Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.

Federal Register: June 30, 2009 (Volume 74, Number 124)

Notices

Page 31334-31336

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr30jn09-111

SECURITIES AND EXCHANGE COMMISSION

Release No. 34-60165; File No. SR-BX-2009-029

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of

Filing and Immediate Effectiveness of Proposed Rule Change To Establish a Flash and Cancel Order

June 23, 2009.

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 June 17, 2009, NASDAQ OMX BX, Inc. (the ``Exchange'') filed with the

Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change, as amended, as constituting a rule change under Rule 19b- 4(f)(6) under the Act,\3\ which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons.

\1\ 15 U.S.C. 78s(b)(1).

\2\ 17 CFR 240.19b-4.

\3\ 17 CFR 240.19b-4(f)(6).

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1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

   The Exchange proposes a rule change to establish a Flash and Cancel order. The Exchange has filed this proposal under Exchange Act Rule 19b-4(f)(6) \4\ and, as such, the proposal is immediately effective.

   \4\ 17 CFR 240.19b-4(f)(6).

   The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference

   Room and also on the Exchange's Internet Web site at http:// nasdaqtrader.com/Trader.aspx?id=Boston_Stock_Exchange.

2. 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.

   1. Self-Regulatory Organization's Statement of the Purpose of, and

      Statutory Basis for, the Proposed Rule Change 1. Purpose

      Nasdaq OMX BX is proposing to establish a new voluntary Flash and

      Cancel Order type. A Flash and Cancel Order will provide an optional pre-cancellation display period for market and marketable limit orders so designated. Under the proposal, market and marketable limit orders designated as Flash and Cancel Orders will, after first executing to the maximum extent possible in Nasdaq OMX BX's book, have their unexecuted portions displayed for potential execution at the NBBO such that a trade-through will not occur, to Nasdaq OMX BX market participants and market data vendors for a period of time determined by

      Nasdaq OMX BX which will not exceed one-half of one second. If any unfilled balance remains after such display, such marketable unfilled balance shall be cancelled back to the entering party, and such non- marketable unfilled balance shall be placed on the book for potential execution. As with other Nasdaq OMX BX order types, the attributes of the Flash and Cancel Order may be combined with all Nasdaq OMX BX order types. Nasdaq OMX BX will provide an electronic method to distinguish the Flash Order during the flash period from the System's protected quote under Regulation NMS.

      Nasdaq OMX BX notes that flash and cancel order functionality is already in use by other markets that such functionality can be expected to provide Nasdaq OMX BX system users with greater control over their trading. Except for the behavior of the Flash and Cancel Order described here, nothing in the proposal will modify or alter any existing rule or process related to order priority, order execution, trade-through protection or locked or crossed markets. 2. Statutory Basis

      The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\5\ in general, and with

      Section 6(b)(5) of the Act,\6\ in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Nasdaq OMX BX notes that similar functionality has already been found to be consistent with the Act by the Commission.\7\

      \5\ 15 U.S.C. 78f.

      \6\ 15 U.S.C. 78f(b)(5).

      \7\ Securities Exchange Act Release No. 54422 (September 11, 2006), 71 FR 54537 (September 15, 2006) (SR-CBOE-2004-21);

      Securities Exchange Act Release No. 59359 (February 4, 2009), 74 FR 6927 (February 11, 2009) (SR-CBOE-2008-123).

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

      The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.

   3. Self-Regulatory Organization's Statement on Comments on the Proposed

      Rule Change Received from Members, Participants or Others

      Written comments on the proposed rule change were neither solicited nor received.

3. 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 \8\ and Rule 19b- 4(f)(6) thereunder.\9\

   \8\ 15 U.S.C. 78s(b)(3)(A).

   \9\ 17 CFR 240.19b-4(f)(6).

   At any time within 60 days of the filing of the proposed rule change the Commission may summarily abrogate 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.

4. 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 (http:// www.sec.gov/rules/sro.shtml); or

   Send an e-mail to rule-comments@sec.gov. Please include

   File Number SR-BX-2009-029 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-2009-029. 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

   Page 31336

   those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying 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 such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR-BX-2009-029 and should be submitted on or before July 21, 2009.

   For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\

   Florence E. Harmon,

   Deputy Secretary.

   \10\ 17 CFR 200.30-3(a)(12).

   FR Doc. E9-15351 Filed 6-29-09; 8:45 am

   BILLING CODE 8010-01-P