Document ID: SEC-2012-0319-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2012-02-27T05:00Z

[Federal Register Volume 77, Number 38 (Monday, February 27, 2012)]
[Notices]
[Pages 11604-11606]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4480]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66431; File No. SR-NASDAQ-2012-026]

Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Listing of Strike Prices

February 21, 2012.
    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 February 13, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' 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 
Exchange has designated the proposed rule change as constituting a non-
controversial rule change under Rule 19b-4(f)(6) under the Act,\3\ 
which renders the proposal effective upon filing with the Commission. 
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\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASDAQ Stock Market LLC proposes to amend Chapter IV, Section 6 
(Series of Options Open for Trading) to permit the listing of strike 
prices in $0.50 intervals where the strike price is less than $75, and 
of strike prices in $1.00 intervals where the strike price is

[[Page 11605]]

between $75 and $150 for option series used to calculate volatility 
indexes.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaq.cchwallstreet.com, 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. 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 Chapter IV, Section 6 to 
permit the listing of strike prices in $0.50 intervals where the strike 
price is less than $75, and of strike prices in $1.00 intervals where 
the strike price is between $75 and $150 for option series used to 
calculate volatility indexes.
    The proposal permits the listing of strike prices in $0.50 
intervals and $1.00 intervals within specified strike price ranges for 
option series used to calculate volatility indexes. Volatility indexes 
are calculated and disseminated by the Chicago Board Options Exchange 
(``CBOE''), which also lists options on the resulting index.\4\ At this 
time, the Exchange has no intention of listing volatility options or 
selecting options on any equity securities, Exchange-Traded Fund 
Shares, Trust Issued Receipts, Exchange Traded Notes, Index-Linked 
Securities, or indexes to be the basis of a volatility index. To the 
extent that CBOE or another exchange selects a multiply-listed product 
as the basis of a volatility index, proposed Chapter IV, Section 6 
would permit the Exchange to list and compete in all series listed by 
the CBOE or another Exchange for purposes of calculating a volatility 
index.
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    \4\ For example, CBOE calculates the CBOE Gold ETF Volatility 
Index (``GVZ''), which is based on the VIX methodology applied to 
options on the SPDR Gold Trust (``GLD''). The current filing would 
permit $0.50 strike price intervals for GLD options where the strike 
price is $ 75 or less. The Exchange is currently permitted to list 
strike prices in $1 intervals for GLD options (where the strike 
price is $200 or less), as well as for other exchange-traded fund 
(``ETF'') options. See Chapter IV, Section 6.
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    The Exchange has analyzed its capacity and represents that it 
believes the Exchange and the Options Price Reporting Authority 
(``OPRA'') have the necessary systems capacity to handle the additional 
traffic associated with the listing of strike prices in $0.50 intervals 
where the strike price is less than $75, and strike prices in $1.00 
intervals where the strike price is between $75 and $150 for option 
series used to calculate volatility indexes in securities selected by 
the CBOE or another exchange.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \6\ 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 allowing the Exchange to offer 
a full range of all available option series in a given class, including 
those selected by other exchanges to be the basis of a volatility 
index.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    While this proposal may potentially generate additional quote 
traffic, the Exchange does not believe that this increased traffic will 
become unmanageable since the proposal is restricted to a limited 
number of classes. Further, the Exchange does not believe that the 
proposal will result in a material proliferation of additional series 
because it is restricted to a limited number of classes.

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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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 \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 this requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal is substantially similar to those of 
another exchange that has been approved by the Commission that permits 
such exchange to allow trading for options series used to calculate 
volatility indexes at $0.50 strike price intervals where the strike 
price is less than $75 and at $1.00 intervals where the strike price is 
between $75 and $150 for options series.\9\ Therefore, the Commission 
designates the proposal operative upon filing.\10\
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    \9\ See Securities Exchange Act Release No. 64189 (April 5, 
2011), 76 FR 20066 (April 11, 2011) (SR-CBOE-2011-008).
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 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 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:

[[Page 11606]]

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2012-026 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-NASDAQ-2012-026. This 
file number should be included on the subject line if email 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-NASDAQ-2012-026 and should 
be submitted on or before March 19, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-4480 Filed 2-24-12; 8:45 am]
BILLING CODE 8011-01-P