Federal Register / Vol. 74, No. 200 / Monday, October 19, 2009 / Notices 53535 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(5). 10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

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 proposed rule change is filed 

pursuant to paragraph (A) of Section 

19(b)(3) 8 and Rule 19b–4(f)(5).9 This 

proposed rule change effects a change in 

an existing order entry or trading system 

of a self-regulatory organization that: (A) 

Does not significantly affect the 

protection of investors or the public 

interest; (B) does not impose any 

significant burden on competition, and 

(C) does not have the effect of limiting 

the access to or availability of the 

system. The Exchange believes that the 

instant proposal is consistent with these 

provisions in that the enhancements to 

Exchange systems allow Floor broker 

hand-held devices to receive and 

process orders containing non-regular 

way instruction and do not change the 

operation of the rule in any other way. 

At any time within 60 days of the 

filing of such 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–NYSE–2009–102 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–NYSE–2009–102. 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 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 publicly available. All 

submissions should refer to File 

Number SR–NYSE–2009–102 and 

should be submitted on or before 

November 9, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–25113 Filed 10–16–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60814; File No. SR–BX– 

2009–063] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Strike Price Intervals of $0.50 for 

Options on Stocks Trading at or Below 

$3.00 on the Boston Options Exchange 

Facility 

October 13, 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, October 

6, 2009, NASDAQ OMX BX, Inc. (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 the self-regulatory organization. The 

Exchange filed the proposed rule change 

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

Act,3 and Rule 19b–4(f)(6) thereunder,4

which renders the proposal effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Supplementary Material to Chapter IV, 

Section 6 (Series of Options Contracts 

Open for Trading) of the Rules of the 

Boston Options Exchange Group, LLC 

(‘‘BOX’’) in order to establish strike 

price intervals of $0.50, beginning at $1, 

for certain option classes whose 

underlying security closed at or below 

$3 in its primary market on the previous 

trading day. The text of the proposed 

rule change is available from the 

principal office of the Exchange, at the 

Commission’s Public Reference Room 

and also on the Exchange’s Internet Web 

site at http:// 

nasdaqomxbx.cchwallstreet.com/ 

NASDAQOMXBX/Filings/. 

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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization 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 expand the ability of 


sroberts on DSKD5P82C1PROD with NOTICES
53536 Federal Register / Vol. 74, No. 200 / Monday, October 19, 2009 / Notices 

5The Exchange may not list long-term option 

series (‘‘LEAPS’’) at $1 strike price intervals for any 

class selected for the $1 Strike Price Program. 

6The Exchange recently amended Chapter IV, 

Section 4 of the BOX Rules. The amendment 

eliminated the prohibition against listing additional 

series or options on an underlying security at any 

time when the price per share of such underlying 

security is less than $3. The Exchange explained in 

that proposed rule change that the market price for 

a large number of securities has fallen below $3 in 

the current volatile market environment. See 

Securities Exchange Act Release No. 59419 

(February 19, 2009), 74 FR 8596 (February 25, 2009) 

(SR–BX–2009–011) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change to Eliminate 

the $3 Underlying Price Requirement for Continued 

Listing and Listing of Additional Series on the 

Boston Options Exchange Facility). 

7Additionally, market participants may be able to 

trade $2.50 strikes on the same option at another 

exchange, if that exchange has elected not to select 

the stock for participation in its own similar $1 

Strike Price Program. 

8Again, market participants may also be able to 

trade the option at $1 strike price intervals on other 

exchanges, if those exchanges have selected the 

stock for participation in their own similar $1 Strike 

Price Program. 

9The option on the qualifying stock could also 

have strike prices set at $5, $7.50 and so forth at 

$2.50 intervals (pursuant to Supplementary 

Material .01 to Chapter IV, Section 6 of the BOX 

Rules) or, if it has been selected for the $1 Strike 

Price Program, at $4, $5, $6, $7 and $8. 

10As of July 31, 2009, stocks trading at or below 

$3 include E*Trade Financial Corporation, Ambac 

Financial Group, Inc., Alcatel-Lucent, Federal 

Home Loan Mortgage Corporation (Freddie Mac) 

and Federal National Mortgage Association (Fannie 

Mae). A number of these stocks are widely held and 

actively traded equities, and the options overlying 

these stocks also trade actively on BOX. 

investors to hedge risks associated with 

stocks trading at or under $3. Currently, 

Supplementary Material .01 to Chapter 

IV, Section 6 of the BOX Rules provides 

that the interval of strike prices of series 

of options on individual stocks may be 

$2.50 or greater where the strike price 

is $25 or less. Additionally, 

Supplementary Material .02 to Chapter 

IV, Section 6 of the BOX Rules allows 

BOX to establish $1 strike price 

intervals (the ‘‘$1 Strike Price Program’’) 

on options classes overlying no more 

than fifty-five individual stocks 

designated by BOX. In order to be 

eligible for selection into the $1 Strike 

Price Program, the underlying stock 

must close below $50 in its primary 

market on the previous trading day. If 

selected for the $1 Strike Price Program, 

BOX may list strike prices at $1 

intervals from $1 to $50, but no $1 strike 

price may be listed that is greater than 

$5 from the underlying stock’s closing 

price in its primary market on the 

previous day. BOX may also list $1 

strikes on any other option class 

designated by another securities 

exchange that employs a similar $1 

Strike Price Program its own rules.5

BOX is restricted from listing any series 

that would result in strike prices being 

within $0.50 of a strike price set 

pursuant to Supplementary Material .01 

to Chapter IV, Section 6 at intervals of 

$2.50. 

The Exchange is now proposing to 

establish strike prices of $1, $1.50, $2, 

$2.50, $3 and $3.50 for certain stocks 

that trade at or under $3.00.6 The listing 

of these strike prices will be limited to 

options classes whose underlying 

security closed at or below $3 in its 

primary market on the previous trading 

day, and which have national average 

daily volume that equals or exceeds 

1,000 contracts per day as determined 

by The Options Clearing Corporation 

during the preceding three calendar 

months. The listing of $0.50 strike 

prices would be limited to options 

classes overlying no more than 5 

individual stocks (the ‘‘$0.50 Strike 

Price Program’’) as specifically 

designated by BOX. BOX would also be 

able to list $0.50 strike prices on any 

other option classes if those classes 

were specifically designated by other 

securities exchanges that employed a 

similar $0.50 Strike Price Program 

under their respective rules. 

Currently, the Exchange may list 

options on stocks trading at $3 at strike 

prices of $1, $2, $3, $4, $5, $6, $7 and 

$8 if they are designated to participate 

in the $1 Strike Price Program.7 If these 

stocks have not been selected for the 

Exchange’s $1 Strike Price Program, the 

Exchange may list strike prices of $2.50, 

$5, $7.50 and so forth as provided in 

Supplementary Material .01 to Chapter 

IV, Section 6 of the BOX Rules, but not 

strike prices of $1, $2, $3, $4, $6, $7 and 

$8.8

The Exchange is now proposing to 

add Supplementary Material .06 to 

Chapter IV, Section 6 of the BOX Rules 

to list strike prices on options on a 

number of qualifying stocks that trade at 

or under $3.00, not simply those stocks 

also participating in the $1 Strike Price 

Program, in finer intervals of $0.50, 

beginning at $1 up to $3.50. Thus, a 

qualifying stock trading at $3 would 

have option strike prices established not 

just at $2.50, $5.00, $7.50 and so forth 

(for stocks not in the $1 Strike Price 

Program) or just at $1, $2, $3, $4, $5, $6, 

$7 and $8 (for stocks designated to 

participate in the $1 Strike Price 

Program), but rather at strike prices 

established at $1, $1.50, $2, $2.50, $3 

and $3.50.9

The Exchange believes that current 

market conditions demonstrate the 

appropriateness of the new strike prices. 

Recently the number of securities 

trading below $3.00 has increased 

dramatically.10 Unless the underlying 

stock has been selected for the $1 Strike 

Price Program, there is only one 

possible in-the-money call (at $2.50) to 

be traded if an underlying stock trades 

at $3.00. Similarly, unless the 

underlying stock has been selected for 

the $1 Strike Price Program, only one 

out-of-the-money strike price choice 

within 100% of a stock price of $3 is 

available if an investor wants to 

purchase out-of-the money calls. Stated 

otherwise, a purchaser would need over 

a 100% move in the underlying stock 

price in order to have a call option at 

any strike price other than the $5 strike 

price become in-the-money. If the stock 

is selected for the $1 Strike Price 

Program, the available strike price 

choices are somewhat broader, but are 

still greatly limited by the proximity of 

the $3 stock price to zero, and the very 

large percent gain or loss in the 

underlying stock price, relative to a 

higher priced stock, that would be 

required in order for strikes set at $1 or 

away from the stock price to become inthe-money and serve their intended 

hedging purpose. 

As a practical matter, a low-priced 

stock by its very nature requires narrow 

strike price intervals in order for 

investors to have any real ability to 

hedge the risks associated with such a 

security or execute other related options 

trading strategies. The current 

restriction on strike price intervals, 

which prohibits intervals of less than 

$2.50 (or $1 for stocks in the $1 Strike 

Price Program) for options on stocks 

trading at or below $3, could have a 

negative affect on investors. The 

Exchange believes that the proposed 

$0.50 strike price intervals would 

provide investors with greater flexibility 

in the trading of equity options that 

overlie lower priced stocks by allowing 

investors to establish equity option 

positions that are better tailored to meet 

their investment objectives. The 

proposed new strike prices would 

enable investors to more closely tailor 

their investment strategies and 

decisions to the movement of the 

underlying security. As the price of 

stocks decline below $3 or even $2, the 

availability of options with strike prices 

at intervals of $0.50 could provide 

investors with opportunities and 

strategies to minimize losses associated 

with owning a stock declining in price. 

With regard to the impact on system 

capacity, BOX has analyzed its capacity 

and represents that it and the Options 

Price Reporting Authority have the 

necessary systems capacity to handle 

the additional traffic associated with the 

listing and trading of an expanded 

number of series as proposed by this 

filing. 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 200 / Monday, October 19, 2009 / Notices 53537 

11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

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. The Exchange has satisfied this 

requirement. 

15See Securities Exchange Act Release No. 60694 

(September 18, 2009), 74 FR 49048 (September 25, 

2009) (SR–Phlx–2009–65) (order approving a $0.50 

strike program substantially the same as the $0.50 

Strike Program proposed by the Exchange). 

16For 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). 

17 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. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the 

Act,11 in general, and Section 6(b)(5) of 

the Act,12 in particular, in that it is 

designed to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and 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 expanding the ability 

of investors to hedge risks associated 

with stocks trading at or under $3. The 

proposal should create greater trading 

and hedging opportunities and 

flexibility and provide customers with 

the ability to more closely tailor 

investment strategies to the price 

movement of the underlying stocks, 

trading in many of which is highly 

liquid. 

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 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing 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 for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, it has 

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

of the Act 13 and Rule 19b–4(f)(6) 

thereunder.14

The Exchange has requested that the 

Commission waive the 30-day operative 

delay to permit the Exchange to 

compete effectively with other options 

exchanges offering a similar $.50 Strike 

Program. The Commission recently 

approved SR–Phlx–2009–65,15 and 

therefore finds that waiver of the 

operative delay is consistent with the 

protection of investors and the public 

interest because such waiver will 

encourage fair competition among the 

exchanges. Therefore, the Commission 

designates the proposal operative upon 

filing.16

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–BX–2009–063 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–BX–2009–063. 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–BX–2009–063 and should 

be submitted on or before November 9, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–25114 Filed 10–16–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60811; File No. SR– 

NYSEAmex–2009–68] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Amex LLC Amending NYSE Amex 

Equities Rule 14 To Be Consistent With 

the New System Capability To Receive 

Orders for Execution on the Exchange 

Containing Settlement Instructions of 

‘‘Cash,’’ ‘‘Next Day’’ and ‘‘Seller’s 

Option’’ Directly to a Floor Broker’s 

Hand-Held Device 

October 9, 2009. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on October 

1, 2009, NYSE Amex LLC (‘‘Exchange’’ 

or ‘‘NYSE Amex’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 


sroberts on DSKD5P82C1PROD with NOTICES