Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)  and Rule 19b-4 thereunder, notice is hereby given that, on May 23, 2011, NASDAQ OMX BX (the “Exchange”) 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 proposed rule change as constituting a non-controversial rule change under Rule 19b-4(f)(6) under the Act, which renders the proposal effective upon filing with the Commission. 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 the Rules of the Boston Options Exchange Group, LLC (“BOX”) to permit the Exchange to list additional expiration months if such expiration months are listed on another exchange. The text of the proposed rule change is available at the Exchange's principal office, at http://www.nasdaqomxbx.cchwallstreet.com, the Commission's Public Reference Room, and at the Commission's Web site at http://www.sec.gov.
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
The purpose of the proposed rule change is to amend the BOX Trading Rules to permit the Exchange to list additional expiration months if such expiration months are listed on another exchange. This filing is based on a filing previously submitted by the International Securities Exchange, LLC.
Under current Chapter IV, Section 6 of the BOX Trading Rules, the Exchange usually will open four (4) Expiration months for each type of option of a class of options open for trading on BOX: the first two (2) being the two nearest months, regardless of the quarterly cycle on which that class trades; the third and fourth being the next two months of the quarterly cycle previously designated by the Exchange for that specific class. For example, if the Exchange listed in late September a new stock option on a January-April-July-October quarterly cycle, the Exchange would list the two nearest-term months (October and November) and the next two expiration months of the cycle (January and April). Further, when the October series expire, the Exchange would add the December series as the next nearest month. And when the November series expire, the Exchange would add the July series as the next month of the cycle.Start Printed Page 32384
In 2010, the Exchange established a pilot program to add up to two additional expiration months for each class of options opened for trading on BOX (the “Additional Expiration Months Pilot”). Under the Additional Expiration Months Pilot, the Exchange lists expiration months that are considered “mid-month.” For example, for options classes that have expiration months of October, November, January, and April, the Exchange lists the December series. For options classes that have expiration months of October, November, February and May, the Exchange lists the December and January series. The listing of additional expiration months has been well-received by BOX Options Participants and has had a very limited impact on system resources.
ISE submitted a similar filing to one submitted by NASDAQ OMX PHLX, Inc. (“PHLX”). PHLX recently submitted a filing to adopt rules that permit it to list an unlimited number of expiration months and series for each class of standard options opened for trading on that exchange. Specifically, PHLX amended its rules so that it can open “at least one expiration month” for each class of standard options open for trading on that exchange. Consequently, while the Exchange is currently restricted to listing a limited number of expiration months that are permissible under its rules and the Additional Expiration Months Pilot, PHLX has the ability to list an unlimited number of expiration months, including those that the Exchange would not be able to currently list under its rules. Indeed, PHLX has listed additional expiration months that no other market, including the Exchange, could list at the time they were added. For example, in February 2011, PHLX listed the October 2011 expiration in Omnicare, Inc. (ticker: OCR). PHLX was able to list that expiration month based on its amended rule. Meanwhile, the Exchange could not list the October 2011 series under Chapter IV, Section 6(a) of the BOX Trading Rules because the standard expiration months for OCR in February are March, April, June, and September. The Exchange also could not list the October 2011 series as part of the Additional Expiration Months Pilot because OCR is not one of the classes selected by BOX to participate in the Additional Expiration Months Pilot. As a result, PHLX was the only exchange that listed the October 2011 series in OCR and traded that series without any competition until recently when other options exchanges amended their rules to permit its listing.
For competitive reasons, the Exchange now proposes to add new Supplementary Material .09 to its Chapter IV, Section 6 and Supplementary Material .03 to Chapter XIV, Section 10 of the BOX Trading Rules to permit the Exchange to list additional expiration months on options classes opened for trading on BOX if such expiration months are opened for trading on at least one other national securities exchange. This proposed rule change will allow the Exchange to match the listing of expiration months that PHLX, NOM, ISE, or other exchanges list in the event the Exchange is not able to list those expiration months because they do not comport to BOX Trading Rules or the Additional Expiration Months Pilot.
BOX notes that the proposed rule change affords additional flexibility in that it will permit listing those additional expiration months that have an actual demand from market participants, thereby potentially reducing the proliferation of classes and series. The Exchange believes the proposed rule change is proper, and indeed necessary, in light of the need to have rules that permit the listing of identical expiration months across exchanges for products that are multiply-listed and fungible with one another.
BOX believes that the proposed rule change should encourage competition and be beneficial to traders and market participants by providing them with a means to trade on BOX securities that are listed and traded on other exchanges.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act, in general, and Section 6(b)(5) of the Act, in particular, in that it is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism for a free and open market and a national market system, and in general, to protect investors and the public interest. In particular, the proposed rule change will permit the Exchange to accommodate requests made by BOX Option Participants and other market participants to list the additional expiration months and thus encourage competition without harming investors or the public interest.
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.
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 significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not 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  and Rule 19b-(f)(6) thereunder.
The Exchange has requested that the Commission waive the 30-day operative delay. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest because the proposal should promote competition by allowing the Exchange, without undue delay, to list and trade option series that are trading on other options exchanges. Therefore, the Commission designates the proposal operative upon 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 Start Printed Page 32385it 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:
- Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
- Send an e-mail to firstname.lastname@example.org. Please include File Number SR-BX-2011-029 on the subject line.
- 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-2011-029. This file number should be included on the subject line if e-mail 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of 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-2011-029 and should be submitted on or before June 27, 2011.Start Signature
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Cathy H. Ahn,
4. See Securities Exchange Act Release No. 64343 (April 26, 2011) 76 FR 24546 (May 2, 2011) (SR-ISE-2011-26).Back to Citation
5. See Securities Exchange Act Release No. 63321 (November 16, 2010) 75 FR 71163 (November 22, 2010) (SR-BX-2010-077).Back to Citation
6. See Securities Exchange Act Release No. 63700 (January 11, 2011) 76 FR 2931 (January 18, 2011) (SR-PHLX-2011-04). In its filing, PHLX cites to the Commission's approval of the NASDAQ Options Market and rules pertaining thereto as the basis for making the change to its rules.Back to Citation
10. 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange's intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Commission has waived the five-day prefiling requirement in this case.Back to Citation
11. 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).Back to Citation
[FR Doc. 2011-13903 Filed 6-3-11; 8:45 am]
BILLING CODE 8011-01-P