
[Federal Register Volume 78, Number 124 (Thursday, June 27, 2013)]
[Notices]
[Pages 38747-38748]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15346]



[[Page 38747]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69818; File No. SR-BX-2013-041]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 4120 To Adopt a Modification in the Process for Initiating Trading 
of a Security That Is the Subject of a Trading Halt or Pause on BX

 June 21, 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 June 14, 2013, NASDAQ OMX BX, Inc. (``BX'' or 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 Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 4120 to adopt a modification in 
the process for initiating trading of a security that is the subject of 
a trading halt or pause on BX. The text of the proposed rule change is 
also available on the Exchange's Web site at http://nasdaqomxbx.cchwallstreet.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 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
    In 2012, The NASDAQ Stock Market LLC (``NASDAQ'') modified its 
process for commencing trading of a security that is the subject of an 
initial public offering on NASDAQ by allowing market participants to 
enter orders to be held in an undisplayed state until the commencement 
of the Display-Only Period that occurs prior to the IPO.\3\ NASDAQ 
recently proposed a similar change with regard to entering orders prior 
to the end of other trading halts or pauses on NASDAQ.\4\ BX is 
proposing to make a similar change with regard to entering orders prior 
to the end of trading halts or pauses on BX. Rule 4120(a) describes the 
circumstances under which BX has the authority to initiate a trading 
halt. As detailed in Rule 4120(a), the specific bases for a halt 
include the following:
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    \3\ Securities Exchange Act Release No. 66652 (March 23, 2012), 
77 FR 13129 (March 29, 2012) (SR-NASDAQ-2012-038).
    \4\ Securities Exchange Act Release No. 69536 (May 13, 2013), 78 
FR 29187 (May 17, 2013) (SR-NASDAQ-2013-073).
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     A halt when a security listed on another national 
securities exchange is halted to permit dissemination of news (Rule 
4120(a)(2)) or due to an order imbalance or influx (Rule 4120(a)(3));
     A halt with respect to an index warrant when deemed 
appropriate in the interests of a fair and orderly market and to 
protect investors (Rule 4120(a)(8));
     A halt in a Derivative Securities Product (as defined in 
Rule 4120(b)(4)(A)) for which a net asset value (``NAV'') or a 
Disclosed Portfolio is disseminated if the Exchange becomes aware that 
the NAV or Disclosed Portfolio is not being disseminated to all market 
participants at the same time (Rule 4120(a)(10));
     A trading pause with respect to stocks that are not 
subject to the Limit Up-Limit Down Plan \5\ and for which the primary 
listing market has issued an individual stock trading pause (Rule 
4120(a)(11)); and
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    \5\ Plan to Address Extraordinary Market Volatility Submitted to 
the Commission Pursuant to Rule 608 of Regulation NMS under the Act, 
Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 
33498 (June 6, 2012).
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     A trading halt in a Derivative Security Product traded 
pursuant to unlisted trading privileges for which a ``Required Value,'' 
such as an intraday indicative value or disclosed portfolio, is not 
being disseminated, under the conditions described in Rule 4120(b).\6\
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    \6\ Rule 4120 includes additional bases for halting securities 
listed on the Exchange; however, the Exchange's rules governing 
listing are not operative at this time. The additional bases 
include: a halt to permit the dissemination of material news with 
respect to a security listed on the Exchange (Rule 4120(a)(1)); a 
halt in an American Depository Receipt (``ADR'') or other security 
listed on the Exchange, when the security listed on the Exchange or 
the security underlying the ADR is listed on or registered with 
another national or foreign securities exchange or market, and the 
regulatory authority overseeing such exchange or market halts 
trading in such security for regulatory reasons (Rule 4120(a)(4)); a 
halt when the Exchange requests from the issuer information relating 
to material news or the issuer's ability to meet Exchange listing 
qualification requirements, or any other information necessary to 
protect investors and the public interest (Rule 4120(a)(5)); a halt 
in a security listed on the Exchange when extraordinary market 
activity in the security is occurring, the Exchange determines that 
the activity is likely to have a material effect on the market for 
the security, and the Exchange believes that the activity is caused 
by the misuse or malfunction of an electronic quotation, 
communication, reporting, or execution system (Rule 4120(a)(6)); a 
halt in a series of Portfolio Depository Receipts, Index Fund Shares 
or Managed Fund Shares listed on the Exchange if the Intraday 
Indicative Value or the index value applicable to that series is not 
being disseminated as required (Rule 4120(a)(9)); and a halt trading 
in a security listed on the Exchange if the security fails to comply 
with Rule 5550(d) (requiring a minimum bid price of at least $0.25 
per share).
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    Under the current process, quotes and orders in a halted security 
may not be entered until the resumption of trading. However, BX 
believes that the quality of its process for commencing trading in the 
halted security would be enhanced by allowing market participants to 
enter orders to be held but not displayed until the resumption of 
trading.\7\ Specifically, BX believes that this change will provide for 
a greater number of orders being entered prior to commencement of 
trading, resulting in a higher level of order interaction at the 
resumption of trading.
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    \7\ Because the orders would be held in an undisplayed state, 
the change would not implicate BX Rule 3340 or FINRA Rule 5260, 
which prohibit transactions, publication of quotations, or 
publication of indications of interest during a trading halt.
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    Orders entered in this manner will be held in a suspended state 
until the resumption of trading, at which time they will be entered 
into the system. Market participants may cancel orders entered in this 
manner in the same way they would cancel any other order. Orders 
entered prior to the resumption of trading will be rejected unless they 
are designated for holding. Specifically, the orders will be entered 
into the continuous market once trading resumes.\8\
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    \8\ Orders entered and held during the halt period will be 
entered into the continuous market in the order in which they were 
received. However, such orders will be entered contemporaneously 
with any orders received through order entry ports after the halt is 
terminated. Thus, the relative priority of orders received during 
the halt and orders received through order entry ports after the 
halt is terminated will be a function of the duration of system 
processing associated with each particular order. As a result, 
orders received during the halt will not automatically have priority 
over orders received at the conclusion of the halt.

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[[Page 38748]]

2. Statutory Basis
    BX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\9\ in general, and with Section 
6(b)(5) of the Act,\10\ 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. Specifically, BX believes 
that the change to allow entry of quotes and orders for holding during 
a trading halt will provide for a greater number of orders being 
entered prior to commencement of trading, resulting in a higher level 
of order interaction in the re-opening process. Thus, BX believes that 
the change will remove impediments to and perfect the mechanism of a 
free and open market.
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    \9\ 15 U.S.C. 78f.
    \10\ 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 this change will provide for a greater number of orders 
being entered prior to commencement of trading, resulting in a higher 
level of order interaction. BX believes that this change will promote 
competition by enhancing the attractiveness of BX as a trading venue 
through higher order fill rates and more complete price discovery. 
Moreover, because the change will not affect the availability or price 
of goods or services offered by BX or others, it will not impose any 
burden 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) of the Act \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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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    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.

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BX-2013-041 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-2013-041. 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 (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 
10:00 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-BX-2013-041 and should be 
submitted on or before July 18, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority. \13\
Jill M. Peterson,
Assistant Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2013-15346 Filed 6-26-13; 8:45 am]
BILLING CODE 8011-01-P


