[Federal Register Volume 76, Number 120 (Wednesday, June 22, 2011)]
[Notices]
[Pages 36598-36600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-15605]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64693; File No. SR-NYSEAmex-2011-38]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending Rule 903G
To Permit the Exchange To List Flexible Exchange Options on Index and
Equity Securities That Are Eligible for Non-FLEX Options Trading, and
That Have Non-FLEX Options on Such Index and Equity Securities Listed
and Traded on at Least One National Securities Exchange, Even if the
Exchange Does Not List Such Non-FLEX Options
June 16, 2011.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on June 3, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend Rule 903G (Terms of FLEX Options) to
permit the Exchange to list Flexible Exchange Options (``FLEX
Options'') on index and equity securities that are eligible for Non-
FLEX Options trading, and that have Non-FLEX Options on such index and
equity securities listed and traded on at least one national securities
exchange, even if the Exchange does not list such Non-FLEX Options. The
text of the proposed rule change is available at the Exchange, the
Commission's Public Reference Room, and http://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 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 Exchange is proposing to amend Rule 903G (Terms of FLEX
Options) to permit trading of FLEX Options series in securities whose
Non-FLEX Options are listed and traded on a national securities
exchange(s), based on a recently adopted rule change of the Chicago
Board Options Exchange (``CBOE'').\4\
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\4\ See Securities Exchange Act Release No. 60585 (August 28,
2009), 74 FR 46257 (September 8, 2009). Unlike CBOE's rule, we have
clarified that our proposed rule would only permit the trading of
FLEX Options on securities whose Non-Flex Options are listed and
traded on at least one options exchange.
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Rule 903G currently permits the Exchange to approve and open for
trading FLEX Options only after the particular index or equity security
has been approved for Non-FLEX Options trading.
The Exchange proposes to adopt a rule change similar to a rule
change recently adopted by the CBOE to allow FLEX Equity Options on any
security that meets the standards of NYSE Amex Rule 915, and that has
Non-FLEX Options on such security listed and traded on at least one
options exchange, regardless of whether the Exchange trades such Non-
FLEX Options.
Similarly, the CBOE rule change also adopted a provision to allow
FLEX Index Options on any index that meets its listing standards. NYSE
Amex proposes to adopt a similar provision that would permit FLEX Index
Options on any index that meets the standards of Rule 901C, and that
has Non-FLEX Options on such index listed and traded on at least one
options exchange, even if the Exchange does not list and trade such
Non-FLEX Options.
The Exchange also proposes to designate 903G(c)(1) as ``reserved''
because the text in that provision stating that FLEX Equity Option
transactions are limited to transactions in options on underlying
securities that have been approved by the Exchange in accordance with
Rule 915 would no longer be applicable.
As an alternative to the over-the-counter marketplace and other
national security exchanges, the Exchange proposes to increase the
spectrum of indexes and equity securities that are
[[Page 36599]]
eligible for FLEX Options trading on the Exchange, even if the Exchange
does not list Non-FLEX Options on such indexes or equity securities. In
this regard, the Exchange does not list options on every NMS stock or
index that is eligible for options trading, even if permitted to do so
according to its listing standards, but recognizes that market
participants may want access to options on such indexes and equity
securities, in addition to the certainty and safeguards that a
regulated and standardized marketplace provides.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\5\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\6\
in particular, because it is designed to prevent fraudulent and
manipulative acts and practices, 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. The Exchange
believes that its proposal to permit the Exchange to list FLEX Options
on indexes and equity securities that are eligible for Non-FLEX Options
trading and whose Non-FLEX Options are listed and traded on at least
one national securities exchange, even if the Exchange does not list
such Non-FLEX Options, would provide market participants with
additional means to manage their risk exposures and carry out their
investment objectives with listed options. In this regard, the
Exchange's proposal would increase competition in the FLEX Options
market. In addition, the Exchange's proposal is consistent with
investor protection and the public interest in that it is limited to
FLEX Options on securities that would be eligible to have, and in fact
have, Non-FLEX Options listed and traded on them. The criteria for such
underlying securities has been carefully crafted over the years to
ensure that only appropriate securities have standardized options
listed on them (e.g., securities with sufficient trading volume and
shareholders).
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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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
Because the 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) 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 \7\ and
Rule 19b-4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii)
under the Act, the Exchange is required to give the Commission
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 Commission notes that the Exchange has satisfied this
requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \9\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \10\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the Exchange could immediately list FLEX Options on indexes and
equity securities that are eligible for non-FLEX Options trading, and
that have non-FLEX Options on such index and equity securities listed
and traded on at least one national securities exchange, even if the
Exchange does not list non-FLEX Options on such indexes and equity
securities. In support of the waiver, the Exchange believes that it
would benefit the marketplace and the investing public because it would
provide market participants with additional means to manage their risk
exposures and carry out their investment objectives with listed
options.
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\9\ 17 CFR 240.19b-4(f)(6).
\10\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiver of the operative delay is
consistent with the protection of investors and the public interest. In
making this determination, the Commission notes that NYSE Amex's
proposed rule change is substantially similar to CBOE's FLEX rules,
which also permit CBOE to list FLEX options on securities that are
eligible for non-FLEX options trading, even if CBOE does not list non-
FLEX options on such securities.\11\ The Commission notes that the
CBOE's proposal was subject to full notice and comment, and the
Commission received no comments on CBOE's rule proposal. Further, the
Commission notes that NYSE Amex's proposal adds clarification to the
rules, noting expressly that its rules would only permit the trading of
FLEX Options on securities whose non-FLEX Options are listed and traded
on at least one national securities exchange. This provision will help
to ensure that adequate exchange requirements are met for trading these
products and that the FLEX market will provide an alternative to
certain investors that want to customize specified options terms not
available in the standardized market. In addition to the factors noted
above, the Commission also believes that waiver of the operative delay
will allow the NYSE Amex to immediately compete with other exchanges
for the trading of such FLEX options, thereby providing investors
another venue on which to trade these products. For these reasons, the
Commission designates, consistent with the protection of investors and
the public interest, that the proposed rule change become operative
immediately upon filing.\12\
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\11\ See supra note 4.
\12\ 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. 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the 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 (http://www.sec.gov/rules/sro.shtml); or
[[Page 36600]]
Send an e-mail to [email protected]. Please include
File No. SR-NYSEAmex-2011-38 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 No. SR-NYSEAmex-2011-38. 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 such filing also will be available for
inspection and copying at the principal office of NYSE Amex. 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 No. SR-NYSEAmex-2011-38 and should be
submitted on or before July 13, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-15605 Filed 6-21-11; 8:45 am]
BILLING CODE 8011-01-P