Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Order Granting Accelerated Approval of Proposed Rule Change To Establish Strike Price Intervals and Trading Hours for Options on Index-Linked Securities, 21689-21690 [2010-9551]

Download as PDF Federal Register / Vol. 75, No. 79 / Monday, April 26, 2010 / Notices thereunder,2 a proposed rule change to establish strike-price intervals for options on Index-Linked Securities and to establish trading hours for these products. The proposed rule change was published for comment in the Federal Register on March 31, 2010.3 The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change on an accelerated basis. II. Description of the Proposed Rule Change Prior to the commencement of trading options on Index-Linked Securities (also known as exchange-traded notes (‘‘ETN’’)), Nasdaq has proposed to establish strike price intervals and trading hours for these new products. The Commission has approved the Nasdaq’s and other options exchanges proposals to enable the listing and trading of options on Index-Linked Securities.4 $1 Strikes for ILS (ETN) Options Nasdaq’s proposal would extend the trading conventions applicable to options on exchange-traded funds (‘‘ETFs’’) to options on Index-Linked Securities. Specifically, under the proposed rule change, strike price intervals of $1 will be permitted where the strike price is less than $200. Where the strike price is greater than $200, $5 strikes will be permitted. These proposed changes are reflected by the addition of Chapter IV, Section 6, Supplementary Material .01(c) to Section 6. In support of its proposal, Nasdaq stated that it believes the marketplace and investors will be expecting ETN options to trade in a similar manner to options on ETFs. Strike prices for ETF options are permitted in $1 or greater intervals where the strike price is $200 or less and $5 or greater where the strike price is greater than $200.5 Accordingly, the Exchange asserts that the rationale for permitting $1 strikes for ETF options equally applies to permitting $1 strikes for ETN options and that investors will be better served if $1 strike price sroberts on DSKD5P82C1PROD with NOTICES 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 61766 (March 23, 2010), 75 FR 16221. 4 See e.g., Securities Exchange Act Release Nos. 58571 (September 17, 2008), 73 FR 55188 (September 24, 2008) (SR–Phlx–2008–60); 59923 (May 14, 2009), 74 FR 23902 (May 21, 2009) (SR– NASDAQ–2009–046); 58204 (July 22, 2008), 73 FR 43807 (July 28, 2008) (approving SR–CBOE–2008– 64); 58203 (July 22, 2008), 73 FR 43812 (July 28, 2008) (approving SR–NYSEArca–2008–57); 58985 (November 10, 2008), 73 FR 72538 (November 28, 2008) (approving SR–ISE–2008–86). 5 See Securities Exchange Act Release No. 60872 (October 23, 2009), 74 FR 55878 (October 29, 2009) (SR–OCC–2009–14) (approval order). VerDate Nov<24>2008 16:56 Apr 23, 2010 Jkt 220001 intervals are available for ETN options (where the strike price is less than $200). Nasdaq further stated that it has analyzed its capacity and represents that it believes the Exchange and the Options Price Reporting Authority have the necessary systems capacity to handle the additional traffic associated with the listing and trading of $1 strikes (where the strike price is less than $200) for ETN options. Trading Hours for ILS (ETN) Options Similar to the trading hours for ETF options, the Exchange proposes to amend Chapter VI, Section 2(b) to provide that options contracts on exchange-traded notes including IndexLinked Securities, as defined in Chapter IV, Section 3(l), may be traded on the Exchange until 4:15 p.m. each business day. III. Discussion and Commission’s Findings The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.6 Specifically, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,7 which requires, among other things, that the rules of a national securities exchange be 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. The Commission notes that the proposed strike price intervals for options on Index-Linked Securities are consistent with the strike price intervals currently permitted for options on ETFs. Accordingly, the proposal should provide consistency and predictability for investors who may view these products as serving similar investment functions in the marketplace to ETFs and may provide investors with greater flexibility in achieving their investment objectives. In addition, the Commission notes that Nasdaq has represented that it believes the Exchange and the Options Price Reporting Authority have the necessary systems capacity to handle the additional traffic associated with the listing and trading of $1 strikes for options on Index-Linked Securities. The Commission finds good cause, pursuant to Section 19(b)(2) of the Act,8 for approving the proposal prior to the thirtieth day after the date of publication of the Notice in the Federal Register. The Commission notes that it recently approved the same changes to strike price intervals and trading hours for options on Index-Linked Securities for another exchange.9 The Commission also notes that it has not received any comments regarding this proposal. The Commission believes that the proposed changes to strike price intervals and trading hours for options on IndexLinked Securities do not raise any novel regulatory issues and accelerating approval of this proposal should benefit investors by creating consistency and predictability for investors who may view these products as serving similar investment functions in the marketplace to ETFs and greater flexibility in achieving their investment objectives. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,10 that the proposed rule change (SR–NASDAQ– 2010–035) be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–9552 Filed 4–23–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61943; File No. SR–Phlx– 2010–40] Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Order Granting Accelerated Approval of Proposed Rule Change To Establish Strike Price Intervals and Trading Hours for Options on Index-Linked Securities April 20, 2010. I. Introduction On March 1, 2010, NASDAQ OMX PHLX, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities 8 15 6 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 7 15 U.S.C. 78f(b)(5). PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 21689 U.S.C. 78s(b)(2). Securities Exchange Act Release No. 61696 (March 12, 2010), 75 FR 13174 (March 18, 2010) (SR–CBOE–2010–005). 10 15 U.S.C. 78s(b)(1). 11 17 CFR 200.30–3(a)(12). 9 See E:\FR\FM\26APN1.SGM 26APN1 21690 Federal Register / Vol. 75, No. 79 / Monday, April 26, 2010 / Notices Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to establish strike-price intervals for options on Index-Linked Securities and to establish trading hours for these products. The proposed rule change was published for comment in the Federal Register on March 22, 2010.3 The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change on an accelerated basis. intervals are available for ETN options (where the strike price is less than $200). Phlx further stated that it has analyzed its capacity and represents that it believes the Exchange and the Options Price Reporting Authority have the necessary systems capacity to handle the additional traffic associated with the listing and trading of $1 strikes (where the strike price is less than $200) for ETN options. II. Description of the Proposed Rule Change Prior to the commencement of trading options on Index-Linked Securities (also known as exchange-traded notes (‘‘ETN’’)), Phlx has proposed to establish strike price intervals and trading hours for these new products. The Commission has approved the Phlx’s and other options exchanges proposals to enable the listing and trading of options on Index-Linked Securities.4 Trading Hours for ILS (ETN) Options $1 Strikes for ILS (ETN) Options Phlx’s proposal would extend the trading conventions applicable to options on exchange-traded funds (‘‘ETFs’’) to options on Index-Linked Securities. Specifically, under the proposed rule change, strike price intervals of $1 will be permitted where the strike price is less than $200. Where the strike price is greater than $200, $5 strikes will be permitted. These proposed changes are reflected by the addition of Commentary .05(a)(v) to Rule 1012. In support of its proposal, Phlx stated that it believes the marketplace and investors will be expecting ETN options to trade in a similar manner to options on ETFs. Strike prices for ETF options are permitted in $1 or greater intervals where the strike price is $200 or less and $5 or greater where the strike price is greater than $200.5 Accordingly, the Exchange asserts that the rationale for permitting $1 strikes for ETF options equally applies to permitting $1 strikes for ETN options and that investors will be better served if $1 strike price The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.6 Specifically, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,7 which requires, among other things, that the rules of a national securities exchange be 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. The Commission notes that the proposed strike price intervals for options on Index-Linked Securities are consistent with the strike price intervals currently permitted for options on ETFs. Accordingly, the proposal should provide consistency and predictability for investors who may view these products as serving similar investment functions in the marketplace to ETFs and may provide investors with greater flexibility in achieving their investment objectives. In addition, the Commission notes that Phlx has represented that it believes the Exchange and the Options Price Reporting Authority have the necessary systems capacity to handle the additional traffic associated with the listing and trading of $1 strikes for options on Index-Linked Securities. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 61695 (March 12, 2010), 75 FR 13614. 4 See e.g., Securities Exchange Act Release Nos. 58571 (September 17, 2008), 73 FR 55188 (September 24, 2008) (SR–Phlx–2008–60); 59923 (May 14, 2009), 74 FR 23902 (May 21, 2009) (SR– NASDAQ–2009–046); 58204 (July 22, 2008), 73 FR 43807 (July 28, 2008) (approving SR–CBOE–2008– 64); 58203 (July 22, 2008), 73 FR 43812 (July 28, 2008) (approving SR–NYSEArca–2008–57); 58985 (November 10, 2008), 73 FR 72538 (November 28, 2008) (approving SR–ISE–2008–86). 5 See Securities Exchange Act Release No. 60872 (October 23, 2009), 74 FR 55878 (October 29, 2009) (SR–OCC–2009–14) (approval order). sroberts on DSKD5P82C1PROD with NOTICES 2 17 VerDate Nov<24>2008 16:56 Apr 23, 2010 Jkt 220001 Similar to the trading hours for ETF options, the Exchange proposes to amend Supplementary Material .01 to Rule 101 to provide that options on exchange-traded notes including IndexLinked Securities may be traded on the Exchange until 4:15 p.m. each business day. III. Discussion and Commission’s Findings 6 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 7 15 U.S.C. 78f(b)(5). PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 The Commission finds good cause, pursuant to Section 19(b)(2) of the Act,8 for approving the proposal prior to the thirtieth day after the date of publication of the Notice in the Federal Register. The Commission notes that it recently approved the same changes to strike price intervals and trading hours for options on Index-Linked Securities for another exchange.9 The Commission also notes that it has not received any comments regarding this proposal. The Commission believes that the proposed changes to strike price intervals and trading hours for options on IndexLinked Securities do not raise any novel regulatory issues and accelerating approval of this proposal should benefit investors by creating consistency and predictability for investors who may view these products as serving similar investment functions in the marketplace to ETFs and greater flexibility in achieving their investment objectives. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,10 that the proposed rule change (SR–Phlx–2010– 40) be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–9551 Filed 4–23–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61942; File No. SR– NYSEArca–2010–26] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Amending Its Fee Schedule April 20, 2010. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on April 9, 2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule 8 15 U.S.C. 78s(b)(2). Securities Exchange Act Release No. 61696 (March 12, 2010), 75 FR 13174 (March 18, 2010) (SR–CBOE–2010–005). 10 15 U.S.C. 78s(b)(1). 11 17 CFR 200.30–3(a)(12). 1 15 U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 9 See E:\FR\FM\26APN1.SGM 26APN1

Agencies

[Federal Register Volume 75, Number 79 (Monday, April 26, 2010)]
[Notices]
[Pages 21689-21690]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-9551]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61943; File No. SR-Phlx-2010-40]


Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Order 
Granting Accelerated Approval of Proposed Rule Change To Establish 
Strike Price Intervals and Trading Hours for Options on Index-Linked 
Securities

April 20, 2010.

I. Introduction

    On March 1, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities

[[Page 21690]]

Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to establish strike-price intervals for options on 
Index-Linked Securities and to establish trading hours for these 
products. The proposed rule change was published for comment in the 
Federal Register on March 22, 2010.\3\ The Commission received no 
comment letters on the proposed rule change. This order approves the 
proposed rule change on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61695 (March 12, 
2010), 75 FR 13614.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    Prior to the commencement of trading options on Index-Linked 
Securities (also known as exchange-traded notes (``ETN'')), Phlx has 
proposed to establish strike price intervals and trading hours for 
these new products. The Commission has approved the Phlx's and other 
options exchanges proposals to enable the listing and trading of 
options on Index-Linked Securities.\4\
---------------------------------------------------------------------------

    \4\ See e.g., Securities Exchange Act Release Nos. 58571 
(September 17, 2008), 73 FR 55188 (September 24, 2008) (SR-Phlx-
2008-60); 59923 (May 14, 2009), 74 FR 23902 (May 21, 2009) (SR-
NASDAQ-2009-046); 58204 (July 22, 2008), 73 FR 43807 (July 28, 2008) 
(approving SR-CBOE-2008-64); 58203 (July 22, 2008), 73 FR 43812 
(July 28, 2008) (approving SR-NYSEArca-2008-57); 58985 (November 10, 
2008), 73 FR 72538 (November 28, 2008) (approving SR-ISE-2008-86).
---------------------------------------------------------------------------

$1 Strikes for ILS (ETN) Options

    Phlx's proposal would extend the trading conventions applicable to 
options on exchange-traded funds (``ETFs'') to options on Index-Linked 
Securities. Specifically, under the proposed rule change, strike price 
intervals of $1 will be permitted where the strike price is less than 
$200. Where the strike price is greater than $200, $5 strikes will be 
permitted. These proposed changes are reflected by the addition of 
Commentary .05(a)(v) to Rule 1012.
    In support of its proposal, Phlx stated that it believes the 
marketplace and investors will be expecting ETN options to trade in a 
similar manner to options on ETFs. Strike prices for ETF options are 
permitted in $1 or greater intervals where the strike price is $200 or 
less and $5 or greater where the strike price is greater than $200.\5\ 
Accordingly, the Exchange asserts that the rationale for permitting $1 
strikes for ETF options equally applies to permitting $1 strikes for 
ETN options and that investors will be better served if $1 strike price 
intervals are available for ETN options (where the strike price is less 
than $200).
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 60872 (October 23, 
2009), 74 FR 55878 (October 29, 2009) (SR-OCC-2009-14) (approval 
order).
---------------------------------------------------------------------------

    Phlx further stated that it has analyzed its capacity and 
represents that it believes the Exchange and the Options Price 
Reporting Authority have the necessary systems capacity to handle the 
additional traffic associated with the listing and trading of $1 
strikes (where the strike price is less than $200) for ETN options.

Trading Hours for ILS (ETN) Options

    Similar to the trading hours for ETF options, the Exchange proposes 
to amend Supplementary Material .01 to Rule 101 to provide that options 
on exchange-traded notes including Index-Linked Securities may be 
traded on the Exchange until 4:15 p.m. each business day.

III. Discussion and Commission's Findings

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\6\ 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\7\ which requires, among other things, that 
the rules of a national securities exchange be 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.
---------------------------------------------------------------------------

    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that the proposed strike price intervals for 
options on Index-Linked Securities are consistent with the strike price 
intervals currently permitted for options on ETFs. Accordingly, the 
proposal should provide consistency and predictability for investors 
who may view these products as serving similar investment functions in 
the marketplace to ETFs and may provide investors with greater 
flexibility in achieving their investment objectives.
    In addition, the Commission notes that Phlx has represented that it 
believes the Exchange and the Options Price Reporting Authority have 
the necessary systems capacity to handle the additional traffic 
associated with the listing and trading of $1 strikes for options on 
Index-Linked Securities.
    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\8\ for approving the proposal prior to the thirtieth day after 
the date of publication of the Notice in the Federal Register. The 
Commission notes that it recently approved the same changes to strike 
price intervals and trading hours for options on Index-Linked 
Securities for another exchange.\9\ The Commission also notes that it 
has not received any comments regarding this proposal. The Commission 
believes that the proposed changes to strike price intervals and 
trading hours for options on Index-Linked Securities do not raise any 
novel regulatory issues and accelerating approval of this proposal 
should benefit investors by creating consistency and predictability for 
investors who may view these products as serving similar investment 
functions in the marketplace to ETFs and greater flexibility in 
achieving their investment objectives.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).
    \9\ See Securities Exchange Act Release No. 61696 (March 12, 
2010), 75 FR 13174 (March 18, 2010) (SR-CBOE-2010-005).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-Phlx-2010-40) be, and it 
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(1).
    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-9551 Filed 4-23-10; 8:45 am]
BILLING CODE 8011-01-P
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