[Federal Register Volume 73, Number 231 (Monday, December 1, 2008)]
[Notices]
[Pages 72878-72879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-28421]
[[Page 72878]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58996; File No. SR-BSE-2008-55]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Boston Stock Exchange,
Inc. To Temporarily Increase the Number of Additional Quarterly Option
Series in Exchange-Traded Fund Share Options That May Be Listed on the
Boston Options Exchange Facility
November 21, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 19, 2008, the Boston Stock Exchange, Inc. (``BSE'' or
``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 self-regulatory
organization. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of
the Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the
proposal effective upon filing with the Commission. The Commission is
publishing this notice to solicit comments on the proposed rule 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).
\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 Chapter IV, Section 6 (Series of
Options Contracts Open for Trading), Supplemental Material .04, of the
Rules of the Boston Options Exchange Group, LLC (``BOX'') to
temporarily increase the number of additional Quarterly Options Series
(``QOS'') in exchange-traded fund share (``ETF'') options from sixty
(60) to one hundred (100) that may be added by BOX. The text of the
proposed rule change is available from the principal office of the
Exchange, at the Commission's Public Reference Room and also on the
Exchange's Internet Web site at http://nasdaqtrader.com/Trader.aspx?id=Boston_Stock_Exchange.
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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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
This proposed rule change is based on a similar proposal by the
Chicago Board Options Exchange, Incorporated (``CBOE'').\5\
A pilot program (the ``Pilot Program'') on BOX currently permits
the listing and trading of QOS.\6\ The purpose of this proposed rule
change is to temporarily increase the number of additional QOS in ETF
options from sixty (60) to one hundred (100) that may be added by BOX.
To effect this change, the Exchange is proposing to add new
subparagraph (h) to Supplemental Material .04.
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\5\ See Securities Exchange Act Release No. 58887 (October 30,
2008), 73 FR 66083 (November 6, 2008) (SR-CBOE-2008-111).
\6\ The term ``Quarterly Options Series'' is defined in the BOX
Rules as a series in an options class that is approved for listing
and trading on the Exchange in which the series is opened for
trading on any business day and that expires at the close of
business on the last business day of a calendar quarter.
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Because of the current, unprecedented market conditions, demand
from market participants exists to add lower priced strikes for certain
of the QOS. However, currently under Supplemental Material .04, BOX
cannot honor this demand because the maximum number of additional
series, sixty (60), has already been listed. These strikes which are
currently in demand are much lower than those currently listed for
which there is open interest.
The Exchange is therefore seeking to temporarily increase the
number of additional QOS that may be added to one hundred (100). The
increase of additional series would be permitted immediately for
expiration months currently listed and for expiration months added
throughout the last quarter of 2008, including the new expiration month
added after December 2008 expiration. The Exchange believes that this
proposal is reasonable and will allow for more efficient risk
management. The Exchange believes that this proposal will facilitate
the functioning of the BOX market and will not harm investors or the
public interest.
The Exchange believes that user demand and the recent downward
price movements in the underlying ETFs warrants a temporary increase in
the number of strikes for all QOS in ETF options. BOX currently lists
QOS in five (5) ETFs: (1) Nasdaq-100 Index Tracking Stock (``QQQQ'');
(2) iShares Russell 2000 Index Fund (``IWM''); (3) DIAMONDS Trust,
Series 1 (``DIA''); (4) Standard and Poor's Depositary Receipts/SPDRs
(``SPY''); and (5) Energy Select SPDR (``XLE''). The chart below
provides the historical closing prices of these ETFs over the past
several months:
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ETF 10/27/2008 10/13/2008 10/6/2008 9/30/2008 8/29/2008 7/31/2008
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QQQQ.................................................... 28.69 35.13 34.86 38.91 46.12 45.46
IWM..................................................... 44.86 56.98 59.72 68 73.87 71.32
DIA..................................................... 80.26 95.03 99.9 108.36 115.45 113.7
SPY..................................................... 83.95 101.35 104.72 115.99 128.79 126.83
XLE..................................................... 40.86 50.55 54.89 63.3 74.65 74.4
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The additional series will enable BOX to list in-demand, lower
priced strikes.
BOX represents that it has the necessary systems capacity to
support the new options series that will result from this proposal.
Further, as proposed, the Exchange notes that these series would
temporarily become part of the Pilot Program and will be considered by
the Commission when the Exchange seeks to renew or make permanent the
Pilot Program in the future. In addition, the Exchange states that in
the event that current market volatility continues, it may seek to
continue (through a rule filing) the time period during which the
additional
[[Page 72879]]
series proposed by this filing may be added.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\7\ in general, and 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, 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. Specifically, the current proposed
rule change is responsive to the current, unprecedented market
conditions, is limited in scope as to QOS in ETF options and as to
time, and the proposed additional new series can be added without
presenting capacity problems.
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\7\ 15 U.S.C. 78f(b).
\8\ 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
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; or (iii) become operative for 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 \9\ and Rule 19b-4(f)(6)
thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its 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 Commission deems this requirement to be met.
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The Exchange has asked the Commission to waive the operative delay
to permit the proposed rule change to become operative prior to the
30th day after filing. The Commission has determined that waiving the
30-day operative delay of the Exchange's proposal is consistent with
the protection of investors and the public interest because such waiver
will enable the Exchange to better meet customer demand in light of
recent increased volatility in the marketplace.\11\ Therefore, the
Commission designates the proposal operative upon filing.
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\11\ 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 such proposed rule
change, the Commission may summarily abrogate 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 e-mail to [email protected]. Please include
File No. SR-BSE-2008-55 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BSE-2008-55. This file
number should be included on the subject line if e-mail 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 inspection and
copying 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 such 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 No. SR-BSE-2008-55 and should be
submitted on or before December 22, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-28421 Filed 11-28-08; 8:45 am]
BILLING CODE 8011-01-P