Self-Regulatory Organizations; NYSE MKT LLC; Order Granting Approval of Proposed Rule Change Adopting Rules Governing the Listing and Trading of New Products Known as DIVS, OWLS, and RISKS, 51590-51592 [2012-20817]
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51590
Federal Register / Vol. 77, No. 165 / Friday, August 24, 2012 / Notices
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the other Applicants. Applicants state
that the entry of the Injunction may
result in Applicants being subject to the
disqualification provisions of section
9(a) of the Act because ReconTrust is
enjoined from engaging in or continuing
particular conduct or practice in
connection with banking activity.5
2. Section 9(c) of the Act provides that
the Commission shall grant an
application for exemption from the
disqualification provisions of section
9(a) if it is established that these
provisions, as applied to Applicants, are
unduly or disproportionately severe or
that the Applicants’ conduct has been
such as not to make it against the public
interest or the protection of investors to
grant the exemption. Applicants have
filed an application pursuant to section
9(c) seeking a temporary and permanent
order exempting the Applicants and the
other Covered Persons from the
disqualification provisions of section
9(a) of the Act.
3. Applicants believe they meet the
standard for exemption specified in
section 9(c). Applicants state that the
prohibitions of section 9(a) as applied to
them would be unduly and
disproportionately severe and that the
conduct of Applicants has been such as
not to make it against the public interest
or the protection of investors to grant
the exemption from section 9(a).
4. Applicants state that the conduct
giving rise to the Injunction did not
involve any of the Applicants acting in
the capacity as investment adviser, subadviser, or principal underwriter (as
defined in section 2(a)(29) of the Act)
for any registered investment companies
(‘‘RIC’’) or ESCs (together with any
business development company,
‘‘Funds’’). Applicants state that to the
best of their reasonable knowledge none
of the Applicants’ current directors,
officers or employees who is involved in
providing services as investment
adviser, subadviser or depositor for any
Funds or principal underwriter (as
defined in section 2(a)(29) of the Act)
for any registered open-end company,
UIT or registered face amount certificate
company (collectively, the ‘‘Fund
Servicing Activities’’) (or any other
persons in such roles during the time
5 Applicants represent that the foreclosure trustee
activity specified in the Injunction is the same as
or similar to at least some of the loan servicing
activity deemed banking activity by an
administrative order issued by the Office of the
Comptroller of the Currency. See In the Matter of
Bank of America, N.A., The Office of the
Comptroller of the Currency Stipulation & Consent
Order No. AA–EC–11–12 (Apr. 13, 2011) (the ‘‘OCC
Order’’). Applicants state that under the standard
set forth in the OCC Order, ReconTrust is enjoined
from engaging in or continuing particular conduct
or practice in connection with banking activity.
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period covered by the Complaint)
participated in the conduct alleged in
the Complaint that constitutes the
violations that provide a basis for the
Injunction. Applicants also state that the
alleged conduct giving rise to the
Injunction did not involve any Fund for
which an Applicant provided Fund
Servicing Activities.
5. Applicants further represent that
the inability of Applicants (except for
ReconTrust) to continue providing Fund
Servicing Activities would result in
potentially severe financial hardships
for both the Funds and their
shareholders. Applicants state that they
will distribute written materials,
including an offer to meet in person to
discuss the materials, to the board of
directors of each Fund (excluding the
ESCs), including the directors who are
not ‘‘interested persons,’’ as defined in
section 2(a)(19) of the Act, of such
Fund, and their independent legal
counsel as defined in rule 0–1(a)(6)
under the Act, if any, regarding the
Injunction, any impact on the Funds,
and the application. The Applicants
will provide the Funds with all
information concerning the Injunction
and the application that is necessary for
the Funds to fulfill their disclosure and
other obligations under the federal
securities laws.
6. Applicants also assert that, if the
Applicants were barred from engaging
in Fund Servicing Activities, the effect
on their businesses and employees
would be severe. The Applicants state
that they have committed substantial
resources to establishing expertise in
providing Fund Servicing Activities.
7. Applicants also state that
disqualifying KECALP and MLGPE from
continuing to provide investment
advisory services to their ESCs is not in
the public interest or in furtherance of
the protection of investors and would
frustrate the expectations of eligible
employees who invest in the ESCs that
the ESCs would be managed by an
affiliate of their employer.
8. Applicants state that several
Applicants and certain of their affiliates
have previously received orders under
section 9(c), as described in greater
detail in the application.
Applicants’ Condition
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
Any temporary exemption granted
pursuant to the application shall be without
prejudice to, and shall not limit the
Commission’s rights in any manner with
respect to, any Commission investigation of,
or administrative proceedings involving or
against, Covered Persons, including without
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limitation, the consideration by the
Commission of a permanent exemption from
section 9(a) of the Act requested pursuant to
the application, or the revocation or removal
of any temporary exemptions granted under
the Act in connection with the application.
Temporary Order
The Commission has considered the
matter and finds that Applicants have
made the necessary showing to justify
granting a temporary exemption.
Accordingly,
It is hereby ordered, pursuant to
section 9(c) of the Act, that the
Applicants and the other Covered
Persons are granted a temporary
exemption from the provisions of
section 9(a), effective forthwith, solely
with respect to the Injunction, subject to
the condition in the application, until
the date the Commission takes final
action on their application for a
permanent order.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012–20859 Filed 8–23–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67684; File No. SR–
NYSEMKT–2012–14]
Self-Regulatory Organizations; NYSE
MKT LLC; Order Granting Approval of
Proposed Rule Change Adopting Rules
Governing the Listing and Trading of
New Products Known as DIVS, OWLS,
and RISKS
August 17, 2012.
I. Introduction
On June 19, 2012, NYSE MKT LLC
(‘‘Exchange’’ or ‘‘NYSE MKT’’), on
behalf of NYSE Amex Options LLC,
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b-4 thereunder,2 a proposed rule
change to adopt rules governing the
listing and trading of new products
known as DIVS, OWLS, and RISKS
(collectively, ‘‘DORS’’). The proposed
rule change was published for comment
in the Federal Register on July 6, 2012.3
The Commission received no comments
on the proposed rule change. This order
approves the proposed rule change.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 67315
(June 12, 2012), 77 FR 130 (‘‘Notice’’).
2 17
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Federal Register / Vol. 77, No. 165 / Friday, August 24, 2012 / Notices
II. Description of the Proposed Rule
Change
The Exchange proposes to adopt rules
governing the listing and trading of new
products known as DIVS, OWLS, and
RISKS. Each product has a different
risk/reward profile and may be bought
or sold separately to achieve a specific
investment goal. The three products,
when combined appropriately (i.e., long
a DIVS, OWLS, and RISKS on the same
underlying security, having the same
expiration, where the OWLS and RISKS
have identical strike prices), are
expected to generate total returns that
replicate that of a long stock position
held for the same duration. The
Exchange believes that the structure of
the product will enable investors to
hedge or obtain exposure to discrete
portions of the total return of a security.
DIVS. The phrase ‘‘Dividend Value of
Stock’’ or ‘‘DIVS’’ refers to an option
contract that returns to the investor a
stream of periodic cash flows equivalent
to the dividends paid by the underlying
stock. An investor that holds a long
DIVS contract will receive cash
payments equal to the dividend paid by
the underlying security. Such payment
will occur on the ‘‘ex-dividend’’ date for
the underlying security. The investor
will continue to have the right to earn
such dividend-equivalent cash
payments as long as the investor
remains long the DIVS contract until
expiration. DIVS contracts will be
European-style and cannot be exercised
prior to expiration.
OWLS. The phrase ‘‘Options with
Limited Stock’’ or ‘‘OWLS’’ refers to an
option contract that returns to the
investor at expiration shares of the
underlying security equal in value to the
lesser of (1) the current value of the
underlying security or (2) the strike
price of the option contract. At
expiration, regardless of how high the
stock closes above the strike price of an
OWLS contract, the holders of the
contract will never receive more than
shares of stock equivalent in value to
the strike price of the OWLS contract.
The risk/reward of a long OWLS
position is similar to a buy/write or
covered call position, less the
dividends, if any. A long OWLS
position offers investors some limited
downside protection in exchange for
limiting their upside participation to the
strike price of the OWLS contract.
OWLS contracts will be European-style
and cannot be exercised prior to
expiration.
RISKS. The phrase ‘‘Residual Interest
in Stock’’ or ‘‘RISKS’’ refers to an option
contract that returns to the investor at
expiration shares of the underlying
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security equal in value to the difference
between the value of the underlying
security at expiration and the strike
price of the contract. At expiration,
holders of RISKS will receive nothing if
the stock closes at or below the strike
price of the RISKS contract. A position
consisting of a long RISKS contract has
a risk/reward similar to that of a long
call position. A long RISKS position
offers an investor all of the upside price
appreciation above the strike price of
the RISKS contract while limiting the
investor’s capital at risk to the premium
paid to acquire the RISKS contract.
RISKS contracts will be European-style
and cannot be exercised prior to
expiration.
Listing Standards. Any security
eligible for listed options pursuant to
NYSE MKT Rule 915 will be eligible for
the listing of DORS. The Exchange has
stated that it will generally avoid listing
DORS on securities that meet the
criteria in Rule 915 but do not in fact
have regular put and call options listed
for trading.
Series Open for Trading. DIVS,
OWLS, and RISKS will be listed with
expirations of up to six years from the
listing date. The Exchange intends to
list five consecutive-year expiration
series at any one time, with the
expiration date set to coincide with
regular options expiration on the third
Friday of January in each expiration
year.
At the initial time of listing, the
Exchange will seek to list both OWLS
and RISKS with strike prices that are
slightly in or out of the money.
Periodically the Exchange will
introduce new strikes as necessary to
ensure that both OWLS and RISKS that
are slightly in or out of the money will
be available for trading. The listing of a
new OWLS series will result in the
listing of a RISKS contract with the
same terms, and vice versa. Standard
strike price intervals will apply to series
of both OWLS and RISKS. DIVS,
however, will always have one strike
available for trading for a given
expiration series. DIVS will always be
listed with a strike price of $0.01.
Settlement. All DORS components
will be automatically exercised, and
settled in accordance with the policies
and procedures of the Options Clearing
Corporation (‘‘OCC’’). Settlement of
OWLS and RISKS will be made via a
combination of shares of the underlying
security plus cash in lieu of any
fractional shares of the underlying
security, except that RISKS may expire
worthless and convey nothing at
expiration upon assignment. At
expiration, holders of OWLS will
receive shares of the underlying security
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51591
plus cash in lieu of fractional shares
equal to the lesser of the composite
closing price of the stock or the strike
price of the OWLS contract. RISKS
contracts will settle for shares of stock
equal to the value (if any) between the
difference of the composite closing price
of the stock at expiration and the strike
price of the RISKS contract. Though all
DIVS contracts will be limited to strike
prices of $0.01, settlement will not
require delivery (receipt) of $1 per
contract assigned (exercised) because
there is no value attached to the strike
price; the only amount due will be
potentially a cash amount equal to any
dividend amount that the underlying
security is ‘‘ex’’ on expiration Friday.
Additional information relating to
DORS, including listing standards,
exercise and settlement, symbology,
margin rules, and position limits can be
found in the Notice.
III. Discussion
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.4 In particular, the
Commission finds that the proposed
rule change is consistent with the
requirements of Section 6(b)(5) of the
Act,5 which requires, among other
things, that the Exchange’s rules be
designed promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. The Commission
believes that the proposal appropriately
balances, on the one hand, the
Exchange’s desire to offer new products
to investors with, on the other hand, the
necessity of having appropriate rules for
listing, trading, capital, and margin,
among other considerations relevant
under the Act.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,6 that the
proposed rule change (SR–NYSEMKT–
2012–14) be, and hereby is, approved.
4 In approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
5 15 U.S.C. 78f(b)(5).
6 15 U.S.C. 78s(b)(2).
7 17 CFR 200.30–3(a)(12).
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51592
Federal Register / Vol. 77, No. 165 / Friday, August 24, 2012 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012–20817 Filed 8–23–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Making Certain
Conforming Changes to Its Rules
Following the Change in the
Exchange’s Name From NYSE Amex
LLC (‘‘NYSE Amex’’) to NYSE MKT LLC
August 20, 2012.
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
9, 2012, NYSE MKT LLC (the
‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to make
certain conforming changes to its rules
following the change in the Exchange’s
name from NYSE Amex LLC (‘‘NYSE
Amex’’) to NYSE MKT LLC. The text of
the proposed rule change is available on
the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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15:22 Aug 23, 2012
Jkt 226001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
[Release No. 34–67695; File No. SR–
NYSEMKT–2012–38]
1 15
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
The Exchange proposes to make
certain conforming changes to its rules
following the change in the Exchange’s
name from NYSE Amex to NYSE MKT
LLC.3
As part of the Exchange’s name
change, the Exchange simplified crossreferences within the Exchange’s rules.
The Exchange shortened references to
‘‘NYSE Amex Equities’’ to ‘‘Equities’’
(e.g., Rule 0—NYSE Amex Equities
became Rule 0—Equities). The
Exchange proposes to change several
remaining cross-references to certain
NYSE Amex Equities rules in Rules
17—Equities, 80B—Equities, 107B—
Equities, 107C—Equities, 127—Equities,
128—Equities, 241—Equities, 250—
Equities, 273—Equities, 432—Equities,
and 502—Equities. Lastly, the Exchange
proposes to replace a reference to
‘‘Amex’’ in Rule 193 and references to
‘‘NYSE Amex Equities’’ and ‘‘NYSE
Amex’’ in Rule 107C—Equities with
references to ‘‘Exchange.’’
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Securities Exchange
Act of 1934 (the ‘‘Act’’),4 in general, and
Section 6(b)(5) of the Act,5 in particular,
in that it 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 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. The Exchange is
proposing certain conforming changes
that would make the rule text more
uniform, which is in the public interest.
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
3 See Securities Exchange Act Release No. 67037
(May 21, 2012), 77 FR 31415 (May 25, 2012) (SR–
NYSEAmex–2012–32).
4 15 U.S.C. 78f(b).
5 15 U.S.C. 78f(b)(5).
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Frm 00082
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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
The foregoing proposed rule change is
concerned solely with the
administration of the Exchange
pursuant to Section 19(b)(3)(A)(iii) 6 of
the Act and Rule 19b–4(f)(3) 7
thereunder. Accordingly, the proposal
will take effect upon filing with the
Commission. 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 email to rulecomments@sec.gov. Please include File
Number SR–NYSEMKT–2012–38 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–NYSEMKT–2012–38. This
file number should be included on the
subject line if email 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
6 15
7 17
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U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(3).
24AUN1
]]>Agencies
[Federal Register Volume 77, Number 165 (Friday, August 24, 2012)]
[Notices]
[Pages 51590-51592]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20817]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67684; File No. SR-NYSEMKT-2012-14]
Self-Regulatory Organizations; NYSE MKT LLC; Order Granting
Approval of Proposed Rule Change Adopting Rules Governing the Listing
and Trading of New Products Known as DIVS, OWLS, and RISKS
August 17, 2012.
I. Introduction
On June 19, 2012, NYSE MKT LLC (``Exchange'' or ``NYSE MKT''), on
behalf of NYSE Amex Options LLC, filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to adopt rules governing the
listing and trading of new products known as DIVS, OWLS, and RISKS
(collectively, ``DORS''). The proposed rule change was published for
comment in the Federal Register on July 6, 2012.\3\ The Commission
received no comments on the proposed rule change. This order approves
the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 67315 (June 12,
2012), 77 FR 130 (``Notice'').
---------------------------------------------------------------------------
[[Page 51591]]
II. Description of the Proposed Rule Change
The Exchange proposes to adopt rules governing the listing and
trading of new products known as DIVS, OWLS, and RISKS. Each product
has a different risk/reward profile and may be bought or sold
separately to achieve a specific investment goal. The three products,
when combined appropriately (i.e., long a DIVS, OWLS, and RISKS on the
same underlying security, having the same expiration, where the OWLS
and RISKS have identical strike prices), are expected to generate total
returns that replicate that of a long stock position held for the same
duration. The Exchange believes that the structure of the product will
enable investors to hedge or obtain exposure to discrete portions of
the total return of a security.
DIVS. The phrase ``Dividend Value of Stock'' or ``DIVS'' refers to
an option contract that returns to the investor a stream of periodic
cash flows equivalent to the dividends paid by the underlying stock. An
investor that holds a long DIVS contract will receive cash payments
equal to the dividend paid by the underlying security. Such payment
will occur on the ``ex-dividend'' date for the underlying security. The
investor will continue to have the right to earn such dividend-
equivalent cash payments as long as the investor remains long the DIVS
contract until expiration. DIVS contracts will be European-style and
cannot be exercised prior to expiration.
OWLS. The phrase ``Options with Limited Stock'' or ``OWLS'' refers
to an option contract that returns to the investor at expiration shares
of the underlying security equal in value to the lesser of (1) the
current value of the underlying security or (2) the strike price of the
option contract. At expiration, regardless of how high the stock closes
above the strike price of an OWLS contract, the holders of the contract
will never receive more than shares of stock equivalent in value to the
strike price of the OWLS contract. The risk/reward of a long OWLS
position is similar to a buy/write or covered call position, less the
dividends, if any. A long OWLS position offers investors some limited
downside protection in exchange for limiting their upside participation
to the strike price of the OWLS contract. OWLS contracts will be
European-style and cannot be exercised prior to expiration.
RISKS. The phrase ``Residual Interest in Stock'' or ``RISKS''
refers to an option contract that returns to the investor at expiration
shares of the underlying security equal in value to the difference
between the value of the underlying security at expiration and the
strike price of the contract. At expiration, holders of RISKS will
receive nothing if the stock closes at or below the strike price of the
RISKS contract. A position consisting of a long RISKS contract has a
risk/reward similar to that of a long call position. A long RISKS
position offers an investor all of the upside price appreciation above
the strike price of the RISKS contract while limiting the investor's
capital at risk to the premium paid to acquire the RISKS contract.
RISKS contracts will be European-style and cannot be exercised prior to
expiration.
Listing Standards. Any security eligible for listed options
pursuant to NYSE MKT Rule 915 will be eligible for the listing of DORS.
The Exchange has stated that it will generally avoid listing DORS on
securities that meet the criteria in Rule 915 but do not in fact have
regular put and call options listed for trading.
Series Open for Trading. DIVS, OWLS, and RISKS will be listed with
expirations of up to six years from the listing date. The Exchange
intends to list five consecutive-year expiration series at any one
time, with the expiration date set to coincide with regular options
expiration on the third Friday of January in each expiration year.
At the initial time of listing, the Exchange will seek to list both
OWLS and RISKS with strike prices that are slightly in or out of the
money. Periodically the Exchange will introduce new strikes as
necessary to ensure that both OWLS and RISKS that are slightly in or
out of the money will be available for trading. The listing of a new
OWLS series will result in the listing of a RISKS contract with the
same terms, and vice versa. Standard strike price intervals will apply
to series of both OWLS and RISKS. DIVS, however, will always have one
strike available for trading for a given expiration series. DIVS will
always be listed with a strike price of $0.01.
Settlement. All DORS components will be automatically exercised,
and settled in accordance with the policies and procedures of the
Options Clearing Corporation (``OCC''). Settlement of OWLS and RISKS
will be made via a combination of shares of the underlying security
plus cash in lieu of any fractional shares of the underlying security,
except that RISKS may expire worthless and convey nothing at expiration
upon assignment. At expiration, holders of OWLS will receive shares of
the underlying security plus cash in lieu of fractional shares equal to
the lesser of the composite closing price of the stock or the strike
price of the OWLS contract. RISKS contracts will settle for shares of
stock equal to the value (if any) between the difference of the
composite closing price of the stock at expiration and the strike price
of the RISKS contract. Though all DIVS contracts will be limited to
strike prices of $0.01, settlement will not require delivery (receipt)
of $1 per contract assigned (exercised) because there is no value
attached to the strike price; the only amount due will be potentially a
cash amount equal to any dividend amount that the underlying security
is ``ex'' on expiration Friday.
Additional information relating to DORS, including listing
standards, exercise and settlement, symbology, margin rules, and
position limits can be found in the Notice.
III. Discussion
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.\4\ In
particular, the Commission finds that the proposed rule change is
consistent with the requirements of Section 6(b)(5) of the Act,\5\
which requires, among other things, that the Exchange's rules be
designed promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest. The Commission believes that the proposal
appropriately balances, on the one hand, the Exchange's desire to offer
new products to investors with, on the other hand, the necessity of
having appropriate rules for listing, trading, capital, and margin,
among other considerations relevant under the Act.
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\4\ In approving this proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\5\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\6\ that the proposed rule change (SR-NYSEMKT-2012-14) be, and
hereby is, approved.
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\6\ 15 U.S.C. 78s(b)(2).
[[Page 51592]]
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-20817 Filed 8-23-12; 8:45 am]
BILLING CODE 8011-01-P
