Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Exchange's Quarterly Options Series Pilot Program, 41392-41394 [E8-16421]

Download as PDF 41392 Federal Register / Vol. 73, No. 139 / Friday, July 18, 2008 / Notices 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–NSCC–2007–08 and should be submitted on or before August 8, 2008. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.7 Florence E. Harmon, Acting Secretary. [FR Doc. E8–16400 Filed 7–17–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58130; File No. SR– NYSEArca–2008–72] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Exchange’s Quarterly Options Series Pilot Program July 9, 2008. dwashington3 on PRODPC61 with NOTICES3 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’)1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 2, 2008, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated this proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NYSE Arca proposes to amend its rules to (i) extend the Quarterly Options Series pilot program (‘‘Pilot Program’’) until July 10, 2009, (ii) add provisions to the Pilot Program regarding the addition of new strike prices and the delisting of inactive series and, (iii) CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 217 CFR 240.19b–4. 315 U.S.C. 78s(b)(3)(A)(iii). 417 CFR 240.19b–4(f)(6). 115 15:36 Jul 17, 2008 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 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 On July 12, 2006 the Exchange filed with the Commission a proposal to list and trade Quarterly Options Series on a pilot basis (‘‘Pilot Program’’) through July 10, 2007. The rule change was effective upon filing.5 The original Pilot Program was subsequently extended and is now due to expire on July 10, 2008.6 The Exchange now proposes to extend the Pilot Program for another year, so that it will now expire on July 10, 2009; to amend the Pilot Program in certain respects; and make minor technical changes. Pilot Extension The Exchange stated that it would submit, in connection with any proposed extension of the Pilot Program, a Pilot Program Report (‘‘Report’’) that would provide an analysis of the Pilot Program covering the entire period which the program was in effect. The Report was to include: (1) Data and written analysis on the open interest and trading volume in the classes for which Quarterly Options Series were opened; (2) an assessment of the appropriateness of the option classes selected for the Pilot Program; (3) an assessment of the impact of the Pilot Program on the capacity on the Exchange, OPRA and on market data 5See Securities Exchange Act Release No. 54166 (July 18, 2006), 71 FR 42151 (July 25, 2006) (SR– NYSEArca–2006–45). 6See Securities Exchange Act Release No. 56119 (July 24, 2007), 72 FR 41563 (July 30, 2007) (SR– NYSEArca–2007–70). 7 17 VerDate Aug<31>2005 make minor technical changes. The text of the proposed rule change is available on the Exchange’s Web site at (http:// www.nyse.com), at the Exchange’s principal office, and at the Commission’s Public Reference Room. Jkt 214001 PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 vendors (to the extent data from market data vendors is available); (4) any capacity problems or other problems that arose during the operation of the Pilot Program and how the Exchange addressed such problems; (5) any complaints that the Exchange received during the operation of the Pilot Program and how the Exchange addressed them; and (6) any additional information that would assist the Commission in assessing the operation of the Pilot Program. The Exchange has submitted the Report. The Exchange represents that the Report supports its belief that extension of the Pilot Program is proper. Among other things, the Report shows the strength of the Pilot Program as reflected by the overall volume and open interest of Quarterly Options Series traded on NYSE Arca and other national options exchanges. The Report shows that the Pilot Program has not created, and in the future should not create, any capacity, operational or regulatory problems attributable to Quarterly Options Series. Finally, NYSE Arca represents that the Exchange has the necessary system capacity to support any additional series listed as part of the Pilot Program. Proposal Related to the Listing and Delisting of Strikes On August 7, 2007, the Chicago Board Options Exchange (‘‘CBOE’’) filed a proposal to revise the terms of its Quarterly Options Series pilot program. As part of this filing, CBOE proposed to implement new policies related to the listing and delisting of additional strike prices for Quarterly Options Series. The proposal, as amended, was approved by the Commission on March 3, 2008.7 NYSE Arca proposes to adopt the revised terms of the CBOE’s pilot program, for use in its own Pilot Program. Specifically, NYSE Arca proposes to amend Rule 6.4, Commentary .08 to permit the Exchange to list additional strike prices for Quarterly Options Series in exchange traded fund (‘‘ETF’’) options that fall within a percentage range (30%) above and below the price of the underlying ETF.8 Additionally, upon demonstrated customer interest, the Exchange also will be permitted to open additional strike prices of Quarterly Options Series 7See Securities Exchange Act Release No. 57410 (March 3, 2008), 73 FR 12483 (March 7, 2008) (SR– CBOE–2007–96). 8 Pursuant to the existing Pilot Program, the Exchange is presently limited to listing new strike prices on Quarterly Options Series that fall within a $5 range from the closing price of the underlying security on the preceding day. E:\FR\FM\18JYN1.SGM 18JYN1 dwashington3 on PRODPC61 with NOTICES3 Federal Register / Vol. 73, No. 139 / Friday, July 18, 2008 / Notices in ETF options that are more than 30% above or below the current price of the underlying ETF. Market-makers trading for their own account will not be considered when determining customer interest under this provision. In addition to the initial listed series, the proposal will permit the Exchange to list up to sixty (60) additional series per expiration month for each Quarterly Options Series in ETF options. The proposed policies regarding the listing of new strikes are identical to those approved for CBOE. The Exchange also proposes to adopt the same policy approved for CBOE, regarding the delisting of inactive strikes in Quarterly Options Series. Under the proposed delisting policy, the Exchange will, on a monthly basis, review Quarterly Options Series that are outside a range of five (5) strikes above and five (5) strikes below the current price of the underlying ETF, and delist series with no open interest in both the put and the call series having a strike price: (i) Higher than the highest strike price with open interest in the put and/or call series for a given expiration month; or (ii) lower than the lowest strike price with open interest in the put and/or call series for a given expiration month. Notwithstanding the proposed delisting policy, the Exchange will grant customer requests to add strikes and/or maintain strikes in Quarterly Options Series eligible for delisting. The delisting policy proposed by the Exchange is designed to mitigate the number of options series with no open interest, and reduce quote traffic accordingly. If during the life of the Pilot Program the Exchange identifies series for delisting, the Exchange will notify other options exchanges with similar delisting polices, and shall work with such other exchanges to develop a uniform list of securities to be delisted, to help to ensure uniform series delisting of multiply listed Quarterly Options Series in ETF options. Finally, the Exchange notes that the delisting policy, once approved, would become part of the Pilot Program and, going forward, would be considered by the Commission when the Exchange seeks to renew or make permanent the Pilot Program in the future. The proposed policies regarding the delisting of inactive strikes are identical to those in place as part of the CBOE Quarterly Options Series Pilot Program. Non-Substantive Changes The Exchange also proposes at this time to make minor, non-substantive changes, to Rule 5.19(a)(3) and Rule 6.4 Commentary .08 in order to revise the dates used in existing examples that VerDate Aug<31>2005 15:36 Jul 17, 2008 Jkt 214001 describe the listing process for Quarterly Options Series, and to renumber certain subsections of the rule for clarity purposes. These changes serve only to update the text, and make no changes to the Pilot Program itself, or the rules governing such. 2. Statutory Basis The Exchange believes that the continuation of the Pilot Program, along with the proposed revision to the program, will continue to stimulate customer interest in options by creating greater trading opportunities and flexibility in investment choices. The Exchange further believes that continuation of the Pilot Program will provide the ability to more closely tailor investment strategies and provide a valuable hedging tool for investors. Also, the Exchange believes that by revising its Pilot Program to include similar provisions contained in the CBOE Quarterly Options Series pilot program will make for more uniform rules across exchanges that have implemented a Quarterly Options Series pilot program. For these reasons, the Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder and, in particular, the requirements of section 6(b) of the Act.9 Specifically, the Exchange believes the proposed rule change is consistent with the section 6(b)(5) of the Act,10 which requires that the rules of an 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 for a free and open market and a national market system, and, in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes that the proposed rule change will not 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 Written comments on the proposed rule change were neither solicited nor received. PO 00000 9 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 10 15 Frm 00082 Fmt 4703 Sfmt 4703 41393 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has designated the proposed rule change as one that: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) does not become operative for 30 days from the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. Therefore, the foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and subparagraph (f)(6) of Rule 19b–4 thereunder.12 The Exchange has asked the Commission to waive the operative delay to permit the proposed rule change to become operative prior to the 30th day after filing. The Commission has determined that waiving the 30-day operative delay of the Exchange’s proposal is consistent with the protection of investors and the public interest and will promote competition because such waiver will allow NYSE Arca to continue the existing Pilot Program without interruption.13 Therefore, the Commission designates the proposal operative upon filing. The Commission notes that NYSE Arca’s proposed changes regarding additional series and the delisting policy will become part of the Pilot Program and, going forward, its effects will be considered by the Commission in the event that the Exchange seeks to renew or make permanent the Pilot Program. Thus, in the Exchange’s future reports on the Pilot Program, the Exchange should include analysis of (1) the impact of the additional series on the Exchange’s market and quote capacity, and (2) the implementation and effects of the delisting policy, including the number of series eligible for delisting during the period covered by the report, the number of series actually delisted during that period (pursuant to the delisting policy or otherwise), and documentation of any customer requests to maintain QOS 11 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to provide 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 of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has fulfilled this requirement. 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). 12 17 E:\FR\FM\18JYN1.SGM 18JYN1 41394 Federal Register / Vol. 73, No. 139 / Friday, July 18, 2008 / Notices strikes that were otherwise eligible for delisting. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the 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: dwashington3 on PRODPC61 with NOTICES3 Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File No. SR–NYSEArca–2008–72 on the subject line. you wish to make available publicly. All submissions should refer to File No. SR–NYSEArca–2008–72 and should be submitted on or before August 8, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Florence E. Harmon, Acting Secretary. [FR Doc. E8–16421 Filed 7–17–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58144; File No. SR–Phlx– 2008–49] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Transaction Charges Applicable to Linkage ‘‘P’’ and ‘‘P/A’’ Orders July 11, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 Paper Comments (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 30, • Send paper comments in triplicate 2008, the Philadelphia Stock Exchange, to Secretary, Securities and Exchange Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with Commission, 100 F Street, NE., the Securities and Exchange Washington, DC 20549–1090. Commission (‘‘Commission’’) the All submissions should refer to File proposed rule change as described in Number SR–NYSEArca–2008–72. This Items I, II, and III below, which Items file number should be included on the have been prepared by the Exchange. subject line if e-mail is used. To help the The Commission is publishing this Commission process and review your notice to solicit comments on the comments more efficiently, please use proposed rule change from interested only one method. The Commission will persons. post all comments on the Commission’s I. Self-Regulatory Organization’s Internet Web site (http://www.sec.gov/ Statement of the Terms of Substance of rules/sro.shtml). Copies of the the Proposed Rule Change submission, all subsequent amendments, all written statements The Phlx, pursuant to Section 19(b)(1) with respect to the proposed rule of the Act 3 and Rule 19b–4 thereunder,4 change that are filed with the proposes to extend for a one-year period Commission, and all written until July 31, 2009, a pilot program communications relating to the relating to transaction fees applicable to proposed rule change between the the execution of Principal Acting as Commission and any person, other than Agent Orders (‘‘P/A Orders’’) 5 and those that may be withheld from the Principal Orders (‘‘P Orders’’) 6 sent to public in accordance with the the Exchange via the Intermarket provisions of 5 U.S.C. 552, will be available for inspection and copying in 14 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). the Commission’s Public Reference 2 17 CFR 240.19b–4. Room, 100 F Street, NE., Washington, 3 15 U.S.C. 78s(b)(1). DC 20549, on official business days 4 17 CFR 240.19b–4. between the hours of 10 a.m. and 3 p.m. 5 A P/A Order is an order for the principal Copies of such filing also will be account of a specialist (or equivalent entity on available for inspection and copying at another participant exchange that is authorized to the principal office of the Exchange. All represent Public Customer orders), reflecting the terms of a related unexecuted Public Customer comments received will be posted order for which the specialist is acting as agent. See without change; the Commission does Exchange Rule 1083(k)(i). not edit personal identifying 6 A Principal Order is an order for the principal information from submissions. You account of an Eligible Market Maker and is not a P/A Order. See Exchange rule 1083(k)(ii). should submit only information that VerDate Aug<31>2005 15:36 Jul 17, 2008 Jkt 214001 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 Options Linkage (‘‘Linkage’’) under the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (the ‘‘Plan’’).7 The text of the proposed rule change is available on the Exchange’s Web site at http:// www.phlx.com, at the Exchange, 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 Phlx 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 these statements may be examined at the places specified in Item IV below. The Phlx 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 proposed rule change is to extend the current pilot program for one year, through July 31, 2009. No substantive changes are being made to the pilot as it currently operates other than to extend the pilot through July 31, 2009. Currently, the Exchange charges $0.25 per option contract for P Orders sent to the Exchange and $0.15 per option contract for P/A Orders. By extending the current pilot program, the Exchange should remain competitive with other exchanges that charge fees for P Orders and P/A Orders.8 Consistent with current practice, the Exchange will charge the clearing member organization of the sender of P Orders and P/A Orders. Also, consistent with current practice, the Exchange will not charge for the execution of Satisfaction Orders sent through Linkage. 2. Statutory Basis The Exchange believes that its proposal to amend its schedule of fees is consistent with Section 6(b) of the 7 See Securities Exchange Act Release Nos. 44482 (June 27, 2001), 66 FR 35470 (July 5, 2001) (File No. 4–429) (Amendment to Plan to Conform to the Requirements of Securities Exchange Act Rule 11Ac1–7); 43573 (November 16, 2000), 65 FR 70851 (November 28, 2000) (File No. 4–429) (Order Approving Phlx Joining the Plan); and 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000) (File No. 4–429) (Approval of the Plan). 8 See, e.g., SR–ISE–2008–52 (filed June 24, 2008) and SR–CBOE–2008–69 (filed June 30, 2008). E:\FR\FM\18JYN1.SGM 18JYN1

Agencies

[Federal Register Volume 73, Number 139 (Friday, July 18, 2008)]
[Notices]
[Pages 41392-41394]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-16421]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58130; File No. SR-NYSEArca-2008-72]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
Exchange's Quarterly Options Series Pilot Program

July 9, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 2, 2008, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been substantially prepared by the Exchange. The Exchange has 
designated this proposal as non-controversial under Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders the proposed rule change effective upon filing with the 
Commission. 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.
    \3\15 U.S.C. 78s(b)(3)(A)(iii).
    \4\17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE Arca proposes to amend its rules to (i) extend the Quarterly 
Options Series pilot program (``Pilot Program'') until July 10, 2009, 
(ii) add provisions to the Pilot Program regarding the addition of new 
strike prices and the delisting of inactive series and, (iii) make 
minor technical changes. The text of the proposed rule change is 
available on the Exchange's Web site at (http://www.nyse.com), 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 Exchange 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 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
    On July 12, 2006 the Exchange filed with the Commission a proposal 
to list and trade Quarterly Options Series on a pilot basis (``Pilot 
Program'') through July 10, 2007. The rule change was effective upon 
filing.\5\ The original Pilot Program was subsequently extended and is 
now due to expire on July 10, 2008.\6\ The Exchange now proposes to 
extend the Pilot Program for another year, so that it will now expire 
on July 10, 2009; to amend the Pilot Program in certain respects; and 
make minor technical changes.
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    \5\See Securities Exchange Act Release No. 54166 (July 18, 
2006), 71 FR 42151 (July 25, 2006) (SR-NYSEArca-2006-45).
    \6\See Securities Exchange Act Release No. 56119 (July 24, 
2007), 72 FR 41563 (July 30, 2007) (SR-NYSEArca-2007-70).
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Pilot Extension
    The Exchange stated that it would submit, in connection with any 
proposed extension of the Pilot Program, a Pilot Program Report 
(``Report'') that would provide an analysis of the Pilot Program 
covering the entire period which the program was in effect. The Report 
was to include: (1) Data and written analysis on the open interest and 
trading volume in the classes for which Quarterly Options Series were 
opened; (2) an assessment of the appropriateness of the option classes 
selected for the Pilot Program; (3) an assessment of the impact of the 
Pilot Program on the capacity on the Exchange, OPRA and on market data 
vendors (to the extent data from market data vendors is available); (4) 
any capacity problems or other problems that arose during the operation 
of the Pilot Program and how the Exchange addressed such problems; (5) 
any complaints that the Exchange received during the operation of the 
Pilot Program and how the Exchange addressed them; and (6) any 
additional information that would assist the Commission in assessing 
the operation of the Pilot Program. The Exchange has submitted the 
Report.
    The Exchange represents that the Report supports its belief that 
extension of the Pilot Program is proper. Among other things, the 
Report shows the strength of the Pilot Program as reflected by the 
overall volume and open interest of Quarterly Options Series traded on 
NYSE Arca and other national options exchanges. The Report shows that 
the Pilot Program has not created, and in the future should not create, 
any capacity, operational or regulatory problems attributable to 
Quarterly Options Series. Finally, NYSE Arca represents that the 
Exchange has the necessary system capacity to support any additional 
series listed as part of the Pilot Program.

Proposal Related to the Listing and Delisting of Strikes

    On August 7, 2007, the Chicago Board Options Exchange (``CBOE'') 
filed a proposal to revise the terms of its Quarterly Options Series 
pilot program. As part of this filing, CBOE proposed to implement new 
policies related to the listing and delisting of additional strike 
prices for Quarterly Options Series. The proposal, as amended, was 
approved by the Commission on March 3, 2008.\7\ NYSE Arca proposes to 
adopt the revised terms of the CBOE's pilot program, for use in its own 
Pilot Program.
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    \7\See Securities Exchange Act Release No. 57410 (March 3, 
2008), 73 FR 12483 (March 7, 2008) (SR-CBOE-2007-96).
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    Specifically, NYSE Arca proposes to amend Rule 6.4, Commentary .08 
to permit the Exchange to list additional strike prices for Quarterly 
Options Series in exchange traded fund (``ETF'') options that fall 
within a percentage range (30%) above and below the price of the 
underlying ETF.\8\
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    \8\ Pursuant to the existing Pilot Program, the Exchange is 
presently limited to listing new strike prices on Quarterly Options 
Series that fall within a $5 range from the closing price of the 
underlying security on the preceding day.
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    Additionally, upon demonstrated customer interest, the Exchange 
also will be permitted to open additional strike prices of Quarterly 
Options Series

[[Page 41393]]

in ETF options that are more than 30% above or below the current price 
of the underlying ETF. Market-makers trading for their own account will 
not be considered when determining customer interest under this 
provision. In addition to the initial listed series, the proposal will 
permit the Exchange to list up to sixty (60) additional series per 
expiration month for each Quarterly Options Series in ETF options.
    The proposed policies regarding the listing of new strikes are 
identical to those approved for CBOE. The Exchange also proposes to 
adopt the same policy approved for CBOE, regarding the delisting of 
inactive strikes in Quarterly Options Series. Under the proposed 
delisting policy, the Exchange will, on a monthly basis, review 
Quarterly Options Series that are outside a range of five (5) strikes 
above and five (5) strikes below the current price of the underlying 
ETF, and delist series with no open interest in both the put and the 
call series having a strike price: (i) Higher than the highest strike 
price with open interest in the put and/or call series for a given 
expiration month; or (ii) lower than the lowest strike price with open 
interest in the put and/or call series for a given expiration month. 
Notwithstanding the proposed delisting policy, the Exchange will grant 
customer requests to add strikes and/or maintain strikes in Quarterly 
Options Series eligible for delisting.
    The delisting policy proposed by the Exchange is designed to 
mitigate the number of options series with no open interest, and reduce 
quote traffic accordingly. If during the life of the Pilot Program the 
Exchange identifies series for delisting, the Exchange will notify 
other options exchanges with similar delisting polices, and shall work 
with such other exchanges to develop a uniform list of securities to be 
delisted, to help to ensure uniform series delisting of multiply listed 
Quarterly Options Series in ETF options.
    Finally, the Exchange notes that the delisting policy, once 
approved, would become part of the Pilot Program and, going forward, 
would be considered by the Commission when the Exchange seeks to renew 
or make permanent the Pilot Program in the future.
    The proposed policies regarding the delisting of inactive strikes 
are identical to those in place as part of the CBOE Quarterly Options 
Series Pilot Program.

Non-Substantive Changes

    The Exchange also proposes at this time to make minor, non-
substantive changes, to Rule 5.19(a)(3) and Rule 6.4 Commentary .08 in 
order to revise the dates used in existing examples that describe the 
listing process for Quarterly Options Series, and to renumber certain 
subsections of the rule for clarity purposes. These changes serve only 
to update the text, and make no changes to the Pilot Program itself, or 
the rules governing such.
2. Statutory Basis
    The Exchange believes that the continuation of the Pilot Program, 
along with the proposed revision to the program, will continue to 
stimulate customer interest in options by creating greater trading 
opportunities and flexibility in investment choices. The Exchange 
further believes that continuation of the Pilot Program will provide 
the ability to more closely tailor investment strategies and provide a 
valuable hedging tool for investors. Also, the Exchange believes that 
by revising its Pilot Program to include similar provisions contained 
in the CBOE Quarterly Options Series pilot program will make for more 
uniform rules across exchanges that have implemented a Quarterly 
Options Series pilot program. For these reasons, the Exchange believes 
the proposed rule change is consistent with the Act and the rules and 
regulations thereunder and, in particular, the requirements of section 
6(b) of the Act.\9\ Specifically, the Exchange believes the proposed 
rule change is consistent with the section 6(b)(5) of the Act,\10\ 
which requires that the rules of an 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 
for a free and open market and a national market system, and, in 
general, to protect investors and the public interest.
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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 believes that the proposed rule change will not 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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \11\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide 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 of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has fulfilled this requirement.
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    The Exchange has asked the Commission to waive the operative delay 
to permit the proposed rule change to become operative prior to the 
30th day after filing. The Commission has determined that waiving the 
30-day operative delay of the Exchange's proposal is consistent with 
the protection of investors and the public interest and will promote 
competition because such waiver will allow NYSE Arca to continue the 
existing Pilot Program without interruption.\13\ Therefore, the 
Commission designates the proposal operative upon filing.
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    \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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    The Commission notes that NYSE Arca's proposed changes regarding 
additional series and the delisting policy will become part of the 
Pilot Program and, going forward, its effects will be considered by the 
Commission in the event that the Exchange seeks to renew or make 
permanent the Pilot Program. Thus, in the Exchange's future reports on 
the Pilot Program, the Exchange should include analysis of (1) the 
impact of the additional series on the Exchange's market and quote 
capacity, and (2) the implementation and effects of the delisting 
policy, including the number of series eligible for delisting during 
the period covered by the report, the number of series actually 
delisted during that period (pursuant to the delisting policy or 
otherwise), and documentation of any customer requests to maintain QOS

[[Page 41394]]

strikes that were otherwise eligible for delisting.
    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the 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 rule-comments@sec.gov. Please include 
File No. SR-NYSEArca-2008-72 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2008-72. 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 inspection 
and copying 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-2008-72 and should be 
submitted on or before August 8, 2008.

    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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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-16421 Filed 7-17-08; 8:45 am]
BILLING CODE 8010-01-P