[Federal Register Volume 75, Number 46 (Wednesday, March 10, 2010)]
[Notices]
[Pages 11211-11213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-5078]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61630; File No. SR-Phlx-2010-26]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. To
Permit the Concurrent Listing of $3.50 and $4 Strikes for Classes
Participating in the $0.50 Strike Program and the $1 Strike Program
March 2, 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 February 19, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or
``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
The Exchange is filing with the Commission a proposal to amend
Commentary .05 to Rule 1012 (Series of Options Open for Trading) to
permit the concurrent listing of $3.50 and $4 strikes for classes that
participate in both the $0.50 Strike Price Program (``$0.50 Strike
Program'') \3\ and the $1
[[Page 11212]]
Strike Price Program (``$1 Strike Program'').\4\ The Exchange requests
that the Commission waive the 30-day operative delay period contained
in Exchange Act Rule 19b-4(f)(6)(iii).\5\
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\3\ The $0.50 Strike Program was initially approved on September
18, 2009. See Securities Exchange Act Release No. 60694 (September
18, 2009), 74 FR 49048 (September 25, 2009) (SR-Phlx-2009-65) (order
approving).
\4\ The $1 Strike Program was initially approved as a pilot on
June 11, 2003. See Securities Exchange Act Release Nos. 48013 (June
11, 2003), 68 FR 35933 (June 17, 2003) (SR-Phlx-2002-55) (order
approving). The program was subsequently made permanent and
expanded. See Securities Exchange Act Release Nos. 57111 (January 8,
2008), 73 FR 2297 (January 14, 2008) (SR-Phlx-2008-01) (notice of
filing and immediate effectiveness); 59590 (March 17, 2009), 74 FR
12412. (March 24, 2009) (SR-Phlx-2009-21) (notice of filing and
immediate effectiveness); and 61277 (January 4, 2010), 75 FR 1442
(January 11, 2010)(SR-Phlx-2009-108) (notice of filing and immediate
effectiveness).
\5\ 17 CFR 240.19b-4(f)(6)(iii).
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The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
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 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposal is to amend Commentary .05 to Rule
1012 to permit the concurrent listing of $3.50 and $4 strikes for
classes that participate in both the $0.50 Strike Program and the $1
Strike Program.
The Exchange recently implemented a rule change that permits strike
price intervals of $0.50 for options on stocks trading at or below
$3.00 pursuant to the $0.50 Strike Program.\6\ As part of the filing to
establish the $0.50 Strike Program, the Exchange contemplated that a
class may be selected to participate in both the $0.50 Strike Program
and the $1 Strike Program. Under the $1 Strike Program, new series with
$1 intervals are not permitted to be listed within $0.50 of an existing
$2.50 strike price in the same series, except that strike prices of $2
and $3 are permitted to be listed within $0.50 of a $2.50 strike price
for classes also selected to participate in the $0.50 Strike
Program.\7\ Under the Exchange's current Rule 1012, for classes
selected to participate in both the $0.50 Strike Program and the $1
Strike Program, the Exchange may either: (a) List a $3.50 strike but
not list a $4 strike; or (b) list a $4 strike but not list a $3.50
strike. For example, if a $3.50 strike for an option class in both the
$0.50 and $1 Strike Programs was listed, the next highest permissible
strike price would be $5.00. Alternatively, if a $4 strike was listed,
the next lowest permissible strike price would be $3.00. The intent of
the $0.50 Strike Program was to expand the ability of investors to
hedge risks associated with stocks trading at or under $3 and to
provide finer intervals of $0.50, beginning at $1 up to $3.50. As a
result, the Exchange believes that the current filing is consistent
with the purpose of the $0.50 Strike Program and will permit the
Exchange to fill in any existing gaps resulting from having to choose
whether to list a $3.50 or $4 strike for options classes in both the
$0.50 and $1 Strike Programs.
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\6\ See Securities Exchange Act Release No. 60694 (September 18,
2009), 74 FR 49048 (September 25, 2009) (SR-Phlx-2009-65) (order
approving); and Commentary .05(a)(ii) to Rule 1012.
\7\ See Commentary .05(a)(i)(C) of Rule 1012.
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Therefore, the Exchange is submitting the current filing to permit
the listing of concurrent $3.50 and $4 strikes for classes that are
selected to participate in both the $0.50 Strike Program and the $1
Strike Program. To effect this change, the Exchange is proposing to
amend Commentary .05(a)(i)(B) to Rule 1012 by adding $4 to the strike
prices of $2 and $3 currently permitted if a class participates in both
the $0.50 Strike Program and the $1 Strike Program.
The Exchange is also proposing to amend the current rule text to
delete references to ``$2.50 strike prices'' (and the example utilizing
$2.50 strike prices) and to replace those references with broader
language, e.g., ``existing strike prices.''
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \8\ in general, and furthers the objectives of Section
6(b)(5) of the Act \9\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system, by permitting the Exchange to list
more granular strikes on options overlying lower priced securities,
which the Exchange believes will provide investors with greater
flexibility by allowing them to establish positions that are better
tailored to meet their investment objectives.
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\8\ 15 U.S.C. 78f(b).
\9\ 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
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange believes that the foregoing proposed rule change may
take effect upon filing with the Commission pursuant to Section
19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \11\
because the foregoing proposed rule change does not: (i) Significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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.
The Exchange has requested that the Commission waive the 30-day
operative delay to permit the Exchange to compete with other exchanges
whose rules permit concurrent listing of $3.50 and $4 strikes for
classes similarly
[[Page 11213]]
participating in both a $0.50 strike program and a $1 strike program.
The Commission finds that waiver of the operative delay is consistent
with the protection of investors and the public interest because such
waiver will encourage fair competition among the exchanges. Therefore,
the Commission designates the proposal operative upon filing.\12\
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\12\ 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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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-Phlx-2010-26 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-Phlx-2010-26. 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. 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-
Phlx-2010-26 and should be submitted on or before March 31, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5078 Filed 3-9-10; 8:45 am]
BILLING CODE 8011-01-P