Federal Register / Vol. 75, No. 239 / Tuesday, December 14, 2010 / Notices 77923 

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

2 17 CFR 240.19b–4. 

apply to securities of an acquired 

company purchased by an acquiring 

company if: (i) The acquired company 

and acquiring company are part of the 

same group of investment companies; 

(ii) the acquiring company holds only 

securities of acquired companies that 

are part of the same group of investment 

companies, government securities, and 

short-term paper; (iii) the aggregate sales 

loads and distribution-related fees of the 

acquiring company and the acquired 

company are not excessive under rules 

adopted pursuant to section 22(b) or 

section 22(c) of the Act by a securities 

association registered under section 15A 

of the Exchange Act or by the 

Commission; and (iv) the acquired 

company has a policy that prohibits it 

from acquiring securities of registered 

open-end investment companies or 

registered unit investment trusts in 

reliance on section 12(d)(1)(F) or (G) of 

the Act. 

3. Rule 12d1–2 under the Act permits 

a registered open-end investment 

company or a registered unit investment 

trust that relies on section 12(d)(1)(G) of 

the Act to acquire, in addition to 

securities issued by another registered 

investment company in the same group 

of investment companies, government 

securities, and short-term paper: (i) 

Securities issued by an investment 

company that is not in the same group 

of investment companies, when the 

acquisition is in reliance on section 

12(d)(1)(A) or 12(d)(1)(F) of the Act; (ii) 

securities (other than securities issued 

by an investment company); and (iii) 

securities issued by a money market 

fund, when the investment is in reliance 

on rule 12d1–1 under the Act. For the 

purposes of rule 12d1–2, ‘‘securities’’ 

means any security as defined in section 

2(a)(36) of the Act. 

4. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security, or transaction from any 

provision of the Act, or from any rule 

under the Act, if such exemption is 

necessary or appropriate in the public 

interest and consistent with the 

protection of investors and the purposes 

fairly intended by the policies and 

provisions of the Act. 

5. Applicants state that the Funds of 

Funds will comply with Rule 12d1–2 

under the Act, but for the fact that the 

Funds of Funds may invest a portion of 

their assets in Other Investments. 

Applicants request an order under 

section 6(c) of the Act for an exemption 

from rule 12d1–2(a) to allow the Funds 

of Funds to invest in Other Investments. 

Applicants assert that permitting the 

Funds of Funds to invest in Other 

Investments as described in the 

application would not raise any of the 

concerns that the requirements of 

section 12(d)(1) were designed to 

address. 

Applicants’ Condition 

Applicants agree that any order 

granting the requested relief will be 

subject to the following condition: 

Applicants will comply with all 

provisions of rule 12d1–2 under the Act, 

except for paragraph (a)(2) to the extent 

that it restricts any Fund of Funds from 

investing in Other Investments as 

described in the application. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31256 Filed 12–13–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63463; File No. SR– 

NYSEAmex-2010–109] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NYSE Amex LLC Amending Its Rules 

Regarding the Listing of Options 

Series With $1 Strike Prices 

December 8, 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, NYSE Amex LLC 

(the ‘‘Exchange’’ or ‘‘NYSE Amex’’) 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 proposes to amend its 

rules regarding the listing of $1 strike 

prices. The text of the proposed rule 

change is available at the principal 

office of the Exchange, the 

Commission’s Public Reference Room, 

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

www.sec.gov, 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 

The Exchange proposes to amend 

Rule 903 Commentary .06 to improve 

the operation of the $1 Strike Price 

Program. 

Currently, the $1 Strike Price Program 

only allows the listing of new $1 strikes 

within $5 of the previous day’s closing 

price. In certain circumstances this has 

led to situations where there are no atthe-money $1 strikes for a day, despite 

significant demand. For instance, on 

November 15, 2010, the underlying 

shares of Isilon Systems Inc. opened at 

$33.83. It had closed the previous 

trading day at $26.29. Options were 

available in $1 intervals up to $31, but 

because of the restriction to only listing 

within $5 of the previous close, the 

Exchange was not able to add $32, $33, 

$34, $36, $37 or $38 strikes during the 

day. 

The Exchange proposes that $1 

interval strike prices be allowed to be 

added immediately within $5 of the 

official opening price in the primary 

listing market. Thus, on any day, $1 

Strike Program strikes may be added 

within $5 of either the opening price or 

the previous day’s closing price. 

On occasion, the price movement in 

the underlying security has been so 

great that listing within $5 of either the 

previous day’s closing price or the day’s 

opening price will leave a gap in the 

continuity of strike prices. For instance, 

if an issue closes at $14 one day, and the 

next day opens above $27, the $21 and 

$22 strikes will be more than $5 from 

either benchmark. The Exchange 

proposes that any such discontinuity be 

avoided by allowing the listing of all $1 

Strike Program strikes between the 

closing price and the opening price. 

Additionally, issues that are in the $1 

Strike Price Program may currently have 

$2.50 interval strike prices added that 


srobinson on DSKHWCL6B1PROD with NOTICES
77924 Federal Register / Vol. 75, No. 239 / Tuesday, December 14, 2010 / Notices 

3Rule 903A codifies the limitation on strike price 

ranges outlined in the OLPP, which, except in 

limited circumstances, prohibits options series with 

an exercise price more than 100% above or below 

the price of the underlying security if that price is 

$20 or less. If the price of the underlying security 

is greater than $20, the Exchange shall not list new 

options series with an exercise price more than 

50% above or below the price of the underlying 

security. 

4 15 U.S.C. 78f(b). 

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

are more than $5 from the underlying 

price or are more than a nine months to 

expiration (long-term options series). In 

such cases, the listing of a $2.50 interval 

strike may lead to discontinuities in 

strike prices and also a lack of parallel 

strikes in different expiration months of 

the same issue. For instance, under the 

current rules, the Exchange may list a 

$12.50 strike in a $1 Strike Program 

issue where the underlying price is $24. 

This allowance was provided to avoid 

too large of an interval between the 

standard strike prices of $10 and $15. 

The unintended consequence, however, 

is that if the underlying price should 

decline to $16, the Exchange would not 

be able to list a $12 or $13 strike. If the 

underlying stayed near this level at 

expiration, a new expiration month 

would have the $12 and $13 strike but 

not the $12.50, leading to a disparity in 

strike intervals in different months of 

the same option class. This has also led 

to investor confusion, as they regularly 

request the addition of inappropriate 

strikes so as to roll a position from one 

month to another at the same strike 

level. 

To avoid this problem, the Exchange 

proposes to prohibit $2.50 interval 

strikes below $50 in all $1 Strike Price 

Program issues, including long term 

option series. At each standard $5 

increment strike more than $5 from the 

price of the underlying security, the 

Exchange proposes to list the strike $2 

above the standard strike for each 

interval above the price of the 

underlying security, and $2 below the 

standard strike, for each interval below 

the price of the underlying security, 

provided it meets the Options Listing 

Procedures Plan (‘‘OLPP’’) Provisions in 

Rule 903A.3 For instance, if the 

underlying security was trading at $19, 

the Exchange could list, for each month, 

the following strikes: $3, $5, $8, $10, 

$13, $14, $15, $16, $17, $18, $19, $20, 

$21, $22, $23, $24, $25, $27, $30, $32, 

$35, and $37. 

Instead of $2.50 strikes for long-term 

options, the Exchange proposes to list 

one long-term $1 Strike option series 

strike in the interval between each 

standard $5 strike, with the $1 Strike 

being $2 above the standard strike price 

for each interval above the price of the 

underlying security, and $2 below the 

standard strike price, for each interval 

below the price of the underlying 

security. In addition, the Exchange may 

list the long-term $1 strike which is $2 

above the standard strike just below the 

underlying price at the time of listing, 

and may add additional long-term 

options series strikes as the price of the 

underlying security moves, consistent 

with the OLPP. For instance, if the 

underlying is trading at $21.25, longterm strikes could be listed at $15, $18, 

$20, $22, $25, $27, and $30. If the 

underlying subsequently moved to $22, 

the $32 strike could be added. If the 

underlying moved to $19.75, the $13, 

$10, $8, and $5 strikes could be added. 

The Exchange also proposes that 

additional long-term option strikes may 

not be listed within $1 of an existing 

strike until less than nine months to 

expiration. 

Finally, the Exchange represents that 

it has the necessary systems capacity to 

support the small increase in new 

options series that will result from these 

changes to the $1 Strike Price Program. 

2. Statutory Basis 

The Exchange believes that this 

proposed rule change is consistent with 

Section 6(b) of the Securities Exchange 

Act of 1934 (‘‘Act’’),4 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act 5 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, 

promote just and equitable principles of 

trade, 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. In 

particular, the proposed rule change 

seeks to reduce investor confusion and 

address issues that have arisen in the 

operation of the $1 Strike Price Program 

by providing a consistent application of 

strike price intervals for issues in the $1 

Strike Price Program. 

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be 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 rulecomments@sec.gov. Please include File 

Number SR–NYSEAmex–2010–109 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-2010–109. 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 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 239 / Tuesday, December 14, 2010 / Notices 77925 

6 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 Nos. 58941 

(Nov. 13, 2008), 73 FR 70392 (Nov. 20, 2008) (SR– 

BSE–2008–50); 58985 (Nov. 10, 2008), 73 FR 72538 

(Nov. 28, 2008) (SR–ISE–2008–86); 58204 (July 22, 

2008), 73 FR 43807 (July 28, 2008) (SR–CBOE– 

2008–64); and 58203 (July 22, 2008), 73 FR 43812 

(July 28, 2008) (SR–NYSEArca-2008–57). 

4OCC previously received Commission approval 

to clear options based on Index-Linked Securities. 

See Securities Exchange Act Release No. 60872 

(Oct. 23, 2009), 74 FR 55878 (Oct. 29, 2009) (SR– 

OCC–2009–14). 5 15 U.S.C. 78f(b)(5). 

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– 

NYSEAmex–2010–109 and should be 

submitted on or before January 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31228 Filed 12–13–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63461; File No. SR–BX– 

2010–085] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Establish 

Strike Price Intervals and Trading 

Hours for Options on Index-Linked 

Securities 

December 8, 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 December 

2, 2010, 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 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 

Supplementary Material to Chapter IV, 

Section 6 (Series of Options Contracts 

Open for Trading) and Chapter V, 

Section 3 (Days and Hours of Business) 

of the Rules of the Boston Options 

Exchange Group, LLC (‘‘BOX’’) to 

establish strike price intervals and 

trading hours for options on IndexLinked Securities. 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 on the 

Exchange’s 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 

Prior to the commencement of trading 

options on Index-Linked Securities on 

BOX, the Exchange is proposing to 

establish strike price intervals and 

trading hours for these products. 

The Securities and Exchange 

Commission (the ‘‘Commission’’) has 

approved BOX’s and other option 

exchanges’ proposals to enable the 

listing and trading of options on IndexLinked Securities.3 BOX has not 

commenced trading options on IndexLinked Securities to date. Trading in 

options on Index-Linked Securities has 

commenced on other exchanges 

following the Commission’s approval of 

The Options Clearing Corporation’s 

(‘‘OCC’’) May 2010 supplement to the 

Options Disclosure Document (‘‘ODD’’) 

that provides disclosure regarding 

options on Index-Linked Securities.4

$1 Strikes for Options on Index-Linked 

Securities 

Prior to the commencement of trading 

on BOX of options on Index-Linked 

Securities that satisfy the criteria set 

forth in Chapter IV, Section 3(k) of the 

BOX Rules, the Exchange is proposing 

to establish that strike price intervals of 

$1 will be permitted where the strike 

price is less than $200. Where the strike 

price is greater than $200, $5 strikes will 

be permitted. These proposed changes 

are reflected by the proposed addition of 

Supplementary Material .01(c) to 

Chapter IV, Section 6 of the BOX Rules. 

Without discounting the differences 

between exchange-traded funds (‘‘ETFs’’) 

and Index-Linked Securities, BOX seeks 

to extend the trading conventions 

applicable to options on ETFs to options 

on Index-Linked Securities. BOX 

contends that the proposed strike price 

intervals for options on Index-Linked 

Securities are consistent with the strike 

price intervals currently permitted for 

options on ETFs. BOX believes that $1 

strike price intervals for options on 

Index-Linked Securities will provide 

investors with greater flexibility by 

allowing them to establish positions that 

are better tailored to meet their 

investment objectives. BOX has 

analyzed its capacity and represents that 

it and the Options Price Reporting 

Authority have the necessary systems 

capacity to handle the additional traffic 

associated with the listing and trading 

of an expanded number of series as 

proposed by this filing. 

Trading Hours for Options on IndexLinked Securities 

Similar to the trading hours for ETF 

options, the Exchange proposes to 

amend Chapter V, Section 3(b) of the 

BOX Rules to provide that options on 

Index-Linked Securities may be traded 

on BOX until 4:15 p.m. each business 

day. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of the Securities and 

Exchange Act of 1934 (‘‘Exchange Act’’), 

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

Exchange Act,5 in particular, that an 

exchange has rules that are designed to 

promote just and equitable principles of 

trade, and 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 Exchange believes the 

proposal will lessen investor confusion 

by having strike price intervals and 

trading hours established prior to the 

commencement of trading on BOX of 

options on Index-Linked Securities. 


srobinson on DSKHWCL6B1PROD with NOTICES