Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 27217 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Commission notes that Amendment No.1 

replaces and supersedes the initial filing in its 

entirety. 

4The Chinese yuan may also be known as 

renminbi (similarly to the British pound and 

sterling). 

5Options on the following U.S. dollar-settled 

foreign currencies are currently listed and traded on 

the Exchange: the Australian dollar, the Euro, the 

British pound, the Canadian dollar, the Swiss franc, 

and the Japanese yen (together, the ‘‘FCOs’’) (the 

New Currencies and FCOs are together known as 

the ‘‘Currencies’’). The product specifications for 

the U.S. dollar-settled FCOs, which are not altered 

by or as a result of this filing, may be found at 

http://www.nasdaqtrader.com/ 

Micro.aspx?id=phlxwcoproductspecs. 

6Rules 1000 (Applicability, Definitions and 

References), 1001 (Position Limits), 1002 (Exercise 

Limits), 1009 (Criteria for Underlying Securities), 

1012 (Series of Options Open for Trading), 1014 

(Obligations and Restrictions Applicable to 

Specialists and Registered Options Traders), 1016 

(Block Transactions in Physical Delivery Foreign 

Currency Options), 1027 (Discretionary Accounts), 

1033 (Bids and Offers—Premium), 1034 (Minimum 

Increments), 1044 (Delivery and Payment), 1049 

(Communications to Customers), 1057 (U.S. DollarSettled Foreign Currency Option Closing Settlement 

Value), 1063 (Responsibilities of Floor Brokers), 

1069 (Customized Foreign Currency Options), 1070 

(Customer Complaints), 1079 (FLEX Index, Equity 

and Currency Options), 1089 (Dealing Directly With 

Specialist and Registered Option Trader in Foreign 

Currency Options), and 1092 (Obvious Errors and 

Catastrophic Errors). 

7Option Floor Procedure Advices B–7 (Time 

Priority of Bids/Offers in Foreign Currency Options 

(Physical Delivery Foreign Currency Option Only)), 

C–2 (Options Floor Broker Management System), F– 

6 (Options Quote Parameters), F–17 (FCO Trades to 

be Effected in the Pit (Physical Delivery Foreign 

Currency Option Only)), F–18 (FCO Expiration 

Months and Strike Prices—Selective Quoting 

Facility (Physical Delivery Foreign Currency Option 

Only)), and F–20 (Quoting and Trading Customized 

Foreign Currency Options (Foreign Currency 

Option Only)). 

8See Securities Exchange Act Release No. 54989 

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

2006) (SR–Phlx–2006–34). In approving the listing 

and trading of U.S. dollar-settled FCOs on the 

British pound and the Euro, the approval order 

stated that the listing and trading of additional U.S. 

dollar-settled FCOs on other foreign currencies will 

require the Exchange to file additional proposed 

rule changes on Form 19b–4. 

9See Securities Exchange Act Release No. 56034 

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

Phlx–2007–34). 

10See Securities Exchange Act Release No. 49832 

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

Phlx–2003–59)(approving Phlx XL). See also 

Release No. 59995 (May 28, 2009) SR–Phlx–2009– 

32 (approving Phlx XL II). The Exchange is rolling 

out a new trading platform. 

11Physical delivery options, so named because 

settlement could involve delivery of the underlying 

currency (as opposed to cash for U.S. dollar-settled 

Continued 

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 FINRA. 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–FINRA–2009–033 and 

should be submitted on or before June 

29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13252 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60021; File No. SR–Phlx– 

2009–40] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing of Proposed Rule Change as 

Modified by Amendment No. 1 Thereto 

Relating to Listing and Trading New 

Currencies 

June 1, 2009. 

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 May 8, 

2009, NASDAQ OMX PHLX, Inc. 

(‘‘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 

Exchange filed Amendment No. 1 to the 

proposal on May 29, 2009.3 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 

Phlx rules to: (1) List and trade U.S. 

dollar-settled foreign currency options 

on the Brazilian real, Chinese yuan,4

Danish krone, New Zealand dollar, 

Mexican peso, Norwegian krone, 

Russian ruble, South African rand, 

South Korean won, and Swedish krona 

(the listed currencies are together 

known as the ‘‘New Currencies’’) 5; (2) 

clarify definitions regarding the 

Currencies, (3) establish position and 

exercise limits for the Currencies; (4) 

clarify the uniform pricing convention 

(methodology) for all Currencies; and (5) 

delete obsolete and out of use references 

regarding foreign currency products and 

processes. 

The Exchange also proposes to amend 

Phlx Option Floor Procedure Advices 

(‘‘OFPAs’’ or ‘‘Advices’’) to harmonize 

Exchange Advices and rules. 

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. 

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 the proposed rule 

change is to amend Phlx rules 6 to: 

Expand the Exchange’s current product 

offering to include options on the New 

Currencies; clarify certain existing 

Exchange rules relating to Currencies; 

establish position limits for Currencies; 

and clarify the uniform pricing 

convention (methodology) for options 

on Currencies. In doing so, the 

Exchange will delete obsolete and out of 

use references regarding foreign 

currency products and processes. The 

purpose is also to conform existing 

Advices 7 to the rules as amended. 

Background 

In January 2007, the Exchange listed 

and began trading U.S. dollar-settled 

FCOs on the British pound and the 

Euro.8 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.9

U.S. dollar-settled FCOs continue being 

traded electronically over the 

Exchange’s options trading platform, 

Phlx XL.10 Additionally, through the 

spring of 2007 the Exchange traded, 

through open outcry, physical delivery 

options on foreign currencies.11


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27218 Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 

FCOs), have traded on the Exchange since 1982 but 

are no longer listed and traded. All open interest 

in physical delivery options was traded out or 

expired by the end of March 2007 and only U.S. 

dollar-settled FCOs now trade on the Exchange. 

12CME Group Inc. (‘‘CME’’), formerly Chicago 

Mercantile Exchange Holdings Inc., lists and trades 

futures contracts on many of the New Currencies 

that are proposed to be listed and traded by the 

Exchange (e.g. the Mexican peso, the New Zealand 

dollar, the Norwegian krone, the Russian ruble, the 

Swedish krona, the Brazilian real, the Chinese 

renminbi, the South African rand, and the South 

Korean won). 

13The International Securities Exchange, LLC 

(‘‘ISE’’), for example, also lists and trades options 

on certain foreign currencies (including the 

Australian dollar, the Euro, the British pound, the 

Canadian dollar, the Swiss franc, and the Japanese 

yen) that are not fungible with Phlx’s U.S. dollarsettled FCOs. See Exchange Act Release No. 55575 

(April 3, 2007), 72 FR 17963 (April 10, 2007) (SR– 

ISE–2006–59). ISE, like Phlx, applies multipliers to 

currency spot prices so that ISE’s currency prices 

tend to look like the prices of index and other 

options. 

14The Exchange will similarly add the New 

Currencies throughout its rules. See, e.g., Rules 

1009, 1057, and 1079. 

15See Securities Exchange Act Release No. 58915 

(November 6, 2008), 73 FR 67916 (November 17, 

2008) (indicating, among other things, that Quote 

Media, Inc. provides spot prices to The NASDAQ 

OMX Group, Inc. (‘‘NASDAQ OMX’’)). Proposed 

section 16 of Rule 1000 defines Exchange Spot Price 

as follows: The term ‘‘Exchange Spot Price’’ in 

respect of an option contract on a foreign currency 

means the cash market spot price, for the sale of one 

foreign currency for another, quoted by various 

foreign exchange participants for the sale of a single 

unit of such foreign currency for immediate 

delivery that is calculated from the foreign currency 

price quotation reported by the foreign currency 

price quotation dissemination system selected by 

the Exchange, to which an appropriate multiplier is 

applied. The multiplier(s) will be: 100 for the 

British pound, the Euro, the Swiss Franc, the 

Canadian dollar, the Australian dollar, the Brazilian 

real, and the New Zealand dollar; 1,000 for the 

Chinese yuan, the Danish krone, the Mexican peso, 

the Norwegian krone, the South African rand, and 

the Swedish krona; 10,000 for the Japanese yen and 

the Russian ruble; and 100,000 for the South Korean 

won. 

16Exchange Spot Prices will generally have two 

decimal places. As an example, the Exchange Spot 

Price for the Japanese yen, with up-front 

application of a multiplier of 10,000, may be 

80.22—which reflects how index (and other) 

options are operationally priced by the Exchange, 

ISE, and other markets that trade options on foreign 

currencies. In contrast, using the old pricing 

methodology (without up-front application of a 

multiplier) the above-noted spot price for the 

Japanese yen would be .008022 (expressed as 

80.22). Moreover, Exchange Spot Prices and what 

are known as modified spot prices (that is, spot 

prices that do not incorporate modifiers but add 

them at a later time) are the same values. See 

Securities Exchange Act Release No. 57575 (March 

28, 2008), 73 FR 18310 (April 3, 2008)(SR–Phlx– 

2008–06)(describing, among other things, modified 

spot prices). 

17NYSE Arca also trades options on certain 

foreign currencies that are listed on ISE. 

18See note 10 of Securities Exchange Act Release 

No. 59611 (March 20, 2009), 74 FR 13498 (March 

27, 2009) (SR–Phlx–2009–22) (notice of filing and 

immediate effectiveness). 

19The Exchange may initially list exercise strike 

prices for each expiration of U.S. dollar-settled 

options on currencies within a 40 percent band 

around the current Exchange Spot Price at fifty cent 

($.50) intervals. Thus, if the Exchange Spot Price of 

the Euro were at $100.00, the Exchange would list 

strikes in $.50 intervals up to $120.00 and down to 

$80, for a total of eighty-one strike prices available 

for trading. As the Exchange Spot Price for U.S. 

dollar-settled FCOs moves, the Exchange will list 

new strike prices that, at the time of listing, do not 

exceed the Exchange Spot Price by more than 20 

percent and are not less than the Exchange Spot 

Price by more than 20 percent. For example, if at 

the time of initial listing, the Exchange Spot Price 

of the Euro is at $100.00, the strike prices the 

Exchange will list will be $80.00 to $120.00. If the 

Exchange Spot Price then moves to $105.00, the 

Exchange may list additional strikes at the 

following prices: $105.50 to $126.00. Proposed 

Commentary .06 to Rule 1012. 

20Long-Term Series. The Exchange may list, with 

respect to any U.S. dollar-settled foreign currencies, 

options having up to three years from the time they 

are listed until expiration. There may be up to ten 

options series, options having up to thirty-six 

months from the time they are listed until 

expiration. There may be up to six additional 

expiration months. Strike price interval, bid/ask 

differential and continuity rules shall not apply to 

such options series until the time to expiration is 

less than nine months. Proposed Rule 

1012(a)(iii)(C). 

The Exchange proposes to amend 

Phlx rules and Advices to enable it to 

list and trade, over Phlx XL, options on 

ten New Currencies: the Mexican peso, 

the Brazilian real, the Chinese yuan, the 

Danish krone, the New Zealand dollar, 

the Norwegian krone, the Russian ruble, 

the South African rand, the South 

Korean won, and the Swedish krona.12

These New Currencies will be listed and 

traded similarly to U.S. dollar-settled 

FCOs that are currently traded on the 

Exchange, and will use existing 

Exchange rules and processes subject to 

the rule changes proposed herein. 

The changes proposed herein 

regarding the methodology or 

convention of pricing options on foreign 

currencies reflect pricing that is similar 

in nature to what is being used by other 

markets that trade currency options.13

Definitions 

The Exchange proposes to clarify in 

its Rule 1000 several definitions in 

respect of foreign currencies. First, the 

Exchange proposes to add ten New 

Currencies to the six that are currently 

listed in Sections 13 (Foreign Currency) 

and 15 (Unit of Underlying Foreign 

Currency) of Rule 1000.14

Second, the Exchange proposes to 

clarify the definition of spot price in 

Section 16 (Spot Price) of Rule 1000 by 

renaming it Exchange Spot Price and 

indicating that, to establish the 

Exchange Spot Price, the Exchange will 

apply an appropriate multiplier to the 

cash market spot price that it receives 

from a price quotation dissemination 

system chosen by the Exchange.15 The 

multipliers will be applied by the 

Exchange so that Exchange Spot Prices 

would look similar to index option 

prices.16 Up-front application of 

appropriate multipliers to cash market 

spot prices to get Exchange Spot Prices 

more accurately reflects how options on 

foreign currencies are actually priced by 

exchanges that list and trade such 

products (currently ISE and Phlx).17

The Exchange will continue to 

disseminate Exchange Spot Prices and 

other FCO-related data such as, for 

example, U.S. dollar-settled FCO 

settlement values and prices (Exchange 

Spot Prices) over the facilities of a major 

public data vendor, such as NASDAQ 

OMX or one or more other (NASDAQ 

OMX-owned or unrelated) major market 

data vendors.18

Pricing of Options 

Consistent with application by the 

Exchange of appropriate multipliers to 

each currency Exchange Spot Price, the 

Exchange proposes to amend Rules 

1012, 1014, 1033, 1034, and 1092, and 

OFPA F–6 to clarify the uniform foreign 

currency option pricing convention and 

thereby greatly simplify the pricing of 

such options. The uniform pricing 

convention will carry through all of the 

Exchange’s rules relating to foreign 

currency options. 

Rule 1012, Commentary .06 currently 

states that, assuming certain spot price 

levels, the Exchange may initially list 

exercise strike prices of the Euro in the 

range of $.9500 (expressed as $95) to 

$1.0550 (expressed as $105.50). That is, 

options on foreign currencies are 

currently priced in Commentary .06 

without application of a multiplier and 

are followed by an ‘‘expressed as’’ price. 

The Exchange proposes to clarify 

Commentary .06 to reflect how options 

are actually priced by applying an 

appropriate modifier up-front to the 

price. As such, there would be no need 

for the Exchange to follow FCO prices 

of several decimal places with 

‘‘expressed as’’ prices, and the abovenoted example in Commentary .06 

would state that the Exchange may 

initially list exercise strike prices of the 

Euro in the range of $95 to $105.50. 

The Exchange proposes to modify 

Rule 1012 such that Exchange Strike 

Prices may be listed within a 40 percent 

band (20 percent above and 20 percent 

below) around Exchange Spot Prices at 

fifty cent ($.50) intervals. This would 

result in no more than eighty-one strike 

prices available for trading.19 Regarding 

long-term options, the Exchange 

proposes to clarify that the Exchange 

may list up to ten options series having 

up to thirty-six months from the time 

they are listed until expiration.20 The 

Exchange proposes to establish that 

FLEX currency options will similarly 


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21See proposed Rule 1079(a)(6). 

22Options on U.S. dollar-settled FCO. With 

respect to all U.S. dollar-settled FCO bidding and/ 

or offering so as to create differences of no more 

than $.25 between the bid and the offer for each 

option contract for which the prevailing bid is less 

than $2.00; no more than $.40 where the prevailing 

bid is $2.00 or more but less than $5.00; no more 

than $.50 where the prevailing bid is $5.00 or more 

but less than $10.00; no more than $.80 where the 

prevailing bid is $10.00 or more but less than 

$20.00; and no more than $1.00 where the 

prevailing bid is $20.00 or more. Proposed 

1014(c)(i)(A). The Exchange proposes similar 

changes to OFPA F–6. 

23Rule 1033 currently states that the first two 

decimal places shall be omitted from all bid and 

offer quotations for the British pound, the Swiss 

franc, the Canadian dollar, the Australian dollar, 

and the Euro, and the first four decimal places shall 

be omitted from all bid and offer quotations for the 

Japanese yen (e.g., a bid of ‘‘9.2’’ for an option 

contract on the British pound shall represent a bid 

to pay $.0920 per unit of underlying foreign 

currency—i.e., a premium of $2,875—for an option 

contract having a unit of trading of 31,250 pounds; 

a bid of .44 for an option contract on the Euro shall 

represent a bid to pay .0044 per unit of underlying 

foreign currency—i.e. a premium of $275—for an 

option contract having a unit of trading of 62,500 

Euros; a bid of ‘‘1.6’’ for an option contract on the 

Japanese yen shall represent a bid to pay $.000160 

per unit of underlying foreign currency—i.e., a 

premium of $1,000—for an option contract having 

a unit of trading of 6,250,000 yen). 

24Rule 1034 currently states that the minimum 

increments for options on various currencies using 

‘‘expressed as’’ pricing (e.g. $.0001 (expressed as 

$.01) for the British pound and $.000001 (expressed 

as $.01) for the Japanese yen). 

25All options on foreign currencies where the 

underlying foreign currency is not the U.S. dollar 

shall have a minimum increment of $.01. Proposed 

Rule 1034. 

26Proposed Rule 1092(a)(i) indicates, for 

example: 

Theoretical price—Below $2; Minimum 

amount—$.25. 

Whereas, current Rule 1092(a)(i) indicates: 

Theoretical price—Below $ .02 (expressed as 2); 

Minimum amount—$.0025 (expressed as .25). 

27Rule 1001 currently also indicates position 

limits of 100,000 contracts for options on the 

Mexican peso traded as a customized option per 

Rule 1069. Because Rule 1069 and other references 

to customized options, among them options on the 

Mexican peso, are deleted in this filing, the 100,000 

contact position limit on the Mexican peso will be 

deleted. 

28See proposed Commentary .05(b) to Rule 1001. 

29See, e.g., Securities Exchange Act Release No. 

55575 (April 3, 2007), 72 FR 17963 (April 10, 2007) 

(SR–ISE–2006–59) (order approving, among other 

things, proposal to establish 1,200,000, 600,000, 

and 300,000 contract position limits for foreign 

currency options). 

30U.S. dollar-settled option contracts generally 

were smaller than physically traded option 

contracts. 

31The closing settlement value was changed from 

the Noon Buying Rate received from the Federal 

Reserve Bank of New York to the spot price at 

12:00:00 Eastern Time (noon) on the last trading 

day prior to expiration. See Securities Exchange Act 

Release No. 58915 (November 6, 2008), 73 FR 67916 

(November 17, 2008) (SR–Phlx–2008–68) (notice of 

filing and immediate effectiveness). 

32The closing settlement value for the U.S. dollarsettled FCO on the Australian dollar, the Euro, the 

British pound, the Canadian dollar, the Swiss franc, 

the Japanese yen, the Mexican peso, the Brazilian 

real, the Chinese yuan, the Danish krone, the New 

Zealand dollar, the Norwegian krone, the Russian 

ruble, the South African rand, the South Korean 

won, and the Swedish krona shall be the Exchange 

Spot Price at 12:00:00 Eastern Time (noon) on the 

last trading day prior to expiration unless the 

Exchange determines to apply an alternative closing 

settlement value as a result of extraordinary 

circumstances. Proposed Rule 1057. See also 

proposed Rule 1079. 

have expiration dates of up to three 

years.21

Rule 1014, like Rule 1012, is proposed 

to be amended to reflect uniform FCO 

pricing that no longer requires 

indicating bid/ask prices with many 

decimal places that are also expressed 

as different, index option-like values 

after appropriate multipliers are 

applied.22

Rule 1033, which applies to all 

Currencies, is proposed to be amended 

to clarify that premiums on all U.S. 

dollar-settled FCOs will be calculated in 

the same way for all options. The 

Exchange proposes to delete 

unnecessary rule text that indicates that 

the first two decimal places will be 

omitted for bid and offer quotations for 

the British pound, the Swiss franc, the 

Canadian dollar, the Australian dollar, 

and the Euro, and the first four decimal 

places will be omitted from bid and 

offer quotations for the Japanese yen. 

The Exchange also proposes to provide 

a clear example of how premiums will 

be calculated on foreign exchange 

options: E.g., a bid of ‘‘3.25’’ for a 

premium on a $170 strike price option 

on the British pound shall represent a 

bid to pay $325 per option contract.23

Rule 1034 currently prescribes the 

minimum trading increments for all 

U.S. dollar-settled FCOs.24 This rule, 

which will apply to the New Currencies 

as well, is proposed to be amended to 

clarify that minimum price increments 

for all currencies will remain at $.01, 

but without the need to indicate 

different minimum price increments for 

different currencies that are thereafter 

each ‘‘expressed as $.01’’.25

Rule 1092 and OFPA F–6 are likewise 

proposed to be amended to clarify that 

option prices will no longer be 

indicated in terms of several decimal 

places that are then expressed as 

different values.26

Position Limits 

Rule 1001 establishes position limits 

for FCOs at 200,000 on the same side of 

the market relating to the same 

underlying currency.27 The Exchange 

proposes to amend Rule 1001 to 

establish three levels of position limits 

for FCOs. Specifically, the Exchange 

proposes the following position limits: 

(1) 300,000 contracts for options on: 

the Mexican peso, the Brazilian real, the 

Chinese yuan, the Danish krone, the 

Norwegian krone, the Russian ruble, the 

South African rand, the South Korean 

won, the Swedish krona; 

(2) 600,000 contracts for options on: 

the British pound, the Swiss franc, the 

Canadian dollar, the Australian dollar, 

the Japanese yen, and the New Zealand 

dollar; and 

(3) 1,200,000 contracts for options on 

the Euro.28

The position limits proposed by the 

Exchange are similar to those used by 

other markets that trade foreign 

currency options.29

The Exchange also proposes to 

eliminate from Rules 1001 and 1079 the 

practice of fractional counting of U.S. 

dollar-settled foreign currency option 

contracts for position limit purposes. 

Fractional counting was needed to 

establish position limit equivalency 

between the Exchange’s physical 

delivery option contracts and U.S. 

dollar-settled option contracts, which 

had different sized contracts on the 

same underlying currencies.30 Because 

physical delivery foreign currency 

options are no longer traded on the 

Exchange, however, it is no longer 

necessary to have fractional counting 

differentiations in Rule 1001 and they 

are being eliminated. 

Rule 1057 currently provides for the 

determination of closing settlement 

values for options on the six foreign 

currency options that trade on the 

Exchange. Rule 1079 currently provides 

for the similar determination of closing 

settlement values for FLEX foreign 

currency options that trade on the 

Exchange. In both rules, the closing 

settlement price for U.S. dollar-settled 

FCOs is the Spot Price at 12:00:00 

Eastern Time (noon) on the last trading 

day prior to expiration. 31 Rules 1057 

and 1079 are updated commensurate 

with the clarification of the pricing 

convention in this filing. In particular, 

Rules 1057 and 1079 are proposed to be 

amended to add the New Currencies 

and reflect that the Exchange Spot Price 

per Rule 1000(b)16 will be the 

settlement price.32 The Exchange 

believes that these modifications would 

reflect the proper methodologies for 

calculating closing settlement values for 

options on its foreign currency 

products. The rules will continue to 

permit the Exchange to apply alternative 

closing settlement values as a result of 

extraordinary circumstances. 

In addition to the specific proposed 

rule changes, options on the New 

Currencies would be subject to the same 

rules and processes that now apply to 

existing options on foreign currencies. 


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33The Exchange is a member of the Intermarket 

Surveillance Group (‘‘ISG’’) under the Intermarket 

Surveillance Group Agreement, dated June 20, 

1994, and may obtain trading information via the 

ISG from other exchanges who are members or 

affiliates of the ISG. The members of the ISG 

include all of the U.S. registered stock and options 

markets. 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. 

34See, e.g., Rules 1000 Sections 14, 15, 21, 38, 

and 40; 1001, 1002, 1009, 1034 and 1069 (cross-rate 

foreign currency options); 1012, 1014, 1016, 1034, 

1044 and 1063 (physical delivery foreign currency 

options); 1001, 1009, 1033, 1034, 1063, 1069 and 

1079 (customized foreign currency options); 1049, 

1070 and 1089 (currency warrants); and 1079 

(Regulatory Services Post). See also OFPAs B–7, F– 

17 and F–18 (physical delivery foreign currency 

options); and C–2 and F–20 (customized foreign 

currency options). See also Rule 1014 correcting 

typographical errors. 

35 15 U.S.C. 78f(b). 

36 15 U.S.C. 78f(b)(5). 

37 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Systems Capacity and Surveillance 

The Exchange represents that it has 

the necessary systems capacity to 

support new options series that will 

result from the introduction of options 

on the New Currencies. The Exchange 

represents that it has an adequate 

surveillance program in place for 

trading U.S. dollar-settled FCOs. The 

Exchange will apply the same 

surveillance program to the New 

Currencies.33

Housekeeping Changes 

Finally, the Exchange proposes 

technical, housekeeping rule changes to 

delete obsolete and out of use 

references, rules and Advices regarding 

foreign currency products and 

processes. These include references to 

cross-rate, physical delivery, and 

customized foreign currency options; 

currency and currency index warrants; 

currency products that are no longer 

traded; and Regulatory Services Post, 

which no longer exist.34

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 35 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 36

in particular, in that it is 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, by 

offering investors the ability to invest in 

options on the New Currencies and by 

clarifying and simplifying existing rules 

relating to the pricing of currency 

options including expression of strike, 

bid and ask, spot, and settlement prices. 

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 

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. 

The Exchange has requested 

accelerated approval of this proposed 

rule change prior to the 30th day after 

the date of publication of notice in the 

Federal Register. The Commission is 

considering granting accelerated 

approval of the proposed rule change at 

the end of a 15-day comment period. 

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–2009–40 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–2009–40. 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 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 No. 

SR–Phlx–2009–40 and should be 

submitted on or before June 23, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13210 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60020; File No. SR–CBOE– 

2009–034] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Trades for 

Less Than $1 

June 1, 2009. 

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 May 27, 

2009, the Chicago Board Options 


cprice-sewell on PRODPC61 with NOTICES