Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Federal Register: April 22, 2010 (Volume 75, Number 77)
Notices
Page 21092-21094
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr22ap10-136
SECURITIES AND EXCHANGE COMMISSION
Release No. 34-61920; File No. SR-NYSEArca-2010-29
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 6.4
Commentary .04.
April 15, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given that on April 12, 2010, NYSE Arca, Inc. (the ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend Rule 6.4 Commentary .04 to permit the concurrent listing of $3.50 and $4 strikes for classes that participate in both the $0.50 Strike and $1 Strike Programs. The text of the proposed rule change is attached as Exhibit 5 to the 19b-4 form.
A copy of this filing is available on the Exchange's Web site at http:/
/www.nyse.com, at the Exchange's principal office and at the
Commission's Public Reference Room.
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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. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
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Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change 1. Purpose
The purpose of this filing is to amend Rule 6.4 Commentary .04 to permit the concurrent listing of $3.50 and $4 strikes for classes that participate in both the $0.50 Strike and $1 Strike Programs.
The Exchange recently implemented a rule change that permits strike price intervals of $0.50 for options on stocks trading at or below
$3.00 (``$0.50 Strike Program'').\5\ As part of the filing to establish the $0.50 Strike Program, the Exchange contemplated that a class may be selected to participate in both the $0.50 Strike Program and the $1
Strike Program.
\5\ See Exchange Act Release No. 60721 (September 25, 2009) 74
FR 50858 (October 1, 2009).
Under the $1 Strike Program, new series with $1 intervals are not permitted to be listed within $0.50 of an existing $2.50 strike price in the same series, except that strike prices of $2 and $3 are permitted to be listed within $0.50 of a $2.50 strike price for classes also selected to participate in the $0.50 Strike Program. Under NYSE
Arca's existing rule, for classes selected to participate in both the
$0.50 Strike Program and the $1 Strike Program, the Exchange may either: (a) List a $3.50 strike but not list a $4 strike; or (b) list a
$4 strike but not list a $3.50 strike. For example, under the
Exchange's current rules, if a $3.50 strike for an option class in both the $0.50 and $1 Strike
Page 21093
Programs was listed, the next highest permissible strike price would be
$5.00. Alternatively, if a $4 strike was listed, the next lowest permissible strike price would be $3.00. The intent of the $.50 Strike
Program was to expand the ability of investors to hedge risks associated with stocks trading at or under $3 and to provide finer intervals of $0.50, beginning at $1 up to $3.50. As a result, the
Exchange believes that the current filing is consistent with the purpose of the $0.50 Strike Program and will permit the Exchange to fill in any existing gaps resulting from having to choose whether to list a $3.50 or $4 strike for options classes in both the $0.50 and $1
Strike Programs.
Therefore, the Exchange is submitting the current filing to permit the listing of concurrent $3.50 and $4 strikes for classes that are selected to participate in both the $0.50 Strike Program and the $1
Strike Program. To effect this change, the Exchange is proposing to add
$4 to the strike prices of $2 and $3 currently permitted if a class participates in both the $0.50 Strike Program and the $1 Strike
Program.
The Exchange is also proposing to amend the current rule text to delete references to ``$2.50 strike prices'' (and the example utilizing
$2.50 strike prices) and to replace those references with broader language, e.g., ``existing strike prices.'' 2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \6\ of the Securities Exchange Act of 1934 (the ``Act''), in general, and furthers the objectives of Section 6(b)(5) \7\ in particular in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and to perfect the mechanism for a free and open market and a national market system and, in general, to protect investors and the public interest by permitting the Exchange to list more granular strikes on options overlying lower priced securities, which the Exchange believes will provide investors with greater flexibility by allowing them to establish positions that are better tailored to meet their investment objectives.
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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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.
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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.
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Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) \8\ of the Act and Rule 19b- 4(f)(6) \9\ thereunder. The Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing the proposed rule change.
\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6).
The Exchange has requested that the Commission waive the 30-day operative delay to permit the Exchange to list series available on other exchanges. The Commission finds that waiver of the operative delay is consistent with the protection of investors and the public interest because such waiver will enable the Exchange to compete with other exchanges whose rules permit concurrent listing of $3.50 and $4 strikes for classes similarly participating in both a $0.50 strike program and a $1 strike program. Therefore, the Commission designates the proposal operative upon filing.\10\
\10\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate 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.
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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 (http:// www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2010-29 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-NYSEArca-2010-29. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission,\11\ all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to
File Number SR-NYSEArca-2010-29 and should be submitted on or before
May 13, 2010.
\11\ The text of the proposed rule change is available on the
Commission's Web site at http://www.sec.gov/.
Page 21094
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\
\12\ 17 CFR 200.30-3(a)(12).
Elizabeth M. Murphy,
Secretary.
FR Doc. 2010-9357 Filed 4-21-10; 8:45 am
BILLING CODE 8011-01-P
