Document ID: SEC-2009-1489-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change Amending NYSE Arca Options Rule 5.3(j)
Posted Date: 2009-10-21T04:00Z

[Federal Register: October 21, 2009 (Volume 74, Number 202)]
[Notices]               
[Page 54114-54115]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21oc09-113]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60822; File No. SR-NYSEArca-2009-77]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change Amending NYSE Arca Options Rule 5.3(j)

October 14, 2009.

    On August 19, 2009, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') a 
proposed rule change pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 \2\ thereunder to 
amend the definition of Futures Reference Asset in NYSE Arca Rule 
5.3(j)(1)(E) to permit options on Futures-Linked Securities to be based 
on products linked to CBOE Volatility Index Futures (``VIX Futures''). 
The proposed rule change was published for comment in the Federal 
Register on September 11, 2009 for a 21-day comment period.\3\ The 
Commission received no comment letters regarding the proposal. This 
order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 60621 (September 3, 
2009), 74 FR 46818.
---------------------------------------------------------------------------

    NYSE Arca Rule 5.3(j) designates the listing and trading of options 
on Equity Index-Linked Securities, Commodity-Linked Securities, 
Currency-Linked Securities, Fixed Income Index-Linked Securities, 
Futures-Linked Securities, and Multifactor Index-Linked securities, 
collectively known as Index-Linked Securities (as defined in NYSE Arca 
Equities Rule 5.2(j)(6)) that are principally traded on a national 
securities exchange and an ``NMS Stock'' (as defined in Rule 600 of 
Regulation NMS under the Act). Futures-Linked Securities pay at 
maturity an amount of cash based on the performance of a ``Futures 
Reference Asset,'' currently defined as an index of futures on Treasury 
Securities, GSE Securities, supranational debt and debt of a foreign 
country or a subdivision thereof, or interest rate futures, or options 
or derivatives on any of the foregoing. The Exchange proposes to 
include VIX Futures in this definition.
    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange \4\ and, in particular, the requirements of Section 6 of the 
Act.\5\ Specifically, the Commission finds that the proposed rule 
change is consistent with Section 6(b)(5) of the Act,\6\ which 
requires, among other things, that the rules of a national securities 
exchange be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanisms of a free and open market and a national market system, 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Currently, the Exchange will consider listing and trading options 
on Index-Linked Securities, including options on Futures-Linked 
Securities, provided the Index-Linked Securities meet the criteria for 
underlying securities set forth in NYSE Arca Rule 5.3(a)-(b). 
Underlying Index-Linked Securities must meet the criteria and 
guidelines for underlying securities set forth in Rule 5.3(a); or the 
Index-Linked Securities must be redeemable at the option of the holder 
at least on a weekly basis through the issuer at a price related to the 
applicable underlying Reference Asset.\7\ After the addition of VIX 
Futures to the definition of a Futures Reference Asset in NYSE Arca 
Rule 5.3(j)(1)(E), options on Index-Linked Securities, including 
options on Futures Linked Securities, would continue to be subject to 
all Exchange rules governing the trading of equity options \8\ and the 
current continuing or maintenance listing standards applicable to the 
trading of options on Index-Linked Securities on NYSE Arca. The 
Commission also notes that it has previously approved an amendment to 
NYSE Arca Equities Rule 5.2(j)(6)(v) to add the VIX Futures to the 
definition of ``Futures Reference Asset'' for the listing and trading 
of Futures-Linked Securities.\9\
---------------------------------------------------------------------------

    \7\ For purposes of NYSE Arca Rule 5.3(j), Reference Assets 
collectively refers to Equity Reference Assets, Commodity Reference 
Assets, Currency Reference Assets, Fixed Income Reference Assets, 
Futures Reference Assets, and Multifactor Reference Assets.
    \8\ Despite the fact that Index-Linked Securities are linked to 
an underlying index, each trade as a single, exchange-listed 
security. Accordingly, rules pertaining to the listing and trading 
of standard equity options apply to options on Index-Linked 
Securities.
    \9\ See Securities Exchange Act Release No. 58968 (November 17, 
2008), 73 FR 71082 (November 24, 2008) (SR-NYSEArca-2008-111); see 
also Securities Exchange Act Release No. 60535 (August 19, 2009), 74 
FR 46826 (August 26, 2009) (NYSEAmex-2009-55).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NYSEArca-2009-77) is hereby 
approved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).

[[Page 54115]]

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

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-25203 Filed 10-20-09; 8:45 am]

BILLING CODE 8011-01-P