[Federal Register Volume 75, Number 66 (Wednesday, April 7, 2010)]
[Notices]
[Pages 17820-17822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7781]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61812; File No. SR-Phlx-2010-49]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by NASDAQ OMX PHLX, Inc. To
Establish $2.50 Strike Price Intervals for Options on the NASDAQ
Internet Index \SM\
March 31, 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 29, 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, II, and III, 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:
Phlx Rule 1101A (Terms of Options Contracts) regarding listing options
on the NASDAQ Internet Index \SM\ trading under the symbol QNET at
$2.50 strike-price intervals below $200; and Phlx Rule 1107A (NASDAQ
OMX Group, Inc. Indexes) regarding disclaimer of express or implied
warranties in respect of NASDAQ OMX Group, Inc. (``NASDAQ'') indexes.
The Exchange requests that the Commission waive the 30-day
operative delay period contained in Exchange Act Rule 19b-
4(f)(6)(iii).\3\
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\3\ 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
[[Page 17821]]
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 the proposal is to amend Rule 1101A regarding
listing options on the NASDAQ Internet Index \SM\ trading under the
symbol QNET (the ``Index'') at $2.50 strike-price intervals below $200;
and to amend Rule 1107A regarding disclaimer of express or implied
warranties in respect of NASDAQ Indexes.
The NASDAQ Internet Index \SM\ has been listed and maintained by
NASDAQ OMX continuously since November 27, 2007.\4\ The Index is
designed to track the performance of the largest and most liquid U.S.-
listed companies engaged in internet-related businesses that are listed
on a U.S. stock exchange. The Index includes companies engaged in a
broad range of internet-related services including, but not limited to
internet software, internet access providers, internet search engines,
web hosting, Web site design, and internet retail commerce. The
Exchange intends to list options on the Index per subsection (b) of
Rule 1009A (Designation of the Index).\5\
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\4\ For a description of the Index, Index Methodology, and Index
pricing, see https://indexes.nasdaqomx.com/. An Exchange-Traded Fund
denominated The PowerShares Nasdaq Internet Portfolio (PNQI), which
is based on the Index, was initiated last year.
\5\ No options are currently traded on the Index. Rule 1009A
establishes generic listing standards for options on narrow-based
and broad-based indexes pursuant to Rule 19b-4(e) of the Act. See
Securities Exchange Act Release No. 40761 (December 8, 1998), 63 FR
70952 (December 22, 1998). The listing standards in Rule 1009A are
similar to those of other options exchanges such as, for example,
Chicago Board Options Exchange, Incorporated (``CBOE'');
International Stock Exchange LLC (``ISE''); and The NASDAQ Stock
Market LLC (``NASDAQ Market'').
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Phlx Rule 1101A currently indicates in subsection (a) that the
Exchange shall determine fixed point strike price intervals for index
options at no less than $5.00, provided that for indexes that are
listed in Rule 1101A, the Exchange may determine to list strike prices
at no less than $2.50 intervals if the strike price is less than $200.
The rule provides also that such options may be listed at no less than
$2.50 strike price intervals on indexes delineated in this rule, and in
response to demonstrated customer interest or specialist request.
Demonstrated customer interest includes institutional (firm) corporate
or customer interest expressed directly to the Exchange or through the
customer's floor brokerage unit, but not interest expressed by a
Registered Options Trader (``ROT'') with respect to trading for the
ROT's own account.\6\
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\6\ Subsection (b) of Rule 1014 states that an ROT is a regular
member or a foreign currency options participant of the Exchange
located on the trading floor who has received permission from the
Exchange to trade in options for his own account, and includes a
Streaming Quote Trader and a Remote Streaming Quote Trader as
defined in Rule 1014.
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The proposed rule change adds the NASDAQ Internet Index\SM\ to the
list of indexes in Rule 1101A upon which the Exchange may list options
at $2.50 strike price intervals.\7\
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\7\ For recent rule change proposals wherein the Exchange
similarly added other indexes to Rule 1101A, see Securities Exchange
Act Release Nos. 57899 (June 2, 2008), 73 FR 32379 (June 6, 2008)
(SR-Phlx-2008-40) (notice of filing and immediate effectiveness);
and 57515 (March 18, 2008), 73 FR 15554 (March 24, 2008) (SR-Phlx-
2008-21) (notice of filing and immediate effectiveness).
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Phlx Rule 1107A currently provides that NASDAQ does not guarantee
the accuracy and/or uninterrupted calculation of the NASDAQ-100
Index[reg] (the ``index'') or any data included therein; makes no
warranty, express or implied, as to results to be obtained by the
Exchange, owners of the options on the index, or any other person or
entity from the use of the index or any data included therein; and
makes no express or implied warranties, and expressly disclaims all
warranties of merchantability or fitness for a particular purpose or
use with respect to the index or any data included therein. The rule
also provides, without limiting any of the foregoing, that in no event
shall NASDAQ have any liability for any lost profits or special,
incidental, punitive, indirect, or consequential damages, even if
notified of the possibility of such damages. In proposing adoption of
Rule 1007A, the Exchange stated that Rule 1107A, being similar in
concept to current Rules 1104A, 1105A, and 1106A, as well as rules of
other options exchanges, should put NASDAQ on similar footing with
other licensors of options on indexes to the Exchange.\8\
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\8\ See Securities Exchange Act Release No. 58194 (July 18,
2008), 73 FR 43275 (July 24, 2008) (SR-Phlx-2003-21) (notice of
filing and immediate effectiveness regarding adoption of Rule
1107A). See also disclaimers and limitation of liability at NYSE
Amex (formerly ``AMEX'') Rule 902C and at CBOE Rule 24.14.
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The proposed rule change expands the coverage of Rule 1107A to
include the NASDAQ Internet Index \SM\.
The Exchange believes that its proposal to modify Rules 1101A and
1107A should encourage listing and trading options on the NASDAQ
Internet Index \SM\ at appropriate strike price intervals and should
encourage maintenance of the index so that overlying options may be
available for listing and trading, thereby expanding investment and
hedging opportunities for investors and other market participants.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and furthers the objectives of Section
6(b)(5) of the Act \10\ 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 encouraging
listing options on the NASDAQ Internet Index \SM\ at appropriate strike
price intervals and encouraging maintenance of the index so that
options overlying the index may be available for trading and hedging.
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\9\ 15 U.S.C. 78f(b).
\10\ 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) \11\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \12\
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
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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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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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-Phlx-2010-49 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-2010-49. 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-Phlx-2010-49 and should be
submitted on or before April 28, 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. 2010-7781 Filed 4-6-10; 8:45 am]
BILLING CODE 8011-01-P