Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices 29787 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 61935 

(April 16, 2010), 75 FR 21373 (‘‘Notice’’). 

4As more fully explained in the Notice, HOLDRS 

are a type of TIR. Currently, the strike price 

intervals for options on TIRs are as follows: 

(1) $2.50 or greater where the strike price is $25.00 

or less; (2) $5.00 or greater where the strike price 

is greater than $25.00; and (3) $10.00 or greater 

where the strike price is greater than $200. See 

CBOE Rule 5.5.01(c)–(e). 

5See Interpretation and Policy .08 to Rule 5.5. 

See also Securities Exchange Act Release No. 46507 

(September 17, 2002), 67 FR 60266 (September 25, 

2002) (permitting list of options on ETFs at $1 strike 

price intervals) (SR–CBOE–2002–54). 

6See Notice, supra note 3, for CBOE’s 

explanation of how TIRS are similar to ETFs. 

7 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

8 15 U.S.C. 78f(b)(5). 

9See supra note 5. 

10 15 U.S.C. 78s(b)(2). 

11See Securities Exchange Act Release No. 61696 

(March 12, 2010), 75 FR 13174 (March 18, 2010) 

(SR–CBOE–2010–005). 

12 15 U.S.C. 78s(b)(2). 

13 17 CFR 200.30–3(a)(12). 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–12876 Filed 5–25–10; 11:15 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62141; File No. SR–CBOE– 

2010–036] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Granting 

Accelerated Approval of Proposed 

Rule Change To Permit $1 Strikes for 

Options on Trust Issued Receipts 

May 20, 2010. 

I. Introduction 

On April 13, 2010, the Chicago Board 

Options Exchange, Incorporated 

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

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

permit $1 strikes for options on Trust 

Issued Receipts. The proposed rule 

change was published for comment in 

the Federal Register on April 23, 2010.3

The Commission received no comment 

letters on the proposal. This order 

approves the proposed rule change on 

an accelerated basis. 

II. Description of the Proposal 

CBOE has proposed to amend Rule 

5.5, Series of Option Contracts Open for 

Trading, by adding new Interpretation 

and Policy .17 that would allow the 

Exchange to list options on the Trust 

Issued Receipts (‘‘TIRs’’), including 

HOLding Company Depository ReceiptS 

(‘‘HOLDRS’’), as defined under 

Interpretation and Policy .07 to Rule 5.3, 

in $1 or greater strike price intervals, 

where the strike price is $200 or less 

and $5 or greater where the strike price 

is greater than $200 (TIRs and HOLDRS 

are hereafter collectively referred to as 

TIRs).4 The proposed strike price 

intervals for options on TIRs are 

consistent with the strike price intervals 

currently permitted for options on 

exchange-traded funds (‘‘ETFs’’).5

In support of its proposal, CBOE 

stated that it believes the marketplace 

and investors will be expecting options 

on TIRs to trade in a similar manner to 

options on ETFs because TIRs have 

characteristics similar to ETFs.6

Accordingly, the Exchange asserts that 

the rationale for permitting $1 strikes for 

ETF options equally applies to 

permitting $1 strikes for options on TIRs 

and that investors will be better served 

if $1 strike price intervals are available 

for options on TIRs (where the strike 

price is less than $200). 

CBOE further stated that it has 

analyzed its capacity and represents that 

it believes the Exchange and the 

Options Price Reporting Authority have 

the necessary systems capacity to 

handle the additional traffic associated 

with the listing and trading of $1 strikes 

(where the strike price is less than $200) 

for options on TIRs. 

III. Discussion 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.7 Specifically, the 

Commission finds that the proposal is 

consistent with Section 6(b)(5) of the 

Act,8 which requires, among other 

things, that the rules of a national 

securities exchange be designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

The Commission notes that the 

proposed strike price intervals for 

options on TIRS are consistent with the 

strike price intervals currently 

permitted for options on ETFs.9

Accordingly, the proposal should 

provide consistency and predictability 

for investors who may view these 

products as serving similar investment 

functions in the marketplace to ETFs 

and may provide investors with greater 

flexibility in achieving their investment 

objectives. 

In addition, the Commission notes 

that CBOE has represented that it 

believes the Exchange and the Options 

Price Reporting Authority CBOE and the 

Options Price Reporting Authority have 

the necessary systems capacity to 

handle the additional traffic associated 

with the listing and trading of $1 strikes 

for options on TIRS. 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,10 for approving the proposal prior 

to the thirtieth day after the date of 

publication of the Notice in the Federal 

Register. The Commission notes that it 

recently approved similar changes to 

strike price intervals for options on 

Index-Linked Securities for the 

Exchange.11 The Commission also notes 

that it has not received any comments 

regarding this proposal. The 

Commission believes that the proposed 

changes to strike price intervals for 

options on TIRs do not raise any novel 

regulatory issues and accelerating 

approval of this proposal should benefit 

investors by creating consistency and 

predictability for investors who may 

view these products as serving similar 

investment functions in the marketplace 

to ETFs and greater flexibility in 

achieving their investment objectives. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,12 that the 

proposed rule change (SR–CBOE–2010– 

036) be, and hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12693 Filed 5–26–10; 8:45 am] 

BILLING CODE 8010–01–P 


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