Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ Stock Market, LLC Relating to the $2.50 Strike Price Program, 24067-24069 [2011-10361]
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Federal Register / Vol. 76, No. 83 / Friday, April 29, 2011 / Notices
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Charles Mierzwa,
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[FR Doc. 2011–10418 Filed 4–28–11; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64326; File No. SR–
NASDAQ–2011–057]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
Stock Market, LLC Relating to the
$2.50 Strike Price Program
April 22, 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 April 18,
2011, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ 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.
srobinson on DSKHWCL6B1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NASDAQ Stock Market LLC
proposes to amend Section 6, Series of
Options Open for Trading, of Chapter
IV, Securities Traded on NOM, to
expand the $2.50 Strike Price Program,
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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which applies to NASDAQ members
using the NASDAQ Options Market
(‘‘NOM’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
www.nasdaq.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
The purpose of this proposed rule
change is to expand the Exchange’s
ability to select option classes on
individual stocks for which the intervals
of strike prices will be $2.50 to list for
trading.
The Exchange recently expanded its
$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 The Exchange
currently list [sic] series at $2.50 strike
price intervals in any multiply traded
option once another exchange has
selected that option to be a part of the
program.
The Exchange proposes to amend
Chapter IV, Section 6 at Commentary
.03 to specify that it may select up to
sixty (60) option classes on individual
stocks for which the intervals of strike
prices will be $2.50 in addition to
options selected by another exchange as
part of the $2.50 Strike Price Program.
NOM has participated in the industry
wide $2.50 Strike Price Program since
NOM’s inception in 2007. Currently,
other options exchanges select up to 60
option classes on individual stocks for
which the intervals of strike prices will
be $2.50.5 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.
Also, significantly more options classes
are trading in 2011 as compared to 2007.
The Exchange proposes to specify that
it may select up to 60 options classes to
remain competitive with other
exchanges and to offer investors
additional investment choices.
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 NOM expanded its $1 Strike
Price Program from 55 individual stocks
to 150 individual stocks on which an
option series may list at $1 strike price
intervals.6 The Exchange believes that
this proposed rule change that would, in
part, result in an increase to overall
options classes in the industry wide
Program, is less than the $1 Strike Price
3 In 2007, NOM proposed to participate in the
$2.50 Strike Price Program. See Securities Exchange
Act Release Nos. 40662 (November 12, 1998), 63 FR
64297 (November 19, 1998) (order approving File
Nos. SR–Amex–98–21; SR–CBOE–98–29; SR–PCX–
98–31; and SR–Phlx–98–26) (‘‘1998 Order’’) and
52893 (December 5, 2005), 70 FR 73488 (December
12, 2005) (order approving File No. SR–Amex–
2005–067). NOM participates in the $2.50 Strike
Price Program on the same terms and conditions as
the other options exchanges. See Securities
Exchange Act Release No. 57478 (March 12, 2008),
73 FR 14521 (March 18, 2008) (SR–NASDAQ–2007–
004 and SR–NASDAQ–2007–080). See also
Securities Exchange Act Release No. 64157 (March
31, 2011), 76 FR 18817 (April 5, 2011) (SR–Phlx–
2011–15).
4 The term ‘‘primary market’’ is defined in
Exchange Rule 1000 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.
5 The International Securities Exchange, LLC
(‘‘ISE’’), NASDAQ OMX PHLX LLC (‘‘Phlx’’), and
Chicago Board Options Exchange (‘‘CBOE’’) may
select up to 60 option classes on individual stocks
for which the intervals of strike prices will be $2.50.
See Securities Exchange Act Release Nos. 64258
(April 8, 2011), 76 FR 20764 (April 13, 2011) (SR–
ISE–2011–23), 63914 (February 15, 2011) and 76 FR
9846 (February 22, 2011) (SR–Phlx–2011–15).
6 See Securities Exchange Release Act No. 62451
(July 6, 2010), 75 FR 40001 (July 13, 2010) (SR–
NASDAQ–2010–083).
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. The text of
these statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
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Federal Register / Vol. 76, No. 83 / Friday, April 29, 2011 / Notices
Program increase, which also occurred
among several exchanges participating
in the program. The Exchange believes
that this proposal would have less
impact than the $1 Strike Program
increase, which did not have any
negative impact on the market in terms
of proliferation of quote volume or
fragmentation.
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. 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
additional traffic associated with the
listing and trading of classes on
individual stocks in the $2.50 Strike
Price Program.
srobinson on DSKHWCL6B1PROD with NOTICES
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 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 classes.
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. While expansion of the $2.50
Strike Price Program may generate
additional quote traffic, the Exchange
does not believe that this increased
traffic will become unmanageable since
the proposal is limited to a fixed
number of classes. Further, the
Exchange does not believe that the
proposal will result in a material
proliferation of additional series
because it is limited to a fixed number
of classes.
7 15
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
IV. Solicitation of Comments
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
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
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not significantly affect the
protection of investors or the public
interest, does not impose any significant
burden on competition, and, by its
terms, does not become operative for 30
days from the date on which it was
filed, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 9 and Rule 19b–
4(f)(6) thereunder.10
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.11 Therefore, the
Commission designates the proposal
operative upon filing.12
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.
9 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 Commission
has waived the five-day prefiling requirement in
this case.
11 See Securities Exchange Act Release No. 64157
(March 31, 2011), 76 FR 18817 (April 5, 2011) (SR–
Phlx–2011–15) (order approving expansion of $2.50
Strike Price Program).
12 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).
10 17
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• 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–NASDAQ–2011–057 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–NASDAQ–2011–057. 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–
NASDAQ–2011–057 and should be
submitted on or before May 20, 2011.
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Federal Register / Vol. 76, No. 83 / Friday, April 29, 2011 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–10361 Filed 4–28–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64338; File No. SR–Phlx–
62011–13]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Order
Approving Proposed Rule Change, as
Modified by Amendment No. 1,
Relating to Amendments to NASDAQ
OMX PHLX LLC’s Limited Liability
Company Agreement, By-Laws, Rules,
Advices and Regulations
April 25, 2011.
I. Introduction
On February 16, 2011, NASDAQ OMX
PHLX LLC (‘‘Phlx’’ 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 alter its governance structure
and to make other non-substantive
conforming changes. The proposed rule
change was published for comment in
the Federal Register on March 4, 2011.3
On April 15, 2011, the Exchange filed
Amendment No. 1 to the proposed rule
change.4 The Commission received no
comment letters regarding the proposal.
This order approves the proposed rule
change, as modified by Amendment No.
1.
II. Description of the Proposal
The Exchange proposes to amend its
Limited Liability Company Agreement
(‘‘LLC Agreement’’) and By-Laws to
substantially conform them to The
NASDAQ Stock Market LLC’s
(‘‘NASDAQ’’) Second Amended Limited
Liability Company Agreement
(‘‘NASDAQ LLC Agreement’’) and ByLaws, respectively. These conforming
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 63981
(February 25, 2011), 76 FR 12180 (March 4, 2011)
(‘‘Notice’’).
4 In Amendment No. 1, the Exchange amended
the text of Rules 607, 862, 1012, 1017, 1058, 1079,
1080, 1082, and 3202 to reflect separate and
unrelated intervening proposed rule changes that
became effective after this proposal was published
for comment. Because Amendment No. 1 is
technical in nature, the Commission is not required
to publish it for comment.
srobinson on DSKHWCL6B1PROD with NOTICES
1 15
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changes include, among other things: (1)
The elimination of the Exchange’s
Series A Preferred Stock and dissolution
of the Member Voting Trust; (2)
modifications to the Exchange’s board
and committee structure to harmonize it
with NASDAQ’s board and committee
structure; 5 (3) the elimination of foreign
currency option (‘‘FCO’’) participations,
of which there are none outstanding; (4)
the elimination of definitions, rules, and
references to XLE (the Exchange’s
former equities trading platform); and
(5) changes to other terms, names, and
cross-references contained in the
Exchange’s LLC Agreement and ByLaws, including technical and
grammatical changes to reflect the
Exchange’s recent conversion from a
Delaware corporation to a Delaware
limited liability company (‘‘LLC’’),6 and
changes to clarify and simplify the ByLaws, Rules, Option Floor Procedure
Advices and Equity Floor Procedure
Advices (the latter two are collectively
referred to herein as ‘‘Advices’’), and
Regulations of the Exchange.
A. Elimination of the Series A Preferred
Stock and Dissolution of the Member
Voting Trust
The Exchange proposes to amend the
Exchange’s formation documents to
eliminate the Series A Preferred Stock.
In 2003, Phlx, formerly the Philadelphia
Stock Exchange, Inc., filed with the
Commission to amend its formation
documents to form a demutualized
Delaware stock corporation.7 At the
time of demutualization, the Exchange
amended its Certificate of Incorporation
to designate one share of preferred stock
as the ‘‘Series A Preferred Stock,’’ the
holder of which had the sole power to
select and remove the On-Floor
Governors,8 in accordance with
5 To align itself with the terminology used by
NASDAQ, the Exchange proposes to rename the
Board of Governors to now be the Board of Directors
(‘‘Board’’). As a result, all references to ‘‘Governors’’
would be changed to ‘‘Directors’’ in the By-Laws,
Rules, Advices, and Regulations of the Exchange.
See Notice, supra note 3, 76 FR at 12181, 12185,
12189.
6 See Securities Exchange Act Release No. 62783
(August 27, 2010), 75 FR 54204 (September 3, 2010)
(SR–Phlx–2010–104). As a result of the conversion,
all references to Incorporation would be changed to
LLC in the By-Laws, Rules, Advices, and
Regulations of the Exchange. The specific proposed
rule changes relating to this amendment are
discussed in detail in the Notice. See Notice, supra
note 3, 76 FR at 12181, 12189.
7 See Securities Exchange Act Release No. 49098
(January 16, 2004), 69 FR 3974 (January 27, 2004)
(SR–Phlx–2003–73).
8 ‘‘On-Floor Governors’’ were the Governors
elected by the Exchange’s Members and Member
Organizations. See Securities Exchange Act Release
No. 53734 (April 27, 2006), 71 FR 26589 (May 5,
2006) (SR–Phlx–2005–93); e-mail from Angela S.
Dunn, Assistant General Counsel, Office of the
General Counsel, NASDAQ OMX (‘‘Dunn’’), to
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24069
specified procedures.9 A trust
agreement was created and the one and
only outstanding share of Series A
Preferred Stock was then held by the
Phlx Member Voting Trust (‘‘Trust’’).
The Exchange believes that these
arrangements were necessary at the time
of demutualization to preserve the
ability of members to vote for and
affirmatively elect certain board
Governors because: (i) Under Delaware
law, only stockholders can elect the
directors of a Delaware corporation; and
(ii) after the demutualization, Members
and Member Organizations that were
not owners at the time of the
demutualization were not stockholders
of the Exchange.10
After the Exchange’s demutualization,
the trustee of the Trust, pursuant to the
Amended Trust Agreement, had the
power to vote the share of Series A
Preferred Stock to elect the Member
Governor and the Designated
Independent Governors,11 as directed by
the vote of the Member Organization
Representatives of Member
Organizations entitled to vote pursuant
to Article III of the By-Laws. According
to the Exchange, this process was
designed to facilitate the exercise by
Members and Member Organizations of
their rights to fair representation in the
selection and removal of certain
Governors of the Exchange and to
facilitate the administration of the
affairs of the Exchange in accordance
with the Act.12 In particular, the Trust
ensured that the candidates for
Governor elected by vote of the
Members were, in turn, validly elected
to the Board of Governors pursuant to
Delaware law and that the Members’
vote could not be overridden.
In 2008, the Exchange was acquired
by and became a wholly-owned
subsidiary of The NASDAQ OMX
Group, Inc. (‘‘NASDAQ OMX’’). The
Exchange represents that, since the
acquisition by NASDAQ OMX, there are
no longer any other common
Ronesha A. Butler, Special Counsel, Division of
Trading and Markets, Commission (‘‘Butler’’), dated
April 20, 2011 (‘‘Dunn Email’’). See also supra note
7 (discussing On-Floor Governors).
9 See supra note 7.
10 See Notice, supra note 3, 76 FR at 12181.
11 After the Exchange’s demutualization, the term
‘‘On-Floor Governors’’ was eliminated and replaced
by the Member Governor and the Designated
Independent Governors. See Dunn Email, supra
note 8. ‘‘Member Governor’’ means a Governor who
is a Member or a general partner or an executive
officer (vice-president and above) of a Member
Organization and is duly elected to fill the one
vacancy on the Board of Governors allocated to the
Member Governor. See By-Laws Article I.
‘‘Designated Independent Governors’’ means those
Independent Governors who are elected by the
holder of the Series A Preferred Stock. See id.
12 See Notice, supra note 3, 76 FR at 12181.
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]]>Agencies
[Federal Register Volume 76, Number 83 (Friday, April 29, 2011)]
[Notices]
[Pages 24067-24069]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10361]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64326; File No. SR-NASDAQ-2011-057]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ Stock Market, LLC
Relating to the $2.50 Strike Price Program
April 22, 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 April 18, 2011, The NASDAQ Stock Market LLC (``NASDAQ'' 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 NASDAQ Stock Market LLC proposes to amend Section 6, Series of
Options Open for Trading, of Chapter IV, Securities Traded on NOM, to
expand the $2.50 Strike Price Program, which applies to NASDAQ members
using the NASDAQ Options Market (``NOM'').
The text of the proposed rule change is available on the Exchange's
Web site at https://www.nasdaq.cchwallstreet.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to expand the
Exchange's ability to select option classes on individual stocks for
which the intervals of strike prices will be $2.50 to list for trading.
The Exchange recently expanded its $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\ The
Exchange currently list [sic] series at $2.50 strike price intervals in
any multiply traded option once another exchange has selected that
option to be a part of the program.
---------------------------------------------------------------------------
\3\ In 2007, NOM proposed to participate in the $2.50 Strike
Price Program. See Securities Exchange Act Release Nos. 40662
(November 12, 1998), 63 FR 64297 (November 19, 1998) (order
approving File Nos. SR-Amex-98-21; SR-CBOE-98-29; SR-PCX-98-31; and
SR-Phlx-98-26) (``1998 Order'') and 52893 (December 5, 2005), 70 FR
73488 (December 12, 2005) (order approving File No. SR-Amex-2005-
067). NOM participates in the $2.50 Strike Price Program on the same
terms and conditions as the other options exchanges. See Securities
Exchange Act Release No. 57478 (March 12, 2008), 73 FR 14521 (March
18, 2008) (SR-NASDAQ-2007-004 and SR-NASDAQ-2007-080). See also
Securities Exchange Act Release No. 64157 (March 31, 2011), 76 FR
18817 (April 5, 2011) (SR-Phlx-2011-15).
\4\ The term ``primary market'' is defined in Exchange Rule 1000
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.
---------------------------------------------------------------------------
The Exchange proposes to amend Chapter IV, Section 6 at Commentary
.03 to specify that it may select up to sixty (60) option classes on
individual stocks for which the intervals of strike prices will be
$2.50 in addition to options selected by another exchange as part of
the $2.50 Strike Price Program.
NOM has participated in the industry wide $2.50 Strike Price
Program since NOM's inception in 2007. Currently, other options
exchanges select up to 60 option classes on individual stocks for which
the intervals of strike prices will be $2.50.\5\ 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. Also, significantly more options classes are trading
in 2011 as compared to 2007. The Exchange proposes to specify that it
may select up to 60 options classes to remain competitive with other
exchanges and to offer investors additional investment choices.
---------------------------------------------------------------------------
\5\ The International Securities Exchange, LLC (``ISE''), NASDAQ
OMX PHLX LLC (``Phlx''), and Chicago Board Options Exchange
(``CBOE'') may select up to 60 option classes on individual stocks
for which the intervals of strike prices will be $2.50. See
Securities Exchange Act Release Nos. 64258 (April 8, 2011), 76 FR
20764 (April 13, 2011) (SR-ISE-2011-23), 63914 (February 15, 2011)
and 76 FR 9846 (February 22, 2011) (SR-Phlx-2011-15).
---------------------------------------------------------------------------
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 NOM expanded
its $1 Strike Price Program from 55 individual stocks to 150 individual
stocks on which an option series may list at $1 strike price
intervals.\6\ The Exchange believes that this proposed rule change that
would, in part, result in an increase to overall options classes in the
industry wide Program, is less than the $1 Strike Price
[[Page 24068]]
Program increase, which also occurred among several exchanges
participating in the program. The Exchange believes that this proposal
would have less impact than the $1 Strike Program increase, which did
not have any negative impact on the market in terms of proliferation of
quote volume or fragmentation.
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\6\ See Securities Exchange Release Act No. 62451 (July 6,
2010), 75 FR 40001 (July 13, 2010) (SR-NASDAQ-2010-083).
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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. 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
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 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 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
classes.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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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. While expansion of
the $2.50 Strike Price Program may generate additional quote traffic,
the Exchange does not believe that this increased traffic will become
unmanageable since the proposal is limited to a fixed number of
classes. Further, the Exchange does not believe that the proposal will
result in a material proliferation of additional series because it is
limited to a fixed number of classes.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not become operative for 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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
Commission has waived the five-day prefiling requirement in this
case.
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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.\11\
Therefore, the Commission designates the proposal operative upon
filing.\12\
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\11\ See Securities Exchange Act Release No. 64157 (March 31,
2011), 76 FR 18817 (April 5, 2011) (SR-Phlx-2011-15) (order
approving expansion of $2.50 Strike Price Program).
\12\ 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-NASDAQ-2011-057 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-NASDAQ-2011-057. 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-
NASDAQ-2011-057 and should be submitted on or before May 20, 2011.
[[Page 24069]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10361 Filed 4-28-11; 8:45 am]
BILLING CODE 8011-01-P
