57098 Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Notices 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

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

9 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. 10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In addition to FLEX Options, FLEX currency 

options are also traded on the Exchange. These 

flexible index, equity, and currency options provide 

investors the ability to customize basic option 

features including size, expiration date, exercise 

style, and certain exercise prices; and may have 

expiration dates within five years. See Rule 1079. 

FLEX currency options traded on the Exchange are 

also known as FLEX World Currency Options 

(‘‘WCO’’) or Foreign Currency Options (‘‘FCO’’). The 

new pilot program proposed in this filing does not 

encompass currency options. 

Finally, due to the adoption of Rule 

2.12, the Exchange proposes to renumber existing Rule 2.12 as 2.13. 

2. Statutory Basis 

The rule change proposed in this 

submission is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the Act.6

In particular, the proposed change is 

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

Act,7 because it would promote just and 

equitable principles of trade, remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest, by implementing a rule to 

allow BATS Trading, Inc. to route 

orders to the Exchange in its capacity as 

an order routing facility of BYX. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change imposes any 

burden on competition. 

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 written 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 from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 8 and Rule 19b– 

4(f)(6)(iii) thereunder.9

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 e-mail to rulecomments@sec.gov. Please include File 

No. SR–BATS–2010–024 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 No. 

SR–BATS–2010–024. 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, 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 BATS. 

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 No. 

SR–BATS–2010–024 and should be 

submitted on or before October 8, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–23299 Filed 9–16–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62900; File No. SR–Phlx– 

2010–123] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Establish a 

New FLEX Options Pilot Program 

September 13, 2010. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on 

September 2, 2010, NASDAQ OMX 

PHLX LLC (‘‘Phlx’’ or the ‘‘Exchange’’) 

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 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 is filing with the 

Commission a proposal to replace the 

150 contract FLEX minimum value pilot 

program with a new pilot program that 

eliminates minimum value sizes for 

equity-traded FLEX index options and 

FLEX equity options (together known as 

‘‘FLEX Options’’).3 The text of the 

proposed rule change is available on the 

Exchange’s Web site at http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Notices 57099 

4See Securities Exchange Act Release No. 61439 

(January 28, 2010), 75 FR 5831 (February 4, 2010) 

(SR–CBOE–2009–087) (order approving no 

minimum value pilot). NYSE Amex based its no 

minimum value pilot on the CBOE pilot. See 

Securities Exchange Act Release No. 62084 (May 

12, 2010), 75 FR 28091 (May 19, 2010) (SR– 

NYSEAmex–2010–40) (notice of filing and 

immediate effectiveness). 

5Market index options and industry index 

options are broad-based index options and narrowbased index options, respectively. See Rule 

1000A(b)(11) and (12). 

6The Exchange notes that CBOE has similar 

provisions in CBOE Rules 24A.4(a)(4)(ii)(A) and 

24B.4(a)(5)(ii)(A). Unlike Phlx, however, CBOE does 

not trade currency options and does not discuss 

them in the noted CBOE rule sections. 

7See Securities Exchange Act Release Nos. 57824 

(May 15, 2008), 73 FR 29805 (May 22, 2008) (SR– 

Phlx–2008–35) (notice of filing and immediate 

effectiveness establishing the 150 minimum value 

pilot program); and 60627 (September 4, 2009), 74 

FR 47032 (September 14, 2009) (SR–Phlx–2009–78) 

(notice of filing and immediate effectiveness 

extending the 150 minimum value pilot program). 

8The Exchange is not aware of any significant 

compliance or enforcement issues pursuant to the 

150 minimum value pilot program. 

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

10 15 U.S.C. 78f(b)(5). 

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 

Exchange 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 

Exchange 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 this filing is to amend 

Commentary .01 to Rule 1079 to replace 

the 150 contract FLEX minimum value 

pilot program with a new pilot program 

that eliminates minimum value sizes for 

FLEX Options for an opening 

transaction (‘‘Pilot Program’’ or ‘‘Pilot’’). 

The Pilot Program would end on March 

28, 2011. 

The rule changes proposed by the 

Exchange are similar to those in use by 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’) and NYSE Amex 

LLC (‘‘NYSE Amex’’).4

Rule 1079 deals with the process of 

listing and trading FLEX options on the 

Exchange. Rule 1079 states that the term 

‘‘FLEX option’’ means a FLEX option 

contract that is traded subject to this 

rule. Rule 1079 permits the Exchange to 

list FLEX options on: Any index upon 

which options currently trade on the 

Exchange; any security which is 

options-eligible pursuant to Rule 1009; 

or any foreign currency which is 

options-eligible pursuant to Rule 1009 

and which underlies non-FLEX U.S. 

dollar-settled foreign currency options 

that are trading on the Exchange. Rule 

1079 discusses, among other things: 

Opening FLEX options trading through 

the Request-for-Quote (‘‘RFQ’’) process; 

quotes responsive to RFQs; trading 

parameters and procedures; and 

position and exercise limits for FLEX 

options. 

Rule 1079(a)(8)(A) currently sets the 

minimum opening transaction value 

size in the case of a FLEX Option in a 

newly established (opening) series if 

there is no open interest in the 

particular series when an RFQ is 

submitted: (i) $10 million underlying 

equivalent value, respecting FLEX 

market index options, and $5 million 

underlying equivalent value respecting 

FLEX industry index options; 5

(ii) except as provided in Commentary 

.01, the lesser of 250 contracts or the 

number of contracts overlying $1 

million in the underlying securities, 

with respect to FLEX equity options; 

and (iii) 50 contracts in the case of FLEX 

currency options.6

Presently, under an existing pilot 

program in Commentary .01 to Rule 

1079, the Exchange has reduced the 

minimum value size requirement of 

subparagraph (a)(8)(A)(ii) for an opening 

FLEX Equity transaction to the lesser of 

150 contracts (previously 250 contracts) 

or the number of contracts overlying $1 

million in underlying securities (‘‘150 

minimum value pilot program’’).7 The 

Exchange proposes to replace the 

existing 150 minimum value pilot 

program with a new Pilot Program in 

Commentary .01 that eliminates the 

minimum value size requirements for 

FLEX Options.8

If, in the future, the Exchange 

proposes an extension of the new Pilot 

Program that establishes no minimum 

size, or should the Exchange propose to 

make the new Pilot Program permanent, 

the Exchange will submit, along with 

any filing proposing such amendments 

to the Pilot, a Pilot Program report that 

would provide an analysis of the Pilot 

Program covering the period during 

which the Pilot was in effect. This 

report would include: (i) Data and 

analysis on the open interest and 

trading volume in (a) FLEX equity 

options with opening transaction with a 

minimum size of 0 to 249 contracts and 

less than $1 million in underlying 

value; (b) FLEX index options with 

opening transaction with a minimum 

opening size of less than $10 million in 

underlying equivalent value; and 

(ii) analysis of the types of investors that 

initiated opening FLEX Options 

transactions (i.e., institutional, high net 

worth, or retail). The report would be 

submitted to the Commission at least 

two months prior to the expiration date 

of the Pilot Program and would be 

provided on a confidential basis. 

The Exchange notes that any positions 

established under this Pilot would not 

be impacted by the expiration of the 

Pilot. For example, a 10-contract FLEX 

equity option opening position that 

overlies less than $1 million in the 

underlying security and expires in 

January 2015 could be established 

during the Pilot. If the Pilot Program 

were not extended, the position would 

continue to exist and any further trading 

in the series would be subject to the 

minimum value size requirements for 

continued trading in that series. 

The Exchange believes that the 

proposed Pilot Program would provide 

greater opportunities for traders and 

investors to manage risk through the use 

of FLEX Options, including investors 

that may otherwise trade in the 

unregulated over the counter (‘‘OTC’’) 

market where similar size restrictions 

do not apply. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 9 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 10

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 

eliminating a minimum size for FLEX 

transactions, which the Exchange 

believes would provide greater 

opportunities for traders and investors 

to manage risk through the use of FLEX 

Options. 

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. 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
57100 Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Notices 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). When filing a proposed 

rule change pursuant to Rule 19b–4(f)(6) under the 

Act, an exchange is required to give 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 Commission 

notes that the Exchange has satisfied this 

requirement. 

13 17 CFR 240.19b–4(f)(6)(iii). 

14 Id. 

15The Commission also notes that waiving the 

operative date as of the date of this notice is 

consistent with approval of CBOE’s pilot, which 

allowed implementation as of the date of the 

Commission’s approval order, and Amex’s pilot, 

where the pilot was operative upon the date of issue 

of the notice. 

16See supra note 4. 

17 Id. 

18 Id. 

19For the purposes only of waiving the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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 does not: (1) Significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) 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 11 and Rule 19b– 

4(f)(6) thereunder.12

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing.13 However, Rule 19b– 

4(f)(6) 14 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. Phlx 

has requested that the Commission 

waive the 30-day operative delay. 

The Commission has considered 

Phlx’s request to waive the 30-day 

operative delay. Because, however, the 

Commission does not believe, 

practically speaking, that a pilot should 

retroactively commence, the 

Commission is only waiving the 

operative delay as of the date of this 

notice for the reasons discussed 

below.15 The Commission believes that 

waiving the 30-day operative delay to 

allow the commencement of the pilot as 

of the date of issuance of this notice of 

the proposed rule change is consistent 

with the protection of investors and the 

public interest. The Commission notes 

that the proposed rule change is 

substantially similar to a pilot that was 

previously approved by the Commission 

and is currently in existence for 

CBOE,16 and to a pilot program that is 

currently in existence on NYSE Amex.17

The Commission notes that these pilots 

were subject to full notice and comment 

in the Federal Register. The 

Commission received no comments on 

the NYSE Amex proposal, and only 

received comments that supported the 

CBOE proposal.18 Further, the 

Exchange’s proposal does not raise any 

new or novel issues that were not 

already considered in connection with 

the CBOE and NYSE Amex proposals. 

For these reasons, consistent with 

investor protection and the public 

interest, the Commission designates this 

pilot to be operative upon the date of 

issuance of this notice.19

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2010–123 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–2010–123. 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, 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–Phlx– 

2010–123 and should be submitted on 

or before October 8, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–23298 Filed 9–16–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62897; File No. SR–CBOE– 

2010–083] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to the Complex 

Order Book 

September 13, 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 

September 9, 2010, the Chicago Board 

Options Exchange, Incorporated 

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

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1