Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating to Position Limit Exemptions, 48617-48619 [E9-22876]
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Federal Register / Vol. 74, No. 183 / Wednesday, September 23, 2009 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting.
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission Investor Advisory
Committee will hold an Open Meeting
on Monday, October 5, 2009, in the
Multipurpose Room, L–006. The
meeting will begin at 9 a.m. and will be
open to the public, with seating on a
first-come, first-served basis. Doors will
open at 8:30 a.m. Visitors will be subject
to security checks.
On September 15, 2009, the
Commission issued notice of the
Committee meeting (Release No. 33–
9064), indicating that the meeting is
open to the public and inviting the
public to submit written comments to
the Committee. This Sunshine Act
notice is being issued because a majority
of the Commission may attend the
meeting. The agenda for the meeting
includes: (i) A presentation by SEC staff
of potential Commission initiatives; (ii)
description of the composition and
purpose of the Committee’s
subcommittees; (iii) consideration of a
Committee recusal policy; (iv) reports
from the Committee’s subcommittees;
and (v) discussion of next steps for the
Committee, including regarding SEC
resources.
For further information, please
contact the Office of the Secretary at
(202) 551–5400.
Dated: September 21, 2009.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–23016 Filed 9–21–09; 4:15 pm]
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SECURITIES AND EXCHANGE
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Agency Meeting
Federal Register Citation of
Previous Announcement: 74 FR 47300,
September 15, 2009.
Status: Open Meeting.
Place: 100 F. Street, NE., Washington,
DC.
Date and Time of Previously
Announced Meeting: September 17,
2009.
Change in the Meeting: Room Change.
The Open Meeting scheduled for
Thursday, September 17, 2009 at 2:30
p.m. will be held in the Auditorium,
Room L–002.
At times, changes in Commission
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VerDate Nov<24>2008
17:06 Sep 22, 2009
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scheduling of meeting items. For further
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any, matters have been added, deleted
or postponed, please contact: The Office
of the Secretary at (202) 551–5400.
Dated: September 17, 2009.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–22830 Filed 9–22–09; 8:45 am]
48617
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.
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
[Release No. 34–60673; File No. SR–Phlx–
2009–79]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
OMX PHLX, Inc. Relating to Position
Limit Exemptions
September 15, 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
September 8, 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 and II, 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 amend
Phlx Rules 1001 (Position Limits) and
1001A (Positions Limits) to enable
Exchange members to rely on position
limit exemptions granted by other
options exchanges.
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
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00100
Fmt 4703
Sfmt 4703
The purpose of the proposed rule
change is to amend Phlx Rules 1001 and
1001A to enable Exchange members to
rely on position limit exemptions
granted by other options exchanges
under specified circumstances.
This proposed rule change is based on
two rules of The NASDAQ Stock Market
LLC (‘‘Nasdaq’’).3 The rule change is
being proposed, subsequent to the
merger of The NASDAQ OMX Group,
Inc. (‘‘NASDAQ OMX’’) and the
Philadelphia Stock Exchange, Inc. (now
NASDAQ OMX PHLX, Inc.),4 to more
closely align the position limit rules of
the Exchange and Nasdaq.5
Phlx position limits and procedures
associated therewith for equity options,
exchange traded fund share (‘‘ETF’’)
options, currency options, and stock
index warrants are located in Rule 1001.
This rule deals with, in addition to
numerical position limit values for the
noted products, the concept of control
for position limit purposes,6 hedge
exemptions,7 firm facilitation
exemptions,8 and delta-based equity
3 See Rules of the Nasdaq Options Market (‘‘NOM
Rules’’) Chapter III, Section 8 and Chapter XIV,
Section 8.
4 See Securities Exchange Act Release No. 58179
(July 17, 2008), 73 FR 42874 (July 23, 2008) (SR–
Phlx–2008–31). See also Securities Exchange Act
Release No. 58183 (July 17, 2008), 73 FR 26182
(May 8, 2008) (SR–NASDAQ–2008–035).
5 The proposal is similar in nature to previous
proposals that, among other things, sought to more
closely align the rules of the two exchanges Phlx
and NOM. See, e.g., Securities Exchange Act
Release Nos. 59764 (April 20, 2009), 74 FR 18761
(April 24, 2009) (SR–Phlx–2009–17) (approval order
regarding proposal to modify the process for
nominating Phlx Governors); 59924 (May 14, 2009),
74 FR 23759 (May 20, 2009) (SR–Phlx–2009–23)
(approval order regarding proposal to eliminate
various standing committees and making other
miscellaneous changes); 60431 (August 4, 2009), 74
FR 40265 (August 11, 2009) (SR–Phlx–2009–
59)(notice of filing relating to by-laws, Regulatory
Oversight Committee, and referee program); and
59923 (May 14, 2009), 74 FR 23902 (May 21, 2009)
(SR–NASDAQ–2009–046) (notice of filing and
immediate effectiveness relating to criteria for
securities that underlie options traded on NOM).
6 See Commentary .06 to Rule 1001.
7 See Commentary .07 to Rule 1001.
8 See Commentary .08 to Rule 1001.
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Federal Register / Vol. 74, No. 183 / Wednesday, September 23, 2009 / Notices
exemptions.9 Phlx position limits and
procedures associated therewith for
index options are generally located in
Rule 1001A. This rule, in addition to
numerical position limits for index
options, deals with position limit
exemptions for index option products.10
Rules 1001 and 1001A, however, do not
have provisions that recognize position
limit exemptions that are granted to
Exchange members by other option
exchanges, as provided for in NOM
Rules in Chapter III, Section 8 for nonindex options and Chapter XIV, Section
8 for index options.11 In light of the
desirability to have similar position
limit standards, the Exchange is adding
such exemptions to its Rules 1001 and
1001A.12
Specifically, new Commentary .10 to
Rule 1001 and new Commentary .03 to
Rule 1001A each provide that an
Exchange member may rely upon any
available exemptions from applicable
position limits that are granted by
another options exchange for any
options contract traded on the Exchange
provided that such member provides the
Exchange either with a copy of any
written exemption issued by another
options exchange or with a written
description of any exemption issued by
another options exchange that is not in
writing, where such description
contains sufficient detail for Exchange
regulatory staff to verify the validity of
that exemption with the issuing options
exchange. In addition, the member must
fulfill all conditions precedent for such
exemption and comply at all times with
the requirements of such exemption
with respect to the member’s trading on
the Exchange.
The Exchange notes that position
limits tend to be similar across options
exchanges, which is desirable in light of
cross option exchange membership(s)
and multiple listing and trading of
similar product(s) on different
exchanges. Because Exchange members
and member firms frequently have
membership and/or trading privileges
on other options exchanges, it is
important that ad hoc position limit
exemptions granted by other options
exchanges (‘‘exemption grants’’) are
available to Exchange members to the
9 See
Commentary .09 to Rule 1001.
for example, Commentaries .01 (hedge
exemption) and .02 (firm facilitation exemption) to
Rule 1001A.
11 See Securities Exchange Act Release Nos.
57478 (March 12, 2008), 73 FR 14521 (March 18,
2008) (SR–NASDAQ–2007–004 and SR–NASDAQ–
2007–080) (approval order regarding NOM Rules
including Chapters III and XIV).
12 Position limits for Cash Index Participations
(‘‘CIPs’’), which are defined in Rule 1000B(b)(1), are
established in Phlx Rule 1005B. CIPs are not
currently listed and traded on the Exchange.
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10 See,
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17:06 Sep 22, 2009
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extent that such exemption grants are
reduced to writing and verifiable by
Exchange staff per new Commentaries
.10 and .03 to Rules 1001 and 1001A,
respectively.13 Proposed Commentaries
.10 and .03 do not give the Exchange the
ability to expand the exemption grants
but only to recognize the exemption so
that the position limit process would be
the same across the exchanges.
For example, during September 2009,
firm XYZ may go to another options
exchange such as Chicago Board
Options Exchange (CBOE), the
International Securities Exchange (ISE),
or NOM to request a position limit
exemption (exemption grant) in respect
of option contracts in the SPDRs (SPY).
The other exchange provides the
exemption grant until expiration in the
same month of September to this
particular firm (XYZ) for this particular
issue (SPY). Should firm XYZ, which is
an Exchange member firm, then want to
trade SPY on the Exchange to the extent
of the exemption grant, the Exchange’s
proposed rule change would allow it to
do so, but only to the extent that firm
XYZ provides the Exchange with a copy
of the written exemption grant provided
by the issuing exchange or, if the
exemption is not in writing to the extent
that firm XYZ provides the Exchange
with sufficient detail for Exchange
regulatory staff to be able to verify the
validity of the exemption grant with the
issuing options exchange.14
The Exchange believes that by adding
uniformity and predictability to the
position limit process, the proposed rule
change should be beneficial to the
Exchange, its members and traders, and
their customers. Moreover, the proposed
rule change should promote
competition by allowing trades across
options exchanges that are similar in
respect of position limits.15
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 16 in general, and furthers the
objectives of Section 6(b)(5) of the Act 17
in particular, in that it is designed to
13 Proposed Commentaries .10 and .03 are, in
turn, wholly based on the approved rules of another
options exchange, namely NOM Rules Chapter III,
Section 8 and Chapter XIV, Section 8, and as such
are not novel or in any way controversial.
14 Additionally, firm XYZ would have to fulfill all
conditions precedent for such exemption grant and
comply with the requirements of such exemption
with respect to trading on the Exchange.
15 The Exchange notes that all reporting
requirements, including Rule 1003 (Reporting of
Options Positions) and Rule 1001A(c) (Reporting
Requirements for Options on Market Indexes)
remain in force.
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
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
allowing the Exchange to have uniform
position limit procedures.
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
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 after the date of
the filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to 19(b)(3)(A)
of the Act18 and Rule 19b–4(f)(6)19
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of filing.20 However, Rule 19b–
4(f)(6)(iii) permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.21 The
Exchange has requested that the
Commission waive the 30-day operative
delay so that the proposal may become
operative immediately upon filing,
thereby giving the Exchange a uniform
position limit process that can recognize
all exemptions.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because such waiver will afford
Exchange members the benefit of the
proposal—the ability to rely on
18 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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. Phlx has satisfied this requirement.
20 17 CFR 240.19b–4(f)(6)(iii).
21 See id.
19 17
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Federal Register / Vol. 74, No. 183 / Wednesday, September 23, 2009 / Notices
exemptions granted by other exchanges,
when appropriately documented—
without unnecessary delay. For this
reason, the Commission designates the
proposed rule change as operative under
upon filing.22
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.
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:
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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–2009–79 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–2009–79.
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. Copies of the filing also will be
available for inspection and copying at
22 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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17:06 Sep 22, 2009
Jkt 217001
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–Phlx–2009–79 and should
be submitted on or before October 14,
2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–22876 Filed 9–22–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60679; File No. SR–Phlx–
2009–81]
Self-Regulatory Organizations;
NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
FLEX Option Expirations
September 16, 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
September 15, 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 and II 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 amend
Phlx Rule 1079 (FLEX Index, Equity and
Currency Options) regarding
permissible expiration dates for FLEX
options.3
The text of the proposed rule change
is available on the Exchange’s Web site
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 FLEX options are flexible exchange-traded
options contracts that overly index, equity, and
currency securities. FLEX options provide investors
with the ability to customize basic option features
including size, expiration date, exercise style, and
certain exercise prices. FLEX options may have long
expiration dates within five years for FLEX index
options and three years for FLEX equity options and
FLEX currency options. See Rule 1079.
1 15
PO 00000
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Fmt 4703
Sfmt 4703
48619
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
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 modify the permissible
expiration dates for FLEX options in
Phlx Rule 1079.
Under current Rule 1079, FLEX
options may not expire on any business
day that falls on, or within two business
days of an expiration day for any nonFLEX option on the same underlying
security (an ‘‘Expiration Friday’’).4
However, subject to aggregation
requirements for cash settled options,
the current FLEX rules do permit the
expiration of FLEX options on the same
day that non-FLEX quarterly index
options (‘‘QIX’’ or ‘‘Quarterly Options’’)
expire.5
The Exchange is now proposing to
eliminate the expiration date restriction
so that FLEX options may expire on any
given business day.6 Although the
4 For example, under current Rule 1079, a FLEX
option could expire on the Tuesday before
Expiration Friday, but could not expire on the
Wednesday or Thursday before Expiration Friday.
Similarly, a FLEX option could expire on the
Wednesday after Expiration Friday, but could not
expire on the Monday or Tuesday after Expiration
Friday. This restriction is hereinafter referred to as
the ‘‘three business day’’ expiration restriction.
5 See Rule 1079(a)(6)(A).
6 Proposed Rule 1079(a)(6) states that the
expiration date for FLEX options is: Any month,
business day and year within five years for FLEX
index options and within three years for FLEX
currency options, except that (i) a FLEX index
option that expires on or within two business days
prior or subsequent to a third Friday-of-the-month
expiration day for a non-FLEX option (except
quarterly expiring index options) or underlying
currency may only have an exercise settlement
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]]>Agencies
[Federal Register Volume 74, Number 183 (Wednesday, September 23, 2009)]
[Notices]
[Pages 48617-48619]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-22876]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60673; File No. SR-Phlx-2009-79]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating
to Position Limit Exemptions
September 15, 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 September 8, 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 and II, 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Phlx Rules 1001 (Position Limits)
and 1001A (Positions Limits) to enable Exchange members to rely on
position limit exemptions granted by other options exchanges.
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
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 amend Phlx Rules 1001
and 1001A to enable Exchange members to rely on position limit
exemptions granted by other options exchanges under specified
circumstances.
This proposed rule change is based on two rules of The NASDAQ Stock
Market LLC (``Nasdaq'').\3\ The rule change is being proposed,
subsequent to the merger of The NASDAQ OMX Group, Inc. (``NASDAQ OMX'')
and the Philadelphia Stock Exchange, Inc. (now NASDAQ OMX PHLX,
Inc.),\4\ to more closely align the position limit rules of the
Exchange and Nasdaq.\5\
---------------------------------------------------------------------------
\3\ See Rules of the Nasdaq Options Market (``NOM Rules'')
Chapter III, Section 8 and Chapter XIV, Section 8.
\4\ See Securities Exchange Act Release No. 58179 (July 17,
2008), 73 FR 42874 (July 23, 2008) (SR-Phlx-2008-31). See also
Securities Exchange Act Release No. 58183 (July 17, 2008), 73 FR
26182 (May 8, 2008) (SR-NASDAQ-2008-035).
\5\ The proposal is similar in nature to previous proposals
that, among other things, sought to more closely align the rules of
the two exchanges Phlx and NOM. See, e.g., Securities Exchange Act
Release Nos. 59764 (April 20, 2009), 74 FR 18761 (April 24, 2009)
(SR-Phlx-2009-17) (approval order regarding proposal to modify the
process for nominating Phlx Governors); 59924 (May 14, 2009), 74 FR
23759 (May 20, 2009) (SR-Phlx-2009-23) (approval order regarding
proposal to eliminate various standing committees and making other
miscellaneous changes); 60431 (August 4, 2009), 74 FR 40265 (August
11, 2009) (SR-Phlx-2009-59)(notice of filing relating to by-laws,
Regulatory Oversight Committee, and referee program); and 59923 (May
14, 2009), 74 FR 23902 (May 21, 2009) (SR-NASDAQ-2009-046) (notice
of filing and immediate effectiveness relating to criteria for
securities that underlie options traded on NOM).
---------------------------------------------------------------------------
Phlx position limits and procedures associated therewith for equity
options, exchange traded fund share (``ETF'') options, currency
options, and stock index warrants are located in Rule 1001. This rule
deals with, in addition to numerical position limit values for the
noted products, the concept of control for position limit purposes,\6\
hedge exemptions,\7\ firm facilitation exemptions,\8\ and delta-based
equity
[[Page 48618]]
exemptions.\9\ Phlx position limits and procedures associated therewith
for index options are generally located in Rule 1001A. This rule, in
addition to numerical position limits for index options, deals with
position limit exemptions for index option products.\10\ Rules 1001 and
1001A, however, do not have provisions that recognize position limit
exemptions that are granted to Exchange members by other option
exchanges, as provided for in NOM Rules in Chapter III, Section 8 for
non-index options and Chapter XIV, Section 8 for index options.\11\ In
light of the desirability to have similar position limit standards, the
Exchange is adding such exemptions to its Rules 1001 and 1001A.\12\
---------------------------------------------------------------------------
\6\ See Commentary .06 to Rule 1001.
\7\ See Commentary .07 to Rule 1001.
\8\ See Commentary .08 to Rule 1001.
\9\ See Commentary .09 to Rule 1001.
\10\ See, for example, Commentaries .01 (hedge exemption) and
.02 (firm facilitation exemption) to Rule 1001A.
\11\ See Securities Exchange Act Release Nos. 57478 (March 12,
2008), 73 FR 14521 (March 18, 2008) (SR-NASDAQ-2007-004 and SR-
NASDAQ-2007-080) (approval order regarding NOM Rules including
Chapters III and XIV).
\12\ Position limits for Cash Index Participations (``CIPs''),
which are defined in Rule 1000B(b)(1), are established in Phlx Rule
1005B. CIPs are not currently listed and traded on the Exchange.
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Specifically, new Commentary .10 to Rule 1001 and new Commentary
.03 to Rule 1001A each provide that an Exchange member may rely upon
any available exemptions from applicable position limits that are
granted by another options exchange for any options contract traded on
the Exchange provided that such member provides the Exchange either
with a copy of any written exemption issued by another options exchange
or with a written description of any exemption issued by another
options exchange that is not in writing, where such description
contains sufficient detail for Exchange regulatory staff to verify the
validity of that exemption with the issuing options exchange. In
addition, the member must fulfill all conditions precedent for such
exemption and comply at all times with the requirements of such
exemption with respect to the member's trading on the Exchange.
The Exchange notes that position limits tend to be similar across
options exchanges, which is desirable in light of cross option exchange
membership(s) and multiple listing and trading of similar product(s) on
different exchanges. Because Exchange members and member firms
frequently have membership and/or trading privileges on other options
exchanges, it is important that ad hoc position limit exemptions
granted by other options exchanges (``exemption grants'') are available
to Exchange members to the extent that such exemption grants are
reduced to writing and verifiable by Exchange staff per new
Commentaries .10 and .03 to Rules 1001 and 1001A, respectively.\13\
Proposed Commentaries .10 and .03 do not give the Exchange the ability
to expand the exemption grants but only to recognize the exemption so
that the position limit process would be the same across the exchanges.
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\13\ Proposed Commentaries .10 and .03 are, in turn, wholly
based on the approved rules of another options exchange, namely NOM
Rules Chapter III, Section 8 and Chapter XIV, Section 8, and as such
are not novel or in any way controversial.
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For example, during September 2009, firm XYZ may go to another
options exchange such as Chicago Board Options Exchange (CBOE), the
International Securities Exchange (ISE), or NOM to request a position
limit exemption (exemption grant) in respect of option contracts in the
SPDRs (SPY). The other exchange provides the exemption grant until
expiration in the same month of September to this particular firm (XYZ)
for this particular issue (SPY). Should firm XYZ, which is an Exchange
member firm, then want to trade SPY on the Exchange to the extent of
the exemption grant, the Exchange's proposed rule change would allow it
to do so, but only to the extent that firm XYZ provides the Exchange
with a copy of the written exemption grant provided by the issuing
exchange or, if the exemption is not in writing to the extent that firm
XYZ provides the Exchange with sufficient detail for Exchange
regulatory staff to be able to verify the validity of the exemption
grant with the issuing options exchange.\14\
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\14\ Additionally, firm XYZ would have to fulfill all conditions
precedent for such exemption grant and comply with the requirements
of such exemption with respect to trading on the Exchange.
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The Exchange believes that by adding uniformity and predictability
to the position limit process, the proposed rule change should be
beneficial to the Exchange, its members and traders, and their
customers. Moreover, the proposed rule change should promote
competition by allowing trades across options exchanges that are
similar in respect of position limits.\15\
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\15\ The Exchange notes that all reporting requirements,
including Rule 1003 (Reporting of Options Positions) and Rule
1001A(c) (Reporting Requirements for Options on Market Indexes)
remain in force.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \16\ in general, and furthers the objectives of Section
6(b)(5) of the Act \17\ 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 allowing the Exchange to have uniform position limit
procedures.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition 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
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 after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act\18\ and Rule 19b-4(f)(6)\19\
thereunder.
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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.
Phlx has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing.\20\ However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest.\21\ The Exchange has requested that the Commission
waive the 30-day operative delay so that the proposal may become
operative immediately upon filing, thereby giving the Exchange a
uniform position limit process that can recognize all exemptions.
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\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ See id.
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because such waiver will afford Exchange members the benefit of the
proposal--the ability to rely on
[[Page 48619]]
exemptions granted by other exchanges, when appropriately documented--
without unnecessary delay. For this reason, the Commission designates
the proposed rule change as operative under upon filing.\22\
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\22\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of 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.
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-2009-79 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-2009-79.
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. Copies of the 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-Phlx-2009-79 and
should be submitted on or before October 14, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-22876 Filed 9-22-09; 8:45 am]
BILLING CODE 8010-01-P
