be rejected. Similarly, if the [NBBO] Reference BBO on the bid side is $1.10, an order to sell options for less than $0.55 will be rejected. (ii) If the [NBBO] Reference BBO on the contra-side of an incoming order is less than or equal to $1.00, orders with a limit more than 100% through such contra-side [NBBO] Reference BBO will be rejected by the System upon receipt. For example, if the [NBBO] Reference BBO on the offer side is $1.00, an order to buy options for more than $2.00 would be rejected. However, if the [NBBO] Reference BBO of the bid side of an incoming order to sell is less than or equal to $1.00, the OPP limits set forth above will result in all incoming sell orders being accepted regardless of their limit. * * * * * 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 forth in sections A, B, and C below, of the most significant aspects of such statements. VerDate Sep<11>2014 18:15 Jun 25, 2015 Jkt 235001 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 amend and correct chapter VI, section 18 of the BX Options rules which describes Order Price Protection (‘‘OPP’’), a feature of the BX Options trading system that prevents certain day limit, good till cancelled, and immediate or cancel orders at prices outside of pre-set standard limits from being accepted by the System. The amendments also remove language providing for the temporary deactivation of OPP from time to time on an intraday basis at the Exchange’s discretion if the Exchange determines that volatility warrants deactivation. OPP applies to all options but does not apply to market orders or Intermarket Sweep Orders. OPP is operational each trading day after the opening until the close of trading, except during trading halts. Chapter VI, section 18 also currently provides that the Exchange may temporarily deactivate OPP from time to time on an intraday basis at its discretion if it determines that volatility warrants deactivation. Participants are notified of intraday OPP deactivation due to volatility and any subsequent intraday reactivation by the Exchange through the issuance of system status messages. OPP rejects incoming orders that exceed certain parameters. Currently, chapter VI, section 18(b) establishes those parameters with reference to the NBBO. It states that if the NBBO on the contra-side of an incoming order is greater than $1.00, orders with a limit more than 50% through such contraside NBBO will be rejected by the system upon receipt. For example, the rule provides that if the NBBO on the offer side is $1.10, an order to buy options for more than $1.65 would be rejected. Similarly, the rule states that if the NBBO on the bid side is $1.10, an order to sell options for less than $0.55 will be rejected. The rule provides that if the NBBO on the contra-side of an incoming order is less than or equal to $1.00, orders with a limit more than 100% through such contra-side NBBO will be rejected by the system upon receipt. For example, under the rule if the NBBO on the offer side is $1.00, an order to buy options for more than $2.00 would be rejected. However, the rule provides that if the NBBO of the bid side of an incoming order to sell is less than or equal to $1.00, the OPP limits set forth above will result in all incoming sell PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 36871 orders being accepted regardless of their limit. The Exchange has determined that a discrepancy exists between this rule description of how the OPP process works and how the system actually functions in cases where Price Improving Orders are present. Price Improving Orders may be submitted in $0.01 increments on BX Options rather than at the minimum price variation (‘‘MPV’’).3 These Price Improving Orders are considered part of the Exchange’s internal market BBO at their non-MPV limit and are displayed at the allowable MPV price as part of the NBBO. While chapter VI, section 18 states that the NBBO is used for OPP determinations as described above, the system is actually basing OPP determinations on the better of (a) the NBBO, or (b) the Exchange’s internal market BBO, which may differ from the NBBO due to the presence of Price Improving Orders. The Exchange is proposing to correct this discrepancy by deleting the term ‘‘NBBO’’ in each instance where it appears in chapter VI, section 18 and replacing it with the term ‘‘Reference BBO’’ which will be defined in the rule as the better of the NBBO or the internal market BBO. Finally, the Exchange is removing from chapter VI, section 18 the statements that the Exchange may temporarily deactivate OPP from time to time on an intraday basis at its discretion if it determines that volatility warrants deactivation, and that members will be notified of intraday OPP deactivation due to volatility and any subsequent intraday reactivation by the Exchange through the issuance of system status messages. The Exchange currently lacks the technology to implement intraday OPP deactivation and is deleting the language which suggests that it has such capability. 2. Statutory Basis The Exchange believes that its proposal is consistent with section 6(b) 4 of the Act in general, and furthers the objectives of section 6(b)(5) 5 of the Act 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 3 See chapter VI, sction 1, which provides that Price Improving Orders are orders to buy or sell an option at a specified price at an increment smaller than the minimum price variation in the security. Price Improving Orders may be entered in increments as small as one cent. Price Improving Orders that are available for display shall be displayed at the minimum price variation in that security and shall be rounded up for sell orders and rounded down for buy orders. 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(5). E:\FR\FM\26JNN1.SGM 26JNN1 36872 Federal Register / Vol. 80, No. 123 / Friday, June 26, 2015 / Notices open market and a national market system, and, in general to protect investors and the public interest, by amending and correcting the rule text to that it accurately reflects the functioning of the trading system. The amendments concerning the Reference BBO and the elimination of references to intraday deactivation of the OPP are both intended to improve the accuracy of the rule. The Exchange believes that the amendments should promote just and equitable principles of trade as well as protect investors and the public interest by making clear how OPP determinations are actually made on the Exchange and by eliminating the potential for confusion inherent in the statement that the Exchange may temporarily deactivate OPP on an intraday basis when in fact it lacks the technical capacity to do so. Calculating OPP on the basis of the better of the NBBO or the internal market BBO rather than solely on the basis of the NBBO protects investors and the public interest by extending the benefits of OPP to orders received in instances where the internal market BBO is better than the NBBO. 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 not necessary or appropriate in furtherance of the purposes of the Act, as the amendments to chapter VI, section 18 will apply uniformly to all market participants availing themselves of the OPP feature. Nor will the proposal impose a burden on competition among the options exchanges, because of the vigorous competition for order flow among the options exchanges. To the extent that market participants disagree with the particular approach taken by the Exchange herein, market participants can easily and readily direct order flow to competing venues. tkelley on DSK3SPTVN1PROD with NOTICES 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 VerDate Sep<11>2014 18:15 Jun 25, 2015 Jkt 235001 as the Commission may designate, it has become effective pursuant to section 19(b)(3)(A) of the Act 6 and Rule 19b– 4(f)(6) thereunder.7 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 8 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6) 9 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it would allow the Exchange to immediately correct the inaccuracy with respect to the NBBO described above, as well as eliminate language suggesting the Exchange possesses the capability to temporarily deactivate OPP on an intraday basis when in fact this is not the case. The Exchange believes that the public interest would not be served by preserving these inaccuracies in its rules during a notice and comment period for this proposed rule change. The Commission believes that waiving the 30-day operative delay 10 is consistent with the protection of investors and the public interest and designates the proposal operative on filing. 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. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. 6 15 U.S.C. 78s(b)(3)(A). 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 Commission has determined to waive the five-day pre-filing period in this case. 8 17 CFR 240.19b–4(f)(6). 9 17 CFR 240.19b–4(f)(6). 10 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 7 17 PO 00000 Frm 00116 Fmt 4703 Sfmt 9990 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–2015–034 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BX–2015–034. 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 available publicly. All submissions should refer to File Number SR–BX– 2015–034 and should be submitted on or before July 17, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–15692 Filed 6–25–15; 8:45 am] BILLING CODE 8011–01–P 11 17 E:\FR\FM\26JNN1.SGM CFR 200.30–3(a)(12). 26JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 123 (Friday, June 26, 2015)]
[Notices]
[Pages 36870-36872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15692]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75259; File No. SR-BX-2015-034]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to a
Proposal To Amend Chapter VI, Section 18 of the Exchange's Options
Rules

June 22, 2015.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that, on June 12, 2015, 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 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 chapter VI, section 18 of the
Exchange's options rules.
The text of the proposed rule change is set forth below.
Proposed new language is italicized. Proposed deletions are
enclosed in [brackets].
* * * * *
NASDAQ OMX BX Rules
* * * * *
Options Rules
* * * * *
Chapter VI Trading Systems
* * * * *
Sec. 18 Order Price Protection
Order Price Protection (``OPP'') is a feature of the System that
prevents certain day limit, good til cancelled, and immediate or cancel
orders at prices outside of pre-set standard limits from being accepted
by the System. OPP

[[Page 36871]]

applies to all options but does not apply to market orders or
Intermarket Sweep Orders.
(a) OPP is operational each trading day after the opening until the
close of trading, except during trading halts. [The Exchange may also
temporarily deactivate OPP from time to time on an intraday basis at
its discretion if it determines that volatility warrants deactivation.
Participants will be notified of intraday OPP deactivation due to
volatility and any subsequent intraday reactivation by the Exchange
through the issuance of system status messages.]
(b) OPP will reject incoming orders that exceed certain parameters
according to the following algorithm:
(i) If the better of the NBBO or the internal market BBO (the
``Reference BBO'') on the contra-side of an incoming order is greater
than $1.00, orders with a limit more than 50% through such contra-side
[NBBO] Reference BBO will be rejected by the System upon receipt. For
example, if the [NBBO] Reference BBO on the offer side is $1.10, an
order to buy options for more than $1.65 would be rejected. Similarly,
if the [NBBO] Reference BBO on the bid side is $1.10, an order to sell
options for less than $0.55 will be rejected.
(ii) If the [NBBO] Reference BBO on the contra-side of an incoming
order is less than or equal to $1.00, orders with a limit more than
100% through such contra-side [NBBO] Reference BBO will be rejected by
the System upon receipt. For example, if the [NBBO] Reference BBO on
the offer side is $1.00, an order to buy options for more than $2.00
would be rejected. However, if the [NBBO] Reference BBO of the bid side
of an incoming order to sell is less than or equal to $1.00, the OPP
limits set forth above will result in all incoming sell orders being
accepted regardless of their limit.
* * * * *

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 amend and correct
chapter VI, section 18 of the BX Options rules which describes Order
Price Protection (``OPP''), a feature of the BX Options trading system
that prevents certain day limit, good till cancelled, and immediate or
cancel orders at prices outside of pre-set standard limits from being
accepted by the System. The amendments also remove language providing
for the temporary deactivation of OPP from time to time on an intraday
basis at the Exchange's discretion if the Exchange determines that
volatility warrants deactivation.
OPP applies to all options but does not apply to market orders or
Intermarket Sweep Orders. OPP is operational each trading day after the
opening until the close of trading, except during trading halts.
Chapter VI, section 18 also currently provides that the Exchange may
temporarily deactivate OPP from time to time on an intraday basis at
its discretion if it determines that volatility warrants deactivation.
Participants are notified of intraday OPP deactivation due to
volatility and any subsequent intraday reactivation by the Exchange
through the issuance of system status messages.
OPP rejects incoming orders that exceed certain parameters.
Currently, chapter VI, section 18(b) establishes those parameters with
reference to the NBBO. It states that if the NBBO on the contra-side of
an incoming order is greater than $1.00, orders with a limit more than
50% through such contraside NBBO will be rejected by the system upon
receipt. For example, the rule provides that if the NBBO on the offer
side is $1.10, an order to buy options for more than $1.65 would be
rejected. Similarly, the rule states that if the NBBO on the bid side
is $1.10, an order to sell options for less than $0.55 will be
rejected. The rule provides that if the NBBO on the contra-side of an
incoming order is less than or equal to $1.00, orders with a limit more
than 100% through such contra-side NBBO will be rejected by the system
upon receipt. For example, under the rule if the NBBO on the offer side
is $1.00, an order to buy options for more than $2.00 would be
rejected. However, the rule provides that if the NBBO of the bid side
of an incoming order to sell is less than or equal to $1.00, the OPP
limits set forth above will result in all incoming sell orders being
accepted regardless of their limit.
The Exchange has determined that a discrepancy exists between this
rule description of how the OPP process works and how the system
actually functions in cases where Price Improving Orders are present.
Price Improving Orders may be submitted in $0.01 increments on BX
Options rather than at the minimum price variation (``MPV'').\3\ These
Price Improving Orders are considered part of the Exchange's internal
market BBO at their non-MPV limit and are displayed at the allowable
MPV price as part of the NBBO. While chapter VI, section 18 states that
the NBBO is used for OPP determinations as described above, the system
is actually basing OPP determinations on the better of (a) the NBBO, or
(b) the Exchange's internal market BBO, which may differ from the NBBO
due to the presence of Price Improving Orders. The Exchange is
proposing to correct this discrepancy by deleting the term ``NBBO'' in
each instance where it appears in chapter VI, section 18 and replacing
it with the term ``Reference BBO'' which will be defined in the rule as
the better of the NBBO or the internal market BBO.
---------------------------------------------------------------------------

\3\ See chapter VI, sction 1, which provides that Price
Improving Orders are orders to buy or sell an option at a specified
price at an increment smaller than the minimum price variation in
the security. Price Improving Orders may be entered in increments as
small as one cent. Price Improving Orders that are available for
display shall be displayed at the minimum price variation in that
security and shall be rounded up for sell orders and rounded down
for buy orders.
---------------------------------------------------------------------------

Finally, the Exchange is removing from chapter VI, section 18 the
statements that the Exchange may temporarily deactivate OPP from time
to time on an intraday basis at its discretion if it determines that
volatility warrants deactivation, and that members will be notified of
intraday OPP deactivation due to volatility and any subsequent intraday
reactivation by the Exchange through the issuance of system status
messages. The Exchange currently lacks the technology to implement
intraday OPP deactivation and is deleting the language which suggests
that it has such capability.
2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) \4\ of the Act in general, and furthers the objectives of section
6(b)(5) \5\ of the Act 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

[[Page 36872]]

open market and a national market system, and, in general to protect
investors and the public interest, by amending and correcting the rule
text to that it accurately reflects the functioning of the trading
system. The amendments concerning the Reference BBO and the elimination
of references to intraday deactivation of the OPP are both intended to
improve the accuracy of the rule. The Exchange believes that the
amendments should promote just and equitable principles of trade as
well as protect investors and the public interest by making clear how
OPP determinations are actually made on the Exchange and by eliminating
the potential for confusion inherent in the statement that the Exchange
may temporarily deactivate OPP on an intraday basis when in fact it
lacks the technical capacity to do so. Calculating OPP on the basis of
the better of the NBBO or the internal market BBO rather than solely on
the basis of the NBBO protects investors and the public interest by
extending the benefits of OPP to orders received in instances where the
internal market BBO is better than the NBBO.
---------------------------------------------------------------------------

\4\ 15 U.S.C. 78f(b).
\5\ 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
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act, as the amendments to chapter
VI, section 18 will apply uniformly to all market participants availing
themselves of the OPP feature. Nor will the proposal impose a burden on
competition among the options exchanges, because of the vigorous
competition for order flow among the options exchanges. To the extent
that market participants disagree with the particular approach taken by
the Exchange herein, market participants can easily and readily direct
order flow to competing venues.

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) of the Act \6\ and Rule 19b-
4(f)(6) thereunder.\7\
---------------------------------------------------------------------------

\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 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 Commission has determined to waive the five-day pre-filing
period in this case.
---------------------------------------------------------------------------

A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \8\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \9\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because it would allow
the Exchange to immediately correct the inaccuracy with respect to the
NBBO described above, as well as eliminate language suggesting the
Exchange possesses the capability to temporarily deactivate OPP on an
intraday basis when in fact this is not the case. The Exchange believes
that the public interest would not be served by preserving these
inaccuracies in its rules during a notice and comment period for this
proposed rule change. The Commission believes that waiving the 30-day
operative delay \10\ is consistent with the protection of investors and
the public interest and designates the proposal operative on filing.
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\8\ 17 CFR 240.19b-4(f)(6).
\9\ 17 CFR 240.19b-4(f)(6).
\10\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BX-2015-034 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BX-2015-034. 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 available publicly. All
submissions should refer to File Number SR-BX-2015-034 and should be
submitted on or before July 17, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-15692 Filed 6-25-15; 8:45 am]
BILLING CODE 8011-01-P

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