Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Amex LLC To Expand the $2.50 Strike Price Program, 19160-19162 [2011-8141]
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19160
Federal Register / Vol. 76, No. 66 / Wednesday, April 6, 2011 / Notices
required customers to produce all
insurance information received from an
insurance sales agent or securities
broker relating to such insurance.83
FINRA has amended the proposed item
to clarify its intended scope by deleting
the reference to ‘‘insurance’’ before
‘‘information.’’ 84
III. Commission’s Findings
After careful review of the proposed
rule change, the comment letters and
the FINRA Response Letter, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 1, is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities association.85 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 15A(b)(6) of the Act,86
which requires, among other things, that
FINRA rules be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, and, in general, to
protect investors and the public interest.
The Commission believes that the
revisions to the Discovery Guide will
help reduce the number and limit the
scope of disputes involving document
production and other matters, thereby
improving the arbitration process for the
benefit of the public investors, brokerdealer firms, and associated persons
who use the process. The revisions to
the Discovery Guide are the result of
over six years of consultation by FINRA
with its constituents. The Commission
also expects that further improvement of
the process should be possible through
the Discovery Task Force’s
consideration of discovery issues as
they arise.87
IV. Accelerated Approval
The Commission finds goods cause,
pursuant to Section 19(b)(2) of the
Exchange Act,88 for approving the
proposed rule change, as modified by
Amendment No. 1 thereto, prior to the
30th day after publication of notice of
the filing of Amendment No. 1 in the
Federal Register. The proposed rule
change was informed by FINRA’s
consideration of, and the incorporation
of many suggestions made in, extensive
mstockstill on DSKH9S0YB1PROD with NOTICES
83 See
note 3 supra.
Letter.
85 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
86 15 U.S.C. 78o–3(b)(6).
87 Cf. Response Letter (describing plans for further
consideration of issues by the Discovery Task
Force).
88 15 U.S.C. 78s(b)(2).
84 Response
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comments on a 2008 proposal to update
the Discovery Guide, and Amendment
No. 1’s modifications to the proposed
rule change add clarity to the Discovery
Guide and provide additional guidance
to parties and arbitrators.
Accordingly, the Commission finds
that good cause exists to approve the
proposal, as modified by Amendment
No. 1, on an accelerated basis.
V. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change, as modified by Amendment No.
1, 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–FINRA–2010–035 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–FINRA–2010–035. 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
FINRA. All comments received will be
posted without change; the Commission
does not edit personal identifying
information from submissions. You
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should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–FINRA–2010–035 and
should be submitted on or before April
27, 2011.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,89 that the
proposed rule change (SR–FINRA–
2010–035), as modified by Amendment
No. 1, be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.90
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–8200 Filed 4–5–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64163; File No. SR–
NYSEAmex–2011–22]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Amex LLC To Expand the $2.50 Strike
Price Program
March 31, 2011.
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 March
29, 2011, NYSE Amex LLC (‘‘NYSE
Amex’’ or ‘‘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 Exchange. 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 Substance of
the Proposed Rule Change
The Exchange proposes to amend
Commentary .07 to NYSE Amex Rule
903 to expand the $2.50 Strike Price
Program. The text of the proposed rule
change is available at the principal
office of Exchange, the Commission’s
Public Reference Room, on the
Commission’s Web site at https://
www.sec.gov, and https://www.nyse.com.
89 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
90 17
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Federal Register / Vol. 76, No. 66 / Wednesday, April 6, 2011 / Notices
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
mstockstill on DSKH9S0YB1PROD with NOTICES
The purpose of this proposed rule
change is to expand the current $2.50
Strike Price Program (‘‘Program’’)3 to
permit the listing of options with $2.50
strike price intervals for options with
strike prices between $50 and $100,
provided the $2.50 strike price intervals
are no more than $10 from the closing
price of the underlying stock in the
primary market.4 Additionally, the
Exchange proposes to increase the
number of option classes on individual
stocks for which the intervals of strike
prices will be $2.50 to 60 options
classes.
Currently, Exchange Rule 903 at
Commentary .07 permits the listing of
options with $2.50 strike price intervals
for options with strike prices between
$50 and $75. Specifically, the Exchange
proposes to amend Commentary .07 to
Exchange Rule 903 to amend the current
text.
For example, consider a hypothetical
where Caterpillar, Inc. (‘‘CAT’’) was
trading at $81. With approximately one
month remaining until expiration, and
with a front month at-the-money put
option (the 80 strike) trading at
approximately $1.30, the investor would
be able to purchase a $77.50 strike put
at an estimated $.60 per contract. Today,
the next available strike of a one month
3 See Securities Exchange Act Release No. 35993
(July 19, 1995), 60 FR 38073 (July 25, 1995)
(approving File Nos. SR—Phlx–95–08, SR–Amex–
95–12, SR–PSE–95–07, SR–CBOE–95–19, and SR–
NYSE–95–12). See also Exchange Act Release No.
52893 (December 5, 2005) 70 FR 73488 (December
12, 2005) (a rule change to allow the listing of
options with $2.50 strike price intervals for strike
prices between $50 and $75).
4 The term ‘‘primary market’’ is defined in NYSE
Amex Rule 900.2NY(62), in respect of an
underlying stock or Exchange-Traded Fund Share,
as the principal market in which the underlying
stock or Exchange-Traded Fund Share is traded.
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put option is the 75 strike. While the 75
strike put would certainly trade at a
lesser price than the 80 strike put,5 the
protection offered would only take
effect with a 7.40% decline in the
market as opposed to a 4.30% decline
in the market. The additional choice
would provide the investor an
additional opportunity to hedge
exposure (the opportunity to hedge with
a reduced outlay) and thereby minimize
risk if there were a decline in the stock
price of CAT.
Another example would be if an
investor desired to sell call options to
hedge the exposure of an underlying
stock position and enhance yield.
Consider a hypothetical where CAT was
trading at $81 and the second month
(two months remaining) of a recently
out-of-the-money call option (the 85
strike) was trading at approximately
$2.35. If the investor where to sell the
85 call against an existing stock
position, the investor could yield a
return of approximately 2.90% over a
two month period or an annualized
return of 17.4%. By providing an
additional $2.50 strike interval above
$75, the investor would have the
opportunity to sell the 82.50 strike
instead of the 85 strike. If the 85 strike
call were trading at $2.35, the 82.50
strike call would trade at approximately
3.30. By selling the 82.50 strike call at
3.30 against an existing stock position,
the investor could yield a 4.07% return
over a two month period or an
annualized 24.40% return. Therefore, an
additional choice of a $2.50 strike
interval could afford varying yields to
the investor.
The Exchange believes that the
Program has to date created additional
trading opportunities for investors,
thereby benefiting the marketplace. The
existence of $2.50 strike prices with
strike intervals above $75 affords
investors the ability to more closely
tailor investment strategies to the
precise movement of the underlying
security and meet their investment,
trading and risk management
requirements.
The Exchange is also proposing to
make a non-substantive amendment to
the rule text to remove language
referring to the original SEC approval of
the Program.
The Exchange is also proposing to
increase the number of option classes on
individual stocks for which the intervals
of strike prices will be $2.50 to 60
options classes. Currently, the Exchange
may select up to 51 options classes on
individual stocks for which the intervals
5 The 75 strike put would trade at $.30 in this
example.
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19161
of strike prices will be $2.50. Initially
adopted in 1995 as a pilot program, the
options exchanges at that time were
permitted to list options with $2.50
strike price intervals up to $50 on a total
of up to 100 option classes. In 1998, the
pilot program was expanded and
permanently approved to allow the
options exchanges collectively to select
up to 200 option classes on which to list
options with $2.50 strike price intervals
up to $50. Of these 200 options classes
eligible for the Program, 51 classes were
allocated to the Exchange pursuant to a
formula approved by the Commission as
part of the permanent approval of the
Program.6 In addition, each options
exchange is permitted to list options
with $2.50 strike price intervals on any
option class that another options
exchange selects under its program.
Since 1998, the 200 options classes
have not been expanded, although
increasingly more companies have
completed initial public offerings from
1998 through 2010. Additionally,
significantly more options classes are
trading in 2010 as compared to 1998.
The Exchange proposes to increase its
allocation from 51 to 60 7 options
classes to accommodate investor
requests for $2.50 strikes in certain
options classes. The Exchange believes
that offering additional options classes
would benefit investors.
Furthermore, the Exchange does not
believe that this proposal would have a
negative impact on the marketplace. The
Exchange would compare this proposal
with the $1 Strike Price expansion,
wherein the Exchange expanded its $1
Strike Price Program from 55 individual
stocks to 150 individual stocks on
which an option series may be listed at
$1 strike price intervals.8 The Exchange
believes that this proposal, wherein the
Exchange is proposing to increase its
allocation from 51 to 60 options classes
is substantially less than the $1 Strike
Price Program increase and therefore
would have less impact than that
program, which has not had any
negative impact on the market in terms
of proliferation of quote volume or
fragmentation.
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 have the necessary
system capacity to handle the potential
6 See Securities Exchange Act Release No. 40662
(November 12, 1998), 63 FR 64297 (November 19,
1998) (approving File Nos. SR–Amex–98–21, SR–
CBOE–98–29, SR–PCX–98–31, and SR Phlx–98–26).
7 Currently, the Chicago Board Options Exchange
(‘‘CBOE’’) has an allocation of 60 options.
8 See Securities Exchange Act Release No. 62452
(July 6, 2010) 75 FR 40011 (July 13, 2010).
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Federal Register / Vol. 76, No. 66 / Wednesday, April 6, 2011 / Notices
additional traffic associated with the
listing and trading of classes on
individual stocks in the $2.50 Strike
Price Program.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Securities Exchange Act of 1934 9
(the ‘‘Act’’) in general, and furthers the
objectives of Section 6(b)(5) of the Act 10
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 the effect of the
proposed expansion on the marketplace
would not result in a material
proliferation of quote volume or
concerns with fragmentation. In
addition, the Exchange believes that it
has the necessary system capacity to
handle the potential additional traffic
associated with the listing and trading
of additional series.
Rather, the Exchange believes the
$2.50 Strike Price Program proposal
would provide the investing public and
other market participants increased
opportunities to better manage their risk
exposure. Accordingly, the Exchange
believes that the proposal to expand the
number of classes in the Program and to
allow the listing of options with $2.50
strike price intervals for options with
strike prices between $50 and $100
should further benefit investors and the
market by providing greater trading
opportunities for those underlying
stocks that have low volatility and thus
trade in a narrow range.
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.
mstockstill on DSKH9S0YB1PROD with NOTICES
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 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 significantly affect the
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 15
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Jkt 223001
protection of investors or the public
interest, does not impose any significant
burden on competition, and, by its
terms, does not become operative for 30
days from the date on which it was
filed, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 11 and Rule 19b–
4(f)(6) thereunder.12
The Exchange has requested that the
Commission waive the 30-day operative
delay. The Commission believes that
waiver of the operative delay is
consistent with the protection of
investors and the public interest
because the proposal is substantially
similar to that of another exchange that
has been approved by the
Commission.13 Therefore, the
Commission designates the proposal
operative upon filing.14
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–2011–22 on
the subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
13 See Securities Exchange Act Release No. 64157
(March 31, 2011) (SR–Phlx–2011–15) (order
approving expansion of $2.50 Strike Price Program).
14 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
12 17
PO 00000
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Fmt 4703
Sfmt 4703
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEAmex–2011–22. 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–
NYSEAmex–2011–22 and should be
submitted on or before April 27, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–8141 Filed 4–5–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64161; File No. SR–BX–
2011–017]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend the
BOX Rules To Expand the $2.50 Strike
Price Program
March 31, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
15 17
E:\FR\FM\06APN1.SGM
CFR 200.30–3(a)(12).
06APN1
]]>Agencies
[Federal Register Volume 76, Number 66 (Wednesday, April 6, 2011)]
[Notices]
[Pages 19160-19162]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8141]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64163; File No. SR-NYSEAmex-2011-22]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE Amex LLC To Expand the
$2.50 Strike Price Program
March 31, 2011.
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 March 29, 2011, NYSE Amex LLC (``NYSE Amex'' or ``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 Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Commentary .07 to NYSE Amex Rule 903
to expand the $2.50 Strike Price Program. The text of the proposed rule
change is available at the principal office of Exchange, the
Commission's Public Reference Room, on the Commission's Web site at
https://www.sec.gov, and https://www.nyse.com.
[[Page 19161]]
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 this proposed rule change is to expand the current
$2.50 Strike Price Program (``Program'')\3\ to permit the listing of
options with $2.50 strike price intervals for options with strike
prices between $50 and $100, provided the $2.50 strike price intervals
are no more than $10 from the closing price of the underlying stock in
the primary market.\4\ Additionally, the Exchange proposes to increase
the number of option classes on individual stocks for which the
intervals of strike prices will be $2.50 to 60 options classes.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 35993 (July 19,
1995), 60 FR 38073 (July 25, 1995) (approving File Nos. SR--Phlx-95-
08, SR-Amex-95-12, SR-PSE-95-07, SR-CBOE-95-19, and SR-NYSE-95-12).
See also Exchange Act Release No. 52893 (December 5, 2005) 70 FR
73488 (December 12, 2005) (a rule change to allow the listing of
options with $2.50 strike price intervals for strike prices between
$50 and $75).
\4\ The term ``primary market'' is defined in NYSE Amex Rule
900.2NY(62), in respect of an underlying stock or Exchange-Traded
Fund Share, as the principal market in which the underlying stock or
Exchange-Traded Fund Share is traded.
---------------------------------------------------------------------------
Currently, Exchange Rule 903 at Commentary .07 permits the listing
of options with $2.50 strike price intervals for options with strike
prices between $50 and $75. Specifically, the Exchange proposes to
amend Commentary .07 to Exchange Rule 903 to amend the current text.
For example, consider a hypothetical where Caterpillar, Inc.
(``CAT'') was trading at $81. With approximately one month remaining
until expiration, and with a front month at-the-money put option (the
80 strike) trading at approximately $1.30, the investor would be able
to purchase a $77.50 strike put at an estimated $.60 per contract.
Today, the next available strike of a one month put option is the 75
strike. While the 75 strike put would certainly trade at a lesser price
than the 80 strike put,\5\ the protection offered would only take
effect with a 7.40% decline in the market as opposed to a 4.30% decline
in the market. The additional choice would provide the investor an
additional opportunity to hedge exposure (the opportunity to hedge with
a reduced outlay) and thereby minimize risk if there were a decline in
the stock price of CAT.
---------------------------------------------------------------------------
\5\ The 75 strike put would trade at $.30 in this example.
---------------------------------------------------------------------------
Another example would be if an investor desired to sell call
options to hedge the exposure of an underlying stock position and
enhance yield. Consider a hypothetical where CAT was trading at $81 and
the second month (two months remaining) of a recently out-of-the-money
call option (the 85 strike) was trading at approximately $2.35. If the
investor where to sell the 85 call against an existing stock position,
the investor could yield a return of approximately 2.90% over a two
month period or an annualized return of 17.4%. By providing an
additional $2.50 strike interval above $75, the investor would have the
opportunity to sell the 82.50 strike instead of the 85 strike. If the
85 strike call were trading at $2.35, the 82.50 strike call would trade
at approximately 3.30. By selling the 82.50 strike call at 3.30 against
an existing stock position, the investor could yield a 4.07% return
over a two month period or an annualized 24.40% return. Therefore, an
additional choice of a $2.50 strike interval could afford varying
yields to the investor.
The Exchange believes that the Program has to date created
additional trading opportunities for investors, thereby benefiting the
marketplace. The existence of $2.50 strike prices with strike intervals
above $75 affords investors the ability to more closely tailor
investment strategies to the precise movement of the underlying
security and meet their investment, trading and risk management
requirements.
The Exchange is also proposing to make a non-substantive amendment
to the rule text to remove language referring to the original SEC
approval of the Program.
The Exchange is also proposing to increase the number of option
classes on individual stocks for which the intervals of strike prices
will be $2.50 to 60 options classes. Currently, the Exchange may select
up to 51 options classes on individual stocks for which the intervals
of strike prices will be $2.50. Initially adopted in 1995 as a pilot
program, the options exchanges at that time were permitted to list
options with $2.50 strike price intervals up to $50 on a total of up to
100 option classes. In 1998, the pilot program was expanded and
permanently approved to allow the options exchanges collectively to
select up to 200 option classes on which to list options with $2.50
strike price intervals up to $50. Of these 200 options classes eligible
for the Program, 51 classes were allocated to the Exchange pursuant to
a formula approved by the Commission as part of the permanent approval
of the Program.\6\ In addition, each options exchange is permitted to
list options with $2.50 strike price intervals on any option class that
another options exchange selects under its program.
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\6\ See Securities Exchange Act Release No. 40662 (November 12,
1998), 63 FR 64297 (November 19, 1998) (approving File Nos. SR-Amex-
98-21, SR-CBOE-98-29, SR-PCX-98-31, and SR Phlx-98-26).
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Since 1998, the 200 options classes have not been expanded,
although increasingly more companies have completed initial public
offerings from 1998 through 2010. Additionally, significantly more
options classes are trading in 2010 as compared to 1998. The Exchange
proposes to increase its allocation from 51 to 60 \7\ options classes
to accommodate investor requests for $2.50 strikes in certain options
classes. The Exchange believes that offering additional options classes
would benefit investors.
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\7\ Currently, the Chicago Board Options Exchange (``CBOE'') has
an allocation of 60 options.
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Furthermore, the Exchange does not believe that this proposal would
have a negative impact on the marketplace. The Exchange would compare
this proposal with the $1 Strike Price expansion, wherein the Exchange
expanded its $1 Strike Price Program from 55 individual stocks to 150
individual stocks on which an option series may be listed at $1 strike
price intervals.\8\ The Exchange believes that this proposal, wherein
the Exchange is proposing to increase its allocation from 51 to 60
options classes is substantially less than the $1 Strike Price Program
increase and therefore would have less impact than that program, which
has not had any negative impact on the market in terms of proliferation
of quote volume or fragmentation.
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\8\ See Securities Exchange Act Release No. 62452 (July 6, 2010)
75 FR 40011 (July 13, 2010).
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With regard to the impact of this proposal on system capacity, the
Exchange has analyzed its capacity and represents that it and the
Options Price Reporting Authority have the necessary system capacity to
handle the potential
[[Page 19162]]
additional traffic associated with the listing and trading of classes
on individual stocks in the $2.50 Strike Price Program.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 \9\ (the ``Act'') in
general, and furthers the objectives of Section 6(b)(5) of the Act \10\
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 the effect of the proposed expansion on the marketplace would not
result in a material proliferation of quote volume or concerns with
fragmentation. In addition, the Exchange believes that it has the
necessary system capacity to handle the potential additional traffic
associated with the listing and trading of additional series.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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Rather, the Exchange believes the $2.50 Strike Price Program
proposal would provide the investing public and other market
participants increased opportunities to better manage their risk
exposure. Accordingly, the Exchange believes that the proposal to
expand the number of classes in the Program and to allow the listing of
options with $2.50 strike price intervals for options with strike
prices between $50 and $100 should further benefit investors and the
market by providing greater trading opportunities for those underlying
stocks that have low volatility and thus trade in a narrow range.
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 on 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 significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not become operative for 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest because the proposal is substantially similar to that of
another exchange that has been approved by the Commission.\13\
Therefore, the Commission designates the proposal operative upon
filing.\14\
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\13\ See Securities Exchange Act Release No. 64157 (March 31,
2011) (SR-Phlx-2011-15) (order approving expansion of $2.50 Strike
Price Program).
\14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission 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-2011-22 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-2011-22. 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-
NYSEAmex-2011-22 and should be submitted on or before April 27, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Cathy H. Ahn,
Deputy Secretary.
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\15\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2011-8141 Filed 4-5-11; 8:45 am]
BILLING CODE 8011-01-P
