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Daily Rules, Proposed Rules, and Notices of the Federal Government

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67822; File No. SR-BX-2012-060]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Transaction Fees

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 August 30, 2012, NASDAQ OMX BX, Inc. ("BX" or "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.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange proposes to amend Chapter XV, Section 2 entitled "BX Options Market--Fees and Rebates" to amend rebates and fees relating to various options and make technical corrections to this section.

The text of the proposed rule change is available on the Exchange's Web site athttp://www.nasdaqtrader.com/micro.aspx?id=BXRulefilings,at theprincipal 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 Change1. Purpose

The purpose of the proposed rule change is to amend Chapter XV, Section 2(1) to amend rebates and fees for Customers, BX Options Market Makers3 and Non-Customers4 in various options,5 as well as remove certain options from the Fees and Rebates schedule below,6 as follows:

The Exchange is proposing to eliminate the Rebate to Add Liquidity, in any symbol, to a Customer. The Exchange is also proposing to increase the Fee to Add Liquidity in IWM, QQQ and SPY from $0.15 to $0.18 per executed contract for Customers and BX Options Market Makers. For Non-Customers the Fee to Add or to Remove Liquidity in IWM, QQQ and SPY and for all other Penny Pilot Options would increase from $0.43 to $0.45 per executed contract. Additionally, for BX Options Market Makers the Fee to Remove Liquidity in IWM, QQQ and SPY and for all other Penny Pilot Options would increase from $0.43 to $0.45 per executed contract. The Exchange is also proposing to remove entirely from the Fees and Rebates schedule certain other options.7

The Exchange is also proposing to make technical corrections in Chapter XV, Section 2 by replacing "$0.00" with "N/A" for several categories. This is not a change to these fees and rebates, but a technical amendment since in these instances "N/A" better reflects that a fee is not relevant for this category rather than "$0.00" which simply reflects that no fee is currently being charged for this category.

The Exchange believes that the proposed amended fees and rebates are competitive and will encourage BX members to transact business on the Exchange. Despite the reduction of the Customer rebate to $0.00, the Exchange believes that the fees remain competitive with other options exchanges and that market participants will continue to send order flow to the Exchange.

2. Statutory Basis

BX believes that the proposed rule changes are consistent with the provisions of Section 6 of the Act,8 in general, and with Section 6(b)(4) of the Act,9 in particular, in that they provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which BX operates or controls.

The Exchange believes that its proposal to assess different fees and rebates for IWM, QQQ and SPY as compared to all other Penny Pilot Options is reasonable given the fact that certain symbols such as IWM, QQQ and SPY are highly liquid Penny Pilot Options as compared to other Penny Pilot Options. Additionally, other options exchanges differentiate pricing by security today.10

The Exchange believes that its proposal to assess different fees and rebates for IWM, QQQ and SPY as compared to all other Penny Pilot Options is equitable and not unfairly discriminatory as described hereafter. With respect to the proposed elimination of the Rebate to Add Liquidity11 for IWM, QQQ, SPY and all other Penny Pilot Options, the Exchange believes it is critical to incentivize BX Options Market Makers because they have obligations to the market and regulatory requirements,12 which normally do not apply to other market participants. A BX Options Market Maker has the obligation to make continuous markets, engage in a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and not make bids or offers or enter into transactions that are inconsistent with a course of dealings. The Exchange is proposing to eliminate the Customer Rebate to Add Liquidity because the Exchange believes that Customers do not require a similar incentive as do BX Options Market Makers because they post liquidity on the Exchange for reasons other than the opportunity to receive rebates and additionally, Customers, unlike BX Options Market Makers, are not assessed a Fee to Remove Liquidity.13 BX Options Market Makers would continue to receive the opportunity to earn a $0.10 per contract (all other Penny Pilot Options) or $0.15 per contract (IWM, QQQ, and SPY) Rebate to Add Liquidity only when they are contra to a Non-Customer or BX Options Market Maker. The proposed differentiation as between Customers and BX Options Market Makers and other market participants recognizes the differing contributions made to the liquidity and trading environment on the Exchange by BX Options Market Makers, as well as the differing mix of orders entered. This is not to say that Customer order flow is not important, to the contrary, the Exchange believes that the pursuit of such order flow by BX Options Market Makers and other market participants because of the valuable liquidity Customer order flow brings to the marketplace is the very reason that at this time, the Exchange desires to incentivize and reward BX Options Market Makers to make continuous markets and pursue Customer Order which can be freely removed at no expense. Also, it is important to note that BX Options Market Makers are unaware at the time the order is entered whether they would be entitled to a $0.10 or $0.15 per contract Rebate to Add Liquidity, depending on the security, because they are unaware of the identity of the contra-party, which would determine whether they receive a rebate. Because of anonymity of the contra-parties, BX Options Market Makers aggressively pursue order flow which benefits all market participants.

The Exchange's proposal to increase the Fee to Add Liquidity for IWM, QQQ, SPY for all market participants and for Non-Customers in all other Penny Pilot Options, as well as to increase the Fee to Remove Liquidity for IWM, QQQ, SPY and all other Penny Pilot Options for BX Options Market Makers and for Non-Customers is reasonable because the increased fees would allow the Exchange to continue to reward Customers for removing liquidity, and BX Options Market Makers for providing liquidity with rebates. The advantage of increased Customer order flow benefits all market participants. In addition, the proposed amended Fees to Add or to Remove Liquidity are no greater than the rates assessed by other exchanges for similar fees.14 Attracting Customer, BX Options Market Maker, and Non-Customer order flow to the Exchange benefits all market participants. BX Options Market Makers have burdens that do not apply to other market participants. The Exchange is also uniformly assessing all Non-Customer market participants (Professionals, Firms, Broker-Dealers, Non-BX Options Market Makers and BX Options Market Makers) the same $0.45 per executed contract Fee to Add or to Remove Liquidity on every transaction.

The Exchange's proposal to increase the Fee to Add Liquidity for IWM, QQQ, SPY for all market participants and for Non-Customers of all other Penny Pilot Options is equitable and not unfairly discriminatory because the Exchange is increasing all market participant Fees to Add Liquidity. Specifically, while Customers and BX Options Market Makers are being increased by $0.03 per executed contract, Non-Customers are being increased by $0.02 per executed contract because they are assessed higher fees. The Exchange is assessing higher fees to all participants and not a select group of market participants. The Exchange's proposal to increase the Fee to Remove Liquidity for BX Options Market Makers and Non-Customers for IWM, QQQ, SPY and for all other Penny Pilot Options is equitable and not unfairly discriminatory because the Exchange is uniformly assessing all market participants, except Customers,15 a $0.45 per executed contract Fee to Remove Liquidity.

The Exchange believes that its proposal to eliminate the fees and rebates currently in place for Deleted Symbols and instead include these symbols in all other Penny Pilot Options and assess those fees and pay those rebates is reasonable because the Exchange does not believes [sic] it is necessary to incentivize BX Options Participants with higher rebates and lower fees as compare [sic] to other Non-Penny [sic] Pilot Options. The Exchange believes that the fee [sic] andrebates in place for all other Penny Pilot Options will continue to incentivize NOM Participants to transact business on the Exchange because despite the increase to the fees and the rebate reduction, the pricing for these Non-Penny [sic] Pilot Options remains competitive. The Exchange also believes that it is equitable and not unfairly discriminatory to assess the Deleted Symbols the fees and rebates currently assessed and paid all other Penny Pilot Options because the fees and rebates would be the same as those assessed and paid for all other Non-Penny [sic] Pilot Options today. The Exchange would assess and pay fees and rebates for the Deleted Symbols, which are Non-Penny [sic] Pilot symbols, the same pricing as is assessed and paid for all other Non-Penny [sic] Pilot symbols options.

The Exchange's proposal to make technical corrections in Chapter XV, Section 2, by replacing "$0.00" with "N/A" for several categories is reasonable, equitable and not unfairly discriminatory because this is not a change to these fees and rebates, but a clarification that in these instances "N/A" better reflects that a fee is not relevant for this category rather than using "$0.00" which simply reflects that no fee is currently being charged for this category.

The Exchange operates in a highly competitive market comprised of ten U.S. options exchanges in which sophisticated and knowledgeable market participants can and do send order flow to competing exchanges if they deem fee levels at a particular exchange to be excessive. The Exchange believes that the proposed amended fee and rebate scheme is competitive and similar to other fees and rebates in place on other exchanges. The Exchange believes that this competitive marketplace materially impacts the fees and rebates present on the Exchange today and substantially influences the proposal set forth above.

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

BX 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. To the contrary, BX has designed its fees and rebates to compete effectively for the execution and routing of options contracts and to reduce the overall cost to investors of options trading. The Exchange believes that the proposed fee/rebate pricing structure would attract liquidity to and benefit order interaction at the Exchange to the benefit of all market participants.

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

The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.16 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 shall institute proceedings to determine whether the proposed rule 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 (http://www.sec.gov/rules/sro.shtml); or

* Send an email torule-comments@sec.gov. Please include File Number SR-BX-2012-060 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 NumberSR-BX-2012-060.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 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 NumberSR-BX-2012-060and should be submitted on or before October 5, 2012.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17

1717 CFR 200.30-3(a)(12).

Kevin M. O'Neill, Deputy Secretary.
ACTION: 1615 U.S.C. 78s(b)(3)(A)(ii).