Federal Register / Vol. 75, No. 244 / Tuesday, December 21, 2010 / Notices 80097 

28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

becoming associated with a member if 

such person does not agree to supply 

the exchange with such information 

with respect to its dealings with the 

member as may be specified by the rules 

of the exchange and to permit the 

examination of its books and records to 

verify the accuracy of any information 

so supplied. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

This 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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate 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–ISE–2010–115 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–2010–115. 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 

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 

publicly available. All submissions 

should refer to File Number SR–ISE– 

2010–115 and should be submitted on 

or before January 11, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31951 Filed 12–20–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63552; File No. SR– 

NYSEAmex–2010–120] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Amex LLC Establishing Strike Price 

Intervals of $1 and Increasing Position 

and Exercise Limits With Respect to 

Options on the KBW Bank Index 

December 15, 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 

14, 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 

NYSE Amex Rules 903C and 904C with 

respect to options on the KBW Bank 

Index (‘‘BKX’’ or ‘‘Index’’) to (i) establish 

strike price intervals of $1.00 and (ii) 

increase the position and exercise limits 

applicable thereto. The text of the 

proposed rule change is available at the 

Exchange’s principal office, on the 

Commission’s Web site at http:// 

www.sec.gov, at 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 

Exchange 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend NYSE Amex Rules 

903C and 904C with respect to options 

on BKX to (i) establish strike price 

intervals of $1.00 and (ii) increase the 

position and exercise limits applicable 

thereto. The proposed change would 

provide investors with greater flexibility 

with respect to trading options on BKX, 

which the Exchange intends on listing 

pursuant to the generic listing standards 

of Amex Rule 903C, by allowing them 

to establish positions that are better 

tailored to meet their investment 

objectives. 


srobinson on DSKHWCL6B1PROD with NOTICES
80098 Federal Register / Vol. 75, No. 244 / Tuesday, December 21, 2010 / Notices 

3The Exchange notes that similar proposals to list 

series of BKX at $1.00 or greater strike price 

intervals have been previously approved by the 

Commission. See Securities Exchange Act Release 

No. 60840 (October 20, 2009), 74 FR 55593 (October 

28, 2009) (SR–Phlx–2009–77). See also Securities 

Exchange Act Release No. 60896 (October 28, 2009), 

74 FR 56906 (November 3, 2009) (SR–NYSEArca– 

2009–98). 

4See Securities Exchange Act Release No. 49312 

(February 24, 2004), 69 FR 9672 (March 1, 2004) 

(SR–Phlx–2004–13). See also Securities Exchange 

Act Release No. 55932 (June 20, 2007), 72 FR 35288 

(June 27, 2007) (SR–NYSEArca–2007–54). 

5The Exchange notes that, as provided under 

NYSE Amex Rule 905C(ii), the amount of stock 

index industry group options contracts that can be 

exercised pursuant to NYSE Amex Rule 905C is the 

same number of contracts established pursuant to 

NYSE Amex Rule 904C as the position limit for 

such options, and thus does not require that the text 

of NYSE Amex Rule 905C be amended to effect the 

change proposed herein. 

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

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 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. 

10See supra notes 3 and 4. 

$1 Strike Price Intervals 

The Exchange proposes to list series 

of BKX at $1.00 or greater strike price 

intervals, if the strike price is less than 

$200, and to list at least two strike 

prices above and two strike prices below 

the current value of the Index at about 

the time a series is opened for trading 

on the Exchange.3

As proposed, additional series of BKX 

could be opened for trading on the 

Exchange when the Exchange deems it 

necessary to maintain an orderly 

market, to meet customer demand, or 

when the underlying Index moves 

substantially from the initial exercise 

price or prices. To the extent that any 

additional strike prices are listed by the 

Exchange, such additional strike prices 

would be within thirty percent (30%) 

above or below the closing value of the 

Index on the prior day. The Exchange 

could also open additional strike prices 

that are more than 30% above or below 

the current Index value provided that 

demonstrated customer interest exists 

for such series, as expressed by 

institutional, corporate, or individual 

customers or their brokers. Market 

Makers trading for their own account 

would not be considered when 

determining customer interest under 

this provision. In addition to the initial 

listed series, the Exchange could list up 

to sixty (60) additional series per 

expiration month for each series on 

BKX. In all cases, however, $1.00 strike 

price intervals could be listed on BKX 

only where the strike price is less than 

$200. 

As proposed, the Exchange could not 

list Long-Term Equity AnticiPation 

Securities (‘‘LEAPS’’) on BKX at 

intervals less than $2.50. 

The Exchange also proposes an 

additional delisting policy for BKX, 

whereby the Exchange would regularly 

review series that are outside a range of 

five (5) strikes above and five (5) strikes 

below the current value of BKX, and 

would be able to delist series with no 

open interest in both the put and the 

call series having a: (a) strike higher 

than the highest strike price with open 

interest in the put and/or call series for 

a given expiration month, and (b) strike 

lower than the lowest strike price with 

open interest in the put and/or call 

series for a given expiration month. 

The Exchange proposes that, 

notwithstanding the above delisting 

policy, customer requests to add strikes 

and/or maintain strikes in BKX eligible 

for delisting could be granted. 

Accordingly, the Exchange proposes 

to include these proposed changes as 

new Commentary .07 to NYSE Amex 

Rule 903C. 

With regard to the impact 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 additional traffic associated 

with the listing and trading of an 

expanded number of series as proposed 

herein. 

Position and Exercise Limits 

Under NYSE Amex Rule 904C(c), the 

highest position and exercise limit that 

a stock index industry group option 

such as BKX is permitted to have is 

31,500 contracts. However, several other 

options exchanges currently list options 

on BKX and have expanded their 

position and exercise limit for options 

on BKX to 44,000 contracts.4 The 

Exchange believes that it is important 

for a product like BKX, which is traded 

on multiple exchanges, to have uniform 

position and exercise limits in order to 

eliminate any confusion among 

investors and other market participants. 

Accordingly, the Exchange proposes to 

amend NYSE Amex Rule 904C(c) to 

similarly increase the position and 

exercise limits for options on BKX to 

44,000 contracts.5

The Exchange also proposes a nonsubstantive change to move the 

reference to the Pauzee ́ Tombstone 

Common Stock Index, and the position 

limit applicable thereto, to a more 

appropriate location within NYSE Amex 

Rule 904C(c). 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,6 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,7

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, 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. Specifically, the changes 

proposed herein would provide 

investors with greater flexibility to 

establish positions that are better 

tailored to meet their investment 

objectives while also eliminating 

potential confusion by aligning the 

Exchange’s position and exercise limits 

with that of other options exchanges. 

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 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 8 and Rule 19b– 

4(f)(6) thereunder.9

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.10 Therefore, the 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 244 / Tuesday, December 21, 2010 / Notices 80099 

11For 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). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 to SR–CBOE–2010–106 

replaced and superseded the original rule filing in 

its entirety. 

4CBOE’s Credit Default Options and Credit 

Default Basket Options are also referred to as Credit 

Event Binary Options. 

Commission designates the proposal 

operative upon filing.11

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–NYSEAmex–2010–120 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–2010–120. 

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– 

NYSEAmex–2010–120 and should be 

submitted on or before January 11, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31949 Filed 12–20–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63546; File No. SR–CBOE– 

2010–106] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Proposed Rule 

Change, as Modified by Amendment 

No. 1, To Amend Margin Requirements 

for Credit Options 

December 15, 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 

1, 2010, the Chicago Board Options 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) 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 

substantially prepared by the Exchange. 

On December 14, 2010, the Exchange 

filed Amendment No. 1 to the proposed 

rule change.3 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 

CBOE proposes to amend Rule 12.3(l), 

Margin Requirements, to make CBOE’s 

margin requirements for Credit Options 

consistent with Financial Industry 

Regulatory Authority (‘‘FINRA’’) Rule 

4240, Margin Requirements for Credit 

Default Swaps. CBOE’s Credit Options 

(i.e., Credit Default Options and Credit 

Default Basket Options) are analogous to 

credit default swaps.4 The text of the 

rule proposal is available on the 

Exchange’s Web site (http:// 

www.cboe.org/legal), at the Exchange’s 

Office of the Secretary and at the 

Commission. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

This filing proposes to amend Rule 

12.3(l), Margin Requirements, to make 

CBOE’s margin requirements for Credit 

Options consistent with FINRA Rule 

4240, Margin Requirements for Credit 

Default Swaps. CBOE’s Credit Options 

consist of two variations—Credit Default 

Options and Credit Default Basket 

Options. Credit Default Options and 

Credit Default Basket Options are also 

referred to as ‘‘Credit Event Binary 

Options.’’ Effectively, both contracts 

operate in the same manner as credit 

default swap contracts. 

Amendment No. 1 replaces the 

original filing in its entirety. The 

purpose of Amendment No. 1 is to 

restyle the original proposal on a pilot 

basis. 

As with a credit default swap 

contract, the buyer of a Credit Option 

contract is buying protection from the 

seller of the Credit Option. This 

protection is in the form of a monetary 

payment from the Credit Option seller 

to the Credit Option buyer in the event 

that the issuer of debt securities, or 

Reference Entity, specified as 

underlying the Credit Option contract 

has a Credit Event (e.g., declares 

bankruptcy), consequently defaulting on 

the payment of principal and interest on 

its debt securities. When a Credit 

Option buyer and seller initially open 


srobinson on DSKHWCL6B1PROD with NOTICES