Document ID: SEC-2010-1218-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2010-08-10T04:00Z

[Federal Register: August 10, 2010 (Volume 75, Number 153)]
[Notices]               
[Page 48400-48402]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10au10-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62647; File No. SR-BX-2010-053]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Rules of the Boston Options Exchange Group, LLC To Enable the Listing 
and Trading of Options on the Sprott Physical Gold Trust

August 4, 2010.
    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 July 28, 2010, NASDAQ OMX BX, Inc. (the ``Exchange''), filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the self-regulatory organization. The Exchange filed the 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder,\4\ 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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

    NASDAQ OMX BX, Inc. (the ``Exchange'') proposes to amend the Rules 
of the Boston Options Exchange Group, LLC (``BOX'') to enable the 
listing and trading of options on the Sprott Physical Gold Trust. A 
copy of the proposed rule change is available from the principal office 
of the Exchange, at the Commission's Public Reference Room and also on 
the Exchange's Internet Web site at http://
nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.

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 these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
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
    Recently, the U.S. Securities and Exchange Commission (``SEC'' or 
``Commission'') authorized the listing and trading on BOX of options on 
the SPDR Gold Trust,\5\ the iShares COMEX Gold Trust,\6\ the iShares 
Silver Trust,\7\ the ETFS Gold Trust,\8\ the ETFS Silver Trust,\9\ the 
ETFS Palladium Trust \10\ and the ETFS Platinum Trust.\11\ Now, the 
Exchange proposes that BOX list and trade options on PHYS.
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    \5\ See Securities Exchange Act Release No. 58136 (July 10, 
2008), 73 FR 40884 (July 16, 2008) (SR-BSE-2008-41).
    \6\ See Securities Exchange Act Release No. 59055 (December 4, 
2008), 73 FR 75148 (December 10, 2008) (SR-BSE-2008-51).
    \7\ Id.
    \8\ See Securities Exchange Act Release No. 62464 (July 7, 
2010), 75 FR 40007 (July 13, 2010) (SR-BX-2010-045).
    \9\ Id.
    \10\ Id.
    \11\ Id.
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    Under Chapter IV, Section 3(i) of the BOX Rules, Exchange-Traded 
Fund Shares (``ETFs'') must meet the following

[[Page 48401]]

criteria to be eligible as underlying securities for options traded on 
BOX: The ETFs must (i) be traded on a national securities exchange; 
(ii) be defined as an ``NMS'' stock under Rule 600 of Regulation NMS; 
and (iii)(a) represent interests in registered investment companies (or 
series thereof) organized as open-end management investment companies, 
unit investment trusts or similar entities that hold portfolios of 
securities and/or financial instruments, including, but not limited to, 
stock index futures contracts, options on futures, options on 
securities and indices, equity caps, collars and floors, swap 
agreements, forward contracts, repurchase agreements and reverse 
repurchase agreements (the ``Financial Instruments''), and money market 
instruments, including, but not limited to, U.S. government securities 
and repurchase agreements (the ``Money Market Instruments'') comprising 
or otherwise based on or representing investments in broad based 
indexes or portfolios of securities and/or Financial Instruments and 
Money Market Instruments (or that hold securities in one or more other 
registered investment companies that themselves hold such portfolios of 
securities and/or Financial Instruments and Money Market Instruments); 
(b) represent interests in a trust that holds a specified non-U.S. 
currency or currencies deposited with the trust or similar entity when 
aggregated in some specified minimum number that may be surrendered to 
the trust by the beneficial owner to receive the specified non-U.S. 
currency or currencies and pays the beneficial owner interest and other 
distributions on the deposited non-U.S. currency or currencies, if any, 
declared and paid by the trust (``Currency Trust Shares''); (c) 
represent commodity pool interests principally engaged, directly or 
indirectly, in holding and/or managing portfolios or baskets of 
securities, commodity futures contracts, options on commodity futures 
contracts, swaps, forward contracts and/or options on physical 
commodities and/or non-U.S. currency (``Commodity Pool ETFs''); or (d) 
represent interests in the SPDR[supreg] Gold Trust, iShares COMEX Gold 
Trust, iShares Silver Trust, ETFS Gold Trust, ETFS Silver Trust, ETFS 
Palladium Trust or the ETFS Platinum Trust.\12\ This rule change 
proposes to expand the types of ETFs that may be approved for options 
trading on BOX to include PHYS.
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    \12\ See Chapter IV, Section 3(i) of the BOX Rules.
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    Apart from allowing PHYS to be an underlying security for options 
traded on BOX as described above, the listing standards for ETFs will 
remain unchanged from those that apply under current BOX rules. ETFs on 
which options may be listed and traded must still be listed and traded 
on a national securities exchange and must satisfy the other listing 
standards set forth in Chapter IV, Section 3(i) of the BOX Rules.
    Specifically, in addition to satisfying the aforementioned listing 
requirements, ETFs must either (1) meet the criteria and guidelines set 
forth in paragraphs (a) and (b) of Chapter IV, Section 3 of the BOX 
Rules or (2) be available for creation or redemption each business day 
from or through the issuing trust, investment company, commodity pool 
or other entity in cash or in kind at a price related to net asset 
value, and the issuer must be obligated to issue ETF shares in a 
specified aggregate number even if some or all of the investment assets 
and/or cash required to be deposited have not been received by the 
issuer, subject to the condition that the person obligated to deposit 
the investment assets has undertaken to deliver them as soon as 
possible and such undertaking is secured by the delivery and 
maintenance of collateral consisting of cash or cash equivalents 
satisfactory to the issuer of the ETF, all as provided in the ETF's 
prospectus.
    The current continued listing standards for options on ETFs will 
apply to options on PHYS. Specifically, under Chapter IV, Section 4(h) 
of the BOX Rules, options on ETFs may be subject to the suspension of 
opening transactions as follows: (i) In the case of options covering 
ETFs approved pursuant to Section 3(i)(A)(1), in accordance with the 
terms of subparagraphs (b)(i), (ii) and (iii) of Chapter IV, Section 4 
of the BOX Rules; (ii) in the case of options covering ETFs approved 
pursuant to Chapter IV, Section 3(i)(A)(2) of the BOX Rules, following 
the initial twelve-month period beginning upon the commencement of 
trading in the ETF on a national securities exchange,\13\ if there are 
fewer than 50 record and/or beneficial holders of the ETF for 30 or 
more consecutive trading days; (iii) the value of the index, portfolio 
of securities, non-U.S. currency, or portfolio of commodities including 
commodity futures contracts, options on commodity futures contracts, 
swaps, forward contracts and/or options on physical commodities and/or 
Financial Instruments and Money Market Instruments on which the ETF is 
based is no longer calculated or available; or (iv) an event occurs or 
condition exists that in the opinion of BOXR makes further dealing in 
such options on BOX inadvisable.
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    \13\ The ETF must also be defined as an NMS Stock under Rule 600 
of Regulation NMS.
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    Additionally, PHYS shall not be deemed to meet the requirements for 
continued approval, and BOX shall not open for trading any additional 
series of option contracts of the class covering PHYS, if PHYS ceases 
to be an ``NMS stock'' as provided for in Chapter IV, Section 4(b)(vi) 
of the BOX Rules or PHYS is halted from trading on its primary market.
    The addition of PHYS to Chapter IV, Section 3(i) of the BOX Rules 
will not have any effect on the rules pertaining to position and 
exercise limits \14\ or margin requirements.\15\
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    \14\ See Chapter III, Sections 7 and 9 of the BOX Rules.
    \15\ See Chapter XIII of the BOX Rules.
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    The Exchange represents that its surveillance procedures applicable 
to trading in options on PHYS will be similar to those applicable to 
all other options on other ETFs currently traded on BOX. Also, the 
Exchange may obtain information from the New York Mercantile Exchange, 
Inc. (``NYMEX'') (a member of the Intermarket Surveillance Group) 
related to any financial instrument that is based, in whole or in part, 
upon an interest in or performance of gold.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\16\ in general, and Section 
6(b)(5) of the Act,\17\ in particular, in 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 for a free and open market and a national market 
system and, in general, to protect investors and the public interest. 
In particular, the Exchange believes that amending the BOX Rules to 
accommodate the listing and trading of options on PHYS will benefit 
investors by providing them with valuable risk management tools.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
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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.

[[Page 48402]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, 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 \18\ and Rule 19b-4(f)(6) 
thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its 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 fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requests that the Commission waive 
the 30-day operative delay so that the Exchange can list and trade 
options on the Sprott Physical Gold Trust immediately. The Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest to permit the Exchange 
to list and trade options on the Sprott Physical Gold Trust without 
delay.\20\ The Commission notes the proposal is substantively identical 
to proposals that were recently approved by the Commission, and does 
not raise any new regulatory issues.\21\ For these reasons, the 
Commission designates the proposed rule change as operative upon 
filing.
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    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \21\ See Securities Exchange Act Release No. 62463 (July 7, 
2010), 75 FR 40005 (July 13, 2010) (SR-CBOE-2010-043).
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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:

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 Number SR-BX-2010-053 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BX-2010-053. 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,\22\ 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-BX-
2010-053 and should be submitted on or before August 31, 2010.
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    \22\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.
    \23\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19654 Filed 8-9-10; 8:45 am]
BILLING CODE 8010-01-P