[Federal Register Volume 78, Number 204 (Tuesday, October 22, 2013)]
[Notices]
[Pages 62809-62814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24673]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70682; File No. SR-Phlx-2013-101]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing of Proposed Rule Change Regarding the Short Term Option Series
Program
October 15, 2013.
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 October 3, 2013, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III, below, which Items have been prepared by the Exchange. 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.
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[[Page 62810]]
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is filing with the Commission a proposal to amend Rule
1012 (Series of Options Open for Trading) to expand the Short Term
Option Program (``STO Program'' or ``Program'') \3\ so that the
Exchange may: Change the current thirty option class limitation to
fifty option classes on which STOs may be opened; list or add STOs
within fifty percent (50%) above or below the closing price of the
underlying security from the preceding day if the price of the
underlying security is greater than $20, or within one hundred percent
(100%) above or below the closing price of the underlying security from
the preceding day if the price of the underlying security is less than
or equal to $20; open up to thirty STO series for each expiration date
in an STO class; add an STO strike price interval of $2.50 or greater
where the strike price is above $150; and in general harmonize the
different parts of the Program.
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\3\ STOs, also known as ``weekly options'' as well as ``Short
Term Options'', are series in an options class that are approved for
listing and trading on the Exchange in which the series are opened
for trading on any Thursday or Friday that is a business day and
that expire on the Friday of the next business week. If a Thursday
or Friday is not a business day, the series may be opened (or shall
expire) on the first business day immediately prior to that Thursday
or Friday, respectively. For STO Program rules regarding non-index
options, see Rule 1000(b)(44) and Commentary .11 to Rule 1012. For
STO Program rules regarding index options, which are not implicated
by this proposal, see Rule 1000A(b)(16) and Rule 1101A(b)(vi).
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The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and the
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to amend Rule 1012 to
expand the STO Program for non-index options so that the Exchange may:
Change the current thirty option class limitation to fifty option
classes on which STOs may be opened; list or add STOs within fifty
percent (50%) above or below the closing price of the underlying
security from the preceding day if the price of the underlying security
is greater than $20, or within one hundred percent (100%) above or
below the closing price of the underlying security from the preceding
day if the price of the underlying security is less than or equal to
$20; open up to thirty STO series for each expiration date in an STO
class; add an STO strike price interval of $2.50 or greater where the
strike price is above $150; and in general harmonize the different
parts of the Program.\4\
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\4\ The price of the underlying security will be calculated
commensurate with Commentary .10(a) to Rule 1012 as amended.
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The STO Program, which was initiated in 2010,\5\ is codified in
Commentary .11 to Rule 1012 for non-index options including equity,
currency, and exchange traded fund (``ETF'') options.\6\ These sections
currently state 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 series of options on
no more than thirty option classes that expire on the Friday of the
following business week that is a business day.\7\ In addition to the
thirty option class limitation, there is also a limitation that no more
than twenty series for each expiration date in those classes may be
opened for trading.\8\ Furthermore, the strike price of each STO has to
be fixed 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 STOs are initially opened for trading on the
Exchange, and with strike prices being within thirty percent (30%)
above or below the closing price of the underlying security from the
preceding day. The Exchange proposes in part to increase the number of
STO classes that may be opened, match the opening of initial and
additional STO strikes to what is permissible per the OLPP,\9\ add new
strike prices increments that may be used in the STO Program, and in
general harmonize the different parts of the Program (e.g., initial
listings and additional series).
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\5\ See Securities Exchange Act Release No. 62296 (June 15,
2010), 75 FR 35115 (June 21, 2010) (SR-Phlx-2010-84) (notice of
filing and immediate effectiveness permanently establishing STO
Program on the Exchange).
\6\ The Exchange does not by this filing propose any changes to
Rule 1101A(b)(vi) related to the STO Program for index options.
\7\ The increase in the number of option issues that could be
opened pursuant to the STO Program was approved in 2011. See
Securities Exchange Act Release No. 65776 (November 17, 2011), 76 FR
72482 (November 23, 2011) (SR-Phlx-2011-131) (approval order).
\8\ However, if the Exchange opens less than twenty (20) Short
Term Option Series for a Short Term Option Expiration Date,
additional series may be opened for trading on the Exchange when the
Exchange deems it necessary to maintain an orderly market, to meet
customer demand or when the market price of the underlying security
moves substantially from the exercise price or prices of the series
already opened. Any additional strike prices listed by the Exchange
shall be within thirty percent (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 shall not
be considered when determining customer interest under this
provision. The opening of the new Short Term Option Series shall not
affect the series of options of the same class previously opened.
Commentary .11(d) to Rule 1012. The Exchange proposes, as discussed
below, to change twenty (20) Short Term Option Series to thirty (30)
Short Term Option Series to achieve consistency with other proposed
rule changes.
\9\ The full name of the OLPP (which is applicable to all option
exchanges) is Plan For The Purpose of Developing and Implementing
Procedures Designed to Facilitate the Listing and Trading of
Standardized Options Submitted Pursuant to Section 11A(a)(3)(B) of
the Securities Exchange Act of 1934. With regard to the listing of
new series on equity, ETF, or trust issued receipt (``TIRs'') option
classes, subsection 3.(g)(i) of the OLPP states, in relevant part,
that the exercise price of each option series listed by an exchange
that chooses to list a series of options (known as the Series
Selecting Exchange) shall be fixed at a price per share which is
reasonably close to the price of the underlying equity security,
ETF, or TIR at or about the time the Series Selecting Exchange
determines to list such series. Except as provided in subparagraphs
(ii) through (iv) of the OLPP, if the price of the underlying
security is less than or equal to $20, the Series Selecting Exchange
shall not list new option series with an exercise price more than
100% above or below the price of the underlying security. If the
price of the underlying security is greater than $20, the Series
Selecting Exchange shall not list new option series with an exercise
price more than 50% above or below the price of the underlying
security.
Subsection 3.(g)(i) of the OLPP indicates that an option series
price has to be reasonably close to the price of the underlying
security and must not exceed a maximum of 50% or 100%, depending on
the price, from the underlying. The Exchange's proposal related to
non-index options, while conforming to the current structure of the
Exchange's STO rules, is similar in practical effect to the noted
OLPP subsection.
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In terms of the strike price intervals, the STO Program currently
allows that the interval between strike prices on
[[Page 62811]]
STOs may be (i) $0.50 or greater where the strike price is less than
$75, and $1 or greater where the strike price is between $75 and $150
for all classes that participate in the STO Program; or (ii) $0.50 for
classes that trade in one dollar increments in Related non-STOs \10\
and that participate in the STO Program. Related non-STO series shall
be opened during the week prior to the week that such Related non-STO
series expire in the same manner and in the same strike price intervals
as permitted in Commentary .11 to Rule 1012.\11\ This proposal retains
many of the fundamental limitations of the STO Program while proposing
specific changes as described below.
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\10\ Related non-STOs are non-STOs that have similar options
with longer expiration cycles (e.g., monthly Apple (AAPL) options
would be Related non-STOs to weekly AAPL options). Unlike monthly
non-index options series such as AAPL, which may not be listed
within two business days of expiration, because of the short STO
expiration cycle these options may be listed up to expiration.
\11\ Commentary .11(e) to Rule 1012.
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The Proposal
First, the Exchange proposes to increase the number of STO classes
that may be opened after an option class has been approved for listing
and trading on the Exchange. Specifically, the Exchange proposes in
Commentary .11(a) of Rule 1012 that the Exchange may select up to fifty
currently listed option classes on which Short Term Option Series may
be opened. The Exchange proposes also that for each option class
eligible for participation in the STO Program, the Exchange may open up
to thirty STO Series for each expiration date in that class.\12\ The
Exchange believes that this proposed moderate increase is needed and
advisable in light of the demonstrated acceptance and popularity of the
STO Program among market participants, as discussed below.
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\12\ The current limitation is up to thirty currently listed
option classes and up to twenty series for each expiration date in
an STO class. Commentary .11(a) of Rule 1012.
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Second, the Exchange proposes to indicate under what circumstances,
subsequent to opening initial STO classes, additional STO strike prices
may be added. Specifically, the Exchange proposes in Commentary .11(c)
of Rule 1012 that any initial series listed by the Exchange shall be
reasonably close to the price of the underlying equity security and
within the following parameters: (i) If the price of the underlying
security is less than or equal to $20, additional strike prices shall
be not more than one hundred percent (100%) above or below the price of
the underlying security; and (ii) if the price of the underlying
security is greater than $20, additional strike prices shall be not
more than fifty percent (50%) above or below the price of the
underlying security. This proposal is in line with the process for
adding new series of options found in subsection 3.(g)(i) of the OLPP,
and harmonizes the Program internally. The Exchange believes that this
proposal is a reasonable and desirable enhancement to the STO Program.
Third, the Exchange proposes changes to Commentary .11(d) of Rule
1012 to indicate that any additional strike prices listed by the
Exchange shall be reasonably close to the price of the underlying
equity security and within the following parameters: (i) If the price
of the underlying security is less than or equal to $20, additional
strike prices shall be not more than one hundred percent (100%) above
or below the price of the underlying security; and (ii) if the price of
the underlying security is greater than $20, additional strike prices
shall be not more than fifty percent (50%) above or below the price of
the underlying security. This is done so that the parameters for
opening STOs and adding strike prices are in conformity. The Exchange
proposes additional changes to Commentary .11(d) to indicate that if
the Exchange has opened less than thirty (30) Short Term Option Series
for a Short Term Option Expiration Date, the Exchange may also open
additional strike prices of Short Term Option Series that are more than
50% above or below the current price of the underlying security (if the
price is greater than $20); 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.\13\ This is done to conform the additional strike
price methodology with the proposed 50% listing standard in the same
subsections, and to ensure that the opening 30 Short Term Option Series
language is consistent with other proposed changes,\14\ while retaining
the demonstrated interest language that may be useful in unforeseen
circumstances.
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\13\ Commentary .10(a) to Rule 1012 currently states that if the
price of the underlying security is greater than $20, the Exchange
shall not list new option series with an exercise price more than
50% above or below the price of the underlying security. Immediately
before this language, the Exchange proposes to also add a carve-out
that states: ``Except as provided in Commentary .11(d) to Rule 1012
. . .''
\14\ The Exchange believes that the 100% standard proposed for
initial listings where the price of the underlying is below $20 is
adequate and does not need to be repeated for additional series
adds.
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Fourth, the Exchange also proposes to simplify the Delisting
Language in Commentary .11(d) of Rule 1012, which currently contains a
range methodology (at least 10% but not more than 30% above or below
the current price of the underlying),\15\ to indicate that the Exchange
will delist any series with no open interest in both the call and the
put series having a: (i) Strike higher than the highest price with open
interest in the put and/or call series for a given expiration week; and
(ii) strike lower than the lowest strike price with open interest in
the put and/or the call series for a given expiration week. The
Exchange believes that like its other proposals, the delisting proposal
will add clarity and certainty to the STO process on the Exchange, as
well as across other markets that may choose to implement similar
changes (discussed below).
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\15\ Currently, the Delisting Language states: ``In the event
that the underlying security has moved such that there are no series
that are at least 10% above or below the current price of the
underlying security, the Exchange will delist any series with no
open interest in both the call and the put series having a: (i)
Strike higher than the highest price with open interest in the put
and/or call series for a given expiration week; and (ii) strike
lower than the lowest strike price with open interest in the put
and/or the call series for a given expiration week, 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. In the event that the
underlying security has moved such that there are no series that are
at least 10% above or below the current price of the underlying
security and all existing series have open interest, the Exchange
may list additional series, in excess of the 30 allowed under
Commentary .11, that are between 10% and 30% above or below the
price of the underlying security.'' Commentary .11(d) of Rule 1012.
See Securities Exchange Act Release No. 70116 (August 5, 2013), 78
FR 48754 (August 9, 2013) (SR-Phlx-2013-79) (notice of filing and
immediate effectiveness regarding delisting series and opening up to
five consecutive weekly expirations of STOs).
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Fifth, the Exchange proposes to add $2.50 strike price intervals to
the STO Program. Specifically, the Exchange proposes in Commentary
.11(e) of Rule 1012 to indicate that the interval between strike prices
on STOs may be $2.50 or greater where the strike price is above $150.
This proposed change complements the current STO strike price
intervals, which are $0.50 or greater where the strike price is less
than $75, and $1 or greater where the strike price is between $75 and
$150 for all classes that participate in the STO Program.\16\ The
proposed $2.50 strike price interval addresses the issue that above a
$150 strike price STO strike
[[Page 62812]]
price intervals must currently be an exceedingly wide $5.00 or
greater.\17\
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\16\ STO strike price intervals may also be in $1 increments in
Related non-STOs that participate in the STO Program. Commentary .11
of Rule 1012.
\17\ See, e.g., Commentary .05 to Rule 1012.
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All options exchanges that have weeklies programs have similar
rules regarding their own programs, and tend to emulate STO changes
that are initiated by other options exchanges. The Exchange recognizes
that while this may result in a potentially increased combined capacity
footprint of exchanges with weeklies programs, the specific beneficial
changes proposed in this filing greatly outweigh any such potential
impact.
The principal reason for the proposed expansion is market demand
for additional STO classes and series and a desire to make the STO
Program more effective. There is continuing strong customer demand for
having the ability to execute hedging and trading strategies via STOs,
particularly in the current fast and volatile multi-faceted trading and
investing environment that extends across numerous markets and
platforms \18\ and includes market moving events such as significant
market volatility, corporate events, or large market, sector, or
individual issue price swings. The Exchange has been requested by
traders and other market participants to expand the STO Program to
allow additional STO offerings and increased efficiency.
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\18\ These include, without limitation, options, equities,
futures, derivatives, indexes, ETFs, exchange traded notes,
currencies, and over the counter instruments.
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In order that the Exchange not exceed the current thirty option
class and twenty option series restriction, the Exchange has on
occasion had to turn away STO customers (traders and investors) because
it could not list, or had to delist, STOs or could not open adequate
STO Series because of restrictions in the STO Program. This has
negatively impacted investors and traders, particularly retail public
customers, who have continued to request the Exchange not to remove STO
classes or add STO classes, or have requested the Exchange to expand
the STO Program so that additional STO classes and series could be
opened that would allow the market participants to execute trading and
hedging strategies.\19\ There are, as discussed, substantial benefits
to market participants having the ability to trade eligible option
classes within the STO Program. Furthermore, the Exchange supports the
objective of responding to customer need to enhance successful programs
to make them more efficient for hedging and trading purposes.
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\19\ The Exchange noted, in its STO Program expansion proposal
in 2011, that it was requested by a retail investor to reinstate an
STO class that the Exchange had to remove from trading because of
the class option limitation within the Program. The investor told
the Exchange that he had used the removed class as a powerful tool
for hedging a market sector, and that various strategies that the
investor put into play were disrupted and eliminated when the class
was removed. See Securities Exchange Act Release No. 65776 (November
17, 2011), 76 FR 72482 (November 23, 2011) (SR-Phlx-2011-131) (order
approving opening STO series on 30 option classes).
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The Exchange notes that the STO Program has been well-received by
market participants, in particular by retail investors. The volume of
STO trading has increased by 132% since the beginning of 2011 \20\ and
continues to grow, such that currently STOs represent 20% of trading
volume on the Exchange and 31% of trading volume across all option
exchanges.\21\ The Exchange believes that weekly expiration options
will continue to grow in importance for all market participants,
including institutional and retail investors.\22\
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\20\ Since the STO Program was initiated in 2010 on the Exchange
and other markets (some of which were established after the STO
Program was initiated), STO Program volume has expanded by more than
3000%.
\21\ During the same period of time, however, the volume of
standard monthly options across all exchanges has, on the other
hand, declined by 28%.
\22\ The current STO Program, which is similar across all
options markets that have weeklies programs, is in its current
formulation one of the more challenging industry-wide listings
program to administer. Recognizing the importance of the Program,
the Exchange is seeking to improve the Program for non-index STOs by
making it more uniform and logical.
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The proposed revisions to the STO Program will permit the Exchange
to meet customer demand for better STO Program use and efficiency,
harmonization of OLPP and STO Program rules, internal harmonization of
the STO Program, and a reasonable expansion of strike price intervals
in the Program.
By way of example, if an investor wants to gain exposure to a
relatively higher priced security like AAPL, he may invest in AAPL
stock and/or AAPL options. Currently, the investor must choose a strike
price that might lack the precision he is looking for in order to gain
or reduce exposure to AAPL. If the investor is looking to invest in a
long position in AAPL, for example, he may choose to execute a covered
call strategy by selling calls on AAPL. Assume AAPL is trading at $415.
Under the current rules the nearest out of the money STO call would be
the $420.00 strike, which would, with one week until expiration, trade
at or about $2.15. If the $417.50 strike were available per this
proposal, however, the investor could sell calls at approximately
$3.15. This would allow the investor to still execute an out of the
money covered call strategy, but would increase the potential return by
$1, or approximately 46% ($1/$2.15), thus offering approximately 46%
additional risk protection. To the investor writing covered calls on
his AAPL equity position, this extra risk protection could be very
significant on an annual basis, and costly if not available.
By way of a second example, if an investor wants to gain exposure
to a lower priced security like Banc of America (BAC), he may invest in
BAC stock and/or options. Assume BAC is trading at $14.60. The investor
may have established a long position in a non-STO BAC option like, for
example, the standard expiration BAC Aug 17th 1.00 calls. To offset
some of the risk the investor possesses in the BAC Aug 17th 1.00 calls,
the investor may wish to make a corresponding trade in the BAC Aug 10th
(STO) 1.00 call. Currently, the investor does not have this risk
reduction strategy available to him, as the current BAC STO does not
have available strikes. The proposal would correct this shortcoming.
By way of further example, in a lower priced stock such as BAC
there may be a need for tighter strike price intervals in case of a
precipitous drop in price. Assume BAC is trading at $14.60. Assume BAC
announces a large loss, and the stock price drops to $6. The Exchange
believes that investors should have the ability to use calls or puts
with a more targeted strike price to attain proper risk protection--one
of the great advantages of options. Because current STO rules do not
allow a strike price below $9.50 in the BAC STO, however, an investor
looking to purchase out of the money put protection for a short period
of time, and at a lower premium than a longer term option, is not able
to do so. BAC $9.50 strike puts would trade at a premium of about $3.50
or more, and would require the investor to sell or exercise his puts by
expiration if they remained in the money. An Aug 10th $5.00 out of the
money STO option in BAC, on the other hand, would trade a much more
affordable premium due to being out of the money, and would only
require the investor to sell or exercise his put if the BAC stock price
continued its precipitous drop. Clearly, the ability to make more
targeted and efficient decisions regarding the protection of
investments is of great importance to investments and market
participants, and should be encouraged.
Following are illustrations of the STO listing process per the
rules as proposed. Assume that the Alcoa Inc. (AA) STO closes at $7.92.
Pursuant to the proposed rule, STOs may be added between $1 and $15.50
(half point strike
[[Page 62813]]
intervals are currently permitted where the strike price is below $75).
On day one, the maximum number of Short Term Option Series that may be
listed are thirty. If the Exchange opens less than thirty Short Term
Option Series, additional series may be added as the underlying price
moves. If the AA price moves to $10, additional series can be added as
high as $20 (100% above the underlying price). If the AA price moves to
$5, additional lower strikes would not be added, since the initial
strikes go as low as possible ($1). Or, assume that the McDonald's
Corporation (MCD) STO closes at $96.26. Pursuant to the proposed rule,
Short Term Options Series may be added between $49 and $144 (in $0.50
and $1 intervals). On day one, no more than thirty Short Term Option
Series may be listed. If the Exchange opens less than thirty Short Term
Option Series, additional series may be added as the underlying price
moves. If the MCD price moves to $105, additional series can be added
as high as $155 (50% above the underlying price). If the MCD price
moves to $87, additional lower strikes can be added as low as $43.50.
To list strikes above the 50% threshold, however, there must be
demonstrated customer interest for such series, as expressed by
institutional, corporate or individual customers or their brokers.
Following are illustrations of the STO delisting process per the
rules as proposed. Series delisting would occur under the proposed rule
if the stock price moves and there are no series at least 10% above/
below the current price. Assume AA closed at $7.92 and strikes were
listed between $1 and $15. If the AA price moved to $15, and there were
no strikes at $16.50 or above (at least 10% above the current price),
the delisting process would begin. For the delisting process, staff
would simply need to check what, if any, strikes are higher than the
highest strike with open interest, and lower than the lowest strike
with open interest. Unlike the current delisting process, there would
be no need to check whether strikes were within a listing band (e.g.,
10% to 30%). Or, assume that MCD closed at $96.26 and strikes were
listed between $82 and $110. If the MCD price moved to $104, and there
were no strikes at $115 or above (at least 10% above the current
price), the delisting process would begin. For the delisting process,
staff would simply need to check what strikes are higher than the
highest strike with open interest, and lower than the lowest strike
with open interest.
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 any potential additional traffic associated with
this current amendment to the STO Program. The Exchange believes that
its members will not have a capacity issue as a result of this
proposal. The Exchange represents that it will monitor the trading
volume associated with the additional options series listed as a result
of this proposal and the effect (if any) of these additional series on
market fragmentation and on the capacity of the Exchange's automated
systems.\23\
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\23\ As noted previously, because the STO Program is an
industry-wide program, exchanges tend to emulate the rule filings of
one another. The Exchange recognizes that while this may result in a
potentially increased combined capacity footprint of exchanges with
weeklies programs, the Exchange believes that the specific
beneficial changes proposed in this filing greatly outweigh any such
potential impact.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \24\ in general, and furthers the objectives of Section
6(b)(5) of the Act \25\ in particular, in that it is designed 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. Expanding the classes and additional series that can be
opened in the STO Program, simplifying the delisting process, and
allowing $2.50 strike price intervals will result in a continuing
benefit to investors by giving them more flexibility to closely tailor
their investment and hedging decisions in greater number of securities.
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\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
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The STO Program has been well-received by market participants, and
in particular by retail investors, and has seen increasing trading
volume. The Exchange believes that the current proposed revisions to
the STO Program will permit the Exchange to meet customer demand for
enhanced STO Program use and efficiency, harmonization of OLPP and STO
Program rules, and a reasonable expansion of strike price intervals in
the Program to the benefit of investors, market participants, and the
marketplace.
With regard to the impact of this proposal on system capacity, the
Exchange believes that it and OPRA have the necessary systems capacity
to handle any potential additional traffic associated with this current
amendment to the STO Program. The Exchange believes that its members
will not have a capacity issue as a result of this proposal. All
exchanges that have STO programs have largely similar STO rules and
tend to emulate STO rule changes proposals initiated by other
exchanges. While the Exchange recognizes that this proposal may be
copied by other exchanges and impact their capacity, the Exchange
believes that any such potential capacity impact will not outweigh (and
does not outweigh for the Exchange) the significant benefits that this
proposal will afford market participants and the market in general in
terms of significantly greater flexibility and increases in efficient
trading and hedging options.
The proposed revisions to the STO Program will permit the Exchange
to meet customer demand for better STO Program use and efficiency,
harmonization of OLPP and STO Program rules, internal harmonization of
the STO Program, and a reasonable expansion of strike price intervals
in the Program.
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. To the contrary, the
Exchange believes that the proposal is decidedly pro-competitive. The
Exchange believes that the proposed rule change will result in
additional investment options and opportunities to achieve the
investment objectives of market participants seeking efficient trading
and hedging vehicles, to the benefit of investors, market participants,
and the marketplace in general.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
[[Page 62814]]
to determine whether the proposed rule change should be disapproved.
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-Phlx-2013-101 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-Phlx-2013-101. 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 on official business
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for inspection and copying at the
principal offices 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-Phlx-2013-101, and should be submitted on or before
November 12, 2013.
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\26\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24673 Filed 10-21-13; 8:45 am]
BILLING CODE 8011-01-P