25294 Federal Register / Vol. 74, No. 100 / Wednesday, May 27, 2009 / Notices 

efficiency, competition, and capital formation. See 

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

10 15 U.S.C. 78o–3(b)(6). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19–4. 

4The Commission notes that while provided in 

Exhibit 5 to the filing, the text of the proposed rule 

change is not attached to this notice, but is available 

at the Commission’s Public Reference Room and at 

http://www.nyse.com. 

5See Securities Exchange Act Release No. 34– 

55156 (January 23, 2007), 72 FR 4759 (February 21, 

2007); Securities Exchange Act Release No. 34– 

56568 (September 27, 2007), 72 FR 56422 (October 

3, 2007); Securities Exchange Act Release No.34– 

59628 (March 26, 2009), 74 FR 15025 (April 2, 

2009). 

6The Exchange will not include options classes 

in which the issuer of the underlying security is 

subject to an announced merger or is in the process 

of being acquired by another company, or if the 

issuer is in bankruptcy. For purposes of assessing 

national average daily volume, the Exchange will 

use data compiled and disseminated by the Options 

Clearing Corporation. 

7The Exchange shall also identify the classes to 

be added to the Pilot Program, per each phase, in 

a filing with the Commission. 

8For purposes of identifying the issues to be 

added per quarter, the Exchange shall use data from 

the prior six calendar months immediately 

preceding the implementation month. For example, 

the quarterly additions to be added on July 27, 2009 

shall be determined using data from the sixth 

month period ending June 30, 2009. 

Section 15A(b)(6) of the Act,10 which 

requires, among other things, that 

FINRA’s rules be designed to prevent 

fraudulent and manipulative practices, 

to promote just and equitable principles 

of trade, and in general, to protect 

investors and the public interest. 

FINRA’s adoption of Incorporated NYSE 

Rule 406 as FINRA Rule 3250 in the 

Consolidated FINRA Rulebook, with the 

minor changes discussed above, will 

extend to all FINRA members the 

applicability of a rule that serves as an 

important tool to guard against behavior 

that may be manipulative and 

fraudulent and that may violate just and 

equitable principles of trade. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,11 that the 

proposed rule change (SR–FINRA– 

2009–017) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–12218 Filed 5–26–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59944; File No. SR– 

NYSEArca–2009–44] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Amending Rule 6.72 

Governing Trading Differentials and 

Proposing To Expand the Penny Pilot 

May 20, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on May 15, 

2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ 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 proposes to amend its 

option trading rules to (i) extend the 

Penny Pilot in options classes in certain 

issues (‘‘Pilot Program’’) previously 

approved by the Securities and 

Exchange Commission (‘‘Commission’’) 

through December 31, 2010, (ii) provide 

for additional classes to quote and trade 

all contracts in one cent ($0.01) 

increments, and (iii) expand the number 

of issues included in the Pilot. The text 

of the proposed rule change is attached 

as Exhibit 5.4 A copy of this filing is 

available on the Exchange’s Web site at 

http://www.nyse.com, at the Exchange’s 

principal office 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange hereby proposes to 

extend the time period of the Pilot 

Program 5 which is currently scheduled 

to expire on July 3, 2009, through 

December 31, 2010. 

Top 300 

The Exchange also proposes to 

expand the number of issues included 

in the Pilot Program. Specifically, NYSE 

Arca proposes to add the top 300 most 

actively traded multiply listed options 

classes that are not yet included in the 

Pilot Program (‘‘Top 300’’). The 

Exchange proposes to determine the 

identity of the Top 300 based on 

national average daily volume in the 

prior six calendar months immediately 

preceding their addition to the Pilot 

Program.6 In determining the identity of 

the Top 300, the Exchange will exclude 

options classes with high premiums. 

Pursuant to Commentary .02 to NYSE 

Arca Rule 6.72, the Pilot Program issues 

will be announced to the Exchange’s 

membership via Regulatory Bulletin and 

published by the Exchange on its 

website.7 This will bring the total 

number of options classes traded 

pursuant to the Pilot Program to 363. 

NYSE Arca represents that the Exchange 

has the necessary system capacity to 

support any additional series listed as 

part of the Pilot Program. 

Phased Implementation 

The Exchange proposes to phase-in 

the additional classes to the Pilot 

Program over four successive quarters. 

Specifically, the Exchange proposes to 

add 75 classes in July 2009, October 

2009, January 2010, and April 2010. In 

order to reduce operational confusion 

and provide for appropriate time to 

update databases, the Exchange 

proposes to add the eligible issues to the 

Pilot Program effective for trading on 

the Monday ten days after Expiration 

Friday. Thus, the quarterly additions 

would be effective on July 27, 2009; 

October 26, 2009; January 25, 2010; and 

April 26, 2010.8

Exchange Designations 

The Exchange further proposes to 

designate two Pilot Program issues as 

eligible to quote and trade all options 

contracts in one cent increments, 

regardless of premium value. 

Specifically, the Exchange proposes to 

so designate SPY (SPDR S&P 500 ETF) 

and IWM (iShares Russell 2000 Index 

Fund). In selecting these issues, the 

Exchange considered, among other 

things, that these symbols are (a) among 

the most actively traded issues 

nationally, with a wide array of investor 


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Federal Register / Vol. 74, No. 100 / Wednesday, May 27, 2009 / Notices 25295 

9The replacement issues will be announced to 

the Exchange’s membership via Regulatory Bulletin 

and published by the Exchange on its Web site. 

10The Exchange will continue to provide data 

concerning the existing 63 Pilot Program classes. 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 13 17 CFR 200.30–3(a)(12). 

interest, (b) have more series trading at 

a premium between $3 and $10, and (c) 

are trading at prices that are neither 

extremely low nor high, but are 

generally trading between $15–$50. The 

Exchange believes that issues that meet 

these criteria benefit the most from the 

ability to quote and trade all options in 

penny increments. 

Delistings 

Additionally, the Exchange proposes 

that any Pilot Program issues that have 

been delisted may be replaced on a 

semi-annual basis by the next most 

actively traded multiply listed options 

classes that are not yet included in the 

Pilot, based on trading activity in the 

previous six months. The replacement 

issues would be added to the Pilot on 

the second trading day following 

January 1, 2010 and July 1, 2010.9

Report 

The Exchange agrees to submit semiannual reports to the Commission that 

will include sample data and analysis of 

information collected from April 1 

through September 30, and from 

October 1 through March 31, for each 

year, for the ten most active and twenty 

least active options classes added to the 

Pilot Program.10 As the Pilot Program 

matures and expands, the Exchange 

believes that this proposed sampling 

approach provides an appropriate 

means by which to monitor and assess 

the Pilot Program’s impact. The 

Exchange will also identify, for 

comparison purposes, a control group 

consisting of the ten least active options 

classes from the existing 63 Pilot 

Program classes. This report will 

include, but is not limited to: (1) Data 

and analysis on the number of 

quotations generated for options 

included in the report; (2) an assessment 

of the quotation spreads for the options 

included in the report; (3) an assessment 

of the impact of the Pilot Program on the 

capacity of the NYSE Arca’s automated 

systems; (4) data reflecting the size and 

depth of markets, and (5) any capacity 

problems or other problems that arose 

related to the operation of the Pilot 

Program and how the Exchange 

addressed them. 

The Exchange believes the benefits to 

public customers and other market 

participants who will be able to express 

their true prices to buy and sell options 

have been demonstrated to outweigh the 

increase in quote traffic. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 11 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’), in general, and furthers the 

objectives of Section 6(b)(5) 12 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. The 

Exchange believes that the Pilot 

Program promotes just and equitable 

principles of trade by enabling public 

customers and other market participants 

to express their true prices to buy and 

sell 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 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 35 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 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2009–44 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–2009–44. 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 inspection and copying 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 will also be available 

for inspection and copying at NYSE 

Arca’s principal office and on its 

Internet Web site at www.nyse.com. 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–2009–44 and 

should be submitted on or before June 

17, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–12217 Filed 5–26–09; 8:45 am] 

BILLING CODE 8010–01–P 


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