77032 Federal Register / Vol. 75, No. 237 / Friday, December 10, 2010 / Notices 

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

13 17 CFR 240.19b–4(f)(6). When filing a proposed 

rule change pursuant to Rule 19b–4(f)(6) under the 

Act, an exchange is required to give the 

Commission 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 

notes that the Exchange has satisfied this 

requirement. 

14 17 CFR 240.19b–4(f)(6)(iii). 

15 Id. 

16For the purposes only of waiving the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

proposed herein would encourage 

Market Maker Q order prices that bear 

a closer relationship to the NBBO, thus 

promoting fair and orderly markets and 

the protection of investors and reducing 

the risk of executions at illogical prices. 

The Exchange also believes that the 

change propose herein would provide 

Market Makers with a more appropriate 

level of flexibility with which to satisfy 

their Two-Sided Obligation by 

permitting interest other than Q order 

interest to be identified to the Exchange 

as meeting such obligation. 

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. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

No written comments were solicited 

or received with respect to 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: (1) Significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) 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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 12 and Rule 19b– 

4(f)(6) thereunder.13

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing.14 However, Rule 19b– 

4(f)(6) 15 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. NYSE 

Arca has requested that the Commission 

waive the 30-day operative delay. 

The Commission has considered 

NYSE Arca’s request to waive the 30- 

day operative delay. The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest, as it will enable the Exchange 

to implement the proposed change 

consistent with the implementation date 

for the new market maker pricing 

obligations.16

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–NYSEArca–2010–112 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–NYSEArca–2010–112. 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– 

NYSEArca–2010–112 and should be 

submitted on or before January 3, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31097 Filed 12–9–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63437; File No. SR–ISE– 

2010–116] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Extend the Penny Pilot 

Program 

December 6, 2010. 

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 December 

2, 2010, the International Securities 

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

‘‘ISE’’) filed with the Securities and 

Exchange Commission the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by the self-regulatory 

organization. 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 ISE proposes to amend its rules 

relating to a pilot program to quote and 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 237 / Friday, December 10, 2010 / Notices 77033 

3See Exchange Act Release No. 60865 (October 

22, 2009), 74 FR 55880 (October 29, 2009). 

to trade certain options in pennies 

(‘‘Penny Pilot Program’’). The text of the 

proposed rule change is as follows, with 

deletions in [brackets] and additions 

italicized: 

Rule 710. Minimum Trading 

Increments 

(a) The Board may establish minimum 

trading increments for options traded on 

the Exchange. Such changes by the 

Board will be designated as a stated 

policy, practice, or interpretation with 

respect to the administration of this 

Rule 710 within the meaning of 

subparagraph (3)(A) of Section 19(b) of 

the Exchange Act and will be filed with 

the SEC as a rule change for 

effectiveness upon filing. Until such 

time as the Board makes a change in the 

increments, the following principles 

shall apply: 

(1) If the options contract is trading at 

less than $3.00 per option, $.05; and 

(2) If the options contract is trading at 

$3.00 per option or higher, $.10. 

(b) Minimum trading increments for 

dealings in options contracts other than 

those specified in paragraph (a) may be 

fixed by the Exchange from time to time 

for options contracts of a particular 

series. 

(c) Notwithstanding the above, the 

Exchange may trade in the minimum 

variation of the primary market in the 

underlying security. 

Supplementary Material to Rule 710 

.01 Notwithstanding any other 

provision of this Rule 710, the Exchange 

will operate a pilot program to permit 

options classes to be quoted and traded 

in increments as low as $.01. The 

Exchange will specify which options 

trade in such pilot, and in what 

increments, in Regulatory Information 

Circulars filed with the Commission 

pursuant to Rule 19b–4 under the 

Exchange Act and distributed to 

Members. 

The Exchange may replace, on a semiannual basis, any penny pilot issues that 

have been delisted with the next most 

actively traded multiply listed options 

classes that are not yet included in the 

penny pilot, based on trading activity in 

the previous six months. The 

replacement issues may be added to the 

penny pilot on the second trading day 

following January 1, 2011 [2010] and 

July 1, 2011 [2010]. 

.02 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, 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 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 

Under the Penny Pilot Program, the 

minimum price variation for all 

participating options classes, except for 

the Nasdaq-100 Index Tracking Stock 

(‘‘QQQQ’’), the SPDR S&P 500 Exchange 

Traded Fund (‘‘SPY’’) and the iShares 

Russell 2000 Index Fund (‘‘IWM’’), is 

$0.01 for all quotations in options series 

that are quoted at less than $3 per 

contract and $0.05 for all quotations in 

options series that are quoted at $3 per 

contract or greater. QQQQ, SPY and 

IWM are quoted in $0.01 increments for 

all options series. The Penny Pilot 

Program is currently scheduled to 

expire on December 31, 2010.3 The 

Exchange proposes to extend the time 

period of the Penny Pilot Program 

through December 31, 2011, and to 

provide revised dates for adding 

replacement issues to the Penny Pilot 

program. The Exchange proposes that 

the semi-annual dates to replace issues 

that have been delisted be revised to the 

second trading day following January 1, 

2011 and July 1, 2011. The Exchange 

notes that 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. This filing does 

not propose any substantive changes to 

the Penny Pilot Program: all classes 

currently participating will remain the 

same and all minimum increments will 

remain unchanged. The Exchange 

believes the benefits to public customers 

and other market participants who will 

be able to express their true prices to 

buy and sell options have been 

demonstrated to outweigh the increase 

in quote traffic. 

The Exchange agrees to submit reports 

to the Commission that will analyze the 

impact of the Penny Pilot Program on 

market quality and options systems 

capacity. These reports will include, but 

are not limited to: (1) Data and analysis 

on the number of quotations generated 

for options included in the report; (2) an 

assessment of the quotation spreads for 

the options included in the report; (3) 

an assessment of the impact of the 

Penny Pilot Program on the capacity of 

the ISE’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 Penny Pilot Program 

and how the Exchange addressed them. 

2. Statutory Basis 

The basis under the Securities 

Exchange Act of 1934 (the ‘‘Exchange 

Act’’) for this proposed rule change is 

found in Section 6(b)(5), in that the 

proposed rule change is designed to 

promote just and equitable principles of 

trade, remove impediments to and 

perfect the mechanisms of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest. In 

particular, the proposed rule change, 

which extends the Penny Pilot Program 

for an additional one year, will enable 

public customers and other market 

participants to express their true prices 

to buy and sell options for the benefit 

of all market participants. 

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 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: (1) Does not significantly affect 

the protection of investors or the public 

interest; (2) does not impose any 

significant burden on competition; and 

(3) by its terms does not become 

operative for 30 days after the date of 

mstockstill on DSKH9S0YB1PROD with NOTICES

77034 Federal Register / Vol. 75, No. 237 / Friday, December 10, 2010 / Notices 

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

5 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. ISE 

has satisfied this requirement. 

6 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Changes are marked to the rule text that appears 

in the electronic manual of NASDAQ found at 

http://nasdaqomx.cchwallstreet.com. 

this filing, 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 4 and Rule 

19b–4(f)(6) thereunder.5

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–2010–116 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–2010–116. 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– 

2010–116 and should be submitted on 

or before January 3, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31050 Filed 12–9–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63439; File No. SR– 

NASDAQ–2010–158] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Clarify 

Market Maker Quote Management 

Procedures 

December 6, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on December 

3, 2010, The NASDAQ Stock Market 

LLC (‘‘Nasdaq’’ 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 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 is filing with the 

Commission a proposed rule change to 

clarify market maker quote management 

procedures. 

The text of the proposed rule change 

is below. Proposed new language is 

italicized and proposed deletions are in 

brackets.3

* * * * * 

4613. Market Maker Obligations 

A member registered as a Market 

Maker shall engage in a course of 

dealings for its own account to assist in 

the maintenance, insofar as reasonably 

practicable, of fair and orderly markets 

in accordance with this Rule. 

(a) Quotation Requirements and 

Obligations 

(1) No Change. 

(2) Pricing Obligations. For NMS 

stocks (as defined in Rule 600 under 

Regulation NMS) a Market Maker shall 

adhere to the pricing obligations 

established by this Rule during Regular 

Market Hours. 

(A)–(E) No Change. 

(F) Quotation Creation and 

Adjustment. For each Issue in which a 

Market Maker is registered, the System 

shall, in the absence of a quotation that 

complies with this Rule entered by that 

Market Maker, automatically create a 

quotation for display to comply with 

this Rule. System-created compliant 

displayed quotations will thereafter be 

allowed to rest and not be further 

adjusted by the System unless the 

relationship between the quotation and 

its related National Best Bid or National 

Best Offer, as appropriate, shrinks to the 

greater of: (a) 4 percentage points, or, (b) 

one-quarter the applicable percentage 

necessary to trigger an individual stock 

trading pause as described in NASDAQ 

Rule 4120(a)(11), or expands to within 

that same percentage less 0.5%, 

whereupon the System will 

immediately re-adjust and display the 

Market Maker’s quote to the appropriate 

Designated Percentage set forth in 

section (D) above. [As the System allows 

for multiple attributable quotations by a 

Market Maker in an issue,] 

[q]Quotations originally entered by 

Market Makers which have not been 

modified by the System upon entry or 

after resting on the book shall be 

allowed to move freely towards [or away 

from] the National Best Bid or National 

Best Offer, as appropriate, for potential 

execution. 

(G)–(K) No Change. 

(b)–(e) No Change. 

* * * * * 

4752. Opening Process 

(a) No Change. 

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