1894 Federal Register / Vol. 78, No. 6 / Wednesday, January 9, 2013 / Notices 

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

17 17 CFR 240.19b–4(f)(2). 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

persons using any facility or system 

which the Exchange operates or 

controls, and it does not unfairly 

discriminate between customers, 

issuers, brokers or dealers. All similarly 

situated Options Participants are subject 

to the same fee structure, and every firm 

must use the CRD system for registration 

and disclosure. 

The change is reasonable because the 

proposed fees are identical to those 

adopted by FINRA for use of the CRD 

system for disclosure and the 

registration of associated persons of 

FINRA members. As FINRA noted in 

amending its fees, it believed the fees 

are reasonable based on the increased 

costs associated with operating and 

maintaining the CRD system, and listed 

a number of enhancements made to the 

CRD system since the last fee increase, 

including: (1) Incorporation of various 

uniform registration form changes; (2) 

electronic fingerprint processing; (3) 

Web EFTTM, which allows subscribing 

firms to submit batch filings to the CRD 

system; (4) increases in the number and 

types of reports available through the 

CRD system; and (5) significant changes 

to BrokerCheck, including making 

BrokerCheck easier to use and 

expanding the amount of information 

made available through the system. 

These increased costs are similarly 

borne by FINRA when a BOX Options 

Participant that is not a member of 

FINRA uses the CRD system. 

Accordingly, the fees collected for such 

use should likewise increase in lockstep 

with the fees assessed FINRA members, 

as is proposed by the Exchange. 

The proposed change, like FINRA’s 

proposal, is consistent with an equitable 

allocation of fees because the fees will 

apply equally to all individuals and 

Options Participants required to report 

information to the CRD system. Thus, 

those Options Participants that register 

more individuals or submit more filings 

through the CRD system will generally 

pay more in fees than those that use the 

CRD system to a lesser extent. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA’s CRD system is the central 

licensing and registration system for the 

U.S. securities industry and the 

proposed change will simply provide 

notice to BOX Options Participants of a 

FINRA fee change that will apply across 

all registered industry participants. As 

such, the Exchange does not believe that 

the proposed rule change will impose 

any additional 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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Exchange Act 16

and Rule 19b–4(f)(2) thereunder,17

because it establishes or changes a due, 

fee, or other charge applicable only to a 

member. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend 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 Exchange Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 rulecomments@sec.gov. Please include File 

Number SR–BOX–2012–024 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–BOX–2012–024. 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 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the 

Exchange’s principal office. 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–BOX–2012–024, and 

should be submitted on or before 

January 30, 2013. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2013–00254 Filed 1–8–13; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–68569; File No. SR– 

NYSEArca–2012–140] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To List and Trade 

Options on the Nasdaq-100 Index 

(NDX) and the Reduced-Value Nasdaq100 Index (MNX) and To Amend NYSE 

Arca Rule 5.15(a)(1) To Provide That 

There Are No Position Limits for 

Options on NDX and MNX 

January 3, 2013. 

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 December 

20, 2012, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ 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 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 78, No. 6 / Wednesday, January 9, 2013 / Notices 1895 

3A description of the Index is available on 

Nasdaq’s Web site at http://dynamic.nasdaq.com/ 

dynamic/nasdaq100_activity.stm. 

4See Exchange Rule 5.15. 

5See Exchange Rule 5.12(a)(8). 

6The initial eligibility criteria and continued 

eligibility criteria are available on Nasdaq’s Web 

site at http://dynamic.nasdaq.com/dynamic/ 

nasdaq100_activity.stm. 

7One of the eligibility requirements it that the 

security must be seasoned (it has been listed on the 

market for three whole months [sic]). In the case of 

spin-offs, the operating history of the spin-off will 

be considered by Nasdaq. Additionally, if a 

component security will otherwise qualify to be in 

the top 25% of securities included in the Index by 

market capitalization for the six prior consecutive 

months, it will be eligible if it had been listed for 

one year. 

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 list and 

trade options on Nasdaq–100 Index 

(NDX) and the reduced-value Nasdaq100 Index (MNX) and to amend NYSE 

Arca Rule 5.15(a)(1) to provide that 

there are no position limits for options 

on NDX and MNX. The text of the 

proposed rule change is available on the 

Exchange’s Web site at www.nyse.com, 

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 

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 proposes to list and 

trade options on the full and reduced 

values of the Nasdaq 100 Index (the 

‘‘Index’’), a stock index calculated and 

maintained by Nasdaq.3 Specifically, 

the Exchange proposes to list options 

based on Nasdaq-100 Index (NDX) and 

the reduced-value Nasdaq–100 Index 

(MNX) and to amend Rule 5.15(a)(1) to 

provide that there are no position limits 

for options on NDX and MNX. The 

Exchange also proposes to list and trade 

FLEX Options and Long-Term Equity 

Option Series (‘‘LEAPS’’) on NDX and 

MNX. The options on NDX and MNX 

listed on the Exchange will be identical 

to those already listed on multiple 

exchanges. 

The Exchange notes that it initially 

listed for trading options on NDX and 

MNX as broad-based index options in 

January 2010 without filing a Rule 19b– 

4 filing with the Commission.4 In 

addition, when initially listed and 

traded, because none of the other 

exchanges that list and trade NDX and 

MNX had position limits for those 

indices, nor did the Options Clearing 

Corporation disseminate position limits 

information for NDX and MNX, the 

Exchange similarly did not apply 

position limits to NDX and MNX. The 

Exchange is filing the proposed rule 

change because options on the Index 

will not otherwise qualify for listing on 

the Exchange due to the component 

weightings of the Index. Specifically, 

Exchange Rule 5.12(a)(8), which allows 

the listing of options on a broad-based 

index currently requires that no 

component of a broad-based index 

account for more than ten percent of the 

weight of the index, and the five highest 

weighted component securities in the 

index do not, in the aggregate, account 

for more than thirty-three percent (33%) 

of the weight of the index.5 Therefore, 

like other options exchanges that 

currently trade options on the Index, the 

Exchange is seeking to file in order to 

list and trade options on the Index 

under the conditions and according to 

the standards set forth below. 

Index Design and Composition 

The Index was launched in January 

1985 and represents the largest nonfinancial domestic and international 

issues listed on Nasdaq based on market 

capitalization. The Index reflects 

companies across major industry 

groups, including computer hardware 

and software, telecommunications, 

retail/wholesale trade, and 

biotechnology. 

The Index is calculated using a 

modified capitalization-weighted 

methodology. The value of the Index 

equals the aggregate value of the Index 

share weights of each of the component 

securities multiplied by each security’s 

respective official closing price on 

Nasdaq, divided by the Divisor. The 

Divisor serves the purpose of scaling 

such aggregate value (otherwise in the 

trillions) to a lower order of magnitude 

which is more desirable for Index 

reporting purposes. If trading in an 

Index security is halted while the 

market is open, the last Nasdaq traded 

price for that security is used for all 

index computations until trading 

resumes. If trading is halted before the 

market is open, the previous day’s 

official closing price is used. 

Additionally, the Index ordinarily is 

calculated without regard to dividends 

on component securities. The modified 

capitalization-weighted methodology is 

expected to retain, in general, the 

economic attributes of capitalization 

weighting, while providing enhanced 

diversification. To accomplish this, 

Nasdaq reviews the composition of the 

Index quarterly and adjusts the 

weighting of Index components using a 

proprietary algorithm, if certain preestablished weight distribution 

requirements are not met. 

Nasdaq has certain eligibility 

requirements for inclusion in the 

Index.6 For example, to be eligible for 

inclusion in the Index, a component 

security must be exclusively listed on 

the Nasdaq National Market, or dually 

listed on a national securities exchange 

prior to January 1, 2004.7 Only one class 

of security per issuer is considered for 

inclusion in the Index. 

Additionally, the issuer of a 

component security cannot be a 

financial or investment company and 

cannot currently be involved in 

bankruptcy proceedings. Criteria for 

inclusion also require the average daily 

trading volume of a component security 

to be at least 200,000 shares on Nasdaq. 

If a component security is of a foreign 

issuer, based on its country of 

incorporation, it must have listed 

options or be eligible for listed-options 

trading. In addition, the issuer of a 

component security must not have 

entered into any definitive agreement or 

other arrangement which will likely 

result in the security no longer being 

Index eligible. An issuer of a component 

security also must not have annual 

financial statements with an audit 

opinion that is currently withdrawn. 

As of November 26, 2012, the 

following were characteristics of the 

Index: 

• The total capitalization of all 

components of the Index was $3.11 

trillion; 

• Regarding component 

capitalization, (a) the highest 

capitalization of a component was 

$554.57 billion (Apple, Inc.), (b) the 

lowest capitalization of a component 

was $2.12 billion (Apollo Group, Inc.), 

(c) the mean capitalization of the 

components was $31.05 billion, and (d) 


srobinson on DSK4SPTVN1PROD with 
1896 Federal Register / Vol. 78, No. 6 / Wednesday, January 9, 2013 / Notices 

8Options trading on MNX have generated 

considerable interest from investors, as measured 

by its robust trading volume on multiple exchanges 

in the third quarter of 2012 (126,151 contracts 

total). 

9Full-size Nasdaq 100 Index and Mini Nasdaq 

100 Index levels are disseminated through the 

Nasdaq Index Dissemination Services (‘‘NIDS’’) 

during normal Nasdaq trading hours (9:30 a.m. to 

4:00 p.m. ET). The Index is calculated using Nasdaq 

prices (not consolidated) during the day and the 

official closing price for the close. The closing value 

of the Index may change until 5:15 p.m. ET due to 

corrections to the NOCP of the component 

securities. In addition, the Index is published daily 

on Nasdaq’s Web site and through major quotation 

vendors such as Reuters and Thomson’s ILX. 

10The aggregate exercise value of the option 

contract is calculated by multiplying the Index 

value by the Index multiplier, which is 100. 

11For any given expiration month, options on the 

Nasdaq 100 Index will expire on the third Saturday 

of the month. 

12Full-size Settlement Values and Mini 

Settlement Values are disseminated by Nasdaq. 

the median capitalization of the 

components was $10.91 billion; 

• Regarding component price per 

share, (a) the highest price per share of 

a component was $661.15 (Google, Inc.), 

(b) the lowest price per share of a 

component was $2.76 (Sirius XM Radio, 

Inc.), (c) the mean price per share of the 

components was $70.30, and (d) the 

median price per share of the 

components was $40.38; 

• Regarding component weightings, 

(a) the highest weighting of a 

component was 18.52% (Apple, Inc.), 

(b) the lowest weighting of a component 

was 0.07% (Apollo Group, Inc.), (c) the 

mean weighting of the components was 

1.00%, (d) the median weighting of the 

components was 0.37%, and (e) the total 

weighting of the top five highest 

weighted components was 40.78% 

(Apple Inc., Microsoft Corporation, 

Google Inc., Oracle Inc., and 

Amazon.com, Inc.); 

• Regarding component available 

shares, (a) the most available shares of 

a component was 8.42 billion shares 

(Microsoft Corp.), (b) the least available 

shares of a component was 39.76 

million shares (Intuitive Surgical, Inc.), 

(c) the mean available shares of the 

components was 750.27 million shares, 

and (d) the median available shares of 

the components was 295.85 million 

shares; 

• Regarding the six-month average 

daily volumes of the components, (a) 

the highest six-month average daily 

volume of a component was 61.25 

million shares (Sirius XM Radio Inc.), 

(b) the lowest six-month average daily 

volume of a component was 331,667 

shares (Intuitive Surgical, Inc.), (c) the 

mean six-month average daily volume of 

the components was 6.94 million 

shares, (d) the median six-month 

average daily volume of the components 

was 3.13 million shares, (e) the average 

of six-month average daily volumes of 

the five most heavily traded 

components was 43.34 million shares 

(Sirius XM Radio, Inc., Microsoft Corp., 

Intel Corp., Cisco Systems, Inc., and 

Micron Technology, Inc.), and (f) 100% 

of the components had a six-month 

average daily volume of at least 50,000; 

and 

• Regarding option eligibility, (a) 

100% of the components were options 

eligible, as measured by weighting, and 

(b) 100% of the components were 

options eligible, as measured by 

number. 

Index Calculation and Index 

Maintenance 

In recent years, the value of the Fullsize Nasdaq 100 Index has increased 

significantly, such that the value of the 

Index stood at 3,012.03 as of November 

29, 2012. As a result, the premium for 

the Full-size Nasdaq 100 Index options 

also has increased. The Exchange 

believes that this has caused Full-size 

Nasdaq 100 Index options to trade at a 

level that may be uncomfortably high 

for retail investors. The Exchange 

believes that listing options on reduced 

values will attract a greater source of 

customer business than if the options 

were based only on the full value of the 

Index. The Exchange further believes 

that listing options on reduced values 

will provide an opportunity for 

investors to hedge, or speculate on, the 

market risk associated with the stocks 

comprising the Index. Additionally, by 

reducing the values of the Index, 

investors will be able to use this trading 

vehicle while extending a smaller outlay 

of capital. The Exchange believes that 

this should attract additional investors 

and, in turn, create a more active and 

liquid trading environment.8

The Full-size Nasdaq 100 Index and 

the Mini Nasdaq 100 Index levels are 

calculated continuously, using the last 

sale price for each component stock in 

the Index, and are disseminated every 

15 seconds throughout the trading day.9

The Full-size Nasdaq 100 Index level 

equals the current market value of 

component stocks multiplied by 125 

and then divided by the stocks’ market 

value of the adjusted base period. The 

adjusted base period market value is 

determined by multiplying the current 

market value after adjustments, times 

the previous base period market value 

and then dividing that result by the 

current market value before 

adjustments. To calculate the value of 

the Mini Nasdaq 100 Index, the full 

value of the Index is divided by ten. To 

maintain continuity for the Index’s 

value, the divisor is adjusted 

periodically to reflect events such as 

changes in the number of common 

shares outstanding for component 

stocks, company additions or deletions, 

corporate restructurings, or other 

capitalization changes. 

The settlement values for purposes of 

settling both Full-size Nasdaq 100 Index 

(‘‘Full-size Settlement Value’’) and Mini 

Nasdaq 100 Index (‘‘Mini Settlement 

Value’’) are calculated based on a 

volume-weighted average of prices 

reported in the first five minutes of 

trading for each of the component 

securities on the last business day 

before the expiration date (‘‘Settlement 

Day’’).10 The Settlement Day is normally 

the Friday preceding ‘‘Expiration 

Saturday.’’ 11 If a component security in 

the Index does not trade on Settlement 

Day, the closing price from the previous 

trading day will be used to calculate 

both the Full-size Settlement Value and 

Mini Settlement Value.12 Accordingly, 

trading in options on the Index will 

normally cease on the Thursday 

preceding an Expiration Saturday. 

Nasdaq monitors and maintains the 

Index. Nasdaq is responsible for making 

all necessary adjustments to the Index to 

reflect component deletions; share 

changes; stock splits; stock dividends; 

stock price adjustments due to 

restructuring, mergers, or spin-offs 

involving the underlying components; 

and other corporate actions. Some 

corporate actions, such as stock splits 

and stock dividends, require simple 

changes to the available shares 

outstanding and the stock prices of the 

underlying components. 

The component securities are 

evaluated on an annual basis, except 

under extraordinary circumstances 

which may result in an interim 

evaluation, as follows: securities listed 

on Nasdaq that meet its eligibility 

criteria are ranked by market value 

using closing prices as of the end of 

October and publicly available total 

shares outstanding as of the end of 

November. Eligible component 

securities which are already in the 

Index and ranked in the top 100 (based 

on market value) are retained in the 

Index. Component securities that are 

ranked from 101 to 125 are also 

retained, provided that those securities 

were ranked in the top 100 eligible 

securities as of the previous ranking 

review or have been added to the Index 

subsequent to the previous ranking 

review. Securities not meeting such 

criteria are replaced. The replacement 

securities chosen are those Indexeligible securities not currently in the 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 78, No. 6 / Wednesday, January 9, 2013 / Notices 1897 

13See NYSE MKT LLC (‘‘NYSE MKT’’) Rule 

904C; Chicago Board Options Exchange (‘‘CBOE’’) 

Rule 24.4; NASDAQ OMX PHLX (‘‘Phlx’’) Rule 

1001A. 

14See Exchange Rule 5.15(c). 

15See Exchange Rule 5.19. 

16See Exchange Rule 6.72. 

17See Exchange Rule 5.25. 

18See Exchange Rule 5.19. 

19See Exchange Rule 5.19(b). 

20See Exchange Rule 5, Section 4. 

21A list of the current members and affiliate 

members of ISG can be found at www.isgportal.com. 

22 15 U.S.C. 78f(b). 

23 15 U.S.C. 78f(b)(5). 

Index that have the largest market 

capitalization. 

Generally, the list of annual additions 

and deletions to the Index is publicly 

announced in early December, and 

changes to the Index are made effective 

after the close of trading on the third 

Friday in December. Moreover, if at any 

time during the year a component 

security is determined by Nasdaq to 

become ineligible for continued 

inclusion in the Index based on the 

continued eligibility criteria, that 

component security will be replaced 

with the largest market capitalization 

component not currently in the Index 

that met the eligibility criteria described 

earlier. 

The Exchange will monitor the Index 

on a quarterly basis, and will not list 

any additional series for trading and 

will limit all transactions in such 

options to closing transactions only for 

the purpose of maintaining a fair and 

orderly market and protecting investors 

if: (i) the number of securities in the 

Index drops by one-third or more; (ii) 

10% or more of the weight of the Index 

is represented by component securities 

having a market value of less than $ 75 

million; (iii) less than 80% of the weight 

of the Index is represented by 

component securities that are eligible 

for options trading pursuant to 

Exchange Rule 5.3.; (iv) 10% or more of 

the weight of the Index is represented 

by component securities trading less 

than 20,000 shares per day; or (v) the 

largest component security accounts for 

more than 25% of the weight of the 

Index or the largest five components in 

the aggregate account for more than 

50% of the weight of the Index. 

The Exchange represents that, if the 

Index ceases to be maintained or 

calculated, or if the Index values are not 

disseminated every 15 seconds by a 

widely available source, it will not list 

any additional series for trading and 

will limit all transactions in such 

options to closing transactions only for 

the purpose of maintaining a fair and 

orderly market and protecting investors. 

Contract Specifications 

The proposed contract specifications 

are identical to the contract 

specifications of NDX and MNX options 

that are currently listed on other 

exchanges. The Index is a broad-based 

index. Options on the Nasdaq 100 Index 

are European-style and A.M. cashsettled. The Exchange’s trading hours 

for index options (9:30 a.m. to 4:15 p.m. 

ET), will apply to options on the Nasdaq 

100 Index. Exchange Rules that are 

applicable to the trading of options on 

broad-based indexes will apply to both 

NDX and MNX. The trading of NDX and 

MNX options will be subject to, among 

others, Exchange Rules governing 

margin requirements and trading halt 

procedures for index options. 

The Exchange also proposes to amend 

Rule 5.15(a)(1) to establish that there are 

no position limits for options on NDX, 

which is consistent with the treatment 

of position limits for NDX on other 

options markets.13 Because MNX is the 

reduced-value option on the NDX 

broad-based index option, pursuant to 

existing Rule 5.15(a), MNX will also 

have no position limits pursuant to this 

proposed change. The NDX contracts 

will be aggregated with the MNX 

contracts, where ten MNX contracts 

equal one NDX contract.14 The 

Exchange will set strike price intervals 

for MNX contracts and NDX contract 

that will be similar to the strike price 

intervals that are already being used by 

multiple exchanges that list these 

options.15 The minimum increment size 

for series trading below $ 3 is $ 0.05, 

and for series trading at or above $ 3 is 

$ 0.10.16 The Exchange’s margin rules 

will be applicable.17 The Exchange may 

list options on both the NDX and the 

NMX in up to seven consecutive 

expiration months plus up to three 

successive expiration months in the 

March cycle.18 The Exchange intends to 

list the same NDX and MNX options 

that are already listed by multiple other 

options exchanges. The trading of 

LEAPS NDX and LEAPS MNX options 

will be subject to the same rules that 

govern the trading of all the Exchange’s 

index options, including sales practice 

rules, margin requirements, and trading 

rules.19 The trading of FLEX NDX and 

FLEX MNX options will be subject to 

the same rules that govern the trading of 

all the Exchange’s index options, 

including sales practice rules, margin 

requirements, and trading rules.20

Surveillance and Capacity 

The Exchange represents that it has an 

adequate surveillance program in place 

for options traded on the Index and 

intends to apply those same program 

procedures that it applies to the 

Exchange’s other index options. 

Additionally, the Exchange is a member 

of the Intermarket Surveillance Group 

(‘‘ISG’’) under the Intermarket 

Surveillance Group Agreement, dated 

June 20, 1994.21 The ISG members work 

together to coordinate surveillance and 

investigative information sharing in the 

stock and options markets. In addition, 

the major futures exchanges are 

affiliated members of the ISG, which 

allows for the sharing of surveillance 

information for potential intermarket 

trading abuses. 

The Exchange represents that it has 

the necessary systems capacity to 

support new options series that will 

result from the introduction of NDX, 

MNX, NDX LEAPS, MNX LEAPS, FLEX 

NDX, and FLEX MNX. 

Finally, the Exchange proposes to 

amend Commentary .01 to Rule 5.22 to 

provide that the reporting authority 

designated by the Exchange for the 

Index underlying the NDX and MNX 

index options is NASDAQ OMX Group, 

Inc. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 22 of the 

Act, in general, and furthers the 

objectives of Section 6(b)(5),23 in 

particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, 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 Exchange believes that the rule 

proposal will remove impediments to 

and perfect the mechanism of a free and 

open market because it enabling [sic] 

the Exchange to immediately list and 

trade full and reduced-size options on 

the Index in a manner consistent with 

other options exchanges. The Exchange 

believes that the proposed rule change 

would be beneficial to market 

participants, including market makers, 

institutional investors and retail 

investors, by specifying that there are no 

position limits on NDX and MNX. The 

Exchange further notes that the rule 

proposal will remove impediments to 

and perfect the mechanism of a free and 

open market because it will harmonize 

how position limits are treated for NDX 

and MNX options across options 

markets. The Commission has already 

approved the listing and trading and the 

elimination of position limits for NDX 


srobinson on DSK4SPTVN1PROD with 
1898 Federal Register / Vol. 78, No. 6 / Wednesday, January 9, 2013 / Notices 

24 15 U.S.C. 78s(b)(3)(A). 

25 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

provide the Commission with 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 fulfilled this requirement. 

26For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

27See, e.g., Security Exchange Act Release Nos. 

57654 (April 11, 2008), 73 FR 21003 (April 17, 

2008) (SR–NASDAQ–2008–028) and 57936 (June 6, 

2008), 73 FR 33481 (June 12, 2008) (SR–Phlx–2008– 

36). See also NYSE MKT Rule 904C, CBOE Rule 

24.4, and Phlx Rule 1001A. 

28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Professional’’ means any person or 

entity that (i) is not a broker or dealer in securities, 

and MNX options for other options 

exchanges, and the Exchange believes 

that harmonizing the standard across 

options markets will enable market 

participants to handle trading in NDX 

and MNX options similarly regardless of 

which options market in which they are 

trading. 

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 

Because the foregoing proposed rule 

change: (1) Does not significantly affect 

the protection of investors or the public 

interest; (2) does not impose any 

significant burden on competition; and 

(3) by its terms does not become 

operative for 30 days after the date of 

this filing, 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 24 and 

Rule 19b–4(f)(6) thereunder.25

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative for 30 days after the 

date of filing. 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. The 

Exchange requests that the Commission 

waive the 30-day operative delay so that 

it can list and trade NDX and MNX 

options with no position limits without 

delay. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest.26 The 

Commission notes the proposal is 

substantively identical to prior 

proposed rule changes and existing 

rules of other exchanges, and does not 

raise any new regulatory issues.27 For 

these reasons, the Commission 

designates the proposed rule change as 

operative upon filing. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend 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 email to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2012–140 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–2012–140. 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 

10:00 a.m. and 3:00 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– 

NYSEArca–2012–140 and should be 

submitted on or before January 30, 2013. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2013–00196 Filed 1–8–13; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–68577; File No. SR–Phlx– 

2012–141] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NASDAQ 

OMX PHLX LLC Relating to 

Professional Options Transaction 

Charges 

January 3, 2013. 

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 December 

21, 2012, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III, below, which Items have been 

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 

certain electronic Professional 3 Options 


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