2174 Federal Register / Vol. 76, No. 8 / Wednesday, January 12, 2011 / Notices 

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 

has waived this requirement in this case. 

11See Rule 504, Supplementary Material .01 ($1 

Strike Program); Rule 504, Supplementary Material 

.05 ($0.50 Strike Program); and Rule 504(g) ($2.50 

Strike Program). 

12See, e.g., Securities Exchange Act Release No. 

60694 (September 18, 2009); 74 FR 49048 

(September 25, 2009) (SR–Phlx–2009–65) 

(approving NASDAQ OMX PHLX’s $0.50 Strike 

Program, with reciprocity provision). 

13For 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). 

14 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 ISE Rule 504(d) also permits strike price 

intervals of $5 or greater where the strike price is 

greater than $25; and $2.50 or greater where the 

strike price is $25 or less. 

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 proposed reciprocity 

provision is similar to reciprocity 

provisions in place for other option 

strike price programs,11 which have 

been previously approved by the 

Commission.12 Therefore, the 

Commission designates the proposal 

operative upon filing.13

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–ISE–2011–02 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–ISE–2011–02. 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 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–ISE– 

2011–02 and should be submitted on or 

before February 2, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–442 Filed 1–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63653; File No. SR–ISE– 

2011–01] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Establish a $5 Strike Price 

Program 

January 6, 2011. 

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 

4, 2011, the International Securities 

Exchange, LLC (‘‘ISE’’or the ‘‘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 Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend ISE 

Rule 504 to allow the Exchange to list 

and trade series in intervals of $5 or 

greater where the strike price is more 

than $200 in up to five option classes on 

individual stocks. The text of the 

proposed rule change is available on the 

Exchange’s Web site http:// 

www.ise.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 

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 

The purpose of this proposed rule 

change is to adopt Supplementary 

Material .09 to ISE Rule 504 to allow the 

Exchange to list and trade series in 

intervals of $5 or greater where the 

strike price is more than $200 in up to 

five option classes on individual stocks 

(‘‘$5 Strike Price Program’’) to provide 

investors and traders additional 

opportunities and strategies to hedge 

high priced securities. 

Currently, Exchange Rule 504(d) 

permits strike price intervals of $10 or 

greater where the strike price is $200 or 

more,3 except the Exchange may list 

options classes on individual stocks for 

which the interval of strike prices will 

be $2.50 where the strike price is greater 

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Federal Register / Vol. 76, No. 8 / Wednesday, January 12, 2011 / Notices 2175 

4 Initially adopted in 1995 as a pilot program, the 

pilot $2.50 Strike Price Program allowed options 

exchanges to list options with $ 2.50 strike price 

intervals for options trading at strike prices greater 

than $ 25 but less than $ 50 on a total of up to 100 

option classes. See Securities Exchange Act Release 

No. 35993 (July 19, 1995), 60 FR 38073 (July 25, 

1995) (approving File Nos. SR–Phlx–95–08, SR– 

Amex–95–12, SR–PSE–95–07, SR–CBOE–95–19, 

and SR–NYSE–95–12). In 1998, the pilot program 

was permanently approved and expanded to allow 

the options exchanges to select up to 200 option 

classes for the $2.50 Strike Price Program. See 

Securities Exchange Act Release No. 40662 

(November 12, 1998), 63 FR 64297 (November 19, 

1998) (approving File Nos. SR–Amex–98–21, SR– 

CBOE–98–29, SR–PCX–98–31, and SR–Phlx–98– 

26). The Exchange lists options with $2.50 strike 

price intervals on those classes selected by the other 

options exchanges and does not select any class for 

inclusion in the $2.50 Strike Price Program. See 

Securities Exchange Act Release No. 52960 

(December 15, 2005), 70 FR 76090 (December 22, 

2005) (SR–ISE–2005–59). 

5The prices listed in this example are 

assumptions and not based on actual prices. The 

assumptions are made for illustrative purposes only 

using the stock price as a hypothetical. 

6 Id. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

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 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 this requirement. 

11See Securities Exchange Act Release No. 63654 

(January 6, 2011) (SR–Phlx–2010–158) (order 

approving establishment of a $5 Strike Price 

Program). 

12For 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). 

than $25 but less than $50 (the ‘‘$2.50 

Strike Price Program’’).4

The Exchange now proposes to list 

series in intervals of $5 or greater where 

the strike price is more than $200 in up 

to five option classes on individual 

stocks. 

The Exchange believes the $5 Strike 

Price Program would offer investors a 

greater selection of strike prices at a 

lower cost. For example, if an investor 

wanted to purchase an option with an 

expiration of approximately one month, 

a $5 strike interval could offer a wider 

choice of strike prices, which may result 

in reduced outlays in order to purchase 

the option. By way of illustration, using 

Google, Inc. (‘‘GOOG’’) as an example, if 

GOOG would trade at $610 5 with 

approximately one month remaining 

until expiration, the front month (one 

month remaining) at-the-money call 

option (the 610 strike) would trade at 

approximately $17.50 and the next 

highest available strike (the 620 strike) 

would trade at approximately $13.00. 

By offering a 615 strike an investor 

would be able to trade a GOOG front 

month call option at approximately 

$15.25, thus providing an additional 

choice at a different price point. 

Similarly, if an investor wanted to 

hedge exposure to an underlying stock 

position by selling call options, the 

investor may chose an option term with 

two months remaining until expiration. 

An additional $5 strike interval could 

offer additional and varying yields to 

the investor. For example if Apple, Inc. 

(‘‘AAPL’’) would trade at $310 6 with 

approximately two months remaining 

until expiration, the second month (two 

months remaining) at-the-money call 

option (the 310 strike) would trade at 

approximately $14.50 and the next 

highest available strike (the 320 strike) 

would trade at $9.90. The 310 strike 

would yield a return of 4.67% and the 

320 strike would yield a return of 

3.20%. If the 315 strike were available, 

that series would be priced at 

approximately $12.20 (a yield of 3.93%) 

and would minimize the risk of having 

the underlying stock called away at 

expiration. 

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 have the necessary 

systems capacity to handle the potential 

additional traffic associated with the 

listing and trading of classes on 

individual stocks $5 Strike Price 

Program. 

The proposed $5 Strike Price Program 

would provide investors increased 

opportunities to improve returns and 

manage risk in the trading of equity 

options that overlie high priced stocks. 

In addition, the proposed $5 Strike Price 

Program would allow investors to 

establish equity options positions that 

are better tailored to meet their 

investment, trading and risk 

management requirements. 

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 

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. The 

Exchange believes the $5 Strike Price 

Program proposal would provide the 

investing public and other market 

participants increased opportunities 

because a $5 series in high-priced stocks 

would provide market participants 

additional opportunities to hedge highpriced securities allowing investors to 

better manage their risk exposure. 

Moreover, the Exchange believes the 

proposed rule change would benefit 

investors by giving them more flexibility 

to closely tailor their investment 

decisions in a greater number of 

securities. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose 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 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

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 9 and Rule 19b– 

4(f)(6) thereunder.10

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 that of another exchange that 

has been approved by the 

Commission.11 Therefore, the 

Commission designates the proposal 

operative upon filing.12

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. 

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2176 Federal Register / Vol. 76, No. 8 / Wednesday, January 12, 2011 / Notices 

13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(2). 

6See SR–NYSE–2010–87 (the ‘‘NYSE Fee Filing’’) 

and SR–NYSEAmex–2010–125 (the ‘‘NYSE Amex 

Fee Filing’’). 

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 rulecomments@sec.gov. Please include File 

Number SR–ISE–2011–01 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–ISE–2011–01. 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 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–ISE– 

2011–01 and should be submitted on or 

before February 2, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–440 Filed 1–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63649; File No. SR– 

NYSEArca–2010–122] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending the NYSE Arca 

Equities Schedule of Fees and 

Charges for Exchange Services 

January 5, 2011. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

28, 2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ 

or 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 self-regulatory organization. 

NYSE Arca filed the proposal pursuant 

to Section 19(b)(3)(A) 4 of the Act and 

Rule 19b–4(f)(2) 5 thereunder. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

NYSE Arca Equities Schedule of Fees 

and Charges for Exchange Services (the 

‘‘Schedule’’) to modify the fees that it 

charges for routing orders to the New 

York Stock Exchange LLC and NYSE 

Amex LLC for execution on those 

markets. The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.com. 

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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Effective January 1, 2011, the 

Exchange proposes to amend the 

Schedule to modify the fees that it 

charges for routing orders to the New 

York Stock Exchange LLC (‘‘NYSE’’) and 

NYSE Amex LLC (‘‘NYSE Amex’’) for 

execution on those markets. In two 

recent rule filings,6 both NYSE and 

NYSE Amex have modified their fee 

structures for equities transactions, 

including changes to the rates for taking 

liquidity and adding liquidity, to 

become effective at the beginning of 

January 2011. The Exchange’s current 

fees for routing orders to those 

exchanges are closely related to those 

exchanges’ fees for taking and adding 

liquidity, and the Exchange is proposing 

an adjustment to its routing fees to 

maintain the existing relationship to the 

new fees in place at the NYSE and 

NYSE Amex. 

The NYSE Fee Filing increased the 

NYSE’s charge for execution of 

customer orders that take liquidity from 

the NYSE from $0.0021 per share to 

$0.0023 per share, and increased the 

rebate for execution of customer orders 

that add liquidity to the NYSE from 

$0.0013 per share to $0.0015 per share. 

Currently, for NYSE Arca Tier 1 and 

Tier 2 customers, the fee for routing 

orders in Tape A securities to the NYSE 

outside the book is equal to the NYSE 

‘‘take’’ rate of $0.0021 per share, and the 

fee for routing such orders to the NYSE 

for non-tier customers is slightly higher 

at $0.0023 per share. Consequently, the 

Exchange is proposing to increase each 

of those fees by $0.0002 to $0.0023 per 

share and $0.0025 per share, 

respectively, in line with the $0.0002 

increase in the NYSE ‘‘take’’ rate. 

In addition, the Exchange currently 

charges $0.0019 per share for Primary 

Sweep Orders in Tape A securities that 

are routed outside the book to the NYSE 

for execution. This charge applies to 

Tier 1, Tier 2 and non-tier customers. In 

order to maintain the existing 

relationship to the other Exchange 

mstockstill on DSKH9S0YB1PROD with NOTICES