[Federal Register Volume 76, Number 59 (Monday, March 28, 2011)]
[Notices]
[Pages 17176-17178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-7231]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64111; File No. SR-NYSEArca-2011-10)
Self-Regulatory Organizations; NYSE Arca Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending Its Option
Trading Rules To Extend the Operation of Its Pilot Program Regarding
Minimum Value Sizes for Flexible Exchange Options
March 23, 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 Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') 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 the
Substance of the Proposed Rule Change
The Exchange proposes [sic] 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's Web site at
http://www.nyse.com, on the Commission's Web site at http://www.sec.gov, at the Exchange'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 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. 62054 (May 6, 2010),
75 FR 27381 (May 14, 2010) (SR-NYSEArca-2010-34).
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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
[[Page 17177]]
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 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.
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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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A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\11\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay to
permit the current pilot to continue uninterrupted.
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\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires that a self-regulatory organization submit to the
Commission 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 filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Commission notes that the Exchange has satisfied
this requirement.
\11\ 17 CFR 240.19b-4(f)(6)(iii).
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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 the
Exchange's original pilot was published for comment in the Federal
Register and the Commission did not receive any comments.\12\ Further,
the Exchange is proposing to extend the existing Pilot Program 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 the Exchange will continue to monitor the Pilot
Program and submit certain interim reports during the extended Pilot
Program period, as well as a final report covering the Pilot Program
period should the Exchange decide to extend or file for permanent
approval of the Pilot Program. 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
19b-4(f)(6)(iii) so that the Pilot Program can continue on an
uninterrupted basis, and therefore designates the proposal operative
upon filing.\13\
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\12\ See supra note 4.
\13\ 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
[[Page 17178]]
Number SR-NYSEArca-2011-10 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-NYSEArca-2011-10. 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 such 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 No. SR-
NYSEArca-2011-10 and should be submitted on or before April 18, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-7231 Filed 3-25-11; 8:45 am]
BILLING CODE 8011-01-P