Self-Regulatory Organizations; Proposed Rule Changes:
Federal Register Volume 76, Number 159 (Wednesday, August 17, 2011)
Notices
Pages 51116-51118
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
FR Doc No: 2011-20899
SECURITIES AND EXCHANGE COMMISSION
Release No. 34-65098; File No. SR-Phlx-2011-102
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Options on ETFS Gold Trust
August 11, 2011.
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 August 2, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``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 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.
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Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to list and trade options on the ETFS Gold
Trust.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, at the principal office of the Exchange, 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 Exchange 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 these 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 aspects 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 the proposed rule change is to amend certain rules to enable the listing and trading on the Exchange of options on the
ETFS Gold Trust (``SGOL'').\3\ Specifically, the Exchange proposes to amend Exchange Rule 1009, entitled ``Criteria for Underlying
Securities,'' to amend Commentary .06 (iv) to add SGOL to the list of products deemed appropriate for options trading.
\3\ The ETFS is physically-backed by gold bullion which are held in Switzerland.
Currently Exchange Rule 1009 lists the securities deemed appropriate for options trading, which includes shares or other securities (``Exchange-Traded Fund Shares'' or ``ETFS''), including but not limited to Partnership Units, as defined in Commentary .08, that are principally traded on a national securities exchange and are defined as an ``NMS stock'' under Rule 600 of Regulation NMS, and that
(i) Represent an interest in a registered investment company organized as an open-end management investment company, a unit investment trust or a similar entity which holds securities and/or financial instruments including, but not limited to, stock index futures contracts, options on futures, options on securities and indexes, equity caps, collars and floors, swap agreements, forward contracts, repurchase agreements and reverse repurchase agreements (the ``Financial Instruments''), and money market instruments, including, but not limited to, U.S. government securities and repurchase agreements (the ``Money Market
Instruments'') constituting or otherwise based on or representing an investment in an index or portfolio of securities and/or Financial
Instruments and Money Market Instruments, or (ii) represent commodity pool interests principally engaged, directly or indirectly, in holding and/or managing portfolios or baskets of securities, commodity futures contracts, options on commodity futures contracts, swaps, forward contracts and/or options on physical commodities and/or non-U.S. currency (``Commodity Pool ETFs'') or (iii) represent interests in a trust or similar entity that holds a specified non-U.S. currency or currencies deposited with the trust or similar entity when aggregated in some specified minimum number may be surrendered to the trust by the beneficial owner to receive the specified non-U.S. currency or
Page 51117
currencies and pays the beneficial owner interest and other distributions on the deposited non-U.S. currency or currencies, if any, declared and paid by the trust (``Currency Trust Shares''), or (iv) are
SPDR Gold Shares or are issued by the iShares COMEX Gold Trust or the iShares Silver Trust. This rule change proposes to expand the types of
ETFs that may be approved for options trading to include SGOL.
Apart from allowing SGOL to be an underlying for options traded in the Exchange as described above, the listing standards for ETFs will remain unchanged from those that apply under current Exchange Rules.
ETFs on which options may be listed and traded must still be listed and traded on a national securities exchange and must satisfy other listing standards.\4\
\4\ The ETFS must meet the criteria and guidelines for underlying securities as set forth in Commentary .01 to Exchange
Rule 1009 and must meet other criteria specified in Commentary .06
(a) and (b) to Exchange Rule 1009.
The Exchange notes that the current continued listing standards for options on Exchange-Traded Fund Shares would also apply to options on
SGOL. Specifically, under the applicable continued listing standards in
Rule 1010, Commentary .08, absent exceptional circumstances, options on
Exchange-Traded Fund Shares shall not be deemed to meet the Exchange's requirements for continued approval, and the exchange shall not open for trading any additional series of option contracts of the class covering such Exchange-Traded Fund Shares, whenever the Exchange-Traded
Fund Shares are delisted and trading in the Shares is suspended on a national securities exchange, or the Exchange-Traded Fund Shares cease to be an ``NMS stock.'' In addition, the exchange shall consider the suspension of opening transactions in any series of options of the class covering Exchange-Traded Fund Shares in any of the following circumstances: (1) In accordance with the terms of paragraphs 1, through 7, of Commentary .01 of Rule 1010 in the case of options covering Exchange-Traded Fund Shares when such options were approved pursuant to paragraph (a)(i) of Commentary .06 of Rule 1009; (2) following the initial twelve-month period beginning upon the commencement of trading of the Exchange-Traded Fund Shares on a national securities exchange and are defined as an ``NMS stock'' under
Rule 600 of Regulation NMS, there are fewer than 50 record and/or beneficial holders of Exchange-Traded Fund Shares for 30 or more consecutive trading day; (3) the value of the index, non-U.S. currency, portfolio of commodities including commodity futures contracts, options on commodity futures contracts, swaps, forward contracts and/or options on physical commodities and/or Financial Instruments or Money Market
Instruments, or portfolio of securities on which the Exchange-Traded
Fund Shares are based is no longer calculated or available; or (4) such other event shall occur or condition exist that in the opinion of the
Exchange makes further dealing in such options on the Exchange inadvisable.\5\
\5\ See Exchange Rule 1010, Commentary .08.
The addition of SGOL to Exchange Rule 1009, Commentary .06 will not have any effect on the rules pertaining to position and exercise limits or margin.\6\ Further, the Exchange represents that its surveillance procedures applicable to trading in options on SGOL will be similar to those applicable to all other options on other ETFs currently traded on the Exchange. The Exchange may obtain trading information via the
Intermarket Surveillance Group (``ISG'') from other exchanges who are members or affiliates of the ISG. The Exchange may also obtain trading information from various commodity futures exchanges worldwide that have entered into comprehensive surveillance sharing agreements with the Exchange. In connection with SGOL, the Exchange represents that it may obtain information from the New York Mercantile Exchange, Inc.
(``NYMEX''), pursuant to a comprehensive surveillance sharing agreement, related to any financial instrument that is based, in whole or in part, upon an interest in or performance of gold. Prior to listing and trading options on SGOL, the Exchange represents that it will either have the ability to obtain specific trading information via
ISG or through a comprehensive surveillance sharing agreement with the marketplace or marketplaces with last sale reporting that represent(s) the highest volume in derivatives (options or futures) on the underlying gold.
\6\ See Exchange Rules 1001 (Position Limits), 1002 (Exercise
Limits) and 721 (Proper and Adequate Margin).
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Statutory Basis
The Exchange believes that its proposal is consistent with Section 6(b) of the Act \7\ in general, and furthers the objectives of Section 6(b)(5) of the Act \8\ in particular, in that it is designed to 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, by amending its rules to accommodate the listing and trading of options on SGOL, which will benefit investors by providing them with valuable risk management tools.
\7\ 15 U.S.C. 78f(b).
\8\ 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 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 either solicited or received.
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Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) by its terms does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory organization to provide 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 of the proposed rule change, or such shorter time as designated by the
Commission. The Exchange has fulfilled this requirement.
A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay so that the Exchange can list and trade options on ETFS Gold Trust immediately. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest.\11\ The Commission notes
Page 51118
the proposal is substantively identical to proposals previously approved by the Commission, and does not raise any new regulatory issues.\12\ For these reasons, the Commission designates the proposed rule change as operative upon filing.
\11\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
\12\ See Securities Exchange Act Release Nos. 61483 (February 3, 2010), 75 FR 6753 (February 10, 2010) (SR-CBOE-2010-007, SR-ISE- 2009-106, SR-NYSEAmex-2009-86, and SR-NYSEArca-2009-110), 62464
(July 7, 2010), 75 FR 40007 (July 13, 2010) (SR-BX-2010-045) (rule filings to enable the listing and trading of options on ETFS Gold
Trust on CBOE, ISE, NYSE Amex, NYSE Arca and BOX).
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.
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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-Phlx-2011-102 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-Phlx-2011-102. 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, 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.\13\ 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-Phlx-2011-102 and should be submitted on or before September 7, 2011.
\13\ The text of the proposed rule change is available on the
Commission's Web site at http://www.sec.gov.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\
\14\ 17 CFR 200.30-3(a)(12).
Elizabeth M. Murphy,
Secretary.
FR Doc. 2011-20899 Filed 8-16-11; 8:45 am
BILLING CODE 8011-01-P
