Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by The NASDAQ Stock Market LLC 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, 14229-14231 [2010-6515]

Download as PDF srobinson on DSKHWCL6B1PROD with NOTICES Federal Register / Vol. 75, No. 56 / Wednesday, March 24, 2010 / Notices particular securities.24 The Commission believes that the potential lack of a Market Maker quoting in particular series will be a factor to be considered in a broker-dealer’s best execution routing determination, similar to other factors a broker-dealer must consider in connection with its best execution obligation. The NYSE Euronext Comment Letter also questions how Nasdaq’s proposal fosters transparency, price competition, and the development of the national market system.25 The Commission does not believe that the proposal will have a negative affect on price transparency, as the prices and sizes of orders on NOM will continue to be disseminated on the consolidated tape even though Market Makers may not be posting twosided quotations. Further, the Commission believes that the proposal could foster intermarket price competition by providing an additional market and source of liquidity for options series that would otherwise have been prohibited from trading on NOM due to the lack of a Market Maker registered in that series. Finally, the Commission does not believe that the proposal will have a negative effect on the development of a national market system. As noted above, notwithstanding the elimination of the requirement to have a registered Market Maker trading in a particular series, NOM is designed to ensure, and the Options Order Protection and Locked/ Crossed Market Plan requires that procedures are in place to ensure, that orders executed on NOM will not tradethrough better prices on other options exchanges. Finally, the NYSE Euronext Comment Letter expresses doubt about the necessity of the proposed rule change and suggests that if there is no Market Maker to trade a series, NOM should simply not list such series.26 The Commission notes that a proposed rule change is not required to be ‘‘necessary’’ in order to be found consistent with the Act. Further, as Nasdaq noted, one of the primary purposes of the proposal is to expand the number of series available to investors for trading and hedging purposes on NOM, and NYSE Euronext’s recommendation would not advance this objective. For the reasons noted above, the Commission believes that the proposed rule change is consistent with the Act. 24 Id. 25 See NYSE Euronext Comment Letter, supra note 5, at 2. 26 See NYSE Euronext Comment Letter, supra note 5, at 2. VerDate Nov<24>2008 16:24 Mar 23, 2010 Jkt 220001 IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,27 that the proposed rule change (SR–NASDAQ– 2010–007), as modified by Amendment No. 1, be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–6516 Filed 3–23–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61736; File No. SR– NASDAQ–2010–038] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by The NASDAQ Stock Market LLC 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 18, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’)1, and Rule 19b–42 thereunder, notice is hereby given that on March 16, 2010, The NASDAQ Stock Market LLC (‘‘NASDAQ’’) 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 NASDAQ. 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 is filing with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) a proposal for the NASDAQ Options Market (‘‘NOM’’ or ‘‘Exchange’’) to amend Chapter IV, Section 6 (Series of Options Contracts 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 27 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The $0.50 Strike Program was initiated in an immediately effective filing on November 6, 2009. See Securities Exchange Act Release No. 60952 (November 6, 2009), 74 FR 59277 (November 17, 2009) (SR–NASDAQ–2009–099) (notice of filing and immediate effectiveness). 28 17 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 14229 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 from NASDAQ’s Web site at https://nasdaq.cchwallstreet.com/ Filings/, 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, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposal is to amend Chapter IV, Section 6 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 4 The $1 Strike Program was initially approved as a pilot on March 12, 2008. See Securities Exchange Act Release No. 57478 (March 12, 2008), 73 FR 14521(March 18, 2008) (SR–NASDAQ–2007–004 and SR–NASDAQ–2007–080) (order approving). The program was subsequently made permanent and expanded. See Securities Exchange Act Release Nos. 58093 (July 3, 2008), 73 FR 39756 (July 10, 2008) (SR–NASDAQ–2008–057) (notice of filing and immediate effectiveness); 59588 (March 17, 2009), 74 FR 12410 (March 24, 2009) (SR– NASDAQ–2009–025) (notice of filing and immediate effectiveness); and 61347 (January 13, 2010), 75 FR 3513 (January 21, 2010) (SR– NASDAQ–2010–003) (notice of filing and immediate effectiveness). 5 17 CFR 240.19b–4(f)(6)(iii). 6 See Securities Exchange Act Release No. 60952 (November 6, 2009), 74 FR 59277 (November 17, 2009) (SR–NASDAQ–2009–099) (notice of filing and immediate effectiveness); and Chapter IV, Section 6, Supplementary Material .05 to Section 6. E:\FR\FM\24MRN1.SGM 24MRN1 srobinson on DSKHWCL6B1PROD with NOTICES 14230 Federal Register / Vol. 75, No. 56 / Wednesday, March 24, 2010 / Notices 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 Chapter IV, Section 6, 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 Chapter IV, Section 6, Supplementary Material .02(b) to Section 6 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.’’ Finally, the Exchange is proposing technical, housekeeping rule changes to Chapter IV, Section 2, Supplementary Material .02 to Section 6 to conform formatting and punctuation and to Chapter IV, Section 6, Supplementary Material .09 to Section 6 to ensure consistency of internal numbering. 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. compete with other exchanges whose rules permit concurrent listing of $3.50 and $4 strikes for classes similarly 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 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. B. Self-Regulatory Organization’s Statement on Burden on Competition NASDAQ does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 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: C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. Electronic Comments III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) 10 of the Act and Rule 19b– 4(f)(6) 11 thereunder. The Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing the proposed rule change. The Exchange has requested that the Commission waive the 30-day operative delay to permit the Exchange to 8 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). 9 15 7 See Chapter IV, Section 6, Supplementary Material .02(b) to Section 6. VerDate Nov<24>2008 16:24 Mar 23, 2010 Jkt 220001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 IV. Solicitation of 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–NASDAQ–2010–038 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–NASDAQ–2010–038. 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 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). E:\FR\FM\24MRN1.SGM 24MRN1 Federal Register / Vol. 75, No. 56 / Wednesday, March 24, 2010 / Notices 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. 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– NASDAQ–2010–038 and should be submitted on or before April 14, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–6515 Filed 3–23–10; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–61732; File No. SR–CBOE– 2010–027] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend CBOE Rule 31.85 to, Among Other Things, Prohibit Broker Discretionary Voting on the Elections of Directors srobinson on DSKHWCL6B1PROD with NOTICES March 18, 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 March 4, 2010, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend CBOE Rule 31.85 to eliminate broker discretionary voting for all elections of directors at shareholder meetings, whether contested or not, except for companies registered under the Investment Company Act of 1940 (the ‘‘1940 Act’’), to amend CBOE Rule 31.85 to preclude broker discretionary voting on a matter that materially amends an investment advisory contract with an investment company, and to define that a material amendment to an investment advisory contract would include any proposal to obtain shareholder approval of an investment company’s investment advisory contract with a new investment advisor The text of the proposed rule change is available on the Exchange’s Web site (https:// www.cboe.org/legal), at the Exchange’s Office of the Secretary, and at the Commission. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 13 17 solicit comments on the proposed rule change from interested persons. In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose A shareholder of a public company may hold shares either directly, as the record holder, or indirectly, as the beneficial holder, with the shares held in the name of the beneficial shareholder’s broker-dealer, bank nominee, or custodian (‘‘securities intermediary’’), which is the record holder.5 The latter generally is referred to as holding securities in ‘‘street name.’’ 6 The number of beneficial owners holding securities in street name 1 15 VerDate Nov<24>2008 16:24 Mar 23, 2010 5 See Commission Release No. 34–60215 (July 1, 2009). 6 See supra note 2 [sic]. Jkt 220001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 14231 has increased significantly over the past thirty-three years. Currently, CBOE Rule 31.85 permits brokers to vote without voting instructions from the beneficial owner on uncontested elections of directors.7 Rule 31.85 also lays out a list of enumerated items for which a member may not give a proxy to vote without instructions from the beneficial owner.8 This list does not include the election of directors. Due to the increase in the holding of securities in street name, the impact of the broker vote on the election of directors has become increasingly significant. At the same time, the number of proxy campaigns, such as ‘‘just vote no’’ or ‘‘withhold’’ campaigns, that have targeted the election of directors without a formal contest has also increased. This has made the ‘‘uncontested’’ election of directors a more controversial, as opposed to routine, matter.9 In light of this development, the New York Stock Exchange proposed a rule filing to declare the election of directors ineligible for broker discretionary voting.10 The Commission approved this filing, as amended, on July 1, 2009.11 Correspondingly, CBOE proposes to amend CBOE Rule 31.85 to add all elections of directors at shareholder meetings whether contested or not, except for companies registered under the 1940 Act, to the list of enumerated items for which a member may not give a proxy to vote without instructions from the beneficial owner. CBOE also proposes to amend CBOE Rule 31.85 to preclude broker discretionary voting on a matter that materially amends an investment advisory contract with an investment company and to define that a material amendment to an investment advisory contract would include any proposal to obtain shareholder approval of an investment company’s investment advisory contract with a new investment advisor for which shareholder approval is required by the 1940 Act and the rules thereunder. These proposed amendments will help ensure the full and effective voting rights of investment company shareholders on material matters. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the 7 See CBOE Rule 31.85(a), which explains the process and situations in which brokers may vote without voting instructions from the beneficial owner. 8 See CBOE Rule 31.85(b). 9 See supra note 2 [sic]. 10 See SR–NYSE–2006–92. 11 See supra note 2 [sic]. E:\FR\FM\24MRN1.SGM 24MRN1

Agencies

[Federal Register Volume 75, Number 56 (Wednesday, March 24, 2010)]
[Notices]
[Pages 14229-14231]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-6515]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61736; File No. SR-NASDAQ-2010-038]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by The NASDAQ Stock Market LLC 
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 18, 2010.
    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 March 16, 2010, The NASDAQ Stock Market LLC (``NASDAQ'') 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 NASDAQ. 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

    NASDAQ is filing with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') a proposal for the NASDAQ Options Market 
(``NOM'' or ``Exchange'') to amend Chapter IV, Section 6 (Series of 
Options Contracts 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 Strike 
Price Program (``$1 Strike Program'').\4\
---------------------------------------------------------------------------

    \3\ The $0.50 Strike Program was initiated in an immediately 
effective filing on November 6, 2009. See Securities Exchange Act 
Release No. 60952 (November 6, 2009), 74 FR 59277 (November 17, 
2009) (SR-NASDAQ-2009-099) (notice of filing and immediate 
effectiveness).
    \4\ The $1 Strike Program was initially approved as a pilot on 
March 12, 2008. See Securities Exchange Act Release No. 57478 (March 
12, 2008), 73 FR 14521(March 18, 2008) (SR-NASDAQ-2007-004 and SR-
NASDAQ-2007-080) (order approving). The program was subsequently 
made permanent and expanded. See Securities Exchange Act Release 
Nos. 58093 (July 3, 2008), 73 FR 39756 (July 10, 2008) (SR-NASDAQ-
2008-057) (notice of filing and immediate effectiveness); 59588 
(March 17, 2009), 74 FR 12410 (March 24, 2009) (SR-NASDAQ-2009-025) 
(notice of filing and immediate effectiveness); and 61347 (January 
13, 2010), 75 FR 3513 (January 21, 2010) (SR-NASDAQ-2010-003) 
(notice of filing and immediate effectiveness).
---------------------------------------------------------------------------

    The Exchange requests that the Commission waive the 30-day 
operative delay period contained in Exchange Act Rule 19b-
4(f)(6)(iii).\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The text of the proposed rule change is available from NASDAQ's Web 
site at https://nasdaq.cchwallstreet.com/Filings/, 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, the self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposal is to amend Chapter IV, Section 6 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

[[Page 14230]]

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 Chapter IV, Section 6, 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.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 60952 (November 6, 
2009), 74 FR 59277 (November 17, 2009) (SR-NASDAQ-2009-099) (notice 
of filing and immediate effectiveness); and Chapter IV, Section 6, 
Supplementary Material .05 to Section 6.
    \7\ See Chapter IV, Section 6, Supplementary Material .02(b) to 
Section 6.
---------------------------------------------------------------------------

    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 Chapter IV, Section 6, Supplementary Material .02(b) to Section 6 
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.''
    Finally, the Exchange is proposing technical, housekeeping rule 
changes to Chapter IV, Section 2, Supplementary Material .02 to Section 
6 to conform formatting and punctuation and to Chapter IV, Section 6, 
Supplementary Material .09 to Section 6 to ensure consistency of 
internal numbering.
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.
---------------------------------------------------------------------------

    \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

    NASDAQ does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) \10\ of the Act and Rule 19b-
4(f)(6) \11\ thereunder. The Exchange provided the Commission with 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five business days prior to the date of filing the proposed rule 
change.
---------------------------------------------------------------------------

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

    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 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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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-NASDAQ-2010-038 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-NASDAQ-2010-038. 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

[[Page 14231]]

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, 100 F Street, NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. 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-NASDAQ-2010-038 and should be submitted on or before 
April 14, 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. 2010-6515 Filed 3-23-10; 8:45 am]
BILLING CODE 8011-01-P
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