Document ID: SEC-2010-0537-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-04-09T04:00Z

[Federal Register: April 9, 2010 (Volume 75, Number 68)]
[Notices]               
[Page 18248-18249]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ap10-137]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61831; File No. SR-NYSEArca-2010-20]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Amending 
Commentary .05 to Rule 6.4 Series of Options for Trading

April 2, 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 March 31, 2010 NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') 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.
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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 6.4-Series of Options for 
Trading by adopting new provisions governing strike price intervals. 
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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to (i) add a provision 
to Rule 6.4 codifying the strike price intervals presently used by NYSE 
Arca for listed options, and (ii) create a provision that will allow 
for $5 strike price intervals of options on Exchange Traded Funds 
Shares (``ETFs'') where the strike price is over $200.
    Options traded on NYSE Arca are listed at strike price intervals of 
$2.50 or greater where the strike price is less than $25.00, $5.00 or 
greater where the strike price is greater than $25.00, and $10.00 or 
greater where the strike price is greater than $200.00. This listing 
convention for strike price intervals is the same as is presently in 
place at other U.S. option exchanges.\3\ The Exchange now proposes to 
adopt new Rule 6.4(f) in order to codify these standards that are 
presently in use at NYSE Arca.
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    \3\ See International Securities Exchange (``ISE'') Rule 504(d) 
and NYSE Amex Rule 903 Commentary .05.
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    Commentary .05 to Rule 6.4-Series of Options Open for Trading 
states that strike price intervals of options on Exchanged-Traded Fund 
Shares will be $1 or greater where the strike price of the underlying 
asset is $200 or less. Most underlying ETF options trade for less than 
$200 per share; therefore most series are priced at $1 strike price 
intervals. However, some higher priced ETFs do have listed options 
series with strike prices over $200.\4\ NYSE Arca does not have a 
provision that allows ETF options to list and trade at $5 strike

[[Page 18249]]

price intervals where the strike price is more than $200. This 
limitation puts NYSE Arca at a competitive disadvantage to other 
exchanges that are able to list ETF options series, with strike prices 
over $200, at $5 price intervals.
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    \4\ As an example, ETF options trading under the symbols ILF, 
FXI, MDY and EEM all have listed strike prices greater than $200.
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    The Exchange believes that the rule proposal to allow for the 
listing of option series at $5 strike price intervals above $200, for 
options on ETFs, will enable the Exchange to competitively list and 
trade ETF options at appropriate strike price intervals. This proposed 
rule is based on similar rules in effect at NYSE Amex LLC (``NYSE 
Amex''), the Chicago Board Options Exchange (``CBOE'') and NASDAQ OMX 
PHLX.\5\
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    \5\ See NYSE Amex Rule 903 Commentary .05, CBOE Rule 5.5 
Commentary .08 and NASDAQ OMX PHLX Rule 1012 Commentary .05.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (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. The Exchange 
believes the proposed rule change will allow the Exchange to 
competitively list and trade ETF options at appropriate strike price 
intervals which are also commensurate with the rules of other options 
exchanges.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    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 after the date of the filing, or such 
shorter time as the Commission may designate, if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to 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) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay so that the proposal may become operative immediately 
upon filing, thereby giving the Exchange the ability to compete with 
other option exchanges by listing and trading ETF options at the same 
strike price intervals. The Commission finds that waiver of the 
operative delay is consistent with the protection of investors and the 
public interest because such waiver will encourage fair competition 
among the exchanges. Therefore, the Commission designates the proposal 
operative upon filing.\10\
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    \10\ 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-NYSEArca-2010-20 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-NYSEArca-2010-20. 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,\11\ 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-NYSEArca-2010-20 and should be submitted on or before 
April 30, 2010.
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    \11\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.
    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-8151 Filed 4-8-10; 8:45 am]
BILLING CODE 8011-01-P