[Federal Register Volume 75, Number 153 (Tuesday, August 10, 2010)]
[Notices]
[Pages 48400-48402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19654]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62647; File No. SR-BX-2010-053]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Rules of the Boston Options Exchange Group, LLC To Enable the Listing
and Trading of Options on the Sprott Physical Gold Trust
August 4, 2010.
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 July 28, 2010, NASDAQ OMX BX, Inc. (the ``Exchange''), filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by the self-regulatory organization. The Exchange filed the
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective
upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASDAQ OMX BX, Inc. (the ``Exchange'') proposes to amend the Rules
of the Boston Options Exchange Group, LLC (``BOX'') to enable the
listing and trading of options on the Sprott Physical Gold Trust. A
copy 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://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.
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 self-regulatory organization
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 self-regulatory organization
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
Recently, the U.S. Securities and Exchange Commission (``SEC'' or
``Commission'') authorized the listing and trading on BOX of options on
the SPDR Gold Trust,\5\ the iShares COMEX Gold Trust,\6\ the iShares
Silver Trust,\7\ the ETFS Gold Trust,\8\ the ETFS Silver Trust,\9\ the
ETFS Palladium Trust \10\ and the ETFS Platinum Trust.\11\ Now, the
Exchange proposes that BOX list and trade options on PHYS.
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\5\ See Securities Exchange Act Release No. 58136 (July 10,
2008), 73 FR 40884 (July 16, 2008) (SR-BSE-2008-41).
\6\ See Securities Exchange Act Release No. 59055 (December 4,
2008), 73 FR 75148 (December 10, 2008) (SR-BSE-2008-51).
\7\ Id.
\8\ See Securities Exchange Act Release No. 62464 (July 7,
2010), 75 FR 40007 (July 13, 2010) (SR-BX-2010-045).
\9\ Id.
\10\ Id.
\11\ Id.
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Under Chapter IV, Section 3(i) of the BOX Rules, Exchange-Traded
Fund Shares (``ETFs'') must meet the following
[[Page 48401]]
criteria to be eligible as underlying securities for options traded on
BOX: The ETFs must (i) be traded on a national securities exchange;
(ii) be defined as an ``NMS'' stock under Rule 600 of Regulation NMS;
and (iii)(a) represent interests in registered investment companies (or
series thereof) organized as open-end management investment companies,
unit investment trusts or similar entities that hold portfolios of
securities and/or financial instruments, including, but not limited to,
stock index futures contracts, options on futures, options on
securities and indices, equity caps, collars and floors, swap
agreements, forward contracts, repurchase agreements and reverse
repurchase agreements (the ``Financial Instruments''), and money market
instruments, including, but not limited to, U.S. government securities
and repurchase agreements (the ``Money Market Instruments'') comprising
or otherwise based on or representing investments in broad based
indexes or portfolios of securities and/or Financial Instruments and
Money Market Instruments (or that hold securities in one or more other
registered investment companies that themselves hold such portfolios of
securities and/or Financial Instruments and Money Market Instruments);
(b) represent interests in a trust that holds a specified non-U.S.
currency or currencies deposited with the trust or similar entity when
aggregated in some specified minimum number that may be surrendered to
the trust by the beneficial owner to receive the specified non-U.S.
currency or currencies and pays the beneficial owner interest and other
distributions on the deposited non-U.S. currency or currencies, if any,
declared and paid by the trust (``Currency Trust Shares''); (c)
represent commodity pool interests principally engaged, directly or
indirectly, in holding and/or managing portfolios or baskets of
securities, commodity futures contracts, options on commodity futures
contracts, swaps, forward contracts and/or options on physical
commodities and/or non-U.S. currency (``Commodity Pool ETFs''); or (d)
represent interests in the SPDR[supreg] Gold Trust, iShares COMEX Gold
Trust, iShares Silver Trust, ETFS Gold Trust, ETFS Silver Trust, ETFS
Palladium Trust or the ETFS Platinum Trust.\12\ This rule change
proposes to expand the types of ETFs that may be approved for options
trading on BOX to include PHYS.
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\12\ See Chapter IV, Section 3(i) of the BOX Rules.
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Apart from allowing PHYS to be an underlying security for options
traded on BOX as described above, the listing standards for ETFs will
remain unchanged from those that apply under current BOX rules. ETFs on
which options may be listed and traded must still be listed and traded
on a national securities exchange and must satisfy the other listing
standards set forth in Chapter IV, Section 3(i) of the BOX Rules.
Specifically, in addition to satisfying the aforementioned listing
requirements, ETFs must either (1) meet the criteria and guidelines set
forth in paragraphs (a) and (b) of Chapter IV, Section 3 of the BOX
Rules or (2) be available for creation or redemption each business day
from or through the issuing trust, investment company, commodity pool
or other entity in cash or in kind at a price related to net asset
value, and the issuer must be obligated to issue ETF shares in a
specified aggregate number even if some or all of the investment assets
and/or cash required to be deposited have not been received by the
issuer, subject to the condition that the person obligated to deposit
the investment assets has undertaken to deliver them as soon as
possible and such undertaking is secured by the delivery and
maintenance of collateral consisting of cash or cash equivalents
satisfactory to the issuer of the ETF, all as provided in the ETF's
prospectus.
The current continued listing standards for options on ETFs will
apply to options on PHYS. Specifically, under Chapter IV, Section 4(h)
of the BOX Rules, options on ETFs may be subject to the suspension of
opening transactions as follows: (i) In the case of options covering
ETFs approved pursuant to Section 3(i)(A)(1), in accordance with the
terms of subparagraphs (b)(i), (ii) and (iii) of Chapter IV, Section 4
of the BOX Rules; (ii) in the case of options covering ETFs approved
pursuant to Chapter IV, Section 3(i)(A)(2) of the BOX Rules, following
the initial twelve-month period beginning upon the commencement of
trading in the ETF on a national securities exchange,\13\ if there are
fewer than 50 record and/or beneficial holders of the ETF for 30 or
more consecutive trading days; (iii) the value of the index, portfolio
of securities, non-U.S. currency, or portfolio of commodities including
commodity futures contracts, options on commodity futures contracts,
swaps, forward contracts and/or options on physical commodities and/or
Financial Instruments and Money Market Instruments on which the ETF is
based is no longer calculated or available; or (iv) an event occurs or
condition exists that in the opinion of BOXR makes further dealing in
such options on BOX inadvisable.
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\13\ The ETF must also be defined as an NMS Stock under Rule 600
of Regulation NMS.
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Additionally, PHYS shall not be deemed to meet the requirements for
continued approval, and BOX shall not open for trading any additional
series of option contracts of the class covering PHYS, if PHYS ceases
to be an ``NMS stock'' as provided for in Chapter IV, Section 4(b)(vi)
of the BOX Rules or PHYS is halted from trading on its primary market.
The addition of PHYS to Chapter IV, Section 3(i) of the BOX Rules
will not have any effect on the rules pertaining to position and
exercise limits \14\ or margin requirements.\15\
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\14\ See Chapter III, Sections 7 and 9 of the BOX Rules.
\15\ See Chapter XIII of the BOX Rules.
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The Exchange represents that its surveillance procedures applicable
to trading in options on PHYS will be similar to those applicable to
all other options on other ETFs currently traded on BOX. Also, the
Exchange may obtain information from the New York Mercantile Exchange,
Inc. (``NYMEX'') (a member of the Intermarket Surveillance Group)
related to any financial instrument that is based, in whole or in part,
upon an interest in or performance of gold.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\16\ in general, and Section
6(b)(5) of the Act,\17\ in particular, in that it is designed to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, and processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism for a free and open market and a national market
system and, in general, to protect investors and the public interest.
In particular, the Exchange believes that amending the BOX Rules to
accommodate the listing and trading of options on PHYS will benefit
investors by providing them with valuable risk management tools.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
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.
[[Page 48402]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6)
thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and text of 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 fulfilled this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest. The Exchange requests that the Commission waive
the 30-day operative delay so that the Exchange can list and trade
options on the Sprott Physical Gold Trust immediately. The Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest to permit the Exchange
to list and trade options on the Sprott Physical Gold Trust without
delay.\20\ The Commission notes the proposal is substantively identical
to proposals that were recently approved by the Commission, and does
not raise any new regulatory issues.\21\ For these reasons, the
Commission designates the proposed rule change as operative upon
filing.
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\20\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\21\ See Securities Exchange Act Release No. 62463 (July 7,
2010), 75 FR 40005 (July 13, 2010) (SR-CBOE-2010-043).
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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 necessary or
appropriate in the public interest, for the protection of investors, or
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 e-mail to [email protected]. Please include
File Number SR-BX-2010-053 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2010-053. 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,\22\ 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 a.m. and 3 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 Number SR-BX-
2010-053 and should be submitted on or before August 31, 2010.
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\22\ The text of the proposed rule change is available on the
Commission's Web site at http://www.sec.gov.
\23\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19654 Filed 8-9-10; 8:45 am]
BILLING CODE 8010-01-P