Document ID: SEC-2007-0681-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2007-05-15T04:00Z

[Federal Register: May 15, 2007 (Volume 72, Number 93)]
[Notices]               
[Page 27346-27347]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15my07-88]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55718; File No. SR-NYSEArca-2007-42]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Extend the $1 
Strike Pilot Program for an Additional Year

May 7, 2007.
    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 May 3, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been substantially prepared by NYSE Arca. The Exchange has 
filed the proposal as a ``non-controversial'' rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders it 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

    NYSE Arca proposes to amend its rules to extend the $1 strike pilot 
program (``Pilot Program'') for an additional year. The text of the 
proposed rule change is available at NYSE Arca, the Commission's Public 
Reference Room, and http://www.nysearca.com.

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 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 Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to extend its Pilot Program for one year. The 
current Pilot Program expires on June 5, 2007. NYSE Arca notes that OTP 
Firms have expressed a continued interest in listing additional strike 
prices on low-priced stocks so that they can provide their customers 
with greater flexibility in their investment choices. For this reason, 
the Exchange proposes to extend the Pilot Program. The Exchange notes 
that the Pilot Program will remain unchanged in all material respects, 
including: The procedures for adding $1 strike intervals; the 
procedures for phasing out $2.50 strike price intervals; the 
prohibition against listing long-term options (``LEAPS'') in equity 
option classes at $1 strike intervals; the procedures for adding 
expiration months; and the procedures for deleting $1 strike intervals. 
In support of the Exchange's proposal to extend the Pilot Program until 
June 5, 2008, the Exchange is submitting a report to the Commission 
(``Pilot Program Report''), attached as Exhibit 3 to the proposal, 
offering detailed data from, and analysis of, the Pilot Program.
2. Statutory Basis
    The Exchange believes that the continuing the Pilot Program will 
stimulate customer interest in options overlying lower-priced stocks by 
creating greater trading opportunities and flexibility. The Exchange 
further believes that continuing the Pilot Program will provide 
customers with the ability to more closely tailor investment strategies 
to the precise movement of the underlying security. For these reasons, 
the Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\5\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act,\6\ in particular, in that it is designed to 
facilitate transactions in securities, to promote just and equitable 
principles of trade, and to protect investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 the 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

    Written comments on the proposed rule change were neither solicited 
nor received.

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

    Because the foregoing rule change does not: (1) Significantly 
affect the protection of investors or the public interest; (2) impose 
any significant burden on competition; and (3) become operative for 30 
days from the date of this filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6) also requires the 
self-regulatory organization to give the Commission 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. NYSE 
Arca has satisfied the five-day pre-filing requirement. As set forth 
in the Commission's initial approval of the Pilot Program and in its 
order extending the operation of the Pilot Program through June 5, 
2005, if NYSE Arca proposes to: (1) extend the Pilot Program; (2) 
expand the number of options eligible for inclusion in the Pilot 
Program; or (3) seek permanent approval of the Pilot Program, it 
must submit a Pilot Program report to the Commission along with the 
filing of its proposal to extend, expand, or seek permanent approval 
of the Pilot Program. NYSE Arca must file any proposal to expand or 
seek permanent approval of the Pilot Program and the Pilot Program 
report with the Commission at least 60 days prior to the expiration 
of the Pilot Program. The Pilot Program report must cover the entire 
time the Pilot Program was in effect and must include: (1) data and 
written analysis on the open interest and trading volume for options 
(at all strike price intervals) selected for the Pilot Program; (2) 
delisted options series (for all strike price intervals) for all 
options selected for the Pilot Program; (3) an assessment of the 
appropriateness of $1 strike price intervals for the options NYSE 
Arca selected for the Pilot Program; (4) an assessment of the impact 
of the Pilot Program on the capacity of NYSE Arca's, the Options 
Price Reporting Authority's, and vendors' automated systems; (5) any 
capacity problems or other problems that arose during the operation 
of the Pilot Program and how NYSE Arca addressed them; (6) any 
complaints that NYSE Arca received during the operation of the Pilot 
Program and how NYSE Arca addressed them; and (7) any additional 
information that would help to assess the operation of the Pilot 
Program. See Securities Exchange Act Release Nos. 48945 (June 17, 
2003), 68 FR 37594 (June 24, 2003) (SR-PCX-2003-28) and 50152 
(August 5, 2004), 69 FR 49931 (August 12, 2004) (SR-PCX-2004-61).

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[[Page 27347]]

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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 No. SR-NYSEAcra-2007-42 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
All submissions should refer to File No. SR-NYSEArca-2007-42. 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. Copies of such 
filing will also be available for inspection and copying at the 
principal office of NYSE Arca. 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 No. SR-NYSEArca-2007-42 and should be submitted on or before June 
5, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-9261 Filed 5-14-07; 8:45 am]

BILLING CODE 8010-01-P