Document ID: SEC-2010-1280-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2010-08-19T04:00Z

[Federal Register: August 19, 2010 (Volume 75, Number 160)]
[Notices]               
[Page 51306-51308]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19au10-89]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62719; File No. SR-BX-2010-056]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Establishing Strike Price Intervals for Options on Trust Issued 
Receipts, Including Holding Company Depositary Receipts

August 13, 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 August 9, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``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

    NASDAQ OMX BX, Inc. (the ``Exchange'') proposes to amend Chapter 
IV, Section 6 (Series of Options Contracts Open for Trading) of the 
Rules of the Boston Options Exchange Group, LLC (``BOX'') to establish 
strike price intervals for options on Trust Issued Receipts (``TIRs''), 
including Holding Company Depositary Receipts (``HOLDRs''). The text of 
the proposed rule change is available from the principal office of the 
Exchange, on the Commission's Web site at http://www.sec.gov, at the 
Commission's Public Reference Room and also on the Exchange's Internet 
Web site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.

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 these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
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 this filing is to amend Chapter IV, Section 6, 
Supplementary Material .01 of the BOX Rules to allow BOX to list 
options on Trust Issued Receipts (``TIRs''), including Holding Company 
Depository Receipts (``HOLDRs''), in $1 or greater strike price 
intervals, where the strike price is $200 or less, and $5 or greater 
where the strike price is greater than $200.\3\
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    \3\ HOLDRs are a type of TIR and the current proposal would 
permit $1 strikes for options on HOLDRS where the strike price is 
less than $200.
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    Currently, the strike price intervals for options on TIRs are as 
follows: (1) $2.50 or greater where the strike price is $ 25.00 or 
less; (2) $5.00 or greater where the strike price is greater than 
$25.00; and (3) $10.00 or greater where the strike price is greater 
than $200.\4\
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    \4\ See Chapter IV, Section 6(d) of the BOX Rules.
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    BOX is seeking to permit $1 strikes for options on TIRs where the 
strike price is less than $200 because TIRs have characteristics 
similar to exchange traded funds (``ETFs''). Specifically, TIRs are 
exchange-listed securities representing beneficial ownership of the 
specific deposited securities represented by the receipts. They are 
negotiable

[[Page 51307]]

receipts issued by a trust representing securities of issuers that have 
been deposited and held on behalf of the holders of the TIRs. TIRs, 
which trade in round-lots of 100, and multiples thereof, may be issued 
after their initial offering through a deposit with the trustee of the 
required number of shares of common stock of the underlying issuers. 
This characteristic of TIRs is similar to that of ETFs, which also may 
be created on any business day upon receipt of the requisite securities 
or other investment assets comprising a creation unit. The trust only 
issues receipts upon the deposit of the shares of the underlying 
securities that are represented by a round-lot of 100 receipts. 
Likewise, the trust will cancel, and an investor may obtain, hold, 
trade or surrender TIRs in a round-lot and round-lot multiples of 100 
receipts.
    Strike prices for ETF options are permitted in $1 or greater 
intervals where the strike price is $200 or less and $5 or greater 
where the strike is greater than $200. Accordingly, BOX believes that 
the rationale for permitting $1 strikes for ETF options equally applies 
to permitting $1 strikes for options on TIRs. BOX has analyzed its 
capacity and believes the Exchange and the Options Price Reporting 
Authority (``OPRA'') have the necessary systems capacity to handle the 
additional traffic associated with the listing and trading of $1 
strikes where the strike price is less than $200 for options on TIRs.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Securities Exchange Act of 1934 
(``Exchange Act''),\5\ in general, and Section 6(b)(5) of the Exchange 
Act,\6\ in particular, in that it is designed to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in, securities, to remove impediments to and perfect the mechanism for 
a free and open market and national market system and, in general, to 
protect investors and the public interest. In particular, BOX believes 
that the marketplace and investors expect options on TIRs to trade in a 
similar manner to ETF options. BOX further believes that investors will 
be better served if $1 strike price intervals are available for options 
on TIRs where the strike price is less than $200.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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

    The Exchange has neither solicited nor received comments on 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 significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act\7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to the 
Commission 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. The Exchange has satisfied the five-day pre-filing 
requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal is substantially similar to a rule of 
another exchange that has been approved by the Commission.\9\ 
Therefore, the Commission designates the proposal operative upon 
filing.\10\
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    \9\ See Securities Exchange Release No. 34-62141 (May 20, 2010), 
75 FR 29787 (May 27, 2010) (SR-CBOE-2010-036).
    \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 summarily may temporarily suspend 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-BX-2010-056 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-BX-2010-056. 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 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-BX-2010-056 and should be 
submitted on or before September 9, 2010.
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    \11\ 17 CFR 200.30-3(a)(12).

[[Page 51308]]

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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-20554 Filed 8-18-10; 8:45 am]
BILLING CODE 8010-01-P