[Federal Register Volume 77, Number 130 (Friday, July 6, 2012)]
[Notices]
[Pages 40127-40129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16539]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67325; File No. SR-NASDAQ-2012-075]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Extension of the Exchange's Penny Pilot Program and
Replacement of Penny Pilot Issues That Have Been Delisted
June 29, 2012.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on June 22, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' 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 NASDAQ. 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 Substance
of the Proposed Rule Change
NASDAQ is filing with the Commission a proposal for the NASDAQ
Options Market (``NOM'') to amend Chapter VI, Section 5 (Minimum
Increments) to: Extend through December 31, 2012, the Penny Pilot
Program in options classes in certain issues (``Penny Pilot'' or
``Pilot''); and provide for or allow replacement of any Penny Pilot
issues that have been delisted.\4\
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\4\ The Penny Pilot was established in March 2008 and in October
2009 was expanded and extended through December 31, 2010. See
Securities Exchange Act Release Nos. 57579 (March 28, 2008), 73 FR
18587 (April 4, 2008) (SR-NASDAQ-2008-026) (notice of filing and
immediate effectiveness establishing Penny Pilot); 60874 (October
23, 2009), 74 FR 56682 (November 2, 2009) (SR-NASDAQ-2009-091)
(notice of filing and immediate effectiveness expanding and
extending Penny Pilot); 60965 (November 9, 2009), 74 FR 59292
(November 17, 2009) (SR-NASDAQ-2009-097) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
61455 (February 1, 2010), 75 FR 6239 (February 8, 2010) (SR-NASDAQ-
2010-013) (notice of filing and immediate effectiveness adding
seventy-five classes to Penny Pilot); 62029 (May 4, 2010), 75 FR
25895 (May 10, 2010) (SR-NASDAQ-2010-053) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
62617 (July 30, 2010), 75 FR 47670 (August 6, 2010) (SR-NASDAQ-2010-
092) (notice of filing and immediate effectiveness adding seventy-
five classes to Penny Pilot); 63396 (November 30, 2010), 75 FR 76064
(December 7, 2010) (SR-NASDAQ-2010-150) (notice of filing and
immediate effectiveness extending the Penny Pilot); and 65969
(December 15, 2011), 76 FR 79268 (December 21, 2011) (SR-NASDAQ-
2011-169) (notice of filing and immediate effectiveness extending
the Penny Pilot).
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[[Page 40128]]
The Exchange requests that the Commission waive the 30-day
operative delay period contained in Exchange Act Rule 19b-4(f)(6)(iii)
\5\ to the extent needed for timely industry-wide implementation of the
proposal.
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\5\ 17 CFR 240.19b-4(f)(6)(iii).
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The text of the proposed rule change is available from NASDAQ's Web
site at http://nasdaq.cchwallstreet.com, at NASDAQ's principal office,
and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASDAQ 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. NASDAQ 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend Chapter VI, Section 5 to
extend the Penny Pilot through December 31, 2012, and replace any Penny
Pilot issues that have been delisted.
For a pilot period scheduled to expire on June 30, 2012, the Penny
Pilot allows certain options to be quoted and traded on the Exchange in
minimum increments of $0.01 for all series in such options with a price
of less than $3.00; and in minimum increments of $0.05 for all series
in such options with a price of $3.00 or higher. Options overlying the
PowerShares QQQ Trust (``QQQQ'')[supreg], SPDR S&P 500 Exchange Traded
Funds (``SPY''), and iShares Russell 2000 Index Funds (``IWM''),
however, are quoted and traded in minimum increments of $0.01 for all
series regardless of the price. Currently the Exchange trades 345
options classes pursuant to the Penny Pilot.
The Penny Pilot is a very successful and efficacious pricing
program that is beneficial to traders, investors, and public customers,
and the Exchange has received numerous requests to expand and continue
it. This proposal allows the Penny Pilot to continue in its current
format for six months through December 31, 2012.
Commensurate with the extension of the Penny Pilot through December
31, 2012, the Exchange proposes to replace any Penny Pilot issues that
have been delisted with the next most actively traded multiply listed
options classes that are not yet included in the Pilot. The replacement
issues will be selected based on trading activity for the six month
period beginning December 1, 2011, and ending May 31, 2012. The
replacement issues would be added to the Pilot on the second trading
day following July 1, 2012.\6\
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\6\ The replacement issues will be announced to the Exchange's
membership via an OTA posted on the Exchange's Web site.
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In terms of housekeeping, the Exchange proposes to delete the
phrase ``on a semi-annual basis'' from Section 5(a)(3) of Chapter VI to
make it consistent with a similar provision of another exchange, namely
Phlx Rule 1034(a)(i)(A).
2. 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 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, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system, by extending the Penny Pilot and
replacing delisted Penny Pilot issues.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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The Exchange notes that the Penny Pilot is a very successful and
efficacious pricing program that is beneficial to traders, investors,
and public customers, and the Exchange has received numerous requests
to expand and continue it. This proposal would allow the Penny Pilot to
continue in its current format through December 31, 2012.
B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ does not believe that the proposed rule change will result
in 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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, 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 \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.\13\
However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission believes
that waiving the 30-day operative delay is
[[Page 40129]]
consistent with the protection of investors and the public interest
because doing so will allow the Pilot Program to continue without
interruption in a manner that is consistent with the Commission's prior
approval of the extension and expansion of the Pilot Program and will
allow the Exchange and the Commission additional time to analyze the
impact of the Pilot Program.\15\ Accordingly, the Commission designates
the proposed rule change as operative upon filing with the
Commission.\16\
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\13\ 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 the 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 pre-filing requirement.
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ See Securities Exchange Act Release No. 61061 (November 24,
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44). See
also supra note 4.
\16\ For purposes only of waiving the operative delay for this
proposal, 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-NASDAQ-2012-075 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-NASDAQ-2012-075.
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 10:00 a.m. and 3:00 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-
NASDAQ-2012-075 and should be submitted on or before July 27, 2012.
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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-16539 Filed 7-5-12; 8:45 am]
BILLING CODE 8011-01-P