Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating to Settlement of FLEX Currency Options, 41773-41774 [E9-19744]

Download as PDF Federal Register / Vol. 74, No. 158 / Tuesday, August 18, 2009 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60486; File No. SR–Phlx– 2009–68] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating to Settlement of FLEX Currency Options August 12, 2009. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) ,1 and Rule 19b–4 2 thereunder, notice is hereby given that on August 6, 2009, NASDAQ OMX PHLX, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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 The Exchange proposes to clarify Phlx Rule 1079 (FLEX Index, Equity and Currency Options) regarding settlement of FLEX currency options 3 in U.S. dollars. The text of the proposed rule change is available on the Exchange’s Web site at https:// nasdaqomxphlx.cchwallstreet.com/ NASDAQOMXPHLX/Filings/, at the principal office of the Exchange, 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 jlentini on DSKJ8SOYB1PROD with NOTICES 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. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 FLEX currency options are long-term U.S. dollar-settled foreign currency options (‘‘FCOs’’) that are up to three years in length. See Rule 1079(a)(6). FCOs are also known as World Currency Options (‘‘WCOs’’). See also Rule 1012 (Exchange may list FCOs having up to three years from the time they are listed until expiration). 2 17 VerDate Nov<24>2008 16:30 Aug 17, 2009 Jkt 217001 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 clarify Phlx Rule 1079 regarding settlement of FLEX currency options in U.S. dollars. In 2007, the Exchange listed and began trading six U.S. dollar-settled FCOs.4 In July 2009, the Commission approved the Exchange’s filing to list and trade ten additional U.S. dollarsettled FCOs (the ‘‘New Currencies’’).5 The Exchange’s 2009 filing, in addition to providing the capability to list and trade the New Currencies, among other things established position limits and spelled out a uniform pricing convention (methodology) for all U.S. dollar-settled FCOs. Currently, sixteen FCOs are listed and traded on the Exchange. The defining characteristic of all FCOs is that they are all U.S. dollar-settled, that is, they do not require delivery of an underlying foreign currency and settle only in U.S. dollars.6 Each of these FCOs can be traded as long-term FLEX currency options. FLEX currency options, which are U.S. dollar-settled FCOs that have long expiration dates up to three years in length, also settle in U.S. dollars.7 This filing clarifies Rule 1079 indicating that FLEX currency options settle in U.S. dollars. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 8 in general, and furthers the objectives of Section 6(b)(5) of the Act 9 in particular, in that it is designed to promote just and equitable principles of 4 See Securities Exchange Act Release Nos. 54989 (December 21, 2006), 71 FR 78506 (December 29, 2006) (SR–Phlx–2006–34) (approval order regarding the listing and trading of U.S. dollar-settled FCOs on the British pound and the Euro); and 56034 (July 10, 2007), 72 FR 38853 (July 16, 2007) (SR–Phlx– 2007–34) (approval order regarding the listing and trading of U.S. dollar-settled FCOs on the Australian dollar, the Canadian dollar, the Swiss franc, and the Japanese yen). 5 See Securities Exchange Act Release No. 60196 (June 24, 2009), 74 FR 31782 (July 2, 2009) (approval order regarding the listing and trading of the Mexican peso, the Brazilian real, the Chinese yuan, the Danish krone, the New Zealand dollar, the Norwegian krone, the Russian ruble, the South African rand, the South Korean won, and the Swedish krona). 6 In contrast, physical delivery foreign currency options, so named because settlement could involve delivery of the underlying currency, were listed and traded on the exchange through early 2007; all open interest in physical delivery options was traded out or expired by the end of March 2007. 7 See Rule 1079(a)(9)(B). 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 41773 trade, 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, by clarifying the settlement of FLEX currency options in U.S. dollars. 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. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange believes that the foregoing proposed rule change may take effect upon filing with the Commission pursuant to Section 19(b)(3)(A) 10 of the Act and Rule 19b– 4(f)(6)(iii) thereunder 11 because the foregoing 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 for 30 days from the date on which it was filed, or such shorter time as the Commission may designate. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate 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. The Exchange has asked the Commission to waive the 30-day operative delay set forth in Rule 19b– 4(f)(6)(iii). The Commission believes investors will be best served by clarifying without delay that FLEX currency options settle in U.S. dollars on the Exchange. The Commission also notes that the proposed rule change presents no novel issues. For these reasons, the Commission believes it is consistent with the protection of investors and the public interest to waive the 30-day operative delay, and hereby grants such waiver.12 10 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6)(iii). 12 For purposes only of waiving the 30-day operative delay, the Commission has considered the 11 17 E:\FR\FM\18AUN1.SGM Continued 18AUN1 41774 Federal Register / Vol. 74, No. 158 / Tuesday, August 18, 2009 / Notices 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: rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. BILLING CODE 8010–01–P A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 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–Phlx–2009–68 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. jlentini on DSKJ8SOYB1PROD with NOTICES For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–19744 Filed 8–17–09; 8:45 am] [Release No. 34–60475; File No. SR–FINRA– 2009–047] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Adopt FINRA Rule 3160 (Networking Arrangements Between Members and Financial Institutions) in the Consolidated FINRA Rulebook August 11, 2009. 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 21, All submissions should refer to File 2009, Financial Industry Regulatory Number SR–Phlx–2009–68. This file Authority, Inc. (‘‘FINRA’’) (f/k/a number should be included on the subject line if e-mail is used. To help the National Association of Securities Dealers, Inc. (‘‘NASD’’)) filed with the Commission process and review your Securities and Exchange Commission comments more efficiently, please use only one method. The Commission will (‘‘SEC’’ or ‘‘Commission’’) the proposed post all comments on the Commission’s rule change as described in Items I, II, and III below, which Items have been Internet Web site (https://www.sec.gov/ substantially prepared by FINRA. The rules/sro.shtml). Copies of the Commission is publishing this notice to submission, all subsequent solicit comments on the proposed rule amendments, all written statements change from interested persons. with respect to the proposed rule I. Self-Regulatory Organization’s change that are filed with the Statement of the Terms of Substance of Commission, and all written the Proposed Rule Change communications relating to the proposed rule change between the FINRA is proposing to adopt NASD Commission and any person, other than Rule 2350 (Broker/Dealer Conduct on those that may be withheld from the the Premises of Financial Institutions) as FINRA Rule 3160 in the consolidated public in accordance with the FINRA rulebook, subject to certain provisions of 5 U.S.C. 552, will be amendments. available for inspection and copying in The text of the proposed rule change the Commission’s Public Reference Room on official business days between is available on FINRA’s Web site at https://www.finra.org, at the principal the hours of 10 a.m. and 3 p.m. Copies office of FINRA and at the of such filing also will be available for Commission’s Public Reference Room. inspection and copying at the principal offices of the Exchange. All comments II. Self-Regulatory Organization’s received will be posted without change; Statement of the Purpose of, and the Commission does not edit personal Statutory Basis for, the Proposed Rule identifying information from Change submissions. You should submit only In its filing with the Commission, information that you wish to make FINRA included statements concerning available publicly. All submissions the purpose of and basis for the should refer to File Number SR–Phlx– proposed rule change and discussed any 2009–68, and should be submitted on or comments it received on the proposed before September 8, 2009. 13 17 proposed rule change’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). VerDate Nov<24>2008 16:30 Aug 17, 2009 Jkt 217001 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 1. Purpose As part of the process of developing a new consolidated rulebook (‘‘Consolidated FINRA Rulebook’’),3 FINRA is proposing to adopt NASD Rule 2350 (Broker/Dealer Conduct on the Premises of Financial Institutions), subject to certain amendments, as FINRA Rule 3160 (Networking Arrangements Between Members and Financial Institutions). The details of the proposed rule change are described below. NASD Rule 2350 NASD Rule 2350 governs the activities of broker-dealers on the premises of financial institutions.4 Also known as the ‘‘bank broker-dealer rule,’’ Rule 2350 generally requires brokerdealers that conduct business on the premises of a financial institution where retail deposits are taken to: (1) Enter into a written agreement with the financial institution specifying each party’s responsibilities and the terms of compensation (networking agreement); (2) segregate the securities activities conducted on the premises of the financial institution from the retail deposit-taking area; (3) allow access for inspection and examination by the SEC and FINRA; (4) ensure that communications with customers clearly identify that the broker-dealer services are provided by the member; (5) disclose to customers that the securities products offered by the broker-dealer are not insured like other banking products; and (6) make reasonable 3 The current FINRA rulebook consists of (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (‘‘Incorporated NYSE Rules’’) (together, the NASD Rules and Incorporated NYSE Rules are referred to as the ‘‘Transitional Rulebook’’). While the NASD Rules generally apply to all FINRA members, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE (‘‘Dual Members’’). The FINRA Rules apply to all FINRA members, unless such rules have a more limited application by their terms. For more information about the rulebook consolidation process, see FINRA Information Notice, March 12, 2008 (Rulebook Consolidation Process). 4 The term ‘‘financial institution’’ includes Federal and State-chartered banks, savings and loan associations, savings banks, credit unions, and the service corporations of such institutions required by law. E:\FR\FM\18AUN1.SGM 18AUN1

Agencies

[Federal Register Volume 74, Number 158 (Tuesday, August 18, 2009)]
[Notices]
[Pages 41773-41774]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-19744]



[[Page 41773]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60486; File No. SR-Phlx-2009-68]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating 
to Settlement of FLEX Currency Options

August 12, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') ,\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on August 6, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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

    The Exchange proposes to clarify Phlx Rule 1079 (FLEX Index, Equity 
and Currency Options) regarding settlement of FLEX currency options \3\ 
in U.S. dollars. The text of the proposed rule change is available on 
the Exchange's Web site at https://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, at the principal office of the Exchange, and at 
the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \3\ FLEX currency options are long-term U.S. dollar-settled 
foreign currency options (``FCOs'') that are up to three years in 
length. See Rule 1079(a)(6). FCOs are also known as World Currency 
Options (``WCOs''). See also Rule 1012 (Exchange may list FCOs 
having up to three years from the time they are listed until 
expiration).
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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
    The purpose of the proposed rule change is to clarify Phlx Rule 
1079 regarding settlement of FLEX currency options in U.S. dollars.
    In 2007, the Exchange listed and began trading six U.S. dollar-
settled FCOs.\4\ In July 2009, the Commission approved the Exchange's 
filing to list and trade ten additional U.S. dollar-settled FCOs (the 
``New Currencies'').\5\ The Exchange's 2009 filing, in addition to 
providing the capability to list and trade the New Currencies, among 
other things established position limits and spelled out a uniform 
pricing convention (methodology) for all U.S. dollar-settled FCOs.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release Nos. 54989 (December 21, 
2006), 71 FR 78506 (December 29, 2006) (SR-Phlx-2006-34) (approval 
order regarding the listing and trading of U.S. dollar-settled FCOs 
on the British pound and the Euro); and 56034 (July 10, 2007), 72 FR 
38853 (July 16, 2007) (SR-Phlx-2007-34) (approval order regarding 
the listing and trading of U.S. dollar-settled FCOs on the 
Australian dollar, the Canadian dollar, the Swiss franc, and the 
Japanese yen).
    \5\ See Securities Exchange Act Release No. 60196 (June 24, 
2009), 74 FR 31782 (July 2, 2009) (approval order regarding the 
listing and trading of the Mexican peso, the Brazilian real, the 
Chinese yuan, the Danish krone, the New Zealand dollar, the 
Norwegian krone, the Russian ruble, the South African rand, the 
South Korean won, and the Swedish krona).
---------------------------------------------------------------------------

    Currently, sixteen FCOs are listed and traded on the Exchange. The 
defining characteristic of all FCOs is that they are all U.S. dollar-
settled, that is, they do not require delivery of an underlying foreign 
currency and settle only in U.S. dollars.\6\ Each of these FCOs can be 
traded as long-term FLEX currency options. FLEX currency options, which 
are U.S. dollar-settled FCOs that have long expiration dates up to 
three years in length, also settle in U.S. dollars.\7\
---------------------------------------------------------------------------

    \6\ In contrast, physical delivery foreign currency options, so 
named because settlement could involve delivery of the underlying 
currency, were listed and traded on the exchange through early 2007; 
all open interest in physical delivery options was traded out or 
expired by the end of March 2007.
    \7\ See Rule 1079(a)(9)(B).
---------------------------------------------------------------------------

    This filing clarifies Rule 1079 indicating that FLEX currency 
options settle in U.S. dollars.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \9\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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, 
by clarifying the settlement of FLEX currency options in U.S. dollars.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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

    The Exchange believes that the foregoing proposed rule change may 
take effect upon filing with the Commission pursuant to Section 
19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \11\ 
because the foregoing 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 for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.
    The Exchange has asked the Commission to waive the 30-day operative 
delay set forth in Rule 19b-4(f)(6)(iii). The Commission believes 
investors will be best served by clarifying without delay that FLEX 
currency options settle in U.S. dollars on the Exchange. The Commission 
also notes that the proposed rule change presents no novel issues. For 
these reasons, the Commission believes it is consistent with the 
protection of investors and the public interest to waive the 30-day 
operative delay, and hereby grants such waiver.\12\
---------------------------------------------------------------------------

    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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[[Page 41774]]

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-Phlx-2009-68 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-Phlx-2009-68. 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 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 offices 
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-
Phlx-2009-68, and should be submitted on or before September 8, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19744 Filed 8-17-09; 8:45 am]
BILLING CODE 8010-01-P
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