Document ID: SEC-2010-1065-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-07-13T04:00Z

[Federal Register: July 13, 2010 (Volume 75, Number 133)]
[Notices]               
[Page 40011-40012]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jy10-129]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62452; File No. SR-NYSEAmex-2010-66]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Amex LLC To List Options 
on Trust Issued Receipts in $1 Strike Intervals

July 6, 2010.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on July 2, 2010, NYSE Amex LLC (``NYSE Amex'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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.
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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 Rule 903 Commentary .05 to establish 
strike price intervals for options on Trust Issued Receipts. The text 
of the proposed rule change is attached as Exhibit 5 to the 19b-4 form. 
A copy of this filing is available on the Exchange's Web site at http:/
/www.nyse.com, at the Exchange's principal office, on the Commission's 
Web site at http://www.sec.gov, 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 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 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 this filing is to amend Rule 903 Commentary .05, to 
establish strike price intervals for options on Trust Issued Receipts 
(``TIRs''), including Holding Company Depositary Receipts (``HOLDRs''), 
in $1 or greater strike price intervals, where the strike price is $200 
or less, and $5 strike price intervals where the strike price is 
greater than $200.\3\
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    \3\ HOLDRs are a type of Trust Issued Receipt and the current 
proposal would permit $1 strikes for options on HOLDRS (where the 
strike price is less than $200).
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    Currently, the strike price intervals for options on TIRs are as 
follows: (1) $2.50 or greater where the strike price is $25.00 or less; 
(2) $5.00 or greater where the strike price is greater than $25.00; and 
(3) $10.00 or greater where the strike price is greater than $200.\4\
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    \4\ See NYSE Amex Rule 903 Commentary .05.
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    The Exchange is seeking to permit $1 strikes for options on TIRs 
where the strike price is less than $200 because TIRS have 
characteristics similar to exchange traded funds (``ETFs''). 
Specifically, TIRs are exchange-listed securities representing 
beneficial ownership of the specific deposited securities represented 
by the receipts. They are negotiable receipts issued by a trust 
representing securities of issuers that have been deposited and held on 
behalf of the holders of the TIRs. TIRs, which trade in round-lots of 
100, and multiples thereof, may be issued after their initial offering 
through a deposit with the trustee of the required number of shares of 
common stock of the underlying issuers. This characteristic of TIRs is 
similar to that of ETFs which also may be created on any business day 
upon receipt of the requisite securities or other investment assets 
comprising a creation unit. The trust only issues receipts upon the 
deposit of the shares of the underlying securities that are represented 
by a round-lot of 100 receipts. Likewise, the trust will cancel, and an 
investor may obtain, hold, trade or surrender TIRs in a round-lot and 
round-lot multiples of 100 receipts.
    Strike prices for ETF options are permitted in $1 or greater 
intervals where the strike price is $200 or less and $5 or greater 
where the strike is greater than $200. Accordingly, the Exchange 
believes that the rationale for permitting $1 strikes for ETF options 
equally applies to permitting $1 strikes for options on TIRs.\5\
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    \5\ Id.
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    The Exchange has analyzed its capacity and believes the Exchange 
and the Options Price Reporting Authority (``OPRA'') have the necessary 
systems capacity to handle the additional traffic associated with the 
listing and trading of $1 strikes where the strike price is less than 
$200 for options on TIRs.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b) \6\ of the Securities Exchange Act of 1934 (the ``Act''), 
in general, and furthers the objectives of section 6(b)(5) \7\ in 
particular in that it is designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, to 
remove impediments to and to perfect the mechanism for a free and open 
market and a national market system and, in general, to protect 
investors and the public interest by allowing the Exchange to list 
options on TIRs at $1 strike price intervals. The Exchange believes 
that the marketplace and investors expect options on TIRs to trade in a 
similar manner to ETF options. The Exchange further believes that 
investors will be better served if $1 strike price intervals are 
available for options on TIRs where the strike price is less than $200.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).

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[[Page 40012]]

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\
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    \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 self-regulatory organization to submit to the 
Commission 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 Commission has waived the five-day pre-filing 
requirement in this case.
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    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 a rule of 
another exchange that has been approved by the Commission.\10\ 
Therefore, the Commission designates the proposal operative upon 
filing.\11\
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    \10\ See Securities Exchange Release No. 34-62141 (May 20, 
2010), 75 FR 29787 (May 27, 2010) (SR-CBOE-2010-036).
    \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).
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    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 Number SR-NYSEAmex-2010-66 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-2010-66. 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-2010-66 and should be submitted on or before August 3, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-16991 Filed 7-12-10; 8:45 am]
BILLING CODE 8010-01-P