[Federal Register Volume 75, Number 224 (Monday, November 22, 2010)]
[Notices]
[Pages 71163-71164]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29352]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63321; File No. SR-BX-2010-077]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Establish
a Pilot Program to List Series With Additional Expiration Months for
Each Class of Options Opened for Trading on BOX
November 16, 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 November 10, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'')
filed with the Securities and Exchange Commission (the ``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
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 adopt a Pilot Program to list
additional expiration months for each class of options opened for
trading on BOX. 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 Exchange proposes to adopt a Pilot Program to list additional
expiration months for each class of options opened for trading on BOX,
by adding proposed Supplementary Material .08 in Chapter IV, Section 6
of the BOX Rules.
Pursuant to Chapter IV, Section 6(e) of the BOX Rules, BOX
currently opens four expiration months for each class of options open
for trading on BOX, the first two being the two nearest months,
regardless of the quarterly cycle on which that class trades; the third
and fourth being the next two months of the quarterly cycle previously
designated for that specific class. For example, if BOX listed in late
May a new equity option on a January-April-July-October quarterly
cycle, BOX would list the two nearest term months (June and July) and
the next two months of the cycle (October and January). When the June
series expires, BOX would add the August series as the next nearest
month. And when the July series expires, BOX would add the September
series.
BOX believes that there is market demand for a greater number of
expiration months. The Exchange therefore proposes to adopt a Pilot
Program pursuant to which it will list up to an additional two
expiration months, for a total of six expiration months for each class
of options open for trading on BOX. The program will be effective on a
pilot basis immediately after approval is received to establish the
pilot program, and expiring on October 31, 2011. Under the proposal,
the additional months listed pursuant to the pilot program will result
in four consecutive expiration months plus two months from the
quarterly cycle. For example, for option classes in the January cycle
that have expiration months of June, July, October, and January, BOX
would additionally list the August and September series. For options
classes in the February quarterly cycle that have expiration months of
October, November, February, and May, BOX would additionally list the
December and January series. Under the proposal, no additional LEAP
Series will be created.
BOX seeks to limit the proposed rule change to 20 actively traded
options classes. By limiting the pilot to a small number of classes,
BOX will be able to gauge interest in the pilot while limiting any
additional demands on system resources. It has been estimated that this
pilot could add up to six or seven percent to current quote traffic,
although changes in market maker quoting behavior may reduce that
increase by up to half. BOX believes that a limited pilot is a prudent
step to determine actual market demand for additional expiration
months.
If the Exchange were to propose an extension or an expansion of the
pilot program, or should the Exchange propose to make the pilot program
permanent, BOX will submit, along with any filing proposing such
amendments to the pilot program, a pilot program report (``Report'')
that will provide an analysis of the Pilot Program covering the first
nine months of the pilot program and shall submit the Report to the
Commission at least sixty (60) days prior to the expiration date of the
pilot program. The Report will include, at a minimum: (1) Data and
written analysis on the open interest and trading volume in the classes
for which additional expiration months were opened; (2) an assessment
of the appropriateness of the options classes selected for the pilot
program; (3) an assessment of the impact of the pilot program on the
capacity on BOX, OPRA, and on market data vendors (to the extent data
from market data vendors is available); (4) any capacity problems or
other problems that arose during the operation of the pilot program and
how BOX addressed such problems; (5) any complaints that BOX or the
Exchange received during the operation of the pilot program and how BOX
and the Exchange addressed them; and (6) any additional information
that would assist the Commission in assessing the operation of the
Pilot Program.
Finally, BOX represents that it has the necessary systems capacity
to support new options series that will result from the introduction of
additional expiration months listed pursuant to this proposed rule
change.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\3\
[[Page 71164]]
in general, and Section 6(b)(5) of the Act,\4\ in particular, in that
it is designed to prevent fraudulent and manipulative acts and
practices, promote just and equitable principles of trade, foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and 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 listing additional near-term
expiration months will offer investors more variety in trading options
series that were previously not available. The Exchange believes this
proposal will also generate additional volume in these options classes
without significantly taxing system resources.
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\3\ 15 U.S.C. 78f(b).
\4\ 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 \5\ and Rule 19b-
4(f)(6) thereunder.\6\
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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
Commission has waived the five-day pre-filing requirement in this
case.
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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 that of
another exchange that has been approved by the Commission.\7\
Therefore, the Commission designates the proposal operative upon
filing.\8\
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\7\ See Securities Exchange Act Release No. 63104 (October 14,
2010), 75 FR 64773 (October 20, 2010) (Approving Additional
Expiration Months Pilot Program).
\8\ 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-2010-077 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-2010-077. 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 website 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-2010-077 and should be
submitted on or before December 13, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-29352 Filed 11-19-10; 8:45 am]
BILLING CODE 8011-01-P