Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of a Proposed Rule Change Amending Rule 6.4, 7710-7711 [E9-3466]

Download as PDF 7710 Federal Register / Vol. 74, No. 32 / Thursday, February 19, 2009 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59395; File No. SR– NYSEArca–2009–10] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of a Proposed Rule Change Amending Rule 6.4 February 11, 2009. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 10, 2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NYSE Arca, Inc. is proposing to amend Rule 6.4, Series of Options Open for Trading, to expand the $1 Strike Program. Changes to the rule text are shown in Exhibit 5 of the filing. A copy of this filing is available on the Exchange’s Web site at https:// 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 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. sroberts on PROD1PC70 with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The $1 Strike Program currently allows NYSE Arca to select a total of 10 individual stocks on which options series may be listed at $1 strike price 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b-4. VerDate Nov<24>2008 17:38 Feb 18, 2009 Jkt 217001 intervals. In order to be eligible for selection into the Program, the underlying stock must close below $50 in its primary market on the previous trading day. If selected for the Program, the Exchange may list strike prices at $1 intervals from $3 to $50, but no $1 Strike Price may be listed that is greater than $5 from the underlying stock’s closing price on its primary market on the previous day. The Exchange may also list $1 strikes on any other option class designated by another securities exchange that employs a similar Program under their respective rules. The Exchange may not list long-term option series (‘‘LEAPS’’) at $1 strike price intervals for any class selected for the Program. The Exchange is also restricted from listing any series that would result in strike prices being $.50 apart. The Exchange now proposes to expand the Program to allow NYSE Arca to select a total of 55 individual stocks on which option series may be listed in $1 strike price intervals, and to expand slightly the price range on which the Exchange may list $1 strikes, i.e., from $1 to $50. The existing restrictions on listing $1 strikes would continue, i.e., no $1 strike price may be listed that is greater than $5 from the underlying stock’s closing price in its primary market on the previous day, and NYSE Arca is restricted from listing any series that would result in strike prices being $.50 apart. NYSE Arca believes that $1 strike price intervals provide investors with greater flexibility in the trading of equity options that overlie lower price stocks by allowing investors to establish equity options positions that are better tailored to meet their investment objectives. The Exchange notes that current market conditions, in which the number of securities trading below $50 has increased dramatically, further warrant the expansion of the Program. The Exchange is also proposing to set forth a delisting policy. Specifically, the Exchange would, on a monthly basis, review series that were originally listed under the $1 Strike Program with strike prices that are more than $5 from the current values of the options classes in the Program. The Exchange would delist series with no open interest in both the put and the call series having a: (i) Strike higher than the highest strike price with open interest in the put and/ or call series for a given expiration month; and (ii) strike 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, NYSE Arca could grant PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 OTP Holder requests to add strikes and/ or maintain strikes in certain options classes in series eligible for delisting. Further, in connection with the proposed delisting policy, if the Exchange identifies series for delisting, the Exchange shall notify other options exchanges with similar delisting policies regarding eligible series for listing, and shall work with such other exchanges to develop a uniform list of series to be delisted, so as to ensure uniform series delisting of multiply listed options classes. NYSE Arca expects that the proposed delisting policy will be adopted by other options exchanges that amend their rules to employ a similar expansion of the Program. With regard to the impact on system capacity, NYSE Arca has analyzed its capacity and represents that it and the Options Price Reporting Authority have the necessary systems capacity to handle the additional traffic associated with the listing and trading of an expanded number of options series as proposed by this filing. The Exchange believes that the $1 Strike Program has provided investors with greater trading opportunities and flexibility and the ability to more closely tailor their investment strategies and decisions to the movement of the underlying security. Furthermore, the Exchange has not detected any material proliferation of illiquid options series resulting from the narrower strike price intervals. For these reasons, NYSE Arca requests an expansion of the current Program. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with and furthers the objectives of Section 6(b)(5) of the Act, in that it is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest, in that it provides for a greater number of available strike prices in lower priced underlying issues, and thus allows investors to better tailor their investments to meet their needs. 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. E:\FR\FM\19FEN1.SGM 19FEN1 Federal Register / Vol. 74, No. 32 / Thursday, February 19, 2009 / Notices 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 Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. 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 https://www.sec.gov/ rules.sro.shtml; or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2009–10 on the subject line. 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, on business days between the hours of 10 a.m. and 3 p.m., located at 100 F Street, NE., Washington, DC 20549. 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 Number SR–NYSEArca–2009–10 and should be submitted on or before March 12, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.3 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–3466 Filed 2–18–09; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59378; File No. SR–CBOE– 2009–001] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change Related to the $1 Strike Program sroberts on PROD1PC70 with NOTICES Paper Comments February 10, 2009. • 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–2009–10. 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 (https://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 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 23, 2009, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change, and on February 4, 2009 filed Amendment No. 1 to 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, as amended, from interested persons. VerDate Nov<24>2008 17:38 Feb 18, 2009 Jkt 217001 3 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 7711 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to expand the $1 Strike Program. The text of the proposed rule change is available on the Exchange’s Web site (https:// www.cboe.org/Legal), at the Office of the Secretary, CBOE and at the Commission. 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 Amendment No. 1 to SR–CBOE– 2009–001 replaces the original filing in its entirety.3 The purpose of the proposed rule change is to expand the $1 Strike Program (the ‘‘Program’’).4 The $1 Strike Program currently allows CBOE to select a total of 10 individual stocks on which option series may be listed at $1 strike price intervals. In order to be eligible for selection into the Program, the underlying stock must close below $50 in its primary market on the previous trading day. If selected for the Program, the Exchange may list strike prices at $1 intervals from $3 to $50, but no $1 strike price may be listed that is greater than 3 In its original filing, CBOE also proposed to establish a $.50 Strike Program in a limited number of classes. CBOE no longer seeks to adopt such a program in connection with this proposed rule change. 4 The Commission approved the $1 Strike Program as a pilot on June 5, 2003. See Securities Exchange Act Release No. 47991 (June 5, 2003), 68 FR 35243 (June 12, 2003). The Pilot Program was subsequently extended through June 5, 2008. See Securities Exchange Act Release No. 49799 (June 3, 2004), 69 FR 32642 (June 10, 2004) (SR–CBOE– 2004–34); SEC Release No. 51771 (May 31, 2005), 70 FR 33228 (June 7, 2005) (SR–CBOE–2005–37); SEC Release No. 53805 (May 15, 2006), 71 FR 29690 (May 23, 2006) (SR–CBOE–2006–31); and SEC Release No. 55673 (April 26, 2007), 72 FR 24646 (May 3, 2007) (SR–CBOE–2007–38). The pilot was subsequently expanded and permanently approved in 2007. See Exchange Act Release No. 57049 (December 27, 2007), 73 FR 528 (January 3, 2008) (SR–CBOE–2007–125). E:\FR\FM\19FEN1.SGM 19FEN1

Agencies

[Federal Register Volume 74, Number 32 (Thursday, February 19, 2009)]
[Notices]
[Pages 7710-7711]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-3466]



[[Page 7710]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59395; File No. SR-NYSEArca-2009-10]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of a Proposed Rule Change Amending Rule 6.4

February 11, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 10, 2009, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``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.
---------------------------------------------------------------------------

    \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

    NYSE Arca, Inc. is proposing to amend Rule 6.4, Series of Options 
Open for Trading, to expand the $1 Strike Program. Changes to the rule 
text are shown in Exhibit 5 of the filing. A copy of this filing is 
available on the Exchange's Web site at https://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 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 $1 Strike Program currently allows NYSE Arca to select a total 
of 10 individual stocks on which options series may be listed at $1 
strike price intervals. In order to be eligible for selection into the 
Program, the underlying stock must close below $50 in its primary 
market on the previous trading day. If selected for the Program, the 
Exchange may list strike prices at $1 intervals from $3 to $50, but no 
$1 Strike Price may be listed that is greater than $5 from the 
underlying stock's closing price on its primary market on the previous 
day. The Exchange may also list $1 strikes on any other option class 
designated by another securities exchange that employs a similar 
Program under their respective rules. The Exchange may not list long-
term option series (``LEAPS'') at $1 strike price intervals for any 
class selected for the Program. The Exchange is also restricted from 
listing any series that would result in strike prices being $.50 apart.
    The Exchange now proposes to expand the Program to allow NYSE Arca 
to select a total of 55 individual stocks on which option series may be 
listed in $1 strike price intervals, and to expand slightly the price 
range on which the Exchange may list $1 strikes, i.e., from $1 to $50. 
The existing restrictions on listing $1 strikes would continue, i.e., 
no $1 strike price may be listed that is greater than $5 from the 
underlying stock's closing price in its primary market on the previous 
day, and NYSE Arca is restricted from listing any series that would 
result in strike prices being $.50 apart.
    NYSE Arca believes that $1 strike price intervals provide investors 
with greater flexibility in the trading of equity options that overlie 
lower price stocks by allowing investors to establish equity options 
positions that are better tailored to meet their investment objectives. 
The Exchange notes that current market conditions, in which the number 
of securities trading below $50 has increased dramatically, further 
warrant the expansion of the Program.
    The Exchange is also proposing to set forth a delisting policy. 
Specifically, the Exchange would, on a monthly basis, review series 
that were originally listed under the $1 Strike Program with strike 
prices that are more than $5 from the current values of the options 
classes in the Program. The Exchange would delist series with no open 
interest in both the put and the call series having a: (i) Strike 
higher than the highest strike price with open interest in the put and/
or call series for a given expiration month; and (ii) strike 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, NYSE Arca could 
grant OTP Holder requests to add strikes and/or maintain strikes in 
certain options classes in series eligible for delisting.
    Further, in connection with the proposed delisting policy, if the 
Exchange identifies series for delisting, the Exchange shall notify 
other options exchanges with similar delisting policies regarding 
eligible series for listing, and shall work with such other exchanges 
to develop a uniform list of series to be delisted, so as to ensure 
uniform series delisting of multiply listed options classes. NYSE Arca 
expects that the proposed delisting policy will be adopted by other 
options exchanges that amend their rules to employ a similar expansion 
of the Program.
    With regard to the impact on system capacity, NYSE Arca has 
analyzed its capacity and represents that it and the Options Price 
Reporting Authority have the necessary systems capacity to handle the 
additional traffic associated with the listing and trading of an 
expanded number of options series as proposed by this filing.
    The Exchange believes that the $1 Strike Program has provided 
investors with greater trading opportunities and flexibility and the 
ability to more closely tailor their investment strategies and 
decisions to the movement of the underlying security. Furthermore, the 
Exchange has not detected any material proliferation of illiquid 
options series resulting from the narrower strike price intervals. For 
these reasons, NYSE Arca requests an expansion of the current Program.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
and furthers the objectives of Section 6(b)(5) of the Act, in that it 
is designed to promote just and equitable principles of trade, remove 
impediments to and perfect the mechanisms of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest, in that it provides for a greater number of available 
strike prices in lower priced underlying issues, and thus allows 
investors to better tailor their investments to meet their needs.

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.

[[Page 7711]]

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 https://
www.sec.gov/rules.sro.shtml; or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2009-10 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-2009-10. 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 (https://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, on business days 
between the hours of 10 a.m. and 3 p.m., located at 100 F Street, NE., 
Washington, DC 20549. 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 Number SR-NYSEArca-2009-10 and should 
be submitted on or before March 12, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\3\
Florence E. Harmon,
Deputy Secretary.
---------------------------------------------------------------------------

    \3\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-3466 Filed 2-18-09; 8:45 am]
BILLING CODE 8011-01-P
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