Federal Register / Vol. 75, No. 94 / Monday, May 17, 2010 / Notices 27605 

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

2 17 CFR 240.19b–4. 

3FCOs are also known as World Currency 

Options (‘‘WCOs’’). Eleven FCOs or WCOs are 

currently listed and traded on the Exchange. 

4See Securities Exchange Act Release No. 54989 

(December 21, 2006), 71 FR 78506 (December 29, 

2006) (SR–Phlx–2006–34). 

5See Securities Exchange Act Release No. 56034 

(July 10, 2007), 72 FR 38853 (July 16, 2007) (SR– 

Phlx–2007–34). 

6See Securities Exchange Act Release No. 60169 

(June 24, 2009), 74 FR 31782 (July 2, 2009) (SR– 

Phlx–2009–40) (approval order). 

7See Securities Exchange Act Release Nos. 49832 

(June 8, 2004), 69 FR 33442 (June 15, 2004) (SR– 

Phlx–2003–59) (order approving Phlx XL); and 

59995 (May 28, 2009), 74 FR 26750 (June 3, 2009) 

(SR–Phlx–2009–32) (order approving Phlx XL II). 

8Rule 1012(a)(iii)(A). 

9Rule 1012(a)(iii)(B). 

10Rule 1012(a)(iii)(C). 

11The spot currency market may also be known 

as the ‘‘cash market’’ or ‘‘physical market’’ because 

prices are settled in cash on the spot at current 

market prices. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62060; File No. SR–Phlx– 

2010–68] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to One 

Cent Strike Price Intervals of Foreign 

Currency Options 

May 7, 2010. 

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 April 29, 

2010, NASDAQ OMX PHLX, Inc. 

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

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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 is filing with the 

Commission a proposal to amend Rule 

1012 (Series of Options Open for 

Trading) by adding a provision that 

permits the Exchange to list, in addition 

to strike prices that are currently 

permitted, a single strike price of one 

cent ($0.01) for each expiration month 

for U.S. dollar-settled foreign currency 

options (‘‘FCOs’’) opened for trading on 

the Exchange.3

The text of the proposed rule change 

is available on Phlx’s Web site at http:// 

www.nasdaqtrader.com, on the 

Commission’s Web site at http:// 

www.sec.gov, 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 amend its 

Rule 1012 to list a single strike price of 

one cent ($0.01) for each expiration 

month for U.S. dollar-settled FCOs 

opened for trading on the Exchange. The 

proposed one cent strike would be in 

addition to the strike prices listed by the 

Exchange pursuant to Rule 1012. 

Background 

In January 2007, the Exchange listed 

and began trading U.S. dollar-settled 

FCOs on the British pound and the 

Euro.4 In July 2007, the Exchange listed 

and began trading U.S. dollar-settled 

FCOs on the Australian dollar, Canadian 

dollar, Swiss franc, and Japanese yen.5

Through the spring of 2007 the 

Exchange traded, through open outcry, 

physical delivery options on foreign 

currencies that are so named because 

settlement could involve delivery of the 

underlying currency (as opposed to cash 

for U.S. dollar-settled FCOs); these 

products are no longer listed and traded 

on the Exchange nor is there any 

remaining open interest. Within the last 

year, the Exchange listed and began 

trading U.S. dollar-settled FCOs on the 

Mexican peso, the New Zealand dollar, 

the South African rand, the Swedish 

krona, and the Norwegian krone (all of 

the listed U.S. dollar-settled options are 

together known as the ‘‘FCO Products’’ 

or ‘‘WCO Products’’).6 Eleven FCO 

Products continue being traded 

electronically over the Exchange’s 

options trading platform, now known as 

Phlx XL II.7

Currently, pursuant to Rule 

1012(a)(iii)(U.S. Dollar-Settled Foreign 

Currency Options), after a class of 

options contracts on any underlying 

currency has been approved for listing 

and trading, the Exchange may open for 

trading series of FCO Products that 

expire in consecutive monthly 

intervals,8 in three or ‘‘cycle’’ month 

intervals,9 or that have up to thirty-six 

months to expiration.10 For example, 

pursuant to Rule 1012(a)(iii)(A), with 

respect to each class of FCOs, the 

Exchange may open for trading series of 

options having up to four consecutive 

expiration months, with the shortest 

term series initially having no more 

than two months to expiration. The 

Exchange may also open additional 

consecutive month series of the same 

class for trading at or about the time a 

prior consecutive month series expires, 

and the expiration month of each such 

new series shall normally be the month 

immediately succeeding the expiration 

month of the then outstanding 

consecutive month series of the same 

class of options having the longest 

remaining time to expiration. 

The Proposal 

Pursuant to proposed new subsection 

(a)(iii)(D) of Rule 1012, for each month 

that a foreign currency options is listed 

for trading per Rule 1012(a)(iii), the 

Exchange would list an additional strike 

price of one cent. 

The Exchange notes that adding a one 

cent strike for FCOs will result in a 

single deep-in-the-money option to 

provide investors with exposure similar 

to that of a spot currency transaction.11

The Exchange believes creating such 

exposure provides an opportunity to 

attract a broader range of market 

participants by offering a product that, 

in particular, accommodates retail spot 

foreign currency traders. 

The Exchange also believes that a one 

cent strike price would enable certain 

trading strategies that were previously 

unavailable to investors. Specifically, 

investors would be able to engage in 

strategies that offer similar exposure to 

a tied-to-spot trade, such as a buy-write 

trade. The proposed new strike should 

also appeal to securities brokers that do 

not currently offer spot foreign currency 

trading. The Exchange believes that 

certain online securities brokers have 

not offered spot foreign currency trading 

to their customers because, unlike 

options, spot foreign currency is not a 

listed and centrally-cleared product. 

The Exchange’s proposed rule change 

offers such brokers an opportunity to 

expand their offerings and retain 

customer assets that may otherwise go 

to spot foreign currency trading venues 


srobinson on DSKHWCL6B1PROD with NOTICES
27606 Federal Register / Vol. 75, No. 94 / Monday, May 17, 2010 / Notices 

12The Exchange believes that, as borne out in the 

current economic crisis, market participants benefit 

from being able to trade options in an exchange 

environment in several ways, including, but not 

limited to, the following: (1) Regulatory oversight of 

the options exchanges/markets; (2) increased 

market transparency; and (3) heightened contraparty creditworthiness due to the role of The 

Options Clearing Corporation (‘‘OCC’’) as issuer and 

guarantor of options including FCO Products. 

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 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)(iii). 

4 17 CFR 240.19b–4(f)(3). 

that operate outside of U.S. regulatory 

jurisdiction.12

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 

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, and to remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system, by 

allowing the Exchange to list a single 

one cent strike for each expiration 

month of foreign currency options 

opened for trading and thereby provide 

investors with the ability to engage in 

previously unavailable spot foreign 

currency trading strategies. 

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 foregoing proposed rule 

change: (i) Does not significantly affect 

the protection of investors or the public 

interest; (ii) does not impose any 

significant burden on competition; and 

(iii) by its terms, does not become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 15 and Rule 19b– 

4(f)(6) thereunder.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–Phlx–2010–68 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–2010–68. 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 Web site viewing and 

printing in the Commission’s Public 

Reference Room 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–Phlx–2010–68 and should 

be submitted on or before June 7, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–11653 Filed 5–14–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62064; File No. SR–FINRA– 

2010–020] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to the Trade 

Reporting Facility Limited Liability 

Company Agreements 

May 10, 2010. 

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 April 27, 

2010, the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) 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 FINRA. FINRA has 

designated the proposed rule change as 

being concerned solely with the 

administration of the self-regulatory 

organization under Section 

19(b)(3)(A)(iii) of the Act 3 and Rule 

19b–4(f)(3) thereunder,4 which renders 

the proposal effective upon receipt of 

this filing by the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 


srobinson on DSKHWCL6B1PROD with NOTICES