Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 44415 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4FLEX Options provide investors with the ability 

to customize basic option features including size, 

expiration date, exercise style, and certain exercise 

prices. FLEX Options can be FLEX Index Options 

or FLEX Equity Options. FLEX Index Options Series 

may be approved and open for trading on any index 

that has been approved for Non-FLEX Options 

trading on the Exchange. FLEX Equity Options may 

be on underlying securities that have been 

approved by the Exchange in accordance with 

NYSE Arca Rule 5.3, which includes but is not 

limited to stock options and exchange-traded fund 

options. Both FLEX Index Options and FLEX Equity 

Options are subject to the FLEX rules in Section 4. 

5For example, under the current rule, a FLEX 

Option could expire on the Tuesday before 

Expiration Friday, but could not expire on the 

Wednesday or Thursday before Expiration Friday. 

Similarly, a FLEX Option could expire on the 

Wednesday after Expiration Friday, but could not 

expire on the Monday or Tuesday after Expiration 

Friday. This restriction is hereinafter referred to as 

the ‘‘three business day’’ expiration restriction. 

6See NYSE Arca Rule 5.35(b). 

7Position Limits for Non-FLEX equity options are 

governed by NYSE Arca Rule 6.8; Exercise Limits 

for Non-FLEX equity options are governed by NYSE 

Arca Rule 6.9; Position Limits for Non FLEX index 

options are governed by Rules 5.15 and 5.16; 

Exercise Limits for Non Flex index options are 

governed by Rule 5.18. 

8The expiration of the contracts for stock index 

futures, stock index options, and stock options all 

expire on the same days occurring on the third 

Friday of March, June, September, and December 

(which is referred to as ‘‘triple witching’’). The 

Exchange’s proposed limitations on p.m. exercise 

settlement values and exercise settlement values 

based on a specified average would apply during 

triple witching expirations, as well as on all other 

Expiration Fridays. 

FINRA’s intent when it filed SR–NASD– 

2007–018. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–FINRA– 

2009–045) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20783 Filed 8–27–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60549; File No. SR– 

NYSEArca–2009–75] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Arca, Inc. Amending Permissible 

Expiration Dates for Flexible Exchange 

Options 

August 20, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on August 

12, 2009, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or 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 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

rules regarding permissible expiration 

dates for Flexible Exchange Options 

(‘‘FLEX Options’’).4 The text of the 

proposed rule change 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this proposal is to 

correct certain cross-references and 

modify the permissible expiration dates 

for FLEX Options. These options are 

governed by Flexible Exchange Options, 

Section 4 pursuant to the Rules of NYSE 

Arca, Inc. Under current NYSE Arca 

Rule 5.32, FLEX options may not expire 

on any business day that falls on, or 

within two business days of, a third 

Friday-of-the-month expiration day for 

any Non-FLEX Options (an ‘‘Expiration 

Friday’’).5 However, subject to 

aggregation requirements 6 for cash 

settled options, the current FLEX Rules 

do permit the expiration of FLEX 

Options on the same day that Non-FLEX 

quarterly index options (‘‘QIX’’) expire. 

The Exchange is now proposing to 

eliminate the expiration date restriction 

so that FLEX Options may expire on any 

given business day. Although the 

expiration date restrictions would be 

eliminated, the Exchange notes that 

position and exercise limits under 

applicable NYSE Arca rules will 

continue to apply. FLEX Index Options 

remain subject to position limits under 

NYSE Arca Rules 6.8 and 5.35, as 

applicable. Additionally, all FLEX 

Options remain subject to the position 

reporting requirements of NYSE Arca 

Rule 6.8. Moreover, the Exchange has 

the authority, pursuant to NYSE Arca 

Rule 5.25, to impose additional margin 

requirements as deemed advisable. 

Beyond the above described position 

limit and reporting requirements for 

FLEX Options that expire on Expiration 

Friday, the proposed rule change 

includes an aggregation requirement 

under NYSE Arca Rule 5.35 for position 

limit purposes. Specifically, for as long 

as the options positions remain open, 

positions in FLEX Options that expire 

on Expiration Friday shall be aggregated 

with positions in Non-FLEX options on 

the same underlying (e.g., the same 

underlying security in the case of a 

FLEX Equity Option and the same 

underlying index in the case of a FLEX 

Index Option) (referred to as 

‘‘Comparable Non-FLEX options’’). Such 

FLEX Options and comparable NonFLEX options would be subject to the 

position and exercise limits that are 

applicable to the Non-FLEX Options.7

The aggregation requirement would 

apply to both cash and physically 

settled options. 

In addition, in the case of FLEX Index 

Options only, the proposed rule change 

provides that FLEX Index Options 

expiring on or within two business days 

of an Expiration Friday may not have an 

exercise settlement value on the 

expiration date determined by reference 

to the closing price of the index or 

specified averages. Therefore, the 

exercise settlement value on such 

expiration dates may only be 

determined by a.m. settlement values. 

These limitations on exercise settlement 

value calculations are intended to serve 

as a safeguard against potential adverse 

effects that might be associated with 

triple witching.8

In conjunction with the elimination of 

the expiration date restriction, the 

proposed rule change also states that, 

provided the options on an underlying 

security or index are otherwise eligible 

for FLEX trading, FLEX Options will be 

permitted in puts and calls that do not 

have the same exercise style, same 

expiration date and same exercise price 


hsrobinson on DSK69SOYB1PROD with NOTICES
44416 Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 

9See NYSE Arca Rules 1.1(p) and 1.1(q). 

10Through a Regulatory Services Agreement 

(‘‘RSA’’) between NYSE Regulation, Inc. (‘‘NYSE 

Regulation’’) and NYSE Arca, staff of NYSE 

Regulation conducts, among other things, 

surveillances of the NYSE Arca options trading 

platform for purposes of monitoring compliance 

with the relevant trading rules by NYSE Arca 

participants. NYSE Arca represents that, through 

this RSA, there is appropriate surveillance in place 

to monitor transactions in FLEX options. 

11 15 U.S.C. 78s(b)(3)(A)(iii). 

12 17 CFR 240.19b–4(f)(6). 

13The Exchange has fulfilled this five day 

requirement. 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). 

16 Id. 

17For purposes only of waiving the operative date 

of this proposal, the Commission has considered 

the proposed rule’s impact on efficiency, 

competition, and capital formation. See 15 U.S.C. 

78c(f). See also 17 CFR 200.30–3(a)(59). 

18Securities Exchange Act Release No. 59417 

(February 18, 2009), 74 FR 8591 (February 25, 2009) 

(SR–CBOE–2008–115). 

as Non-FLEX Options that are already 

available for trading on the same 

underlying security or index. The 

proposed rule change also provides that 

FLEX options will be permitted before 

(but not after) the options are listed for 

trading as Non-FLEX Options. Once and 

if an option series is listed for trading 

as a Non-FLEX Option series, (i) all 

existing open positions established 

under the FLEX Trading procedures 

shall be fully fungible with transactions 

in the respective Non-FLEX Options 

series, and (ii) any further trading in the 

series would be as Non-FLEX options 

subject to the Non-FLEX trading 

procedures and rules, as governed by 

Section 4. 

For example, a FLEX trader could 

establish a FLEX Options position in a 

European-style, a.m.-settled MiniNasdaq 100 Index (‘‘MNX’’) 210 Call 

Option Series with an expiration of 

August 19, 2011 (which will be an 

Expiration Friday). In such instance, 

once and if the Non-FLEX, Europeanstyle, a.m.-settled MNX 210 Call option 

series that expires on August 19, 2011 

is listed for trading, the established 

FLEX Option position would be fully 

fungible with transactions in the NonFLEX Option series. Any further trading 

in the series would be as Non-FLEX 

Options subject to the Non-FLEX 

trading procedures. 

The Exchange will report any undue 

effects or unanticipated consequences 

that may occur due to the elimination of 

the blackout period. 

NYSE Arca believes that expanding 

the eligible dates for FLEX expirations 

is important and necessary to the 

Exchange’s efforts to create a product 

and market that provides OTP Holders 9

and investors interested in FLEX-type 

options with an improved but 

comparable alternative to the over-thecounter (‘‘OTC’’) market in customized 

options, which can take on contract 

characteristics similar to FLEX options 

but are not subject to the same 

restrictions (such as the three business 

day expiration restriction or the p.m. 

settlement restriction).10 By expanding 

the eligible expiration dates for FLEX 

Options, market participants will now 

have greater flexibility in determining 

whether to execute their customized 

options in an exchange environment or 

in the OTC market. NYSE Arca believes 

market participants benefit from being 

able to trade these customized options 

in an exchange environment in several 

ways, including, but not limited to, the 

following: (1) Enhanced efficiency in 

initiating and closing out positions; (2) 

increased market transparency; and (3) 

heightened contra-party 

creditworthiness because of the role of 

The Options Clearing Corporation 

(‘‘OCC’’) as issuer and guarantor of 

FLEX Options. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is found in 

Section 6(b)(5), in that the proposed rule 

change is designed to promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest, in that the proposed rule 

change will provide OTP Firms and 

OTP Holders and investors with 

additional opportunities to trade 

customized options in an exchange 

environment. 

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 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 11 and Rule 

19b–4(f)(6) thereunder.12 Because the 

foregoing rule does not (i) significantly 

affect the protection of investors or the 

public interest; (ii) impose any 

significant burden on competition; and 

(iii) become operative for 30 days from 

the date on which it was filed, or such 

shorter time as the Commission may 

designate if consistent with the 

protection of investors and the public 

interest, provided that the selfregulatory organization has given the 

Commission written notice of its intent 

to file 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,13 the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 14 and 

Rule 19b–4(f)(6) thereunder.15

Under Rule 19b–4(f)(6) of the Act,16 a 

proposal does not become operative for 

30 days after the date of its filing, or 

such shorter time as the Commission 

may designate if consistent with the 

protection of investors and the public 

interest. 

The Exchange has requested that the 

Commission waive the 30-day operative 

date. The Exchange believes that waiver 

of the 30-day operative date will: (i) 

Permit the Exchange to offer investors 

additional opportunities to trade 

customized options in response to 

recent member requests; and (ii) level 

the current competitive landscape by 

permitting the Exchange to implement 

changes similar to those recently 

implemented by another self-regulatory 

organization. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest, and 

thus designates the proposal as 

operative upon filing.17 The 

Commission notes that the Exchange’s 

proposal is based on a similar proposed 

rule change adopted by the Chicago 

Board Options Exchange.18 That 

proposal was subject to full notice and 

comment and no comments were 

received. Based on this, the Commission 

believes that it is appropriate to 

designate the proposal operative upon 

filing. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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, 


hsrobinson on DSK69SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 44417 

19 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4A Managed Fund Share is a security that 

represents an interest in an investment company 

registered under the Investment Company Act of 

1940 (15 U.S.C. 80a) (‘‘1940 Act’’) organized as an 

open-end investment company or similar entity that 

invests in a portfolio of securities selected by its 

investment adviser consistent with its investment 

objectives and policies. In contrast, an open-end 

investment company that issues Investment 

Company Units, listed and traded on the Exchange 

under NYSE Arca Equities Rule 5.2(j)(3), seeks to 

provide investment results that correspond 

generally to the price and yield performance of a 

specific foreign or domestic stock index, fixed 

income securities index or combination thereof. 

5The Commission previously approved listing 

and trading on the Exchange of the following 

actively managed funds under NYSE Arca Equities 

Rule 8.600. See Securities Exchange Act Release 

No. 57619 (April 4, 2008), 73 FR 19544 (April 10, 

2008) (SR–NYSEArca–2008–25) (order approving 

Rule 8.600 and Exchange listing and trading of 

PowerShares Active AlphaQ Fund, PowerShares 

Active Alpha Multi-Cap Fund, PowerShares Active 

Mega-Cap Portfolio and PowerShares Active Low 

Duration Portfolio); Securities Exchange Act 

Release No. 57801 (May 8, 2008), 73 FR 27878 (May 

14, 2008) (SR–NYSEArca–2008–31) (order 

approving Exchange listing and trading of twelve 

actively-managed funds of the WisdomTree Trust); 

Securities Exchange Act Release No. 59826 (April 

28, 2009), 74 FR 20512 (May 4, 2009) (SR– 

NYSEArca–2009–22) (order approving listing and 

trading of Grail American Beacon Large Cap Value 

ETF). 

6The Trust is registered under the 1940 Act. On 

June 8, 2009, the Trust filed with the Commission 

post-effective Amendment No. 1 to its registration 

Continued 

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–NYSEArca–2009–75 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–NYSEArca–2009–75. 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 20549–1090 on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of the filing will also be 

available for inspection and copying at 

NYSE Arca’s principal office and on its 

Internet Web site at http:// 

www.nyse.com. 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– 

NYSEArca–2009–75 and should be 

submitted on or before September 18, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20785 Filed 8–27–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60552; File No. SR– 

NYSEArca–2009–74] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Relating to Listing Four 

Grail Advisors RP Exchange-Traded 

Funds 

August 20, 2009. 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 2 and Rule 19b–4 

thereunder,3 notice is hereby given that, 

on August 12, 2009, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or 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 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 Substance of 

the Proposed Rule Change 

Pursuant to the provisions of Section 

19(b)(1) of the Act, NYSE Arca, through 

its wholly-owned subsidiary NYSE Arca 

Equities, Inc. (‘‘NYSE Arca Equities’’ or 

the ‘‘Corporation’’), proposes to list and 

trade the following Grail Advisors 

actively managed exchange-traded 

funds, or ‘‘ETFs’’, under NYSE Arca 

Equities Rule 8.600 (‘‘Managed Fund 

Shares’’): RP Growth ETF, RP Focused 

Large Cap Growth ETF, RP Technology 

ETF and the RP Financials ETF (each an 

‘‘ETF’’ or ‘‘Fund’’ and collectively the 

‘‘ETFs or ‘‘Funds’’), each of which is a 

series of Grail Advisors ETF Trust 

(‘‘Trust’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nyx.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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade the following Managed Fund 

Shares 4 (‘‘Shares’’) under NYSE Arca 

Equities Rule 8.600: RP Growth ETF, RP 

Focused Large Cap Growth ETF, RP 

Technology ETF and the RP Financials 

ETF.5 The Shares will be offered by 

Grail Advisors ETF Trust (the ‘‘Trust’’), 

a statutory trust organized under the 

laws of the State of Delaware and 

registered with the Commission as an 

open-end management investment 

company.6 Grail Advisors, LLC (the 


hsrobinson on DSK69SOYB1PROD with NOTICES