[Federal Register Volume 73, Number 126 (Monday, June 30, 2008)]
[Notices]
[Pages 36945-36950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-14767]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58008; File No. SR-NYSEArca-2008-61]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Order Granting Accelerated Approval of Proposed Rule Change To List
and Trade Options on Reduced Values of the FTSE 100 Index and the FTSE
250 Index
June 24, 2008.
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 June 19, 2008, 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 substantially prepared by the Exchange.
This order provides notice of the proposed rule change and approves it
on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend certain Exchange rules to trade
options on reduced values of the FTSE 100 Index and the FTSE 250 Index.
The Exchange also proposes to list and trade long-term options on
reduced values of the FTSE 100 Index and the FTSE 250 Index. Options on
these indexes will be a.m. cash-settled and will have European-style
exercise provisions.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.nyse.com, at the
[[Page 36946]]
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 Exchange included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item III 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade on the Exchange a.m. cash-
settled, European-style, index options on the FTSE 100 Index and the
FTSE 250 Index (collectively, ``FTSE Indexes''). Specifically, the
Exchange proposes to list options based upon one-tenth of the value of
the FTSE Indexes (``Mini FTSE Indexes''). In addition to regular
options on the Mini FTSE Indexes, the Exchange may list long-term
options on such Indexes (``FTSE LEAPS'').\3\
---------------------------------------------------------------------------
\3\ Under NYSE Arca Rule 5.19(b)(1) ``Index LEAPS Options
Series,'' the Exchange may list long-term options that expire from
12 to 60 months from the date of issuance.
---------------------------------------------------------------------------
The Exchange states that the FTSE 100 Index and the FTSE 250 Index
are internationally recognized, capitalization-weighted indexes based
on the prices of the most highly capitalized British stocks traded on
the London Stock Exchange (``LSE''), a Recognized Investment Exchange
under the Financial Services and Markets Act 2000 of the U.K and
regulated by the Financial Services Authority (``FSA'') of the U.K. The
LSE's Stock Exchange Electronic Trading Service (``SETS'') is a fully
electronic order book trading service. SETS is the central price
formation and trading service for the securities comprising the FTSE
100 Index, the most liquid FTSE 250 securities, and equities that
underlie EuronextLIFFE (``LIFFE'') traded equity options. SETS market
maker (``SETSmm'') is the LSE's trading service for, among others, the
FTSE 250 securities that are not traded on SETS.
Currently, LIFFE lists equity options on the FTSE 100 Index and
futures and futures options on the FTSE 250 Index. The Exchange notes
that the Commission previously approved for the Chicago Board Options
Exchange (``CBOE'') to list reduced-value options on the FTSE 100
Index, and for the International Securities Exchange (``ISE'') to list
reduced value options on both the FTSE 100 and the FTSE 250.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 29722 (September 23,
1991), 56 FR 49807 (October 1, 1991) (order approving SR-CBOE-91-
07); Securities Exchange Act Release No. 53484 (March 14, 2006) 71
FR 14268 (March 21, 2006) (order approving SR-ISE-2005-25).
---------------------------------------------------------------------------
Index Design and Composition
The FTSE 100 and 250 Indexes were created in the 1980s by the
International Stock Exchange of the United Kingdom and the Republic of
Ireland (the predecessor to the LSE) in conjunction with the Financial
Times and a committee of U.K. financial institutions, including LIFFE.
The Indexes are administered and maintained by FTSE International
Limited (``FTSE'').\5\ To qualify for inclusion in a FTSE Index, a
company must satisfy, among others, the following conditions: (1) It
must have a full listing on the London Stock Exchange; (2) it must not
be a subsidiary of another FTSE Index constituent; and (3) it must be
sufficiently liquid to be traded.\6\ The FTSE 100 Index consists of the
largest 100 U.K. companies ranked by unadjusted market value, and the
FTSE 250 consists of the next largest 250 U.K. companies ranked by
unadjusted market value.\7\ The FTSE EMEA Committee conducts a
quarterly review of the FTSE Indexes to ensure that its component
stocks are representative of the state of the equity market for the
largest U.K. companies.
---------------------------------------------------------------------------
\5\ The FTSE Europe, Middle East and Africa (``EMEA'') Committee
is responsible for, among other things, establishing rules to
determine, review, and modify the composition of the FTSE Indexes,
as well as how the FTSE Indexes are calculated. The FTSE EMEA
Committee is comprised of representatives from various financial
institutions including, among others, FTSE, Barclays Global
Investors, Goldman Sachs, and LIFFE.
\6\ See ``Ground Rules for the Management of the UK Series of
the FTSE Actuaries Share Indices,'' at http://www.ftse.com for
complete eligibility criteria.
\7\ Unadjusted market capitalization (as opposed to a ``free-
float'' index methodology) refers to the total number of shares
outstanding multiplied by the share price. A ``free-float'' index
methodology usually excludes shares held by strategic investors by
way of cross ownership, government ownership, private ownership, and
restricted share ownership.
---------------------------------------------------------------------------
As of August 31, 2007, the following were the characteristics of
the FTSE 100 Index: \8\ (i) The total capitalization of all of the
components in the Index is [pound]1.50 trillion; (ii) regarding
component capitalization, (a) the highest capitalization of a component
is [pound]107.14 billion (BP Plc), (b) the lowest capitalization of a
component is [pound]861.13 million (Schroders NV), (c) the average
capitalization of the components is 14.70 billion, and (d) the median
capitalization of the components is [pound]6.02 billion; (iii)
regarding component price per share, (a) the highest price per share of
a component is [pound]44.19 (Rio Tinto), (b) the lowest price per share
of a component is 101 pence (ITV), (c) the mean price per share of a
component is [pound]8.60, and (d) the median price per share of a
component is [pound]7.16; (iv) regarding component weightings, (a) the
highest weighting of a component is 7.14% (BP Plc), (b) the lowest
weighting of a component is 0.04% (Schroders NV), (c) the mean
weighting of the components is 0.99%, (d) the median weighting of the
components is 0.45%, and (e) the total weighting of the top five
highest weighted components is 29.36% (BP Plc, HSBC Holdings, Vodafone
Group, GlaxoSmithKline, Royal Dutch Shell); (v) regarding component
available shares, (a) the most available shares of a component is 5.03
billion (Vodafone Group), (b) the least available shares of a component
is 66.90 million (Schroders NV), (c) the mean available shares of the
components is 2.97 billion, and (d) the median available shares of the
components is 1.24 billion; (vi) regarding the three-month average
daily volumes of the components, (a) the highest three-month average
daily volume of a component is 291.648 million (Vodafone Group), (b)
the lowest three-month average daily volume of a component is 307,521
(Schroders NV), (c) the mean three-month average daily volume of the
components is 15.77 million, (d) the median three-month average daily
volume of the components is 8.01 million, (e) the average of three-
month average daily volumes of the five most heavily traded components
is 579.50 million (Vodafone Group, BP Plc, Corus Group, BT Group,
Tesco), and (f) 100% of the components had a three-month average daily
volume of at least 50,000.
---------------------------------------------------------------------------
\8\ The Exchange deems information regarding characteristics of
the FTSE 100 accurate as per data available from various sources,
including the FTSE 100 Fact Sheet published by FTSE International
Ltd. and the Bloomberg Financial Web sites.
---------------------------------------------------------------------------
As of August 31, 2007, the following were the characteristics of
the FTSE 250 Index \9\: (i) The total capitalization of all of the
components in the Index is [pound]260.34 billion; (ii) regarding
component capitalization, (a) the highest capitalization of a component
is [pound]3.97 billion (Taylor Wimpey), (b) the lowest capitalization
of a component is
[[Page 36947]]
[pound]369.09 million (JPM European), (c) the average capitalization of
the components is [pound]1.03 billion, and (d) the median
capitalization of the components is [pound]830 million; (iii) regarding
component price per share, (a) the highest price per share of a
component is [pound]52.93 (Greggs), (b) the lowest price per share of a
component is 28 pence (PartyGaming), (c) the mean price per share of a
component is [pound]4.60, and (d) the median price per share of a
component is [pound]5.97; (iv) regarding component weightings, (a) the
highest weighting of a component is 1.53% (Taylor Wimpey), (b) the
lowest weighting of a component is 0.06% (JP Morgan European), (c) the
mean weighting of the components is 0.41%, (d) the median weighting of
the components is 0.30%, and (e) the total weighting of the top five
highest weighted components is 6.13% (Taylor Wimpey, Tulow Oil, First
Group, Ladbrokes, Invensys); (v) regarding component available shares,
(a) the most available shares of a component is 3.96 billion
(PartyGaming), (b) the least available shares of a component is 16.41
million (Daejan), (c) the mean available shares of the components is
367.10 million, and (d) the median available shares of the components
is 211.60 million; (vi) regarding the three-month average daily volumes
of the components, (a) the highest three-month average daily volume of
a component is 30.80 million (PartyGaming), (b) the lowest three-month
average daily volume of a component is 10,900 (Daejan), (c) the mean
three-month average daily volume of the components is 2.41 million, (d)
the median three-month average daily volume of the components is
769,801, (e) the average of three-month average daily volumes of the
five most heavily traded components is 97.29 million (PartyGaming,
Bradford & Bingley, Debenhams, LogicaCMG, and Hays), and (f) 98% of the
components had a three-month average daily volume of at least 50,000.
---------------------------------------------------------------------------
\9\ The Exchange deems information regarding characteristics of
the FTSE 250 accurate as per data available from various sources,
including the FTSE 250 Fact Sheet published by FTSE International
Ltd. and Bloomberg Financial Web sites.
---------------------------------------------------------------------------
Index Calculation and Index Maintenance
The base index value of the FTSE 100 Index and the FTSE 250 Index,
was 1000, as of December 31, 1983, and 1412.60, as of December 31,
1985, respectively. As of April 17, 2008, the index value of the FTSE
100 Index and the FTSE 250 Index was 5980.4 and 10,089.4, respectively.
The Exchange believes that these levels are too high for successful
options trading. As a result, the premiums for options on the full
values of the FTSE Indexes are high, which may deter retail investors.
Accordingly, the Exchange proposes to base trading in options on a
fraction of the full size FTSE Indexes. In particular, the Exchange
proposes to list Mini FTSE Index options that are based on one-tenth of
the value of each of the FTSE Indexes.\10\ The Exchange believes that
listing options on reduced values will attract a greater source of
customer business than if options were based on the full value of the
FTSE Indexes. The Exchange further believes that listing options on
reduced values will provide an opportunity for investors to hedge, or
speculate on, the market risk associated with the stocks comprising the
FTSE Indexes. Additionally, by reducing the values of the FTSE Indexes,
investors will be able to use this trading vehicle while extending a
smaller outlay of capital. The Exchange believes that this should
attract additional investors, and, in turn, create a more active and
liquid trading environment.\11\
---------------------------------------------------------------------------
\10\ As noted above, the Exchange also proposes to list LEAPS on
the Mini FTSE Indexes.
\11\ The concept of listing reduced value options on an index is
not a novel one. For example, the Commission has previously approved
the listing of reduced value options on the S&P 500 Index, the
NASDAQ 100 Index, and the NYSE Composite Index. See Securities
Exchange Act Release Nos. 32893 (September 14, 1993), 58 FR 49070
(September 21, 1993) (S&P 500 Index); and 48681 (October 22, 2003),
68 FR 62337 (November 3, 2003) (NYSE Composite Index). See also
Securities Exchange Act Release No. 43000 (June 30, 2000), 65 FR
42409 (July 10, 2000) (relating to a reduction in the value of the
NASDAQ 100 Index).
---------------------------------------------------------------------------
Index levels for options on the Mini FTSE Indexes are calculated by
FTSE, and are currently disseminated by ISE every 15 seconds during the
Exchange's regular trading hours to market information vendors via the
Options Price Reporting Authority (``OPRA'').\12\ In the event ISE no
longer disseminates such index levels, the Exchange will cause such
index levels to be disseminated via OPRA, the Consolidated Tape
Association, or one or more major market data vendors. The methodology
used to calculate the value of the FTSE Indexes is similar to the
methodology used to calculate the value of other well-known market-
capitalization weighted indexes. The level of each FTSE Index reflects
the total market value of the component stocks relative to a particular
base period and is computed by dividing the total market value of the
companies in each index by its respective index divisor.\13\
---------------------------------------------------------------------------
\12\ The FTSE Indexes will be published daily through major
quotation vendors, such as Reuters.
\13\ A divisor is an arbitrary number chosen at the starting
date of an index to fix the index starting value. The divisor is
adjusted periodically when capitalization amendments are made to the
constituents of the index in order to allow the index value to
remain comparable over time. Without a divisor the index value would
change when corporate actions took place and would not reflect the
true value of an underlying portfolio upon which the index is based.
---------------------------------------------------------------------------
The FTSE Indexes are updated on a real-time basis from 8 a.m. to
4:30 p.m. (London time), which corresponds to 3 a.m. to 11:30 a.m. (New
York time). After 11:30 a.m. (New York time), OPRA disseminates a
static value of the FTSE Indexes until the close of trading each day.
The FTSE Indexes are calculated using the last traded price of the
component securities. If a component security does not open for
trading, the price of that security at the close or the index on the
previous day is used in the calculation.\14\
---------------------------------------------------------------------------
\14\ The FTSE Indexes are published daily in the Financial Times
and are available in real-time on Reuters, Bloomberg, and other
market information systems which disseminate information on a real-
time basis.
---------------------------------------------------------------------------
The FTSE Indexes will be monitored and maintained by FTSE. FTSE
will be responsible for making all necessary adjustments to the indexes
to reflect component deletions, share changes, stock splits, stock
dividends (other than an ordinary cash dividend), and stock price
adjustments due to restructuring, mergers, or spin-offs involving the
underlying components. Some corporate actions, such as stock splits and
stock dividends, require simple changes to the available shares
outstanding and the stock prices of the underlying components. Other
corporate actions, such as share issuances, that change the market
value would require changing the index divisor to effect adjustments.
The FTSE Indexes are reviewed each quarter in March, June,
September, and December based on market capitalization. Based on
information submitted by FTSE, the FTSE EMEA Committee approves the new
index components and a reserve list of six companies for the FTSE 100
Index. If a company is deleted from the FTSE 100 Index between reviews
as a result of a merger, takeover, or other corporate action, the
highest ranking company from the reserve list will replace it in the
index.
Although the Exchange is not involved in the maintenance of any of
the FTSE Indexes, the Exchange represents that it will monitor each
FTSE Index on a quarterly basis. The Exchange will not list any
additional series for trading and will limit all transactions in such
options to closing transactions only if, with respect to any FTSE
Index: (i) The number of securities in a FTSE Index drops by one-third
or more; (ii) 10% or more of the weight of a FTSE Index is represented
by component securities having a market
[[Page 36948]]
value of less than $50 million; (iii) 10% or more of the weight of a
FTSE Index is represented by component securities trading less than
20,000 shares per day; or (iv) the largest component security accounts
for more than 15% of the weight of a FTSE Index or the largest five
components in the aggregate account for more than 50% of the weight of
a FTSE Index. As of May 15, 2008, the FTSE Indexes comply with these
criteria.
In the event the FTSE Indexes cease to be maintained or calculated,
or their values are not disseminated every 15 seconds by a widely
available source, the Exchange will not list any additional series for
trading and will limit all transactions in such options to closing
transactions only for the purpose of maintaining a fair and orderly
market and protecting investors.
Exercise and Settlement Value
Options on the FTSE Indexes will expire on the Saturday following
the third Friday of the expiration month. Trading in the FTSE Indexes
will normally cease at 4:15 p.m. (New York time) on the Thursday
preceding an expiration Saturday. The index value for exercise of the
FTSE Index options will be calculated based on the LSE's Exchange
Delivery Settlement Price (``EDSP'') intra-day auction, which was
introduced by LSE in November of 2004. The EDSP is a settlement value
calculated by Euronext-LIFFE for FTSE index futures and options
contracts traded on its exchange. The EDSP value is calculated using an
intra-day auction process administered by the LSE for all the component
stocks of the FTSE 100 Index and the FTSE 250 Index. The intra-day
auction occurs between 10:10 a.m. and 10:29 a.m. (London time) for the
FTSE 100 Index, and between 10:10 a.m. and 10:31 a.m. (London time) for
the FTSE 250 Index on the third Friday of the expiration month.
Therefore, because trading in the expiring contract months will
normally cease on a Thursday at 4:15 p.m. (New York time), the EDSP for
exercise will be determined the day after trading has ceased, i.e.,
during the Friday morning LSE trading session, by 5:31 a.m. (New York
time). The last automated traded price prior to the EDSP auction or the
previous day's closing price will be used to calculate the final EDSP
if a security did not participate in the auction. During the auction
process, indications of the settlement price for each index are widely
disseminated every 15 seconds via special indexes called Expiry
Indexes. The purpose of the Expiry Indexes is to disseminate expected
settlement values as the auction progresses. When the auction is
finished, the final values of the Expiry Indexes are disseminated as
the EDSP values. The Expiry Indexes and subsequent EDSP values are
widely disseminated through major market data vendors including
Reuters, Bloomberg, and Thomson.
If the LSE is closed on the Friday before expiration, but the
Exchange remains open, then the last trading day for expiring FTSE
Index options will be moved earlier to Wednesday as if the Exchange had
had a Friday holiday. The settlement index value used for exercise will
be calculated during LSE's EDSP intra-day auction on Thursday morning.
Contract Specifications
The contract specifications for options on the FTSE Indexes are set
forth in Exhibits 3-1 and 3-2 to the proposed rule change. The FTSE
Indexes are broad-based indexes, as defined in NYSE Arca Rule 5.12.
Options on the FTSE Indexes are European-style and a.m. cash-settled.
The Exchange's standard trading hours for broad-based index options
(6:30 a.m. to 1:15 p.m., Pacific time), as set forth in Rule 7.1, will
apply to the FTSE Indexes. Exchange rules that are applicable to the
trading of options on broad-based indexes will apply to the reduced
values of the FTSE Indexes.\15\ Specifically, the trading of reduced
values of the FTSE Indexes will be subject to, among others, Exchange
rules governing margin requirements and trading halt procedures for
index options. Options shall be quoted and traded in U.S. dollars.
---------------------------------------------------------------------------
\15\ See NYSE Arca Rule 5.12.
---------------------------------------------------------------------------
For options on the Mini FTSE Indexes, the Exchange proposes to
amend Rule 5.15 to state that all broad-based index options contracts
shall be subject to a contract limitation fixed by the Exchange, which
shall not be larger than the limits provided in the chart included in
Rule 5.15. The proposed amended Rule 5.15 would establish aggregate
position limits for options on the Mini FTSE Indexes at 250,000
contracts on the same side of the market, provided no more than 150,000
of such contracts are in the nearest expiration month series.
Additionally, the Exchange proposes to amend NYSE Arca Rule 5.17
relating to the availability of an index option hedge exemption for
public customers. The proposed rule change would specify that, for
options on broad-based indexes other than for those that do not have
any position limits, the hedge exemption is 75,000 contracts in
addition to the standard limit.\16\ Furthermore, proprietary accounts
of members may receive an exemption of up to 500,000 contracts for the
purpose of facilitating public customer orders.\17\
---------------------------------------------------------------------------
\16\ The same limits that apply to position limits shall apply
to exercise limits for these products.
\17\ See NYSE Arca Rule 6.8, Commentary .08.
---------------------------------------------------------------------------
The Exchange proposes to apply broad-based index margin
requirements for the purchase and sale of options on the Mini FTSE
Indexes. Accordingly, purchases of put or call options with 9 months or
less until expiration must be paid for in full. Writers of uncovered
put or call options must deposit/maintain 100% of the option proceeds,
plus 15% of the aggregate contract value (current index level x $100),
less any out-of-the-money amount, subject to a minimum of the option
proceeds plus 10% of the aggregate contract value for call options and
a minimum of the option proceeds plus 10% of the aggregate exercise
price amount for put options.
The Exchange proposes to set strike price intervals at least 2\1/2\
points for certain near-the-money series in near-term expiration months
when the index level of the FTSE Indexes is below 200, and 5-point
strike price intervals for other options series with expirations up to
one year, and at least 10-point strike price intervals for longer-term
options. The minimum tick size for series trading below $3 shall be
$0.05, and for series trading at or above $3, the minimum tick size
shall be $0.10.
The Exchange proposes to list options on reduced values of the FTSE
Indexes in the three consecutive near-term expiration months plus up to
three successive expiration months in the March cycle. For example,
consecutive expirations of January, February, March, plus June,
September, and December expirations would be listed.\18\ In addition,
long-term option series having up to sixty months to expiration may be
traded.\19\ The trading of long-term FTSE Indexes shall be subject to
the same rules that govern the trading of all the Exchange's index
options, including sales practice rules, margin requirements, and
trading rules.
---------------------------------------------------------------------------
\18\ See NYSE Arca Rule 5.19(a)(3).
\19\ See NYSE Arca Rule 5.19(b)(1). The Exchange is not listing
reduced value LEAPS on the FTSE Indexes pursuant to NYSE Arca Rule
5.19(b)(2).
---------------------------------------------------------------------------
Options on the Mini FTSE Indexes shall be subject to the same rules
that presently govern the trading of Exchange index options, including
sales practice rules, margin requirements, trading rules, and position
and exercise limits.
The Exchange proposes to amend Rule 5.19(a)(7)(A) to specify Mini
FTSE
[[Page 36949]]
Index options as a.m.-settled options approved for trading on the
Exchange. The Exchange also proposes to add Commentary .01 to Rule 5.22
(Disclaimers) to specify that FTSE International Limited is the
reporting authority for the FTSE 100 and 250 Indexes.
Surveillance and Capacity
The Exchange represents that it has an adequate surveillance
program in place for options traded on the FTSE Indexes and intends to
apply those same program procedures that it applies to the Exchange's
other index options. Additionally, the Exchange has provided the
Commission, on a confidential basis, a representation made by FTSE to
the Exchange regarding FTSE's insider trading policies, as they pertain
to the broker-dealer members of FTSE's EMEA Committee who are charged
with the selection of component securities that comprise the FTSE
Indexes. The FTSE EMEA Committee members are also required to maintain
in confidence, including non-disclosure to another party, any
information that they may be given by virtue of their membership of the
FTSE EMEA Committee, unless such information is already in the public
domain or where disclosure is required by law. NYSE Arca is also a
member of the Intermarket Surveillance Group (ISG). The members of the
ISG include all of the U.S. registered stock and options markets. In
addition, the LSE and LIFFE are members of ISG. ISG members work
together to coordinate surveillance and investigative information
sharing in the stock and options markets. In addition, the major
futures exchanges are members of the ISG, which allows for the sharing
of surveillance information for potential intermarket trading abuses.
The Exchange has the necessary systems capacity to support new
options series that will result from the introduction of reduced values
of the FTSE Indexes, including LEAPS. The Exchange has provided the
Commission system capacity information that supports its system
capacity representations.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
and furthers the objectives of Section 6(b)(5) of the Act,\20\ in that
it is designed to prevent fraudulent and manipulative acts and
practices, 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. The Exchange believes that the proposed rule
change will provide for additional competition in the U.S. options
markets in trading FTSE Index options, to the benefit of the investing
public.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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. 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 [email protected]. Please include
File Number SR-NYSEArca-2008-61 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2008-61. 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 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-NYSEArca-2008-61 and should
be submitted on or before July 21, 2008.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
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.\21\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b) of the Act,\22\ in general,
and furthers the objectives of Section 6(b)(5),\23\ 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.
---------------------------------------------------------------------------
\21\ In approving this proposal, the Commission notes that it
has considered the proposal's impact on efficiency, competition, and
capital formation. See 15 U.S.C. 78c(f).
\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Because the FTSE 100 and FTSE 250 Indexes are broad-based indexes
of actively traded, well-capitalized stocks, the trading of the
proposed Index options on the Exchange does not raise unique regulatory
concerns. The options on the Mini FTSE Indexes will be traded under
NYSE Arca's existing regulatory regime for index options, which
includes among other things, positions and exercise limits and margin
requirements. Additionally, the Exchange has represented that it has
adequate system capacity and surveillance for these Index options and
that the index value will be disseminated at least every 15 seconds. In
addition, as ISG members, NYSE Arca, LSE, and LIFFE work together to
coordinate surveillance and investigate information sharing in the
stock and options markets.
[[Page 36950]]
Under Section 19(b)(2) of the Act,\24\ the Commission may not
approve any proposed rule change prior to the thirtieth day after
publication of the notice of the filing thereof, unless the Commission
find good cause for so doing and publishes its reasons for so finding.
The Commission believes that the proposed rule filing does not raise
any new, unique or substantive issues from those raised in similar
proposals previously approved the Commission,\25\ allowing other
exchanges to list and trade reduced value index options on the FTSE
Indexes. Accordingly, the Commission hereby finds good cause for
approving the proposed rule change thereto prior to thirtieth day after
the date of publication of notice of filings thereof in the Federal
Register.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78s(b)(2).
\25\ See Securities Exchange Act Release No. 29722 (September
23, 1991), 56 FR 49807 (October 1, 1991) (order approving SR-CBOE-
91-07); 53484 (March 14, 2006), 71 FR 14268 (March 21, 2006) (order
approving SR-ISE-2005-25).
---------------------------------------------------------------------------
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\26\ that the proposed rule change (SR-NYSEArca-2008-61) be, and it
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
---------------------------------------------------------------------------
\27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-14767 Filed 6-27-08; 8:45 am]
BILLING CODE 8010-01-P