[Federal Register Volume 75, Number 56 (Wednesday, March 24, 2010)]
[Notices]
[Pages 14229-14231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6515]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61736; File No. SR-NASDAQ-2010-038]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by The NASDAQ Stock Market LLC
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 18, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\, and Rule 19b-4\2\ thereunder, notice is hereby given that
on March 16, 2010, The NASDAQ Stock Market LLC (``NASDAQ'') filed with
the Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I, II, and III, below, which
Items have been prepared by NASDAQ. 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 is filing with the Securities and Exchange Commission
(``SEC'' or ``Commission'') a proposal for the NASDAQ Options Market
(``NOM'' or ``Exchange'') to amend Chapter IV, Section 6 (Series of
Options Contracts 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 Strike
Price Program (``$1 Strike Program'').\4\
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\3\ The $0.50 Strike Program was initiated in an immediately
effective filing on November 6, 2009. See Securities Exchange Act
Release No. 60952 (November 6, 2009), 74 FR 59277 (November 17,
2009) (SR-NASDAQ-2009-099) (notice of filing and immediate
effectiveness).
\4\ The $1 Strike Program was initially approved as a pilot on
March 12, 2008. See Securities Exchange Act Release No. 57478 (March
12, 2008), 73 FR 14521(March 18, 2008) (SR-NASDAQ-2007-004 and SR-
NASDAQ-2007-080) (order approving). The program was subsequently
made permanent and expanded. See Securities Exchange Act Release
Nos. 58093 (July 3, 2008), 73 FR 39756 (July 10, 2008) (SR-NASDAQ-
2008-057) (notice of filing and immediate effectiveness); 59588
(March 17, 2009), 74 FR 12410 (March 24, 2009) (SR-NASDAQ-2009-025)
(notice of filing and immediate effectiveness); and 61347 (January
13, 2010), 75 FR 3513 (January 21, 2010) (SR-NASDAQ-2010-003)
(notice of filing and immediate effectiveness).
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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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\5\ 17 CFR 240.19b-4(f)(6)(iii).
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The text of the proposed rule change is available from NASDAQ's Web
site at http://nasdaq.cchwallstreet.com/Filings/, at NASDAQ's principal
office, 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 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 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 this proposal is to amend Chapter IV, Section 6 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
[[Page 14230]]
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 Chapter IV, Section 6, 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. 60952 (November 6,
2009), 74 FR 59277 (November 17, 2009) (SR-NASDAQ-2009-099) (notice
of filing and immediate effectiveness); and Chapter IV, Section 6,
Supplementary Material .05 to Section 6.
\7\ See Chapter IV, Section 6, Supplementary Material .02(b) to
Section 6.
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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 Chapter IV, Section 6, Supplementary Material .02(b) to Section 6
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.''
Finally, the Exchange is proposing technical, housekeeping rule
changes to Chapter IV, Section 2, Supplementary Material .02 to Section
6 to conform formatting and punctuation and to Chapter IV, Section 6,
Supplementary Material .09 to Section 6 to ensure consistency of
internal numbering.
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
NASDAQ does not believe that the proposed rule change will result
in 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
Written comments were neither solicited nor received.
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) \10\ of the Act and Rule 19b-
4(f)(6) \11\ thereunder. The Exchange provided 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 the proposed rule
change.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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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 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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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.
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-NASDAQ-2010-038 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-NASDAQ-2010-038. 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
[[Page 14231]]
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-NASDAQ-2010-038 and should be submitted on or before
April 14, 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. 2010-6515 Filed 3-23-10; 8:45 am]
BILLING CODE 8011-01-P