Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE AMEX LLC Amending Rule 980-Exercise of Options Contracts, 51322-51324 [2010-20550]
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51322
Federal Register / Vol. 75, No. 160 / Thursday, August 19, 2010 / Notices
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) by order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–FINRA–2010–039 and
should be submitted on or before
September 9, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.148
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–20537 Filed 8–18–10; 8:45 am]
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–FINRA–2010–039 on the
subject line.
emcdonald on DSK2BSOYB1PROD with NOTICES
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:
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
AMEX LLC Amending Rule 980–
Exercise of Options Contracts
BILLING CODE 8010–01–P
17:05 Aug 18, 2010
Jkt 220001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62707; File No. SR–
NYSEAmex–2010–79]
August 12, 2010.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
Paper Comments
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on August
• Send paper comments in triplicate
3, 2010, NYSE Amex LLC (‘‘NYSE
to Elizabeth M. Murphy, Secretary,
Amex’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission,
Securities and Exchange Commission
100 F Street, NE., Washington, DC
20549–1090.
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
All submissions should refer to File
Number SR–FINRA–2010–039. This file below, which Items have been prepared
by the self-regulatory organization. The
number should be included on the
subject line if e-mail is used. To help the Commission is publishing this notice to
solicit comments on the proposed rule
Commission process and review your
change from interested persons.
comments more efficiently, please use
only one method. The Commission will I. Self-Regulatory Organization’s
post all comments on the Commission’s Statement of the Terms of the Substance
Internet Web site (https://www.sec.gov/
of the Proposed Rule Change
rules/sro.shtml). Copies of the
The Exchange proposes to amend
submission, all subsequent
Rule 980–Exercise of Options Contracts.
amendments, all written statements
The text of the proposed rule change is
with respect to the proposed rule
attached as Exhibit 5 to the 19b–4 form.
change that are filed with the
A copy of this filing is available on the
Commission, and all written
Exchange’s Web site at https://
communications relating to the
www.nyse.com, at the Exchange’s
proposed rule change between the
principal office, at the Commission’s
Commission and any person, other than
Public Reference Room, and on the
those that may be withheld from the
Commission’s Web site at https://
public in accordance with the
www.sec.gov.
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
II. Self-Regulatory Organization’s
printing in the Commission’s Public
Statement of the Purpose of, and
Reference Room, 100 F Street, NE.,
Statutory Basis for, the Proposed Rule
Washington, DC 20549, on official
Change
business days between the hours of 10
In its filing with the Commission, the
a.m. and 3 p.m. Copies of such filing
self-regulatory organization included
also will be available for inspection and
copying at the principal office of
148 17 CFR 200.30–3(a)(12).
FINRA. All comments received will be
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
posted without change; the Commission
3 17 CFR 240.19b–4.
does not edit personal identifying
VerDate Mar<15>2010
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.
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The purpose of the proposed rule
change is to amend Rule 980 in order to
extend the cut-off time to submit
Contrary Exercise Advices (‘‘CEA’’) 4 to
the Exchange.
The Options Clearing Corporation
(‘‘OCC’’) has an established procedure,
under OCC Rule 805, that provides for
the automatic exercise of certain options
that are in-the-money by a specified
amount known as ‘‘Exercise-byException’’ or ‘‘Ex-by-Ex.’’ Under the Exby-Ex process, options holders holding
option contracts that are in-the-money
by a requisite amount and who wish to
have their contracts automatically
exercised need take no further action.
However, under OCC Rule 805, option
holders who do not want their options
automatically exercised or who want
their options to be exercised under
different parameters than that of the Exby-Ex procedures must instruct OCC of
their ‘‘contrary intention.’’
In addition to and separately from the
OCC requirement, under NYSE Amex
Rule 980 option holders must file a CEA
with the Exchange notifying it of the
contrary intention. Rule 980 is designed,
in part, to deter individuals from taking
improper advantage of late breaking
news by requiring evidence of an option
holder’s timely decision to exercise or
not exercise expiring equity options.
ATP Holders 5 satisfy this evidentiary
requirement by submitting a CEA form
directly to the Exchange, or by
electronically submitting the CEA to the
Exchange through OCC’s electronic
communications system. The
submission of the CEA allows the
Exchange to satisfy its regulatory
obligation to verify that the decision to
4 Contrary Exercise Advices are also known as
Expiring Exercise Declarations (‘‘EED’’).
5 The term ATP refers to an Amex Trading Permit
issued by the Exchange for effecting securities
transactions on the Exchange. ATP Holders have
the status of ‘‘member’’ of the Exchange as that term
is defined in Section 3 of the Securities Exchange
Act of 1934, as amended.
E:\FR\FM\19AUN1.SGM
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Federal Register / Vol. 75, No. 160 / Thursday, August 19, 2010 / Notices
emcdonald on DSK2BSOYB1PROD with NOTICES
make a contrary exercise was made
timely and in accordance with Rule 980.
Under Rule 980, option holders have
until 5:30 p.m. on the last business day
before their expiration to make a final
decision to exercise or not exercise an
expiring option that would otherwise
either expire or be automatically
exercised. ATP Holders may not accept
CEA instructions from their customer or
non customer accounts after 5:30 p.m.
However, the current rule gives ATP
Holders additional time to submit the
CEA instructions if they use an
electronic submission process.6
Specifically, an ATP Holder may
currently submit CEA instructions until
6:30 p.m. for electronic submission.
This current process allowing ATP
Holders an additional one hour after the
decision making cut off time of 5:30
p.m. to submit a CEA to the various
options exchanges was approved by the
Commission in 2003.7 In 2003, the Exby-Ex thresholds were $0.75 for
customers and $0.25 for broker-dealer
accounts. In 2009, the Ex-by-Ex
threshold is $0.01 for all accounts. This
decrease in the Ex-by-Ex threshold,
coupled with the dramatic increase in
option trading volume from 2003 to
2009, has led to a larger number of CEA
instructions and has increased the
burden on firms to process and submit
instructions timely.
The Exchange proposes to extend the
current 6:30 p.m. deadline for
submitting CEA instructions to the
Exchange by one additional hour, to
7:30 p.m. The Exchange believes that
this proposed rule change is necessary
to address concerns that, given the
decrease in the Ex-by-Ex threshold and
the increase in trading, the existing
deadline for submitting CEAs to the
Exchange is problematic for timely
back-office processing. The proposed
additional one hour will address this
concern by further enabling firms to
more timely manage, process, and
submit the instructions to the Exchange.
The Exchange also proposes to modify
6 If an ATP Holder does not employ an electronic
submission procedure, they are required to submit
CEAs for non-customer accounts by the 5:30 p.m.
deadline. This deadline for manual submission is
required in order to prevent firms from improperly
extending the 5:30 p.m. deadline to exercise or not
exercise an option. This requirement is based on the
difficulty in monitoring a manual procedure that
has different times for deciding whether or not to
exercise the option and for the submission of the
CEA.
7 See Securities Exchange Act Release Nos. 47885
(May 16, 2003), 68 FR 28309 (May 23, 2003) (SR–
Amex–2001–92); 48505 (September 17, 2003), 68
FR 55680 (September 26, 2003) (SR–ISE–2003–20);
48640 (October 16, 2003), 68 FR 60757 (October 23,
2003) (SR–PCX–2003–47); and 48639 (October 16,
2003), 68 FR 60764 (October 23, 2003) (SR– Phlx–
2003–65).
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17:05 Aug 18, 2010
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the language in subsection (g) of the
current rule, which allows ATP Holders
up to 2 hours and 30 minutes to submit
a CEA to the Exchange in the event of
a modified close of trading on the day
of expiration, by removing the two hour
and thirty minute restriction and
allowing for submission of a CEA to the
Exchange in the event of a modified
close of trading of up to the proposed
7:30 p.m. deadline. This will make
consistent the submission deadline for
both regular and modified close
expiration days. Moreover, this will
provide uniformity with submission
deadlines for both regular and modified
close expiration days which will remove
any possibility for error when
determining what the submission
deadline is on any modified close
expiration day.
In addition, the Exchange proposes to
revise Commentary .04(i) to reflect that
members and member firms, who
electronically submit Contrary Exercise
Advice decisions on behalf of noncustomer option holders, will now have
until 7:30 p.m. ET to submit such
decisions to the Exchange.
This proposal does not change the
substantive requirement that option
holders make a final decision by 5:30
p.m. The options exchanges currently
enforce the 5:30 p.m. requirement while
giving members additional time to
process and submit the CEA
instructions. This proposal seeks to
increase that additional submission time
by one hour, and the Exchange believes
that this proposal will be beneficial to
the marketplace, particularly as it
concerns back-office processing. The
initiative to address ATP Holder
concerns is industry-wide. The
International Securities Exchange
recently adopted a rule change which
extended by a one hour the submission
time for CEAs.8 The Exchange
anticipates that other options exchanges
will also propose similar rule changes.
This additional processing time and
Exchange submission deadline will not
conflict with OCC submission rules or
cause any OCC processing issues. If the
operative date of this proposed rule
change is more than five business days
prior to the date of the next options
expiration Friday, i.e. the third Friday of
the month. (‘‘Expiration Friday’’),9 the
Exchange will implement the rule
change so as to be effective for that
Expiration Friday. If the operative date
8 See Securities and Exchange Act Release No.
61710 (March 15, 2010), 75 FR 13636 (March 22,
2010) Approval order for SR–ISE–2010–02.
9 For example, Expiration Friday for August 2010
options will be August 20, 2010, Expiration Friday
for September 2010 options will be September 17,
2010.
PO 00000
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51323
of this proposed rule change is 5
business days, or less, prior to the date
of the next Expiration Friday, the
Exchange will implement the rule
change so as to be effective for the
following Expiration Friday. NYSE
Amex will notify OTP Holders of the
implementation date of the rule change
via a Regulatory Bulletin.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Securities Exchange Act of 1934
(the ‘‘Act’’),10 in general, and furthers the
objectives of Section 6(b)(5) of the Act,11
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, 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. This proposed rule
change will foster coordination with
back office personnel engaged in
processing information and is consistent
with the facilitating of transactions in
securities as set forth in Section 6(b)(5)
in that it, by providing ATP Holders an
additional hour within which to
complete the necessary processing of
CEAs, will thereby decrease the burden
of processing an increasing number of
contrary exercise advices and enable
ATP Holders to more easily manage and
process these instructions.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments Regarding the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
10 15
11 15
E:\FR\FM\19AUN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
19AUN1
51324
Federal Register / Vol. 75, No. 160 / Thursday, August 19, 2010 / Notices
become effective pursuant to Section
19(b)(3)(A) of the Act 12 and Rule 19b–
4(f)(6) thereunder.13
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend 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–NYSEAMEX–2010–79 on
the subject line.
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 such 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
publicly available. All submissions
should refer to File Number SR–
NYSEAMEX–2010–79 and should be
submitted on or before September 9,
2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–20550 Filed 8–18–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62708; File No. SR–BX–
2010–055]
Paper Comments
emcdonald on DSK2BSOYB1PROD with NOTICES
• 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–NYSEAMEX–2010–79. This
file number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
13 17
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17:05 Aug 18, 2010
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Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
of Proposed Rule Change Relating To
Extend the Cut-Off Time To Submit
Contrary Exercise Advices and Make
Some Clerical and Conforming
Changes
August 12, 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 August 4,
2010, NASDAQ OMX BX, Inc. (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend
Chapter VII (Exercises and Deliveries) of
the Rules of the Boston Options
Exchange Group, LLC (‘‘BOX’’) to extend
the cut-off time to submit contrary
exercise advices and make some clerical
changes and Chapter X (Minor Rule
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00087
Fmt 4703
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Violations) to make some conforming
changes.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/
NASDAQOMXBX/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
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 these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend Chapter VII, Section
1 of the BOX Trading Rules to extend
the cut-off time to submit contrary
exercise advices (‘‘Contrary Exercise
Advice’’, or, ‘‘CEA’’) 3 to the Exchange.
The Exchange also proposes to make
certain non-substantive changes to
reorganize the text of the Rule to more
clearly present the existing
requirements and to eliminate
duplicative language.4 The Exchange
also proposes to make some clerical
changes. In addition, the Exchange
proposes to make some conforming
changes to Chapter X.
The Options Clearing Corporation
(‘‘OCC’’) has an established procedure,
under OCC Rule 805, that provides for
the automatic exercise of certain options
3 Contrary Exercise Advices are also referred to as
Expiring Exercise Declarations (‘‘EED’’) in the OCC
rules.
4 The Exchange proposes to reorganize the current
rule text so that the requirement that exercise
decisions must be made by 5:30 p.m. Eastern Time
is specified in paragraph (c), while the requirements
pertaining to submitting CEA instructions are
contained in new paragraph (d). The language in
new paragraph (d) is comprised of language moved
from paragraph (b)(ii) and paragraph (c) of the
current rule. The Exchange also proposes to
eliminate Supplementary Material .03 to Chapter
VII because it is duplicative of the language
contained in paragraph (c) of the current rule and
paragraph (d)(iii) in the proposal.
E:\FR\FM\19AUN1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 160 (Thursday, August 19, 2010)]
[Notices]
[Pages 51322-51324]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-20550]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62707; File No. SR-NYSEAmex-2010-79]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE AMEX LLC Amending Rule
980-Exercise of Options Contracts
August 12, 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 August 3, 2010, NYSE Amex LLC (``NYSE Amex'' or the
``Exchange'') 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 self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend Rule 980-Exercise of Options
Contracts. The text of the proposed rule change is attached as Exhibit
5 to the 19b-4 form. A copy of this filing is available on the
Exchange's Web site at https://www.nyse.com, at the Exchange's principal
office, at the Commission's Public Reference Room, and on the
Commission's Web site at https://www.sec.gov.
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 the proposed rule change is to amend Rule 980 in
order to extend the cut-off time to submit Contrary Exercise Advices
(``CEA'') \4\ to the Exchange.
---------------------------------------------------------------------------
\4\ Contrary Exercise Advices are also known as Expiring
Exercise Declarations (``EED'').
---------------------------------------------------------------------------
The Options Clearing Corporation (``OCC'') has an established
procedure, under OCC Rule 805, that provides for the automatic exercise
of certain options that are in-the-money by a specified amount known as
``Exercise-by-Exception'' or ``Ex-by-Ex.'' Under the Ex-by-Ex process,
options holders holding option contracts that are in-the-money by a
requisite amount and who wish to have their contracts automatically
exercised need take no further action. However, under OCC Rule 805,
option holders who do not want their options automatically exercised or
who want their options to be exercised under different parameters than
that of the Ex-by-Ex procedures must instruct OCC of their ``contrary
intention.''
In addition to and separately from the OCC requirement, under NYSE
Amex Rule 980 option holders must file a CEA with the Exchange
notifying it of the contrary intention. Rule 980 is designed, in part,
to deter individuals from taking improper advantage of late breaking
news by requiring evidence of an option holder's timely decision to
exercise or not exercise expiring equity options. ATP Holders \5\
satisfy this evidentiary requirement by submitting a CEA form directly
to the Exchange, or by electronically submitting the CEA to the
Exchange through OCC's electronic communications system. The submission
of the CEA allows the Exchange to satisfy its regulatory obligation to
verify that the decision to
[[Page 51323]]
make a contrary exercise was made timely and in accordance with Rule
980.
---------------------------------------------------------------------------
\5\ The term ATP refers to an Amex Trading Permit issued by the
Exchange for effecting securities transactions on the Exchange. ATP
Holders have the status of ``member'' of the Exchange as that term
is defined in Section 3 of the Securities Exchange Act of 1934, as
amended.
---------------------------------------------------------------------------
Under Rule 980, option holders have until 5:30 p.m. on the last
business day before their expiration to make a final decision to
exercise or not exercise an expiring option that would otherwise either
expire or be automatically exercised. ATP Holders may not accept CEA
instructions from their customer or non customer accounts after 5:30
p.m. However, the current rule gives ATP Holders additional time to
submit the CEA instructions if they use an electronic submission
process.\6\ Specifically, an ATP Holder may currently submit CEA
instructions until 6:30 p.m. for electronic submission.
---------------------------------------------------------------------------
\6\ If an ATP Holder does not employ an electronic submission
procedure, they are required to submit CEAs for non-customer
accounts by the 5:30 p.m. deadline. This deadline for manual
submission is required in order to prevent firms from improperly
extending the 5:30 p.m. deadline to exercise or not exercise an
option. This requirement is based on the difficulty in monitoring a
manual procedure that has different times for deciding whether or
not to exercise the option and for the submission of the CEA.
---------------------------------------------------------------------------
This current process allowing ATP Holders an additional one hour
after the decision making cut off time of 5:30 p.m. to submit a CEA to
the various options exchanges was approved by the Commission in
2003.\7\ In 2003, the Ex-by-Ex thresholds were $0.75 for customers and
$0.25 for broker-dealer accounts. In 2009, the Ex-by-Ex threshold is
$0.01 for all accounts. This decrease in the Ex-by-Ex threshold,
coupled with the dramatic increase in option trading volume from 2003
to 2009, has led to a larger number of CEA instructions and has
increased the burden on firms to process and submit instructions
timely.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release Nos. 47885 (May 16,
2003), 68 FR 28309 (May 23, 2003) (SR-Amex-2001-92); 48505
(September 17, 2003), 68 FR 55680 (September 26, 2003) (SR-ISE-2003-
20); 48640 (October 16, 2003), 68 FR 60757 (October 23, 2003) (SR-
PCX-2003-47); and 48639 (October 16, 2003), 68 FR 60764 (October 23,
2003) (SR- Phlx-2003-65).
---------------------------------------------------------------------------
The Exchange proposes to extend the current 6:30 p.m. deadline for
submitting CEA instructions to the Exchange by one additional hour, to
7:30 p.m. The Exchange believes that this proposed rule change is
necessary to address concerns that, given the decrease in the Ex-by-Ex
threshold and the increase in trading, the existing deadline for
submitting CEAs to the Exchange is problematic for timely back-office
processing. The proposed additional one hour will address this concern
by further enabling firms to more timely manage, process, and submit
the instructions to the Exchange. The Exchange also proposes to modify
the language in subsection (g) of the current rule, which allows ATP
Holders up to 2 hours and 30 minutes to submit a CEA to the Exchange in
the event of a modified close of trading on the day of expiration, by
removing the two hour and thirty minute restriction and allowing for
submission of a CEA to the Exchange in the event of a modified close of
trading of up to the proposed 7:30 p.m. deadline. This will make
consistent the submission deadline for both regular and modified close
expiration days. Moreover, this will provide uniformity with submission
deadlines for both regular and modified close expiration days which
will remove any possibility for error when determining what the
submission deadline is on any modified close expiration day.
In addition, the Exchange proposes to revise Commentary .04(i) to
reflect that members and member firms, who electronically submit
Contrary Exercise Advice decisions on behalf of non-customer option
holders, will now have until 7:30 p.m. ET to submit such decisions to
the Exchange.
This proposal does not change the substantive requirement that
option holders make a final decision by 5:30 p.m. The options exchanges
currently enforce the 5:30 p.m. requirement while giving members
additional time to process and submit the CEA instructions. This
proposal seeks to increase that additional submission time by one hour,
and the Exchange believes that this proposal will be beneficial to the
marketplace, particularly as it concerns back-office processing. The
initiative to address ATP Holder concerns is industry-wide. The
International Securities Exchange recently adopted a rule change which
extended by a one hour the submission time for CEAs.\8\ The Exchange
anticipates that other options exchanges will also propose similar rule
changes. This additional processing time and Exchange submission
deadline will not conflict with OCC submission rules or cause any OCC
processing issues. If the operative date of this proposed rule change
is more than five business days prior to the date of the next options
expiration Friday, i.e. the third Friday of the month. (``Expiration
Friday''),\9\ the Exchange will implement the rule change so as to be
effective for that Expiration Friday. If the operative date of this
proposed rule change is 5 business days, or less, prior to the date of
the next Expiration Friday, the Exchange will implement the rule change
so as to be effective for the following Expiration Friday. NYSE Amex
will notify OTP Holders of the implementation date of the rule change
via a Regulatory Bulletin.
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\8\ See Securities and Exchange Act Release No. 61710 (March 15,
2010), 75 FR 13636 (March 22, 2010) Approval order for SR-ISE-2010-
02.
\9\ For example, Expiration Friday for August 2010 options will
be August 20, 2010, Expiration Friday for September 2010 options
will be September 17, 2010.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\10\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\11\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, 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. This proposed
rule change will foster coordination with back office personnel engaged
in processing information and is consistent with the facilitating of
transactions in securities as set forth in Section 6(b)(5) in that it,
by providing ATP Holders an additional hour within which to complete
the necessary processing of CEAs, will thereby decrease the burden of
processing an increasing number of contrary exercise advices and enable
ATP Holders to more easily manage and process these instructions.
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\10\ 15 U.S.C. 78f(b).
\11\ 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 that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments Regarding the
Proposed Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has
[[Page 51324]]
become effective pursuant to Section 19(b)(3)(A) of the Act \12\ and
Rule 19b-4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend 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-NYSEAMEX-2010-79 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAMEX-2010-79. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for 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 such 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
publicly available. All submissions should refer to File Number SR-
NYSEAMEX-2010-79 and should be submitted on or before September 9,
2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-20550 Filed 8-18-10; 8:45 am]
BILLING CODE 8010-01-P
