Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposes to amend Rule 510 titled "SQT and RSQT Performance Evaluation" to provide a different method for reviewing quote submissions in evaluating member organizations to determine whether they have fulfilled performance standards relating to the quality of markets.
The text of the proposed rule change is available on the Exchange's Web site at
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.
The purpose of the proposed rule change is to amend a standard by which Streaming Quote Traders
By way of background, Rule 510 establishes specific criteria for each option assigned to an SQT or RSQT that would be regularly evaluated by the Exchange. The Exchange periodically conducts an evaluation of member organizations that have SQTs and RSQTs, as defined in Exchange Rule 1014,
With respect to Performance Evaluations, Commentary .01 to Rule 510 specifies that the Exchange will evaluate Minimum Performance Standards on a monthly basis for each SQT and RSQT. Among other factors, the Exchange would review the percentage of total quotes that represent the PBBO, quoting requirements pursuant to Rule 1014, the number of requests for a quote spread parameter and efficient quote submission.
This proposal seeks to amend the method by which the Exchange reviews efficient quote submission. Today the Exchange considers how an SQT or RSQT optimizes the submission of quotes through the Specialized Quote Feed,
The Exchange believes that updating the methodology utilized to review quote submissions with different statistical information, specifically quote-to-trade and quote-to-contracts traded ratios, would allow the Exchange to obtain more precise information with which to evaluate SQTs and RSQTs and determine Performance Evaluations.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
The Exchange believes that the proposed rule change would be beneficial because it would provide the Exchange with a better means to evaluate quote submissions in comparison to other liquidity providers to evaluate how much their quote usage is actually resulting in liquidity being accessed by participants in the marketplace. The trade count to quote ratio would provide an additional subset of information that would reflect participation at the NBBO. This information, which relates to efficiency, would allow the Exchange to obtain more precise information with which to evaluate the performance of SQTs and RSQTs, particularly market participants that execute at a lesser size. The information would allow the Exchange to evaluate the value provided to the marketplace. The Exchange believes that the quote-to-trade and quote-to-contract data would provide valuable information to utilize in evaluations as compared to the number of individual quotes per quote block because the Exchange believes the proposed information would provide better metrics overall.
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.
No written comments were either solicited or received.
Within 45 days of the date of publication of this notice in the
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 (
* Send an email to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.