[Federal Register Volume 76, Number 65 (Tuesday, April 5, 2011)]
[Notices]
[Pages 18817-18818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8054]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64157; File No. SR-Phlx-2011-15]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order
Granting Approval of Proposed Rule Change To Expand the $2.50 Strike
Price Program
March 31, 2011.
I. Introduction
On February 2, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
expand the $2.50 Strike Price Program. The proposed rule change was
published for comment in the Federal Register on February 22, 2011.\3\
The Commission received no comment letters on the proposal. This order
approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 63914 (February 15,
2011), 76 FR 9846 (``Notice'').
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II. Description of the Proposal
Phlx has proposed to modify Exchange Rule 1012, Series of Options
Open for Trading, to expand the range of option strike prices for which
$2.50 strike price intervals may be listed under the $2.50 Strike Price
Program
[[Page 18818]]
(``Program'') from between $50 and $75 to between $50 and $100,
provided the $2.50 strike price intervals are no more than $10 from the
closing price of the underlying stock in the primary market. The
Exchange also proposed to increase the number of option classes on
individual stocks, from 46 to 60, that it may select for the
Program.\4\
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\4\ In addition, the $2.50 Strike Price Program also permits the
Exchange to list any option class with $2.50 strike intervals that
is included in the $2.50 Strike Price Program of another exchange.
See Phlx Rule 1012, Commentary .05(b).
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In support of its proposal, Phlx stated that $2.50 strike intervals
above $75 would afford investors the ability to more closely tailor
investment strategies to the precise movement of the underlying
security. The Exchange also stated that the number of option classes in
the Program has not expanded since 1998, although increasingly more
companies have completed initial public offerings since 1998 and
significantly more options classes are trading now as compared to 1998.
The Exchange stated that the increase would allow it to accommodate
investor requests for $2.50 strikes in additional options classes.
Finally, Phlx stated that it analyzed its capacity, and represented
that the Exchange and the Options Price Reporting Authority have the
necessary systems capacity to handle the potential additional traffic
that would result from expanding the Program.
III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\5\
Specifically, the Commission finds that the proposal is consistent with
Section 6(b)(5) of the Act,\6\ which requires, among other things, that
the rules of a national securities exchange be designed to promote just
and equitable principles of trade, to prevent fraudulent and
manipulative acts, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest.
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\5\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\6\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the proposal strikes a reasonable
balance between the Exchange's desire to offer a wider array of
investment opportunities and the need to avoid unnecessary
proliferation of options series and the corresponding increase in
quotes and market fragmentation. The Commission expects the Exchange to
monitor the trading volume associated with the additional options
series listed as a result of this proposal and the effect of these
additional series on market fragmentation and on the capacity of the
Exchange's, OPRA's, and vendors' automated systems.
In addition, the Commission notes that Phlx has represented that it
believes the Exchange and the Options Price Reporting Authority have
the necessary systems capacity to handle the additional traffic
associated with the newly permitted listings.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-Phlx-2011-15) be, and it
hereby is, approved.
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\7\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8054 Filed 4-4-11; 8:45 am]
BILLING CODE 8011-01-P