[Federal Register Volume 77, Number 221 (Thursday, November 15, 2012)]
[Notices]
[Pages 68193-68194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27719]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68190; File No. SR-NYSEArca-2012-95]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of Proposed Rule Change, as Modified by Amendment No. 1, To
Amend Commentary .07 to NYSE Arca Options Rule 6.4 To Expand the Number
of Expirations Available Under the Short Term Option Series Program
(``STOS Program''), To Allow for the Exchange To Delist Series in the
STOS Program That Do Not Have Open Interest, and To Expand the Number
of Series in the STOS Program Under Limited Circumstances
November 8, 2012.
I. Introduction
On September 6, 2012, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend Commentary .07 to NYSE Arca Options Rule
6.4 (``Commentary .07'') to make certain modifications to the
Exchange's Short Term Option Series Program (``STOS Program''). The
proposed rule change was published for comment in the Federal Register
on September 26,
[[Page 68194]]
2012.\3\ The Commission received no comment letters on the proposal.
This order approves the proposed rule change, as modified by Amendment
No. 1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 67898 (September 20,
2012), 77 FR 59233 (``Notice''). The Commission notes that on
September 18, 2012, the Exchange submitted Amendment No. 1 to the
proposed rule change to make certain amendments that, in part,
clarified the circumstances in which the Exchange will delist series
with no open interest.
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II. Description of the Proposal
The Exchange proposes to amend Commentary .07 to (i) expand the
number of expirations available under the STOS Program; (ii) allow the
Exchange to delist, in certain circumstances, series in the STOS
program that do not have open interest; and (iii) allow the Exchange to
list, in certain circumstances, additional series in the STOS program.
The proposed rule change allows the Exchange to open a maximum of
five consecutive expirations under the STOS Program for trading on the
Exchange. The Exchange notes that it will not add expirations in a STOS
series if such expirations would coincide with an existing expiration
of a monthly or quarterly series of an option in the same class of the
STOS series.
The proposed rule change also amends the circumstances in which the
Exchange may delist or list series in the STOS Program. Specifically,
the proposed rule change provides that the Exchange will delist series
in the STOS Program with no open interest in both the call and the put
series having a: (i) Strike price higher than the highest strike price
with open interest in the put and/or call series for a given expiration
month; and (ii) strike price lower than the lowest strike price with
open interest in the put and/or call series for a given month, so as to
list series that are at least 10% but not more than 30% above or below
the current price of the underlying security. The Exchange would also
be permitted, under the proposed rule change, to list additional series
in excess of the 30 series otherwise allowed \4\ under Commentary .07
that are between 10% and 30% above or below the price of the underlying
security. The Exchange will only be allowed to delist or list series in
accordance with the proposed rule change in the event that the
underlying security has moved so that there are no series that are at
least 10% above or below the current price of the underlying security.
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\4\ Commentary .07(a) provides, in part, that for each option
class eligible for participation in the STOS Program, the Exchange
may open up to 30 Short Term Option Series for each expiration date
in that class.
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The Exchange asserts that the ability to list five consecutive
expirations under the STOS Program is designed to meet increased
customer demand and provide market participants with the ability to
hedge in a greater number of option classes and series.\5\ The Exchange
also claims that the proposed amendments regarding delisting or listing
STOS series are designed to provide investors flexibility by ensuring
that there are series within the band of at least 10% but not more than
30% above or below the current price of the underlying security.\6\
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\5\ See Notice, supra note 3 at 59233.
\6\ See id. at 59234.
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III. Discussion and Commission Findings
After careful review of the proposed rule change, the Commission
finds that the proposed rule change is consistent with the requirements
of the Act and the rules and regulations thereunder applicable to a
national securities exchange.\7\ Specifically, the Commission finds
that the proposal is consistent with Section 6(b)(5) of the Act,\8\
which requires, among other things, that the rules of a national
securities exchange be designed to promote just and equitable
principles of trade, to prevent fraudulent and manipulative acts, 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 Commission believes that the
proposed change may provide the investing public and other market
participants with greater flexibility to closely tailor their
investment and hedging decisions in a greater number of series, thus
allowing investors to better manage their risk exposure.
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\7\ In approving this proposed rule change, the Commission
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b)(5).
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In approving this proposal, the Commission notes that the Exchange
has represented that it and OPRA have the necessary systems capacity to
handle the potential additional traffic associated with opening of up
to five consecutive expirations under the STOS Program.\9\ The
Commission expects the Exchange to monitor the trading volume
associated with the additional options series listed as a result of
this proposal and the effect of these additional series on market
fragmentation and on the capacity of the Exchange's, OPRA's, and
vendors' automated systems.
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\9\ See Notice, supra note 3 at 59233.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change, as modified by Amendment No. 1,
(SR-NYSEArca-2012-95) be, and it hereby is, approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27719 Filed 11-14-12; 8:45 am]
BILLING CODE 8011-01-P