[Federal Register Volume 76, Number 59 (Monday, March 28, 2011)]
[Notices]
[Pages 17178-17180]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-7167]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64107; File No. SR-NYSEAmex-2011-15]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend the
Operation of Its Pilot Program Regarding Minimum Value Sizes for
Flexible Exchange Options
March 22, 2011.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on March 11, 2011, 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 self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 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 its option trading rules to extend
the operation of its pilot program (``Pilot Program'') regarding
minimum value sizes for flexible exchange options (``FLEX Options''),
currently scheduled to expire on March 28, 2011, until March 30, 2012.
The text of the proposed rule change is available at the Exchange; on
the Exchange's Web site (http://www.nyse.com); on the Commission's Web
site at http://www.sec.gov; and 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange hereby proposes to amend its option trading rules to
extend the operation of its Pilot Program regarding minimum value sizes
for FLEX Options, currently scheduled to expire on March 28, 2011,\4\
until March 30, 2012. This filing does not propose any substantive
changes to the Pilot Program and contemplates that all other terms of
FLEX Options will remain the same. The Exchange believes that extending
the Pilot Program will benefit public customers and other market
participants who will be able to use FLEX Options to manage risk for
smaller portfolios.
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\4\ See Securities Exchange Act Release No. 62084 (May 12,
2010), 75 FR 28091 (May 19, 2010) (SR-NYSEAmex-2010-40).
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In support of the proposed extension of the Pilot Program, and as
required by the terms of the Pilot Program's implementation,\5\ the
Exchange has submitted to the Securities and Exchange Commission
(``SEC'' or ``Commission'') a Pilot Program Report that provides an
analysis of the Pilot Program covering the period during which the
Pilot Program has been in effect. This Pilot Program Report includes
(i) data and analysis on the open interest and trading volume in (a)
FLEX Equity Options that have opening transactions with a minimum size
of 0 to 249 contracts and less than $1 million in underlying value; (b)
FLEX Index Options that have opening transactions with a minimum
opening size of less than $10 million in underlying equivalent value;
and (ii) analysis on the types of investors that initiated opening FLEX
Equity and Index Options transactions (i.e., institutional, high net
worth, or retail). The report has been submitted to the Commission on a
confidential basis.
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\5\ Id.
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The Exchange believes that there is sufficient investor interest
and demand in the Pilot Program to warrant extension for an additional
year. The Exchange believes that the Pilot Program has provided
investors with additional means of managing their risk exposures and
carrying out their investment objectives. The Exchange has not
experienced any adverse market effects with respect to the Pilot
Program.
If, in the future, the Exchange proposes an additional extension of
the Pilot Program, or should the Exchange propose to make the Pilot
Program
[[Page 17179]]
permanent, the Exchange will submit, along with any filing proposing
such amendments to the Pilot Program, an additional Pilot Program
Report covering the period during which the Pilot Program was in effect
and including the details referenced above, along with the nominal
dollar value of the underlying security of each trade. The Pilot
Program Report would be submitted to the Commission at least two months
prior to the expiration date of the Pilot Program and would be provided
on a confidential basis.
The Exchange notes that any positions established under this Pilot
Program would not be impacted by the expiration of the Pilot Program.
For example, a 10-contract FLEX Equity Option opening position that
overlies less than $1 million in the underlying security and expires in
January 2015 could be established during the Pilot Program. If the
Pilot Program were not extended, the position would continue to exist
and any further trading in the series would be subject to the minimum
value size requirements for continued trading in that series.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\6\ in general, and
furthers the objectives of Section 6(b)(5),\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 foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanism of a free and open market and a national market system.
Specifically, the Exchange believes that the proposed extension of the
Pilot Program, which eliminates the minimum value size applicable to
FLEX Options, would provide greater opportunities for investors to
manage risk through the use of FLEX Options. Further, the Exchange
notes that it has not experienced any adverse effects from the
operation of the Pilot Program.
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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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) 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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\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 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 current pilot to continue uninterrupted.
The Commission finds that waiver of the operative delay is consistent
with the protection of investors and the public interest. The
Commission notes in waiving the 30 day operative delay that NYSE Amex's
original pilot was published for comment in the Federal Register and
the Commission did not receive any comments on the proposed rule
change.\10\
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\10\ See note 4, supra.
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Further, NYSE Amex is proposing to extend the existing pilot on the
same terms and conditions as they were originally approved by the
Commission. This includes, as described in more detail above, a
representation that NYSE Amex will continue to monitor the pilot and
submit certain interim reports during the extended pilot period, as
well as a final report covering the pilot period should the Exchange
decide to extend or file for permanent approval of the pilot. Finally,
the Commission notes that the Exchange has represented that it has not
experienced any adverse market effects with respect to the pilot
program.
Based on the above, the Commission finds that it is consistent with
investor protection and the public interest to waive the 30 day
operative delay in accordance with Rule 19b-4(f)(6)(iii) so that the
pilot can continue on an uninterrupted basis, and therefore designates
the proposal operative upon filing.\11\
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\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 such 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-2011-15 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-2011-15. 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
[[Page 17180]]
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 20549-1090 on
official business days between the hours of 10 a.m. and 3 p.m. Copies
of the filing will also 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-2011-15 and should be submitted on or before
April 18, 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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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-7167 Filed 3-25-11; 8:45 am]
BILLING CODE 8011-01-P