[Federal Register Volume 73, Number 145 (Monday, July 28, 2008)]
[Notices]
[Pages 43798-43799]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17213]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58205; File No. 4-443]


Joint Industry Plan; Order Granting Permanent Approval to 
Amendment No. 1 to the Plan for the Purpose of Developing and 
Implementing Procedures Designed To Facilitate the Listing and Trading 
of Standardized Options

July 22, 2008.

I. Introduction

    On May 15, 2008, May 15, 2008, May 13, 2008, May 6, 2008, May 13, 
2008, May 7, 2008, May 13, 2008, and May 8, 2008, the American Stock 
Exchange LLC (``Amex''), the Boston Stock Exchange, Inc. (``BSE''), 
Chicago Board Options Exchange, Incorporated (``CBOE''), the 
International Securities Exchange, LLC (``ISE''), The NASDAQ Stock 
Market LLC (``Nasdaq''), NYSE Arca Inc. (``NYSE Arca''), the 
Philadelphia Stock Exchange, Inc. (``Phlx''), and the Options Clearing 
Corporation (``OCC'') respectively, filed with the Securities and 
Exchange Commission (``Commission''), pursuant to Section 11A of the 
Securities Exchange Act \1\ of 1934 (``Act'') and Rule 608 
thereunder,\2\ Amendment No. 1 to the Plan for the Purpose of 
Developing and Implementing Procedures Designed to Facilitate the 
Listing and Trading of Standardized Options (``the Options Listing 
Procedures Plan'' or ``OLPP'').\3\ Amendment No. 1 would provide a 
uniform time frame for the introduction of new Long-term Equity 
AnticiPation (``LEAP'' or ``LEAPS'') series on equity option classes, 
options on Exchange Traded Funds (``ETFs''), or options on Trust Issued 
Receipts (``TIRs'').
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ On July 6, 2001, the Commission approved the OLPP, which was 
originally proposed by the Amex, CBOE, ISE, OCC, Phlx, and Pacific 
Exchange, Inc. (k/n/a NYSE Arca). See Securities Exchange Act 
Release No. 44521, 66 FR 36809 (July 13, 2001). On February 5, 2004, 
BSE was added as a sponsor to the OLPP. See Securities Exchange Act 
Release No. 49199, 69 FR 7030 (February 12, 2004). On March 21, 
2008, Nasdaq was added as a sponsor to the OLPP. See Securities 
Exchange Act Release No. 57546 (March 21, 2008), 73 FR 16393 (March 
27, 2008).
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    On May 22, 2008, the Commission issued notice of and approved 
Amendment No. 1 on a temporary basis

[[Page 43799]]

not to exceed 120 days, and solicited comment on the proposal.\4\ The 
Commission received no comment letters in response to the Temporary 
Approval Order. This order approves Amendment No. 1 on a permanent 
basis.
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    \4\ See Securities Exchange Act Release No. 57848 (May 22, 
2008), 73 FR 30985 (May 29, 2008) (``Temporary Approval Order'').
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II. Description of the Proposal

    Currently, new January LEAPS are introduced shortly after the 
groups of LEAPS with the least time to expiration are converted to a 
conventional expiration symbol, generally when they have less than nine 
months to expiration. The proposal provides for a uniform time frame 
for the introduction of new LEAP series on equity option classes, 
options on ETFs, or options on TIRs.
    By agreeing to a uniform time frame for the introduction of new 
LEAP series, the Participants to the OLPP intend to mitigate the number 
of option series available for trading during certain times of the 
year. The Participants to the OLPP intend that this will in turn lessen 
the rate of increase in quote traffic, because quotes will not be 
generated in the not-yet-available series.
    The Participants to the OLPP represent that, for example, in 2007, 
if this proposal had been in effect, the industry would have eliminated 
one and a half billion (1,500,000,000) quotes over the three months of 
June, July, and August, out of just less than 100 billion quotes over 
all, for a savings of 1.5%. The affected series, however, generated 
less than three million (3,000,000) contracts traded in the same 
period, out of more than seven hundred eighty million (780,000,000) 
contracts total industry volume, or approximately .38%. The exchanges 
agree that the benefit from reduced quoting levels greatly exceeds the 
small cost in missed business.
    In addition, the Participants to the OLPP may coordinate the date 
of introduction of new LEAP classes, so as to provide the least 
disruption on the options industry by having the flexibility to avoid 
holidays, expiration periods, and industry-wide tests which are 
scheduled from time to time.

III. Discussion

    After careful review, the Commission finds that Amendment No. 1 is 
consistent with the requirements of the Act and the rules and 
regulations thereunder.\5\ Specifically, the Commission finds that 
Amendment No. 1 to the OLPP is consistent with Section 11A of the Act 
\6\ and Rule 608 thereunder \7\ in that it is in the public interest 
and appropriate for the protection of investors and the maintenance of 
fair and orderly markets. Specifically, the Commission believes that by 
adopting a uniform time frame for the introduction of new LEAP series 
on equity option classes, options on ETFs, and options on TIRs, the 
options exchanges should reduce the number of option series available 
for trading during certain times of the year, and thus may reduce 
increases in the options quote rate because market participants would 
not be submitting quotes in the not-yet-available LEAP series. 
Accordingly, the Commission believes that it is necessary or 
appropriate in the public interest, for the protection of investors and 
the maintenance of fair and orderly markets, to remove impediments to, 
and perfect mechanisms of, a national market system to approve 
Amendment No. 1 to the OLPP on a permanent basis.
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    \5\ In approving this proposed OPRA Plan Amendment, the 
Commission has considered its impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78k-1.
    \7\ 17 CFR 242.608.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act,\8\ and 
Rule 608 thereunder,\9\ that proposed Amendment No. 1 to the OLPP be, 
and it hereby is, approved on a permanent basis.
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    \8\ 15 U.S.C. 78k-1.
    \9\ 17 CFR 242.608.
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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(29).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-17213 Filed 7-25-08; 8:45 am]
BILLING CODE 8010-01-P