Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by NASDAQ OMX PHLX, Inc. To Establish a Short Term Option Program, 35115-35117 [2010-14965]
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Federal Register / Vol. 75, No. 118 / Monday, June 21, 2010 / Notices
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–2010–070 and should be
submitted on or before July 12, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–14964 Filed 6–18–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62296; File No. SR–Phlx–
2010–84]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change by
NASDAQ OMX PHLX, Inc. To Establish
a Short Term Option Program
June 15, 2010.
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 June 14,
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.
sroberts on DSKD5P82C1PROD with NOTICES
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 Rule
1012 (Series of Options Open for
Trading) and Rule 1101A (Terms of
Option Contracts) in order to list option
series that expire one week after being
opened for trading; to add the definition
of Short Term Option Series to Rule
1000 (Applicability, Definitions and
References) and Rule 1000A
(Applicability and Definitions); and to
make non-substantive changes to the
language of Rule 1012 and Rule 1101A.
The Exchange requests that the
Commission waive the 30-day operative
delay period contained in Exchange Act
Rule 19b–4(f)(6)(iii).3
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6)(iii).
1 15
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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, on the
Commission’s Web site at https://
www.sec.gov, 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 Rules 1012 and 1101A to
establish a short term option program on
the Exchange (‘‘STO Program’’ or ‘‘Short
Term Option Program’’) by proposing to
add new Commentary .11 to Rule 1012
and new subsection (b)(vi) to Rule
1101A in order to list option series that
expire one week after being opened for
trading (‘‘Short Term Option Series’’ or
‘‘STO’’). The Exchange also proposes to
add the definition of Short Term Option
Series to Rule 1000 and Rule 1000A;4
and to make non-substantive changes to
conform the language of Rule 1012 and
Rule 1101A and delete unnecessary
language.
The Commission approved the Short
Term Option Program on a pilot basis in
2005 and approved permanent
establishment of the Short Term Option
Program in 2009 on behalf of Chicago
Board Options Exchange (‘‘CBOE’’) in its
Rules 5.5 and 24.9.5 Thereafter, CBOE
4 Short Term Option Series is defined as: A series
in an option class that is approved for listing and
trading on the Exchange in which the series is
opened for trading on any Thursday or Friday that
is a business day and that expires on the Friday of
the next business week. If a Thursday or Friday is
not a business day, the series may be opened (or
shall expire) on the first business day immediately
prior to that Thursday or Friday, respectively.
Proposed Rules 1000(b)(44) and 1000A(b)(16).
5 CBOE refers to its short term option program as
the ‘‘Weeklys Program.’’ See Securities Exchange
Act Release Nos. 52011 (July 12, 2005), 70 FR 41451
(July 19, 2005) (SR–CBOE–2004–63) (approval order
PO 00000
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35115
amended Rules 5.5 and 24.9 to permit
opening Short Term Option Series not
just on Friday but also on Thursday.6
The Exchange’s proposal is based
directly on the short term option
program (Weeklys Program) in CBOE
Rules 5.5 and 24.9.
Specifically, the Exchange proposes to
establish a Short Term Option Program
for non-index options (e.g., equity
options and ETF options) in new
Commentary .11 to Rule 1012; and for
index options in new subsection (b)(vi)
to Rule 1001A. The Short Term Option
Program allows the Exchange to list and
trade Short Term Option Series. Thus,
after an option class has been approved
for listing and trading on the Exchange,
the Exchange may open for trading on
any Thursday or Friday that is a
business day (‘‘Short Term Option
Opening Date’’) series of options on that
class that expire on the Friday of the
following business week that is a
business day (‘‘Short Term Option
Expiration Date’’). If the Exchange is not
open for business on the respective
Thursday or Friday, the Short Term
Option Opening Date will be the first
business day immediately prior to that
respective Thursday or Friday.
Similarly, if the Exchange is not open
for business on the Friday of the
following business week, the Short
Term Option Expiration Date will be the
first business day immediately prior to
that Friday.7
Under the STO Program, the
Exchange may select up to five
approved option classes on which Short
Term Option Series could be opened.
The Exchange also may list Short Term
Option Series on any option classes that
are selected by other securities
exchanges that employ a similar
program under their respective rules.8
establishing Weeklys Pilot Program) and 59824
(April 27, 2009), 74 FR 20518 (May 4, 2009) (SR–
CBOE–2009–018) (approval order permanently
establishing Weeklys Program).
Other options exchanges have also established
short term option series pilots (but have not made
them permanent). See Securities Exchange Act
Release Nos. 52012 (July 12, 2005), 70 FR 41246
(July 18, 2005) (SR–ISE–2005–17) (approval order
establishing short term option series pilot); 52013
(July 12, 2005), 70 FR 41471 (July 19, 2005) (SR–
PCX–2005–32) (approval order establishing short
term option series pilot); 52014 (July 12, 2005), 70
FR 41244 (July 18, 2005) (SR–AMEX–2005–035)
(approval order establishing short term option
series pilot).
6 See Securities Exchange Act Release No. 62170
(May 25, 2010), 75 FR 30889 (June 2, 2010) (SR–
CBOE–2010–048) (notice of filing and immediate
effectiveness allowing opening Short Term Option
Series on any Thursday or Friday).
7 See proposed Commentary .11 to Rule 1012 and
Rule 1101A(b)(6).
8 See proposed Commentary .11(a) to Rule 1012
and Rule 1101A(b)(6)(A).
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35116
Federal Register / Vol. 75, No. 118 / Monday, June 21, 2010 / Notices
sroberts on DSKD5P82C1PROD with NOTICES
For each class selected for the STO
Program, the Exchange may open up to
twenty Short Term Option Series for
each expiration date in that class, with
approximately the same number of
strike prices above and below the value
of the underlying security or calculated
index value at about the time that the
Short Term Option Series is opened.
The interval between strike prices on
Short Term Option Series shall be the
same as the strike prices for series in
that same option class that expire in
accordance with the normal monthly
expiration cycle.9 Any strike prices
listed by the Exchange shall be within
thirty percent (30%) above or below the
current value of the underlying index.10
If the Exchange opens less than
twenty Short Term Option Series for a
given expiration date, additional series
may be opened for trading on the
Exchange when the Exchange deems it
necessary to maintain an orderly
market, to meet customer demand, or
when the current value of the
underlying security or index moves
substantially from the previously listed
exercise prices. The total number of
series for a given expiration date,
however, will not exceed twenty series.
Any additional strike prices listed by
the Exchange shall be within 30% above
or below the current price of the
underlying security. The Exchange may
also open additional strike prices of
Short Term Option Series that are more
than 30% above or below the current
price of the underlying security
provided that demonstrated customer
interest exists for such series, as
expressed by institutional, corporate or
individual customers or their brokers.
Market-Makers trading for their own
account shall not be considered when
determining customer interest under
this provision. Moreover, the opening of
the new Short Term Option Series shall
not affect the series of options of the
same class previously opened.11
The Short Term Option Program
provides that no Short Term Option
Series may expire in the same week in
which monthly option series on the
same class expire or, in the case of
Quarterly Options Series, on an
expiration that coincides with an
expiration of Quarterly Options Series
on the same class.12
9 See proposed Commentary .11(e) to Rule 1012
and Rule 1101A(b)(6)(E).
10 See proposed Commentary .11(c) to Rule 1012
and Rule 1101A(b)(6)(C).
11 See proposed Commentary .11(d) to Rule 1012
and Rule 1101A(b)(6)(D).
12 See proposed Commentary .11(b) to Rule 1012
and Rule 1101A(b)(6)(B). Moreover, the Exchange
expects that Short Term Option Series will settle
(e.g., in terms of A.M. or P.M.) in the same manner
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With regard to the impact of this
proposal on system capacity, the
Exchange has analyzed its capacity and
represents that it and the Options Price
Reporting Authority (‘‘OPRA’’) have the
necessary systems capacity to handle
the potential additional traffic
associated with the listing and trading
of options pursuant to the Short Term
Option Program.
Finally, the Exchange is proposing to
make non-substantive changes to
conform the language of Rule 1012 and
Rule 1101A, and to delete unnecessary
language. Thus, the Exchange proposes
to delete unnecessary language
regarding expiration in Commentary
.08(b) to rule 1012 and proposed Rule
1012(v)(B) because expiration is
discussed in newly-added STO Program
rule language, and conforms the Phlx
rule language with CBOE Rules 5.5 and
24.9. The Exchange proposes to update
the numbering (lettering) of Rule 1101A
for internal rule language consistency.
The Exchange believes that the Short
Term Option Program will provide
investors with a flexible and valuable
tool to manage risk exposure, minimize
capital outlays, and be more responsive
to the timing of events affecting the
securities that underlie options
contracts. The Exchange also believes
that providing the flexibility to list all
Short Term Option series (equity and
index) on any Thursday or Friday will
help implement the program more
effectively and avoid investor
confusion.
The Commission has requested, and
the Exchange has agreed for the
purposes of this filing, to submit one
report to the Commission providing an
analysis of the Exchange’s Short Term
Option Program (the ‘‘Report’’). The
Report will cover the period from the
date of effectiveness of the STO Program
through the first quarter of 2011, and
will describe the experience of the
Exchange with the STO Program in
respect of the options classes included
by the Exchange in such program.13 The
as do the monthly expiration series in the same
option class.
13 The Report would include the following: (1)
Data and written analysis on the open interest and
trading volume in the classes for which Short Term
Option Series were opened; (2) an assessment of the
appropriateness of the option classes selected for
the STO Program; (3) an assessment of the impact
of the STO Program on the capacity of the
Exchange, OPRA, and market data vendors (to the
extent data from market data vendors is available);
(4) any capacity problems or other problems that
arose during the operation of the STO Program and
how the Exchange addressed such problems; (5) any
complaints that the Exchange received during the
operation of the STO Program and how the
Exchange addressed them; and (6) any additional
information that would assist in assessing the
operation of the STO Program.
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Frm 00147
Fmt 4703
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Report will be submitted by May 1,
2011, under separate cover and will
seek confidential treatment under the
Freedom of Information Act.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 14 in general, and furthers the
objectives of Section 6(b)(5) of the Act 15
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
establishing a Short Term Option
Program that will provide investors with
a flexible and valuable tool to manage
risk exposure, minimize capital outlays,
and be more responsive to the timing of
events affecting the securities that
underlie option contracts.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not 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
14 15
15 15
E:\FR\FM\21JNN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
21JNN1
Federal Register / Vol. 75, No. 118 / Monday, June 21, 2010 / Notices
19(b)(3)(A) of the Act 16 and Rule 19b–
4(f)(6) thereunder,17
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 the listing of similar short
term options series.18 The Commission
believes that waiver of the operative
delay is consistent with the protection
of investors and the public interest
because the proposal is substantially
similar to a rule of another exchange
that has been approved by the
Commission.19 Therefore, the
Commission designates the proposal
operative upon filing.20
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 rulecomments@sec.gov. Please include File
Number SR–Phlx–2010–84 on the
subject line.
sroberts on DSKD5P82C1PROD with NOTICES
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–2010–84. This file
16 15 U.S.C. 78s(b)(3)(A). 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, along with a brief
description and text of 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 Commission
is waiving the five-day pre-filing requirement in
this case.
17 17 CFR 240.19b–4(f)(6).
18 See supra notes 5–6 and accompanying text.
19 See Securities Exchange Act Release No. 59824
(April 27, 2009), 74 FR 20518 (May 4, 2009) (SR–
CBOE–2009–018).
20 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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15:46 Jun 18, 2010
Jkt 220001
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, 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–Phlx–
2010–84 and should be submitted on or
before July 12, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–14965 Filed 6–18–10; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice 7058]
60-Day Notice of Proposed Information
Collection: Form DS–5504, Application
for a U.S. Passport: Name Change,
Data Correction, and Limited Passport
Book Replacement, OMB Control
Number 1405–0160
ACTION: Notice of request for public
comments.
SUMMARY: The Department of State is
seeking Office of Management and
Budget (OMB) approval for the
information collection described below.
The purpose of this notice is to allow 60
days for public comment in the Federal
Register preceding submission to OMB.
21 17
PO 00000
CFR 200.30–3(a)(12).
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35117
We are conducting this process in
accordance with the Paperwork
Reduction Act of 1995.
• Title of Information Collection:
Application for a U.S. Passport: Name
Change, Data Correction, And Limited
Passport Book Replacement.
• OMB Control Number: 1405–0160.
• Type of Request: Revision of a
Currently Approved Collection.
• Originating Office: Bureau of
Consular Affairs, Passport Services CA/
PPT.
• Form Number: DS–5504.
• Respondents: Individuals or
Households.
• Estimated Number of Respondents:
181,000 respondents per year.
• Estimated Number of Responses:
181,000 responses per year.
• Average Hours per Response: 30
minutes.
• Total Estimated Burden: 90,500
hours per year.
• Frequency: On occasion.
• Obligation to Respond: Required to
Obtain or Retain a Benefit.
DATES: The Department will accept
comments from the public up to 60 days
from June 21, 2010.
ADDRESSES: You may submit comments
by any of the following methods:
• E-mail: PPT-FormsOfficer@state.gov.
• Mail (paper, disk, or CD–ROM
submissions): Passport Forms
Management Officer, U.S. Department of
State, Office of Program Management
and Operational Support, 2100
Pennsylvania Avenue, NW., Room 3031,
Washington, DC 20037.
You must include the DS form
number (if applicable), information
collection title, and OMB control
number in any correspondence.
FOR FURTHER INFORMATION CONTACT:
Direct requests for additional
information regarding the collection
listed in this notice, including requests
for copies of the proposed information
collection and supporting documents, to
Passport Forms Management Officer,
U.S. Department of State, Office of
Program Management and Operational
Support, 2100 Pennsylvania Avenue,
NW., Room 3031, Washington, DC
20037, who may be reached on 202–
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SUPPLEMENTARY INFORMATION:
We are soliciting public comments to
permit the Department to:
• Evaluate whether the proposed
information collection is necessary for
the proper performance of our
functions.
• Evaluate the accuracy of our
estimate of the burden of the proposed
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Agencies
[Federal Register Volume 75, Number 118 (Monday, June 21, 2010)]
[Notices]
[Pages 35115-35117]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-14965]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62296; File No. SR-Phlx-2010-84]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by NASDAQ OMX PHLX, Inc. To
Establish a Short Term Option Program
June 15, 2010.
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 June 14, 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 Rule
1012 (Series of Options Open for Trading) and Rule 1101A (Terms of
Option Contracts) in order to list option series that expire one week
after being opened for trading; to add the definition of Short Term
Option Series to Rule 1000 (Applicability, Definitions and References)
and Rule 1000A (Applicability and Definitions); and to make non-
substantive changes to the language of Rule 1012 and Rule 1101A.
The Exchange requests that the Commission waive the 30-day
operative delay period contained in Exchange Act Rule 19b-
4(f)(6)(iii).\3\
---------------------------------------------------------------------------
\3\ 17 CFR 240.19b-4(f)(6)(iii).
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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, on the Commission's
Web site at https://www.sec.gov, 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 Rules 1012 and 1101A to
establish a short term option program on the Exchange (``STO Program''
or ``Short Term Option Program'') by proposing to add new Commentary
.11 to Rule 1012 and new subsection (b)(vi) to Rule 1101A in order to
list option series that expire one week after being opened for trading
(``Short Term Option Series'' or ``STO''). The Exchange also proposes
to add the definition of Short Term Option Series to Rule 1000 and Rule
1000A;\4\ and to make non-substantive changes to conform the language
of Rule 1012 and Rule 1101A and delete unnecessary language.
---------------------------------------------------------------------------
\4\ Short Term Option Series is defined as: A series in an
option class that is approved for listing and trading on the
Exchange in which the series is opened for trading on any Thursday
or Friday that is a business day and that expires on the Friday of
the next business week. If a Thursday or Friday is not a business
day, the series may be opened (or shall expire) on the first
business day immediately prior to that Thursday or Friday,
respectively. Proposed Rules 1000(b)(44) and 1000A(b)(16).
---------------------------------------------------------------------------
The Commission approved the Short Term Option Program on a pilot
basis in 2005 and approved permanent establishment of the Short Term
Option Program in 2009 on behalf of Chicago Board Options Exchange
(``CBOE'') in its Rules 5.5 and 24.9.\5\ Thereafter, CBOE amended Rules
5.5 and 24.9 to permit opening Short Term Option Series not just on
Friday but also on Thursday.\6\ The Exchange's proposal is based
directly on the short term option program (Weeklys Program) in CBOE
Rules 5.5 and 24.9.
---------------------------------------------------------------------------
\5\ CBOE refers to its short term option program as the
``Weeklys Program.'' See Securities Exchange Act Release Nos. 52011
(July 12, 2005), 70 FR 41451 (July 19, 2005) (SR-CBOE-2004-63)
(approval order establishing Weeklys Pilot Program) and 59824 (April
27, 2009), 74 FR 20518 (May 4, 2009) (SR-CBOE-2009-018) (approval
order permanently establishing Weeklys Program).
Other options exchanges have also established short term option
series pilots (but have not made them permanent). See Securities
Exchange Act Release Nos. 52012 (July 12, 2005), 70 FR 41246 (July
18, 2005) (SR-ISE-2005-17) (approval order establishing short term
option series pilot); 52013 (July 12, 2005), 70 FR 41471 (July 19,
2005) (SR-PCX-2005-32) (approval order establishing short term
option series pilot); 52014 (July 12, 2005), 70 FR 41244 (July 18,
2005) (SR-AMEX-2005-035) (approval order establishing short term
option series pilot).
\6\ See Securities Exchange Act Release No. 62170 (May 25,
2010), 75 FR 30889 (June 2, 2010) (SR-CBOE-2010-048) (notice of
filing and immediate effectiveness allowing opening Short Term
Option Series on any Thursday or Friday).
---------------------------------------------------------------------------
Specifically, the Exchange proposes to establish a Short Term
Option Program for non-index options (e.g., equity options and ETF
options) in new Commentary .11 to Rule 1012; and for index options in
new subsection (b)(vi) to Rule 1001A. The Short Term Option Program
allows the Exchange to list and trade Short Term Option Series. Thus,
after an option class has been approved for listing and trading on the
Exchange, the Exchange may open for trading on any Thursday or Friday
that is a business day (``Short Term Option Opening Date'') series of
options on that class that expire on the Friday of the following
business week that is a business day (``Short Term Option Expiration
Date''). If the Exchange is not open for business on the respective
Thursday or Friday, the Short Term Option Opening Date will be the
first business day immediately prior to that respective Thursday or
Friday. Similarly, if the Exchange is not open for business on the
Friday of the following business week, the Short Term Option Expiration
Date will be the first business day immediately prior to that
Friday.\7\
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\7\ See proposed Commentary .11 to Rule 1012 and Rule
1101A(b)(6).
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Under the STO Program, the Exchange may select up to five approved
option classes on which Short Term Option Series could be opened. The
Exchange also may list Short Term Option Series on any option classes
that are selected by other securities exchanges that employ a similar
program under their respective rules.\8\
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\8\ See proposed Commentary .11(a) to Rule 1012 and Rule
1101A(b)(6)(A).
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[[Page 35116]]
For each class selected for the STO Program, the Exchange may open
up to twenty Short Term Option Series for each expiration date in that
class, with approximately the same number of strike prices above and
below the value of the underlying security or calculated index value at
about the time that the Short Term Option Series is opened. The
interval between strike prices on Short Term Option Series shall be the
same as the strike prices for series in that same option class that
expire in accordance with the normal monthly expiration cycle.\9\ Any
strike prices listed by the Exchange shall be within thirty percent
(30%) above or below the current value of the underlying index.\10\
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\9\ See proposed Commentary .11(e) to Rule 1012 and Rule
1101A(b)(6)(E).
\10\ See proposed Commentary .11(c) to Rule 1012 and Rule
1101A(b)(6)(C).
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If the Exchange opens less than twenty Short Term Option Series for
a given expiration date, additional series may be opened for trading on
the Exchange when the Exchange deems it necessary to maintain an
orderly market, to meet customer demand, or when the current value of
the underlying security or index moves substantially from the
previously listed exercise prices. The total number of series for a
given expiration date, however, will not exceed twenty series. Any
additional strike prices listed by the Exchange shall be within 30%
above or below the current price of the underlying security. The
Exchange may also open additional strike prices of Short Term Option
Series that are more than 30% above or below the current price of the
underlying security provided that demonstrated customer interest exists
for such series, as expressed by institutional, corporate or individual
customers or their brokers. Market-Makers trading for their own account
shall not be considered when determining customer interest under this
provision. Moreover, the opening of the new Short Term Option Series
shall not affect the series of options of the same class previously
opened.\11\
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\11\ See proposed Commentary .11(d) to Rule 1012 and Rule
1101A(b)(6)(D).
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The Short Term Option Program provides that no Short Term Option
Series may expire in the same week in which monthly option series on
the same class expire or, in the case of Quarterly Options Series, on
an expiration that coincides with an expiration of Quarterly Options
Series on the same class.\12\
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\12\ See proposed Commentary .11(b) to Rule 1012 and Rule
1101A(b)(6)(B). Moreover, the Exchange expects that Short Term
Option Series will settle (e.g., in terms of A.M. or P.M.) in the
same manner as do the monthly expiration series in the same option
class.
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With regard to the impact of this proposal on system capacity, the
Exchange has analyzed its capacity and represents that it and the
Options Price Reporting Authority (``OPRA'') have the necessary systems
capacity to handle the potential additional traffic associated with the
listing and trading of options pursuant to the Short Term Option
Program.
Finally, the Exchange is proposing to make non-substantive changes
to conform the language of Rule 1012 and Rule 1101A, and to delete
unnecessary language. Thus, the Exchange proposes to delete unnecessary
language regarding expiration in Commentary .08(b) to rule 1012 and
proposed Rule 1012(v)(B) because expiration is discussed in newly-added
STO Program rule language, and conforms the Phlx rule language with
CBOE Rules 5.5 and 24.9. The Exchange proposes to update the numbering
(lettering) of Rule 1101A for internal rule language consistency.
The Exchange believes that the Short Term Option Program will
provide investors with a flexible and valuable tool to manage risk
exposure, minimize capital outlays, and be more responsive to the
timing of events affecting the securities that underlie options
contracts. The Exchange also believes that providing the flexibility to
list all Short Term Option series (equity and index) on any Thursday or
Friday will help implement the program more effectively and avoid
investor confusion.
The Commission has requested, and the Exchange has agreed for the
purposes of this filing, to submit one report to the Commission
providing an analysis of the Exchange's Short Term Option Program (the
``Report''). The Report will cover the period from the date of
effectiveness of the STO Program through the first quarter of 2011, and
will describe the experience of the Exchange with the STO Program in
respect of the options classes included by the Exchange in such
program.\13\ The Report will be submitted by May 1, 2011, under
separate cover and will seek confidential treatment under the Freedom
of Information Act.
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\13\ The Report would include the following: (1) Data and
written analysis on the open interest and trading volume in the
classes for which Short Term Option Series were opened; (2) an
assessment of the appropriateness of the option classes selected for
the STO Program; (3) an assessment of the impact of the STO Program
on the capacity of the Exchange, OPRA, and market data vendors (to
the extent data from market data vendors is available); (4) any
capacity problems or other problems that arose during the operation
of the STO Program and how the Exchange addressed such problems; (5)
any complaints that the Exchange received during the operation of
the STO Program and how the Exchange addressed them; and (6) any
additional information that would assist in assessing the operation
of the STO Program.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \14\ in general, and furthers the objectives of Section
6(b)(5) of the Act \15\ 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 establishing a
Short Term Option Program that will provide investors with a flexible
and valuable tool to manage risk exposure, minimize capital outlays,
and be more responsive to the timing of events affecting the securities
that underlie option contracts.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not 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
[[Page 35117]]
19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) thereunder,\17\
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\16\ 15 U.S.C. 78s(b)(3)(A). 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, along
with a brief description and text of 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 Commission is waiving the five-day pre-filing requirement in
this case.
\17\ 17 CFR 240.19b-4(f)(6).
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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 the listing of similar short term options
series.\18\ The Commission believes that waiver of the operative delay
is consistent with the protection of investors and the public interest
because the proposal is substantially similar to a rule of another
exchange that has been approved by the Commission.\19\ Therefore, the
Commission designates the proposal operative upon filing.\20\
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\18\ See supra notes 5-6 and accompanying text.
\19\ See Securities Exchange Act Release No. 59824 (April 27,
2009), 74 FR 20518 (May 4, 2009) (SR-CBOE-2009-018).
\20\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2010-84 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-2010-84. 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, 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-Phlx-2010-84 and should be
submitted on or before July 12, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14965 Filed 6-18-10; 8:45 am]
BILLING CODE 8010-01-P