Document ID: SEC-2009-1677-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Arca, Inc.
Posted Date: 2009-11-30T05:00Z

[Federal Register: November 30, 2009 (Volume 74, Number 228)]
[Notices]               
[Page 62614-62616]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30no09-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61033; File No. SR-NYSEArca-2009-100]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Amending Rules 
5.17 and 6.8

November 19, 2009.
    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 5, 2009, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 Exchange Rules 5.17 and 6.8 
pertaining to Exemptions from Position Limits. The text of the proposed 
rule change is attached as Exhibit 5 to the 19b-4 form. A copy of this 
filing 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend NYSE Arca Rules 
5.17 and 6.8 to enable OTP Holders and OTP Firms to rely on position 
limit exemptions granted by other options exchanges under specified 
circumstances. This proposed rule change is based on Chapter III, 
Section 8 and Chapter XIV Section 8, of Options Rules of the NASDAQ 
Stock Market, LLC (``NOM'').
    NYSE Arca rules governing position limit exemptions for stock index 
options are generally found in Rule 5.17. NYSE Arca rules governing 
position limit exemptions for non-index options are generally located 
in Rule 6.8, Commentary .07-.09. These rules include a number of 
position limit exemptions available to OTP Holders and OTP Firms. Rules 
5.17 and 6.8,

[[Page 62615]]

however, do not have a provision that recognizes position limit 
exemptions that are granted to OTP Holders and OTP Firms by other 
option exchanges, as provided for in NOM Rules in Chapter III, Section 
8 for non-index options and Chapter XIV, Section 8 for index options. 
In light of the desirability to have similar position limit standards, 
the Exchange proposes to add a similar an [sic] exemption to both Rule 
5.17 and Rule 6.8.
    Specifically, the Exchange proposes to add new Rule 5.17(c) and new 
Rule 6.8 Commentary .07(iv) to address position limit exemptions 
granted by other options exchanges. This proposed rule [sic] will 
provide that an OTP Holder or OTP Firm may rely upon any valid 
exemption from applicable position limits that has been granted by 
another options exchange for any options contract traded on NYSE Arca, 
provided that such OTP Holder or OTP Firm provides the Exchange either 
with a copy of any written exemption issued by another options exchange 
or with a written description of any exemption issued by another 
options exchange that is not in writing, where such description 
contains sufficient detail for Exchange [sic] to verify the validity of 
that exemption with the issuing options exchange. In addition, such OTP 
Holder or OTP Firm must fulfill all conditions precedent for such 
exemption and comply at all times with the requirements of such 
exemption with respect to trading on the Exchange.
    The Exchange notes that position limits tend to be similar across 
options exchanges, which is desirable in light of cross option exchange 
membership(s) and multiple listing and trading of similar product(s) on 
different exchanges. Because OTP Holders and OTP Firms frequently have 
membership and/or trading privileges on other options exchanges, it is 
important that ad hoc position limit exemptions granted by other 
options exchanges (``exemption grants'') are available to OTP Holders 
and OTP Firms to the extent that such exemption grants are reduced to 
writing and verifiable by the Exchange.
    These new proposed rules do not give the Exchange the ability to 
alter the scope of these exemptions but only to recognize the exemption 
so that the position limit process would be the same across the 
exchanges.
    For example, an OTP Firm may go to another options exchange of 
which it is a member, such as the International Securities Exchange 
(``ISE''), or NOM to request a position limit exemption (exemption 
grant) for option contracts in the SPDRs (SPY). The other exchange 
provides the exemption grant until expiration in the same month to this 
particular firm for this particular issue (SPY). Should the same OTP 
Firm want to trade SPY on the NYSE Arca to the extent of the exemption 
grant, the Exchange's proposed rule change would allow it to do so, but 
only to the extent that the firm provides the Exchange with a copy of 
the written exemption grant provided by the issuing exchange or, if the 
exemption is not in writing, to the extent that said OTP Firm provides 
the Exchange with sufficient detail for Exchange regulatory staff to be 
able to verify the validity of the exemption grant with the issuing 
options exchange.\4\
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    \4\ Additionally, the OTP Firm would have to fulfill all 
conditions precedent for such exemption grant and comply with the 
requirements of such exemption with respect to trading on the 
Exchange.
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    The Exchange believes that by adding uniformity and predictability 
to the position limit process, the proposed rule change should be 
beneficial to the Exchange, OTP Holders and OTP Firms, and their 
customers. Moreover, the proposed rule change should promote 
competition by allowing trades across options exchanges that are 
similar in respect of position limits.\5\
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    \5\ The Exchange notes that all reporting requirements, such as 
Rule 6.6 (Reporting of Options Positions) remains in force.
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    The Exchange is also proposing to revise the rule numbering 
convention contained in the Commentary to Rule 6.8. This change is 
being made for technical purposes only in order to provide clarity to 
rules governing position limit exemptions on NYSE Arca. The renumbering 
of the rules has no material effect on the actual meaning of the rules.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \6\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \7\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
and 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 allowing the Exchange to have uniform position 
limit procedures.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
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 \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 pre-filing requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
will bring uniformity and predictability to the position limit process. 
Accordingly, the Commission hereby grants the Exchange's request and 
designates the proposal operative upon filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rules impact on 
efficiency, competition and capital formation. See 15 U.S.C. 78c(f).

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[[Page 62616]]

    At any time within 60 days of the filing of the 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 Number SR-NYSEArca-2009-100 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-NYSEArca-2009-100. 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,\15\ 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 Section, 100 F Street, NE., Washington, DC 20549-1090 on 
official business days between the hours of 10 a.m. and 3 p.m. Copies 
of the filing will also be available for inspection and copying at NYSE 
Arca's principal office and on its Internet Web site at www.nyse.com. 
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-NYSEArca-2009-
100 and should be submitted on or before December 21, 2009.
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    \15\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov/.
    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-28535 Filed 11-27-09; 8:45 am]

BILLING CODE 8011-01-P