[Federal Register Volume 75, Number 244 (Tuesday, December 21, 2010)]
[Notices]
[Pages 80097-80099]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31949]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63552; File No. SR-NYSEAmex-2010-120]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE Amex LLC Establishing
Strike Price Intervals of $1 and Increasing Position and Exercise
Limits With Respect to Options on the KBW Bank Index
December 15, 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 December 14, 2010, NYSE Amex LLC (the ``Exchange'' or ``NYSE
Amex'') 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 NYSE Amex Rules 903C and 904C with
respect to options on the KBW Bank Index (``BKX'' or ``Index'') to (i)
establish strike price intervals of $1.00 and (ii) increase the
position and exercise limits applicable thereto. The text of the
proposed rule change is available at the Exchange's principal office,
on the Commission's Web site at http://www.sec.gov, at the Commission's
Public Reference Room, and http://www.nyse.com.
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 those 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 parts 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 the proposed rule change is to amend NYSE Amex Rules
903C and 904C with respect to options on BKX to (i) establish strike
price intervals of $1.00 and (ii) increase the position and exercise
limits applicable thereto. The proposed change would provide investors
with greater flexibility with respect to trading options on BKX, which
the Exchange intends on listing pursuant to the generic listing
standards of Amex Rule 903C, by allowing them to establish positions
that are better tailored to meet their investment objectives.
[[Page 80098]]
$1 Strike Price Intervals
The Exchange proposes to list series of BKX at $1.00 or greater
strike price intervals, if the strike price is less than $200, and to
list at least two strike prices above and two strike prices below the
current value of the Index at about the time a series is opened for
trading on the Exchange.\3\
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\3\ The Exchange notes that similar proposals to list series of
BKX at $1.00 or greater strike price intervals have been previously
approved by the Commission. See Securities Exchange Act Release No.
60840 (October 20, 2009), 74 FR 55593 (October 28, 2009) (SR-Phlx-
2009-77). See also Securities Exchange Act Release No. 60896
(October 28, 2009), 74 FR 56906 (November 3, 2009) (SR-NYSEArca-
2009-98).
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As proposed, additional series of BKX could be opened for trading
on the Exchange when the Exchange deems it necessary to maintain an
orderly market, to meet customer demand, or when the underlying Index
moves substantially from the initial exercise price or prices. To the
extent that any additional strike prices are listed by the Exchange,
such additional strike prices would be within thirty percent (30%)
above or below the closing value of the Index on the prior day. The
Exchange could also open additional strike prices that are more than
30% above or below the current Index value provided that demonstrated
customer interest exists for such series, as expressed by
institutional, corporate, or individual customers or their brokers.
Market Makers trading for their own account would not be considered
when determining customer interest under this provision. In addition to
the initial listed series, the Exchange could list up to sixty (60)
additional series per expiration month for each series on BKX. In all
cases, however, $1.00 strike price intervals could be listed on BKX
only where the strike price is less than $200.
As proposed, the Exchange could not list Long-Term Equity
AnticiPation Securities (``LEAPS'') on BKX at intervals less than
$2.50.
The Exchange also proposes an additional delisting policy for BKX,
whereby the Exchange would regularly review series that are outside a
range of five (5) strikes above and five (5) strikes below the current
value of BKX, and would be able to delist series with no open interest
in both the put and the call series having a: (a) strike higher than
the highest strike price with open interest in the put and/or call
series for a given expiration month, and (b) strike lower than the
lowest strike price with open interest in the put and/or call series
for a given expiration month.
The Exchange proposes that, notwithstanding the above delisting
policy, customer requests to add strikes and/or maintain strikes in BKX
eligible for delisting could be granted.
Accordingly, the Exchange proposes to include these proposed
changes as new Commentary .07 to NYSE Amex Rule 903C.
With regard to the impact on system capacity, the Exchange has
analyzed its capacity and represents that it and the Options Price
Reporting Authority have the necessary systems capacity to handle the
additional traffic associated with the listing and trading of an
expanded number of series as proposed herein.
Position and Exercise Limits
Under NYSE Amex Rule 904C(c), the highest position and exercise
limit that a stock index industry group option such as BKX is permitted
to have is 31,500 contracts. However, several other options exchanges
currently list options on BKX and have expanded their position and
exercise limit for options on BKX to 44,000 contracts.\4\ The Exchange
believes that it is important for a product like BKX, which is traded
on multiple exchanges, to have uniform position and exercise limits in
order to eliminate any confusion among investors and other market
participants. Accordingly, the Exchange proposes to amend NYSE Amex
Rule 904C(c) to similarly increase the position and exercise limits for
options on BKX to 44,000 contracts.\5\
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\4\ See Securities Exchange Act Release No. 49312 (February 24,
2004), 69 FR 9672 (March 1, 2004) (SR-Phlx-2004-13). See also
Securities Exchange Act Release No. 55932 (June 20, 2007), 72 FR
35288 (June 27, 2007) (SR-NYSEArca-2007-54).
\5\ The Exchange notes that, as provided under NYSE Amex Rule
905C(ii), the amount of stock index industry group options contracts
that can be exercised pursuant to NYSE Amex Rule 905C is the same
number of contracts established pursuant to NYSE Amex Rule 904C as
the position limit for such options, and thus does not require that
the text of NYSE Amex Rule 905C be amended to effect the change
proposed herein.
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The Exchange also proposes a non-substantive change to move the
reference to the Pauze[eacute] Tombstone Common Stock Index, and the
position limit applicable thereto, to a more appropriate location
within NYSE Amex Rule 904C(c).
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Specifically,
the changes proposed herein would provide investors with greater
flexibility to establish positions that are better tailored to meet
their investment objectives while also eliminating potential confusion
by aligning the Exchange's position and exercise limits with that of
other options exchanges.
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\6\ 15 U.S.C. 78f(b).
\7\ 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 that is 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
No written comments were solicited or received with respect to 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 \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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
Exchange has satisfied this 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 that of
another exchange that has been approved by the Commission.\10\
Therefore, the
[[Page 80099]]
Commission designates the proposal operative upon filing.\11\
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\10\ See supra notes 3 and 4.
\11\ 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-NYSEAmex-2010-120 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-NYSEAmex-2010-120. 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-
NYSEAmex-2010-120 and should be submitted on or before January 11,
2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31949 Filed 12-20-10; 8:45 am]
BILLING CODE 8011-01-P