Document ID: SEC-2008-0869-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-06-30T04:00Z

[Federal Register: June 30, 2008 (Volume 73, Number 126)]
[Notices]               
[Page 36945-36950]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jn08-133]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58008; File No. SR-NYSEArca-2008-61]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Change To List 
and Trade Options on Reduced Values of the FTSE 100 Index and the FTSE 
250 Index

June 24, 2008.
    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 June 19, 2008, NYSE Arca, Inc. (``NYSE Arca'' or 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 substantially prepared by the Exchange. 
This order provides notice of the proposed rule change and approves it 
on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 certain Exchange rules to trade 
options on reduced values of the FTSE 100 Index and the FTSE 250 Index. 
The Exchange also proposes to list and trade long-term options on 
reduced values of the FTSE 100 Index and the FTSE 250 Index. Options on 
these indexes will be a.m. cash-settled and will have European-style 
exercise provisions.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nyse.com, at the

[[Page 36946]]

Exchange's principal office, and at the Commission's Public Reference 
Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade on the Exchange a.m. cash-
settled, European-style, index options on the FTSE 100 Index and the 
FTSE 250 Index (collectively, ``FTSE Indexes''). Specifically, the 
Exchange proposes to list options based upon one-tenth of the value of 
the FTSE Indexes (``Mini FTSE Indexes''). In addition to regular 
options on the Mini FTSE Indexes, the Exchange may list long-term 
options on such Indexes (``FTSE LEAPS'').\3\
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    \3\ Under NYSE Arca Rule 5.19(b)(1) ``Index LEAPS Options 
Series,'' the Exchange may list long-term options that expire from 
12 to 60 months from the date of issuance.
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    The Exchange states that the FTSE 100 Index and the FTSE 250 Index 
are internationally recognized, capitalization-weighted indexes based 
on the prices of the most highly capitalized British stocks traded on 
the London Stock Exchange (``LSE''), a Recognized Investment Exchange 
under the Financial Services and Markets Act 2000 of the U.K and 
regulated by the Financial Services Authority (``FSA'') of the U.K. The 
LSE's Stock Exchange Electronic Trading Service (``SETS'') is a fully 
electronic order book trading service. SETS is the central price 
formation and trading service for the securities comprising the FTSE 
100 Index, the most liquid FTSE 250 securities, and equities that 
underlie EuronextLIFFE (``LIFFE'') traded equity options. SETS market 
maker (``SETSmm'') is the LSE's trading service for, among others, the 
FTSE 250 securities that are not traded on SETS.
    Currently, LIFFE lists equity options on the FTSE 100 Index and 
futures and futures options on the FTSE 250 Index. The Exchange notes 
that the Commission previously approved for the Chicago Board Options 
Exchange (``CBOE'') to list reduced-value options on the FTSE 100 
Index, and for the International Securities Exchange (``ISE'') to list 
reduced value options on both the FTSE 100 and the FTSE 250.\4\
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    \4\ See Securities Exchange Act Release No. 29722 (September 23, 
1991), 56 FR 49807 (October 1, 1991) (order approving SR-CBOE-91-
07); Securities Exchange Act Release No. 53484 (March 14, 2006) 71 
FR 14268 (March 21, 2006) (order approving SR-ISE-2005-25).
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Index Design and Composition

    The FTSE 100 and 250 Indexes were created in the 1980s by the 
International Stock Exchange of the United Kingdom and the Republic of 
Ireland (the predecessor to the LSE) in conjunction with the Financial 
Times and a committee of U.K. financial institutions, including LIFFE. 
The Indexes are administered and maintained by FTSE International 
Limited (``FTSE'').\5\ To qualify for inclusion in a FTSE Index, a 
company must satisfy, among others, the following conditions: (1) It 
must have a full listing on the London Stock Exchange; (2) it must not 
be a subsidiary of another FTSE Index constituent; and (3) it must be 
sufficiently liquid to be traded.\6\ The FTSE 100 Index consists of the 
largest 100 U.K. companies ranked by unadjusted market value, and the 
FTSE 250 consists of the next largest 250 U.K. companies ranked by 
unadjusted market value.\7\ The FTSE EMEA Committee conducts a 
quarterly review of the FTSE Indexes to ensure that its component 
stocks are representative of the state of the equity market for the 
largest U.K. companies.
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    \5\ The FTSE Europe, Middle East and Africa (``EMEA'') Committee 
is responsible for, among other things, establishing rules to 
determine, review, and modify the composition of the FTSE Indexes, 
as well as how the FTSE Indexes are calculated. The FTSE EMEA 
Committee is comprised of representatives from various financial 
institutions including, among others, FTSE, Barclays Global 
Investors, Goldman Sachs, and LIFFE.
    \6\ See ``Ground Rules for the Management of the UK Series of 
the FTSE Actuaries Share Indices,'' at http://www.ftse.com for 
complete eligibility criteria.
    \7\ Unadjusted market capitalization (as opposed to a ``free-
float'' index methodology) refers to the total number of shares 
outstanding multiplied by the share price. A ``free-float'' index 
methodology usually excludes shares held by strategic investors by 
way of cross ownership, government ownership, private ownership, and 
restricted share ownership.
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    As of August 31, 2007, the following were the characteristics of 
the FTSE 100 Index: \8\ (i) The total capitalization of all of the 
components in the Index is [pound]1.50 trillion; (ii) regarding 
component capitalization, (a) the highest capitalization of a component 
is [pound]107.14 billion (BP Plc), (b) the lowest capitalization of a 
component is [pound]861.13 million (Schroders NV), (c) the average 
capitalization of the components is 14.70 billion, and (d) the median 
capitalization of the components is [pound]6.02 billion; (iii) 
regarding component price per share, (a) the highest price per share of 
a component is [pound]44.19 (Rio Tinto), (b) the lowest price per share 
of a component is 101 pence (ITV), (c) the mean price per share of a 
component is [pound]8.60, and (d) the median price per share of a 
component is [pound]7.16; (iv) regarding component weightings, (a) the 
highest weighting of a component is 7.14% (BP Plc), (b) the lowest 
weighting of a component is 0.04% (Schroders NV), (c) the mean 
weighting of the components is 0.99%, (d) the median weighting of the 
components is 0.45%, and (e) the total weighting of the top five 
highest weighted components is 29.36% (BP Plc, HSBC Holdings, Vodafone 
Group, GlaxoSmithKline, Royal Dutch Shell); (v) regarding component 
available shares, (a) the most available shares of a component is 5.03 
billion (Vodafone Group), (b) the least available shares of a component 
is 66.90 million (Schroders NV), (c) the mean available shares of the 
components is 2.97 billion, and (d) the median available shares of the 
components is 1.24 billion; (vi) regarding the three-month average 
daily volumes of the components, (a) the highest three-month average 
daily volume of a component is 291.648 million (Vodafone Group), (b) 
the lowest three-month average daily volume of a component is 307,521 
(Schroders NV), (c) the mean three-month average daily volume of the 
components is 15.77 million, (d) the median three-month average daily 
volume of the components is 8.01 million, (e) the average of three-
month average daily volumes of the five most heavily traded components 
is 579.50 million (Vodafone Group, BP Plc, Corus Group, BT Group, 
Tesco), and (f) 100% of the components had a three-month average daily 
volume of at least 50,000.
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    \8\ The Exchange deems information regarding characteristics of 
the FTSE 100 accurate as per data available from various sources, 
including the FTSE 100 Fact Sheet published by FTSE International 
Ltd. and the Bloomberg Financial Web sites.
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    As of August 31, 2007, the following were the characteristics of 
the FTSE 250 Index \9\: (i) The total capitalization of all of the 
components in the Index is [pound]260.34 billion; (ii) regarding 
component capitalization, (a) the highest capitalization of a component 
is [pound]3.97 billion (Taylor Wimpey), (b) the lowest capitalization 
of a component is

[[Page 36947]]

[pound]369.09 million (JPM European), (c) the average capitalization of 
the components is [pound]1.03 billion, and (d) the median 
capitalization of the components is [pound]830 million; (iii) regarding 
component price per share, (a) the highest price per share of a 
component is [pound]52.93 (Greggs), (b) the lowest price per share of a 
component is 28 pence (PartyGaming), (c) the mean price per share of a 
component is [pound]4.60, and (d) the median price per share of a 
component is [pound]5.97; (iv) regarding component weightings, (a) the 
highest weighting of a component is 1.53% (Taylor Wimpey), (b) the 
lowest weighting of a component is 0.06% (JP Morgan European), (c) the 
mean weighting of the components is 0.41%, (d) the median weighting of 
the components is 0.30%, and (e) the total weighting of the top five 
highest weighted components is 6.13% (Taylor Wimpey, Tulow Oil, First 
Group, Ladbrokes, Invensys); (v) regarding component available shares, 
(a) the most available shares of a component is 3.96 billion 
(PartyGaming), (b) the least available shares of a component is 16.41 
million (Daejan), (c) the mean available shares of the components is 
367.10 million, and (d) the median available shares of the components 
is 211.60 million; (vi) regarding the three-month average daily volumes 
of the components, (a) the highest three-month average daily volume of 
a component is 30.80 million (PartyGaming), (b) the lowest three-month 
average daily volume of a component is 10,900 (Daejan), (c) the mean 
three-month average daily volume of the components is 2.41 million, (d) 
the median three-month average daily volume of the components is 
769,801, (e) the average of three-month average daily volumes of the 
five most heavily traded components is 97.29 million (PartyGaming, 
Bradford & Bingley, Debenhams, LogicaCMG, and Hays), and (f) 98% of the 
components had a three-month average daily volume of at least 50,000.
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    \9\ The Exchange deems information regarding characteristics of 
the FTSE 250 accurate as per data available from various sources, 
including the FTSE 250 Fact Sheet published by FTSE International 
Ltd. and Bloomberg Financial Web sites.
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Index Calculation and Index Maintenance

    The base index value of the FTSE 100 Index and the FTSE 250 Index, 
was 1000, as of December 31, 1983, and 1412.60, as of December 31, 
1985, respectively. As of April 17, 2008, the index value of the FTSE 
100 Index and the FTSE 250 Index was 5980.4 and 10,089.4, respectively. 
The Exchange believes that these levels are too high for successful 
options trading. As a result, the premiums for options on the full 
values of the FTSE Indexes are high, which may deter retail investors. 
Accordingly, the Exchange proposes to base trading in options on a 
fraction of the full size FTSE Indexes. In particular, the Exchange 
proposes to list Mini FTSE Index options that are based on one-tenth of 
the value of each of the FTSE Indexes.\10\ The Exchange believes that 
listing options on reduced values will attract a greater source of 
customer business than if options were based on the full value of the 
FTSE Indexes. The Exchange further believes that listing options on 
reduced values will provide an opportunity for investors to hedge, or 
speculate on, the market risk associated with the stocks comprising the 
FTSE Indexes. Additionally, by reducing the values of the FTSE Indexes, 
investors will be able to use this trading vehicle while extending a 
smaller outlay of capital. The Exchange believes that this should 
attract additional investors, and, in turn, create a more active and 
liquid trading environment.\11\
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    \10\ As noted above, the Exchange also proposes to list LEAPS on 
the Mini FTSE Indexes.
    \11\ The concept of listing reduced value options on an index is 
not a novel one. For example, the Commission has previously approved 
the listing of reduced value options on the S&P 500 Index, the 
NASDAQ 100 Index, and the NYSE Composite Index. See Securities 
Exchange Act Release Nos. 32893 (September 14, 1993), 58 FR 49070 
(September 21, 1993) (S&P 500 Index); and 48681 (October 22, 2003), 
68 FR 62337 (November 3, 2003) (NYSE Composite Index). See also 
Securities Exchange Act Release No. 43000 (June 30, 2000), 65 FR 
42409 (July 10, 2000) (relating to a reduction in the value of the 
NASDAQ 100 Index).
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    Index levels for options on the Mini FTSE Indexes are calculated by 
FTSE, and are currently disseminated by ISE every 15 seconds during the 
Exchange's regular trading hours to market information vendors via the 
Options Price Reporting Authority (``OPRA'').\12\ In the event ISE no 
longer disseminates such index levels, the Exchange will cause such 
index levels to be disseminated via OPRA, the Consolidated Tape 
Association, or one or more major market data vendors. The methodology 
used to calculate the value of the FTSE Indexes is similar to the 
methodology used to calculate the value of other well-known market-
capitalization weighted indexes. The level of each FTSE Index reflects 
the total market value of the component stocks relative to a particular 
base period and is computed by dividing the total market value of the 
companies in each index by its respective index divisor.\13\
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    \12\ The FTSE Indexes will be published daily through major 
quotation vendors, such as Reuters.
    \13\ A divisor is an arbitrary number chosen at the starting 
date of an index to fix the index starting value. The divisor is 
adjusted periodically when capitalization amendments are made to the 
constituents of the index in order to allow the index value to 
remain comparable over time. Without a divisor the index value would 
change when corporate actions took place and would not reflect the 
true value of an underlying portfolio upon which the index is based.
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    The FTSE Indexes are updated on a real-time basis from 8 a.m. to 
4:30 p.m. (London time), which corresponds to 3 a.m. to 11:30 a.m. (New 
York time). After 11:30 a.m. (New York time), OPRA disseminates a 
static value of the FTSE Indexes until the close of trading each day. 
The FTSE Indexes are calculated using the last traded price of the 
component securities. If a component security does not open for 
trading, the price of that security at the close or the index on the 
previous day is used in the calculation.\14\
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    \14\ The FTSE Indexes are published daily in the Financial Times 
and are available in real-time on Reuters, Bloomberg, and other 
market information systems which disseminate information on a real-
time basis.
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    The FTSE Indexes will be monitored and maintained by FTSE. FTSE 
will be responsible for making all necessary adjustments to the indexes 
to reflect component deletions, share changes, stock splits, stock 
dividends (other than an ordinary cash dividend), and stock price 
adjustments due to restructuring, mergers, or spin-offs involving the 
underlying components. Some corporate actions, such as stock splits and 
stock dividends, require simple changes to the available shares 
outstanding and the stock prices of the underlying components. Other 
corporate actions, such as share issuances, that change the market 
value would require changing the index divisor to effect adjustments.
    The FTSE Indexes are reviewed each quarter in March, June, 
September, and December based on market capitalization. Based on 
information submitted by FTSE, the FTSE EMEA Committee approves the new 
index components and a reserve list of six companies for the FTSE 100 
Index. If a company is deleted from the FTSE 100 Index between reviews 
as a result of a merger, takeover, or other corporate action, the 
highest ranking company from the reserve list will replace it in the 
index.
    Although the Exchange is not involved in the maintenance of any of 
the FTSE Indexes, the Exchange represents that it will monitor each 
FTSE Index on a quarterly basis. The Exchange will not list any 
additional series for trading and will limit all transactions in such 
options to closing transactions only if, with respect to any FTSE 
Index: (i) The number of securities in a FTSE Index drops by one-third 
or more; (ii) 10% or more of the weight of a FTSE Index is represented 
by component securities having a market

[[Page 36948]]

value of less than $50 million; (iii) 10% or more of the weight of a 
FTSE Index is represented by component securities trading less than 
20,000 shares per day; or (iv) the largest component security accounts 
for more than 15% of the weight of a FTSE Index or the largest five 
components in the aggregate account for more than 50% of the weight of 
a FTSE Index. As of May 15, 2008, the FTSE Indexes comply with these 
criteria.
    In the event the FTSE Indexes cease to be maintained or calculated, 
or their values are not disseminated every 15 seconds by a widely 
available source, the Exchange will not list any additional series for 
trading and will limit all transactions in such options to closing 
transactions only for the purpose of maintaining a fair and orderly 
market and protecting investors.

Exercise and Settlement Value

    Options on the FTSE Indexes will expire on the Saturday following 
the third Friday of the expiration month. Trading in the FTSE Indexes 
will normally cease at 4:15 p.m. (New York time) on the Thursday 
preceding an expiration Saturday. The index value for exercise of the 
FTSE Index options will be calculated based on the LSE's Exchange 
Delivery Settlement Price (``EDSP'') intra-day auction, which was 
introduced by LSE in November of 2004. The EDSP is a settlement value 
calculated by Euronext-LIFFE for FTSE index futures and options 
contracts traded on its exchange. The EDSP value is calculated using an 
intra-day auction process administered by the LSE for all the component 
stocks of the FTSE 100 Index and the FTSE 250 Index. The intra-day 
auction occurs between 10:10 a.m. and 10:29 a.m. (London time) for the 
FTSE 100 Index, and between 10:10 a.m. and 10:31 a.m. (London time) for 
the FTSE 250 Index on the third Friday of the expiration month. 
Therefore, because trading in the expiring contract months will 
normally cease on a Thursday at 4:15 p.m. (New York time), the EDSP for 
exercise will be determined the day after trading has ceased, i.e., 
during the Friday morning LSE trading session, by 5:31 a.m. (New York 
time). The last automated traded price prior to the EDSP auction or the 
previous day's closing price will be used to calculate the final EDSP 
if a security did not participate in the auction. During the auction 
process, indications of the settlement price for each index are widely 
disseminated every 15 seconds via special indexes called Expiry 
Indexes. The purpose of the Expiry Indexes is to disseminate expected 
settlement values as the auction progresses. When the auction is 
finished, the final values of the Expiry Indexes are disseminated as 
the EDSP values. The Expiry Indexes and subsequent EDSP values are 
widely disseminated through major market data vendors including 
Reuters, Bloomberg, and Thomson.
    If the LSE is closed on the Friday before expiration, but the 
Exchange remains open, then the last trading day for expiring FTSE 
Index options will be moved earlier to Wednesday as if the Exchange had 
had a Friday holiday. The settlement index value used for exercise will 
be calculated during LSE's EDSP intra-day auction on Thursday morning.

Contract Specifications

    The contract specifications for options on the FTSE Indexes are set 
forth in Exhibits 3-1 and 3-2 to the proposed rule change. The FTSE 
Indexes are broad-based indexes, as defined in NYSE Arca Rule 5.12. 
Options on the FTSE Indexes are European-style and a.m. cash-settled. 
The Exchange's standard trading hours for broad-based index options 
(6:30 a.m. to 1:15 p.m., Pacific time), as set forth in Rule 7.1, will 
apply to the FTSE Indexes. Exchange rules that are applicable to the 
trading of options on broad-based indexes will apply to the reduced 
values of the FTSE Indexes.\15\ Specifically, the trading of reduced 
values of the FTSE Indexes will be subject to, among others, Exchange 
rules governing margin requirements and trading halt procedures for 
index options. Options shall be quoted and traded in U.S. dollars.
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    \15\ See NYSE Arca Rule 5.12.
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    For options on the Mini FTSE Indexes, the Exchange proposes to 
amend Rule 5.15 to state that all broad-based index options contracts 
shall be subject to a contract limitation fixed by the Exchange, which 
shall not be larger than the limits provided in the chart included in 
Rule 5.15. The proposed amended Rule 5.15 would establish aggregate 
position limits for options on the Mini FTSE Indexes at 250,000 
contracts on the same side of the market, provided no more than 150,000 
of such contracts are in the nearest expiration month series. 
Additionally, the Exchange proposes to amend NYSE Arca Rule 5.17 
relating to the availability of an index option hedge exemption for 
public customers. The proposed rule change would specify that, for 
options on broad-based indexes other than for those that do not have 
any position limits, the hedge exemption is 75,000 contracts in 
addition to the standard limit.\16\ Furthermore, proprietary accounts 
of members may receive an exemption of up to 500,000 contracts for the 
purpose of facilitating public customer orders.\17\
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    \16\ The same limits that apply to position limits shall apply 
to exercise limits for these products.
    \17\ See NYSE Arca Rule 6.8, Commentary .08.
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    The Exchange proposes to apply broad-based index margin 
requirements for the purchase and sale of options on the Mini FTSE 
Indexes. Accordingly, purchases of put or call options with 9 months or 
less until expiration must be paid for in full. Writers of uncovered 
put or call options must deposit/maintain 100% of the option proceeds, 
plus 15% of the aggregate contract value (current index level x $100), 
less any out-of-the-money amount, subject to a minimum of the option 
proceeds plus 10% of the aggregate contract value for call options and 
a minimum of the option proceeds plus 10% of the aggregate exercise 
price amount for put options.
    The Exchange proposes to set strike price intervals at least 2\1/2\ 
points for certain near-the-money series in near-term expiration months 
when the index level of the FTSE Indexes is below 200, and 5-point 
strike price intervals for other options series with expirations up to 
one year, and at least 10-point strike price intervals for longer-term 
options. The minimum tick size for series trading below $3 shall be 
$0.05, and for series trading at or above $3, the minimum tick size 
shall be $0.10.
    The Exchange proposes to list options on reduced values of the FTSE 
Indexes in the three consecutive near-term expiration months plus up to 
three successive expiration months in the March cycle. For example, 
consecutive expirations of January, February, March, plus June, 
September, and December expirations would be listed.\18\ In addition, 
long-term option series having up to sixty months to expiration may be 
traded.\19\ The trading of long-term FTSE Indexes shall be subject to 
the same rules that govern the trading of all the Exchange's index 
options, including sales practice rules, margin requirements, and 
trading rules.
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    \18\ See NYSE Arca Rule 5.19(a)(3).
    \19\ See NYSE Arca Rule 5.19(b)(1). The Exchange is not listing 
reduced value LEAPS on the FTSE Indexes pursuant to NYSE Arca Rule 
5.19(b)(2).
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    Options on the Mini FTSE Indexes shall be subject to the same rules 
that presently govern the trading of Exchange index options, including 
sales practice rules, margin requirements, trading rules, and position 
and exercise limits.
    The Exchange proposes to amend Rule 5.19(a)(7)(A) to specify Mini 
FTSE

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Index options as a.m.-settled options approved for trading on the 
Exchange. The Exchange also proposes to add Commentary .01 to Rule 5.22 
(Disclaimers) to specify that FTSE International Limited is the 
reporting authority for the FTSE 100 and 250 Indexes.

Surveillance and Capacity

    The Exchange represents that it has an adequate surveillance 
program in place for options traded on the FTSE Indexes and intends to 
apply those same program procedures that it applies to the Exchange's 
other index options. Additionally, the Exchange has provided the 
Commission, on a confidential basis, a representation made by FTSE to 
the Exchange regarding FTSE's insider trading policies, as they pertain 
to the broker-dealer members of FTSE's EMEA Committee who are charged 
with the selection of component securities that comprise the FTSE 
Indexes. The FTSE EMEA Committee members are also required to maintain 
in confidence, including non-disclosure to another party, any 
information that they may be given by virtue of their membership of the 
FTSE EMEA Committee, unless such information is already in the public 
domain or where disclosure is required by law. NYSE Arca is also a 
member of the Intermarket Surveillance Group (ISG). The members of the 
ISG include all of the U.S. registered stock and options markets. In 
addition, the LSE and LIFFE are members of ISG. ISG members work 
together to coordinate surveillance and investigative information 
sharing in the stock and options markets. In addition, the major 
futures exchanges are members of the ISG, which allows for the sharing 
of surveillance information for potential intermarket trading abuses.
    The Exchange has the necessary systems capacity to support new 
options series that will result from the introduction of reduced values 
of the FTSE Indexes, including LEAPS. The Exchange has provided the 
Commission system capacity information that supports its system 
capacity representations.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
and furthers the objectives of Section 6(b)(5) of the Act,\20\ in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, 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. The Exchange believes that the proposed rule 
change will provide for additional competition in the U.S. options 
markets in trading FTSE Index options, to the benefit of the investing 
public.
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    \20\ 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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. 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-NYSEArca-2008-61 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-NYSEArca-2008-61. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, 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-NYSEArca-2008-61 and should 
be submitted on or before July 21, 2008.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\21\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b) of the Act,\22\ in general, 
and furthers the objectives of Section 6(b)(5),\23\ in particular, in 
that it is designed to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general to protect 
investors and the public interest.
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    \21\ In approving this proposal, the Commission notes that it 
has considered the proposal's impact on efficiency, competition, and 
capital formation. See 15 U.S.C. 78c(f).
    \22\ 15 U.S.C. 78f(b).
    \23\ 15 U.S.C. 78f(b)(5).
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    Because the FTSE 100 and FTSE 250 Indexes are broad-based indexes 
of actively traded, well-capitalized stocks, the trading of the 
proposed Index options on the Exchange does not raise unique regulatory 
concerns. The options on the Mini FTSE Indexes will be traded under 
NYSE Arca's existing regulatory regime for index options, which 
includes among other things, positions and exercise limits and margin 
requirements. Additionally, the Exchange has represented that it has 
adequate system capacity and surveillance for these Index options and 
that the index value will be disseminated at least every 15 seconds. In 
addition, as ISG members, NYSE Arca, LSE, and LIFFE work together to 
coordinate surveillance and investigate information sharing in the 
stock and options markets.

[[Page 36950]]

    Under Section 19(b)(2) of the Act,\24\ the Commission may not 
approve any proposed rule change prior to the thirtieth day after 
publication of the notice of the filing thereof, unless the Commission 
find good cause for so doing and publishes its reasons for so finding. 
The Commission believes that the proposed rule filing does not raise 
any new, unique or substantive issues from those raised in similar 
proposals previously approved the Commission,\25\ allowing other 
exchanges to list and trade reduced value index options on the FTSE 
Indexes. Accordingly, the Commission hereby finds good cause for 
approving the proposed rule change thereto prior to thirtieth day after 
the date of publication of notice of filings thereof in the Federal 
Register.
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    \24\ 15 U.S.C. 78s(b)(2).
    \25\ See Securities Exchange Act Release No. 29722 (September 
23, 1991), 56 FR 49807 (October 1, 1991) (order approving SR-CBOE-
91-07); 53484 (March 14, 2006), 71 FR 14268 (March 21, 2006) (order 
approving SR-ISE-2005-25).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\26\ that the proposed rule change (SR-NYSEArca-2008-61) be, and it 
hereby is, approved on an accelerated basis.
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    \26\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-14767 Filed 6-27-08; 8:45 am]

BILLING CODE 8010-01-P