Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices 81689 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Commentary .11 to Rule 1012 and Rule 

1101A(b)(vi). See Securities Exchange Act Release 

No. 62296 (June 15, 2010), 75 FR 35115 (June 21, 

2010) (SR–Phlx–2010–84) (notice of filing and 

immediate effectiveness permanently establishing 

STO Program on the Exchange). Other exchanges 

have also established permanent short term option 

programs. See Securities Exchange Act Release Nos. 

59824 (April 27, 2009), 74 FR 20518 (May 4, 2009) 

(SR–CBOE–2009–018) (approval order permanently 

establishing short term option program); 62444 (July 

2, 2010), 75 FR 39595 (July 9, 2010) (SR–ISE–2010– 

72) (approval order [sic] permanently establishing 

short term option program); 62297 (June 15, 2010), 

75 FR 35111 (June 21, 2010) (SR–NASDAQ–2010– 

073) (notice of filing and immediate effectiveness 

permanently establishing short term option 

program); 62296 (June 15, 2010), 75 FR 35111 (June 

21, 2010) [sic] (SR–Arca–2010–059) (notice of filing 

and immediate effectiveness permanently 

establishing short term option program); 62296 

(June 15, 2010), 75 FR 35111 (June 21, 2010) [sic] 

(SR–Amex–2010–062) (notice of filing and 

immediate effectiveness permanently establishing 

short term option program); and 62505 (July 15, 

2010), 75 FR 42792 (July 22, 2010) (SR–BX–2010– 

047) (approval order [sic] permanently establishing 

short term option program). 

4Short Term Option Series are series in an option 

class that is approved for listing and trading on the 

Exchange in which the series is opened for trading 

on any Thursday or Friday that is a business day 

and that expires on the Friday of the next business 

week. If a Thursday or Friday is not a business day, 

the series may be opened (or shall expire) on the 

first business day immediately prior to that 

Thursday or Friday, respectively. Rules 1000(b)(44), 

1000A(b)(16), Commentary .11 to Rule 1012 and 

Rule 1101A(b)(vi). 

Commission designates the proposed 

rule change operative upon filing with 

the Commission. 

At any time within 60 days of the 

filing of such 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–2010–091 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–2010–091. 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 

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 website 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–BX– 

2010–091 and should be submitted on 

or before January 18, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–32615 Filed 12–27–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63594; File No. SR–Phlx– 

2010–183] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NASDAQ OMX PHLX LLC To Expand 

Its Short Term Option Program 

December 21, 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 

15, 2010, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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 proposal to expand the 

Short Term Option Program (‘‘STO 

Program’’ or ‘‘Program’’) 3 so that the 

Exchange may select fifteen option 

classes on which Short Term Option 

Series 4 may be opened. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, at the 

principal office of the Exchange, at the 

Commission’s Public Reference Room, 

and on the Commission’s Web site at 

http://www.sec.gov. 

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 these 

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 aspects 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 purpose of this proposed rule 

change is to amend Rule 1012 to expand 

the STO Program so that the Exchange 

may select fifteen option classes on 

which Short Term Option Series may be 

opened. 

The STO Program is codified in 

Commentary .11 to Rule 1012 and Rule 

1101A(b)(vi). These sections state that 

after an option class has been approved 

for listing and trading on the Exchange, 

the Exchange may open for trading on 

any Thursday or Friday that is a 

business day series of options on no 

more than five option classes that expire 

on the Friday of the following business 

week that is a business day. In addition 

to the five-option class limitation, there 


emcdonald on DSK2BSOYB1PROD with NOTICES
81690 Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices 

5However, if the Exchange opens less than 

twenty (20) short term options for a Short Term 

Option Expiration Date, additional series may 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 

market price of the underlying security moves 

substantially from the exercise price or prices of the 

series already opened. Any additional strike prices 

listed by the Exchange shall be within thirty 

percent (30%) above or below the current price of 

the underlying security. The Exchange may also 

open additional strike prices of Short Term Option 

Series that are more than 30% above or below the 

current price of the underlying security provided 

that demonstrated customer interest exists for such 

series, as expressed by institutional, corporate or 

individual customers or their brokers (marketmakers trading for their own account shall not be 

considered when determining customer interest 

under this provision). Commentary .11(d) to Rule 

1012 and Rule 1101A(b)(vi)(D). 

6The Report would include the following: (1) 

Data and written analysis on the open interest and 

trading volume in the classes for which Short Term 

Option Series were opened; (2) an assessment of the 

appropriateness of the option classes selected for 

the STO Program; (3) an assessment of the impact 

of the STO Program on the capacity of the 

Exchange, OPRA, and market data vendors (to the 

extent data from market data vendors is available); 

(4) any capacity problems or other problems that 

arose during the operation of the STO Program and 

how the Exchange addressed such problems; (5) any 

complaints that the Exchange received during the 

operation of the STO Program and how the 

Exchange addressed them; and (6) any additional 

information that would assist in assessing the 

operation of the STO Program. 

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

8 15 U.S.C. 78f(b)(5). 

is also a limitation that no more than 

twenty series for each expiration date in 

those classes that may be opened for 

trading.5 Furthermore, the strike price of 

each short term option has to be fixed 

with approximately the same number of 

strike prices being opened above and 

below the value of the underlying 

security at about the time that the short 

term options are initially opened for 

trading on the Exchange, and with strike 

prices being within thirty percent (30%) 

above or below the closing price of the 

underlying security from the preceding 

day. The Exchange does not propose 

any changes to these additional Program 

limitations. The Exchange proposes 

only to increase from five to fifteen the 

number of option classes that may be 

opened pursuant to the Program. 

The principal reason for the proposed 

expansion is customer demand for 

adding, or not removing, short term 

option classes from the Program. In 

order that the Exchange not exceed the 

five-option class restriction, each month 

since the inception of the Program the 

Exchange has had to discontinue 

trading, on the average, more than one 

short term option class before it could 

begin trading other option classes 

within the Program. This has negatively 

impacted investors and traders, 

particularly retail public customers, 

who have on several occasions 

requested the Exchange not to remove 

short term option classes or add short 

term option classes. 

As an example, a retail investor 

recently asked the Exchange to reinstate 

a short term option class that the 

Exchange had to remove from trading 

because of the five-class option limit 

within the Program. The investor told 

the Exchange that he had used the 

removed class as a powerful tool for 

hedging a market sector, and that 

various strategies that the investor put 

into play were disrupted and eliminated 

when the class was removed. The 

Exchange feels that it is essential that 

such negative, potentially very costly 

impacts on retail investors are 

eliminated by modestly expanding the 

Program to enable additional classes to 

be traded. 

With regard to the impact of this 

proposal on system capacity, the 

Exchange has analyzed its capacity and 

represents that it and the Options Price 

Reporting Authority (‘‘OPRA’’) have the 

necessary systems capacity to handle 

the potential additional traffic 

associated with trading of an expanded 

number of classes in the Program. 

The Exchange believes that the STO 

Program has provided investors with 

greater trading opportunities and 

flexibility and the ability to more 

closely tailor their investment and risk 

management strategies and decisions. 

Furthermore, the Exchange has had to 

eliminate option classes on numerous 

occasions because of the limitation 

imposed by the Program. For these 

reasons, the Exchange requests an 

expansion of the current Program and 

the opportunity to provide investors 

with additional short term option 

classes for investment, trading, and risk 

management purposes. 

Finally, the Commission has 

requested, and the Exchange has agreed 

for the purposes of this filing, to submit 

one report to the Commission providing 

an analysis of the STO Program (the 

‘‘Report’’). The Report will cover the 

period from the date of effectiveness of 

the STO Program through November of 

2010, and will describe the experience 

of the Exchange with the STO Program 

in respect of the options classes 

included by the Exchange in such 

program.6 The Report will be submitted 

on a confidential basis under separate 

cover within one week of the filing. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 7 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 8

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 that expanding the 

current STO Program will result in a 

continuing benefit to investors by giving 

them more flexibility to closely tailor 

their investment and hedging decisions 

in greater number of securities. 

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 

No written comments were solicited 

or received. 

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 Exchange consents, 

the Commission shall: (a) By order 

approve or disapprove such 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–Phlx–2010–183 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices 81691 

9 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. 63163 

(October 22, 2010), 75 FR 66408 (October 28, 2010) 

(SR–EDGX–2010–14). 

4A User is defined in Exchange Rule 1.5(cc) as 

‘‘any Member or Sponsored Participant who is 

authorized to obtain access to the System pursuant 

to Rule 11.3’’. 

5Rule 11.5(c)(10) defines a Destination-on-Open 

order, in part, as ‘‘a market or limit order that 

instructs the System to route the order to a specified 

away trading center to participate in said trading 

center’s opening process, without being processed 

by the System as described below in Rule 

11.9(b)(1).’’ 

6The Exchange notes that when orders are routed 

to an away trading center, such away trading 

centers’ collar rules apply, when applicable, 

regardless of the Exchange’s proposed exclusion for 

Destination-on-Open orders. 

7See, e.g., Nasdaq Rule 4751(f)(13) which 

excludes market on open orders from the definition 

of ‘‘collared orders.’’ See also Securities Exchange 

Act Release No. 60371 (July 23, 2009), 74 FR 38075 

(July 30, 2009) (SR–Nasdaq–2009–070). 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2010–183. 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–Phlx– 

2010–183 and should be submitted on 

or before January 18, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–32623 Filed 12–27–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63589; File No. SR–EDGX– 

2010–24] 

Self-Regulatory Organizations; EDGX 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Amend EDGX Rule 

11.5 

December 21, 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 

13, 2010, EDGX Exchange, Inc. (the 

‘‘Exchange’’ or the ‘‘EDGX’’) filed with 

the Securities and Exchange 

Commission (‘‘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 the Substance 

of the Proposed Rule Change 

EDGX proposes to amend EDGX Rule 

11.5(a)(2) to provide that the system 

functionality that cancels any portion of 

a market order submitted to the 

Exchange that would execute at a price 

that is more than $0.50 or 5 percent 

worse than last sale at the time the order 

initially reaches the Exchange, 

whichever is greater, does not apply to 

Destination-on-Open orders, as defined 

in Rule 11.5(c)(10). The text of the 

proposed rule change is available on the 

Exchange’s Internet Web site at http:// 

www.directedge.com, on the 

Commission’s Web site at http:// 

www.sec.gov, and at the Commission’s 

Public Reference Room. 

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 

As provided in SR–EDGX–2010–14,3

Exchange Rule 11.5(a)(2) protects 

market participants from executions at 

prices that are significantly worse than 

the last sale at the time of order entry 

by providing Exchange system 

functionality that cancels any portion of 

a market order (as defined in Rule 

11.5(a)(2)) that would execute at a price 

that is 50 cents or 5 percentage points 

worse than the consolidated last sale, 

whichever is greater. Any portion of a 

market order that would otherwise 

execute outside of these thresholds is 

immediately cancelled back to the 

User.4

The Exchange proposes to modify 

Rule 11.5(a)(2) to provide that 

Destination-on-Open orders, as defined 

in Rule 11.5(c)(10),5 are not subject to 

these market collars.6 The rationale for 

this exception is twofold. First, using a 

reference price calculation for market 

collar thresholds at the open of trading 

is problematic because of the potential 

lack of trading activity just prior to the 

open and the resulting price dislocation. 

Therefore, the reference price for a 

market collar on a Destination-on-Open 

order could be out of line with the 

market at the open of the regular trading 

session. In addition, other Exchanges 

also address this issue similarly by 

excluding market on open orders as 

well.7

2. Statutory Basis 

The statutory basis for the proposed 

rule change is Section 6(b)(5) of the 


emcdonald on DSK2BSOYB1PROD with NOTICES