[Federal Register Volume 75, Number 160 (Thursday, August 19, 2010)]
[Notices]
[Pages 51306-51308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20554]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62719; File No. SR-BX-2010-056]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Establishing Strike Price Intervals for Options on Trust Issued
Receipts, Including Holding Company Depositary Receipts
August 13, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on August 9, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I and II 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
NASDAQ OMX BX, Inc. (the ``Exchange'') proposes to amend Chapter
IV, Section 6 (Series of Options Contracts Open for Trading) of the
Rules of the Boston Options Exchange Group, LLC (``BOX'') to establish
strike price intervals for options on Trust Issued Receipts (``TIRs''),
including Holding Company Depositary Receipts (``HOLDRs''). The text of
the proposed rule change is available from the principal office of the
Exchange, on the Commission's Web site at http://www.sec.gov, 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
The purpose of this filing is to amend Chapter IV, Section 6,
Supplementary Material .01 of the BOX Rules to allow BOX to list
options on Trust Issued Receipts (``TIRs''), including Holding Company
Depository Receipts (``HOLDRs''), in $1 or greater strike price
intervals, where the strike price is $200 or less, and $5 or greater
where the strike price is greater than $200.\3\
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\3\ HOLDRs are a type of TIR and the current proposal would
permit $1 strikes for options on HOLDRS where the strike price is
less than $200.
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Currently, the strike price intervals for options on TIRs are as
follows: (1) $2.50 or greater where the strike price is $ 25.00 or
less; (2) $5.00 or greater where the strike price is greater than
$25.00; and (3) $10.00 or greater where the strike price is greater
than $200.\4\
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\4\ See Chapter IV, Section 6(d) of the BOX Rules.
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BOX is seeking to permit $1 strikes for options on TIRs where the
strike price is less than $200 because TIRs have characteristics
similar to exchange traded funds (``ETFs''). Specifically, TIRs are
exchange-listed securities representing beneficial ownership of the
specific deposited securities represented by the receipts. They are
negotiable
[[Page 51307]]
receipts issued by a trust representing securities of issuers that have
been deposited and held on behalf of the holders of the TIRs. TIRs,
which trade in round-lots of 100, and multiples thereof, may be issued
after their initial offering through a deposit with the trustee of the
required number of shares of common stock of the underlying issuers.
This characteristic of TIRs is similar to that of ETFs, which also may
be created on any business day upon receipt of the requisite securities
or other investment assets comprising a creation unit. The trust only
issues receipts upon the deposit of the shares of the underlying
securities that are represented by a round-lot of 100 receipts.
Likewise, the trust will cancel, and an investor may obtain, hold,
trade or surrender TIRs in a round-lot and round-lot multiples of 100
receipts.
Strike prices for ETF options are permitted in $1 or greater
intervals where the strike price is $200 or less and $5 or greater
where the strike is greater than $200. Accordingly, BOX believes that
the rationale for permitting $1 strikes for ETF options equally applies
to permitting $1 strikes for options on TIRs. BOX has analyzed its
capacity and believes the Exchange and the Options Price Reporting
Authority (``OPRA'') have the necessary systems capacity to handle the
additional traffic associated with the listing and trading of $1
strikes where the strike price is less than $200 for options on TIRs.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(``Exchange Act''),\5\ in general, and Section 6(b)(5) of the Exchange
Act,\6\ in particular, in that it is designed 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 for
a free and open market and national market system and, in general, to
protect investors and the public interest. In particular, BOX believes
that the marketplace and investors expect options on TIRs to trade in a
similar manner to ETF options. BOX further believes that investors will
be better served if $1 strike price intervals are available for options
on TIRs where the strike price is less than $200.
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\5\ 15 U.S.C. 78f(b).
\6\ 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.
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 does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not 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\7\ and Rule 19b-
4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission 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 satisfied the five-day pre-filing
requirement.
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The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest because the proposal is substantially similar to a rule of
another exchange that has been approved by the Commission.\9\
Therefore, the Commission designates the proposal operative upon
filing.\10\
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\9\ See Securities Exchange Release No. 34-62141 (May 20, 2010),
75 FR 29787 (May 27, 2010) (SR-CBOE-2010-036).
\10\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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-2010-056 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-2010-056. 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, 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-2010-056 and should be
submitted on or before September 9, 2010.
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\11\ 17 CFR 200.30-3(a)(12).
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-20554 Filed 8-18-10; 8:45 am]
BILLING CODE 8010-01-P