47032 Federal Register / Vol. 74, No. 176 / Monday, September 14, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5FLEX Quotes responsive to a FLEX Request for 

Quote (‘‘RFQ’’) have different parameters that were 

not changed by the pilot program proposal. See 

Phlx Rule 1079(a)(8)(C). 

6FLEX Equity Options are flexible exchangetraded options contracts that overlie equity 

securities. FLEX Equity Options provide investors 

with the ability to customize basic option features 

including size, expiration date, exercise style, and 

certain exercise prices. FLEX Equity Options (as 

also FLEX index options) may have expiration dates 

within five years. See Phlx Rule 1079. 

7See Securities Exchange Act Release No. 57824 

(May 15, 2008), 73 FR 29805 (May 22, 2008) (SR– 

Phlx–2008–35) (notice of filing and immediate 

effectiveness establishing the Pilot Program). 

8See Securities Exchange Act Release No. 57824 

(May 15, 2008), 73 FR 29805 (May 22, 2008) (SR– 

Phlx–2008–35) (notice of filing and immediate 

effectiveness establishing the Pilot Program). The 

filing also modified the minimum value size for an 

opening transaction in a currently-opened FLEX 

Equity series (other than FLEX Quotes responsive 

to a RFQ) to the lesser of 100 contracts or the 

number of contracts overlying $1 million in the 

underlying securities. Other options exchanges 

have established FLEX pilot programs that are 

similar to the Exchange’s. See, e.g., Securities 

Exchange Act Release No. 57429 (March 4, 2008), 

73 FR 13058 (March 11, 2008) (SR–CBOE–2006–36) 

(approval order). 

when no registration statement was filed 

or in effect with respect to those 

securities and no exemption from 

registration was available. The law 

judge ordered Schoemann to cease and 

desist from committing or causing any 

violations or future violations of 

Sections 5(a) and 5(c) of the Securities 

Act, and ordered Schoemann to disgorge 

$967,901 in profits, plus prejudgment 

interest, from his sales of the securities. 

Among the issues likely to be argued 

are 

1. Whether Schoemann’s sales of the 

securities at issue violated the Securities 

Act; and 

2. Whether sanctions should be 

imposed in the public interest. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(3), (5), (7), 9(ii) 

and (10), permit consideration of the 

scheduled matters at the closed meeting. 

Commissioner Paredes, as duty 

officer, voted to consider the items 

listed for the closed meeting in a closed 

session. 

The subject matter of the September 

16, 2009 closed meeting will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; 

Other matters relating to enforcement 

proceedings; and 

An opinion. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: September 9, 2009. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–22105 Filed 9–10–09; 11:15 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60627; File No. SR–Phlx– 

2009–78] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to an 

Extension of the FLEX Minimum Size 

Pilot Program 

September 4, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1, and Rule 19b–4 2 thereunder, 

notice is hereby given that on 

September 3, 2009, NASDAQ OMX 

PHLX, Inc. (‘‘Phlx’’ or ‘‘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 the Exchange. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 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 

Phlx rules to amend its Rule 1079 (FLEX 

Index, Equity and Currency Options), to 

amend its Rule 1079 (FLEX Index, 

Equity and Currency Options), [sic] to 

extend through September 4, 2010, the 

Exchange’s pilot program that reduced 

from 250 contracts to 150 contracts the 

minimum value size for an opening 

transaction (other than FLEX Quotes 

responsive to a FLEX Request for 

Quotes) 5 in any FLEX Equity Option 6

series in which there is no open interest 

at the time a FLEX Request for Quotes 

(‘‘RFQ’’) is submitted (the ‘‘Pilot 

Program’’).7

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nasdaqtrader.com/ 

micro.aspx?id=PHLXRulefilings, at the 

principal office of the Exchange, 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 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to extend the Pilot Program 

through September 4, 2010. 

On or about May 15, 2008, the 

Exchange filed SR–Phlx-2008–35 with 

the Commission to establish the Pilot 

Program. The Pilot Program reduced the 

minimum value size for an opening 

transaction (other than FLEX Quotes 

responsive to a FLEX RFQ) in any FLEX 

Equity Option series in which there is 

no open interest at the time an RFQ is 

submitted.8 The proposed extension of 

the Pilot Program for opening FLEX 

option transactions should provide 

members that use FLEX Equity Options 

greater flexibility in structuring the 

terms of such options to better comport 

with the particular needs of the 

members and their customers. 

Prior to the Pilot Program, Phlx Rule 

1079(a)(8)(A) set the minimum opening 

transaction value size in the case of a 

FLEX Equity Option in a newly 


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Federal Register / Vol. 74, No. 176 / Monday, September 14, 2009 / Notices 47033 

9Under the Pilot Program, an opening transaction 

in a FLEX Equity series in a stock priced at 

approximately $66.67 or more would reach the $1 

million limit before it would reach the contract size 

limit, i.e., 150 contracts times the multiplier (100) 

times the stock price ($66.67) equals just over $1 

million in underlying value. For a FLEX Equity 

series in a stock priced at less than $66.67, the 150 

contract size limit would apply. 

10Specifically, for FLEX Equity Options the 

minimum value size for a transaction in any 

currently-opened FLEX series is the lesser of 100 

contracts or the number of contracts overlying $1 

million in the underlying securities; or the lesser of 

25 contracts or the remaining size in the case of a 

closing transaction. Additionally, the minimum 

value size for a FLEX Quote entered in response to 

a RFQ in FLEX Equity Options is the lesser of 25 

contracts or the remaining size in a closing 

transaction. See Phlx Rules 1079(a)(8)(B)(ii) and 

1079(a)(8)(C)(ii). 

11The existing customer base for FLEX Options 

includes institutional investors, retail investors, and 

high net worth individuals. 

12The report would provide: (i) Data and analysis 

on the open interest and trading volume in FLEX 

Equity Options for which series were opened with 

a minimum opening size of 150 to 249 contracts 

and less than $1 million in underlying value; and 

(ii) analysis on the types of investors that initiated 

opening FLEX Equity Options transactions (i.e., 

institutional, high net worth, or retail, if any). 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

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

16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the self-regulatory organization 

to submit to the Commission written notice of its 

intent to file the proposed rule change, along with 

a brief description and text of 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. The 

Exchange has satisfied this requirement. 

17 17 CFR 240.19b–4(f)(6)(iii). 

18See id. 

established series as the lesser of (i) 250 

contracts or (ii) the number of contracts 

overlying $1 million in the underlying 

securities. Under the Pilot Program, the 

Exchange reduced the ‘‘250 contracts’’ 

component to ‘‘150 contracts’’; the $1 

million underlying value component 

continued to apply unchanged.9

The Exchange now proposes to extend 

the Pilot Program. 

Given that FLEX Equity Option 

transactions can occur in increments of 

100 or more contracts in subsequent 

opening transactions,10 the Exchange 

believes it is reasonable to permit the 

initial series opening transaction size to 

be 150 contracts (or $1 million in 

underlying value, whichever is less). 

The Exchange notes that the opening 

size requirement for FLEX Equity 

Options was originally put in place to 

limit participation in FLEX Equity 

Options to sophisticated, high net worth 

investors rather than retail investors.11

The Exchange believes that the 

reduction of the minimum value size for 

opening a series, per the Pilot Program, 

provides FLEX-participating members 

and their customers with greater 

flexibility in structuring the terms of 

FLEX Equity Options to better suit the 

FLEX traders’ particular needs. The 

Exchange believes that market 

participants benefit from being able to 

trade these customized options in an 

exchange environment in several ways, 

including, but not limited to, enhanced 

efficiency in initiating and closing out 

positions; increased market 

transparency; and heightened contraparty creditworthiness due to the role of 

The Options Clearing Corporation as 

issuer and guarantor of FLEX Equity 

Options. 

In support of extending the Pilot 

Program, the Exchange has submitted to 

the Commission a FLEX Pilot Program 

Report (‘‘Report’’) detailing the 

Exchange’s experience with the Pilot 

Program. Specifically, the Report 

contains data and written analysis 

regarding: (i) The open interest and 

trading volume in FLEX Equity Options 

for which series were opened with a 

minimum opening size of 150 to 249 

contracts and less than $1 million in 

underlying value; and (ii) analysis on 

the types of investors that initiated 

opening FLEX Equity Options 

transactions (i.e., institutional, high net 

worth, or retail, if any). The Report was 

submitted under separate cover and 

seeks confidential treatment under the 

Freedom of Information Act. 

The Exchange believes there is 

sufficient investor interest and demand 

in the Pilot Program to warrant its 

extension. The Exchange believes that, 

during the time that the Pilot Program 

has been in operation, it has afforded 

investors with additional means of 

managing their risk exposures and 

carrying out their investment objectives. 

The Exchange represents that it has the 

necessary system capacity to continue to 

support the option series listed under 

the Pilot Program. 

Should the Exchange desire to 

propose an extension, expansion, or 

permanent implementation of the Pilot 

Program, the Exchange would submit, 

along with a filing proposing any 

necessary amendments to the Pilot 

Program, a pilot program Report for the 

extended period during which the Pilot 

Program is in effect.12 The Report, along 

with any filing to extend or permanently 

implement the Pilot Program, would be 

submitted to the Commission at least 

forty-five days prior to the expiration 

date of the Pilot Program. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 13 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 14

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, by 

extending the Exchange’s Pilot Program 

in respect of FLEX options. The 

Exchange believes that extension of the 

Pilot Program will result in a continuing 

benefit to investors by allowing them 

additional means to manage their risk 

exposure and carry out their investment 

objectives, and will allow the Exchange 

to further study investor interest in the 

Pilot Program. 

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 either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative prior to 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, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 15 and Rule 19b–4(f)(6) 

thereunder.16

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative for 30 days after the 

date of filing.17 However, Rule 19b– 

4(f)(6)(iii) permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest.18 The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay so that the proposal may become 

operative immediately upon filing, 

thereby allowing the Exchange to 

seamlessly continue the Pilot Program 

in respect of FLEX options. 

The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 


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47034 Federal Register / Vol. 74, No. 176 / Monday, September 14, 2009 / Notices 

19See Securities Exchange Act Release No. 57824 

(May 15, 2008), 73 FR 29805, 29806 (May 22, 2008) 

(SR–Phlx–2008–35). 

20The Commission notes that the Exchange has 

undertaken in this filing to submit a pilot program 

report at least forty-five days prior to the expiration 

date of the Pilot Program. 

21For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

22 15 U.S.C. 78s(b)(3)(C). 23 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(3)(A)(ii). 

2 17 CFR 240.19b–4(f)(2). 

3See Securities Exchange Act Release No. 56458 

(September 18, 2007), 72 FR 54309 (September 24, 

investors and the public interest 

because such waiver will allow the 

Exchange to continue its Pilot Program 

without interruption in its current form. 

The Commission notes that the 

Exchange did not provide a pilot 

program report to the Commission at 

least ninety days prior to the expiration 

date of the Pilot Program as the 

Exchange had undertaken to do as part 

of its original proposal.19 Waiving the 

operative delay to accommodate an 

extension of the Pilot Program will 

provide investors with a continued 

ability to utilize the lower minimum 

value size for an opening transaction in 

a FLEX Equity Option series on Phlx 

and also will provide the Exchange with 

additional time to collect data and 

prepare and submit to the Commission 

a pilot program report in the event that 

it seeks to extend or permanently 

implement the Pilot Program.20 For 

these reasons, the Commission 

designates the proposed rule change as 

operative upon filing.21

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.22

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-2009–78 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–Phlx-2009–78. 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 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–2009–78 and should 

be submitted on or before October 5, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21993 Filed 9–11–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60629; File No. SR–CBOE– 

2009–063] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Temporary 

Membership Status and Interim 

Trading Permit Access Fees 

September 4, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is 

hereby given that on August 31, 2009, 

the Chicago Board Options Exchange, 

Incorporated (‘‘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 the CBOE. CBOE has 

designated this proposal as one 

establishing or changing a due, fee, or 

other charge applicable only to a 

member under Section 19(b)(3)(A)(ii) of 

the Act,1 and Rule 19b–4(f)(2) 

thereunder,2 which renders the proposal 

effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested parties. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

CBOE proposes to adjust (i) the 

monthly access fee for persons granted 

temporary CBOE membership status 

(‘‘Temporary Members’’) pursuant to 

Interpretation and Policy .02 under 

CBOE Rule 3.19 (‘‘Rule 3.19.02’’) and 

(ii) the monthly access fee for Interim 

Trading Permit (‘‘ITP’’) holders under 

CBOE Rule 3.27. 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. The 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, Proposed Rule 

Change 

(a) Purpose 

The current access fee for Temporary 

Members under Rule 3.19.02 3 and the 


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