Document ID: SEC-2009-0751-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2009-06-08T04:00Z

[Federal Register: June 8, 2009 (Volume 74, Number 108)]
[Notices]               
[Page 27217-27220]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jn09-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60021; File No. SR-Phlx-2009-40]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing of Proposed Rule Change as Modified by Amendment No. 1 Thereto 
Relating to Listing and Trading New Currencies

June 1, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 8, 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 
Exchange filed Amendment No. 1 to the proposal on May 29, 2009.\3\ 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.
    \3\ The Commission notes that Amendment No.1 replaces and 
supersedes the initial filing in its entirety.
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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 Phlx rules to: (1) List and trade 
U.S. dollar-settled foreign currency options on the Brazilian real, 
Chinese yuan,\4\ Danish krone, New Zealand dollar, Mexican peso, 
Norwegian krone, Russian ruble, South African rand, South Korean won, 
and Swedish krona (the listed currencies are together known as the 
``New Currencies'') \5\; (2) clarify definitions regarding the 
Currencies, (3) establish position and exercise limits for the 
Currencies; (4) clarify the uniform pricing convention (methodology) 
for all Currencies; and (5) delete obsolete and out of use references 
regarding foreign currency products and processes.
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    \4\ The Chinese yuan may also be known as renminbi (similarly to 
the British pound and sterling).
    \5\ Options on the following U.S. dollar-settled foreign 
currencies are currently listed and traded on the Exchange: the 
Australian dollar, the Euro, the British pound, the Canadian dollar, 
the Swiss franc, and the Japanese yen (together, the ``FCOs'') (the 
New Currencies and FCOs are together known as the ``Currencies''). 
The product specifications for the U.S. dollar-settled FCOs, which 
are not altered by or as a result of this filing, may be found at 
http://www.nasdaqtrader.com/Micro.aspx?id=phlxwcoproductspecs.
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    The Exchange also proposes to amend Phlx Option Floor Procedure 
Advices (``OFPAs'' or ``Advices'') to harmonize Exchange Advices and 
rules.
    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.

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 amend Phlx rules \6\ 
to: Expand the Exchange's current product offering to include options 
on the New Currencies; clarify certain existing Exchange rules relating 
to Currencies; establish position limits for Currencies; and clarify 
the uniform pricing convention (methodology) for options on Currencies. 
In doing so, the Exchange will delete obsolete and out of use 
references regarding foreign currency products and processes. The 
purpose is also to conform existing Advices \7\ to the rules as 
amended.
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    \6\ Rules 1000 (Applicability, Definitions and References), 1001 
(Position Limits), 1002 (Exercise Limits), 1009 (Criteria for 
Underlying Securities), 1012 (Series of Options Open for Trading), 
1014 (Obligations and Restrictions Applicable to Specialists and 
Registered Options Traders), 1016 (Block Transactions in Physical 
Delivery Foreign Currency Options), 1027 (Discretionary Accounts), 
1033 (Bids and Offers--Premium), 1034 (Minimum Increments), 1044 
(Delivery and Payment), 1049 (Communications to Customers), 1057 
(U.S. Dollar-Settled Foreign Currency Option Closing Settlement 
Value), 1063 (Responsibilities of Floor Brokers), 1069 (Customized 
Foreign Currency Options), 1070 (Customer Complaints), 1079 (FLEX 
Index, Equity and Currency Options), 1089 (Dealing Directly With 
Specialist and Registered Option Trader in Foreign Currency 
Options), and 1092 (Obvious Errors and Catastrophic Errors).
    \7\ Option Floor Procedure Advices B-7 (Time Priority of Bids/
Offers in Foreign Currency Options (Physical Delivery Foreign 
Currency Option Only)), C-2 (Options Floor Broker Management 
System), F-6 (Options Quote Parameters), F-17 (FCO Trades to be 
Effected in the Pit (Physical Delivery Foreign Currency Option 
Only)), F-18 (FCO Expiration Months and Strike Prices--Selective 
Quoting Facility (Physical Delivery Foreign Currency Option Only)), 
and F-20 (Quoting and Trading Customized Foreign Currency Options 
(Foreign Currency Option Only)).
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Background
    In January 2007, the Exchange listed and began trading U.S. dollar-
settled FCOs on the British pound and the Euro.\8\ In July 2007, the 
Exchange listed and began trading U.S. dollar-settled FCOs on the 
Australian dollar, Canadian dollar, Swiss franc, and Japanese yen.\9\ 
U.S. dollar-settled FCOs continue being traded electronically over the 
Exchange's options trading platform, Phlx XL.\10\ Additionally, through 
the spring of 2007 the Exchange traded, through open outcry, physical 
delivery options on foreign currencies.\11\
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    \8\ See Securities Exchange Act Release No. 54989 (December 21, 
2006), 71 FR 78506 (December 29, 2006) (SR-Phlx-2006-34). In 
approving the listing and trading of U.S. dollar-settled FCOs on the 
British pound and the Euro, the approval order stated that the 
listing and trading of additional U.S. dollar-settled FCOs on other 
foreign currencies will require the Exchange to file additional 
proposed rule changes on Form 19b-4.
    \9\ See Securities Exchange Act Release No. 56034 (July 10, 
2007), 72 FR 38853 (July 16, 2007) (SR-Phlx-2007-34).
    \10\ See Securities Exchange Act Release No. 49832 (June 8, 
2004), 69 FR 33442 (June 15, 2004) (SR-Phlx-2003-59)(approving Phlx 
XL). See also Release No. 59995 (May 28, 2009) SR-Phlx-2009-32 
(approving Phlx XL II). The Exchange is rolling out a new trading 
platform.
    \11\ Physical delivery options, so named because settlement 
could involve delivery of the underlying currency (as opposed to 
cash for U.S. dollar-settled FCOs), have traded on the Exchange 
since 1982 but are no longer listed and traded. All open interest in 
physical delivery options was traded out or expired by the end of 
March 2007 and only U.S. dollar-settled FCOs now trade on the 
Exchange.

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[[Page 27218]]

    The Exchange proposes to amend Phlx rules and Advices to enable it 
to list and trade, over Phlx XL, options on ten New Currencies: 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.\12\ 
These New Currencies will be listed and traded similarly to U.S. 
dollar-settled FCOs that are currently traded on the Exchange, and will 
use existing Exchange rules and processes subject to the rule changes 
proposed herein.
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    \12\ CME Group Inc. (``CME''), formerly Chicago Mercantile 
Exchange Holdings Inc., lists and trades futures contracts on many 
of the New Currencies that are proposed to be listed and traded by 
the Exchange (e.g. the Mexican peso, the New Zealand dollar, the 
Norwegian krone, the Russian ruble, the Swedish krona, the Brazilian 
real, the Chinese renminbi, the South African rand, and the South 
Korean won).
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    The changes proposed herein regarding the methodology or convention 
of pricing options on foreign currencies reflect pricing that is 
similar in nature to what is being used by other markets that trade 
currency options.\13\
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    \13\ The International Securities Exchange, LLC (``ISE''), for 
example, also lists and trades options on certain foreign currencies 
(including the Australian dollar, the Euro, the British pound, the 
Canadian dollar, the Swiss franc, and the Japanese yen) that are not 
fungible with Phlx's U.S. dollar-settled FCOs. See Exchange Act 
Release No. 55575 (April 3, 2007), 72 FR 17963 (April 10, 2007) (SR-
ISE-2006-59). ISE, like Phlx, applies multipliers to currency spot 
prices so that ISE's currency prices tend to look like the prices of 
index and other options.
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Definitions
    The Exchange proposes to clarify in its Rule 1000 several 
definitions in respect of foreign currencies. First, the Exchange 
proposes to add ten New Currencies to the six that are currently listed 
in Sections 13 (Foreign Currency) and 15 (Unit of Underlying Foreign 
Currency) of Rule 1000.\14\
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    \14\ The Exchange will similarly add the New Currencies 
throughout its rules. See, e.g., Rules 1009, 1057, and 1079.
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    Second, the Exchange proposes to clarify the definition of spot 
price in Section 16 (Spot Price) of Rule 1000 by renaming it Exchange 
Spot Price and indicating that, to establish the Exchange Spot Price, 
the Exchange will apply an appropriate multiplier to the cash market 
spot price that it receives from a price quotation dissemination system 
chosen by the Exchange.\15\ The multipliers will be applied by the 
Exchange so that Exchange Spot Prices would look similar to index 
option prices.\16\ Up-front application of appropriate multipliers to 
cash market spot prices to get Exchange Spot Prices more accurately 
reflects how options on foreign currencies are actually priced by 
exchanges that list and trade such products (currently ISE and 
Phlx).\17\
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    \15\ See Securities Exchange Act Release No. 58915 (November 6, 
2008), 73 FR 67916 (November 17, 2008) (indicating, among other 
things, that Quote Media, Inc. provides spot prices to The NASDAQ 
OMX Group, Inc. (``NASDAQ OMX'')). Proposed section 16 of Rule 1000 
defines Exchange Spot Price as follows: The term ``Exchange Spot 
Price'' in respect of an option contract on a foreign currency means 
the cash market spot price, for the sale of one foreign currency for 
another, quoted by various foreign exchange participants for the 
sale of a single unit of such foreign currency for immediate 
delivery that is calculated from the foreign currency price 
quotation reported by the foreign currency price quotation 
dissemination system selected by the Exchange, to which an 
appropriate multiplier is applied. The multiplier(s) will be: 100 
for the British pound, the Euro, the Swiss Franc, the Canadian 
dollar, the Australian dollar, the Brazilian real, and the New 
Zealand dollar; 1,000 for the Chinese yuan, the Danish krone, the 
Mexican peso, the Norwegian krone, the South African rand, and the 
Swedish krona; 10,000 for the Japanese yen and the Russian ruble; 
and 100,000 for the South Korean won.
    \16\ Exchange Spot Prices will generally have two decimal 
places. As an example, the Exchange Spot Price for the Japanese yen, 
with up-front application of a multiplier of 10,000, may be 80.22--
which reflects how index (and other) options are operationally 
priced by the Exchange, ISE, and other markets that trade options on 
foreign currencies. In contrast, using the old pricing methodology 
(without up-front application of a multiplier) the above-noted spot 
price for the Japanese yen would be .008022 (expressed as 80.22). 
Moreover, Exchange Spot Prices and what are known as modified spot 
prices (that is, spot prices that do not incorporate modifiers but 
add them at a later time) are the same values. See Securities 
Exchange Act Release No. 57575 (March 28, 2008), 73 FR 18310 (April 
3, 2008)(SR-Phlx-2008-06)(describing, among other things, modified 
spot prices).
    \17\ NYSE Arca also trades options on certain foreign currencies 
that are listed on ISE.
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    The Exchange will continue to disseminate Exchange Spot Prices and 
other FCO-related data such as, for example, U.S. dollar-settled FCO 
settlement values and prices (Exchange Spot Prices) over the facilities 
of a major public data vendor, such as NASDAQ OMX or one or more other 
(NASDAQ OMX-owned or unrelated) major market data vendors.\18\
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    \18\ See note 10 of Securities Exchange Act Release No. 59611 
(March 20, 2009), 74 FR 13498 (March 27, 2009) (SR-Phlx-2009-22) 
(notice of filing and immediate effectiveness).
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Pricing of Options
    Consistent with application by the Exchange of appropriate 
multipliers to each currency Exchange Spot Price, the Exchange proposes 
to amend Rules 1012, 1014, 1033, 1034, and 1092, and OFPA F-6 to 
clarify the uniform foreign currency option pricing convention and 
thereby greatly simplify the pricing of such options. The uniform 
pricing convention will carry through all of the Exchange's rules 
relating to foreign currency options.
    Rule 1012, Commentary .06 currently states that, assuming certain 
spot price levels, the Exchange may initially list exercise strike 
prices of the Euro in the range of $.9500 (expressed as $95) to $1.0550 
(expressed as $105.50). That is, options on foreign currencies are 
currently priced in Commentary .06 without application of a multiplier 
and are followed by an ``expressed as'' price. The Exchange proposes to 
clarify Commentary .06 to reflect how options are actually priced by 
applying an appropriate modifier up-front to the price. As such, there 
would be no need for the Exchange to follow FCO prices of several 
decimal places with ``expressed as'' prices, and the above-noted 
example in Commentary .06 would state that the Exchange may initially 
list exercise strike prices of the Euro in the range of $95 to $105.50.
    The Exchange proposes to modify Rule 1012 such that Exchange Strike 
Prices may be listed within a 40 percent band (20 percent above and 20 
percent below) around Exchange Spot Prices at fifty cent ($.50) 
intervals. This would result in no more than eighty-one strike prices 
available for trading.\19\ Regarding long-term options, the Exchange 
proposes to clarify that the Exchange may list up to ten options series 
having up to thirty-six months from the time they are listed until 
expiration.\20\ The Exchange proposes to establish that FLEX currency 
options will similarly

[[Page 27219]]

have expiration dates of up to three years.\21\
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    \19\ The Exchange may initially list exercise strike prices for 
each expiration of U.S. dollar-settled options on currencies within 
a 40 percent band around the current Exchange Spot Price at fifty 
cent ($.50) intervals. Thus, if the Exchange Spot Price of the Euro 
were at $100.00, the Exchange would list strikes in $.50 intervals 
up to $120.00 and down to $80, for a total of eighty-one strike 
prices available for trading. As the Exchange Spot Price for U.S. 
dollar-settled FCOs moves, the Exchange will list new strike prices 
that, at the time of listing, do not exceed the Exchange Spot Price 
by more than 20 percent and are not less than the Exchange Spot 
Price by more than 20 percent. For example, if at the time of 
initial listing, the Exchange Spot Price of the Euro is at $100.00, 
the strike prices the Exchange will list will be $80.00 to $120.00. 
If the Exchange Spot Price then moves to $105.00, the Exchange may 
list additional strikes at the following prices: $105.50 to $126.00. 
Proposed Commentary .06 to Rule 1012.
    \20\ Long-Term Series. The Exchange may list, with respect to 
any U.S. dollar-settled foreign currencies, options having up to 
three years from the time they are listed until expiration. There 
may be up to ten options series, options having up to thirty-six 
months from the time they are listed until expiration. There may be 
up to six additional expiration months. Strike price interval, bid/
ask differential and continuity rules shall not apply to such 
options series until the time to expiration is less than nine 
months. Proposed Rule 1012(a)(iii)(C).
    \21\ See proposed Rule 1079(a)(6).
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    Rule 1014, like Rule 1012, is proposed to be amended to reflect 
uniform FCO pricing that no longer requires indicating bid/ask prices 
with many decimal places that are also expressed as different, index 
option-like values after appropriate multipliers are applied.\22\
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    \22\ Options on U.S. dollar-settled FCO. With respect to all 
U.S. dollar-settled FCO bidding and/or offering so as to create 
differences of no more than $.25 between the bid and the offer for 
each option contract for which the prevailing bid is less than 
$2.00; no more than $.40 where the prevailing bid is $2.00 or more 
but less than $5.00; no more than $.50 where the prevailing bid is 
$5.00 or more but less than $10.00; no more than $.80 where the 
prevailing bid is $10.00 or more but less than $20.00; and no more 
than $1.00 where the prevailing bid is $20.00 or more. Proposed 
1014(c)(i)(A). The Exchange proposes similar changes to OFPA F-6.
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    Rule 1033, which applies to all Currencies, is proposed to be 
amended to clarify that premiums on all U.S. dollar-settled FCOs will 
be calculated in the same way for all options. The Exchange proposes to 
delete unnecessary rule text that indicates that the first two decimal 
places will be omitted for bid and offer quotations for the British 
pound, the Swiss franc, the Canadian dollar, the Australian dollar, and 
the Euro, and the first four decimal places will be omitted from bid 
and offer quotations for the Japanese yen. The Exchange also proposes 
to provide a clear example of how premiums will be calculated on 
foreign exchange options: E.g., a bid of ``3.25'' for a premium on a 
$170 strike price option on the British pound shall represent a bid to 
pay $325 per option contract.\23\
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    \23\ Rule 1033 currently states that the first two decimal 
places shall be omitted from all bid and offer quotations for the 
British pound, the Swiss franc, the Canadian dollar, the Australian 
dollar, and the Euro, and the first four decimal places shall be 
omitted from all bid and offer quotations for the Japanese yen 
(e.g., a bid of ``9.2'' for an option contract on the British pound 
shall represent a bid to pay $.0920 per unit of underlying foreign 
currency--i.e., a premium of $2,875--for an option contract having a 
unit of trading of 31,250 pounds; a bid of .44 for an option 
contract on the Euro shall represent a bid to pay .0044 per unit of 
underlying foreign currency--i.e. a premium of $275--for an option 
contract having a unit of trading of 62,500 Euros; a bid of ``1.6'' 
for an option contract on the Japanese yen shall represent a bid to 
pay $.000160 per unit of underlying foreign currency--i.e., a 
premium of $1,000--for an option contract having a unit of trading 
of 6,250,000 yen).
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    Rule 1034 currently prescribes the minimum trading increments for 
all U.S. dollar-settled FCOs.\24\ This rule, which will apply to the 
New Currencies as well, is proposed to be amended to clarify that 
minimum price increments for all currencies will remain at $.01, but 
without the need to indicate different minimum price increments for 
different currencies that are thereafter each ``expressed as 
$.01''.\25\
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    \24\ Rule 1034 currently states that the minimum increments for 
options on various currencies using ``expressed as'' pricing (e.g. 
$.0001 (expressed as $.01) for the British pound and $.000001 
(expressed as $.01) for the Japanese yen).
    \25\ All options on foreign currencies where the underlying 
foreign currency is not the U.S. dollar shall have a minimum 
increment of $.01. Proposed Rule 1034.
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    Rule 1092 and OFPA F-6 are likewise proposed to be amended to 
clarify that option prices will no longer be indicated in terms of 
several decimal places that are then expressed as different values.\26\
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    \26\ Proposed Rule 1092(a)(i) indicates, for example:
     Theoretical price--Below $2; Minimum amount--$.25.
     Whereas, current Rule 1092(a)(i) indicates:
     Theoretical price--Below $ .02 (expressed as 2); Minimum 
amount--$.0025 (expressed as .25).
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Position Limits
    Rule 1001 establishes position limits for FCOs at 200,000 on the 
same side of the market relating to the same underlying currency.\27\ 
The Exchange proposes to amend Rule 1001 to establish three levels of 
position limits for FCOs. Specifically, the Exchange proposes the 
following position limits:
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    \27\ Rule 1001 currently also indicates position limits of 
100,000 contracts for options on the Mexican peso traded as a 
customized option per Rule 1069. Because Rule 1069 and other 
references to customized options, among them options on the Mexican 
peso, are deleted in this filing, the 100,000 contact position limit 
on the Mexican peso will be deleted.
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    (1) 300,000 contracts for options on: the Mexican peso, the 
Brazilian real, the Chinese yuan, the Danish krone, the Norwegian 
krone, the Russian ruble, the South African rand, the South Korean won, 
the Swedish krona;
    (2) 600,000 contracts for options on: the British pound, the Swiss 
franc, the Canadian dollar, the Australian dollar, the Japanese yen, 
and the New Zealand dollar; and
    (3) 1,200,000 contracts for options on the Euro.\28\
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    \28\ See proposed Commentary .05(b) to Rule 1001.

The position limits proposed by the Exchange are similar to those used 
by other markets that trade foreign currency options.\29\
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    \29\ See, e.g., Securities Exchange Act Release No. 55575 (April 
3, 2007), 72 FR 17963 (April 10, 2007) (SR-ISE-2006-59) (order 
approving, among other things, proposal to establish 1,200,000, 
600,000, and 300,000 contract position limits for foreign currency 
options).

    The Exchange also proposes to eliminate from Rules 1001 and 1079 
the practice of fractional counting of U.S. dollar-settled foreign 
currency option contracts for position limit purposes. Fractional 
counting was needed to establish position limit equivalency between the 
Exchange's physical delivery option contracts and U.S. dollar-settled 
option contracts, which had different sized contracts on the same 
underlying currencies.\30\ Because physical delivery foreign currency 
options are no longer traded on the Exchange, however, it is no longer 
necessary to have fractional counting differentiations in Rule 1001 and 
they are being eliminated.
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    \30\ U.S. dollar-settled option contracts generally were smaller 
than physically traded option contracts.
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    Rule 1057 currently provides for the determination of closing 
settlement values for options on the six foreign currency options that 
trade on the Exchange. Rule 1079 currently provides for the similar 
determination of closing settlement values for FLEX foreign currency 
options that trade on the Exchange. In both rules, the closing 
settlement price for U.S. dollar-settled FCOs is the Spot Price at 
12:00:00 Eastern Time (noon) on the last trading day prior to 
expiration. \31\ Rules 1057 and 1079 are updated commensurate with the 
clarification of the pricing convention in this filing. In particular, 
Rules 1057 and 1079 are proposed to be amended to add the New 
Currencies and reflect that the Exchange Spot Price per Rule 1000(b)16 
will be the settlement price.\32\ The Exchange believes that these 
modifications would reflect the proper methodologies for calculating 
closing settlement values for options on its foreign currency products. 
The rules will continue to permit the Exchange to apply alternative 
closing settlement values as a result of extraordinary circumstances.
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    \31\ The closing settlement value was changed from the Noon 
Buying Rate received from the Federal Reserve Bank of New York to 
the spot price at 12:00:00 Eastern Time (noon) on the last trading 
day prior to expiration. See Securities Exchange Act Release No. 
58915 (November 6, 2008), 73 FR 67916 (November 17, 2008) (SR-Phlx-
2008-68) (notice of filing and immediate effectiveness).
    \32\ The closing settlement value for the U.S. dollar-settled 
FCO on the Australian dollar, the Euro, the British pound, the 
Canadian dollar, the Swiss franc, the Japanese yen, 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 
shall be the Exchange Spot Price at 12:00:00 Eastern Time (noon) on 
the last trading day prior to expiration unless the Exchange 
determines to apply an alternative closing settlement value as a 
result of extraordinary circumstances. Proposed Rule 1057. See also 
proposed Rule 1079.
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    In addition to the specific proposed rule changes, options on the 
New Currencies would be subject to the same rules and processes that 
now apply to existing options on foreign currencies.

[[Page 27220]]

Systems Capacity and Surveillance
    The Exchange represents that it has the necessary systems capacity 
to support new options series that will result from the introduction of 
options on the New Currencies. The Exchange represents that it has an 
adequate surveillance program in place for trading U.S. dollar-settled 
FCOs. The Exchange will apply the same surveillance program to the New 
Currencies.\33\
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    \33\ The Exchange is a member of the Intermarket Surveillance 
Group (``ISG'') under the Intermarket Surveillance Group Agreement, 
dated June 20, 1994, and may obtain trading information via the ISG 
from other exchanges who are members or affiliates of the ISG. The 
members of the ISG include all of the U.S. registered stock and 
options markets. The ISG members work together to coordinate 
surveillance and investigative information sharing in the stock and 
options markets. In addition, the major futures exchanges are 
affiliated members of the ISG, which allows for the sharing of 
surveillance information for potential intermarket trading abuses.
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Housekeeping Changes
    Finally, the Exchange proposes technical, housekeeping rule changes 
to delete obsolete and out of use references, rules and Advices 
regarding foreign currency products and processes. These include 
references to cross-rate, physical delivery, and customized foreign 
currency options; currency and currency index warrants; currency 
products that are no longer traded; and Regulatory Services Post, which 
no longer exist.\34\
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    \34\ See, e.g., Rules 1000 Sections 14, 15, 21, 38, and 40; 
1001, 1002, 1009, 1034 and 1069 (cross-rate foreign currency 
options); 1012, 1014, 1016, 1034, 1044 and 1063 (physical delivery 
foreign currency options); 1001, 1009, 1033, 1034, 1063, 1069 and 
1079 (customized foreign currency options); 1049, 1070 and 1089 
(currency warrants); and 1079 (Regulatory Services Post). See also 
OFPAs B-7, F-17 and F-18 (physical delivery foreign currency 
options); and C-2 and F-20 (customized foreign currency options). 
See also Rule 1014 correcting typographical errors.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \35\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \36\ 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 offering investors the ability to invest in options on the 
New Currencies and by clarifying and simplifying existing rules 
relating to the pricing of currency options including expression of 
strike, bid and ask, spot, and settlement prices.
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    \35\ 15 U.S.C. 78f(b).
    \36\ 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 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The Exchange has requested accelerated approval of this proposed 
rule change prior to the 30th day after the date of publication of 
notice in the Federal Register. The Commission is considering granting 
accelerated approval of the proposed rule change at the end of a 15-day 
comment period.

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-2009-40 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-2009-40. 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 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-Phlx-2009-40 and should be 
submitted on or before June 23, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13210 Filed 6-5-09; 8:45 am]

BILLING CODE 8010-01-P