75716 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Notices 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Penny Pilot Program has been in effect on 

BOX since January 26, 2007. See Securities 

Exchange Act Release No. 55155 (Jan. 23, 2007), 72 

FR 4741 (Feb. 1, 2007) (SR–BSE–2006–49). The 

Penny Pilot Program was later extended through 

September 27, 2007. See Securities Exchange Act 

Release No. 56149 (July 26, 2007), 72 FR 42450 

(Aug. 2, 2007) (SR–BSE–2007–38). A subsequent 

rule filing by the Exchange on September 27, 2007 

initiated a two-phased expansion of the Penny Pilot 

Program. See Securities Exchange Act Release No. 

56566 (Sept. 27, 2007), 72 FR 56400 (Oct. 3, 2007) 

(S–aRBSE–2007–40). See also Securities Exchange 

Act Release No. 57566 (March 26, 2008), 73 FR 

18013 (April 2, 2008) (SR–BSE–2008–20). The 

Penny Pilot Program was then extended and 

expanded a number of times and is set to expire on 

December 31, 2010. See Securities Exchange Act 

Release Nos. 59629 (March 26, 2009), 74 FR 15021 

(April 2, 2009) (SR–BX–2009–017); 60213 (July 1, 

2009), 74 FR 32998 (July 9, 2009) (SR–BX–2009– 

032); 60886 (Oct. 27, 2009), 74 FR 56897 (Nov. 3, 

2009) (SR–BX–2009–067); 60950 (Nov. 6, 2009), 74 

FR 58666 (Nov. 6, 2009) (SR–BX–2009–069); 61456 

(Feb. 1, 2010), 75 FR 6235 (Feb. 8, 2010) (SR–BX– 

2010–011); 62039 (May 5, 2010), 75 FR 26313 (May 

11, 2010) (SR–BX–2010–032) and 62615 (July 30, 

2010), 75 FR 47875 (Aug. 9, 2010) (SR–BX–2010– 

052). The extension of the effective date is the only 

change to the Penny Pilot Program being proposed 

at this time. 

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 and Rule 19b–4(f)(6)(iii) 

thereunder. 

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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 e-mail to rule-comments

@sec.gov. Please include File Number 

SR–NYSEAmex–2010–107 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–NYSEAmex-2010–107. 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 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 

Number SR–NYSEAmex–2010–107 and 

should be submitted on or before 

December 27, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–30431 Filed 12–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63397; File No. SR–BX– 

2010–084] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change as Modified by 

Amendment No. 1 To Extend, Through 

December 31, 2011, the Pilot Program 

That Permits Certain Classes To Be 

Quoted in Penny Increments on BOX 

November 30, 2010. 

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 November 

24, 2010, NASDAQ OMX BX, Inc. (the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. On November 30, 2010, 

the Exchange submitted Amendment 

No. 1 to the proposed rule change. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

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 V, Section 33 (Penny Pilot 

Program) of the Rules of the Boston 

Options Exchange Group, LLC (‘‘BOX’’) 

to extend, through December 31, 2011, 

the pilot program that permits certain 

classes to be quoted in penny 

increments on BOX (‘‘Penny Pilot 

Program’’). The text of the proposed rule 

change is available from the principal 

office of the Exchange, at the 

Commission’s Public Reference Room, 

on the Commission’s Web site at http:// 

www.sec.gov, 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 Exchange proposes to extend the 

effective time period of the Penny Pilot 

Program on BOX that is currently 

scheduled to expire on December 31, 

2010, for an additional year, through 

December 31, 2011.3 The Penny Pilot 

Program permits certain classes to be 


jdjones on DSK8KYBLC1PROD with NOTICES
Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Notices 75717 

4The replacement classes will be announced to 

BOX Participants via Regulatory Circular and 

published by the Exchange on its Web site. 

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

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(6). 

9As required under Rule 19b-4(f)(6)(iii), BOX 

provided the Commission with written notice of its 

intent to file the proposed rule change along with 

a brief description and the 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. 

quoted in penny increments on BOX. 

The minimum price variation for all 

classes included in the Penny Pilot 

Program, except for the QQQQs, SPY 

and IWM, will continue to be $0.01 for 

all quotations in option series that are 

quoted at less than $3 per contract and 

$0.05 for all quotations in option series 

that are quoted at $3 per contract or 

greater. The QQQQs, SPY and IWM, 

will continue to be quoted in $0.01 

increments for all options series. The 

Exchange is not currently proposing any 

changes to the classes included within 

the Penny Pilot Program. 

Additionally, the Exchange proposes 

to amend Chapter V, Section 33(b) of the 

BOX Rules to continue to be able to 

replace, on a semi-annual basis, any 

Pilot Program classes that have been 

delisted. These delisted classes will be 

replaced by the next most actively 

traded multiply listed options classes 

that are not yet included in the Pilot 

Program, based on trading activity in the 

previous six months. The replacement 

classes may be added to the Pilot 

Program on the second trading day 

following January 1, 2011 and July 1, 

2011.4 The replacement issues will be 

selected based on trading activity for the 

six-month period beginning June 1, 

2010 and ending November 30, 2010, for 

the January 2011 replacement, and the 

six month period beginning December 1, 

2010 and ending May 31, 2011 for the 

July 2011 replacements. The Exchange 

will employ the same parameters to 

prospective replacement classes as 

approved and applicable under the Pilot 

Program, including excluding highpriced underlying securities. 

Further, BOX agrees to submit to the 

Commission such reports regarding the 

Penny Pilot Program as the Commission 

may request. Such reports may include: 

(1) Data and analysis on the number of 

quotations generated for options 

included in the Pilot Program; (2) an 

assessment of the quotation spreads for 

the options included in the Pilot 

Program; (3) an assessment of the 

impact of the Pilot Program on the 

capacity of BOX’s automated systems; 

(4) data reflecting the size and depth of 

markets; and (5) any capacity problems 

or other problems that arose related to 

the operation of the Pilot Program and 

how the Exchange addressed them. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the Act,5

in general, and Section 6(b)(5) of the 

Act,6 in particular, in that it is designed 

to foster cooperation and coordination 

with persons engaged in regulating, 

clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism for a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. In particular, the 

proposed extension will allow the 

Penny Pilot Program to remain in effect 

on BOX without interruption. 

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. Basis for Summary Effectiveness 

Pursuant to Section 19(b)(3) or for 

Accelerated Effectiveness Pursuant to 

Section 19(b)(2) 

This proposed rule change is filed 

pursuant to paragraph (A) of section 

19(b)(3) of the Exchange Act 7 and Rule 

19b–4(f)(6) thereunder.8 This 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 after the date of the filing, or such 

shorter time as the Commission may 

designate if consistent with the 

protection of investors and the public 

interest.9

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–2010–084 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–2010–084. 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, on business days 

between the hours of 10 a.m. and 3 p.m., 

located at 100 F Street, NE., 

Washington, DC 20549. 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 Number SR–BX– 

2010–084 and should be submitted on 

or before December 27, 2010. 


jdjones on DSK8KYBLC1PROD with NOTICES
75718 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Notices 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b-4. 

3 17 CFR 240.19b 4(f)(6). 

4See Securities Exchange Act Release No. 59955 

(May 22, 2009), 74 FR 25586 (May 28, 2009) (Notice 

of Approval of Proposed Rule Change; File No. SR– 

FINRA–2009–012) (‘‘Approval Order’’). 

5See Securities Exchange Act Release No. 60722 

(September 25, 2009), 74 FR 50856 (October 1, 

2010) (Notice of Filing and Immediate Effectiveness 

of Proposed Rule Change; File No. SR–FINRA– 

2009–063). 

6See 74 FR 25588 through 25589. In early 2009 

the Commission enacted interim final temporary 

rules (the ‘‘interim final temporary rules’’) providing 

enumerated exemptions under the Federal 

securities laws for certain CDS to facilitate the 

operation of one or more central clearing 

counterparties in such CDS. See Securities Act 

Release No. 8999 (January 14, 2009), 74 FR 3967 

(January 22, 2009) (Temporary Exemptions for 

Eligible Credit Default Swaps To Facilitate 

Operation of Central Counterparties To Clear and 

Settle Credit Default Swaps); Securities Act Release 

No. 9063 (September 14, 2009) (Extension of 

Temporary Exemptions for Eligible Credit Default 

Swaps To Facilitate Operation of Central 

Counterparties To Clear and Settle Credit Default 

Swaps). See also Securities Exchange Act Release 

No. 59578 (March 13, 2009), 74 FR 11781 (March 

19, 2009) (Order Granting Temporary Exemptions 

in Connection with Request of Chicago Mercantile 

Exchange Inc. and Citadel Investment Group, L.L.C. 

Related to Central Clearing of Credit Default 

Swaps); Securities Exchange Act Release No. 59165 

(December 24, 2008), 74 FR 133 (January 2, 2009) 

(Order Granting Temporary Exemptions for BrokerDealers and Exchanges Effecting Transactions in 

Credit Default Swaps). 

7See Securities Act Release No. 9158 (November 

19, 2010), 75 FR 72260 (November 26, 2009) 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–30432 Filed 12–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63391; File No. SR–FINRA– 

2010–063] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend to July 16, 

2011, the Pilot Period for FINRA Rule 

4240 (Margin Requirements for Credit 

Default Swaps) 

November 30, 2010. 

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 November 

22, 2010, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) 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 

substantially prepared by FINRA. 

FINRA has designated the proposed rule 

change as constituting a ‘‘noncontroversial’’ rule change under 

paragraph (f)(6) of Rule 19b-4 under the 

Act,3 which renders the proposal 

effective upon receipt of this filing by 

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 

FINRA is proposing to extend to July 

16, 2011, FINRA Rule 4240 (Margin 

Requirements for Credit Default Swaps) 

on an interim pilot program basis. 

FINRA Rule 4240, as approved by the 

SEC on May 22, 2009, will expire on 

November 30, 2010. The rule 

implements an interim pilot program 

with respect to margin requirements for 

transactions in credit default swaps 

executed by a member (regardless of the 

type of account in which the transaction 

is booked), including those in which the 

offsetting matching hedging transactions 

are effected by the member in credit 

default swap contracts that are cleared 

through the central counterparty 

clearing services of the Chicago 

Mercantile Exchange. 

The text of the proposed rule change 

is below. Proposed new language is 

underlined; proposed deletions are in 

brackets: 

* * * * * 

4000. FINANCIAL AND OPERATIONAL 

RULES 

* * * * * 

4200. MARGIN 

* * * * * 

4240. Margin Requirements for Credit 

Default Swaps 

(a) Effective Period of Interim Pilot 

Program. 

This Rule establishes an interim pilot 

program (‘‘Interim Pilot Program’’) with 

respect to margin requirements for any 

transactions in credit default swaps executed 

by a member (regardless of the type of 

account in which the transaction is booked), 

including those in which the offsetting 

matching hedging transactions (‘‘matching 

transactions’’) are effected by the member in 

contracts that are cleared through the central 

counterparty clearing services of the Chicago 

Mercantile Exchange (‘‘CME’’). The Interim 

Pilot Program shall automatically expire on 

[November 30, 2010] July 16, 2011. For 

purposes of this Rule, the term ‘‘credit default 

swap’’ (‘‘CDS’’) shall mean any ‘‘eligible credit 

default swap’’ as defined in Securities Act 

Rule 239T(d), as well as any other CDS that 

would otherwise meet such definition but for 

being subject to individual negotiation, and 

the term ‘‘transaction’’ shall include any 

ongoing CDS position. 

(b) through (e) No Change. 

* * * Supplementary Material: 

.01 No Change. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA 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. FINRA 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 

On May 22, 2009, the Commission 

approved FINRA Rule 4240,4 which 

implements an interim pilot program 

(the ‘‘Interim Pilot Program’’) with 

respect to margin requirements for 

transactions in credit default swaps 

(‘‘CDS’’) executed by a member 

(regardless of the type of account in 

which the transaction is booked), 

including those in which the offsetting 

matching hedging transactions are 

effected by the member in credit default 

swap contracts that are cleared through 

the central counterparty clearing 

services of the Chicago Mercantile 

Exchange (‘‘CME’’). On September 21, 

2009, FINRA extended the 

implementation of Rule 4240 to 

November 30, 2010.5

As explained in the Approval Order, 

FINRA Rule 4240 is intended to be 

coterminous with certain Commission 

actions intended to address concerns 

arising from systemic risk posed by 

CDS, including, among others, risks to 

the financial system arising from the 

lack of a central clearing counterparty to 

clear and settle CDS.6 Recently, the 

Commission has determined to extend 

the period for which certain of these 

actions are in effect.7 FINRA believes it 


jdjones on DSK8KYBLC1PROD with NOTICES