Document ID: SEC-2014-1149-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2014-07-10T04:00Z

[Federal Register Volume 79, Number 132 (Thursday, July 10, 2014)]
[Notices]
[Pages 39425-39429]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16095]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72536; File No. SR-NYSEMKT-2014-21]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Amendment No. 1 and Order Granting Accelerated Approval of Proposed 
Rule Change, as Modified by Amendment No. 1, To Make Permanent Its 
Pilot Program Regarding Minimum Value Sizes for Opening Transactions in 
New Series of Flexible Exchange Options and Establish New Minimum Value 
Sizes Applicable to Other FLEX Transactions and FLEX Quotes

July 3, 2014.

I. Introduction

    On March 18, 2014, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
make permanent its pilot program regarding minimum value sizes for 
opening transactions in new series of flexible exchange options (``FLEX 
Options'' or ``FLEX'') and establish new minimum value sizes applicable 
to

[[Page 39426]]

other FLEX transactions and FLEX Quotes. The proposed rule change was 
published for comment in the Federal Register on April 7, 2014.\3\ The 
Commission received no comments on the proposal. The Exchange consented 
to an extension of the time period for the Commission to approve the 
proposed rule change, disapprove the proposed rule change, or institute 
proceedings to determine whether the proposed rule change should be 
disapproved, to July 6, 2014. The Exchange filed Amendment No. 1 to the 
proposed rule change on May 22, 2014, in order to transmit a revised 
pilot report that replaces the original Exhibit 3 to the filing.\4\ The 
Commission is publishing this notice to solicit comments on Amendment 
No. 1 from interested persons and is approving the proposed rule 
change, as modified by Amendment No. 1, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 71840 (April 1, 
2014), 79 FR 19162 (``Notice'').
    \4\ The Exchange attached an Exhibit 3 to its proposed rule 
change that contained an annual report summarizing pilot data 
collected for the year 2013, the most recent complete year of the 
pilot program (``Pilot Report''). Specifically, the Pilot Report 
summarizes the trading volume and underlying value of opening 
transactions in new series of FLEX Options during the year 2013 with 
a size below the minimum value thresholds in force before the pilot, 
as well as the types of customers initiating such transactions. In 
Amendment No. 1, the Exchange submitted a revised Pilot Report as a 
new Exhibit 3 that replaces the original Exhibit 3 in its entirety. 
The revised Pilot Report corrects errors in the total FLEX Equity 
Option contract trading volume under the pilot, total FLEX Index 
Option contract trading volume under the pilot, and total number of 
FLEX Index Option trades under the pilot reported in the original 
Pilot Report. The revised Pilot Report also makes corresponding 
adjustments to other figures reported in the Pilot Report, as well 
as non-substantive changes to certain descriptive language in the 
Pilot Report.
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II. Description of the Amended Proposal

    FLEX Options, unlike traditional standardized options, allow 
investors to customize basic option terms, including size, expiration 
date, exercise style, and certain exercise prices.\5\ Pursuant to 
Commentary .01 to Rule 903G, the Exchange currently has in place a 
pilot program under which the minimum size requirements set forth in 
Rule 903G(a)(4)(ii), which apply to opening transactions in new series 
of FLEX Options, are replaced with a one-contract minimum size (``Pilot 
Program'').\6\ Prior to the Pilot Program, pursuant to Rule 
903G(a)(4)(ii), the minimum value size for an opening transaction in 
any FLEX series in which there was no open interest at the time the 
request for quotes was submitted was: (i) For FLEX Equity Options, the 
lesser of 250 contracts or the number of contracts overlying $1 million 
in the underlying securities; and (ii) for FLEX Index Options, $10 
million Underlying Equivalent Value in the case of Broad Stock Index 
Group FLEX Index Options and $5 million Underlying Equivalent Value in 
the case of Stock Index Industry Group FLEX Index Options.\7\ The 
Exchange's proposal will make the Pilot Program permanent by 
eliminating the minimum value size requirements set forth in Rule 
903G(a)(4)(ii) for opening transactions in new FLEX Option series and 
by eliminating the Pilot Program rule text set forth in Commentary .01 
to Rule 903G. In connection with its proposal to make the Pilot Program 
permanent, and as required by its filing establishing the Pilot 
Program,\8\ the Exchange submitted to the Commission an annual Pilot 
Report summarizing Pilot Program data collected for year 2013, the most 
recent complete year of the Pilot Program.\9\
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    \5\ See Notice, 79 FR at 19162 n.4; see also NYSE MKT Options 
Rule (``Rule'') 903G. FLEX Options can be FLEX Index Options or FLEX 
Equity Options. See Rules 900G(b)(10) and (b)(11) (defining, 
respectively, the terms ``FLEX Equity Option'' and ``FLEX Index 
Option'').
    \6\ See Commentary .01 to Rule 903G; see also Securities 
Exchange Act Release No. 62084 (May 12, 2010), 75 FR 28091 (May 19, 
2010) (SR-NYSEAmex-2010-40) (establishing Pilot Program); and 71844 
(April 1, 2014), 79 FR 19160 (April 7, 2014) (SR-NYSEMKT-2014-26) 
(extending Pilot Program until the earlier of July 31, 2014 or 
approval of the Pilot Program on a permanent basis).
    \7\ See Rule 903G(a)(4)(ii); see also Rule 900G(b)(9) (defining 
the term ``Underlying Equivalent Value'').
    \8\ See supra note 6.
    \9\ Specifically, the Pilot Report contains data and analysis of 
underlying equivalent values, open interest and trading volume, and 
analysis of the types of investors that initiated opening FLEX 
Equity and Index Options transactions (i.e., institutional, high net 
worth, or retail) in new FLEX Option series. See Amendment No. 1, 
supra note 4.
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    In its filing, the Exchange also has proposed to make some other 
changes to its FLEX Option minimum value size rules, in addition to 
requesting that the Pilot Program be made permanent. Rules 
903G(a)(4)(iii)-(iv), which are not part of the Pilot Program, set 
forth minimum value sizes for other FLEX Option transactions and for 
FLEX Quotes. Specifically, pursuant to Rule 903G(a)(4)(iii), for a 
transaction in any currently-opened FLEX series, the minimum value size 
is: (i) For FLEX Equity Options, the lesser of 100 contracts or the 
number of contracts overlying $1 million in the underlying securities 
in the case of opening transactions, and 25 contracts in the case of 
closing transactions; and (ii) for FLEX Index Options, $1 million 
Underlying Equivalent Value in the case of both opening and closing 
transactions; or (iii) for either case, the remaining underlying size 
or Underlying Equivalent Value on a closing transaction, whichever is 
less. Pursuant to Rule 903G(a)(4)(iv), the minimum value size for FLEX 
Quotes responsive to a Request for Quotes is 25 contracts in the case 
of FLEX Equity Options and $1 million Underlying Equivalent Value in 
the case of FLEX Index Options or for either case the remaining 
underlying size or Underlying Equivalent Value on a closing 
transaction, whichever is less. Even though these minimum value size 
requirements set forth in Rules 903G(a)(4)(iii)-(iv) are not part of 
the Pilot Program, the Exchange has proposed to eliminate them as well, 
in conjunction with making the Pilot Program permanent. In its proposal 
the Exchange noted that adopting the same minimum value sizes for 
existing and new series, in addition to quotes, will allow market 
participants to tailor their FLEX Option transactions to meet their 
investment objectives.
    By proposing to make permanent the Pilot Program one-contract 
minimum for opening transactions in new series of FLEX Options and by 
also proposing to eliminate the minimum value size requirements for 
FLEX Option transactions in currently-opened series and FLEX Quotes 
responsive to a Request for Quotes, the Exchange is seeking to 
establish a one-contract minimum size for all FLEX Option transactions 
and FLEX Quotes. This one-contract minimum size would be codified in 
new Rule 903G(a)(2)(vii). The Exchange states that its proposal for a 
one-contract minimum value size for all FLEX Option transactions and 
FLEX Quotes is based on similar rules governing minimum value size for 
FLEX Options approved for the CBOE.\10\
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    \10\ See Notice, 79 FR at 19164 and n.15 (citing Securities 
Exchange Act Release No. 67624 (August 8, 2012), 77 FR 48580 (August 
14, 2012) (order approving CBOE's proposal to make permanent its 
pilot program eliminating minimum value sizes for FLEX Options)).
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    In addition, as a technical, non-substantive change, the Exchange 
has proposed to relocate from current Rule 903G(a)(4)(i) to new Rule 
903G(a)(2)(vi) rule text stating that the maximum term for both Equity 
and Index FLEX Options shall be fifteen years, and make other non-
substantive changes to the rule.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to

[[Page 39427]]

a national securities exchange.\11\ In particular, the Commission finds 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Act,\12\ which requires, among other things, that the rules of a 
national securities exchange be 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 regulating, clearing, settling, 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; and not be designed to 
permit unfair discrimination between customers, issuers, brokers or 
dealers.
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    \11\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
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    FLEX Options were originally designed for use by institutional and 
high net worth customers, rather than retail investors.\13\ In 
approving CBOE's pilot eliminating minimum value sizes for FLEX 
Options, which was the first such pilot to go into effect, the 
Commission noted that it had received several comment letters stating 
that the proposal would assist institutional customers, but it also 
noted that the elimination of the minimum value size requirements 
raised the possibility that retail customers would access the FLEX 
Options market.\14\ One of the risks to retail investors outlined in 
the ODD \15\ is that, because of the customized nature of FLEX Options 
and lack of continuous quotes, trading in FLEX Options is often less 
deep and liquid than trading in standardized options on the same 
underlying interest.\16\ Additionally, the Commission observed that 
reducing the minimum value size for opening FLEX Option transactions 
increases the potential for the FLEX Options market to act as a 
surrogate for the standardized options market, and expressed concern in 
this regard because the standardized market contains certain 
protections for investors not present in the FLEX Options market.\17\ 
The Commission stated that, in the event CBOE proposed making its pilot 
program permanent, information regarding the types of customers 
initiating opening FLEX Options transactions during the pilot would 
enable the Commission to evaluate how market participants have 
responded to CBOE's pilot program and what types of customers are using 
the FLEX Options market.\18\ For these same reasons, at the 
Commission's request, the Exchange included in its Pilot Report 
information regarding the types of customers that initiated opening 
FLEX Option transactions under its Pilot Program.\19\
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    \13\ See Notice, 79 FR at 19163; see also Securities Exchange 
Act Release No. 37336 (June 19, 1996), 61 FR 33558 (June 27, 1996) 
(order approving SR-Amex-95-57). As noted in the Options Disclosure 
Document (``ODD''), which explains the characteristics and risks of 
exchange-traded options, flexibly structured options may be useful 
to sophisticated investors seeking to manage particular portfolio 
and trading risks. Rule 9b-1 under the Act requires that broker-
dealers furnish the ODD to a customer before accepting an order from 
the customer to purchase or sell an option contract relating to an 
options class that is the subject of the ODD, or approving the 
customer's account for the trading of such option. See 17 CFR 
240.9b-1(d).
    \14\ See Securities Exchange Act Release No. 61439 (January 28, 
2010), 75 FR 5831 (February 4, 2010) (order approving SR-CBOE-2009-
087) (``CBOE Pilot Approval Order'').
    \15\ See supra note 13.
    \16\ In particular, the ODD states that because many of the 
terms of FLEX Options are not standardized, it is less likely that 
there will be an active secondary market in which holders and 
writers of such options will be able to close out their positions by 
offsetting sales and purchases. Also, the ODD states that certain 
margin requirements for positions in flexibly structured options may 
be significantly greater than the margin requirements applicable to 
similar positions in other options on the same underlying interest.
    \17\ See CBOE Pilot Approval Order, supra note 14. In 
particular, the Commission noted that continuous quotes may not 
always be available in the FLEX Options market and that FLEX Options 
do not have trading rotations at either the opening or closing of 
trading. Id.
    \18\ Id. The Exchange has submitted a Pilot Report to the 
Commission as Exhibit 3 to its filing, as well as other, 
confidential reports of data collected during the Pilot Program. See 
Amendment No. 1, supra note 4.
    \19\ See Amendment No. 1, supra note 4.
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    The Commission believes that these considerations and concerns that 
informed its analysis of whether to permanently approve CBOE's pilot 
are equally germane to its analysis here. As such, the Commission has 
carefully reviewed the Pilot Report that the Exchange provided to the 
Commission.\20\ The Pilot Report reflects that, in 2013, 315 opening 
transactions in new series of FLEX Equity Options were initiated on the 
Exchange with small minimum value sizes made possible by the Pilot 
Program, 286 of which were initiated by retail customers, 25 of which 
were initiated by institutional customers, and 4 of which were 
initiated by high net worth customers.\21\ Moreover, the Pilot Report 
indicates that these 315 FLEX Equity Option transactions covered by the 
Pilot Program accounted for approximately 3% of the total volume and 
approximately 5% of the total value of all opening FLEX Equity Option 
transactions in new series--i.e., opening transactions covered by the 
Pilot Program as well as opening transactions with value sizes above 
the pre-pilot minimum--during 2013.
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    \20\ Id.
    \21\ Id. The Pilot Report indicates that there were no opening 
transactions in new series of FLEX Index Options during 2013 that 
were initiated below the pre-pilot minimum size requirement.
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    The Exchange notes that the Pilot Report includes data specific to 
opening transactions in new series of FLEX Options pursuant to current 
Rule 903G(a)(4)(ii), and does not include data for transactions in 
currently-opened FLEX Options series or FLEX Quotes responsive to a 
request for quotes pursuant to Rules 903G(a)(4)(iii)-(iv), as such 
transactions and FLEX Quotes were not part of the Pilot Program.\22\ 
The Exchange represents, however, that based on its internal review, if 
Rules 903G(a)(4)(iii)-(iv) had been part of the Pilot Program, 
transactions in currently-opened FLEX Options series or FLEX Quotes 
with small value sizes made permissible by the Pilot Program would have 
been de minimis, and would not have materially altered the data in the 
Pilot Report.\23\
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    \22\ See Notice, 79 FR at 19164.
    \23\ Id.
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    On balance, the Commission believes that it is consistent with the 
Act to make the Pilot Program permanent and thus eliminate, on a 
permanent basis, the minimum value size requirements set forth in Rule 
903G(a)(4)(ii) for opening transactions in new series of FLEX Options. 
The protections noted below, including heightened options suitability 
requirements, should help to address any concerns about retail 
participation in the Exchange's FLEX Options market. Moreover, the 
Commission is not aware of any data or analysis to date suggesting that 
the trading of FLEX Options has acted as a surrogate for the trading of 
standardized options on the Exchange as a result of the Pilot Program. 
Indeed, the Commission understands that FLEX Option trading accounts 
for less than 1% of the combined trading volume of the standardized and 
FLEX Option markets.\24\ In addition, the Pilot Report indicates that 
Pilot Program FLEX Option trades account for a very small proportion of 
the total volume and total value of all FLEX Option trades. Thus, it 
appears that the Pilot Program has not caused significant trading 
interest to migrate from the standardized options market to the FLEX 
Options market, nor caused, to the best of our knowledge, a

[[Page 39428]]

large number of investors to use FLEX Options to avoid certain 
requirements in the standardized market. Based on the current data and 
size of the FLEX Options market, and the lack of any evidence to the 
contrary, it would appear that investors are using the FLEX Options 
market for its intended purpose--to be able to customize certain terms 
not available in the standardized options market.
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    \24\ See email dated June 19, 2014 from Glenn H. Gsell, Managing 
Director, Intercontinental Exchange, NYSE Regulation, Inc. to 
Michael Bradley and David Michehl, Special Counsels, Division of 
Trading and Markets, Commission.
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    The Commission also believes that a logical corollary to making the 
Pilot Program permanent is to eliminate the minimum value size 
requirements set forth in Rules 903G(a)(4)(iii)-(iv) for transactions 
in currently-opened FLEX Options series and FLEX Quotes responsive to a 
request for quotes. In this regard, the Commission notes that the 
Exchange does not believe that the difference between effecting a 
transaction in an existing FLEX Option series and effecting a FLEX 
transaction in a new series is material to the extent that there should 
be different minimum value sizes for the two types of transactions.\25\ 
In addition, the Exchange believes it would be consistent to apply the 
same minimum value size to closing transactions so that investors may 
elect to close just a portion of their FLEX position, without being 
subject to a minimum value size that may be greater than the equivalent 
value size necessary to meet their investment objectives.\26\ Further, 
the Exchange believes that it would be consistent to apply the same 
minimum value size to FLEX Quotes so that market participants may 
respond to a request for quotes with the precise number of contracts or 
underlying equivalent value needed to trade with the OTP Holder that 
submitted the request. The Commission finds no basis under the Act at 
this time for maintaining a minimum value size requirement for 
transactions in currently-opened FLEX Option series or FLEX Quotes 
responsive to a request for quotes, and believes that these changes 
should be approved for reasons similar to those supporting permanent 
approval of the Pilot Program. The Commission notes that it is not 
aware of any problems resulting from the permanent approval of CBOE's 
pilot eliminating FLEX Option minimum value sizes, which included 
currently-opened series and FLEX Quotes responsive to a request for 
quotes. As a result, the Commission believes that it is appropriate 
under the Act, and would promote just and equitable principles of 
trade, as well as remove impediments to and perfect the mechanism of a 
free and open market and a national market system, to replace the 
current minimum value size requirements for all FLEX Option 
transactions and FLEX Quotes on the Exchange with a one-contract 
minimum size.
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    \25\ See Notice, 79 FR at 19164.
    \26\ Id. Currently, the minimum value size for closing 
transactions is 25 contracts in the case of FLEX Equity Options and 
$1 million Underlying Equivalent Value in the case of FLEX Index 
Options, or in either case the remaining underlying size or 
Underlying Equivalent Value on a closing transaction, whichever is 
less. See Rules 903G(a)(4)(iii)-(iv).
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    Existing safeguards--such as position reporting requirements and 
margin requirements--will continue to apply to FLEX Options.\27\ 
Further, as noted above, under Rule 9b-1 under the Act,\28\ all 
customers of a broker-dealer with options accounts approved to trade 
FLEX Options must receive the ODD, which contains specific disclosures 
about the characteristics and special risks of trading FLEX 
Options.\29\ In addition, similar to other options, FLEX Options are 
subject to Trading Permit Holder supervision and suitability 
requirements, such as in Rules 922 and 923, respectively.\30\ In 
addition to ensuring that FLEX Options are suitable for their 
customers, broker-dealers also must take into account the 
characteristics of the FLEX market, as compared to the standardized 
market, when satisfying their best execution obligations. The 
Commission believes that the safeguards in place are reasonably 
designed to help mitigate potential risks for retail investors and 
other market participants investing in FLEX Options.
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    \27\ Certain position limit, aggregation and exercise limit 
requirements continue to apply to FLEX Options in accordance with 
Rule 906G (Position Limits) and Rule 907G (Exercise Limits). But the 
Commission notes that certain FLEX Options do not have position or 
exercise limits.
    \28\ 17 CFR 240.9b-1.
    \29\ See supra notes 13 and 16.
    \30\ See Notice, 79 FR at 19163.
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    The Exchange believes that permanently removing the minimum value 
size requirements for FLEX Options will give investors a more viable, 
exchange-traded alternative to customized options in the OTC market, 
which are not subject to minimum value size requirements.\31\ 
Furthermore, the Exchange has represented that broker-dealers have 
indicated to the Exchange that the minimum value size requirements have 
prevented them from bringing transactions on the Exchange that are 
already taking place in the OTC market.\32\ Therefore, it appears 
possible that eliminating the minimum value sizes for all FLEX Options 
transactions and FLEX Quotes could further incent trading interest in 
customized options to move from the OTC market to the Exchange. To the 
extent investors choose to trade FLEX Options on the Exchange in lieu 
of the OTC market as a result of the permanent removal of the minimum 
value size requirements, such action should benefit investors. As the 
Commission has previously noted, there are certain benefits to trading 
on an exchange, such as enhanced efficiency in initiating and closing 
out positions, increased market transparency, and heightened contra-
party creditworthiness due to the role of the Options Clearing 
Corporation as issuer and guarantor of FLEX Options.\33\
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    \31\ Id.
    \32\ Id.
    \33\ See Securities Exchange Act Release No. 57429 (March 4, 
2008), 73 FR 13058 (March 11, 2008) (order approving SR-CBOE-2006-
36).
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IV. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether Amendment No. 1 
to 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-NYSEMKT-2014-21 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2014-21. 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

[[Page 39429]]

printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 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-NYSEMKT-2014-21 and should 
be submitted on or before July 31, 2014.

V. Accelerated Approval of Proposal, as Modified by Amendment No. 1

    In Amendment No. 1, the Exchange submitted a revised Pilot Report 
that corrects errors in the total FLEX Equity Option contract trading 
volume under the pilot, total FLEX Index Option contract trading volume 
under the pilot, and total number of FLEX Index Option trades under the 
pilot reported in the original Pilot Report. The revised Pilot Report 
also makes corresponding adjustments to other figures reported in the 
Pilot Report, as well non-substantive changes to certain descriptive 
language in the Pilot Report. The Commission believes that these 
corrections to the Pilot Report do not substantively alter the findings 
in the Pilot Report or diminish their support for approval of the pilot 
on a permanent basis. Accordingly, the Commission also finds good 
cause, pursuant to Section 19(b)(2) of the Act,\34\ for approving the 
proposed rule change, as modified by Amendment No. 1, prior to the 
thirtieth day after the date of publication of notice in the Federal 
Register.
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    \34\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    In summary, the Commission believes, for the reasons noted above, 
that the proposed rule change to permanently approve the Pilot Program 
as well as remove the minimum size requirements for currently-opened 
FLEX Option series and FLEX Quotes, thereby permanently removing the 
minimum size requirements for all FLEX Options on the Exchange, is 
consistent with the Act and Section 6(b)(5) thereunder in particular, 
and should be approved, as amended. The Exchange has committed, and the 
Commission expects the Exchange, to continue to monitor the usage of 
FLEX Options, whether changes need to be made to its rules or the ODD 
to address any changes in retail FLEX Option participation, and for any 
other issues that may occur as a result of the elimination of the 
minimum value sizes on a permanent basis, including whether FLEX Option 
trades are being used as a surrogate for trading options in the 
standardized market.\35\
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    \35\ See Notice, 79 FR at 19164 (Exchange representing that it 
will continue to monitor the usage of FLEX Options and whether any 
changes to its rules or the ODD are necessary).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\36\ that the proposed rule change (SR-NYSEMKT-2014-21) be, and it 
hereby is, approved, on an accelerated basis, as amended.
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    \36\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-16095 Filed 7-9-14; 8:45 am]
BILLING CODE 8011-01-P