Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Extending the Pilot Period To Allow Cabinet Trading To Take Place Below $1 Per Option Contract, 32385-32387 [2011-13876]
Download as PDF
Federal Register / Vol. 76, No. 108 / Monday, June 6, 2011 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Cathy H. Ahn,
Deputy Secretary.
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:
[FR Doc. 2011–13903 Filed 6–3–11; 8:45 am]
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BX–2011–029 on the
subject line.
jlentini on DSK4TPTVN1PROD with NOTICES
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.
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change Extending
the Pilot Period To Allow Cabinet
Trading To Take Place Below $1 Per
Option Contract
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–BX–2011–029. 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–BX–
2011–029 and should be submitted on
or before June 27, 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 May 20,
2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated the proposed rule change as
constituting a non-controversial rule
change under Rule 19b–4(f)(6) under the
Act,3 which renders the proposal
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
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BILLING CODE 8011–01–P
32385
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.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64571; File No. SR–Phlx–
2011–72]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
May 31, 2011.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange submits this proposed
rule change to extend through December
1, 2011, the pilot program in Rule 1059,
Accomodation Transactions, to allow
cabinet trading to take place below $1
per option contract, under specified
circumstances (the ‘‘pilot program’’).
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
1 15
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Frm 00031
Fmt 4703
Sfmt 4703
The purpose is to extend through
December 1, 2011, the pilot program in
Commentary .02 of Exchange Rule 1059,
Accommodation Transactions, which
sets forth specific procedures for
engaging in cabinet trades.4 Prior to the
pilot program, Rule 1059 required that
all orders placed in the cabinet were
assigned priority based upon the
sequence in which such orders were
received by the specialist. All closing
bids and offers would be submitted to
the specialist in writing, and the
specialist effected all closing cabinet
transactions by matching such orders
placed with him. Bids or offers on
orders to open for the accounts of
customer, firm, specialists and ROTs
could be made at $1 per option contract,
but such orders could not be placed in
and must yield to all orders in the
cabinet. Specialists effected all cabinet
transactions by matching closing
purchase or sale orders which were
placed in the cabinet or, provided there
was no matching closing purchase or
sale order in the cabinet, by matching a
closing purchase or sale order in the
cabinet with an opening purchase or
sale order.5 All cabinet transactions
were reported to the Exchange following
the close of each business day.6 Any (i)
Member, (ii) member organization, or
(iii) other person who was a nonmember broker or dealer and who
directly or indirectly controlled, was
controlled by, or was under common
control with, a member or member
organization (any such other person
being referred to as an affiliated person)
could effect any transaction as principal
in the over-the-counter market in any
class of option contracts listed on the
4 Cabinet or accommodation trading of option
contracts is intended to accommodate persons
wishing to effect closing transactions in those series
of options dealt in on the Exchange for which there
is no auction market.
5 Specialists and ROTs are not subject to the
requirements of Rule 1014 in respect of orders
placed pursuant to this Rule. Also, the provisions
of Rule 1033(b) and (c), Rule 1034 and Rule 1038
do not apply to orders placed in the cabinet.
Cabinet transactions are not reported on the ticker.
6 See Exchange Rule 1059.
E:\FR\FM\06JNN1.SGM
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32386
Federal Register / Vol. 76, No. 108 / Monday, June 6, 2011 / Notices
Exchange for a premium not in excess
of $1.00 per contract.
On December 30, 2010, the Exchange
filed an immediately effective proposal
that established the pilot program being
extended by this filing. The pilot
program allows transactions to take
place in open outcry at a price of at least
$0 but less than $1 per option contract
until June 1, 2011 (the ‘‘pilot program’’).7
These lower priced transactions are
traded pursuant to the same procedures
applicable to $1 cabinet trades, except
that pursuant to the pilot program (i)
Bids and offers for opening transactions
are only permitted to accommodate
closing transactions in order to limit use
of the procedure to liquidations of
existing positions, and (ii) the
procedures are also made available for
trading in options participating in the
Penny Pilot Program.8
The Exchange believes that allowing a
price of at least $0 but less than $1 will
better accommodate the closing of
options positions in series that are
worthless or not actively traded,
particularly due to recent market
conditions which have resulted in a
significant number of series being outof-the-money. For example, a market
participant might have a long position
in a call series with a strike price of
$100 and the underlying stock might
now be trading at $30. In such an
instance, there might not otherwise be a
market for that person to close-out its
position even at the $1 cabinet price
(e.g., the series might be quoted no bid).
The Exchange hereby seeks to extend
the previously approved pilot period for
such $1 cabinet trading for an additional
six months through December 1, 2011 so
that the procedures can continue
without interruptions while the
Exchange considers whether to seek
permanent approval of the temporary
procedure.
jlentini on DSK4TPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,9
in general, and with Section 6(b)(5) of
7 PHLX Rule 1059, Commentary .02; See
Securities Exchange Act Release No. 63626
(December 30, 2010), 76 FR 812 (January 6, 2011)
(SR–PHLX–2010–185).
8 Prior to the pilot, the $1 cabinet trading
procedures were limited to options classes traded
in $0.05 or $0.10 standard increments. The $1
cabinet trading procedures were not available in
Penny Pilot Program classes because in those
classes, an option series could trade in a standard
increment as low as $0.01 per share (or $1.00 per
option contract with a 100 share multiplier). The
pilot allows trading below $0.01 per share (or $1.00
per option contract with a 100 share multiplier) in
all classes, including those classes participating in
the Penny Pilot Program.
9 15 U.S.C. 78f.
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16:06 Jun 03, 2011
Jkt 223001
the Act,10 in particular, in that the
proposal is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, 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.
Specifically, the Exchange believes that
allowing for liquidations at a price less
than $1 per option contract pursuant to
the pilot program will better facilitate
the closing of options positions that are
worthless or not actively trading,
especially in Penny Pilot issues where
cabinet trades are not otherwise
permitted. The Exchange believes the
extension is of sufficient length to
permit both the Exchange and the
Commission to assess the impact of the
Exchange’s authority to allow
transactions to take place in open outcry
at a price of at least $0 but less than $1
per option in accordance with its
attendant obligations and conditions.
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, as amended.
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: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, if
consistent with the protection of
investors and the public interest, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 11 and Rule 19b–
4(f)(6) thereunder.12
10 15
U.S.C. 78f(b)(5).
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 self-regulatory organization
to submit to the Commission written notice of its
intent to file the proposed rule change, along with
11 15
PO 00000
Frm 00032
Fmt 4703
Sfmt 4703
The Exchange has requested that the
Commission waive the 30-day operative
delay. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest,
because waiver of the 30-day operative
delay will enable the benefits of the
pilot program to continue without
interruption for a six-month period.
Accordingly, the Commission
designates the proposed rule change
operative upon filing with the
Commission.13
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2011–72 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–Phlx–2011–72. 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
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 For the 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. 78(c)(f).
E:\FR\FM\06JNN1.SGM
06JNN1
Federal Register / Vol. 76, No. 108 / Monday, June 6, 2011 / Notices
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 on official business
days between the hours of 10 a.m. and
3 p.m. Copies of such filing also will be
available for inspection and copying at
the principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–Phlx–2011–72 and should
be submitted on or before June 27, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Cathy H. Ahn,
Deputy Secretary.
409 3rd Street, SW., Suite 6050,
Washington, DC 20416
SUPPLEMENTARY INFORMATION: The notice
of the Presidential disaster declaration
for the Commonwealth of KENTUCKY,
dated 05/19/2011 is hereby amended to
include the following areas as adversely
affected by the disaster:
Primary Counties: (Physical Damage
and Economic Injury Loans): Ballard,
Daviess, Henderson, Lawrence,
McLean, Pike.
Contiguous Counties: (Economic Injury
Loans Only):
Kentucky: Elliott, Floyd, Hancock,
Johnson, Knott, Letcher, Martin,
Morgan, Muhlenberg, Ohio.
Illinois: Alexander.
Indiana: Spencer, Vanderburgh,
Warrick.
Virginia: Buchanan, Dickenson, Wise.
West Virginia: Mingo.
All other information in the original
declaration remains unchanged.
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
James E. Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2011–13876 Filed 6–3–11; 8:45 am]
[FR Doc. 2011–13846 Filed 6–3–11; 8:45 am]
BILLING CODE 8011–01–P
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #12572 and #12573]
[Disaster Declaration #12599 and #12600]
Tennessee Disaster Number TN–00053
Kentucky Disaster Number KY–00040
U.S. Small Business
Administration.
ACTION: Amendment 2.
AGENCY:
jlentini on DSK4TPTVN1PROD with NOTICES
14 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
16:06 Jun 03, 2011
Jkt 223001
U.S. Small Business
Administration.
ACTION: Amendment 1.
AGENCY:
This is an amendment of the
Presidential declaration of a major
disaster for the State of Tennessee
(FEMA–1979–DR), dated 05/09/2011.
Incident: Severe Storms, Tornadoes,
Straight-line, Winds, and Flooding.
Incident Period: 04/19/2011 and
continuing.
Effective Date: 05/26/2011.
Physical Loan Application Deadline
Date: 07/08/2011.
EIDL Loan Application Deadline Date:
02/09/2012.
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: The notice
of the Presidential disaster declaration
SUMMARY:
This is an amendment of the
Presidential declaration of a major
disaster for the Commonwealth of
Kentucky (FEMA–1976–DR), dated 05/
19/2011.
Incident: Severe Storms, Tornadoes,
and Flooding.
Incident Period: 04/22/2011 through
05/20/2011.
Effective Date: 05/26/2011.
Physical Loan Application Deadline
Date: 07/18/2011.
EIDL Loan Application Deadline Date:
02/21/2012.
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,
SUMMARY:
PO 00000
Frm 00033
Fmt 4703
for the State of Tennessee, dated 05/09/
2011 is hereby amended to include the
following areas as adversely affected by
the disaster:
Primary Counties: (Physical Damage and
Economic Injury Loans): Gibson,
Lauderdale.
Contiguous Counties: (Economic Injury
Loans Only): Tennessee: Carroll,
Haywood, Madison.
All other information in the original
declaration remains unchanged.
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
James E. Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2011–13847 Filed 6–3–11; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
Disaster Declaration #12566 and
#12567
Kentucky Disaster Number KY–00039
U.S. Small Business
Administration.
ACTION: Amendment 4.
AGENCY:
This is an amendment of the
Presidential declaration of a major
disaster for Public Assistance Only for
the Commonwealth of Kentucky
(FEMA–1976–DR), dated 05/04/2011.
Incident: Severe Storms, Tornadoes,
and Flooding.
Incident Period: 04/22/2011 through
05/20/2011.
Effective Date: 05/25/2011.
Physical Loan Application Deadline
Date: 07/05/2011.
Economic Injury (EIDL) Loan
Application Deadline Date: 02/06/2012.
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: The notice
of the President’s major disaster
declaration for Private Non-Profit
organizations in the Commonwealth of
KENTUCKY, dated 05/04/2011, is
hereby amended to include the
following areas as adversely affected by
the disaster.
Primary Counties: Ballard, Breckinridge,
Crittenden, Daviess, Floyd, Grayson,
Hancock, Henderson, Hickman,
Johnson, Knott, Livingston, Magoffin,
SUMMARY:
SMALL BUSINESS ADMINISTRATION
Sfmt 4703
32387
E:\FR\FM\06JNN1.SGM
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Agencies
[Federal Register Volume 76, Number 108 (Monday, June 6, 2011)]
[Notices]
[Pages 32385-32387]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-13876]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64571; File No. SR-Phlx-2011-72]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Extending
the Pilot Period To Allow Cabinet Trading To Take Place Below $1 Per
Option Contract
May 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 May 20, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or the ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Exchange has designated the
proposed rule change as constituting a non-controversial rule change
under Rule 19b-4(f)(6) under the Act,\3\ which renders the proposal
effective upon filing with the Commission. 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.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange submits this proposed rule change to extend through
December 1, 2011, the pilot program in Rule 1059, Accomodation
Transactions, to allow cabinet trading to take place below $1 per
option contract, under specified circumstances (the ``pilot program'').
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose is to extend through December 1, 2011, the pilot
program in Commentary .02 of Exchange Rule 1059, Accommodation
Transactions, which sets forth specific procedures for engaging in
cabinet trades.\4\ Prior to the pilot program, Rule 1059 required that
all orders placed in the cabinet were assigned priority based upon the
sequence in which such orders were received by the specialist. All
closing bids and offers would be submitted to the specialist in
writing, and the specialist effected all closing cabinet transactions
by matching such orders placed with him. Bids or offers on orders to
open for the accounts of customer, firm, specialists and ROTs could be
made at $1 per option contract, but such orders could not be placed in
and must yield to all orders in the cabinet. Specialists effected all
cabinet transactions by matching closing purchase or sale orders which
were placed in the cabinet or, provided there was no matching closing
purchase or sale order in the cabinet, by matching a closing purchase
or sale order in the cabinet with an opening purchase or sale order.\5\
All cabinet transactions were reported to the Exchange following the
close of each business day.\6\ Any (i) Member, (ii) member
organization, or (iii) other person who was a non-member broker or
dealer and who directly or indirectly controlled, was controlled by, or
was under common control with, a member or member organization (any
such other person being referred to as an affiliated person) could
effect any transaction as principal in the over-the-counter market in
any class of option contracts listed on the
[[Page 32386]]
Exchange for a premium not in excess of $1.00 per contract.
---------------------------------------------------------------------------
\4\ Cabinet or accommodation trading of option contracts is
intended to accommodate persons wishing to effect closing
transactions in those series of options dealt in on the Exchange for
which there is no auction market.
\5\ Specialists and ROTs are not subject to the requirements of
Rule 1014 in respect of orders placed pursuant to this Rule. Also,
the provisions of Rule 1033(b) and (c), Rule 1034 and Rule 1038 do
not apply to orders placed in the cabinet. Cabinet transactions are
not reported on the ticker.
\6\ See Exchange Rule 1059.
---------------------------------------------------------------------------
On December 30, 2010, the Exchange filed an immediately effective
proposal that established the pilot program being extended by this
filing. The pilot program allows transactions to take place in open
outcry at a price of at least $0 but less than $1 per option contract
until June 1, 2011 (the ``pilot program'').\7\ These lower priced
transactions are traded pursuant to the same procedures applicable to
$1 cabinet trades, except that pursuant to the pilot program (i) Bids
and offers for opening transactions are only permitted to accommodate
closing transactions in order to limit use of the procedure to
liquidations of existing positions, and (ii) the procedures are also
made available for trading in options participating in the Penny Pilot
Program.\8\
---------------------------------------------------------------------------
\7\ PHLX Rule 1059, Commentary .02; See Securities Exchange Act
Release No. 63626 (December 30, 2010), 76 FR 812 (January 6, 2011)
(SR-PHLX-2010-185).
\8\ Prior to the pilot, the $1 cabinet trading procedures were
limited to options classes traded in $0.05 or $0.10 standard
increments. The $1 cabinet trading procedures were not available in
Penny Pilot Program classes because in those classes, an option
series could trade in a standard increment as low as $0.01 per share
(or $1.00 per option contract with a 100 share multiplier). The
pilot allows trading below $0.01 per share (or $1.00 per option
contract with a 100 share multiplier) in all classes, including
those classes participating in the Penny Pilot Program.
---------------------------------------------------------------------------
The Exchange believes that allowing a price of at least $0 but less
than $1 will better accommodate the closing of options positions in
series that are worthless or not actively traded, particularly due to
recent market conditions which have resulted in a significant number of
series being out-of-the-money. For example, a market participant might
have a long position in a call series with a strike price of $100 and
the underlying stock might now be trading at $30. In such an instance,
there might not otherwise be a market for that person to close-out its
position even at the $1 cabinet price (e.g., the series might be quoted
no bid).
The Exchange hereby seeks to extend the previously approved pilot
period for such $1 cabinet trading for an additional six months through
December 1, 2011 so that the procedures can continue without
interruptions while the Exchange considers whether to seek permanent
approval of the temporary procedure.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\9\ in general, and with
Section 6(b)(5) of the Act,\10\ in particular, in that the proposal is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, 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. Specifically,
the Exchange believes that allowing for liquidations at a price less
than $1 per option contract pursuant to the pilot program will better
facilitate the closing of options positions that are worthless or not
actively trading, especially in Penny Pilot issues where cabinet trades
are not otherwise permitted. The Exchange believes the extension is of
sufficient length to permit both the Exchange and the Commission to
assess the impact of the Exchange's authority to allow transactions to
take place in open outcry at a price of at least $0 but less than $1
per option in accordance with its attendant obligations and conditions.
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
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: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, if consistent with
the protection of investors and the public interest, 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 self-regulatory organization to submit to the
Commission written notice of its 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 waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest, because waiver of the 30-day operative delay will
enable the benefits of the pilot program to continue without
interruption for a six-month period. Accordingly, the Commission
designates the proposed rule change operative upon filing with the
Commission.\13\
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\13\ For the 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.
78(c)(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-Phlx-2011-72 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-Phlx-2011-72. 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
[[Page 32387]]
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 on official business days
between the hours of 10 a.m. and 3 p.m. Copies of such filing also will
be available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
Phlx-2011-72 and should be submitted on or before June 27, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-13876 Filed 6-3-11; 8:45 am]
BILLING CODE 8011-01-P