Self-Regulatory Organizations; International Securities Exchange, LLC; Order Granting Approval to a Proposed Rule Change Relating to Appointments to Competitive Market Makers, 51075-51076 [2011-20901]
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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
to the extent permitted by exemptive
relief from the Commission permitting
the Fund to purchase shares of other
investment companies for short-term
cash management purposes.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–20870 Filed 8–16–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65047; File No. SR–
NYSEAmex–2011–56]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE Amex
Options Rule 985NY To Permit
Qualified Contingent Cross Orders To
Be Electronically Submitted to the
NYSE Amex System From the Floor of
the Exchange for Potential Execution
August 5, 2011.
Correction
In notice document 2011–20388
appearing on pages 49812–49815 in the
issue of August 11, 2011, make the
following correction:
On page 49815, in the third column,
in the first full paragraph, in the last
line, ‘‘August 31, 2011’’ should read
‘‘September 1, 2011.’’
[FR Doc. C1–2011–20388 Filed 8–16–11; 8:45 am]
BILLING CODE 1505–01–D
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65100; File No. SR–ISE–
2011–33]
Emcdonald on DSK2BSOYB1PROD with NOTICES
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Order Granting Approval to a
Proposed Rule Change Relating to
Appointments to Competitive Market
Makers
August 11, 2011.
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
4 See Securities Exchange Act Release No. 64719
(June 22, 2011), 76 FR 37863 (‘‘Notice’’).
5 Under the proposal, CMMs can select the
options classes to which they seek appointment, but
the Exchange retains the authority to make such
2 15
On June 10, 2011, the International
Securities Exchange, LLC (the
‘‘Exchange’’ or the ‘‘ISE’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
18:13 Aug 16, 2011
II. Description of the Proposal
The ISE’s membership is divided into
three categories, Primary Market Makers
(‘‘PMMs’’), Competitive Market Makers
(‘‘CMMs’’) and Electronic Access
Members. There are 10 PMM trading
rights and 160 CMM trading rights
(collectively ‘‘market maker rights’’). In
order to access the Exchange as a market
maker, a member must own or lease one
or more market maker rights. EAMs are
not required to purchase such a right in
order to access the Exchange. Under the
current structure, options traded on the
Exchange are divided into 10 groups,
with one of the 10 PMM trading rights
and 16 of the 160 CMM trading rights
appointed to each group. Thus, each
PMM and CMM trading right is
associated with a specific group of
options. Under the existing structure, a
member is required to own and/or lease
10 CMM trading rights (one in each of
the 10 options groups) in order to have
the ability to make markets in all of the
options classes traded on the Exchange.
Moreover, because the number of
options classes contained in each group
varies, CMM trading rights currently
represent 10 different levels of
participation.
The Exchange proposes to change the
structure of CMM appointments to
allow CMMs to seek appointment in the
options classes listed on the Exchange
across the groups of options assigned to
particular PMMs. Under the proposal,
the Exchange will assign points to each
options class equal to its percentage of
overall industry volume (not including
exclusively-traded index options),
rounded down to the nearest tenth of a
percentage. A CMM will be able to seek
appointments to options classes that
total: (i) 20 points for the first CMM
trading right it owns or leases; and (ii)
10 points for the second and each
subsequent CMM trading right it owns
or leases.5 CMMs will be able to change
1 15
I. Introduction
VerDate Mar<15>2010
19(b)(1) 1 of the Securities Exchange Act
of 1934 (‘‘Act’’) 2 and Rule 19b–4
thereunder,3 a proposed rule change to
revise the manner in which Competitive
Market Makers are appointed to options
classes. The proposed rule change was
published for comment in the Federal
Register on June 28, 2011.4 The
Commission received no comments
regarding the proposal. This order
approves the proposed rule change.
Jkt 223001
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
51075
their appointments at any time upon
advance notification to the Exchange.6
The Exchange will provide members
with a transition period of 30 to 60 days
following approval of the proposed rule
change. During the transition period, the
Exchange will work with existing
market makers to restructure their
appointments within the new pointbased structure.
The proposal seeks to standardize the
level of access gained by owning or
leasing a CMM trading right. In
addition, the proposal will make
additional memberships available.
Specifically, by assigning 20 points to
the first CMM trading right owned or
leased by a member and 10 points to
each subsequent CMM trading right
owned or leased by the same member,
only 9 CMM trading rights (instead of
10) will be required to cover the entire
ISE market.
The Exchange also proposes to adjust
its CMM quotation requirements to
reflect the proposed elimination of
specified groups of options associated
with CMM trading rights. Under the
current structure, CMMs are required to
participate in the opening and provide
continuous quotations in a minimum
number of options classes in each of
their assigned groups. Since CMMs will
have the flexibility to choose the
options classes to which they are
appointed, rather than being appointed
to a pre-determined group of options,
the Exchange proposes to modify this
requirement to limit the number of
appointed options classes in which a
CMM can initiate intraday quoting to
the number of options classes in which
it participates in the opening rotation.
Under the current rules, a CMM is
required to participate in the opening in
60% of the options classes in its
appointed group of options or 40
options classes, whichever is lesser. If,
for example, a CMM is appointed to a
group with 100 options classes, then it
must participate in the opening for 40
options classes and may initiate intraday quoting in 60 options classes. Under
the proposed structure, a CMM
appointed to 100 options classes that
participates in the opening in 40 options
appointments and to remove appointments from
CMMs based on their performance. Under the
proposal, either the Exchange or a committee
designated by the Board will be permitted to make
appointments.
6 The Exchange will notify CMMs of the
procedure for requesting changes to their
appointments, including the length of advance
notification required. The Exchange will establish
the shortest advance notification period that is
operationally feasible, such as a specific time on the
day prior to the intended effectiveness of a change
in a CMM’s appointments, or by a specified time
prior to the opening on the same trading day.
E:\FR\FM\17AUN1.SGM
17AUN1
51076
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices
classes may only initiate intra-day
quoting in 40 additional classes.
Additionally, under the proposal the
Exchange will retain the current
requirement that once a CMM enters a
quotation in an appointed options class,
it must maintain continuous quotations
for that series and at least 60% of the
series of the options class until the close
of trading that day. CMMs will also
continue to be subject to the quotation
requirements contained in Rule 803 and
804. If a CMM receives Preferenced
Orders in an options class, it will
continue to be required to maintain
continuous quotations in at least 90% of
the series in that class. The Exchange
will continue to have the ability under
its rules to call upon a CMM to submit
quotations in one or more series of an
options class to which the CMM is
appointed.
Finally, the Exchange proposes to
terminate its current CMM inactivity
fee. That fee currently imposes a charge
of $25,000 a month for CMM trading
rights that are not active. The purpose
of the fee is to help recoup a portion of
the income that the Exchange loses
when market makers do not operate
their trading rights and generate
transaction-based revenue. Under the
proposed CMM trading rights structure,
the Exchange does not believe that the
inactivity fee is appropriate or
necessary, as CMMs will now be able to
manage the number of options classes to
which they are appointed.7 Moreover,
the Exchange believes that there will be
increased demand for CMM trading
rights, and that owners of such rights
will have a financial incentive to sell or
lease any unused trading rights. If this
does not turn out to be the case, the
Exchange states that it will consider
reinstituting some form of inactivity fee
that is appropriate for the new structure.
Emcdonald on DSK2BSOYB1PROD with NOTICES
III. Discussion and Commission
Findings
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange 8 and, in particular, the
requirements of Section 6 of the Act.9
7 For example, under the current structure, a
CMM that owns or leases three CMM trading rights
is obligated to continuously quote a minimum of
120 options classes. Under the new structure, a
CMM with three trading rights could seek
appointment for only three options classes (one for
each trading right), thus making the inactivity fee
ineffective.
8 In approving this proposed rule change the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
9 15 U.S.C. 78f.
VerDate Mar<15>2010
18:13 Aug 16, 2011
Jkt 223001
Specifically, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,10 which
requires, among other things, that the
rules of a national securities exchange
be 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 and are not designed to
permit unfair discrimination between
customers, issuers, brokers or dealers.
The Commission also believes that the
proposal is consistent with Section
6(b)(4) of the Act,11 which requires that
the rules of a national securities
exchange provide for the equitable
allocation of reasonable fees and other
charges among the Exchange’s members
and issuers and other persons using its
facilities.
In particular, the Commission
believes that the proposal should allow
CMMs additional flexibility to choosing
their appointed classes.12 The
Commission notes that potential market
makers will be able to purchase or lease
newly-available CMM trading rights.
Under the proposal, CMMs can select
the options classes to which they seek
appointment, but the Exchange retains
the authority to make such
appointments and to remove
appointments from CMMs based on
their performance.13 In addition,
because a PMM will continue to be
appointed to each options class, there
will continue to be continuous, twosided quotations in all options listed on
the Exchange.14
The Exchange proposes to limit the
number of appointed options classes in
which a CMM can initiate intraday
quoting to the number of options classes
in which it participates in the opening
rotation. The Commission notes that
CMMs will also continue to be subject
to the quotation requirements contained
in Rules 803 and 804. In addition, once
a CMM enters a quotation in an
10 15
U.S.C. 78f(b)(5).
U.S.C. 78f(b)(4).
12 The Commission also notes that the new
structure is similar to the Chicago Board Options
Exchange’s (‘‘CBOE’’) rules, which permit its
market makers to choose the options to which they
are appointed. See CBOE Rule 8.3.
13 ISE Rule 802(e)–(f).
14 Pursuant to Rule 804(a)(2), PMMs have the
obligation to provide continuous quotations in all
of the series of all of the options to which they are
appointed.
11 15
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
appointed options class, it must
maintain continuous quotations for that
series and at least 60% of the series of
the options class until the close of
trading that day.15 If a CMM receives
Preferenced Orders in an options class,
it will continue to be required to
maintain continuous quotations in at
least 90% of the series in that class.16
Also, the Exchange will continue to
have the ability under its rules to call
upon a CMM to submit quotations in
one or more series of an options class
to which the CMM is appointed.17
Finally, the Exchange proposes to
eliminate its current charge of $25,000
a month for CMM trading rights that are
not active. The Exchange states that the
inactivity fee is not appropriate or
necessary, as CMMs will now be able to
manage the number of options classes to
which they are appointed. The
Commission believes that the proposal
is consistent with Section 6(b)(4) of the
Act.18
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,19 that the
proposed rule change (SR–ISE–2011–
33), be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–20901 Filed 8–16–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65104; File No. SR–
NASDAQ–2011–116]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Clearly Erroneous Rule in Light of
Changes to the Single Stock Trading
Pause Process
August 11, 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 August 8,
2011, The NASDAQ Stock Market LLC
(‘‘Exchange’’), filed with the Securities
15 ISE
Rule 804(e)(2)(iii).
Rule 804(e)(2)(iii).
17 ISE Rule 802(e)(2)(iv).
18 15 U.S.C. 78f(b)(4).
19 15 U.S.C. 78s(b)(2).
20 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
16 ISE
E:\FR\FM\17AUN1.SGM
17AUN1
]]>Agencies
[Federal Register Volume 76, Number 159 (Wednesday, August 17, 2011)]
[Notices]
[Pages 51075-51076]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20901]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65100; File No. SR-ISE-2011-33]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Order Granting Approval to a Proposed Rule Change Relating to
Appointments to Competitive Market Makers
August 11, 2011.
I. Introduction
On June 10, 2011, the International Securities Exchange, LLC (the
``Exchange'' or the ``ISE'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) \1\ of the
Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4
thereunder,\3\ a proposed rule change to revise the manner in which
Competitive Market Makers are appointed to options classes. The
proposed rule change was published for comment in the Federal Register
on June 28, 2011.\4\ The Commission received no comments regarding the
proposal. This order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 64719 (June 22,
2011), 76 FR 37863 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposal
The ISE's membership is divided into three categories, Primary
Market Makers (``PMMs''), Competitive Market Makers (``CMMs'') and
Electronic Access Members. There are 10 PMM trading rights and 160 CMM
trading rights (collectively ``market maker rights''). In order to
access the Exchange as a market maker, a member must own or lease one
or more market maker rights. EAMs are not required to purchase such a
right in order to access the Exchange. Under the current structure,
options traded on the Exchange are divided into 10 groups, with one of
the 10 PMM trading rights and 16 of the 160 CMM trading rights
appointed to each group. Thus, each PMM and CMM trading right is
associated with a specific group of options. Under the existing
structure, a member is required to own and/or lease 10 CMM trading
rights (one in each of the 10 options groups) in order to have the
ability to make markets in all of the options classes traded on the
Exchange. Moreover, because the number of options classes contained in
each group varies, CMM trading rights currently represent 10 different
levels of participation.
The Exchange proposes to change the structure of CMM appointments
to allow CMMs to seek appointment in the options classes listed on the
Exchange across the groups of options assigned to particular PMMs.
Under the proposal, the Exchange will assign points to each options
class equal to its percentage of overall industry volume (not including
exclusively-traded index options), rounded down to the nearest tenth of
a percentage. A CMM will be able to seek appointments to options
classes that total: (i) 20 points for the first CMM trading right it
owns or leases; and (ii) 10 points for the second and each subsequent
CMM trading right it owns or leases.\5\ CMMs will be able to change
their appointments at any time upon advance notification to the
Exchange.\6\ The Exchange will provide members with a transition period
of 30 to 60 days following approval of the proposed rule change. During
the transition period, the Exchange will work with existing market
makers to restructure their appointments within the new point-based
structure.
---------------------------------------------------------------------------
\5\ Under the proposal, CMMs can select the options classes to
which they seek appointment, but the Exchange retains the authority
to make such appointments and to remove appointments from CMMs based
on their performance. Under the proposal, either the Exchange or a
committee designated by the Board will be permitted to make
appointments.
\6\ The Exchange will notify CMMs of the procedure for
requesting changes to their appointments, including the length of
advance notification required. The Exchange will establish the
shortest advance notification period that is operationally feasible,
such as a specific time on the day prior to the intended
effectiveness of a change in a CMM's appointments, or by a specified
time prior to the opening on the same trading day.
---------------------------------------------------------------------------
The proposal seeks to standardize the level of access gained by
owning or leasing a CMM trading right. In addition, the proposal will
make additional memberships available. Specifically, by assigning 20
points to the first CMM trading right owned or leased by a member and
10 points to each subsequent CMM trading right owned or leased by the
same member, only 9 CMM trading rights (instead of 10) will be required
to cover the entire ISE market.
The Exchange also proposes to adjust its CMM quotation requirements
to reflect the proposed elimination of specified groups of options
associated with CMM trading rights. Under the current structure, CMMs
are required to participate in the opening and provide continuous
quotations in a minimum number of options classes in each of their
assigned groups. Since CMMs will have the flexibility to choose the
options classes to which they are appointed, rather than being
appointed to a pre-determined group of options, the Exchange proposes
to modify this requirement to limit the number of appointed options
classes in which a CMM can initiate intraday quoting to the number of
options classes in which it participates in the opening rotation.
Under the current rules, a CMM is required to participate in the
opening in 60% of the options classes in its appointed group of options
or 40 options classes, whichever is lesser. If, for example, a CMM is
appointed to a group with 100 options classes, then it must participate
in the opening for 40 options classes and may initiate intra-day
quoting in 60 options classes. Under the proposed structure, a CMM
appointed to 100 options classes that participates in the opening in 40
options
[[Page 51076]]
classes may only initiate intra-day quoting in 40 additional classes.
Additionally, under the proposal the Exchange will retain the current
requirement that once a CMM enters a quotation in an appointed options
class, it must maintain continuous quotations for that series and at
least 60% of the series of the options class until the close of trading
that day. CMMs will also continue to be subject to the quotation
requirements contained in Rule 803 and 804. If a CMM receives
Preferenced Orders in an options class, it will continue to be required
to maintain continuous quotations in at least 90% of the series in that
class. The Exchange will continue to have the ability under its rules
to call upon a CMM to submit quotations in one or more series of an
options class to which the CMM is appointed.
Finally, the Exchange proposes to terminate its current CMM
inactivity fee. That fee currently imposes a charge of $25,000 a month
for CMM trading rights that are not active. The purpose of the fee is
to help recoup a portion of the income that the Exchange loses when
market makers do not operate their trading rights and generate
transaction-based revenue. Under the proposed CMM trading rights
structure, the Exchange does not believe that the inactivity fee is
appropriate or necessary, as CMMs will now be able to manage the number
of options classes to which they are appointed.\7\ Moreover, the
Exchange believes that there will be increased demand for CMM trading
rights, and that owners of such rights will have a financial incentive
to sell or lease any unused trading rights. If this does not turn out
to be the case, the Exchange states that it will consider reinstituting
some form of inactivity fee that is appropriate for the new structure.
---------------------------------------------------------------------------
\7\ For example, under the current structure, a CMM that owns or
leases three CMM trading rights is obligated to continuously quote a
minimum of 120 options classes. Under the new structure, a CMM with
three trading rights could seek appointment for only three options
classes (one for each trading right), thus making the inactivity fee
ineffective.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange \8\ and, in
particular, the requirements of Section 6 of the Act.\9\ Specifically,
the Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\10\ which requires, among other things,
that the rules of a national securities exchange be 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 and are not designed to
permit unfair discrimination between customers, issuers, brokers or
dealers. The Commission also believes that the proposal is consistent
with Section 6(b)(4) of the Act,\11\ which requires that the rules of a
national securities exchange provide for the equitable allocation of
reasonable fees and other charges among the Exchange's members and
issuers and other persons using its facilities.
---------------------------------------------------------------------------
\8\ In approving this proposed rule change the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In particular, the Commission believes that the proposal should
allow CMMs additional flexibility to choosing their appointed
classes.\12\ The Commission notes that potential market makers will be
able to purchase or lease newly-available CMM trading rights. Under the
proposal, CMMs can select the options classes to which they seek
appointment, but the Exchange retains the authority to make such
appointments and to remove appointments from CMMs based on their
performance.\13\ In addition, because a PMM will continue to be
appointed to each options class, there will continue to be continuous,
two-sided quotations in all options listed on the Exchange.\14\
---------------------------------------------------------------------------
\12\ The Commission also notes that the new structure is similar
to the Chicago Board Options Exchange's (``CBOE'') rules, which
permit its market makers to choose the options to which they are
appointed. See CBOE Rule 8.3.
\13\ ISE Rule 802(e)-(f).
\14\ Pursuant to Rule 804(a)(2), PMMs have the obligation to
provide continuous quotations in all of the series of all of the
options to which they are appointed.
---------------------------------------------------------------------------
The Exchange proposes to limit the number of appointed options
classes in which a CMM can initiate intraday quoting to the number of
options classes in which it participates in the opening rotation. The
Commission notes that CMMs will also continue to be subject to the
quotation requirements contained in Rules 803 and 804. In addition,
once a CMM enters a quotation in an appointed options class, it must
maintain continuous quotations for that series and at least 60% of the
series of the options class until the close of trading that day.\15\ If
a CMM receives Preferenced Orders in an options class, it will continue
to be required to maintain continuous quotations in at least 90% of the
series in that class.\16\ Also, the Exchange will continue to have the
ability under its rules to call upon a CMM to submit quotations in one
or more series of an options class to which the CMM is appointed.\17\
---------------------------------------------------------------------------
\15\ ISE Rule 804(e)(2)(iii).
\16\ ISE Rule 804(e)(2)(iii).
\17\ ISE Rule 802(e)(2)(iv).
---------------------------------------------------------------------------
Finally, the Exchange proposes to eliminate its current charge of
$25,000 a month for CMM trading rights that are not active. The
Exchange states that the inactivity fee is not appropriate or
necessary, as CMMs will now be able to manage the number of options
classes to which they are appointed. The Commission believes that the
proposal is consistent with Section 6(b)(4) of the Act.\18\
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\19\ that the proposed rule change (SR-ISE-2011-33), be, and hereby
is, approved.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------
\20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20901 Filed 8-16-11; 8:45 am]
BILLING CODE 8011-01-P
