Document ID: SEC-2011-0211-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-02-15T05:00Z

[Federal Register Volume 76, Number 31 (Tuesday, February 15, 2011)]
[Notices]
[Pages 8793-8794]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-3315]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63875; File No. SR-Phlx-2010-183]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order 
Granting Approval of Proposed Rule Change Expanding Its Short Term 
Option Program

February 9, 2011.

I. Introduction

    On December 15, 2010, NASDAQ OMX PHLX LLC (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to expand the Short Term Option Program 
(``Program'') to allow the Exchange to select up to 15 option classes 
on which Short Term Option Series may be listed. The proposed rule 
change was published for comment in the Federal Register on December 
28, 2010.\3\ The Commission received no comment letters on the 
proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 63594 (December 21, 
2010), 75 FR 81689 (``Notice'').
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II. Description of the Proposal

    Currently, Rule 1101A(b)(vi)(A) and Commentary .11(a) to Rule 1012 
permit the Exchange to open for trading on any Thursday or Friday that 
is a business day series of options on no more than five option classes 
that expire on the Friday of the following business week that is a 
business day. The Exchange has proposed to increase from five to 15 the 
number of option classes that may be opened pursuant to the Program.
    In its filing, the Exchange stated that, because of the five-class 
limit imposed by the Program, on numerous occasions it has had to 
eliminate option classes from the Program in order to select new 
classes, even though demand remained for the eliminated classes. The 
Exchange noted that it believes an expansion of the current Program 
would allow the Exchange to better meet customer demand for short-term 
option classes.
    Phlx stated that it has analyzed its capacity and represented that 
it believes that it and the Options Price Reporting Authority 
(``OPRA'') have the necessary systems capacity to handle the potential 
additional traffic associated with trading of an expanded number of 
classes in the Program.

[[Page 8794]]

    Finally the Exchange submitted a report to the Commission providing 
an analysis of the Program (the ``Report''). The Report covered the 
period from the date of effectiveness of the Program through November 
2010, and described the experience of the Exchange with the Program in 
respect of the options classes included by the Exchange in the 
Program.\4\ The Report was submitted on a confidential basis under 
separate cover.
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    \4\ The Report included the following: (1) Data and written 
analysis on the open interest and trading volume in the classes for 
which Short Term Option Series were opened; (2) an assessment of the 
appropriateness of the option classes selected for the Program; (3) 
an assessment of the impact of the Program on the capacity of the 
Exchange, OPRA, and market data vendors (to the extent data from 
market data vendors are available); (4) any capacity problems or 
other problems that arose during the operation of the Program and 
how the Exchange addressed such problems; (5) any complaints that 
the Exchange received during the operation of the Program and how 
the Exchange addressed them; and (6) any additional information that 
would assist in assessing the operation of the Program.
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III. Discussion

    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.\5\ 
Specifically, the Commission finds that the proposal 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 promote just 
and equitable principles of trade, to prevent fraudulent and 
manipulative acts, 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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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposal strikes a reasonable 
balance between the Exchange's desire to offer a wider array of 
investment opportunities and the need to avoid unnecessary 
proliferation of options series. The Commission expects the Exchange to 
monitor the trading volume associated with the additional options 
series listed as a result of this proposal and the effect of these 
additional series on market fragmentation and on the capacity of the 
Exchange's, OPRA's, and vendors' automated systems.
    In approving this proposal, the Commission notes that Exchange has 
represented that it believes the Exchange and OPRA have the necessary 
systems capacity to handle the potential additional traffic associated 
with trading of an expanded number of classes in the Program.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-Phlx-2010-183) be, and it 
hereby is, approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    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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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3315 Filed 2-14-11; 8:45 am]
BILLING CODE 8011-01-P