Document ID: SEC-2010-1972-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-12-21T05:00Z

[Federal Register Volume 75, Number 244 (Tuesday, December 21, 2010)]
[Notices]
[Pages 80097-80099]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31949]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63552; File No. SR-NYSEAmex-2010-120]

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Amex LLC Establishing 
Strike Price Intervals of $1 and Increasing Position and Exercise 
Limits With Respect to Options on the KBW Bank Index

December 15, 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 December 14, 2010, NYSE Amex LLC (the ``Exchange'' or ``NYSE 
Amex'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Amex Rules 903C and 904C with 
respect to options on the KBW Bank Index (``BKX'' or ``Index'') to (i) 
establish strike price intervals of $1.00 and (ii) increase the 
position and exercise limits applicable thereto. The text of the 
proposed rule change is available at the Exchange's principal office, 
on the Commission's Web site at http://www.sec.gov, at the Commission's 
Public Reference Room, and http://www.nyse.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 those statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant parts of such 
statements.

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

1. Purpose
    The purpose of the proposed rule change is to amend NYSE Amex Rules 
903C and 904C with respect to options on BKX to (i) establish strike 
price intervals of $1.00 and (ii) increase the position and exercise 
limits applicable thereto. The proposed change would provide investors 
with greater flexibility with respect to trading options on BKX, which 
the Exchange intends on listing pursuant to the generic listing 
standards of Amex Rule 903C, by allowing them to establish positions 
that are better tailored to meet their investment objectives.

[[Page 80098]]

$1 Strike Price Intervals
    The Exchange proposes to list series of BKX at $1.00 or greater 
strike price intervals, if the strike price is less than $200, and to 
list at least two strike prices above and two strike prices below the 
current value of the Index at about the time a series is opened for 
trading on the Exchange.\3\
---------------------------------------------------------------------------

    \3\ The Exchange notes that similar proposals to list series of 
BKX at $1.00 or greater strike price intervals have been previously 
approved by the Commission. See Securities Exchange Act Release No. 
60840 (October 20, 2009), 74 FR 55593 (October 28, 2009) (SR-Phlx-
2009-77). See also Securities Exchange Act Release No. 60896 
(October 28, 2009), 74 FR 56906 (November 3, 2009) (SR-NYSEArca-
2009-98).
---------------------------------------------------------------------------

    As proposed, additional series of BKX could be opened for trading 
on the Exchange when the Exchange deems it necessary to maintain an 
orderly market, to meet customer demand, or when the underlying Index 
moves substantially from the initial exercise price or prices. To the 
extent that any additional strike prices are listed by the Exchange, 
such additional strike prices would be within thirty percent (30%) 
above or below the closing value of the Index on the prior day. The 
Exchange could also open additional strike prices that are more than 
30% above or below the current Index value provided that demonstrated 
customer interest exists for such series, as expressed by 
institutional, corporate, or individual customers or their brokers. 
Market Makers trading for their own account would not be considered 
when determining customer interest under this provision. In addition to 
the initial listed series, the Exchange could list up to sixty (60) 
additional series per expiration month for each series on BKX. In all 
cases, however, $1.00 strike price intervals could be listed on BKX 
only where the strike price is less than $200.
    As proposed, the Exchange could not list Long-Term Equity 
AnticiPation Securities (``LEAPS'') on BKX at intervals less than 
$2.50.
    The Exchange also proposes an additional delisting policy for BKX, 
whereby the Exchange would regularly review series that are outside a 
range of five (5) strikes above and five (5) strikes below the current 
value of BKX, and would be able to delist series with no open interest 
in both the put and the call series having a: (a) strike higher than 
the highest strike price with open interest in the put and/or call 
series for a given expiration month, and (b) strike lower than the 
lowest strike price with open interest in the put and/or call series 
for a given expiration month.
    The Exchange proposes that, notwithstanding the above delisting 
policy, customer requests to add strikes and/or maintain strikes in BKX 
eligible for delisting could be granted.
    Accordingly, the Exchange proposes to include these proposed 
changes as new Commentary .07 to NYSE Amex Rule 903C.
    With regard to the impact on system capacity, the Exchange has 
analyzed its capacity and represents that it and the Options Price 
Reporting Authority have the necessary systems capacity to handle the 
additional traffic associated with the listing and trading of an 
expanded number of series as proposed herein.
Position and Exercise Limits
    Under NYSE Amex Rule 904C(c), the highest position and exercise 
limit that a stock index industry group option such as BKX is permitted 
to have is 31,500 contracts. However, several other options exchanges 
currently list options on BKX and have expanded their position and 
exercise limit for options on BKX to 44,000 contracts.\4\ The Exchange 
believes that it is important for a product like BKX, which is traded 
on multiple exchanges, to have uniform position and exercise limits in 
order to eliminate any confusion among investors and other market 
participants. Accordingly, the Exchange proposes to amend NYSE Amex 
Rule 904C(c) to similarly increase the position and exercise limits for 
options on BKX to 44,000 contracts.\5\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 49312 (February 24, 
2004), 69 FR 9672 (March 1, 2004) (SR-Phlx-2004-13). See also 
Securities Exchange Act Release No. 55932 (June 20, 2007), 72 FR 
35288 (June 27, 2007) (SR-NYSEArca-2007-54).
    \5\ The Exchange notes that, as provided under NYSE Amex Rule 
905C(ii), the amount of stock index industry group options contracts 
that can be exercised pursuant to NYSE Amex Rule 905C is the same 
number of contracts established pursuant to NYSE Amex Rule 904C as 
the position limit for such options, and thus does not require that 
the text of NYSE Amex Rule 905C be amended to effect the change 
proposed herein.
---------------------------------------------------------------------------

    The Exchange also proposes a non-substantive change to move the 
reference to the Pauze[eacute] Tombstone Common Stock Index, and the 
position limit applicable thereto, to a more appropriate location 
within NYSE Amex Rule 904C(c).
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ in particular, 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. Specifically, 
the changes proposed herein would provide investors with greater 
flexibility to establish positions that are better tailored to meet 
their investment objectives while also eliminating potential confusion 
by aligning the Exchange's position and exercise limits with that of 
other options exchanges.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 satisfied this requirement.
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal is substantially similar to that of 
another exchange that has been approved by the Commission.\10\ 
Therefore, the

[[Page 80099]]

Commission designates the proposal operative upon filing.\11\
---------------------------------------------------------------------------

    \10\ See supra notes 3 and 4.
    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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-NYSEAmex-2010-120 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEAmex-2010-120. 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 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-
NYSEAmex-2010-120 and should be submitted on or before January 11, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31949 Filed 12-20-10; 8:45 am]
BILLING CODE 8011-01-P