Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 43191 

38Section 6 of the Plan permits exceptions to the 

Plan’s locked and crossed market rules as may be 

contained in the rules of a Participant approved by 

the Commission. 

39 15 U.S.C. 78f(b)(5). 

40See Plan Approval, supra, note 5. 

41The Commission notes that any Participating 

Options Exchange that wishes to utilize such order 

types in a manner that would result in a TradeThrough would need to separately request an 

exemption from the Plan for such use. 

42The Commission notes that the rules contained 

in Proposed Nasdaq Chapter XII, Section 4 are not 

required by the Plan, but rather are rules proposed 

by the Exchange in order to facilitate the 

participation in the Plan of certain exchanges 

during an initial transition period. 

43 15 U.S.C. 78f(b)(5). 

44 15 U.S.C. 78s(b)(2). 

45 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 Amex Rule 915, 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 15. 

the Exchange’s general rule relating to 

locked and crossed markets.38 These 

exceptions would be similar to 

analogous certain trade-through 

exceptions under proposed Nasdaq 

Chapter XII, Section 2(b), and relate to 

when the Exchange is experiencing 

systems issues, when there exists a 

crossed market, and when a member 

simultaneously routes ISOs against the 

full displayed size of any locked or 

crossed Protected Bid or Protected Offer. 

The Commission believes that the 

Exchange’s proposed rules relating to 

locked and crossed markets are 

consistent with the Plan and the Act 

and should help ensure that the display 

of locked or crossed markets will be 

limited and that any such display will 

be promptly reconciled. The 

Commission also believes that each of 

the proposed exceptions to locked and 

crossed markets relate to circumstances 

when it is appropriate to permit a 

limited, narrow exception to the general 

locked and crossed market rule. 

Therefore, the Commission finds that 

Exchange’s rule regarding locked and 

crossed markets appropriately 

implements Section 6 of the Plan, and 

is consistent with Section 6(b)(5) of the 

Act 39 which requires, among other 

things, that the rules of a national 

securities exchange be 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 also finds that 

proposed Nasdaq Chapter XII, Section 4, 

which facilitates the participation of 

certain Participating Options Exchanges 

who may require the use of P/A Orders 

and Principal Orders after 

implementation of the Plan, is 

consistent with the Act. Although the 

Commission has already approved the 

Plan,40 the Commission also recognizes 

that there may be one or more 

Participating Options Exchanges that 

may require a temporary transition 

period during which they may want to 

continue to utilize these order types that 

exist currently under the Old Plan.41

The Exchange and each of the other 

Participating Options Exchanges have 

proposed substantially identical 

temporary provisions to accommodate 

this possibility.42 Thus, the Commission 

finds that the proposed rule relating to 

the Exchange’s receipt and handling of 

P/A Orders and Principal Orders, and 

imposing certain obligations on the 

Exchange with respect to such orders 

that are similar to those that exist under 

the Old Plan, is appropriate and 

consistent with Section 6(b)(5) of the 

Act 43 which requires, among other 

things, that the rules of a national 

securities exchange be 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. 

Finally, the Commission finds that 

Nasdaq’s proposed amendments to 

certain other Nasdaq rules to modify 

and/or delete language that is no longer 

necessary under the Plan are 

appropriate and consistent with the Act 

and the Plan. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,44 that the 

proposed rule change (SR–NASDAQ– 

2009–056), as modified by Amendment 

No. 1, be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.45

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20535 Filed 8–25–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60548; File No. SR– 

NYSEAMEX–2009–44] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

AMEX LLC Amending the 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 

7, 2009, NYSE Amex LLC (‘‘NYSE 

Amex’’ 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 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 

modify the permissible expiration dates 

for FLEX Options. These options are 

governed by Trading of Option 

Contracts, Section 15 (Flexible 


jlentini on DSKJ8SOYB1PROD with NOTICES
43192 Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 

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 Amex Rule 906G(a)(ii). 

7Position Limits for Non-FLEX equity options are 

governed by Rule 904; Exercise Limits for NonFLEX equity options are governed by Rule 905. 

Position Limits for Non FLEX index options are 

governed by Rule 904 and 904C; Exercise Limits for 

Non Flex index options are governed by Rule 905 

and 905C. 

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. 

9Through a Regulatory Services Agreement 

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

Regulation’’) and NYSE Amex, staff of NYSE 

Regulation conducts, among other things, 

surveillances of the NYSE Amex options trading 

platform for purposes of monitoring compliance 

with the relevant trading rules by NYSE Amex 

participants. NYSE Amex represents that, through 

this RSA, there are appropriate surveillances in 

place to monitor transactions in FLEX options. 

10 15 U.S.C. 78f(b). 

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

Exchange Options) pursuant to the 

Rules of NYSE Amex LLC. Under 

current NYSE Amex Rule 903G, FLEX 

options may not expire on any business 

day that fall 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 Amex rules will 

continue to apply. FLEX Index Options 

remain subject to position limits under 

Rules 904 and 904C, as applicable. 

Additionally, all FLEX Options remain 

subject to the position reporting 

requirements of NYSE Amex Rule 906. 

Moreover, the Exchange has the 

authority, pursuant to Rule 461, 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 Amex Rule 906G 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 

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 900NY. 

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 Amex 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 ATP Holders 

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).9 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 Amex 

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 proposed rule change is 

consistent with Section 6(b) 10 of the 

Securities Exchange Act of 1934 (the 

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

objectives of Section 6(b)(5) 11 in 

particular in that it is designed to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

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. The Exchange believes 

that the proposed rule change will 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 164 / Wednesday, August 26, 2009 / Notices 43193 

12See NYSE Amex Rule 900.2NY(5). 

13 15 U.S.C. 78s(b)(3)(A)(iii). 

14 17 CFR 240.19b–4(f)(6). 

15The Exchange has fulfilled this five day 

requirement. 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(6). 

18 Id. 

19For 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). 

20Securities Exchange Act Release No. 59417 

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

(SR–CBOE–2008–115). 21 17 CFR 200.30–3(a)(12). 

provide ATP Holders 12 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 13 and Rule 

19b–4(f)(6) thereunder.14 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,15 the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 16 and 

Rule 19b–4(f)(6) thereunder.17

Under Rule 19b–4(f)(6) of the Act,18 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.19 The 

Commission notes that the Exchange’s 

proposal is based on a similar proposed 

rule change adopted by the Chicago 

Board Options Exchange.20 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, 

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–2009–44 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–2009–44. 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 

the NYSE’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– 

NYSEAMEX–2009–44 and should be 

submitted on or before September 16, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20545 Filed 8–25–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60542; File No. SR–NYSE– 

2009–60] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Approving a Proposed Rule Change in 

Connection With the Proposal of NYSE 

Euronext To Require That at Least 

Three-Fourths of Its Directors Satisfy 

Independence Requirements 

August 19, 2009. 

I. Introduction 

On June 23, 2009, the New York Stock 

Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 


jlentini on DSKJ8SOYB1PROD with NOTICES