Self-Regulatory Organizations; NYSE Amex LLC; Order Granting Approval of Proposed Rule Change Regarding the Listing of Options Series With $1 Strike Prices, 5646-5647 [2011-2122]

Download as PDF 5646 Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices available publicly. All submissions should refer to File Number SR–CBOE– 2011–006 and should be submitted on or before February 22, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–2119 Filed 1–31–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63773; File No. SR– NYSEAmex–2010–109] Self-Regulatory Organizations; NYSE Amex LLC; Order Granting Approval of Proposed Rule Change Regarding the Listing of Options Series With $1 Strike Prices January 25, 2011. I. Introduction On November 24, 2010, NYSE Amex LLC (‘‘NYSE Amex’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to allow the Exchange to modify the operation of the $1 Strike Price Program. The proposed rule change was published for comment in the Federal Register on December 14, 2010.3 The Commission received no comment letters on the proposal. This order approves the proposed rule change. srobinson on DSKHWCL6B1PROD with NOTICES II. Description of the Proposal NYSE Amex has proposed to amend Rule 903 Commentary .06 to modify the operation of the $1 Strike Price Program. Currently, the $1 Strike Price Program allows the listing of new series with strikes at $1 intervals only if such series have strike prices within $5 of the previous day’s closing price in the primary listing market.4 The proposal would allow the Exchange also to: (a) List new series with $1 interval strike prices within $5 of the official opening price in the primary listing market, and (b) add $1 interval strike prices between the closing price and the opening price, regardless of whether such strikes are 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Securities Exchange Act Release No. 63463 (December 8, 2010), 75 FR 77923 (‘‘Notice’’). 4 Rule 903 Commentary .06(b). 1 15 VerDate Mar<15>2010 15:05 Jan 31, 2011 Jkt 223001 within $5 of the previous day’s closing price or the day’s opening price. In support of allowing the listing of $1 interval strike between the closing and opening prices, the Exchange stated that, on occasion, the price movement in an underlying security has been so great that listing series with strikes within $5 of the previous day’s closing price and the day’s opening price would leave a gap in the continuity of strike prices. Thus, if an issue closes at $14 one day, and the next day opens above $27, the $21 and $22 strikes would be more than $5 from either benchmark. The Exchange proposed that any such discontinuity be avoided by allowing the listing of options on all $1 interval strike prices that fall between the previous day’s closing price and the opening price. The Exchange also has proposed to prohibit the listing of $2.50 interval strikes below $50 in all classes chosen for the $1 Strike Price Program, and in all long-term option series. According to the Exchange, this change is designed to eliminate discontinuities in strike prices and a lack of parallel strikes in different expiration months of the same issue. Currently, Exchange rules provide that the Exchange may not list series within $1 strike price intervals within $0.50 of an existing strike price in the same class, unless the class in question has been selected to participate in the $0.50 Strike Program.5 In addition, Exchange rules currently stipulate that the Exchange may not list series with $1 strike price intervals for any long-term options (i.e., options having greater than nine months to expiration) under the $1 Strike Price Program.6 However, as the Exchange noted in its proposal, due to the prohibition on $1 strike price intervals within $0.50 of an existing strike price, the existence of series with $2.50 interval strikes for classes selected for the $1 Strike Price Program could lead to discontinuities in strike prices and a lack of parallel strikes in different expiration months of the same issue. For example, if a $12.50 strike series was open in a class selected for the $1 Strike Price Program, the Exchange would not be able to list series with a $12 or $13 strike, potentially resulting in sequence of strike prices at 5 See id. id. The standard strike interval for LongTerm Equity Option Series (LEAPs) is $2.50 where the strike price is $25 or less. See Rule 903 Commentary .05. However, under a separate provision of the rules, the Exchange may list series with $1 strike prices up to $5 in LEAPS in up to 200 option classes on individual stocks, provided the $1 intervals are not within $0.50 of an existing series with a $2.50 strike price. See Rule 903 Commentary .06(e). This provision would not change under the current proposal. irregular intervals (i.e., $10, $11, $12.50, $14, and $15). To replace these now-forbidden $2.50 interval strikes, the Exchange proposes to allow the listing of one additional series within each natural $5 interval, as follows. The Exchange proposed to permit the listing of a series with a strike $2 above the $5-interval strike for each such $5-interval strike above the price of the underlying security at the time of listing. Conversely, the Exchange’s proposal would permit the listing of a series with a strike $2 below the $5-interval strike for each such $5interval strike below the price of the underlying security at the time of listing. For example, if the underlying security was trading at $19, the Exchange could list a $27 strike between the $25 and the $30 strikes, and a $32 strike between the $30 and $35 strikes; as well as a $13 strike between the $10 and $15 strikes, and an $8 strike between the $10 and $15 strikes. The Exchange also notes that each such additional series may be listed only if such listing is consistent with the Options Listing Procedures Plan (‘‘OLPP’’) Provisions in Rule 903A.7 The foregoing provisions would apply to all classes selected for the $1 Strike Price Program, both with respect to standard and long-term options. In addition, since series with $1-interval strikes are not permitted for most long-term options, the proposal would allow the Exchange to list the long-term strike that is $2 above the $5-interval just below the underlying price at the time of listing. For example, if the underlying security is trading at $21.25, this provision would allow the Exchange to add a $22 strike ($2 above the $20 strike) for the long-term option series. In support of its proposal, the Exchange stated that the proposed rule change seeks to reduce investor confusion resulting from discontinuous strike prices that has arisen in the operation of the $1 Strike Price Program, by providing a consistent application of strike price intervals for issues in the $1 Strike Price Program. The Exchange further represented that it has the necessary systems capacity to support the potential increase in new options series that will result from the proposed changes to the $1 Strike Price Program. 6 See PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 7 Rule 903A codifies the limitation on strike price ranges outlined in the OLPP, which, except in limited circumstances, prohibits options series with an exercise price more than 100% above or below the price of the underlying security if that price is $20 or less. If the price of the underlying security is greater than $20, an exchange may not list new options series with an exercise price more than 50% above or below the price of the underlying security. E:\FR\FM\01FEN1.SGM 01FEN1 5647 Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices III. Discussion The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.8 Specifically, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,9 which requires, among other things, that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and practices, 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. As the Exchange notes, the proposal is intended to reduce investor confusion resulting from the operation of the $1 Strike Price Program by reducing the occurrences of discontinuities in strike prices and non-parallel strikes in different expiration months of the same issue. The Commission believes that the proposal strikes a reasonable balance between the Exchange’s desire to accommodate market participants and the need to avoid unnecessary proliferation of options series and the corresponding increase in quotes and market fragmentation. The Commission expects the Exchange to monitor the trading and quotation volume associated with the additional options series listed as a result of this proposal and the effect of these additional series on market fragmentation and on the capacity of the Exchange’s, OPRA’s, and vendors’ automated systems. In approving this proposal, the Commission notes that Exchange has represented that it has the necessary systems capacity to support the potential increase in new options series that will result from the proposed changes to the $1 Strike Price Program. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–2122 Filed 1–31–11; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #12449 and #12450] Pennsylvania Disaster #PA–00036 U.S. Small Business Administration. ACTION: Notice. AGENCY: This is a notice of an Administrative declaration of a disaster for the Commonwealth of Pennsylvania dated 01/25/2011. Incident: Apartment Building Fire. Incident Period: 01/10/2011. Effective Date: 01/25/2011. Physical Loan Application Deadline Date: 03/28/2011. Economic Injury (EIDL) Loan Application Deadline Date: 10/25/2011. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Philadelphia. Contiguous Counties: Pennsylvania: Bucks, Delaware, Montgomery. New Jersey: Burlington, Camden, Gloucester. The Interest Rates are: SUMMARY: srobinson on DSKHWCL6B1PROD with NOTICES IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,10 that the proposed rule change (SR–NYSEAmex– 2010–109) be, and it hereby is, approved. 8 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 9 15 U.S.C. 78f(b)(5). 10 15 U.S.C. 78s(b)(2). VerDate Mar<15>2010 17:41 Jan 31, 2011 Jkt 223001 For Physical Damage: Homeowners With Credit Available Elsewhere ...................... Homeowners Without Credit Available Elsewhere .............. Businesses With Credit Available Elsewhere ...................... Businesses Without Credit Available Elsewhere .............. Non-Profit Organizations With Credit Available Elsewhere ... 11 17 PO 00000 CFR 200.30–3(a)(12). Frm 00089 Fmt 4703 Sfmt 4703 Percent Non-Profit Organizations Without Credit Available Elsewhere ..................................... For Economic Injury: Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere .............. Non-Profit Organizations Without Credit Available Elsewhere ..................................... 3.000 4.000 3.000 The number assigned to this disaster for physical damage is 12449 5 and for economic injury is 12450 0. The States which received an EIDL Declaration # are Pennsylvania, New Jersey. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Dated: January 25, 2011. Karen G. Mills, Administrator. [FR Doc. 2011–2176 Filed 1–31–11; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION Public Availability of U.S. Small Business Administration FY 2010 Service Contract Inventory U.S. Small Business Administration. AGENCY: Notice of Public Availability of FY 2010 Service Contract Inventories. ACTION: In accordance with Section 743 of Division C of the Consolidated Appropriations Act of 2010 (Pub. L. 111–117), the Small Business Administration is publishing this notice to advise the public of the availability of the FY 2010 Service Contract inventory. This inventory provides information on service contract actions over $25,000 that were made in FY 2010. The information is organized by function to show how contracted resources are distributed throughout the agency. The inventory has been developed in accordance with guidance issued on November 5, 2010 by the Percent Office of Management and Budget’s Office of Federal Procurement Policy (OFPP). OFPP’s guidance is available at 4.500 http://www.whitehouse.gov/sites/ default/files/omb/procurement/memo/ 2.250 service-contract-inventories-guidance11052010.pdf. The Small Business 6.000 Administration has posted its inventory 4.000 and a summary of the inventory on the Small Business Administration 3.250 homepage at the following link: http:// www.sba.gov/content/service-contractinventory. SUMMARY: E:\FR\FM\01FEN1.SGM 01FEN1

Agencies

[Federal Register Volume 76, Number 21 (Tuesday, February 1, 2011)]
[Notices]
[Pages 5646-5647]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2122]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63773; File No. SR-NYSEAmex-2010-109]


Self-Regulatory Organizations; NYSE Amex LLC; Order Granting 
Approval of Proposed Rule Change Regarding the Listing of Options 
Series With $1 Strike Prices

January 25, 2011.

I. Introduction

    On November 24, 2010, NYSE Amex LLC (``NYSE Amex'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
allow the Exchange to modify the operation of the $1 Strike Price 
Program. The proposed rule change was published for comment in the 
Federal Register on December 14, 2010.\3\ The Commission received no 
comment letters on the proposal. This order approves the proposed rule 
change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 63463 (December 8, 
2010), 75 FR 77923 (``Notice'').
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II. Description of the Proposal

    NYSE Amex has proposed to amend Rule 903 Commentary .06 to modify 
the operation of the $1 Strike Price Program.
    Currently, the $1 Strike Price Program allows the listing of new 
series with strikes at $1 intervals only if such series have strike 
prices within $5 of the previous day's closing price in the primary 
listing market.\4\ The proposal would allow the Exchange also to: (a) 
List new series with $1 interval strike prices within $5 of the 
official opening price in the primary listing market, and (b) add $1 
interval strike prices between the closing price and the opening price, 
regardless of whether such strikes are within $5 of the previous day's 
closing price or the day's opening price.
---------------------------------------------------------------------------

    \4\ Rule 903 Commentary .06(b).
---------------------------------------------------------------------------

    In support of allowing the listing of $1 interval strike between 
the closing and opening prices, the Exchange stated that, on occasion, 
the price movement in an underlying security has been so great that 
listing series with strikes within $5 of the previous day's closing 
price and the day's opening price would leave a gap in the continuity 
of strike prices. Thus, if an issue closes at $14 one day, and the next 
day opens above $27, the $21 and $22 strikes would be more than $5 from 
either benchmark. The Exchange proposed that any such discontinuity be 
avoided by allowing the listing of options on all $1 interval strike 
prices that fall between the previous day's closing price and the 
opening price.
    The Exchange also has proposed to prohibit the listing of $2.50 
interval strikes below $50 in all classes chosen for the $1 Strike 
Price Program, and in all long-term option series. According to the 
Exchange, this change is designed to eliminate discontinuities in 
strike prices and a lack of parallel strikes in different expiration 
months of the same issue. Currently, Exchange rules provide that the 
Exchange may not list series within $1 strike price intervals within 
$0.50 of an existing strike price in the same class, unless the class 
in question has been selected to participate in the $0.50 Strike 
Program.\5\ In addition, Exchange rules currently stipulate that the 
Exchange may not list series with $1 strike price intervals for any 
long-term options (i.e., options having greater than nine months to 
expiration) under the $1 Strike Price Program.\6\
---------------------------------------------------------------------------

    \5\ See id.
    \6\ See id. The standard strike interval for Long-Term Equity 
Option Series (LEAPs) is $2.50 where the strike price is $25 or 
less. See Rule 903 Commentary .05. However, under a separate 
provision of the rules, the Exchange may list series with $1 strike 
prices up to $5 in LEAPS in up to 200 option classes on individual 
stocks, provided the $1 intervals are not within $0.50 of an 
existing series with a $2.50 strike price. See Rule 903 Commentary 
.06(e). This provision would not change under the current proposal.
---------------------------------------------------------------------------

    However, as the Exchange noted in its proposal, due to the 
prohibition on $1 strike price intervals within $0.50 of an existing 
strike price, the existence of series with $2.50 interval strikes for 
classes selected for the $1 Strike Price Program could lead to 
discontinuities in strike prices and a lack of parallel strikes in 
different expiration months of the same issue. For example, if a $12.50 
strike series was open in a class selected for the $1 Strike Price 
Program, the Exchange would not be able to list series with a $12 or 
$13 strike, potentially resulting in sequence of strike prices at 
irregular intervals (i.e., $10, $11, $12.50, $14, and $15).
    To replace these now-forbidden $2.50 interval strikes, the Exchange 
proposes to allow the listing of one additional series within each 
natural $5 interval, as follows. The Exchange proposed to permit the 
listing of a series with a strike $2 above the $5-interval strike for 
each such $5-interval strike above the price of the underlying security 
at the time of listing. Conversely, the Exchange's proposal would 
permit the listing of a series with a strike $2 below the $5-interval 
strike for each such $5-interval strike below the price of the 
underlying security at the time of listing. For example, if the 
underlying security was trading at $19, the Exchange could list a $27 
strike between the $25 and the $30 strikes, and a $32 strike between 
the $30 and $35 strikes; as well as a $13 strike between the $10 and 
$15 strikes, and an $8 strike between the $10 and $15 strikes. The 
Exchange also notes that each such additional series may be listed only 
if such listing is consistent with the Options Listing Procedures Plan 
(``OLPP'') Provisions in Rule 903A.\7\ The foregoing provisions would 
apply to all classes selected for the $1 Strike Price Program, both 
with respect to standard and long-term options. In addition, since 
series with $1-interval strikes are not permitted for most long-term 
options, the proposal would allow the Exchange to list the long-term 
strike that is $2 above the $5-interval just below the underlying price 
at the time of listing. For example, if the underlying security is 
trading at $21.25, this provision would allow the Exchange to add a $22 
strike ($2 above the $20 strike) for the long-term option series.
---------------------------------------------------------------------------

    \7\ Rule 903A codifies the limitation on strike price ranges 
outlined in the OLPP, which, except in limited circumstances, 
prohibits options series with an exercise price more than 100% above 
or below the price of the underlying security if that price is $20 
or less. If the price of the underlying security is greater than 
$20, an exchange may not list new options series with an exercise 
price more than 50% above or below the price of the underlying 
security.
---------------------------------------------------------------------------

    In support of its proposal, the Exchange stated that the proposed 
rule change seeks to reduce investor confusion resulting from 
discontinuous strike prices that has arisen in the operation of the $1 
Strike Price Program, by providing a consistent application of strike 
price intervals for issues in the $1 Strike Price Program.
    The Exchange further represented that it has the necessary systems 
capacity to support the potential increase in new options series that 
will result from the proposed changes to the $1 Strike Price Program.

[[Page 5647]]

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\8\ 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\9\ which requires, among other things, that 
the rules of a national securities exchange be designed to promote just 
and equitable principles of trade, to prevent fraudulent and 
manipulative acts and practices, 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.
---------------------------------------------------------------------------

    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As the Exchange notes, the proposal is intended to reduce investor 
confusion resulting from the operation of the $1 Strike Price Program 
by reducing the occurrences of discontinuities in strike prices and 
non-parallel strikes in different expiration months of the same issue. 
The Commission believes that the proposal strikes a reasonable balance 
between the Exchange's desire to accommodate market participants and 
the need to avoid unnecessary proliferation of options series and the 
corresponding increase in quotes and market fragmentation. The 
Commission expects the Exchange to monitor the trading and quotation 
volume associated with the additional options series listed as a result 
of this proposal and the effect of these additional series on market 
fragmentation and on the capacity of the Exchange's, OPRA's, and 
vendors' automated systems.
    In approving this proposal, the Commission notes that Exchange has 
represented that it has the necessary systems capacity to support the 
potential increase in new options series that will result from the 
proposed changes to the $1 Strike Price Program.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NYSEAmex-2010-109) be, and 
it hereby is, approved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-2122 Filed 1-31-11; 8:45 am]
BILLING CODE 8011-01-P