Document ID: SEC-2012-1868-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-11-15T05:00Z

[Federal Register Volume 77, Number 221 (Thursday, November 15, 2012)]
[Notices]
[Pages 68172-68177]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-27777]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68194; File No. SR-NYSEArca-2012-114]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Commentary 
.05 and .07 to NYSE Arca Rule 6.4 Regarding Strike Price Intervals for 
Classes in the Short Term Option Series Program

November 8, 2012.
    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 October 26, 2012, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 self-regulatory 
organization. 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.
    \3\ 17 CFR 240.19b-4.
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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 Commentary .07 to NYSE Arca Rule 6.4 
to allow the Exchange to provide: (i) That the strike price interval 
for classes in the Short Term Option Series (``STOS'') Program that 
normally trade in $1 Strike Price Intervals shall be

[[Page 68173]]

$0.50 or greater; and for classes in the STOS Program that do not 
normally trade in $1 Strike Price Intervals, the strike price interval 
shall be $0.50 or greater strike price intervals [sic] where the strike 
price is less than $75 and $1.00 or greater strike price intervals 
[sic] where the strike price is between $75 and $150; and (ii) that the 
strike price intervals for the Related non-STOS options shall be the 
same as the strike price intervals for STOS from the Thursday prior to 
expiration week of an option class that is selected for the STOS 
Program. The Exchange also proposes to amend Commentary .05 and .07 to 
provide that strike price intervals for the Related non-STOS options 
shall be the same as the strike price intervals for STOS starting the 
Thursday prior to the expiration week of an option class that is 
selected for the STOS Program. The text of the proposed rule change is 
available on the Exchange's Web site at www.nyse.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 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 proposes to amend Commentary .07 to NYSE Arca Rule 6.4 
to provide that the Exchange may open for trading Short Term Option 
Series (``STOS'') \4\ at $0.50 or greater strike price intervals if the 
class normally trades in $1 strike price intervals. If the class 
normally trades in a greater interval, the Exchange may open STOS at a 
strike price interval of $0.50 where the strike price is less than $75, 
$1.00 or greater strike price intervals where the strike price is 
between $75 and $150, and strike price intervals the same as strike 
prices for series in that same option class that expire in accordance 
with the normal monthly expiration cycle [sic]. The Exchange also 
proposes that the strike price intervals for the Related non-STOS 
options \5\ shall be the same as the strike price intervals for STOS 
starting the Thursday prior to the expiration week of an option class 
that is selected for the STOS Program.
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    \4\ Short Term Options Series (``STOS'') also known as ``Weekly 
options'' or ``weeklies'' trade under the STOS Program. For all 
practical purposes, the terms STOS, Weekly options, and weeklies are 
interchangeable.
    \5\ As proposed, a non-Short Term Option that is on a class that 
has been selected to participate in the Short Term Option Series 
Program is referred to as a ``Related non-Short Term Option.'' The 
Related non-STOS option will be the same option class as the STOS 
option but will have a longer expiration cycle (e.g., a SPY monthly 
option as compared to a SPY weekly option).
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    This is a competitive filing that is based on two recently approved 
filings submitted by the International Securities Exchange, LLC 
(``ISE'') and NASDAQ OMX PHLX, LLC (``Phlx'').\6\ The ISE and Phlx 
filings both made changes to the strike price interval setting 
parameter rules for their respective STOS Programs. Weekly options are 
not listed to expire during the same week as non-Weekly options. As a 
result, both ISE and Phlx amended their rules to permit non-STOS 
options to have the same strike price interval setting parameters for 
Weekly options during the week that non-Weekly options expire.
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    \6\ See Securities Exchange Act Release Nos. 67754 (August 29, 
2012), 77 FR 54629 (September 5, 2012) (order approving SR-ISE-2012-
33) (``ISE filing'') and 67753 (August 29, 2012), 77 FR 54635 
(September 5, 2012) (order approving SR-Phlx-2012-78) (``Phlx 
filing'').
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    ISE and Phlx also both amended the strike price interval setting 
parameters for their STOS Programs, but the revisions to their 
respective rules differ. Specifically, ISE permits $0.50 strike price 
intervals for Weekly options for option classes that trade in one 
dollar increments and are in the STOS Program.\7\ Phlx permits $0.50 
strike price intervals when the strike price is below $75, and $1 
strike price intervals when the strike price is between $75 and $150. 
Phlx also provides that related non-Weekly option series may be opened 
during the week prior to expiration week pursuant to the same strike 
price interval parameters that exist for Weekly options. Thus a related 
non-Weekly option may be opened in Weekly option strike price intervals 
on a Thursday or a Friday that is a business day before the non-Weekly 
option expiration week.\8\ If the Phlx is not open for business on the 
respective Thursday or Friday, however, the non-Weekly option may be 
opened in Weekly option intervals on the first business day immediately 
prior to that respective Thursday or Friday.\9\ Chicago Board Options 
Exchange, Incorporated (``CBOE'') highlighted the differences between 
the two filings during the notice and comment period and submitted a 
comment letter on that subject.\10\
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    \7\ The permissible $0.50 strike price intervals may only be 
opened on the Weekly option Opening Date that expire on the Weekly 
option Expiration date and no additional series, including 
additional series of the related non-Weekly option, may be opened 
during expiration week in classes that are listed pursuant to the 
newly amended ISE rules.
    \8\ This opening timing is consistent with the principle that 
the Exchange may add new series of options until five business days 
prior to expiration. See Rules 6.4 and 5.19(c)(2).
    \9\ On the Exchange, the STOS opening process is set forth in 
NYSE Arca Rules 6.4, Commentary .07: After an option class has been 
approved for listing and trading on the Exchange, the Exchange may 
open for trading on any Thursday or Friday that is a business day 
(``Short Term Option Opening Date'') series of options on that class 
that expire on the Friday of the following business week that is a 
business day (``Short Term Option Expiration Date''). If the 
Exchange is not open for business on the respective Thursday or 
Friday, the Short Term Option Opening Date will be the first 
business day immediately prior to that respective Thursday or 
Friday. Similarly, if the Exchange is not open for business on the 
Friday of the following business week, the Short Term Option 
Expiration Date will be the first business day immediately prior to 
that Friday.
    \10\ A copy of CBOE's comment letter may be accessed at: http://sec.gov/comments/sr-phlx-2012-78/phlx201278-1.pdf. For example, in 
the comment letter CBOE noted its belief that the Phlx strike price 
interval setting parameters were broader since they applied to all 
classes that participate in the STOS Program where the ISE proposal 
provided increased granularity only to those classes in which $1 
strike price intervals are currently permitted.
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    The Exchange is proposing to adopt strike price interval setting 
parameters that are currently in effect for both ISE and Phlx in order 
to remain competitive. The Exchange notes that while it believes that 
there is substantial overlap between the two strike price interval 
setting parameters, the Exchange believes there are gaps that would 
enable Phlx to initiate a series that ISE would not be able to initiate 
and vice versa.\11\ Since uniformity is not required for the STOS 
Programs that

[[Page 68174]]

have been adopted by the various options exchanges, the Exchange 
proposes to revise its strike price intervals setting parameters so 
that it has the ability to initiate strike prices in the same manner 
(i.e., intervals) as both ISE and Phlx. Accordingly, the Exchange 
proposes to adopt aspects of both the ISE rule text language and the 
Phlx rule text language that the SEC recently approved.
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    \11\ The Exchange is making a distinction between initiating 
series and cloning series. The Exchange and the majority, if not 
all, of the other options exchanges that have adopted a STOS Program 
have a similar rule that permits the listing of series that are 
opened by other exchanges. See Rule 6.4, Commentary 12. This filing 
is concerned with the ability to initiate series. For example, if a 
class is selected to participate in the STOS Program and non-STOS on 
that class do not trade in dollar increments, the Exchange believes 
that Phlx would be permitted to initiate $0.50 strikes on that class 
and ISE would not. Similarly, the strike price interval for 
exchange-traded fund (``ETF'') options is generally $1 or greater 
where the strike price is $200 or less. If, an ETF class is selected 
to participate in the STOS Program, the Exchange believes that ISE 
would be permitted to initiate $0.50 strike price intervals where 
the strike price is between $151 and $200, but Phlx would not be.
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    The STOS Program is codified in Commentary .07 to Exchange Rule 
6.4.\12\ The Rule states that after an option class has been approved 
for listing and trading on the Exchange, the Exchange may open for 
trading on any Thursday or Friday that is a business day series of 
options on no more than five option classes that expire on the Friday 
of the following business week that is a business day. In addition to 
the five-option class limitation, there is also a limitation that no 
more than twenty series for each expiration date in those classes may 
be initially opened for trading.\13\ Furthermore, the strike price of 
each STOS has to be fixed with approximately the same number of strike 
prices being opened above and below the value of the underlying 
security at about the time that the short term options are initially 
opened for trading on the Exchange, and with strike prices being within 
thirty percent (30%) above or below the closing price of the underlying 
security from the preceding day. The Exchange does not propose any 
changes to the current program limitations. The Exchange proposes only 
to specify that STOS can have interval prices of $0.50 and $1, as 
proposed under Commentary .07 to Exchange Rule 6.4.\14\
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    \12\ On July 12, 2005, the Commission approved the STOS Program 
on a pilot basis. See Securities Exchange Act Release No. 52013 
(July 12, 2005), 70 FR 41471 (July 19, 2005) (SR-PCX-2005-32). The 
STOS Program was made permanent on June 23, 2010. See Securities 
Exchange Act Release No. 62369 (June 23, 2010), 75 FR 37868 (June 
30, 2010) (SR-NYSEArca-2010-59).
    \13\ However, if the Exchange opens twenty (20) short term 
options for a Short Term Option Expiration Date, up to 10 additional 
series may be opened for trading on the Exchange when the Exchange 
deems it necessary to maintain an orderly market, to meet customer 
demand or when the market price of the underlying security moves 
substantially from the exercise price or prices of the series 
already opened. Any additional strike prices listed by the Exchange 
shall be within thirty percent (30%) above or below the current 
price of the underlying security. The Exchange may also open 
additional strike prices of STOS that are more than 30% above or 
below the current price of the underlying security provided that 
demonstrated customer interest exists for such series, as expressed 
by institutional, corporate or individual customers or their brokers 
(market-makers trading for their own account shall not be considered 
when determining customer interest under this provision).
    \14\ As of August 31, 2012, there are 159 option classes across 
all options exchanges that have STOS options expiring on September 
7, 2012.
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    The principal reason for the proposed interval pricing structure is 
market demand for weekly options. There is continuing strong customer 
demand for having the ability to execute hedging and trading strategies 
effectively via STOS, particularly in the current fast, multi-faceted 
trading and investing environment that extends across numerous markets 
and platforms.\15\ The Exchange has observed increased demand for STOS 
classes and/or series, particularly when market moving events such as 
significant market volatility, corporate events, or large market, 
sector, or individual issue price swings have occurred. The STOS 
Program is one of the most popular and quickly expanding options 
expiration programs.
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    \15\ These include, without limitation, options, equities, 
futures, derivatives, indexes, exchange traded funds, exchange 
traded notes, currencies, and over-the-counter instruments.
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    In the two years since the application of the STOS Program to 
multiply listed issues, it has steadily expanded to the point that as 
of August 31, 2012, STOS represent 4.69% of the total options volume on 
the Exchange and 12.6% of the total options volume in the United 
States.\16\ The STOS volumes become even more significant when the 
volumes of an STOS class are compared to the volumes of the Related 
non-STOS options class. As an example, through the first eight months 
of 2012, on the Exchange there were 2,090,189 contracts of SPY STOS 
traded and 34,967,949 contracts of SPY monthly options traded; and 
1,047,903 contracts of AAPL STOS traded and 8,818,945 contracts of AAPL 
monthly options traded. From the 4th quarter of 2010 to the 4th quarter 
of 2011, STOS volume expanded more than 90%,\17\ and the Exchange 
believes that STOS volumes will continue to expand in 2012. The 
Exchange believes that, as such, while STOS are currently one of most 
popular (high volume) expiration lengths of options traded on NYSE Arca 
and other options exchanges, STOS will only become more popular as 
market participants continue to gain knowledge about more effective 
uses of these products for trading and hedging purposes.
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    \16\ The Exchange notes that, in fact, the volume increase in 
STOs since their inception just over two years ago greatly exceeds 
the volume increase of any other length option (e.g., monthly, 
quarterly, or long term) over the same equivalent time period.
    \17\ During the same time period, monthly options volume 
decreased by 8%.
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    Moreover, the Commission has approved the use of $0.50 and $1 
strike price intervals on the Exchange as well as in the options 
industry, particularly at lower price levels (e.g., below $150). 
Numerous options products are listed (trade) on the Exchange at $0.50 
and $1 strike price intervals. For example, there are two individual 
ETF options listed on the Exchange with $0.50 strike price intervals. 
There are approximately 50 options listed on the Exchange at $0.50 
strike price intervals pursuant to the $0.50 Strike Program. There are 
820 options listed on the Exchange with $1 strike price intervals. 
Moreover, the Commission has recently approved certain products to 
trade at $0.50 and $1 strike price intervals on CBOE within exactly the 
same strike price points that are proposed by the Exchange in this 
filing, namely $75 and $150.\18\
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    \18\ See Securities Exchange Act Release No. 64189 (April 5, 
2011), 76 FR 20066 (April 11, 2011) (SR-CBOE-2011-008) (order 
granting approval of $0.50 and $1 strike price intervals for certain 
volatility options where the strike prices are less than $75 and 
between $75 and $150, respectively). In approving the CBOE proposal, 
the Commission stated that the proposal appears to strike a 
reasonable balance between the Exchange's desire to offer a wider 
array of investment opportunities and the need to avoid unnecessary 
proliferation of options series and the corresponding increase in 
quotes and market fragmentation. The Exchange notes that other 
options exchanges including NYSE MKT, ISE, NOM, and Phlx, have made 
similar rule changes.
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    The Exchange believes that the benefits of the ability to trade 
STOS at $0.50 and $1 intervals at lower price levels cannot be 
underestimated. The proposed intervals would clearly allow traders and 
investors, and in particular public (retail) investors to more 
effectively and with greater precision consummate trading and hedging 
strategies on the Exchange. The Exchange believes that this precision 
is increasingly necessary, and in fact crucial, as traders and 
investors engage in trading and hedging strategies across various 
investment platforms (e.g., equity and ETF, index, derivatives, 
futures, foreign currency, and even commodities products); particularly 
when many of these platforms enjoy substantially smaller strike price 
differentiations (e.g., as low as $.05).\19\
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    \19\ As an example, per the CME Web site, strike prices for 
options on futures may be at an interval of $.05, $.10, and $.25 per 
specified parameters. See http://www.cmegroup.com/trading/equityindex/files/EQUITY_FLEX_Options.pdf (options on S&P 500 and 
NASDAQ-100 contracts) and http://www.cmegroup.com/rulebook/files/S_5734_x11-0518x_Change_in_Listing_Rules_for_Goldx_Silverx_Copper_Options.pdf (options on metals contracts).
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    Weekly options have characteristics that are attractive for certain 
trading and hedging strategies. Thus, weeklies may be attractive for 
retail trading strategies that could benefit from the inherent 
accelerated time decay of weekly

[[Page 68175]]

options, such as selling (buying) vertical or calendar spreads. And 
weeklies may be particularly attractive instruments for short-term 
institutional hedging needs (e.g., sudden price movements against large 
option positions during expiration week; maintenance or adjustment of 
complex option positions) as well as for retail hedging needs (e.g., 
preceding large earnings plays). In every case, trading and hedging is 
more effective when it can be closely tailored. The current wider STOS 
price intervals have negatively impacted investors and traders, 
particularly retail public customers, who have on several occasions 
requested the Exchange for finer, narrower STOS intervals. The proposal 
would fix this.
    The following is an example of how inadequately narrow STOS 
intervals negatively impact trading and hedging opportunities. If an 
investor needs to purchase an STOS call option in CSCO (03/26/12 
closing price $20.84), the current $1 strike interval would offer less 
opportunity and choice for an investor seeking to keep cash 
expenditures low. For example, an investor wishing to buy an in-the-
money call option for less than a $2.50 investment per call purchase 
has only two strike prices that meet his criteria from which to choose: 
the 19 strike and the 20 strike. Such call options with five days until 
expiration might offer ``ask prices'' (option premiums) of $1.75 and 
$.75. However, if CSCO had $0.50 strike prices as proposed, the same 
investor would have a selection of March 18.50, 19.00, 19.50, 20.00, 
and the 20.50 strike call options that may have options premiums from 
approximately $2.25 down to approximately $.25. This expanded range of 
strikes, and commensurate option premiums, offers far more choice and a 
considerably lower cost of entry to the investor, thereby garnering the 
investor more than a 66% options premium savings. Lower intervals 
increase effective liquidity by offering investors and traders more 
price points at which they may execute trading and hedging 
strategies.\20\ This allows investors and traders the ability to more 
effectively execute their strategies at lower cost. Clearly, more 
efficient pricing is advantageous to all market participants, from 
retail to institutional investors. The changes proposed by the Exchange 
should allow execution of more trading and hedging strategies on the 
Exchange. The Exchange notes that in conformance with Exchange Rules, 
the Exchange shall not list $0.50 or $1 strike price intervals on 
Related non-STOS options within five days of expiration. For example, 
if a Related non-STOS in an options class is set to expire on Friday, 
September 21, the Exchange could begin to trade $0.50 strike price 
intervals surrounding that Related non-STOS on Thursday, September 13, 
but no later than Friday September 14.
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    \20\ Moreover, lower strike intervals provide additional price 
points for liquidity providers. This allows the liquidity providers 
to improve theoretical pricing as well as hedging capabilities, 
thereby enabling them to increase the size and quality of their 
markets.
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    The Exchange proposes to list the expiring Related non-STOS on the 
Thursday or Friday prior to expiration week, so that investors can 
close a position in an expiring STOS and open a position at the same 
strike price in a Related non-STOS. The listing of the $0.50 or $1 
strike price intervals for expiring Related non-STOS on the Thursday or 
Friday prior to expiration week is intended to be consistent with the 
``overlap'' of STOS today, which facilitates investors desire to 
``roll'' a position from one STOS expiration to another. If the $0.50 
or $1 interval strikes are not available until the opening on Monday of 
expiration week, an investor who had a position in the prior week's 
$0.50 or $1 interval STOS could not close a position in the expiring 
STOS and open a position at the same strike in the Related non-STOS.
    Furthermore, the inadequate price intervals for STOS, particularly 
at the lower price levels proposed by the Exchange, may discourage 
retail and other customers from executing STOS orders when they could 
be the most advantageous for effective execution of trading and hedging 
strategies on regulated and transparent exchanges. The Exchange feels 
that it is essential that such negative, potentially costly and time-
consuming impacts on retail investors are eliminated by offering 
tighter intervals within the STOS Program. The changes proposed by the 
Exchange should allow execution of more trading and hedging strategies 
on the Exchange.\21\
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    \21\ In addition, there is a competitive impact. First, the 
proposal would enable the Exchange to provide market participants 
with an opportunity to execute their strategies (e.g., complex 
option spreads) wholly on their preferred market, namely the 
Exchange. Second, the proposal would diminish the potential for 
foregone market opportunities on the Exchange caused by the need to 
use a more advantageous (that is, interval-precise) platform than 
STOs currently allow.
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    With regard to the impact of this proposal on system capacity, the 
Exchange has analyzed its capacity and represents that it and the 
Options Price Reporting Authority (``OPRA'') have the necessary systems 
capacity to handle the potential additional traffic associated with 
trading in the Program at $.50 or $1 intervals, as applicable under the 
proposal. The Exchange notes that this proposal would not increase the 
number of listed STOS, but only the interval between them. The Exchange 
believes that its OTP Holders and OTP Firms will not have a capacity 
issue as a result of this proposal.
    The Exchange also proposes that Related non-STOS shall be opened on 
the Thursday or Friday prior to the expiration week that such Related 
non-STOS expire in the same manner as permitted in Rule 6.4, subsection 
(a) of Commentary .07, and in the same strike price intervals for the 
STOS permitted in this [sic] Rule 6.4, subsection (e) of Commentary 
.07. The Exchange proposes to make this change to ensure conformity 
between STOS options and Related non-STOS options that are in the same 
options class (e.g., weekly and monthly SPY options). The Exchange 
believes that not having such a conforming change would be counter-
productive and not beneficial for trading and hedging purposes.\22\
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    \22\ Moreover, the Exchange notes that STOS options are not 
listed and traded during the expiration week of the Related non-STOS 
options. During this week, the non-STOS options are materially and 
financially equivalent to the STOS options. The proposed change 
would allow traders and hedgers to have the noted benefits of the 
STOS Program during each week in a month.
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    The Exchange believes that the STOS Program has provided investors 
with greater trading opportunities and flexibility and the ability to 
more closely tailor their investment and risk management strategies and 
decisions. Furthermore, the Exchange has had to reject trading requests 
because of the limitations imposed by the Program. For these reasons, 
the Exchange requests a modification of the strike price intervals in 
the Program and the opportunity to provide investors with better weekly 
option choices for investment, trading, and risk management purposes.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\23\ in general, and 
furthers the objectives of Section 6(b)(5),\24\ 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

[[Page 68176]]

mechanism of a free and open market and a national market system.
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    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that providing strike prices of $.50 and $1 
intervals in STOS eligible classes will result in a continuing benefit 
to investors by giving them more flexibility to closely tailor their 
investment decisions and hedging decisions in a greater number of 
securities. The Exchange also believes that providing the same strike 
price intervals for options classes that are in the STOS Program and 
for the Related non-STOS options just prior to and during expiration 
week will provide the investing public and other market participants 
with additional opportunities to hedge their investment, thus allowing 
these investors to better manage their risk exposure. In addition, the 
Exchange believes that the proposal will ensure conformity between STOS 
options and Related non-STOS options that are in the same options 
class. The Exchange believes that allowing the listing of expiring 
Related non-STOS on the on the Thursday or Friday prior to expiration 
week will help facilitate the ability of investors and other market 
participants to close a position in an expiring STOS and open a 
position at the same strike price in a Related non-STOS is a manner 
that is designed to promote just and equitable principles of trade. 
While the expansion of the STOS Program will generate additional quote 
traffic, the Exchange does not believe that this increased traffic will 
become unmanageable since the proposal remains limited to a fixed 
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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. In this regard and as 
indicated above, the Exchange notes that the rule change is being 
proposed as a competitive response to existing ISE and PHLX rules. The 
Exchange believes this proposed rule change is necessary to permit fair 
competition among the options exchanges with respect to their short 
term options programs.

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

    Because the foregoing proposed rule 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 if consistent with the protection of 
investors and the public interest, provided that the self-regulatory 
organization has given 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 proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \25\ and Rule 19b-
4(f)(6) thereunder.\26\
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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 17 CFR 240.19b-4(f)(6).
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    The Exchange asked the Commission to waive the 30-day operative 
delay period for non-controversial proposed rule changes to allow the 
proposed rule change to be operative upon filing.\27\ The Commission 
believes it is consistent with the public interest to waive the 30-day 
operative delay. The proposed rule change is substantially similar in 
all material respects to existing ISE and PHLX rules, which permit the 
listing of Short Term Options Series at finer strike price intervals; 
the proposal presents no novel issues.\28\ Waiver of the operative 
delay will allow the Exchange to expand its STOS Program to the current 
parameters of those SROs and compete without undue delay. Therefore, 
the Commission grants such waiver and designates the proposal operative 
upon filing.\29\
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    \27\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
provided the Commission with written notice of its intent to file 
the proposed rule change along with a brief description and the 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.
    \28\ See ISE Filing and Phlx Filing, supra note 6.
    \29\ 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 such 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 email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2012-114 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-2012-114. 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 Section, 100 F Street 
NE., Washington, DC 20549, on official business days between 10:00 a.m. 
and 3:00 p.m. Copies of the filing will also be available for 
inspection and copying at the NYSE'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-2012-114 and should be submitted on or before 
December 6, 2012.

[[Page 68177]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27777 Filed 11-14-12; 8:45 am]
BILLING CODE 8011-01-P