Document ID: SEC-2009-1165-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2009-08-18T04:00Z

[Federal Register: August 18, 2009 (Volume 74, Number 158)]
[Notices]
[Page 41773-41774]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18au09-88]

[[Page 41773]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60486; File No. SR-Phlx-2009-68]

Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating
to Settlement of FLEX Currency Options

August 12, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') ,\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on August 6, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, 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 clarify Phlx Rule 1079 (FLEX Index, Equity
and Currency Options) regarding settlement of FLEX currency options \3\
in U.S. dollars. The text of the proposed rule change is available on
the Exchange's Web site at http://nasdaqomxphlx.cchwallstreet.com/
NASDAQOMXPHLX/Filings/, at the principal office of the Exchange, and at
the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \3\ FLEX currency options are long-term U.S. dollar-settled
foreign currency options (``FCOs'') that are up to three years in
length. See Rule 1079(a)(6). FCOs are also known as World Currency
Options (``WCOs''). See also Rule 1012 (Exchange may list FCOs
having up to three years from the time they are listed until
expiration).
---------------------------------------------------------------------------

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 purpose of the proposed rule change is to clarify Phlx Rule
1079 regarding settlement of FLEX currency options in U.S. dollars.
    In 2007, the Exchange listed and began trading six U.S. dollar-
settled FCOs.\4\ In July 2009, the Commission approved the Exchange's
filing to list and trade ten additional U.S. dollar-settled FCOs (the
``New Currencies'').\5\ The Exchange's 2009 filing, in addition to
providing the capability to list and trade the New Currencies, among
other things established position limits and spelled out a uniform
pricing convention (methodology) for all U.S. dollar-settled FCOs.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release Nos. 54989 (December 21,
2006), 71 FR 78506 (December 29, 2006) (SR-Phlx-2006-34) (approval
order regarding the listing and trading of U.S. dollar-settled FCOs
on the British pound and the Euro); and 56034 (July 10, 2007), 72 FR
38853 (July 16, 2007) (SR-Phlx-2007-34) (approval order regarding
the listing and trading of U.S. dollar-settled FCOs on the
Australian dollar, the Canadian dollar, the Swiss franc, and the
Japanese yen).
    \5\ See Securities Exchange Act Release No. 60196 (June 24,
2009), 74 FR 31782 (July 2, 2009) (approval order regarding the
listing and trading of the Mexican peso, the Brazilian real, the
Chinese yuan, the Danish krone, the New Zealand dollar, the
Norwegian krone, the Russian ruble, the South African rand, the
South Korean won, and the Swedish krona).
---------------------------------------------------------------------------

    Currently, sixteen FCOs are listed and traded on the Exchange. The
defining characteristic of all FCOs is that they are all U.S. dollar-
settled, that is, they do not require delivery of an underlying foreign
currency and settle only in U.S. dollars.\6\ Each of these FCOs can be
traded as long-term FLEX currency options. FLEX currency options, which
are U.S. dollar-settled FCOs that have long expiration dates up to
three years in length, also settle in U.S. dollars.\7\
---------------------------------------------------------------------------

    \6\ In contrast, physical delivery foreign currency options, so
named because settlement could involve delivery of the underlying
currency, were listed and traded on the exchange through early 2007;
all open interest in physical delivery options was traded out or
expired by the end of March 2007.
    \7\ See Rule 1079(a)(9)(B).
---------------------------------------------------------------------------

    This filing clarifies Rule 1079 indicating that FLEX currency
options settle in U.S. dollars.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \8\ in general, and furthers the objectives of Section
6(b)(5) of the Act \9\ 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,
by clarifying the settlement of FLEX currency options in U.S. dollars.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 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 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 either solicited or received.

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

    The Exchange believes that the foregoing proposed rule change may
take effect upon filing with the Commission pursuant to Section
19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \11\
because the foregoing proposed rule change does not: (i) Significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    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.
    The Exchange has asked the Commission to waive the 30-day operative
delay set forth in Rule 19b-4(f)(6)(iii). The Commission believes
investors will be best served by clarifying without delay that FLEX
currency options settle in U.S. dollars on the Exchange. The Commission
also notes that the proposed rule change presents no novel issues. For
these reasons, the Commission believes it is consistent with the
protection of investors and the public interest to waive the 30-day
operative delay, and hereby grants such waiver.\12\
---------------------------------------------------------------------------

    \12\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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

[[Page 41774]]

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-Phlx-2009-68 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-Phlx-2009-68. 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 on official business
days between the hours of 10 a.m. and 3 p.m. Copies of such filing also
will be available for inspection and copying at the principal offices
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-
Phlx-2009-68, and should be submitted on or before September 8, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19744 Filed 8-17-09; 8:45 am]

BILLING CODE 8010-01-P