Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NASDAQ OMX PHLX LLC To Expand Its Short Term Option Program, 81689-81691 [2010-32623]

Download as PDF Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices Commission designates the proposed rule change operative upon filing with the Commission. At any time within 60 days of the filing of such 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: emcdonald on DSK2BSOYB1PROD with NOTICES 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–BX–2010–091 on the subject line. submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR–BX– 2010–091 and should be submitted on or before January 18, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–32615 Filed 12–27–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63594; File No. SR–Phlx– 2010–183] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NASDAQ OMX PHLX LLC To Expand Its Short Term Option Program December 21, 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 December Paper Comments 15, 2010, NASDAQ OMX PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the • Send paper comments in triplicate Securities and Exchange Commission to Elizabeth M. Murphy, Secretary, (the ‘‘Commission’’) the proposed rule Securities and Exchange Commission, change as described in Items I, II, and 100 F Street, NE., Washington, DC III below, which Items have been 20549–1090. prepared by the Exchange. The All submissions should refer to File Commission is publishing this notice to Number SR–BX–2010–091. This file solicit comments on the proposed rule number should be included on the subject line if e-mail is used. To help the change from interested persons. Commission process and review your I. Self-Regulatory Organization’s comments more efficiently, please use Statement of the Terms of Substance of only one method. The Commission will the Proposed Rule Change post all comments on the Commission’s The Exchange is filing with the Web site (https://www.sec.gov/rules/ Commission a proposal to expand the sro.shtml). Copies of the submission, all Short Term Option Program (‘‘STO subsequent amendments, all written Program’’ or ‘‘Program’’) 3 so that the statements with respect to the proposed rule change that are filed with the 17 17 CFR 200.30–3(a)(12). Commission, and all written 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. communications relating to the 3 Commentary .11 to Rule 1012 and Rule proposed rule change between the Commission and any person, other than 1101A(b)(vi). See Securities Exchange Act Release No. 62296 (June 15, 2010), 75 FR 35115 (June 21, those that may be withheld from the 2010) (SR–Phlx–2010–84) (notice of filing and public in accordance with the immediate effectiveness permanently establishing STO Program on the Exchange). Other exchanges provisions of 5 U.S.C. 552, will be have also established permanent short term option available for website viewing and programs. See Securities Exchange Act Release Nos. printing in the Commission’s Public 59824 (April 27, 2009), 74 FR 20518 (May 4, 2009) Reference Room, 100 F Street, NE., (SR–CBOE–2009–018) (approval order permanently establishing short term option program); 62444 (July Washington, DC 20549, on official 2, 2010), 75 FR 39595 (July 9, 2010) (SR–ISE–2010– business days between the hours of 10 a.m. and 3 p.m. Copies of such filing 72) (approval order [sic] permanently establishing short term option program); 62297 (June 15, 2010), also will be available for inspection and 75 FR 35111 (June 21, 2010) (SR–NASDAQ–2010– 073) (notice of filing and immediate effectiveness copying at the principal office of the permanently establishing short term option Exchange. All comments received will program); 62296 (June 15, 2010), 75 FR 35111 (June be posted without change; the 21, 2010) [sic] (SR–Arca–2010–059) (notice of filing Commission does not edit personal and immediate effectiveness permanently establishing short term option program); 62296 identifying information from VerDate Mar<15>2010 23:58 Dec 27, 2010 Jkt 223001 PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 81689 Exchange may select fifteen option classes on which Short Term Option Series 4 may be opened. 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, 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 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to amend Rule 1012 to expand the STO Program so that the Exchange may select fifteen option classes on which Short Term Option Series may be opened. The STO Program is codified in Commentary .11 to Rule 1012 and Rule 1101A(b)(vi). These sections state that 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 series of options on no more than five option classes that expire on the Friday of the following business week that is a business day. In addition to the five-option class limitation, there (June 15, 2010), 75 FR 35111 (June 21, 2010) [sic] (SR–Amex–2010–062) (notice of filing and immediate effectiveness permanently establishing short term option program); and 62505 (July 15, 2010), 75 FR 42792 (July 22, 2010) (SR–BX–2010– 047) (approval order [sic] permanently establishing short term option program). 4 Short Term Option Series are 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. Rules 1000(b)(44), 1000A(b)(16), Commentary .11 to Rule 1012 and Rule 1101A(b)(vi). E:\FR\FM\28DEN1.SGM 28DEN1 81690 Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices emcdonald on DSK2BSOYB1PROD with NOTICES is also a limitation that no more than twenty series for each expiration date in those classes that may be opened for trading.5 Furthermore, the strike price of each short term option has to be fixed with approximately the same number of strike prices being opened above and below the value of the underlying security at about the time that the short term options are initially opened for trading on the Exchange, and with strike prices being within thirty percent (30%) above or below the closing price of the underlying security from the preceding day. The Exchange does not propose any changes to these additional Program limitations. The Exchange proposes only to increase from five to fifteen the number of option classes that may be opened pursuant to the Program. The principal reason for the proposed expansion is customer demand for adding, or not removing, short term option classes from the Program. In order that the Exchange not exceed the five-option class restriction, each month since the inception of the Program the Exchange has had to discontinue trading, on the average, more than one short term option class before it could begin trading other option classes within the Program. This has negatively impacted investors and traders, particularly retail public customers, who have on several occasions requested the Exchange not to remove short term option classes or add short term option classes. As an example, a retail investor recently asked the Exchange to reinstate a short term option class that the Exchange had to remove from trading because of the five-class option limit within the Program. The investor told the Exchange that he had used the removed class as a powerful tool for hedging a market sector, and that various strategies that the investor put into play were disrupted and eliminated when the class was removed. The 5 However, if the Exchange opens less than twenty (20) short term options for a Short Term Option 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 market price of the underlying security moves substantially from the exercise price or prices of the series already opened. Any additional strike prices listed by the Exchange shall be within thirty percent (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 (marketmakers trading for their own account shall not be considered when determining customer interest under this provision). Commentary .11(d) to Rule 1012 and Rule 1101A(b)(vi)(D). VerDate Mar<15>2010 22:37 Dec 27, 2010 Jkt 223001 Exchange feels that it is essential that such negative, potentially very costly impacts on retail investors are eliminated by modestly expanding the Program to enable additional classes to be traded. 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 trading of an expanded number of classes in the Program. The Exchange believes that the STO Program has provided investors with greater trading opportunities and flexibility and the ability to more closely tailor their investment and risk management strategies and decisions. Furthermore, the Exchange has had to eliminate option classes on numerous occasions because of the limitation imposed by the Program. For these reasons, the Exchange requests an expansion of the current Program and the opportunity to provide investors with additional short term option classes for investment, trading, and risk management purposes. Finally, 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 STO Program (the ‘‘Report’’). The Report will cover the period from the date of effectiveness of the STO Program through November of 2010, 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.6 The Report will be submitted on a confidential basis under separate cover within one week of the filing. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 7 in general, and furthers the objectives of Section 6(b)(5) of the Act 8 6 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. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 in particular, in that it is 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 Exchange believes that expanding the current STO Program will result in a continuing benefit to investors by giving them more flexibility to closely tailor their investment and hedging decisions in greater number of securities. 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 solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) 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 Exchange consents, the Commission shall: (a) By order approve or disapprove such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be disapproved. 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–2010–183 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, E:\FR\FM\28DEN1.SGM 28DEN1 Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices 81691 100 F Street, NE., Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION sections A, B and C below, of the most significant aspects of such statements. All submissions should refer to File Number SR–Phlx–2010–183. 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– 2010–183 and should be submitted on or before January 18, 2011. [Release No. 34–63589; File No. SR–EDGX– 2010–24] A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–32623 Filed 12–27–10; 8:45 am] emcdonald on DSK2BSOYB1PROD with NOTICES BILLING CODE 8011–01–P Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend EDGX Rule 11.5 December 21, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 13, 2010, EDGX Exchange, Inc. (the ‘‘Exchange’’ or the ‘‘EDGX’’) 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 change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change EDGX proposes to amend EDGX Rule 11.5(a)(2) to provide that the system functionality that cancels any portion of a market order submitted to the Exchange that would execute at a price that is more than $0.50 or 5 percent worse than last sale at the time the order initially reaches the Exchange, whichever is greater, does not apply to Destination-on-Open orders, as defined in Rule 11.5(c)(10). The text of the proposed rule change is available on the Exchange’s Internet Web site at https:// www.directedge.com, 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 1 15 9 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 22:37 Dec 27, 2010 2 17 Jkt 223001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00132 Fmt 4703 Sfmt 4703 1. Purpose As provided in SR–EDGX–2010–14,3 Exchange Rule 11.5(a)(2) protects market participants from executions at prices that are significantly worse than the last sale at the time of order entry by providing Exchange system functionality that cancels any portion of a market order (as defined in Rule 11.5(a)(2)) that would execute at a price that is 50 cents or 5 percentage points worse than the consolidated last sale, whichever is greater. Any portion of a market order that would otherwise execute outside of these thresholds is immediately cancelled back to the User.4 The Exchange proposes to modify Rule 11.5(a)(2) to provide that Destination-on-Open orders, as defined in Rule 11.5(c)(10),5 are not subject to these market collars.6 The rationale for this exception is twofold. First, using a reference price calculation for market collar thresholds at the open of trading is problematic because of the potential lack of trading activity just prior to the open and the resulting price dislocation. Therefore, the reference price for a market collar on a Destination-on-Open order could be out of line with the market at the open of the regular trading session. In addition, other Exchanges also address this issue similarly by excluding market on open orders as well.7 2. Statutory Basis The statutory basis for the proposed rule change is Section 6(b)(5) of the 3 See Securities Exchange Act Release No. 63163 (October 22, 2010), 75 FR 66408 (October 28, 2010) (SR–EDGX–2010–14). 4 A User is defined in Exchange Rule 1.5(cc) as ‘‘any Member or Sponsored Participant who is authorized to obtain access to the System pursuant to Rule 11.3’’. 5 Rule 11.5(c)(10) defines a Destination-on-Open order, in part, as ‘‘a market or limit order that instructs the System to route the order to a specified away trading center to participate in said trading center’s opening process, without being processed by the System as described below in Rule 11.9(b)(1).’’ 6 The Exchange notes that when orders are routed to an away trading center, such away trading centers’ collar rules apply, when applicable, regardless of the Exchange’s proposed exclusion for Destination-on-Open orders. 7 See, e.g., Nasdaq Rule 4751(f)(13) which excludes market on open orders from the definition of ‘‘collared orders.’’ See also Securities Exchange Act Release No. 60371 (July 23, 2009), 74 FR 38075 (July 30, 2009) (SR–Nasdaq–2009–070). E:\FR\FM\28DEN1.SGM 28DEN1

Agencies

[Federal Register Volume 75, Number 248 (Tuesday, December 28, 2010)]
[Notices]
[Pages 81689-81691]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32623]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63594; File No. SR-Phlx-2010-183]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NASDAQ OMX PHLX LLC To Expand Its Short Term Option Program

December 21, 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 December 15, 2010, NASDAQ OMX PHLX LLC (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 expand the 
Short Term Option Program (``STO Program'' or ``Program'') \3\ so that 
the Exchange may select fifteen option classes on which Short Term 
Option Series \4\ may be opened.
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    \3\ Commentary .11 to Rule 1012 and Rule 1101A(b)(vi). See 
Securities Exchange Act Release No. 62296 (June 15, 2010), 75 FR 
35115 (June 21, 2010) (SR-Phlx-2010-84) (notice of filing and 
immediate effectiveness permanently establishing STO Program on the 
Exchange). Other exchanges have also established permanent short 
term option programs. See Securities Exchange Act Release Nos. 59824 
(April 27, 2009), 74 FR 20518 (May 4, 2009) (SR-CBOE-2009-018) 
(approval order permanently establishing short term option program); 
62444 (July 2, 2010), 75 FR 39595 (July 9, 2010) (SR-ISE-2010-72) 
(approval order [sic] permanently establishing short term option 
program); 62297 (June 15, 2010), 75 FR 35111 (June 21, 2010) (SR-
NASDAQ-2010-073) (notice of filing and immediate effectiveness 
permanently establishing short term option program); 62296 (June 15, 
2010), 75 FR 35111 (June 21, 2010) [sic] (SR-Arca-2010-059) (notice 
of filing and immediate effectiveness permanently establishing short 
term option program); 62296 (June 15, 2010), 75 FR 35111 (June 21, 
2010) [sic] (SR-Amex-2010-062) (notice of filing and immediate 
effectiveness permanently establishing short term option program); 
and 62505 (July 15, 2010), 75 FR 42792 (July 22, 2010) (SR-BX-2010-
047) (approval order [sic] permanently establishing short term 
option program).
    \4\ Short Term Option Series are 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. Rules 1000(b)(44), 
1000A(b)(16), Commentary .11 to Rule 1012 and Rule 1101A(b)(vi).
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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, 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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to amend Rule 1012 to 
expand the STO Program so that the Exchange may select fifteen option 
classes on which Short Term Option Series may be opened.
    The STO Program is codified in Commentary .11 to Rule 1012 and Rule 
1101A(b)(vi). These sections state that 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 series of 
options on no more than five option classes that expire on the Friday 
of the following business

[[Page 81690]]

week that is a business day. In addition to the five-option class 
limitation, there is also a limitation that no more than twenty series 
for each expiration date in those classes that may be opened for 
trading.\5\ Furthermore, the strike price of each short term option has 
to be fixed with approximately the same number of strike prices being 
opened above and below the value of the underlying security at about 
the time that the short term options are initially opened for trading 
on the Exchange, and with strike prices being within thirty percent 
(30%) above or below the closing price of the underlying security from 
the preceding day. The Exchange does not propose any changes to these 
additional Program limitations. The Exchange proposes only to increase 
from five to fifteen the number of option classes that may be opened 
pursuant to the Program.
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    \5\ However, if the Exchange opens less than twenty (20) short 
term options for a Short Term Option 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 market price of the underlying security moves 
substantially from the exercise price or prices of the series 
already opened. Any additional strike prices listed by the Exchange 
shall be within thirty percent (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). Commentary .11(d) to Rule 1012 and Rule 1101A(b)(vi)(D).
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    The principal reason for the proposed expansion is customer demand 
for adding, or not removing, short term option classes from the 
Program. In order that the Exchange not exceed the five-option class 
restriction, each month since the inception of the Program the Exchange 
has had to discontinue trading, on the average, more than one short 
term option class before it could begin trading other option classes 
within the Program. This has negatively impacted investors and traders, 
particularly retail public customers, who have on several occasions 
requested the Exchange not to remove short term option classes or add 
short term option classes.
    As an example, a retail investor recently asked the Exchange to 
reinstate a short term option class that the Exchange had to remove 
from trading because of the five-class option limit within the Program. 
The investor told the Exchange that he had used the removed class as a 
powerful tool for hedging a market sector, and that various strategies 
that the investor put into play were disrupted and eliminated when the 
class was removed. The Exchange feels that it is essential that such 
negative, potentially very costly impacts on retail investors are 
eliminated by modestly expanding the Program to enable additional 
classes to be traded.
    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 
trading of an expanded number of classes in the Program.
    The Exchange believes that the STO Program has provided investors 
with greater trading opportunities and flexibility and the ability to 
more closely tailor their investment and risk management strategies and 
decisions. Furthermore, the Exchange has had to eliminate option 
classes on numerous occasions because of the limitation imposed by the 
Program. For these reasons, the Exchange requests an expansion of the 
current Program and the opportunity to provide investors with 
additional short term option classes for investment, trading, and risk 
management purposes.
    Finally, 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 STO Program (the ``Report''). The Report 
will cover the period from the date of effectiveness of the STO Program 
through November of 2010, 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.\6\ The Report will be 
submitted on a confidential basis under separate cover within one week 
of the filing.
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    \6\ 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 \7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \8\ in particular, in that it is 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 Exchange believes that expanding the current STO Program will 
result in a continuing benefit to investors by giving them more 
flexibility to closely tailor their investment and hedging decisions in 
greater number of securities.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 solicited or received.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) 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 Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

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-2010-183 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 81691]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

    All submissions should refer to File Number SR-Phlx-2010-183. 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-2010-183 and should be submitted on or before January 18, 2011.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
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pursuant to delegated authority.\9\

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-32623 Filed 12-27-10; 8:45 am]
BILLING CODE 8011-01-P
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