Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. To Permit the Concurrent Listing of $3.50 and $4 Strikes for Classes Participating in the $0.50 Strike Program and the $1 Strike Program, 11211-11213 [2010-5078]
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Federal Register / Vol. 75, No. 46 / Wednesday, March 10, 2010 / Notices
In the Commission’s publication of
the proposed rules for comment, the
notice indicated the following:
erowe on DSK5CLS3C1PROD with NOTICES
In determining the schedule for completion
of the inspections subject to new paragraph
(g), the Board will implement its proposal to
sequence these 49 inspections such that
certain minimum thresholds will be satisfied
in each of the years from 2009 to 2012. The
minimum thresholds relate to U.S. market
capitalization of firms’ issuer audit clients.
The Board will begin by ranking the 49 firms
according to the total U.S. market
capitalization of a firm’s foreign private
issuer audit clients. Working from the top of
the list (highest U.S. market capitalization
total) down, the 49 firms will be distributed
over 2009 to 2012 such that, at a minimum,
the following criteria are satisfied:
• by the end of 2009, the Board will
inspect firms whose combined issuer audit
clients’ U.S. market capitalization constitutes
at least 35 percent of the aggregate U.S.
market capitalization of the audit clients of
all 49 firms;
• by the end of 2010, the Board will
inspect firms whose combined issuer audit
clients’ U.S. market capitalization constitutes
at least 90 percent of that aggregate;
• by the end of 2011, the Board will
inspect firms whose combined issuer audit
clients’ U.S. market capitalization constitutes
at least 99.9 percent of that aggregate; and
• the Board will inspect the remaining
firms in 2012.
In addition to meeting those market
capitalization thresholds, the Board also will
satisfy certain criteria concerning the number
of those 49 firms that will be inspected in
each year. Specifically, the Board will
conduct at least four of the 49 inspections in
2009, at least 11 more in 2010, and at least
14 more in 2011. (footnotes omitted)
On February 3, 2010, the PCAOB
released new and updated information
about the status of its inspections of
registered non-U.S. accounting firms,
including reporting on the PCAOB’s
progress in meeting the above target
thresholds.7 Specifically, the PCAOB
reported that, as of December 31, 2009,
the PCAOB had inspected five firms that
would meet the proposed Rule 4003(g)
criteria for deferral. However, the
PCAOB inspected only two of the four
firms that the PCAOB had scheduled for
inspection in 2009 based on their
clients’ U.S. market capitalization. As a
result, the PCAOB did not meet the
target threshold for U.S. market
capitalization for 2009. The PCAOB was
unable to conduct the inspections of the
remaining two firms it intended to
inspect in 2009 because, on the basis of
asserted restrictions under non-U.S.
7 See https://pcaobus.org/News/Releases/Pages/
02032010_Progress_IntlInspections.aspx. The
PCAOB also noted that that it intends to update its
progress report semiannually to reflect information
current as of June 30 and December 31.
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law, access to information necessary to
conduct the inspections was denied.
The PCAOB also reported that
discussions are continuing with the
relevant authorities in the affected
jurisdictions in an effort to resolve their
objections to PCAOB inspections. We
agree that the PCAOB should continue
to work toward cooperative
arrangements with the appropriate local
auditor oversight authorities where it is
reasonably likely that appropriate
cooperative arrangements can be
obtained.8 We also recognize that
formalization and finalization of such
arrangements take time. However, as the
Board has acknowledged, inspection is
the cornerstone of the Board’s regulatory
oversight of audit firms.9 Public
companies and investors rely on the
integrity of the auditing work performed
by firms registered with the PCAOB,
and the salutary effects of briefly
delaying inspection of certain of these
firms decrease as the period of delay
increases or there no longer appears to
be a reasonable possibility of reaching
appropriate cooperative arrangements.
Accordingly, we encourage the
PCAOB to continue to work with
deliberate speed with its foreign
counterparts to finalize these
cooperative arrangements. We continue
to expect the PCAOB to satisfy its
announced inspection schedule for
2010–2012.10 We also direct the PCAOB
to work closely with Commission staff
in the PCAOB’s ongoing discussions
with relevant authorities and efforts to
meet its non-U.S. audit firm inspection
schedule.11
V. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
8 Cf., PCAOB Release 2009–003 (June 25, 2009)
(expressing the view that ‘‘There is long-term value
in accepting a limited delay in inspections to
continue working toward cooperative arrangements
where it appears reasonably possible to reach
them.’’).
9 See, PCAOB Release 2009–003 (June 25, 2009)
(stating that ‘‘[I]nspection is the Board’s primary
tool of oversight.’’).
10 As part of its semiannual disclosures, the
PCAOB also discloses a list of those registered firms
where inspections have not been completed by the
PCAOB, even though more than four years have
passed since the end of the calendar year in which
the firm first issued an auditor report while
registered with the PCAOB.
11 Separately, in the Commission’s order
approving the PCAOB’s budget and annual
accounting support fee for calendar year 2010, the
Commission directed the PCAOB to include in its
quarterly reports to the Commission information
about the timing of the PCAOB’s international
inspection program and updates on the PCAOB’s
efforts to establish cooperative arrangements with
respective non-U.S. authorities for inspections
required in those countries. See SEC Release No.
34–61212 (December 22, 2009); 74 FR 68875
(December 29, 2009).
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11211
amendment of the Board’s rules
governing inspections of registered
public accounting firms are consistent
with the requirements of the Act and the
securities laws and are necessary or
appropriate in the public interest or for
the protection of investors.
It is therefore ordered, pursuant to
section 107 of the Act and section
19(b)(2) of the Exchange Act, that the
proposed rule amendment (File No.
PCAOB 2009–01) be and hereby is
approved.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010–5046 Filed 3–9–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61630; File No. SR–Phlx–
2010–26]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
OMX PHLX, Inc. To Permit the
Concurrent Listing of $3.50 and $4
Strikes for Classes Participating in the
$0.50 Strike Program and the $1 Strike
Program
March 2, 2010.
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
19, 2010, 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 is filing with the
Commission a proposal to amend
Commentary .05 to Rule 1012 (Series of
Options Open for Trading) to permit the
concurrent listing of $3.50 and $4
strikes for classes that participate in
both the $0.50 Strike Price Program
(‘‘$0.50 Strike Program’’) 3 and the $1
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The $0.50 Strike Program was initially approved
on September 18, 2009. See Securities Exchange
Act Release No. 60694 (September 18, 2009), 74 FR
49048 (September 25, 2009) (SR–Phlx–2009–65)
(order approving).
2 17
E:\FR\FM\10MRN1.SGM
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11212
Federal Register / Vol. 75, No. 46 / Wednesday, March 10, 2010 / Notices
Strike Price Program (‘‘$1 Strike
Program’’).4 The Exchange requests that
the Commission waive the 30-day
operative delay period contained in
Exchange Act Rule 19b–4(f)(6)(iii).5
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
erowe on DSK5CLS3C1PROD with NOTICES
1. Purpose
The purpose of this proposal is to
amend Commentary .05 to Rule 1012 to
permit the concurrent listing of $3.50
and $4 strikes for classes that participate
in both the $0.50 Strike Program and the
$1 Strike Program.
The Exchange recently implemented a
rule change that permits strike price
intervals of $0.50 for options on stocks
trading at or below $3.00 pursuant to
the $0.50 Strike Program.6 As part of the
filing to establish the $0.50 Strike
Program, the Exchange contemplated
that a class may be selected to
participate in both the $0.50 Strike
Program and the $1 Strike Program.
4 The $1 Strike Program was initially approved as
a pilot on June 11, 2003. See Securities Exchange
Act Release Nos. 48013 (June 11, 2003), 68 FR
35933 (June 17, 2003) (SR–Phlx–2002–55) (order
approving). The program was subsequently made
permanent and expanded. See Securities Exchange
Act Release Nos. 57111 (January 8, 2008), 73 FR
2297 (January 14, 2008) (SR–Phlx–2008–01) (notice
of filing and immediate effectiveness); 59590
(March 17, 2009), 74 FR 12412. (March 24, 2009)
(SR–Phlx–2009–21) (notice of filing and immediate
effectiveness); and 61277 (January 4, 2010), 75 FR
1442 (January 11, 2010)(SR–Phlx–2009–108) (notice
of filing and immediate effectiveness).
5 17 CFR 240.19b–4(f)(6)(iii).
6 See Securities Exchange Act Release No. 60694
(September 18, 2009), 74 FR 49048 (September 25,
2009) (SR–Phlx–2009–65) (order approving); and
Commentary .05(a)(ii) to Rule 1012.
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15:07 Mar 09, 2010
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Under the $1 Strike Program, new series
with $1 intervals are not permitted to be
listed within $0.50 of an existing $2.50
strike price in the same series, except
that strike prices of $2 and $3 are
permitted to be listed within $0.50 of a
$2.50 strike price for classes also
selected to participate in the $0.50
Strike Program.7 Under the Exchange’s
current Rule 1012, for classes selected to
participate in both the $0.50 Strike
Program and the $1 Strike Program, the
Exchange may either: (a) List a $3.50
strike but not list a $4 strike; or (b) list
a $4 strike but not list a $3.50 strike. For
example, if a $3.50 strike for an option
class in both the $0.50 and $1 Strike
Programs was listed, the next highest
permissible strike price would be $5.00.
Alternatively, if a $4 strike was listed,
the next lowest permissible strike price
would be $3.00. The intent of the $0.50
Strike Program was to expand the ability
of investors to hedge risks associated
with stocks trading at or under $3 and
to provide finer intervals of $0.50,
beginning at $1 up to $3.50. As a result,
the Exchange believes that the current
filing is consistent with the purpose of
the $0.50 Strike Program and will
permit the Exchange to fill in any
existing gaps resulting from having to
choose whether to list a $3.50 or $4
strike for options classes in both the
$0.50 and $1 Strike Programs.
Therefore, the Exchange is submitting
the current filing to permit the listing of
concurrent $3.50 and $4 strikes for
classes that are selected to participate in
both the $0.50 Strike Program and the
$1 Strike Program. To effect this change,
the Exchange is proposing to amend
Commentary .05(a)(i)(B) to Rule 1012 by
adding $4 to the strike prices of $2 and
$3 currently permitted if a class
participates in both the $0.50 Strike
Program and the $1 Strike Program.
The Exchange is also proposing to
amend the current rule text to delete
references to ‘‘$2.50 strike prices’’ (and
the example utilizing $2.50 strike
prices) and to replace those references
with broader language, e.g., ‘‘existing
strike prices.’’
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
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
7 See
Commentary .05(a)(i)(C) of Rule 1012.
U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
8 15
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Fmt 4703
Sfmt 4703
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system, by
permitting the Exchange to list more
granular strikes on options overlying
lower priced securities, which the
Exchange believes will provide
investors with greater flexibility by
allowing them to establish positions that
are better tailored to meet their
investment objectives.
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 requested that the
Commission waive the 30-day operative
delay to permit the Exchange to
compete with other exchanges whose
rules permit concurrent listing of $3.50
and $4 strikes for classes similarly
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii). 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. The Exchange has satisfied this
requirement.
11 17
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Federal Register / Vol. 75, No. 46 / Wednesday, March 10, 2010 / Notices
participating in both a $0.50 strike
program and a $1 strike program. The
Commission finds that waiver of the
operative delay is consistent with the
protection of investors and the public
interest because such waiver will
encourage fair competition among the
exchanges. Therefore, the Commission
designates the proposal operative upon
filing.12
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:
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–
2010–26 and should be submitted on or
before March 31, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–5078 Filed 3–9–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
• 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–2010–26 on the
subject line.
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify Fees
for Members Using the NASDAQ
Market Center
Paper Comments
erowe on DSK5CLS3C1PROD with NOTICES
[Release No. 34–61645; File No. SR–
NASDAQ–2010–029]
March 4, 2010.
12 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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15:07 Mar 09, 2010
Jkt 220001
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 February
26, 2010, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or the ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘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
NASDAQ proposes to modify pricing
for NASDAQ members using the
NASDAQ Market Center. NASDAQ will
implement the proposed change on
March 1, 2010. The text of the proposed
rule change is available at https://
nasdaqomx.cchwallstreet.com/, at
NASDAQ’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,
NASDAQ included statements
concerning the purpose of and basis for
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Frm 00110
Fmt 4703
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.
NASDAQ 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
Electronic 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–2010–26. 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 Web site viewing and
printing 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
11213
Sfmt 4703
NASDAQ is making minor
modifications to its pricing schedule for
execution and routing of orders through
the NASDAQ Market Center. First,
NASDAQ is increasing the fee for
members using the STGY, SCAN,
SKNY, SKIP, or DOTI routing
strategies.3 For orders using these
strategies that execute in destinations
other than the New York Stock
Exchange (‘‘NYSE’’) (or NASDAQ OMX
BX, in the case of DOTI orders),
NASDAQ will increase the fee from
$0.0029 to $0.0030 per share executed.4
Second, NASDAQ is eliminating a
temporary pricing incentive designed to
encourage use of Mid-Point Pegged
Orders in the NASDAQ Market Center.
Currently, members providing an
average daily volume of more than 95
million shares of liquidity during a
month pay no fee for the use of MidPoint Pegged Orders. As a result of the
change, all members will pay the same
rates for executions of Mid-Point Pegged
Orders as they pay for executions of
other orders in the NASDAQ Market
Center: either $0.0028 or $0.0030 per
share executed, depending on the type
of security traded and the member’s
trading volumes.
2. Statutory Basis
NASDAQ believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,5 in
general, and with Section 6(b)(4) of the
3 Orders designated to use these routing strategies
check the NASDAQ book for the full size of the
order prior to routing. The terms and conditions of
NASDAQ’s routing strategies are described in
NASDAQ Rule 4758.
4 For DOTI orders that execute in NASDAQ OMX
BX, NASDAQ will continue to pass through fees
and rebates associated with order execution on that
venue. SCAN, SKNY, STGY, and SKIP orders
executed at NASDAQ OMX BX are currently
charged $0.0029, however, and will now be charged
$0.0030. DOTI, STGY, SCAN, SKNY, and SKIP
orders that execute at NYSE are charged $0.0018
per share executed if they access liquidity at NYSE,
or receive a $0.0010 per share executed credit if
they add liquidity at NYSE. These fees and credits
are unchanged.
5 15 U.S.C. 78f.
E:\FR\FM\10MRN1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 46 (Wednesday, March 10, 2010)]
[Notices]
[Pages 11211-11213]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5078]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61630; File No. SR-Phlx-2010-26]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. To
Permit the Concurrent Listing of $3.50 and $4 Strikes for Classes
Participating in the $0.50 Strike Program and the $1 Strike Program
March 2, 2010.
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 19, 2010, 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 is filing with the Commission a proposal to amend
Commentary .05 to Rule 1012 (Series of Options Open for Trading) to
permit the concurrent listing of $3.50 and $4 strikes for classes that
participate in both the $0.50 Strike Price Program (``$0.50 Strike
Program'') \3\ and the $1
[[Page 11212]]
Strike Price Program (``$1 Strike Program'').\4\ The Exchange requests
that the Commission waive the 30-day operative delay period contained
in Exchange Act Rule 19b-4(f)(6)(iii).\5\
---------------------------------------------------------------------------
\3\ The $0.50 Strike Program was initially approved on September
18, 2009. See Securities Exchange Act Release No. 60694 (September
18, 2009), 74 FR 49048 (September 25, 2009) (SR-Phlx-2009-65) (order
approving).
\4\ The $1 Strike Program was initially approved as a pilot on
June 11, 2003. See Securities Exchange Act Release Nos. 48013 (June
11, 2003), 68 FR 35933 (June 17, 2003) (SR-Phlx-2002-55) (order
approving). The program was subsequently made permanent and
expanded. See Securities Exchange Act Release Nos. 57111 (January 8,
2008), 73 FR 2297 (January 14, 2008) (SR-Phlx-2008-01) (notice of
filing and immediate effectiveness); 59590 (March 17, 2009), 74 FR
12412. (March 24, 2009) (SR-Phlx-2009-21) (notice of filing and
immediate effectiveness); and 61277 (January 4, 2010), 75 FR 1442
(January 11, 2010)(SR-Phlx-2009-108) (notice of filing and immediate
effectiveness).
\5\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
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 this proposal is to amend Commentary .05 to Rule
1012 to permit the concurrent listing of $3.50 and $4 strikes for
classes that participate in both the $0.50 Strike Program and the $1
Strike Program.
The Exchange recently implemented a rule change that permits strike
price intervals of $0.50 for options on stocks trading at or below
$3.00 pursuant to the $0.50 Strike Program.\6\ As part of the filing to
establish the $0.50 Strike Program, the Exchange contemplated that a
class may be selected to participate in both the $0.50 Strike Program
and the $1 Strike Program. Under the $1 Strike Program, new series with
$1 intervals are not permitted to be listed within $0.50 of an existing
$2.50 strike price in the same series, except that strike prices of $2
and $3 are permitted to be listed within $0.50 of a $2.50 strike price
for classes also selected to participate in the $0.50 Strike
Program.\7\ Under the Exchange's current Rule 1012, for classes
selected to participate in both the $0.50 Strike Program and the $1
Strike Program, the Exchange may either: (a) List a $3.50 strike but
not list a $4 strike; or (b) list a $4 strike but not list a $3.50
strike. For example, if a $3.50 strike for an option class in both the
$0.50 and $1 Strike Programs was listed, the next highest permissible
strike price would be $5.00. Alternatively, if a $4 strike was listed,
the next lowest permissible strike price would be $3.00. The intent of
the $0.50 Strike Program was to expand the ability of investors to
hedge risks associated with stocks trading at or under $3 and to
provide finer intervals of $0.50, beginning at $1 up to $3.50. As a
result, the Exchange believes that the current filing is consistent
with the purpose of the $0.50 Strike Program and will permit the
Exchange to fill in any existing gaps resulting from having to choose
whether to list a $3.50 or $4 strike for options classes in both the
$0.50 and $1 Strike Programs.
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\6\ See Securities Exchange Act Release No. 60694 (September 18,
2009), 74 FR 49048 (September 25, 2009) (SR-Phlx-2009-65) (order
approving); and Commentary .05(a)(ii) to Rule 1012.
\7\ See Commentary .05(a)(i)(C) of Rule 1012.
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Therefore, the Exchange is submitting the current filing to permit
the listing of concurrent $3.50 and $4 strikes for classes that are
selected to participate in both the $0.50 Strike Program and the $1
Strike Program. To effect this change, the Exchange is proposing to
amend Commentary .05(a)(i)(B) to Rule 1012 by adding $4 to the strike
prices of $2 and $3 currently permitted if a class participates in both
the $0.50 Strike Program and the $1 Strike Program.
The Exchange is also proposing to amend the current rule text to
delete references to ``$2.50 strike prices'' (and the example utilizing
$2.50 strike prices) and to replace those references with broader
language, e.g., ``existing strike prices.''
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 prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system, by permitting the Exchange to list
more granular strikes on options overlying lower priced securities,
which the Exchange believes will provide investors with greater
flexibility by allowing them to establish positions that are better
tailored to meet their investment objectives.
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\8\ 15 U.S.C. 78f(b).
\9\ 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
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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6)(iii). 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.
The Exchange has satisfied this requirement.
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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.
The Exchange has requested that the Commission waive the 30-day
operative delay to permit the Exchange to compete with other exchanges
whose rules permit concurrent listing of $3.50 and $4 strikes for
classes similarly
[[Page 11213]]
participating in both a $0.50 strike program and a $1 strike program.
The Commission finds that waiver of the operative delay is consistent
with the protection of investors and the public interest because such
waiver will encourage fair competition among the exchanges. Therefore,
the Commission designates the proposal operative upon filing.\12\
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\12\ 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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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-2010-26 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-2010-26. 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 Web site viewing and printing 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-2010-26 and should be submitted on or before March 31, 2010.
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. 2010-5078 Filed 3-9-10; 8:45 am]
BILLING CODE 8011-01-P
