21120 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Notices 

24 17 CFR 240.10A–3. 25 17 CFR 240.10A–3(c)(7). 26The Commission notes that it does not regulate 

the market for futures in which the Fund plans to 

take positions, which is the responsibility of the 

CFTC. The CFTC has the authority to set limits on 

the positions that any person may take in futures. 

These limits may be directly set by the CFTC or by 

the markets on which the futures are traded. The 

Commission has no role in establishing position 

limits on futures, even though such limits could 

impact an exchange-traded product that is under 

the jurisdiction of the Commission. 

27 15 U.S.C. 78f(b)(5). 

28 15 U.S.C. 78s(b)(2). 

29 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange proposes that mini-options 

contracts would be listed in only five issues, 

specifically SPDR S&P 500 (SPY), Apple, Inc. 

(AAPL), SPDR Gold Trust (GLD), Google Inc. 

(GOOG), and Amazon.com Inc. (AMZN). These 

issues were selected because they are priced greater 

than $100 and are among the most actively traded 

issues, in that the standard contract exhibits average 

daily volume (‘‘ADV’’) over the previous three 

calendar months of at least 45,000 contracts, 

excluding LEAPS and FLEX series. The Exchange 

notes that any expansion of the program would 

require that a subsequent proposed rule change be 

submitted with the Commission. 

4A high priced underlying security may have 

relatively expensive options, because a low 

percentage move in the share price may mean a 

large movement in the options in terms of absolute 

dollars. Average non-FLEX equity option premium 

per contract January 1–December 31, 2011. See 

http://www.theocc.com/webapps/monthly-volumereports?reportClass=equity. 

(6) A minimum of 100,000 Shares of 

the Fund will be outstanding as of the 

start of trading on the Exchange. 

(7) With respect to application of Rule 

10A–3 under the Act,24 the Fund will 

rely on the exception contained in Rule 

10A–3(c)(7).25

This approval order is based on all of 

the Exchange’s representations.26

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act 27 and the rules and 

regulations thereunder applicable to a 

national securities exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,28 that the 

proposed rule change (SR–NYSEArca– 

2012–10) be, and it hereby is, approved. 

For the Commission, by the Division 

of Trading and Markets, pursuant to 

delegated authority.29

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–8425 Filed 4–6–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66725; File No. SR– 

NYSEArca–2012–26] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change to List and Trade Option 

Contracts Overlying 10 Shares of a 

Security (‘‘Mini-Options Contracts’’) 

and Implementing Rule Text Necessary 

to Distinguish Mini-Options Contracts 

From Option Contracts Overlying 100 

Shares of a Security (‘‘Standard 

Contracts’’) 

April 3, 2012. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on March 23, 

2012, NYSE Arca, Inc. (the ‘‘Exchange’’ 

or ‘‘NYSE Arca’’) 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 list and 

trade option contracts overlying 10 

shares of a security (‘‘mini-options 

contracts’’) and implement rule text 

necessary to distinguish mini-options 

contracts from option contracts 

overlying 100 shares of a security 

(‘‘standard contracts’’). The text of the 

proposed rule change is available at the 

Exchange, www.nyse.com, and 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 Exchange is proposing to list and 

trade mini-options contracts and 

implement rule text necessary to 

distinguish mini-options contracts from 

standard contracts. Whereas standard 

contracts represent a deliverable of 100 

shares of an underlying security, minioptions contracts would represent a 

deliverable of 10 shares. The Exchange 

proposes to list and trade mini-options 

contracts overlying 5 high priced 

securities for which the standard 

contract overlying the same security 

exhibits significant liquidity.3 The 

Exchange believes that investors would 

benefit from the availability of minioptions contracts by making options 

overlying high priced securities more 

readily available as an investing tool 

and at more affordable and realistic 

prices, most notably for the average 

retail investor. 

For example, with Apple Inc. 

(‘‘AAPL’’) trading at $605.85 on March 

21, 2012, ($60,585 for 100 shares 

underlying a standard contract), the 605 

level call expiring on March 23 is 

trading at $7.65. The cost of the 

standard contract overlying 100 shares 

would be $765, which is substantially 

higher in notional terms than the 

average equity option price of $250.89.4

Proportionately equivalent mini-options 

contracts on AAPL would provide 

investors with the ability to manage and 

hedge their portfolio risk on their 

underlying investment, at a price of $76 

per contract. In addition, investors who 

hold a position in AAPL at less than the 

round lot size would still be able to 

avail themselves of options to manage 

their portfolio risk. For example, the 

holder of 50 shares of AAPL could write 

covered calls for five mini-options 

contracts. The table below demonstrates 

the proposed differences between a 

mini-options contracts and a standard 

contract with a strike price of $125 per 

share and a bid or offer of $3.20 per 

share: 

Standard Mini 

Share Deliverable Upon Exercise ......................................................................................................... 100 shares .................... 10 shares 

Strike Price ............................................................................................................................................ 125 ................................ 12.5 


pmangrum on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Notices 21121 

5See Securities Exchange Act Release No. 44025 

(February 28, 2001) 66 FR 13986 (March 8, 2001) 

(approving SR–PCX–01–12). 

6OCC Symbology is structured for contracts with 

other than 100 shares to be designated with a 

numerical suffix to the standard trading symbol, 

i.e., AAPL8. 

7See Securities Exchange Act Release No. 61485 

(February 3, 2010), 75 FR 6750 (February 10, 2010) 

(SR–OCC–2010–01). 8 15 U.S.C. 78f(b). 

Standard Mini 

Bid/Offer ................................................................................................................................................ 3.20 ............................... .32 

Premium Multiplier ................................................................................................................................ 100 ................................ 100 

Total Value of Deliverable ............................................................................................................. 12,500 ........................... 1,250 

Total Value of Contract .................................................................................................................. 320 ................................ 32 

The Exchange notes that the 

Commission has approved an earlier 

proposal of NYSE Arca to list and trade 

option contracts overlying a number of 

shares other than 100.5 Moreover, the 

concept of listing and trading parallel 

options products of reduced values and 

sizes on the same underlying security is 

not novel. For example, parallel product 

pairs on a full-value and reduced-value 

basis are currently listed on the S&P 500 

Index (‘‘SPX’’ and ‘‘XSP,’’ respectively), 

the Nasdaq 100 Index (‘‘NDX’’ and 

‘‘MNX,’’ respectively) and the Russell 

2000 Index (‘‘RUT’’ and ‘‘RMN,’’ 

respectively). 

The Exchange believes that the 

proposal to list and trade mini-options 

contracts would not lead to investor 

confusion. On the contrary, the 

Exchange’s proposal is structured to 

easily convey strike prices and 

premiums to investors in the total 

amount of the investment (100 times the 

displayed premium) and the amount of 

the deliverable (100 times the strike 

price). The Exchange believes that the 

difference between the price of the 100 

share standard contract and the 10 share 

mini-options contract would 

immediately alert investors that the 

contract is different, thereby avoiding 

inadvertent investment in the wrong 

contract. Additionally, the Exchange 

will designate mini-options contracts 

with a different trading symbols than 

their related standard contract.6 The 

Exchange believes that the clarity of this 

approach is appropriate and 

transparent, as supported by the recent 

Options Clearing Corporation (‘‘OCC’’) 

filing to amend its bylaws to 

accommodate such strike prices and 

premiums.7 Moreover, the Exchange 

believes that the terms of mini-options 

contracts are consistent with the terms 

of the Options Disclosure Document. 

The Exchange recognizes the need to 

differentiate mini-options contracts 

from standard options and therefore is 

proposing the following changes to its 

rules. 

The Exchange proposes to add 

Commentary .01 to Rule 6.3 (Option 

Contracts to Be Traded) to reflect that, 

in addition to option contracts with a 

unit of trading of 100, the Exchange may 

list option contracts overlying 10 shares 

of SPDR S&P 500 (SPY), Apple, Inc. 

(AAPL), SPDR Gold Trust (GLD), Google 

Inc. (GOOG), and Amazon.com Inc. 

(AMZN) for all expirations applicable to 

100 share options in each class. The 

Exchange believes that these five 

securities are appropriate because they 

are high priced securities for which 

there is already significant options 

liquidity and therefore significant 

customer demand. 

The Exchange also proposes to add 

Commentary .14 to Rule 6.4 (Series of 

Options Open for Trading) to list series 

of mini-options provided that (i) the 

underlying security has been designated 

as eligible under Rule 6.3 Commentary 

.01, (ii) no mini-options series will be 

listed with a strike price less than $10, 

and (iii) for each mini-options contract 

there is a corresponding option contract 

with a unit of trading of 100 overlying 

the same security, and that the 

underlying security is trading over $90 

to list additional mini-options series. 

Commentary .14 would also delineate 

that strike prices for contracts overlying 

10 shares shall be set at 1/100th of the 

value of the contract deliverable value. 

For example, an option contract to 

deliver 10 shares of stock at $125 per 

share has a total deliverable value of 

$1,250, and the strike price would be set 

at 12.50. The Exchange notes that this 

is consistent with the current 

determination of strike prices for 

standard contracts as well as options on 

the full and reduced-values of the 

indexes referenced above. Additionally, 

by restricting mini-options series to a 

strike price of $10 or greater and to a 

corresponding standard strike overlying 

100 shares, the Exchange will limit the 

number of series and also maintain its 

application to high priced underlyings. 

Also, the Exchange proposes to not 

permit the listing of additional minioptions series if the underlying is 

trading at $90 or less to limit the 

number of strikes once the underlying is 

no longer a high priced security. The 

Exchange proposes a $90.01 minimum 

for continued qualification so that 

additional mini-options that correspond 

to standard strikes may be added even 

though the underlying has fallen 

slightly below the initial qualification 

standard. In addition, the underlying 

security must be trading above $90 for 

five consecutive days before the listing 

of mini-option contracts in a new 

expiration month. This restriction will 

allow the Exchange to list mini-option 

strikes without disruption when a new 

expiration month is added even if the 

underlying has had a minor decline in 

price. 

The Exchange also proposes to add 

Commentary .08 to Rule 6.8 (Position 

Limits) to reflect that, for purposes of 

compliance with the Position Limits of 

Rules 6.8, ten mini-options contracts 

will equal one standard contract 

overlying 100 shares. 

The Exchange also proposes to add 

subsection (c) to Rule 6.71 (Meaning of 

Premium Bids and Offers) to extend the 

explanation of bids and offers with 

respect to mini-options contracts and 

also remove references to ExchangeTraded Fund Shares, because other 

types of underlying securities have 

options traded on them. 

Finally, the Exchange proposes to add 

Commentary .03 to Rule 6.72, Trading 

Differentials, to allow quoting in penny 

increments in mini-options contracts, 

because a penny increment in a minioption is equivalent to quoting at an 

increment of $0.10 per share. 

With regard to the impact of this 

proposal on system capacity, the 

Exchange has analyzed its capacity and 

represents that it and the Options Price 

Reporting Authority have the necessary 

systems capacity to handle the potential 

additional traffic associated with the 

listing and trading of mini-options 

contracts. The Exchange has further 

discussed the proposed listing and 

trading of mini-options contracts with 

the OCC, which has represented that it 

is able to accommodate the proposal. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) 8 of the Securities Exchange Act of 

1934 (the ‘‘Act’’), in general, and 

furthers the objectives of Section 


pmangrum on DSK3VPTVN1PROD with NOTICES
21122 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Notices 

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

10See supra note 6. 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Commission notes that the Exhibit 5 is 

attached to the filing, not to this notice. 

6(b)(5),9 in particular, because it is 

designed to promote just and equitable 

principles of trade, to prevent 

fraudulent and manipulative acts, to 

remove impediments to and to perfect 

the mechanism for a free and open 

market and a national market system 

and, in general, to protect investors and 

the public interest. Specifically, the 

Exchange believes that investors would 

benefit from the availability of minioptions contracts by making options on 

high priced securities more readily 

available as an investing tool and at 

more affordable and realistic prices, 

most notably for the average retail 

investor. As described above, the 

proposal contains a number of features 

designed to protect investors by 

reducing investor confusion, such as the 

mini-options contracts being designated 

by different trading symbols from their 

related standard contracts.10 Moreover, 

the proposal is designed to protect 

investors and the public interest by 

providing investors with an enhanced 

tool to reduce risk in high priced 

securities. In particular, the proposed 

contracts will provide retail customers 

who invest in high priced issues in lots 

of less than 100 shares with a means of 

protecting their investments that is 

presently only available to those who 

have positions of 100 shares or more. 

Further, the proposal currently is 

limited to five high priced securities for 

which there is already significant 

options liquidity, and therefore 

significant customer demand and 

trading volume. 

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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 email to rule-comments@

sec.gov. Please include File No. SR– 

NYSEArca–2012–26 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–NYSEArca–2012–26. This 

file number should be included on the 

subject line if email 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 Web site viewing and 

printing 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 

available publicly. All submissions 

should refer to File Number SR– 

NYSEArca–2012–26 and should be 

submitted on or before April 30, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–8428 Filed 4–6–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66728; File No. SR–BX– 

2012–023] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

BOX Fee Schedule 

April 3, 2012. 

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 March 29, 

2012, NASDAQ OMX BX, Inc. 

(‘‘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 

substantially 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 the 

Fee Schedule of the Boston Options 

Exchange Group, LLC (‘‘BOX’’). The text 

of the proposed rule change is attached 

as Exhibit 5.3 The text of the proposed 

rule change is available from the 

principal office of the Exchange, at the 

Commission’s Public Reference Room, 

on the Commission’s Web site at 

www.sec.gov, 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 


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