Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change To Amend Commentary .06 to NYSE Arca Options Rule 6.4 To Permit the Exchange To List Additional Strike Prices Until the Close of Trading on the Second Business Day Prior to Monthly Expiration, 76155-76156 [2012-30891]

Download as PDF Federal Register / Vol. 77, No. 247 / Wednesday, December 26, 2012 / Notices business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NYSEArca–2012–139 and should be submitted on or before January 14, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–30888 Filed 12–21–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68461; File No. SR– NYSEArca–2012–94] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change To Amend Commentary .06 to NYSE Arca Options Rule 6.4 To Permit the Exchange To List Additional Strike Prices Until the Close of Trading on the Second Business Day Prior to Monthly Expiration December 18, 2012. I. Introduction On September 6, 2012, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend Commentary .06 to NYSE Arca Options Rule 6.4 to permit the Exchange to list additional strike prices until the close of trading on the second business day prior to monthly expiration in unusual market conditions. The proposed rule change was published for comment in the Federal Register on September 20, 2012.3 On November 1, 2012, the Commission designated a longer period to act on the proposed rule change, until December 19, 2012.4 The Commission tkelley on DSK3SPTVN1PROD with 28 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Securities Exchange Act Release No. 67863 (September 14, 2012), 77 FR 58433 (‘‘Notice’’). 4 Securities Exchange Act Release No. 68136, 77 FR 66896 (November 7, 2012). 1 15 VerDate Mar<15>2010 06:31 Dec 22, 2012 Jkt 229001 received no comment letters on the proposal. This order approves the proposed rule change. II. Description of the Proposal The Exchange proposes to amend Commentary .06 to NYSE Arca Options Rule 6.4 to permit the Exchange to add additional strikes until the close of trading on the second business day prior to the expiration of a monthly, or standard, option in the event of unusual market conditions. NYSE Arca Options Rule 6.4 currently permits the Exchange to open additional series of individual stock options until the first calendar day of the month in which the option expires or until the fifth business day prior to expiration if unusual market conditions exist.5 The Exchange claims that, under its current rules, if unusual market conditions occur anytime from five to two days prior to expiration, then market participants are unable to obtain a contract tailored to manage their risk.6 According to the Exchange, options market participants generally prefer to focus their trading in strike prices that immediately surround the price of the underlying security.7 If, however, the price of the underlying stock moves significantly, the Exchange argues that there may be a market need for additional strike prices to adequately account for market participants’ risk management in a stock.8 Accordingly, the Exchange proposes to permit the listing of additional strikes until the close of trading on the second business day prior to expiration of a monthly option in unusual market conditions. The Exchange represents that the proposal does not raise any capacity concerns on the Exchange because the proposed change presents no material difference in impact from the current rules.9 The Exchange notes that the proposed change allows for new strikes that it would otherwise be permitted to add under existing rules either on the fifth day prior to or immediately after expiration. The Exchange further represents that it discussed the proposed change with the Options Clearing Corporation (‘‘OCC’’).10 According to the Exchange, the OCC 5 The Exchange may make the determination to open additional series for trading when the Exchange deems it necessary to maintain an orderly market, to meet customer demand, or when certain price movements take place in the underlying market. See Notice, supra note 3 at 58434. 6 See Notice, supra note 3 at 58434. 7 See id. at 58433. 8 See id. at 58434. 9 See id. The Exchange also stated that any new strikes added under this proposal would be added in a manner consistent with the range limitations described in NYSE Arca Options Rule 6.4A. 10 See id. PO 00000 Frm 00188 Fmt 4703 Sfmt 4703 76155 represented that it is able to accommodate the proposal and will have no operational concerns with adding new series on any day, except the last day of trading an expiring series.11 The Exchange states that, since the implementation of the fifth business day restriction on listing additional strikes, improved communications and the adoption of the Streamline Options Series Adds by OCC allows notification of new strikes in real time throughout the industry.12 III. Discussion and Commission Findings After careful review of the proposed rule change, 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.13 Specifically, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,14 which requires, among other things, that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, 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 notes that the proposed change extends the timeframe during which the Exchange may list additional series of individual stock options in unusual market conditions. The Commission believes that the proposed change will provide the investing public and other market participants with additional opportunities to tailor their investment and hedging decisions, thus allowing investors to better manage their risk exposure with additional series.15 IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,16 that the 11 See id. id. at 58433 n. 4. 13 In approving this proposed rule change, the Commission considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 14 15 U.S.C. 78f(b)(5). 15 In approving this proposal, the Commission notes that the Exchange has stated that, although the four additional days to list additional strike prices in the event of unusual market circumstances may generate additional quote traffic, the Exchange believes that any increased traffic will not become unmanageable since the proposal remains limited to the narrow situations when an unusual market event occurs. See Notice, supra note 3 at 58434. 16 15 U.S.C. 78s(b)(2). 12 See E:\FR\FM\26DEN1.SGM 26DEN1 76156 Federal Register / Vol. 77, No. 247 / Wednesday, December 26, 2012 / Notices proposed rule change (SR–NYSEArca– 2012–94) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–30891 Filed 12–21–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68482; File No. SR–ICC– 2012–24] Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change To Add Rules Related to the Clearing of European Corporate Single-Name CDS December 19, 2012. tkelley on DSK3SPTVN1PROD with 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 December 6, 2012, ICE Clear Credit LLC (‘‘ICC’’) 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 primarily by ICC. 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 purpose of the proposed rule change is to adopt new rules that will provide the basis for ICC to clear additional credit default swap contracts. Specifically, ICC is proposing to amend Chapters 20 and 26 and Schedule 401 and Schedule 502 of its rules as well as make corresponding changes to the applicable ICC Policies and Procedures to provide for the clearance of standard single-name CDS Contracts referencing European corporate reference entities (‘‘European SN Contracts’’). ICC proposes to amend Chapter 20 of its rules to remove definitions that are included in Chapter 26E of the rules. ICC proposes to amend Section 26E of its rules to include certain additional provisions relevant to the treatment of restructuring credit events under iTraxx Europe Index CDS (‘‘iTraxx Contracts’’) and European SN Contracts. ICC proposes to add new Section 26G to provide for the clearance of European 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b 4. 1 15 VerDate Mar<15>2010 06:31 Dec 22, 2012 Jkt 229001 SN Contracts. As discussed in more detail in Item II.A below, new Section 26G provides for the definitions and certain specific contracts terms for cleared European SN Contracts. ICC will update Schedule 401 of its Rules (Eligible Collateral & Thresholds), as applicable, with respect to Initial Margin and Guaranty Fund liquidity requirements for Non-Client and ClientRelated positions for both US Dollar and Euro denominated products. ICC will also update Schedule 502 of its Rules (Cleared Products List) to incorporate the additional cleared products. Upon Commission approval, ICC plans to provide for the clearance of the following European SN Contracts: Centrica Plc; E.ON AG; ENEL S.P.A.; EDISON S.P.A.; EDP—Energias de Portugal S.A.; ELECTRICITE DE FRANCE; EnBW Energie BadenWuerttemberg AG; Fortum Oyj; Adecco S.A.; Aktiebolaget Volvo; ALSTOM; BRITISH TELECOMMUNICATIONS public limited company; COMPAGNIE DE SAINT–GOBAIN; Deutsche Telekom AG; FRANCE TELECOM; GAS NATURAL SDG, S.A.; GDF SUEZ; HELLENIC TELECOMMUNICATIONS ORGANISATION SOCIETE ANONYME; IBERDROLA, S.A.; Koninklijke KPN N.V.; NATIONAL GRID PLC; Portugal Telecom International Finance B.V.; RWE Aktiengesellschaft; TELECOM ITALIA SPA; TELEFONICA, S.A.; Telekom Austria Aktiengesellschaft; TELENOR ASA; TeliaSonera Aktiebolag; UNITED UTILITIES PLC; Vattenfall Aktiebolag; VEOLIA ENVIRONNEMENT; VIVENDI; VODAFONE GROUP PUBLIC LIMITED COMPANY; Deutsche Post AG; European Aeronautic Defence and Space Company EADS N.V.; FINMECCANICA S.P.A.; Holcim Ltd; ROLLS–ROYCE plc; Siemens Aktiengesellschaft; PostNL N.V.; REPSOL, S.A.; Bayerische Motoren Werke Aktiengesellschaft; BRITISH AMERICAN TOBACCO p.l.c.; Daimler AG; DANONE; DIAGEO PLC; Koninklijke Philips Electronics N.V.; LVMH MOET HENNESSY LOUIS VUITTON; Nestle S.A.; Svenska Cellulosa Aktiebolaget SCA; Unilever N.V.; VOLKSWAGEN AKTIENGESELLSCHAFT; ACCOR; Bertelsmann AG; CARREFOUR; CASINO GUICHARD–PERRACHON; COMPASS GROUP PLC; EXPERIAN FINANCE PLC; GROUPE AUCHAN; J SAINSBURY plc; Koninklijke Ahold N.V.; MARKS AND SPENCER p.l.c.; METRO AG; NEXT PLC; PEARSON plc; PPR; PUBLICIS GROUPE SA; REED ELSEVIER PLC; SAFEWAY LIMITED; SODEXO; TESCO PLC; Wolters Kluwer N.V.; WPP 2005 LIMITED; AKZO Nobel PO 00000 Frm 00189 Fmt 4703 Sfmt 4703 N.V.; Anglo American plc; ArcelorMittal; BASF SE; Glencore International AG; Henkel AG & Co. KGaA; Koninklijke DSM N.V.; LANXESS Aktiengesellschaft; Linde Aktiengesellschaft; Solvay; XSTRATA PLC; STMicroelectronics N.V.; Bayer Aktiengesellschaft; SANOFI; Aegon N.V.; Allianz SE; ASSICURAZIONI GENERALI—SOCIETA PER AZIONI; AVIVA PLC; AXA; BANCA MONTE DEI PASCHI DI SIENA S.P.A.; BANCO BILBAO VIZCAYA ARGENTARIA, SOCIEDAD ANONIMA; Banco Espirito Santo, S.A.; BANCO SANTANDER, S.A.; Bank of Scotland plc; INTESA SANPAOLO SPA; JTI (UK) FINANCE PLC; Swiss Reinsurance Company Ltd; Zurich Insurance Company Ltd; Compagnie Financiere Michelin; L’AIR LIQUIDE SOCIETE ANONYME POUR L’ETUDE ET L’EXPLOITATION DES PROCEDES GEORGES CLAUDE; BAE SYSTEMS PLC; BOUYGUES; BP P.L.C.; IMPERIAL TOBACCO GROUP PLC; KINGFISHER PLC; Suedzucker Aktiengesellschaft Mannheim/ Ochsenfurt; Swedish Match AB; TECHNIP; IMPERIAL CHEMICAL INDUSTRIES LIMITED; ALTADIS SA; BRITISH SKY BROADCASTING GROUP PLC; Aktiebolaget Electrolux; THALES; Metso Oyj; Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen; Syngenta AG; TATE & LYLE PUBLIC LIMITED COMPANY; and TOTAL SA. ICC also updated its Policies and Procedures to provide for the clearance of European SN Contracts, specifically the ICC Treasury Operations Policies & Procedures, ICC Risk Management Framework and ICC End-of-Day (‘‘EOD’’) Price Discovery Policies and Procedures. Consistent with the changes to Schedule 401 of the ICC Rules, the ICC Treasury Operations Policies & Procedures have been updated to include Initial Margin and Guaranty Fund liquidity requirements for NonClient and Client-Related positions for both US Dollar and Euro denominated products. In order to accommodate the return of funds during London banking hours, the ICC Treasury Operations Policies & Procedures have been updated to require requests for Euro withdrawals to be submitted by 9:00 a.m. Eastern. The ICC Risk Management Framework has been updated to account for Euro denominated portfolios. Specifically, updates have been made to the Guaranty Fund, Initial Margin and Mark-toMarket Methodologies to address: Foreign Exchange Risk, Liquidity Risk, Time Zone Risk, and Operational Risk. E:\FR\FM\26DEN1.SGM 26DEN1

Agencies

[Federal Register Volume 77, Number 247 (Wednesday, December 26, 2012)]
[Notices]
[Pages 76155-76156]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30891]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68461; File No. SR-NYSEArca-2012-94]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change To Amend Commentary .06 to NYSE Arca 
Options Rule 6.4 To Permit the Exchange To List Additional Strike 
Prices Until the Close of Trading on the Second Business Day Prior to 
Monthly Expiration

December 18, 2012.

I. Introduction

    On September 6, 2012, NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Commentary .06 to NYSE Arca Options Rule 
6.4 to permit the Exchange to list additional strike prices until the 
close of trading on the second business day prior to monthly expiration 
in unusual market conditions. The proposed rule change was published 
for comment in the Federal Register on September 20, 2012.\3\ On 
November 1, 2012, the Commission designated a longer period to act on 
the proposed rule change, until December 19, 2012.\4\ The Commission 
received no comment letters on the proposal. This order approves the 
proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 67863 (September 14, 
2012), 77 FR 58433 (``Notice'').
    \4\ Securities Exchange Act Release No. 68136, 77 FR 66896 
(November 7, 2012).
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to amend Commentary .06 to NYSE Arca Options 
Rule 6.4 to permit the Exchange to add additional strikes until the 
close of trading on the second business day prior to the expiration of 
a monthly, or standard, option in the event of unusual market 
conditions. NYSE Arca Options Rule 6.4 currently permits the Exchange 
to open additional series of individual stock options until the first 
calendar day of the month in which the option expires or until the 
fifth business day prior to expiration if unusual market conditions 
exist.\5\ The Exchange claims that, under its current rules, if unusual 
market conditions occur anytime from five to two days prior to 
expiration, then market participants are unable to obtain a contract 
tailored to manage their risk.\6\ According to the Exchange, options 
market participants generally prefer to focus their trading in strike 
prices that immediately surround the price of the underlying 
security.\7\ If, however, the price of the underlying stock moves 
significantly, the Exchange argues that there may be a market need for 
additional strike prices to adequately account for market participants' 
risk management in a stock.\8\ Accordingly, the Exchange proposes to 
permit the listing of additional strikes until the close of trading on 
the second business day prior to expiration of a monthly option in 
unusual market conditions.
---------------------------------------------------------------------------

    \5\ The Exchange may make the determination to open additional 
series for trading when the Exchange deems it necessary to maintain 
an orderly market, to meet customer demand, or when certain price 
movements take place in the underlying market. See Notice, supra 
note 3 at 58434.
    \6\ See Notice, supra note 3 at 58434.
    \7\ See id. at 58433.
    \8\ See id. at 58434.
---------------------------------------------------------------------------

    The Exchange represents that the proposal does not raise any 
capacity concerns on the Exchange because the proposed change presents 
no material difference in impact from the current rules.\9\ The 
Exchange notes that the proposed change allows for new strikes that it 
would otherwise be permitted to add under existing rules either on the 
fifth day prior to or immediately after expiration. The Exchange 
further represents that it discussed the proposed change with the 
Options Clearing Corporation (``OCC'').\10\ According to the Exchange, 
the OCC represented that it is able to accommodate the proposal and 
will have no operational concerns with adding new series on any day, 
except the last day of trading an expiring series.\11\ The Exchange 
states that, since the implementation of the fifth business day 
restriction on listing additional strikes, improved communications and 
the adoption of the Streamline Options Series Adds by OCC allows 
notification of new strikes in real time throughout the industry.\12\
---------------------------------------------------------------------------

    \9\ See id. The Exchange also stated that any new strikes added 
under this proposal would be added in a manner consistent with the 
range limitations described in NYSE Arca Options Rule 6.4A.
    \10\ See id.
    \11\ See id.
    \12\ See id. at 58433 n. 4.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review of the proposed rule change, 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.\13\ Specifically, the Commission finds 
that the proposal is consistent with Section 6(b)(5) of the Act,\14\ 
which requires, among other things, that the rules of a national 
securities exchange be designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, 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 notes that the 
proposed change extends the timeframe during which the Exchange may 
list additional series of individual stock options in unusual market 
conditions. The Commission believes that the proposed change will 
provide the investing public and other market participants with 
additional opportunities to tailor their investment and hedging 
decisions, thus allowing investors to better manage their risk exposure 
with additional series.\15\
---------------------------------------------------------------------------

    \13\ In approving this proposed rule change, the Commission 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ In approving this proposal, the Commission notes that the 
Exchange has stated that, although the four additional days to list 
additional strike prices in the event of unusual market 
circumstances may generate additional quote traffic, the Exchange 
believes that any increased traffic will not become unmanageable 
since the proposal remains limited to the narrow situations when an 
unusual market event occurs. See Notice, supra note 3 at 58434.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the

[[Page 76156]]

proposed rule change (SR-NYSEArca-2012-94) be, and it hereby is, 
approved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-30891 Filed 12-21-12; 8:45 am]
BILLING CODE 8011-01-P
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