2730 Federal Register / Vol. 76, No. 10 / Friday, January 14, 2011 / Notices 

10 17 CFR 200.30–3(a)(12). 

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). 

5See Supplementary Material .02, .03, and .06 to 

Chapter IV, Section 6 of the BOX Rules. 

6Chapter IV, Section 6(d) of the BOX Rules also 

permits strike price intervals of $5.00 or greater 

where the strike price is greater than $25.00 but less 

than $200; and $2.50 or greater where the strike 

price is $25.00 or less. 

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–BYX–2011–001 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–BYX–2011–001. 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 such filing 

will also 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–BYX–2011– 

001 and should be submitted on or 

before February 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–664 Filed 1–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63687; File No. SR–BX– 

2011–002] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Establish a 

$5 Strike Price Program on the Boston 

Options Exchange Facility 

January 10, 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 

10, 2011, NASDAQ OMX BX, Inc. (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 Exchange. The Exchange filed the 

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 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 

Chapter IV, Section 6 (Series of Options 

Contracts Open for Trading) of the Rules 

of the Boston Options Exchange Group, 

LLC (‘‘BOX’’) to allow BOX to list and 

trade series in intervals of $5 or greater 

where the strike price is more than $200 

in up to five (5) option classes on 

individual stocks (‘‘$5 Strike Price 

Program’’), and to clarify that BOX may 

list option classes designated by other 

securities exchanges that employ a 

similar $5 Strike Price Program under 

their respective rules. The text of the 

proposed rule change is available from 

the principal office of the Exchange, on 

the Commission’s Web site at http:// 

www.sec.gov, at the Commission’s 

Public Reference Room, and also on the 

Exchange’s Internet Web site at http:// 

nasdaqomxbx.cchwallstreet.com/ 

NASDAQOMXBX/Filings/. 

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 modify Chapter IV, Section 

6(d) of the BOX Rules to allow BOX to 

list and trade options series in intervals 

of $5 or greater where the strike price is 

more than $200 in up to five (5) option 

classes on individual stocks (‘‘$5 Strike 

Price Program’’) to provide investors and 

traders additional opportunities and 

strategies to hedge high priced 

securities. Additionally, this proposed 

rule change will clarify that BOX may 

list series on any other option classes if 

those classes are specifically designated 

by other securities exchanges that 

employ a similar $5 Strike Price 

Program under their respective rules. 

Similar reciprocity currently is 

permitted with BOX’s $1 Strike 

Program, $.50 Strike Program and $2.50 

Strike Program.5

Currently, Chapter IV, Section 6(d)(iii) 

of the BOX Rules permits strike price 

intervals of $10 or greater where the 

strike price is greater than $200.6 The 

Exchange is proposing to add the 

proposed $5 Strike Price Program as an 

exception to the $10 or greater program 

language in Chapter IV, Section 6. The 

proposal would allow BOX to list series 

in intervals of $5 or greater where the 

strike price is more than $200 in up to 

five (5) option classes on individual 

stocks. The Exchange specifically 

proposes to create a new sub-section 

(d)(v) to Chapter IV, Section 6 which 

would state, ‘‘BOX may list series in 

intervals of $5 or greater where the 

strike price is more than $200 in up to 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 10 / Friday, January 14, 2011 / Notices 2731 

7The 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. 

8The 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. 

9See Supplementary Material .02, .03, and .06 to 

Chapter IV, Section 6 of the BOX Rules. 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78s(b)(3)(A). 

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 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 the five-day prefiling requirement in 

this case. 

14See Securities Exchange Act Release No. 63654 

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

approving establishment of a $5 Strike Price 

Program). See also Securities Exchange Act Release 

No. 63658 (January 6, 2011) (SR–Phlx–2011–02) 

(notice of filing and immediate effectiveness of 

reciprocity provision related to the $5 Strike Price 

Program). 

five (5) option classes on individual 

stocks. BOX may list $5 strike prices on 

any other option classes if those classes 

are specifically designated by other 

securities exchanges that employ a 

similar $5 Strike Price Program under 

their respective rules.’’ BOX 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 7 with approximately one month 

remaining until expiration, the front 

month (one month remaining) at-themoney 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 choose 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 8 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, BOX 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. Finally, the 

Exchange proposes to clarify that the 

options in the $5 Strike Price Program 

may be listed and traded in series that 

are listed by BOX or other securities 

exchanges that employ a similar $5 

Strike Price Program, pursuant to the 

rules of the other securities exchanges. 

Similar reciprocity currently is 

permitted with BOX’s $1 Strike 

Program, $.50 Strike Program and $2.50 

Strike Program.9

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 10 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 11

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 high 

priced securities. This would allow 

investors to better manage their risk 

exposure. Moreover, the Exchange 

believes the proposed $5 Strike Price 

Program would benefit investors by 

giving them more flexibility to closely 

tailor their investment decisions in a 

greater number of securities. While the 

$5 Strike Price Program will generate 

additional quote traffic, BOX does not 

believe that this increased traffic will 

become unmanageable since the 

proposal is limited to a fixed number of 

classes. Further, BOX does not believe 

that the proposal will result in a 

material proliferation of additional 

series because it is limited to a fixed 

number of classes and BOX does not 

believe that the additional price points 

will result in fractured liquidity. 

Finally, the Exchange believes that 

clarifying that BOX may list and trade 

options in series that are listed by BOX 

or other securities exchanges that 

employ a similar $5 Strike Price 

Program will provide its Options 

Participants greater clarity on the types 

of options that may be listed by BOX. 

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 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 12 and Rule 19b– 

4(f)(6) thereunder.13

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 $5 Strike Price Program is 

substantially similar to that of another 

exchange that is already effective and 

operative.14 Therefore, the Commission 

mstockstill on DSKH9S0YB1PROD with NOTICES

2732 Federal Register / Vol. 76, No. 10 / Friday, January 14, 2011 / Notices 

15For 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). 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 62468 

(July 7, 2010), 75 FR 41258. 

4See Letter from Joe Ratterman, Chairman and 

Chief Executive Officer, BATS Global Markets, Inc., 

to Hon. Mary Schapiro, Chairman, Commission, 

dated July 1, 2010 (‘‘BATS Letter’’); Letter from Jose 

Marques, Managing Director, Deutsche Bank 

Securities Inc., to Elizabeth M. Murphy, Secretary, 

Commission, dated July 21, 2010 (‘‘Deutsche Bank 

Letter’’); Letter from Janet M. Kissane, Senior Vice 

President, Legal and Corporate Secretary, NYSE 

Euronext, to Elizabeth Murphy, Secretary, 

Commission, dated August 3, 2010 (‘‘NYSE Letter’’); 

Letter from Ann L. Vlcek, Managing Director and 

Associate General Counsel, Securities Industry and 

Financial Markets Association, to Elizabeth M. 

Murphy, Secretary, Commission, dated June 25, 

2010 (‘‘SIFMA Letter’’). 

5See Letter from T. Sean Bennett, Assistant 

General Counsel, Nasdaq, to Elizabeth M. Murphy, 

Secretary, Commission (‘‘Nasdaq response’’). 

6See Securities Exchange Act Release No. 62740 

(August 18, 2010), 75 FR 52049 (August 24, 2010). 

7See Securities Exchange Act Release No. 63098, 

75 FR 64384 (October 19, 2010). 

8See Letter from Timothy Quast, Managing 

Director, ModernIR, to Elizabeth M. Murphy, 

Secretary, Commission, dated November 11, 2010. 

9 15 U.S.C. 78s(b)(2). 

designates the proposal operative upon 

filing.15

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–BX–2011–002 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–BX–2011–002. 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–BX– 

2011–002 and should be submitted on 

or before February 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–772 Filed 1–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63685; File No. SR– 

NASDAQ–2010–074] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Designation of Longer Period for 

Commission Action on Proceedings To 

Determine Whether To Disapprove 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Adopt Rule 

4753(c) as a Six Month Pilot in 100 

NASDAQ-Listed Securities 

January 10, 2011. 

I. Introduction 

On June 18, 2010, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’ or the 

‘‘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 

implement, on a six-month pilot basis, 

a volatility-based trading pause in 100 

Nasdaq-listed securities (‘‘Volatility 

Guard’’). On June 25, 2010, Nasdaq filed 

Amendment No. 1 to the proposed rule 

change. The proposed rule change, as 

amended, was published for comment 

in the Federal Register on July 15, 

2010.3 The Commission received four 

comment letters on the proposal.4

Nasdaq responded to these comments 

on August 12, 2010.5 The Commission 

subsequently extended the time period 

in which to either approve the proposed 

rule change, or to institute proceedings 

to determine whether to disapprove the 

proposed rule change, to October 13, 

2010.6 On October 13, 2010, the 

Commission issued an order instituting 

disapproval proceedings.7 The 

Commission thereafter received one 

comment letter, which requested that 

the proposed rule change be 

disapproved.8

Section 19(b)(2) of the Act 9 provides 

that, after initiating dispproval 

proceedings, the Commission shall issue 

an order approving or disapproving the 

proposed rule change not later than 180 

days after the date of publication of 

notice of the filing of the proposed rule 

change. The Commission may extend 

the period for issuing an order 

approving or disapproving the proposed 

rule change, however, by not more than 

60 days if the Commission determines 

that a longer period is appropriate and 

publishes the reasons for such 

determination. The proposed rule 

change was published for notice and 

comment in the Federal Register on July 

15, 2010. January 11, 2011 is 180 days 

from that date, and March 12, 2011, is 

an additional 60 days from that date. 

The Commission finds it appropriate 

to designate a longer period within 

which to issue an order approving or 

disapproving the proposed rule change 

so that it has sufficient time to consider 

this proposed rule change and the issues 

raised in the comment letters that have 

been submitted in connection with this 

filing. Specifically, the Commission 

believes the proposal raises issues as to 

whether the Volatility Guard, by halting 

trading on Nasdaq when the price of a 

security moves quickly over a short 

period of time, will exacerbate the 

volatility of trading in that security on 

the other exchanges and over-thecounter trading centers that remain 

open. In addition, because the 

thresholds for triggering the Volatility 

mstockstill on DSKH9S0YB1PROD with NOTICES