Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of Proposed Rule Change Adding Commentary .01 to Rule 925.1NY To Indicate That Market Makers Will Not Be Obligated To Quote in Adjusted Option Series and To Clarify an Existing Exception to the Quoting Obligations, 54518-54520 [2011-22440]
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<![CDATA[
54518
Federal Register / Vol. 76, No. 170 / Thursday, September 1, 2011 / Notices
manipulative acts and practices,
promote just and equitable principles of
trade, 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 its
proposal is consistent with the Act
because, on balance, the elimination of
the continuous quoting obligations in
adjusted series is a minor change and
should not impact the quality of Arca’s
market. Among other things, adjusted
series are not common, and trading
interest is often very low after the
corporate event has passed.
Consequently, continuous quotes in
such series increases quote traffic and
burdens systems without a
corresponding benefit. By not requiring
Market Makers to continuously quote in
such series, the Exchange’s proposal
would further its goal of measured quote
mitigation. Further, while they will not
be tasked with continually quoting such
series, Market Makers will be obligated
to quote the series when called upon by
a Trading Official. In addition, a MM
[sic] will be required to quote the series
when it becomes ‘‘lit’’ in response to a
request for quote being received.
Accordingly, the proposal supports the
quality of Arca’s market by helping to
ensure that Market Makers will continue
to be obligated to quote in adjusted
series when the need arises.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
srobinson on DSK4SPTVN1PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve or disapprove
the proposed rule change, or
VerDate Mar<15>2010
16:16 Aug 31, 2011
Jkt 223001
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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
No. SR–NYSEArca–2011–59 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEArca-2011–59. This
file number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of 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–
NYSEArca–2011–59 and should be
submitted on or before September 22,
2011.
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–22442 Filed 8–31–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65209; File No. SR–
NYSEAmex–2011–61]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing of
Proposed Rule Change Adding
Commentary .01 to Rule 925.1NY To
Indicate That Market Makers Will Not
Be Obligated To Quote in Adjusted
Option Series and To Clarify an
Existing Exception to the Quoting
Obligations
August 26, 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
16, 2011, NYSE Amex LLC (the
‘‘Exchange’’ or ‘‘NYSE Amex’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to add
Commentary .01 to Rule 925.1NY to
indicate that Market Makers will not be
obligated to quote in adjusted option
series and to clarify an existing
exception to the quoting obligations.
The text of the proposed rule change is
available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
1 15
E:\FR\FM\01SEN1.SGM
01SEN1
Federal Register / Vol. 76, No. 170 / Thursday, September 1, 2011 / Notices
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
srobinson on DSK4SPTVN1PROD with NOTICES
The purpose of the proposal is to add
Commentary .01 to Rule 925.1NY to
relieve Market Makers of the obligation
to quote in adjusted option series and to
propose a definition of adjusted options
series. The proposal is similar to a rule
change recently approved 3 for
NASDAQ OMX Phlx (‘‘Phlx’’).4
Rule 925.1NY discusses the quoting
obligations that are applicable to Market
Makers on the Exchange. The Rule
states that, in addition to other
requirements, Specialists must provide
continuous two-sided quotations
throughout the trading day in its
appointed issues for 90% of the time the
Exchange is open for trading in each
issue. Similarly, Market Makers must
provide continuous two-sided
quotations throughout the trading day in
its appointed issues for 60% of the time
the Exchange is open for trading in each
issue.
Under Commentary .03(a) to Rule 903,
LEAPS are series added as part of an
extended far term expiration month, and
under the same provision, the Exchange
Rules regarding continuity do not apply
to index option series until the time to
expiration is less than 12 months, and
do not apply to equity option series or
option series on Exchange Traded Fund
Shares until the time to expiration is
less than nine months.
The Exchange proposes to clarify that
the exception for LEAPS is an exception
to the obligations in Rule 925.1NY by
adding Commentary .01. The Exchange
further proposes to extend the exception
to certain adjusted series,5 and to define
‘‘adjusted series’’ for the purposes of
Rule 925.1NY. An ‘‘adjusted series’’
under the Rule would be defined as an
option series wherein, as a result of a
corporate action by the issuer of the
underlying security, one option contract
in the series represents the delivery of
3 The
Commission notes that the Phlx proposal
was not approved by the Commission, but rather
designated for immediate effectiveness by Phlx.
4 See Exchange Act Release No. 61095 (December
2, 2009) 74 FR 64786 (December 8, 2009).
5 NYSE Amex Rule 903(g) states ‘‘Option
contracts shall be subject to adjustments in
accordance with the Rules of the Options Clearing
Corporation.’’
VerDate Mar<15>2010
16:16 Aug 31, 2011
Jkt 223001
other than 100 shares of underlying
stock or Exchange-Traded Fund Shares.
After a corporate action and a
subsequent adjustment to the existing
options, the series in question are
identified by the Options Price
Reporting Authority (‘‘OPRA’’) and at
OCC with a separate symbol consisting
of the underlying symbol and a
numerical appendage. As a standard
procedure, exchanges listing options on
an underlying security which undergoes
a corporate action resulting in adjusted
series will list new standard option
series across all appropriate expiration
months the day after the existing series
are adjusted. The adjusted series are
generally active for a short period of
time following adjustment, but orders to
open an options position in the
underlying are almost exclusively
placed in the new standard contracts.
Although the adjusted series may not
expire for as much as 27 months, in a
short time the adjusted series become
inactive. Thus, the burden of quoting
these series generally outweighs the
benefit of being appointed in the class
because of the lack of interest in the
series by various market participants.
On NYSE Amex, such series may not
meet the standards to be considered
active, and, under NYSE Amex Rule
970.1NY, the Exchange shall no longer
disseminate quotes in the series. Thus,
the current obligation holds Market
Makers to submit quotes in series that
are generally not published to OPRA
unless requested.6 Since the obligation
to submit electronic quotes upon
request of a Trading Official will
continue if the proposed rule is
approved, a fair and orderly market in
the inactive series is readily available.
The Exchange has recently noticed
requests for withdrawals from
appointment in classes that include
adjusted series by Market Makers,
including Specialists, resulting in a
reduction in liquidity in these classes.
Market Makers and Specialists that have
withdrawn from assignments in these
classes have informed the Exchange that
the withdrawals were based in part on
the obligation to continuously quote
adjusted options series whereby the
quoting obligations on these often less
frequently traded option series impacted
the risk parameters acceptable to the
Market Makers and Specialists. The
6 Rule 970.1NY states, in part, ‘‘The Exchange
may determine that a series has become active
intraday if (i) the series trades at any options
exchange; (ii) NYSE Amex receives an order in the
series; or (iii) NYSE Amex receives a request for
quote from a customer in that series. If a series
becomes active intraday, the Exchange will
immediately disseminate quotes in the series to
OPRA, and continue to disseminate quotes for the
balance of the trading day.’’
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
54519
Market Makers and Specialists have also
expressed that the adjusted nature of
these series also complicates the
calculation of an appropriate quote.
This lack of interest is exacerbated by
Market Makers withdrawing from the
appointments which in turn, has caused
liquidity (as well as volume) to be
negatively impacted in the affected
options classes listed on the Exchange.
The Exchange believes that the
proposed Commentary will ameliorate
the liquidity impact by allowing Market
Makers and Specialists to continue their
appointments in these option classes.
The proposed rule change is similar to
the Phlx rule, in that the Exchange is
merely proposing to exclude the
adjusted series from the continuous
quoting obligation, but not from other
obligations under Rules 6.37, 6.37A,
6.37B and 6.82. The Phlx rule excludes
adjusted series (and Quarterly Options)
from the Streaming Quote Trader’s
assignment. Of particular note, the
proposal would not excuse a Market
Maker from the obligation, when called
upon by a Trading Official, to submit a
single quote or maintain continuous
quotes in one or more series of an
option issue within the Market Maker’s
appointment whenever, in the judgment
of such Trading Official, it is necessary
to do so in the interest of maintaining
fair and orderly markets.7
Further, the proposed rule does not
excuse the Market Maker from the
obligations to respond with a two-sided,
legal width market to a call for a market
by a Floor Broker.8
The current quoting obligation in
such illiquid series is a minor part of a
Market Maker’s overall obligation, and
the proposed modicum of relief is
mitigated by the obligation to respond to
a request for quote from a Trading
Official or a Floor Broker. Because of the
lack of interest in such series, there is
little demonstrable benefit to being a
market maker in them other than the
ability to maintain market maker
margins for what little activity may
occur. In addition, the burden of
continuous quoting in these series is
counter to efforts to mitigate the number
of quotes collected and disseminated.
The Exchange believes that the
proposed rule change should incent
Market Makers and Specialists to
continue appointments and thereby
expand liquidity in options classes
listed on the Exchange to the benefit of
the Exchange and its ATP Holders and
public customers.
7 See
8 See
E:\FR\FM\01SEN1.SGM
NYSE Amex Rule 925.1NY(d).
NYSE Amex Rule 925NY(b)(6).
01SEN1
54520
Federal Register / Vol. 76, No. 170 / Thursday, September 1, 2011 / Notices
2. Statutory Basis
The Exchange believes that this
proposed rule change is consistent with
Section 6(b) of the Securities Exchange
Act of 1934 (‘‘Act’’),9 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 10 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices,
promote just and equitable principles of
trade, 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 its
proposal is consistent with the Act
because, on balance, the elimination of
the continuous quoting obligations in
adjusted series is a minor change and
should not impact the quality of Amex’s
market. Among other things, adjusted
series are not common, and trading
interest is often very low after the
corporate event has passed.
Consequently, continuous quotes in
such series increases quote traffic and
burdens systems without a
corresponding benefit. By not requiring
Market Makers to continuously quote in
such series, the Exchange’s proposal
would further its goal of measured quote
mitigation. Further, while they will not
be tasked with continually quoting such
series, Market Makers will be obligated
to quote the series when called upon by
a Trading Official. In addition, a MM
[sic] will be required to quote the series
becomes ‘‘lit’’ in response to a request
for quote being received. Accordingly,
the proposal supports the quality of
Amex’s market by helping to ensure that
Market Makers will continue to be
obligated to quote in adjusted series
when the need arises.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
srobinson on DSK4SPTVN1PROD with NOTICES
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 15
VerDate Mar<15>2010
16:16 Aug 31, 2011
Jkt 223001
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve or disapprove
the proposed rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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
No. SR–NYSEAmex–2011–61 on the
subject line.
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–
NYSEAmex–2011–61 and should be
submitted on or before September 22,
2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–22440 Filed 8–31–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
Somerset International Group, Inc.;
Order of Suspension of Trading
August 30, 2011.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Somerset
International Group, Inc.
Paper Comments
The Commission is of the opinion that
• Send paper comments in triplicate
the public interest and the protection of
to Elizabeth M. Murphy, Secretary,
investors require a suspension of trading
Securities and Exchange Commission,
in the securities of the above-listed
Station Place, 100 F Street, NE.,
company.
Washington, DC 20549–1090.
Therefore, it is ordered, pursuant to
All submissions should refer to File
Section 12(k) of the Securities Exchange
Number SR–NYSEAmex–2011–61. This Act of 1934, that trading in the
file number should be included on the
securities of the above-listed company is
subject line if e-mail is used. To help the suspended for the period from 9:30 a.m.
Commission process and review your
EDT on August 30, 2011, through 11:59
comments more efficiently, please use
p.m. EDT on September 13, 2011.
only one method. The Commission will
By the Commission.
post all comments on the Commission’s
Jill M. Peterson,
Internet Web site (https://www.sec.gov/
Assistant Secretary.
rules/sro.shtml). Copies of the
[FR Doc. 2011–22534 Filed 8–30–11; 4:15 pm]
submission, all subsequent
BILLING CODE 8011–01–P
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
SMALL BUSINESS ADMINISTRATION
communications relating to the
[Disaster Declaration #12756 and #12757]
proposed rule change between the
Commission and any person, other than
South Dakota Disaster #SD–00042
those that may be withheld from the
public in accordance with the
AGENCY: U.S. Small Business
provisions of 5 U.S.C. 552, will be
Administration.
available for Web site viewing and
ACTION: Notice.
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
11 17 CFR 200.30–3(a)(12).
Washington, DC 20549, on official
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
E:\FR\FM\01SEN1.SGM
01SEN1
]]>Agencies
[Federal Register Volume 76, Number 170 (Thursday, September 1, 2011)]
[Notices]
[Pages 54518-54520]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22440]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65209; File No. SR-NYSEAmex-2011-61]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of
Proposed Rule Change Adding Commentary .01 to Rule 925.1NY To Indicate
That Market Makers Will Not Be Obligated To Quote in Adjusted Option
Series and To Clarify an Existing Exception to the Quoting Obligations
August 26, 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 16, 2011, NYSE Amex LLC (the ``Exchange'' or ``NYSE Amex'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I and II below, which
Items have been prepared by the self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to add Commentary .01 to Rule 925.1NY to
indicate that Market Makers will not be obligated to quote in adjusted
option series and to clarify an existing exception to the quoting
obligations. The text of the proposed rule change is available at the
Exchange, the Commission's Public Reference Room, and https://www.nyse.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text
[[Page 54519]]
of those statements may be examined at the places specified in Item IV
below. The Exchange has prepared summaries, set forth in sections A, B,
and C below, of the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposal is to add Commentary .01 to Rule
925.1NY to relieve Market Makers of the obligation to quote in adjusted
option series and to propose a definition of adjusted options series.
The proposal is similar to a rule change recently approved \3\ for
NASDAQ OMX Phlx (``Phlx'').\4\
---------------------------------------------------------------------------
\3\ The Commission notes that the Phlx proposal was not approved
by the Commission, but rather designated for immediate effectiveness
by Phlx.
\4\ See Exchange Act Release No. 61095 (December 2, 2009) 74 FR
64786 (December 8, 2009).
---------------------------------------------------------------------------
Rule 925.1NY discusses the quoting obligations that are applicable
to Market Makers on the Exchange. The Rule states that, in addition to
other requirements, Specialists must provide continuous two-sided
quotations throughout the trading day in its appointed issues for 90%
of the time the Exchange is open for trading in each issue. Similarly,
Market Makers must provide continuous two-sided quotations throughout
the trading day in its appointed issues for 60% of the time the
Exchange is open for trading in each issue.
Under Commentary .03(a) to Rule 903, LEAPS are series added as part
of an extended far term expiration month, and under the same provision,
the Exchange Rules regarding continuity do not apply to index option
series until the time to expiration is less than 12 months, and do not
apply to equity option series or option series on Exchange Traded Fund
Shares until the time to expiration is less than nine months.
The Exchange proposes to clarify that the exception for LEAPS is an
exception to the obligations in Rule 925.1NY by adding Commentary .01.
The Exchange further proposes to extend the exception to certain
adjusted series,\5\ and to define ``adjusted series'' for the purposes
of Rule 925.1NY. An ``adjusted series'' under the Rule would be defined
as an option series wherein, as a result of a corporate action by the
issuer of the underlying security, one option contract in the series
represents the delivery of other than 100 shares of underlying stock or
Exchange-Traded Fund Shares.
---------------------------------------------------------------------------
\5\ NYSE Amex Rule 903(g) states ``Option contracts shall be
subject to adjustments in accordance with the Rules of the Options
Clearing Corporation.''
---------------------------------------------------------------------------
After a corporate action and a subsequent adjustment to the
existing options, the series in question are identified by the Options
Price Reporting Authority (``OPRA'') and at OCC with a separate symbol
consisting of the underlying symbol and a numerical appendage. As a
standard procedure, exchanges listing options on an underlying security
which undergoes a corporate action resulting in adjusted series will
list new standard option series across all appropriate expiration
months the day after the existing series are adjusted. The adjusted
series are generally active for a short period of time following
adjustment, but orders to open an options position in the underlying
are almost exclusively placed in the new standard contracts. Although
the adjusted series may not expire for as much as 27 months, in a short
time the adjusted series become inactive. Thus, the burden of quoting
these series generally outweighs the benefit of being appointed in the
class because of the lack of interest in the series by various market
participants.
On NYSE Amex, such series may not meet the standards to be
considered active, and, under NYSE Amex Rule 970.1NY, the Exchange
shall no longer disseminate quotes in the series. Thus, the current
obligation holds Market Makers to submit quotes in series that are
generally not published to OPRA unless requested.\6\ Since the
obligation to submit electronic quotes upon request of a Trading
Official will continue if the proposed rule is approved, a fair and
orderly market in the inactive series is readily available.
---------------------------------------------------------------------------
\6\ Rule 970.1NY states, in part, ``The Exchange may determine
that a series has become active intraday if (i) the series trades at
any options exchange; (ii) NYSE Amex receives an order in the
series; or (iii) NYSE Amex receives a request for quote from a
customer in that series. If a series becomes active intraday, the
Exchange will immediately disseminate quotes in the series to OPRA,
and continue to disseminate quotes for the balance of the trading
day.''
---------------------------------------------------------------------------
The Exchange has recently noticed requests for withdrawals from
appointment in classes that include adjusted series by Market Makers,
including Specialists, resulting in a reduction in liquidity in these
classes. Market Makers and Specialists that have withdrawn from
assignments in these classes have informed the Exchange that the
withdrawals were based in part on the obligation to continuously quote
adjusted options series whereby the quoting obligations on these often
less frequently traded option series impacted the risk parameters
acceptable to the Market Makers and Specialists. The Market Makers and
Specialists have also expressed that the adjusted nature of these
series also complicates the calculation of an appropriate quote.
This lack of interest is exacerbated by Market Makers withdrawing
from the appointments which in turn, has caused liquidity (as well as
volume) to be negatively impacted in the affected options classes
listed on the Exchange. The Exchange believes that the proposed
Commentary will ameliorate the liquidity impact by allowing Market
Makers and Specialists to continue their appointments in these option
classes.
The proposed rule change is similar to the Phlx rule, in that the
Exchange is merely proposing to exclude the adjusted series from the
continuous quoting obligation, but not from other obligations under
Rules 6.37, 6.37A, 6.37B and 6.82. The Phlx rule excludes adjusted
series (and Quarterly Options) from the Streaming Quote Trader's
assignment. Of particular note, the proposal would not excuse a Market
Maker from the obligation, when called upon by a Trading Official, to
submit a single quote or maintain continuous quotes in one or more
series of an option issue within the Market Maker's appointment
whenever, in the judgment of such Trading Official, it is necessary to
do so in the interest of maintaining fair and orderly markets.\7\
---------------------------------------------------------------------------
\7\ See NYSE Amex Rule 925.1NY(d).
---------------------------------------------------------------------------
Further, the proposed rule does not excuse the Market Maker from
the obligations to respond with a two-sided, legal width market to a
call for a market by a Floor Broker.\8\
---------------------------------------------------------------------------
\8\ See NYSE Amex Rule 925NY(b)(6).
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The current quoting obligation in such illiquid series is a minor
part of a Market Maker's overall obligation, and the proposed modicum
of relief is mitigated by the obligation to respond to a request for
quote from a Trading Official or a Floor Broker. Because of the lack of
interest in such series, there is little demonstrable benefit to being
a market maker in them other than the ability to maintain market maker
margins for what little activity may occur. In addition, the burden of
continuous quoting in these series is counter to efforts to mitigate
the number of quotes collected and disseminated.
The Exchange believes that the proposed rule change should incent
Market Makers and Specialists to continue appointments and thereby
expand liquidity in options classes listed on the Exchange to the
benefit of the Exchange and its ATP Holders and public customers.
[[Page 54520]]
2. Statutory Basis
The Exchange believes that this proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934 (``Act''),\9\
in general, and furthers the objectives of Section 6(b)(5) of the Act
\10\ in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, promote just and equitable principles
of trade, 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.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that its proposal is consistent with the Act
because, on balance, the elimination of the continuous quoting
obligations in adjusted series is a minor change and should not impact
the quality of Amex's market. Among other things, adjusted series are
not common, and trading interest is often very low after the corporate
event has passed. Consequently, continuous quotes in such series
increases quote traffic and burdens systems without a corresponding
benefit. By not requiring Market Makers to continuously quote in such
series, the Exchange's proposal would further its goal of measured
quote mitigation. Further, while they will not be tasked with
continually quoting such series, Market Makers will be obligated to
quote the series when called upon by a Trading Official. In addition, a
MM [sic] will be required to quote the series becomes ``lit'' in
response to a request for quote being received. Accordingly, the
proposal supports the quality of Amex's market by helping to ensure
that Market Makers will continue to be obligated to quote in adjusted
series when the need arises.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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 No. SR-NYSEAmex-2011-61 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAmex-2011-61. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for Web site
viewing and printing in the Commission's Public Reference Room, 100 F
Street, NE., Washington, DC 20549, on official business days between
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NYSEAmex-2011-61 and should be submitted on or before September 22,
2011.
For the Commission, by the Division of Trading and Markets, pursuant
to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22440 Filed 8-31-11; 8:45 am]
BILLING CODE 8011-01-P
