Document ID: SEC-2008-1633-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-12-02T05:00Z

[Federal Register: December 2, 2008 (Volume 73, Number 232)]
[Notices]               
[Page 73371-73373]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02de08-113]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59012; File No. SR-NYSEArca-2008-131]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. To Temporarily 
Increase the Number of Additional Quarterly Option Series

November 24, 2008.
    Pursuant to section 19(b)(1)\1\ of the Securities Exchange Act of 
1934 (the ``Act'')\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on November 21, 2008, 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 self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 its rules to temporarily increase 
the number of additional Quarterly Options Series (``QOS''). The text 
of the proposed rule change 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to temporarily increase 
the number of additional QOS in ETF options from sixty (60) to one 
hundred (100) that may be added by the Exchange. To effect this change, 
the Exchange is proposing to add new subparagraph (iv) to Rule 6.4 
Commentary .08.
    Because of the current, unprecedented market conditions, the 
Exchange has received requests from market participants to add lower 
priced strikes for QOS in the Energy Select Sector SPDR (``XLE''), the 
DIAMONDS Trust, Series 1 (``DIA'') and the Standard and Poor's 
Depositary Receipts/SPDRs (``SPY''). For example, for December 2008 
expiration, there is demand for strikes (a) ranging from $20 up through 
and including $40 for XLE, (b) ranging from $60 up through and 
including $75 for DIA, and (c) ranging from $74 up through and 
including $85 for SPY. These strikes are much lower than those 
currently listed for which there is open interest.
    However, under current Rule 6.4 and commentary thereto, the 
Exchange cannot honor these requests because the maximum number of 
additional series, sixty (60), has already been listed. The Exchange is 
therefore seeking to temporarily increase the number of additional QOS 
that may be added to one hundred (100). The increase of additional 
series would be permitted immediately for expiration months currently 
listed and for expiration months added throughout the last quarter of 
2008, including the new expiration month added after December 2008 
expiration.
    The Exchange believes that this proposal is reasonable and will 
allow for more efficient risk management. The Exchange believes this 
proposal will facilitate the functioning of the Exchange's market and 
will not harm investors or the public interest. The Exchange believes 
that user demand and the recent downward price movements

[[Page 73372]]

in the underlying ETFs warrants a temporary increase in the number of 
strikes for all QOS in ETF options. Currently, the Exchange list QOS in 
five ETF options: (1) Nasdaq-100 Index Tracking Stock (``QQQQ''); (2) 
iShares Russell 2000Index Fund (``IWM''); (3) DIA; (4) SPY; and (5) 
XLE. The below chart provides the historical closing prices of these 
ETFs over the past couple of months:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                           ETF                               11/19/08        10/13/08         10/6/08         9/30/08         8/29/08         7/31/08
--------------------------------------------------------------------------------------------------------------------------------------------------------
 QQQQ...................................................           26.86           35.13           34.86           38.91           46.12           45.46
IWM.....................................................           41.36           56.98           59.72           68.00           73.87           71.32
DIA.....................................................           80.36           95.03           99.90          108.36          115.45          113.70
SPY.....................................................           81.50          101.35          104.72          115.99          128.79          126.83
XLE.....................................................           45.60           50.55           54.89           63.30           74.65           74.40
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The additional series will enable the Exchange to list in-demand, lower 
priced strikes.
    The Exchange represents that it has the necessary systems capacity 
to support the new options series that will result from this proposal. 
Further, as proposed, the Exchange notes that these series would 
temporarily become part of the pilot program and will be considered by 
the Commission when the Exchange seeks to renew or make permanent the 
pilot program in the future. In addition, the Exchange states that in 
the event that current market volatility continues, it may seek to 
continue (through a rule filing) the time period during which the 
additional series proposed by this filing may be added.
2. Statutory Basis
    Because the current rule proposal is responsive to the current, 
unprecedented market conditions, is limited in scope as to QOS in ETF 
options and as to time, and because the additional new series can be 
added without presenting capacity problems, the Exchange believes that 
its proposal is consistent with section 6(b) of the Securities Exchange 
Act of 1934 (the ``Act'') in general, and furthers the objectives of 
section 6(b)(5) of the Act,\4\ 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.
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    \4\ 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 rule does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; or (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Act \5\ and Rule 19b-4(f)(6) 
thereunder.\6\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with 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. NYSE Arca has met this requirement.
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    The Exchange has asked the Commission to waive the operative delay 
to permit the proposed rule change to become operative prior to the 
30th day after filing. The Commission has determined that waiving the 
30-day operative delay of the Exchange's proposal is consistent with 
the protection of investors and the public interest because such waiver 
will enable the Exchange to better meet customer demand in light of 
recent increased volatility in the marketplace.\7\ Therefore, the 
Commission designates the proposal operative upon filing.
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    \7\ 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 such 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-NYSEArca-2008-131 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NYSEArca-2008-131. 
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, 100 F Street, 
NE., Washington, DC 20549, on official business days

[[Page 73373]]

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 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 No. SR-
NYSEArca-2008-131 and should be submitted on or before December 23, 
2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E8-28498 Filed 12-1-08; 8:45 am]

BILLING CODE 8011-01-P