
[Federal Register: April 16, 2009 (Volume 74, Number 72)]
[Notices]               
[Page 17701-17702]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16ap09-84]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59742; File No. SR-BX-2009-014]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Order 
Approving a Proposed Rule Change Relating to Zero Bid Orders on the 
Boston Options Exchange Facility

April 9, 2009.
    On February 26, 2009, NASDAQ OMX BX, Inc. (``Exchange'') filed with 
the Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change relating to zero 
bid orders on the Boston Options Exchange Facility. The proposed rule 
change was published for comment in the Federal Register on March 6, 
2009.\3\ The Commission received no comments on the proposal. This 
order approves the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59475 (February 26, 
2009), 74 FR 9830.
---------------------------------------------------------------------------

    The proposed rule change amends Chapter V, Section 14 of the Rules 
of the Boston Options Exchange Group, LLC (``BOX'') to clarify the 
treatment of Market Orders to sell and BOX-Top Orders to sell when the 
highest bid on BOX is zero in the options series for a particular order 
(``Zero Bid Order''). Currently, Section 14 states, in part, that: 
``[i]n the case where the lowest offer for any options contract is 
$.05, and an Options Participant enters a Market Order to sell that 
series, any such Market Order shall be considered a Limit Order to sell 
at a price of $.05.'' \4\
---------------------------------------------------------------------------

    \4\ See Chapter V, Section 14 of the BOX Rules.
---------------------------------------------------------------------------

    The Exchange is amending Section 14 so that it will apply equally 
to Market Orders to sell and BOX-Top Orders to sell when the highest 
bid on BOX is zero in the options series. In this case such Zero Bid 
Orders will be considered Limit Orders to sell at a price, above zero, 
that is equal to the minimum trading increment applicable to that 
particular options series.
    Consequently, where the BOX market displays a zero bid and the 
options series is subject to the Penny Pilot Program,\5\ the Zero Bid 
Order will be considered a Limit Order to sell at a price of $.01. If 
the options series is not subject to the Penny Pilot Program, the Zero 
Bid Order will be considered a Limit Order to sell at a price of $.05 
or $.10, depending upon the minimum trading increment for the specific 
options series of the Zero Bid Order. Further, if the resulting Limit 
Order would cause either a locked or crossed market, then the original 
Market Order or BOX-Top Order will be rejected by the Trading Host.
---------------------------------------------------------------------------

    \5\ BOX may trade options contracts in one-cent increments in 
certain approved issues through July 3, 2009, as part of the Penny 
Pilot Program. See Securities Exchange Act Release No. 59629 (March 
26, 2009), 74 FR 15021 (April 2, 2009) (SR-BX-2009-17).
---------------------------------------------------------------------------

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange \6\ 
and, in particular, the requirements of Section 6 of the Act.\7\ 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\8\ in that the proposal has been designed 
to promote just and equitable principles of trade, and to protect 
investors and the public interest. The Commission believes that the 
proposed rule change will provide greater clarification to market 
participants regarding the handling of Zero Bid Orders on BOX. In 
addition, the Commission believes that the proposal will benefit the 
public interest by preventing locked or crossed markets in situations 
where the Limit Order resulting from the Zero Bid Order would cause 
such a lock or cross.
---------------------------------------------------------------------------

    \6\ The Commission has considered the proposed rule change's 
impact on efficiency, competition and capital formation. 15 U.S.C. 
78c(f).
    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-BX-2009-014) is approved.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).


[[Page 17702]]


---------------------------------------------------------------------------

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

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

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-8737 Filed 4-15-09; 8:45 am]
