Document ID: SEC-2009-0728-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rules Related to Doing a Public Business in Options
Posted Date: 2009-06-02T04:00Z

[Federal Register: June 2, 2009 (Volume 74, Number 104)]
[Notices]               
[Page 26451-26453]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jn09-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59978; File No. SR-NYSEArca-2009-41]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rules Related to Doing a Public Business in Options

May 27, 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 7, 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 and II 
below, which Items have been substantially prepared by the Exchange.\4\ 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a et seq.
    \3\ 17 CFR 240.19b-4.
    \4\ The Exchange and Commission staff agreed to several 
clarifying changes in text of Items I, II, and III during a 
telephone conversation between Andrew Stevens, Chief Counsel U.S. 
Equities and Derivatives, Exchange, and Darren Vieira, Attorney 
Advisor, Division of Trading and Markets, Commission on May 21, 
2008.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Exchange Rule 9.18--Doing a Public 
Business in Options. The text of the proposed rule change 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 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.

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 Exchange Rule 
9.18(f) to provide that the market on which an options transaction is 
executed need not be disclosed on a written confirmation furnished to a 
customer of an Options Trading Permit Holder (``OTP Holder'') or 
Options Trading Permit Firm (``OTP Firm'').\5\

[[Page 26452]]

Pursuant to proposed Rule 9.18(f), the OTP Holders and OTP Firms would 
continue to be required to furnish a written confirmation that contains 
a description of each transaction in the option contracts which shows: 
The type of option; the underlying security (e.g., stock or exchange 
traded fund); the expiration month; the exercise price; the number of 
option contracts; the premium and commissions; the transaction and 
settlement dates; whether the transaction was a purchase or a sale 
(writing) transaction; and whether the transaction was effected on a 
principal or agency basis.
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    \5\ The proposed filing is being done pursuant to an industry-
wide initiative under the auspices of the Options Self-Regulatory 
Council (``OSRC''), which is a committee comprised of 
representatives from each of the options exchanges functioning 
pursuant to the OSRC Plan (the ``Plan''). See Securities Exchange 
Act Release No. 20158 (September 8, 1983), 48 FR 41256 (September 
14, 1983). The Plan is not a National Market System (``NMS'') plan 
under Section 11A of the Act, but rather is a plan to allocate 
regulatory responsibilities under Rule 17d-2 under the Act. 17 CFR 
240.17d-2. As a result of the introduction of multiply listed 
options and the introduction of the Plan for the Purpose of Creating 
and Operating an Intermarket Options Market Linkage (``Options 
Linkage Plan''), the contracts in a customer options order could be 
executed on more than one options exchange, and the significance of 
the options exchange, or exchanges, that execute a particular 
options transaction has diminished significantly. See Securities 
Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 
4, 2000). Furthermore, the OSRC believes that in light of best 
execution and disclosure requirements, the usefulness of including 
on an options confirmation the name of the options exchange, or 
exchanges, on which the options transaction was effected does not 
outweigh the operational difficulties of capturing the information 
given the multiple trading of options and the application of the 
Options Linkage Plan industry wide.
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    The Exchange believes that with the expansion of multi-listing of 
options and the introduction of new options exchanges, it has become 
operationally inefficient to require the disclosure of the market 
center on which an order was executed on the confirmation. As an 
example, a customer may have a single option order containing numerous 
option contracts executed on multiple exchanges. As such, it would be 
inefficient for the executing firm to be required to identify the 
exchange symbol for each contract executed on that customer's order. 
This proposal would clarify that written confirmations furnished to a 
customer will not need to specify the exchange or exchanges on which 
such option contracts were executed.
    This proposal is similar to rule change proposals that have been 
filed by the American Stock Exchange LLC, the Financial Industry 
Regulatory Authority, Inc., the Chicago Board Options Exchange, the 
NASDAQ OMX PHLX, Inc., the Boston Stock Exchange, Inc., and the 
International Securities Exchange, LLC and approved by the 
Commission.\6\
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    \6\ See Securities Exchange Act Release No. 58814 (October 20, 
2008), 73 FR 63527 (October 24, 2008) (approval order); Securities 
Exchange Act Release No. 58932 (November 12, 2008), 73 FR 69696 
(November 19, 2008) (approval order); Securities Exchange Act 
Release No. 58980 (November 19, 2008), 73 FR 72091 (November 26, 
2008) (approval order); Securities Exchange Act Release No. 59166 
(December 29, 2008), 74 FR 328 (January 5, 2009) (approval order); 
Securities Exchange Act Release No. 59434 (February 23, 2009), 74 FR 
9012 (February 27, 2009) (approval order); and Securities Exchange 
Act Release No. 59806 (April 21, 2009), 74 FR 19254 (April 28, 2009) 
(approval order).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of Section 6(b) of the Act \7\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act \8\ in 
particular, because it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and to protect investors and the public interest, 
and that it is designed to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, and processing 
information with respect to, and facilitating transactions in, 
securities, 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    Additionally, this proposed rule change would promote consistency 
between NYSE Arca and other self-regulatory organization rules and 
clarify the Exchange's options confirmation procedure rules to better 
reflect the realities of the modern options market.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not 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

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
Because the 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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 the pre-filing requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. Because the proposed rule 
change is based on rule changes previously approved by the Commission 
and the proposed rule change does not present any novel issues, the 
Commission believes that waiving the 30-day operative delay period to 
permit the proposed rule change to be implemented immediately is 
consistent with the protection of investors and the public interest. 
The proposed rule will promote consistency between the rules of the 
NYSE Arca and other self-regulatory organizations. Thus, the 
Commission, consistent with the protection of investors and the public 
interest, has determined to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the operative date of the 
proposal, the Commission has considered the proposed Rule's impact 
on efficiency, competition and capital formation. 15 U.S.C. 78c(f).
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    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:

[[Page 26453]]

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File No. SR-NYSEArca-2009-41 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.

All submissions should refer to File Number SR-NYSEArca-2009-41. 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 20549-1090 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 NYSE Arca's principal office 
and on its Internet Web site at http://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-2009-41 and should 
be submitted on or before June 23, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12715 Filed 6-1-09; 8:45 am]

BILLING CODE 8010-01-P