8774 Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 

10 15 U.S.C. 78o–3(b)(6). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Exchange Act Release No. 40157, File No. SR– 

Amex–96–44 (July 1, 1998) 63 FR 37426 (July 10, 

1998). 

4SR–Amex–96–44 was also silent on the manner 

of expressing strike prices and premium bids and 

offers, thus it is necessary to define them in this 

filing. 

5See Securities Exchange Act Release No. 56351 

(September 4, 2007); see also Securities Exchange 

Act Release No. 52649 (October 21, 2005), 70 FR 

62146 (October 28, 2005) (SR–Amex–2005–063) 

(‘‘NDX Approval Order’’); see also Securities 

Exchange Act Release No. 46393 (August 21, 2002), 

67 FR 55289 (August 28, 2002) (SR–Amex–2002– 

31) (‘‘XMI/XII Permanent Approval Order’’). 

15A(b)(6) of the Exchange Act,10 which 

requires, among other things, that 

FINRA’s rules be designed to prevent 

fraud and manipulative practices and to 

promote just and equitable principles of 

trade and, in general, to protect 

investors and the public interest. The 

Commission believes that the proposed 

rule change is reasonably designed to 

achieve these ends by providing FINRA 

member broker-dealers the opportunity 

to evaluate the appropriateness of 

certain lending arrangements between 

their registered persons and others, to 

the extent permitted by a FINRA 

member broker-dealer, and the potential 

that these lending arrangements could 

create certain conflicts of interest. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,11

that the proposed rule change (SR– 

FINRA–2009–095) be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3775 Filed 2–24–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61535; File No. SR– 

NYSEAmex–2010–14] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Notice of Filing of 

Proposed Rule Change Amending 

Position Limits for Certain Exchange 

Traded Funds 

February 18, 2010. 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on February 17, 2010, NYSE Amex LLC 

(‘‘NYSE Amex’’ or ‘‘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 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 (a) amend 

the Position Limits for certain highly 

liquid Exchange Traded Funds (‘‘ETFs’’); 

(b) memorialize a previously approved 

provision that was never inserted in the 

Exchange’s Rules, as well as clarify its 

applicable scope, and (c) amend certain 

rules to define certain contract terms. 

The text of the proposed rule change is 

available on NYSE Amex’s Web site at 

(http://www.nyse.com), on the 

Commission’s Web site at http:// 

www.sec.gov, at NYSE Amex, 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 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 this filing is to (a) 

eliminate Position Limits in certain 

highly active ETFs, (b) memorialize a 

previously approved provision that was 

never inserted in the Exchange’s Rules, 

as well as clarify its applicable scope, 

and (c) amend certain rules to define 

certain contract terms. The provision at 

issue—allowing for option contracts on 

ETFs that overly 1,000 shares (‘‘Jumbo 

options’’)—was approved in 1998, but 

did not include changes to Rule Text at 

that time.3 In order to resume listing 

these products, the Exchange is 

proposing to restrict the listing of Jumbo 

options to four specific ETFs that have 

no Position Limit (as proposed below), 

and also define how strike prices and 

premiums will be expressed for Jumbo 

contracts by amending Rule 903 and 

Rule 959NY.4

Position Limits 

Four ETFs have been approved under 

NYSE Amex Rule 904 to have 

exceptional Position Limits. These are 

NASDAQ 100 Tracking Stock (QQQQ); 

SPDR S&P 500 ETF (SPY); iShares 

Russell 2000 Index Fund (IWM); and 

DIAMONDS Trust (DIA). NYSE Amex 

proposes that these four ETFs have no 

Position Limit. 

Position and Exercise limits were 

introduced as a means of forestalling the 

potential manipulation of an equity’s 

price by someone that established a 

large option position. This concern was 

mitigated with cash settled index 

options since the contract settled for 

cash as opposed to physical shares of 

stock. Additionally, those index options 

whose position limits have been 

eliminated are based on a broad based 

index comprised of many equities 

further mitigating concerns about 

manipulation through the establishment 

and subsequent exercise of a large 

options position. This resulted in a 

repeal of position and exercise limits for 

the options on the aforementioned 

broad based indexes.5

While ETF options are physically 

settled, NYSE Amex feels that there are 

specific aspects related to an ETF’s 

structure that serve to mitigate any 

concerns about manipulation and allow 

eliminating position limits on a narrow 

subset of the ETF option universe. First, 

ETF’s are structured as open-ended 

trusts or mutual funds that can 

continually issue new shares as required 

to satisfy demand. This is in sharp 

contrast to an equity that has a float that 

is only increased by corporate action 

and is not a function of investor 

demand. Second, the ETF itself is 

comprised of a basket of stocks, 

specifically those that comprise a 

benchmark broad based index. 

Additionally, in approving the 

elimination of position and exercise 

limits for RUT, NDX, DJX, and SPX 

options, the Commission considered the 

capitalization of the components of each 

of these indexes and the deep and liquid 

markets for the securities underlying 

each index significantly reduced 

concerns of market manipulation or 

disruption in the underlying markets. 

Shares in these four underlying ETFs 

have exceptionally high trading volume, 

demonstrating extraordinary liquidity. 

The volume for each of these ETFs for 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 8775 

the last six months of 2009 was at least 

a full order of magnitude greater than 

the standard for the highest current 

position limit tier (250,000 contracts on 

100 million shares traded): 

ETF Jul–Dec 2009 

total share vol. 

Jul–Dec 2009 

avg. daily share 

vol. 

SPY .......................................................................................................................................................... 22,828,864,134 198,511,862 

IWM .......................................................................................................................................................... 6,480,281,641 54,002,347 

DIA ........................................................................................................................................................... 1,409,445,977 11,745,383 

QQQQ ...................................................................................................................................................... 12,562,364,006 104,686,367 

Additionally, the options trading 

volume in these issues is comparable to 

index option trading in similar products 

(including their counterpart indexes) 

which have no Position Limit: 

Nat’l rank Symbol Company name ADV 

Current 

position 

limit 

1 .......................................... SPY .................................... SPDR Trust Series 1 ...................................................... 1,383,317 300,000 

3 .......................................... SPX .................................... S&P 500 Index ............................................................... 651,303 Unlimited. 

4 .......................................... QQQQ ................................ Powershares QQQ Trust ................................................ 613,406 900,000 

6 .......................................... IWM .................................... iShares Russell 2000 Index Fund .................................. 323,983 500,000 

20 ........................................ RUT .................................... Russell 2000 Index ......................................................... 97,046 Unlimited. 

24 ........................................ DIA ..................................... DIAMONDS Trust Series I ............................................. 80,622 300,000 

49 ........................................ OEX ................................... S&P 100 Index ............................................................... 46,766 Unlimited. 

57 ........................................ NDX ................................... Nasdaq 100 Stock Index ................................................ 40,470 Unlimited. 

147 ...................................... DJX .................................... Dow Jones Industrial Average Index ............................. 15,696 Unlimited. 

Jumbo Options Contracts 

SR–Amex–96–44 (‘‘96–44’’) provided 

that the Exchange could list contracts 

overlying 1000 shares of an ETF, 100 

shares of an ETF, or both. To eliminate 

confusion, NYSE Amex is proposing to 

add a Commentary to Rule 901—Option 

Contracts to Be Traded. 

At the time that 96–44 was approved, 

the number of ETFs was limited, and 

the Exchange contemplated listing 

options on only the most active ETFs. 

Since that time, the universe of ETFs 

has grown substantially, with some 

becoming very actively traded, and 

others with relatively low volume. The 

Exchange proposes to designate four 

very active ETFs as eligible for 1,000 

share contracts, and also restrict Jumbo 

contracts to only those ETFs that have 

been approved to have no Position 

Limit. Pursuant to this filing, the 

Exchange proposes to designate the 

following four ETFs as eligible to trade 

as Jumbo options: NASDAQ 100 

Tracking Stock (QQQQ); SPDR S&P 500 

ETF (SPY); iShares Russell 2000 Index 

Fund (IWM); and DIAMONDS Trust 

(DIA). 

Contract Terms 

To avoid investor confusion with 

contracts in the same ETF that overly 

100 shares, NYSE Amex is further 

proposing to amend Rules 903 and 

959NY to define how strike prices will 

be set and premiums defined for 

contracts overlying 1,000 shares. 

Because a standard option contract is 

identified in terms of 100 shares and 

related values on a per-share basis, the 

option strike prices result in being equal 

to 1⁄100th of the deliverable value, and 

premiums are equal to 1⁄100th of the total 

cost of the contract. 

NYSE Amex proposes to maintain this 

ratio for Jumbo contracts in such a way 

as to avoid confusion between standard 

contracts and Jumbo contracts. 

Commentary .10 to Rule 903 proposes 

that strike prices be set at 1/100th of the 

total contract deliverable value. Thus, a 

Jumbo contract to deliver an ETF at $45 

per share would carry a total deliverable 

value of $45,000, and the strike price 

would be set at 450. 

Similarly, proposed sub-paragraph (c) 

to Rule 959NY would maintain that bids 

and offers in Jumbo contracts would be 

set at 1/100th of the total value of the 

contract. Thus if an ETF with a Jumbo 

contract strike price of 450 was trading 

at $46 per share, the intrinsic $1 per 

share value of the Jumbo contract would 

be expressed as ‘‘10’’, and denote a total 

contract value of $1,000. 

The table below demonstrates the 

difference between a Jumbo contract 

and a standard contract for options to 

call or put shares at $45 per share, with 

a bid or offer of $3.20 per share: 

JUMBO CONTRACTS VS. STANDARD CONTRACTS

Standard Jumbo 

Share Deliverable Upon Exercise .................................................................................. 100 shares ................................................ 1,000 

shares. 

Strike Price of $45/per share ......................................................................................... 45 .............................................................. 450. 

Bid or Offer of $3.20 per share ...................................................................................... 3.20 ........................................................... 32.00. 

Total Value of Deliverable .............................................................................................. $4,500 ....................................................... $45,000. 

Total Value of Contract .................................................................................................. $320 .......................................................... $3,200. 


jlentini on DSKJ8SOYB1PROD with NOTICES
8776 Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 

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

7 15 U.S.C. 78f(b)(5). 8 17 CFR 200.30–3(a)(12). 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) 6 of the Securities Exchange Act of 

1934 (the ‘‘Act’’), in general, and furthers 

the objectives of Section 6(b)(5) 7 in 

particular in that it is designed to 

promote just and equitable principles of 

trade, to prevent fraudulent and 

manipulative acts, to remove 

impediments to and to perfect the 

mechanism for a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest, by providing additional 

methods to trade highly liquid options, 

and provide greater ability to mitigate 

risk in managing large portfolios by 

removing unnecessary position limits. 

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 35 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 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 

No. SR–NYSEAmex–2010–14 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEAmex–2010–14. 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 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 available publicly. All 

submissions should refer to File 

Number SR–NYSEAmex–2010–14 and 

should be submitted on or before March 

12, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3773 Filed 2–24–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61533; File No. SR–CBOE– 

2010–011] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated: Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Reduction of 

the Customer Transaction Fee for OEX 

and XEO Weeklys Options 

February 18, 2010. 

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

Securities Exchange Act of 1934, 15 

U.S.C. 78s(b)(1), notice is hereby given 

that on January 29, 2010, Chicago Board 

Options Exchange, Incorported (‘‘CBOE’’ 

or 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 CBOE. 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 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) 

proposes to amend its Fees Schedule to 

reduce the transaction fee for short term 

options series (‘‘Weeklys’’) in options on 

the S&P 100 Index American-style 

options (OEX) and S&P 100 Index 

European-style options (XEO). The text 

of the proposed rule change 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, 

CBOE 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. CBOE 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 

(a) Purpose 

Weeklys are listed index and equity 

options that match all other terms of 


jlentini on DSKJ8SOYB1PROD with NOTICES