43174 Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 

6Application of any of the aforementioned 

exceptions and/or exemptions to the strike price 

range limitations for an underlying security would 

be available to all exchanges listing options on such 

security. 7 In approving this proposed Amendment, the 

Commission has considered its impact on 

efficiency, competition, and capital formation. 15 

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

8 15 U.S.C. 78k–1. 

9 17 CFR 242.608. 

10See Notice, supra note 4. 

11 15 U.S.C. 78k–1. 

12 17 CFR 242.608. 

13 17 CFR 200.30–3(a)(29). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 57219 

(Jan. 29, 2008), 73 FR 6542 (Feb. 4, 2008) (SR– 

NYSEArca–2008–13). 

4See Securities Exchange Act Release No. 55733 

(May 10, 2007), 72 FR 27602 (May 16, 2007) (SR– 

Amex–2007–34) (the ‘‘May 2007 Amex Order’’) and 

Securities Exchange Act Release No. 56629 (October 

9, 2007), 72 FR 58689 (October 16, 2007) (SR– 

Amex–2007–87) (the ‘‘October 2007 Amex Order’’). 

These two orders approved changes to Section 

107A of the Amex Company Guide. 

designated class is delisted by the 

designating exchange but continues to 

trade on at least one other exchange, any 

additional series for the class which are 

added from that point forward would 

again be subject to the proposed 

exercise price range limitations, unless 

the class is subsequently designated by 

another exchange. The proposal also 

provides an exchange with a procedure 

to request, if conditions warrant, 

additional case-by-case exceptions even 

when it has already so designated five 

underlying securities. 

In addition, a procedure is created for 

a Series Listing Exchange to request an 

exemption, on a case-by-case basis, from 

the 100 percent range limitation, 

whereby, if unanimously agreed upon 

by all exchanges that list the particular 

options class, the Series Listing 

Exchange may list options series with 

strike prices that are more than 100 

percent above or below the price of the 

underlying security.6

The proposal would not allow for the 

listing of options series that would 

otherwise be prohibited by the rules of 

a Series Selecting Exchange or the Plan, 

nor does it restrict the ability of an 

exchange to list options series that have 

been properly listed by another 

exchange. The proposal also expressly 

eliminates the applicability of the strike 

price range limitations with regard to: 

(1) The listing of $1 strike prices in 

option classes participating in the $1 

Strike Program, where instead, the 

Series Selecting Exchange would be 

permitted to list $1 strike prices to the 

fullest extent as permitted under its 

rules for the $1 Strike Program; and (2) 

the listing of series of Flexible Exchange 

Options. 

III. Discussion 

After careful review, the Commission 

finds that Amendment No. 3 is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder.7 Specifically, the 

Commission finds that Amendment No. 

3 to the OLPP is consistent with section 

11A of the Act 8 and Rule 608 

thereunder 9 in that it is necessary or 

appropriate in the public interest, for 

the protection of investors and the 

maintenance of fair and orderly markets, 

to remove impediments to, and perfect 

the mechanisms of, a national market 

system. 

The Commission notes that according 

to one study cited by the Plan Sponsor 

exchanges, the options industry would 

expect an approximate four percent 

reduction in the number of series 

traded, with only a nominal reduction 

in trading volume, upon 

implementation of the changes 

proposed in this Amendment.10

Therefore, the Commission believes that 

adopting uniform objective standards to 

the range of options series exercise (or 

strike) prices available for trading on the 

Plan Sponsor exchanges should reduce 

the number of option series available for 

trading, and thus should reduce 

increases in the options quote message 

traffic because market participants will 

not be submitting quotes in those series. 

Accordingly, the Commission believes 

that it is necessary or appropriate in the 

public interest, for the protection of 

investors and the maintenance of fair 

and orderly markets, to remove 

impediments to, and perfect 

mechanisms of, a national market 

system to approve Amendment No. 3 to 

the OLPP. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 11A of the Act,11 and Rule 608 

thereunder,12 that proposed 

Amendment No. 3 to the OLPP be, and 

it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20538 Filed 8–25–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60514; File No. SR– 

NASDAQ–2009–075] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Order Granting Accelerated 

Approval of a Proposed Rule Change 

Relating to the Listing Standards for 

Selected Equity-Linked Debt Securities 

August 17, 2009. 

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 August 6, 

2009, The NASDAQ Stock Market LLC 

(‘‘Nasdaq’’ or the ‘‘Exchange’’) 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 Nasdaq. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons and is 

approving the proposed rule change on 

an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Nasdaq is proposing to amend Nasdaq 

Rule 5715, the Exchange’s listing 

standards for selected equity-linked 

debt securities (‘‘SEEDS’’). The text of 

the proposed rule change is available 

from Nasdaq’s Web site at http:// 

nasdaq.cchwallstreet.com, at Nasdaq’s 

principal office, 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, 

Nasdaq included statements concerning 

the purpose of, and basis for, the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item III below, and 

is set forth in Sections A, B, and C 

below. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to amend 

Nasdaq Rule 5715, the Exchange’s 

listing standards for SEEDS, to provide 

for greater flexibility in the listing 

criteria for such securities, as set forth 

below. The proposed substantive rule 

changes herein are based upon the rules 

of NYSE Arca, Inc. (‘‘NYSEArca’’) 3 and 

the American Stock Exchange LLC 

(‘‘Amex’’).4 Similar proposed rule 

changes by other national securities 


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Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 43175 

5See Securities Exchange Act Release No. 56924 

(December 7, 2007), 72 FR 70918 (December 13, 

2007) (SR–NYSEArca–2007–98) (amending Rule 

5.2(j)(2) (‘‘Equity-Linked Notes’’)); Securities 

Exchange Act Release No. 56906 (December 5, 

2007), 72 FR 70636 (December 12, 2007) (SR– 

NYSEArca–2007–103) (amending Rule 5.2(j)(1) 

(‘‘Other Securities’’)); and Securities Exchange Act 

Release No. 56593 (October 1, 2007), 72 FR 57362 

(October 9, 2007) (SR–NYSEArca–2007–96) 

(amending Rule 5.2(j)(6) (‘‘Equity Index-Linked 

Securities, Commodity-Linked Securities and 

Currency-Linked Securities’’)). 

6See the May 2007 Amex Order, Note 4, supra. 

7See the May 2007 Amex Order (approving no 

minimum holders requirement if there is a weekly 

redemption right) and the October 2007 Amex 

Order (approving no minimum public distribution 

requirement if there is a weekly redemption right), 

Note 4, supra. 

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

9 15 U.S.C. 78f(b)(5). 

exchanges have been approved recently 

by the Commission.5

Nasdaq Rule 5715 currently provides 

that an issue of SEEDS must have a 

minimum public distribution of 

1,000,000 notes with a minimum of 400 

public note-holders, except, if traded in 

thousand dollar denominations, then no 

minimum number of holders. The 

Exchange proposes to expand the 

exception to provide that, if the notes 

are traded in thousand dollar 

denominations, then there is also no 

minimum public distribution 

requirement.6 The Exchange notes that, 

without the exception to the 1,000,000 

publicly distributed notes requirement, 

the Exchange would be unable to list 

issues in thousand dollar 

denominations having a market value of 

less than $1 billion. The Exchange 

believes that the proposed exception is 

a reasonable accommodation for those 

issuances in $1,000 denominations. 

The Exchange proposes to further 

amend Nasdaq Rule 5715 to provide 

that there are no minimum public 

distribution and holders requirements if 

the notes are redeemable at the option 

of the holders thereof on at least a 

weekly basis (regardless of whether the 

notes are traded in thousand dollar 

denominations).7 The Exchange believes 

that a weekly redemption right will 

ensure a strong correlation between the 

market price of the notes and the 

performance of the underlying index, as 

holders will be unlikely to sell their 

notes for less than their redemption 

value if they have a weekly right to 

redeem such notes for their full value. 

In addition, in the case of certain notes 

with a weekly redemption feature the 

issuer may have the ability to issue new 

notes from time to time at market prices 

prevailing at the time of sale, at prices 

related to market prices, or at negotiated 

prices. This provides a ready supply of 

new notes, thereby lessening the 

possibility that the market price of such 

notes will be affected by a scarcity of 

available notes for sale. The Exchange 

believes that the weekly redemption 

right also assists in maintaining a strong 

correlation between the market price 

and the indicative value of the notes, as 

investors will be unlikely to pay more 

than the indicative value in the open 

market if they can acquire notes from 

the issuer at that price. 

The Exchange believes that the ability 

to list SEEDS with these characteristics 

without any minimum public 

distribution or holders requirements is 

important to the successful listing of 

such notes. Issuers issuing these types 

of notes generally do not intend to do 

so by way of an underwritten offering. 

Rather, the distribution arrangement is 

analogous to that of an exchange traded 

fund issuance, in that the issue is 

launched without any significant 

distribution event and the float 

increases over time as investors 

purchase additional securities from the 

issuer at the then indicative value. 

Investors will generally seek to purchase 

the notes at a point when the underlying 

index is at a level that they perceive as 

providing an attractive growth 

opportunity. In the context of such a 

distribution arrangement, it is difficult 

for an issuer to guarantee its ability to 

sell a specific number of units on the 

listing date. However, the Exchange 

believes that this difficulty in ensuring 

the sale of 1,000,000 notes and 400 

public holders on the listing date is not 

indicative of a likely long-term lack of 

liquidity in the notes or, for the reasons 

set forth in the prior paragraph, of a 

difficulty in establishing a pricing 

equilibrium in the notes or a successful 

two-sided market. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 8 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 9

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 

proposed rule change is consistent with 

that requirement in that conforming the 

listing standard for SEEDS enables 

continued multiple listing and trading 

of SEEDS across multiple venues within 

the national market system. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Nasdaq 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 

Written comments were neither 

solicited nor received. 

III. 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–NASDAQ–2009–075 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–NASDAQ–2009–075. 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 inspection and copying 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 Nasdaq. All 


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43176 Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 

10 In approving this rule change, the Commission 

notes that it has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78s(b)(2). 

13See Securities Exchange Act Release No. 55733 

(May 10, 2007), 72 FR 27602 (May 16, 2007) (SR– 

Amex–2007–34); Securities Exchange Act Release 

No. 56629 (October 9, 2007), 72 FR 58689 (October 

16, 2007) (SR–Amex–2007–87); and Securities 

Exchange Act Release No. 56924 (December 7, 

2007), 72 FR 70918 (December 13, 2007) (SR– 

NYSEArca–2007–98) (amending Rule 5.2(j)(2) 

(‘‘Equity-Linked Notes’’)). 

14 15 U.S.C. 78s(b)(2). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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–NASDAQ–2009–075 and 

should be submitted on or before 

September 16, 2009. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.10 The 

Commission believes that the proposal 

is consistent with Section 6(b)(5) 11 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 

Commission believes that the proposed 

rule change should enhance 

competition among issuers, to the 

benefit of the market, by expanding the 

listing and trading of SEEDS. 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,12 for approving the proposed rule 

change prior to the 30th day after the 

date of publication of the notice of filing 

thereof in the Federal Register. The 

proposal seeks to conform the 

Exchange’s rules for SEEDS to the rules 

of other exchanges that have previously 

been approved by the Commission.13

Therefore, the Commission does not 

believe that the Exchange’s proposal 

raises any novel regulatory issues. The 

Commission believes that accelerating 

approval of this proposal should benefit 

investors by creating, without undue 

delay, additional competition in the 

market for these products. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,14 that the 

proposed rule change (SR–NASDAQ– 

2009–075) be, and it hereby is, approved 

on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20531 Filed 8–25–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60520; File No. SR– 

NYSEAmex–2009–45] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Notice of Filing of a 

Proposed Rule Change Amending Rule 

476A—Imposition of Fines for Minor 

Violations of Rules 

August 18, 2009. 

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 July 29, 

2009, NYSE Amex LLC (‘‘NYSE Amex’’ 

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 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 

Rule 476A—Imposition of Fines for 

Minor Violations of Rules. The text of 

the proposed rule change is attached as 

Exhibit 5 to the 19b–4 form. A copy of 

this filing is available on the Exchange’s 

Web site at http://www.nyse.com, at the 

Exchange’s principal office 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 NYSE Amex Minor Rule Plan 

(‘‘MRP’’) fosters compliance with 

applicable rules and also helps to 

reduce the number and extent of rule 

violations committed by Amex Options 

Trading Permit (‘‘ATP’’) Holders and 

associated persons. The prompt 

imposition of a financial penalty helps 

to quickly educate and improve the 

conduct of ATP Holders and associated 

persons that have engaged in 

inadvertent or otherwise minor 

violations of the Exchange’s rules. By 

promptly imposing a meaningful 

financial penalty for such violations, the 

MRP focuses on correcting conduct 

before it gives rise to more serious 

enforcement action. 

The Exchange is now proposing to 

incorporate additional violations into 

the MRP, these violations include (i) 

trading in restricted classes, (ii) failure 

to report position and account 

information and (iii) failure to complete 

mandatory annual training. The 

Exchange is also proposing to increase 

fine levels for certain violations 

presently included in the MRP. The 

increases fine levels will be applicable 

for violations of due diligence, priority 

rules and order exposure rules. A brief 

description of each proposed changes is 

shown below. 

Proposed Rules 476A Part 1C(i)(37) and 

476A Part 1C(iii)(i)(37) 

NYSE Amex Rules 916 and 916C 

provide, in part, that the Exchange may 

prohibit any opening purchase 

transactions in a series of options to the 

extent it deems such action necessary or 

appropriate. Accordingly, ATP Holders 

effecting opening transactions in 

restricted series, inconsistent with the 

terms of any such restriction, will be 

considered to be in violation of Rule 916 

or 916C. The Exchange is proposing to 

incorporate violations related to trading 

in restricted series into the MRP under 

Rules 476A Part 1C(i)(37). 

The Exchange is proposing to 

implement a fine of $1,000 for the first 

violation in a rolling twenty-four month 

period. A second violation within the 

same period would be allocated a 


jlentini on DSKJ8SOYB1PROD with NOTICES