[Federal Register Volume 76, Number 229 (Tuesday, November 29, 2011)]
[Notices]
[Pages 73750-73752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-30634]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65805; File No. SR-NYSEAmex-2011-89]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Increase From 20
to 30 the Number of Short Term Options Series That May Be Opened for
Each Option Class That Participates in the Exchange's Short Term Option
Series Program
November 22, 2011.
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 November 18, 2011, NYSE Amex LLC (the ``Exchange'' or ``NYSE
Amex'') filed with the Securities and Exchange Commission
(``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 proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Commentary .10 to NYSE Amex Options
Rule 903 to increase the number of Short Term Options Series that may
be opened for each option class that participates in the Exchange's
Short Term Option Series Program (``Program'') from 20 series to 30
series. The text of the proposed rule change is available at the
Exchange, the Commission's Public Reference Room, http://www.nyse.com,
and http://www.sec.gov.
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 proposes to amend Commentary .10 to NYSE Amex Options
Rule 903 to increase the number of Short Term Options Series that may
be opened for each option class that participates in the Program from
20 series to 30 series.\5\
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\5\ On July 12, 2005, the Commission approved the Program on a
pilot basis. See Securities Exchange Act Release No. 52014 (July 12,
2005), 70 FR 41244 (July 18, 2005) (SR-Amex-2005-035). The Program
was expanded and made permanent on June 23, 2010. See Securities
Exchange Act Release No. 62370 (June 23, 2010), 75 FR 37870 (June
30, 2010) (SR-NYSEAmex-2010-62).
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The Program is codified in NYSE Amex Options Rule 903 and
Commentary .10 thereto. This rule text provides that, after an option
class has been approved for listing and trading on the Exchange, the
Exchange may open for trading on any Thursday or Friday that is a
business day (``Short Term Option Opening Date'') series of options on
no more than five (5) classes \6\ that expire at the close of business
on the next Friday that is a business day (``Short Term Option
Expiration Date'').\7\
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\6\ In addition to the five-option class restriction, the
Exchange also may list Short Term Option Series on any option
classes that are selected by other securities exchanges that employ
a similar program under their respective rules.
\7\ If the Exchange is not open for business on a Thursday or
Friday, the Short Term Option Opening Date will be the first
business day immediately prior to that Thursday or Friday.
Similarly, if the Exchange is not open for business on a Friday, the
Short Term Option Expiration Date will be the first business day
immediately prior to that Friday. Short Term Option Series are P.M.-
settled, except for Short Term Option Series on indexes, which are
A.M.-settled. No Short Term Option Series may expire in the same
week in which monthly or Quarterly Option Series on the same class
expire.
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The strike price of each Short Term Option Series will be fixed at
a price per share, with approximately the same number of strike prices
being opened above and below the value of the underlying security at
about the time that the Short Term Option Series are initially opened
for trading on the Exchange (e.g., if seven series are initially
opened, there will be at least three strike prices above and three
strike prices below the value of the underlying security).\8\ Any
strike prices listed by
[[Page 73751]]
the Exchange must be within thirty percent (30%) above or below the
closing price of the underlying security from the preceding day. The
Exchange is not proposing any changes to these additional Program
limitations.
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\8\ The listing criteria for Short Term Options Series contained
in Commentary .10 of Rule 903 is made applicable to index options by
Rule 903C(a). Accordingly, NYSE Amex is proposing to add a
parenthetical reference to Commentary .10(c) of Rule 903 stating
that in the case of index options, the calculated value of an index
will be used when determining the initial strike prices of Short
Term Options Series.
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The principal reason for the proposed expansion is market demand
for additional Short Term Option Series in classes included in the
Program in which the maximum number of series (20) has already been
reached. Specifically, the Exchange has observed increased demand for
additional Short Term Option Series when market-moving events, such as
corporate events and large price swings, have occurred during the
lifespan of an affected class included in the Program.
Currently, in order to be able to respond to market demand, the
Exchange is forced to delist certain Short Term Option Series in order
to make room for higher-demand Short Term Option Series.\9\ The
Exchange finds this method to be problematic for two reasons. First,
the Exchange has received requests to maintain certain Short Term
Option Series that it intends to delist to make room for higher-demand
Short Term Option Series. While market participants may often access
other markets for the delisted Short Term Option Series, the Exchange
would prefer to provide market participants with their preferred choice
of markets on which to trade--NYSE Amex. Second, this method can lead
to competitive disadvantages among exchanges. If one exchange is
actively responding to market demand by delisting and adding series and
another exchange is the last to delist the less desirable series with
open interest, then that exchange is required to maintain those series
and is potentially unable to list the in-demand Short Term Option
Series (because to do so could result in more than 20 Short Term Option
Series being listed on that exchange). As a result, the Exchange
believes that the maximum number of Short Term Option Series per class
of options that participates in the Program should be increased to 30
so that exchanges can list the full panoply of Short Term Option Series
that other exchanges list and that the market demands.
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\9\ The Exchange delists Short Term Option Series with no open
interest regardless of whether those series are open for trading on
another exchange.
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To effect this change, the Exchange is proposing to amend
Commentary .10 to NYSE Amex Options Rule 903. Specifically, the
Exchange is proposing to limit the initial number of Short Term Option
Series that may be opened for trading to 20 series and to limit the
number of additional Short Term Option Series that may be opened for
trading to 10 series.\10\
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\10\ Short Term Option Series must be added pursuant to the
existing listing parameters set forth in Commentary .10 to NYSE Amex
Options Rule 903. Initial Short Term Option Series must be within
30% above or below the closing price of the underlying security on
the preceding day. Any additional strike prices listed by the
Exchange must be within 30% above or below the current price of the
underlying security. The Exchange may also open additional strike
prices of Short Term Option Series that are more than 30% above or
below the current price of the underlying security provided that
demonstrated customer interest exists for such series, as expressed
by institutional, corporate or individual customers or their
brokers. Market-Makers trading for their own account are not
considered when determining customer interest.
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With regard to the impact of this proposal on system capacity, the
Exchange has analyzed its capacity and represents that it and the
Options Price Reporting Authority (``OPRA'') have the necessary systems
capacity to handle the potential additional traffic associated with
trading of an expanded number of Short Term Option Series for classes
that participate in the Program.
The Exchange believes that the Program has provided investors with
greater trading opportunities and flexibility and the ability to more
closely tailor their investment and risk management strategies and
decisions. Therefore, the Exchange requests a modest expansion of the
current Program. It is expected that other options exchanges that have
adopted a similar program will submit similar proposals.
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''),\11\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\12\ 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 mechanisms 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 expanding the number of Short Term Option Series
per option class eligible to participate in the Program will allow the
investing public and other market participants to better manage their
risk exposure, and would benefit investors by giving them more
flexibility to closely tailor their investment decisions in a greater
number of securities. While the expansion of the Program will generate
additional quote traffic, the Exchange does not believe that this
increased traffic will become unmanageable since the proposal is
limited to a fixed number of series per class. Further, the Exchange
does not believe that the proposal will result in a material
proliferation of additional series because it is limited to a fixed
number of series per class and the Exchange does not believe that the
additional price points will result in fractured liquidity.
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\11\ 15 U.S.C. 78f(b).
\12\ 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 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) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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 satisfied this requirement.
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The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest because the proposal is substantially similar to that of
another exchange that has been approved by the
[[Page 73752]]
Commission.\15\ Therefore, the Commission designates the proposal
operative upon filing.\16\
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\15\ See Securities Exchange Act Release No. 65772 (November 17,
2011) (SR-CBOE-2011-086) (order approving expansion of Short Term
Option Program).
\16\ 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).
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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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEAmex-2011-89 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-NYSEAmex-2011-89. 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 (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. 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-NYSEAmex-2011-89 and should
be submitted on or before December 20, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30634 Filed 11-28-11; 8:45 am]
BILLING CODE 8011-01-P