[Federal Register Volume 77, Number 20 (Tuesday, January 31, 2012)]
[Notices]
[Pages 4850-4851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-2037]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66238; File No. SR-BX-2012-005]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Expand
the Short Term Option Series Program
January 25, 2012.
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 January 17, 2012, NASDAQ OMX BX, Inc. (the ``Exchange'') 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 Exchange. The Exchange has designated the
proposed rule change as constituting a non-controversial rule change
under Rule 19b-4(f)(6) under the Act,\3\ 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 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 the Trading Rules of the Boston
Options Exchange Group, LLC (``BOX'') to expand the Short Term Option
Series Program.
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 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to amend Supplementary
Material .07 to Chapter IV, Section 6 (Series of Options Open for
Trading) and Supplementary Material .02 to Chapter XIV, Section 10
(Terms of Index Options Contracts) to expand the Short Term Option
Series Program (``Weeklys Program'').\4\ Currently, BOX may select up
to 25 currently listed option classes on which Weekly options may be
opened in the Weeklys Program. The Exchange proposes to increase this
to thirty option classes to participate in the Weeklys Program. This is
a competitive filing and is based on recently approved filings
submitted by The NASDAQ Stock Market LLC for the NASDAQ Options Market
(``NOM'') and NASDAQ OMX PHLX, Inc. (``PHLX'').\5\
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\4\ The Exchange adopted the Weeklys Program on July 15, 2010.
See Securities Exchange Act Release No. 62505 (July 15, 2010), 75 FR
42792 (July 22, 2010) (SR-BX-2010-047).
\5\ See Securities Exchange Act Release Nos. 65775 (November 17,
2011), 76 FR 72473 (November 23, 2011) (SR-NASDAQ-2011-138) and
65776 (November 17, 2011), 76 FR 72482 (November 23, 2011) (SR-PHLX-
2011-131).
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On November 17, 2011, the Exchange amended the BOX Weeklys Program
by increasing the number of strikes that may be listed per class (from
20 to 30) that participates in the Weeklys Program, and by increasing
the number of classes (from 15 to 25) that are eligible to participate
in the BOX Weeklys Program.\6\ On that same day, NOM and PHLX each
increased the number of classes that are eligible to participate in
their Weeklys Programs from 15 classes to 30 classes. As a result, BOX
is competitively disadvantaged since it operates a substantially
similar Weeklys Program as NOM and PHLX but is limited to selecting
only 25 classes that may participate in its Weeklys Program (whereas
PHLX and NOM may each select 30 classes).\7\
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\6\ See Securities Exchange Act Release No. 65773 (November 17,
2011), 76 FR 72490 (November 23, 2011) (SR-BX-2011-075).
\7\ BOX is permitted to list Weekly options ``on any option
classes that are selected by other securities exchanges that employ
a similar program under their respective rules.'' See Supplementary
Material .07 to Chapter IV, Section 6, and Supplementary Material
.02 to Chapter XIV, Section 10 of the BOX Trading Rules.
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The Exchange is not proposing any changes to these additional
Weeklys Program limitations other than to increase from 25 to 30 the
number of option classes that may participate in the Weeklys Program.
BOX notes that the Weeklys Program has been well-received by market
participants, in particular by retail investors. BOX believes a modest
increase to the number of classes that may participate in the Weeklys
Program, such as the one proposed in this rule filing, will permit BOX
to meet increased customer demand and provide market participants with
the ability to hedge in a greater number of option classes.
With regard to the impact of this proposal on system capacity, BOX
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 classes that participate in the Weeklys Program.
The proposed increase to the number of classes eligible to
participate in the
[[Page 4851]]
Weeklys Program is required for competitive purposes as well as to
ensure consistency and uniformity among the competing options exchanges
that have adopted similar Weeklys Programs.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934 \8\ (the
``Act'') in general, and furthers the objectives of Section 6(b)(5) of
the Act \9\ in particular, in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, 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 expanding the current short
term options program will result in a continuing benefit to investors
by giving them more flexibility to closely tailor their investment
decisions and hedging decisions in greater number of securities. The
Exchange believes that expanding the current program would provide the
investing public and other market participants increased opportunities
because an expanded program would provide market participants
additional opportunities to hedge their investment thus allowing these
investors to better manage their risk exposure. While the expansion of
the Weeklys Program will generate additional quote traffic, the
Exchange does not believe that this increased traffic will become
unmanageable since the proposal remains limited to a fixed number of
classes. Further, the Exchange does not believe that the proposed rule
change will result in a material proliferation of additional series
because it [sic] the number of series per class remains limited, and
the Exchange does not believe that the additional price points will
result in fractured liquidity.
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\8\ 15 U.S.C. 78f(b).
\9\ 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 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 either solicited or received.
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 \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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 the five-day prefiling 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 those of
other exchanges that have been approved by the Commission that permit
such exchanges to select up to 30 classes to participate in their
respective short term option series programs.\12\ Therefore, the
Commission designates the proposal operative upon filing.\13\
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\12\ See supra note 5.
\13\ 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-BX-2012-005 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-BX-2012-005. 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-BX-2012-005 and should be
submitted on or before February 21, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-2037 Filed 1-30-12; 8:45 am]
BILLING CODE 8011-01-P