[Federal Register Volume 74, Number 123 (Monday, June 29, 2009)]
[Notices]
[Pages 31077-31079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-15224]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60156; File No. SR-Phlx-2009-46]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating 
to $1 Strikes for Reduced Value Nasdaq 100 Options (MNX)

June 22, 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 June 12, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or 
``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\ 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 Phlx Rules 1012 (Series of Options 
Open for Trading) and 1101A (Terms of Options Contracts) to allow the 
Exchange to list options that are based on 1/10th the value of the 
Nasdaq-100 Index and are known as Reduced Value Nasdaq 100 Options, at 
$1 strike price intervals.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, at the principal office of the Exchange, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend Phlx Rules 1012 
(Series of Options Open for Trading) and 1101A (Terms of Options 
Contracts) by adding a new interpretation that would allow the Exchange 
to list options that are based on 1/10th the value of the Nasdaq-100 
Index (``NDX'') and are known as Reduced Value Nasdaq 100 Options 
(``MNX'' or ``Mini-NDX''), at $1 or greater strike price intervals.\4\
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    \4\ Currently, under subsection (a)(xxxiv) to Rule 1001A, the 
Exchange has authority to list Mini-NDX options at $2.50 strike 
price intervals.
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    Specifically, the Exchange proposes that the minimum strike price 
interval Mini-NDX options will be $1 or greater. The Exchange believes 
that $1 strike price intervals in Mini-NDX option series will provide 
investors with greater flexibility by allowing them to

[[Page 31078]]

establish positions that are better tailored to meet their investment 
objectives. The rule changes proposed herein are consistent with 
existing rules and practices that allow other options exchanges to list 
and trade Mini-NDX options at $1 or greater strike price intervals.\5\
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    \5\ See Securities Exchange Act Release Nos. 58924 (November 10, 
2008), 73 FR 68464 (November 18, 2008) (SR-CBOE-2008-96) (approval 
order); 58997 (November 21, 2008), 73 FR 72887 (December 1, 2008) 
(SR-ISE-2008-88) (notice of filing and immediate effectiveness); and 
59129 (December 22, 2008), 73 FR 79945 (December 30, 2008) (SR-BSE-
2008-57) (notice of filing and immediate effectiveness).
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    For initial series, the Exchange would list at least two strike 
prices above and two strike prices below the current value of the MNX 
at or about the time a series is opened for trading on the Exchange. As 
part of this initial listing, the Exchange would list strike prices 
that are within five (5) points from the closing value of the MNX on 
the preceding day.
    As for additional series, the Exchange would be permitted to add 
additional series when the Exchange deems it necessary to maintain an 
orderly market, to meet customer demand or when the underlying MNX 
moves substantially from the initial exercise price or prices. To the 
extent that any additional strike prices are listed by the Exchange, 
such additional strike prices shall be within thirty percent (30%) 
above or below the closing value of the MNX. The Exchange would also be 
permitted to open additional strike prices that are more than 30% above 
or below the current MNX value provided that demonstrated customer 
interest exists for such series, as expressed by institutional, 
corporate or individual customers or their brokers. Market-Makers 
trading for their own account would not be considered when determining 
customer interest. In addition to the initial listed series, the 
Exchange may list up to sixty (60) additional series per expiration 
month for each series in Mini-NDX options. In addition, the Exchange 
confirms that it shall not list LEAPS on Reduced Value Nasdaq 100 
Options at intervals less than $2.50.\6\
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    \6\ This is consistent with Rule 1101A(a)(xxxv).
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    The Exchange is also proposing to set forth a delisting policy with 
respect to Mini-NDX options. Specifically, the Exchange would, on a 
monthly basis, review series that are outside a range of five (5) 
strikes above and five (5) strikes below the current value of the MNX 
and delist series with no open interest in both the put and the call 
series having a: (i) Strike higher than the highest strike price with 
open interest in the put and/or call series for a given expiration 
month; and (ii) strike lower than the lowest strike price with open 
interest in the put and/or call series for a given expiration month.
    Notwithstanding the proposed delisting policy, customer requests to 
add strikes and/or maintain strikes in Mini-NDX options in series 
eligible for delisting shall be granted.
    Further, in connection with the proposed delisting policy, if the 
Exchange identifies series for delisting, the Exchange shall notify 
other options exchanges with similar delisting policies regarding 
eligible series for listing, and shall work with such other exchanges 
to develop a uniform list of series to be delisted, so as to ensure 
uniform series delisting of multiply listed Mini-NDX options.
    It is expected that the proposed delisting policy for Mini-NDX 
options will be adopted by other options exchanges that list and trade 
Mini-NDX options.
    The Exchange also proposes to add new Commentary .09 to Rule 1012, 
which would be an internal cross reference stating that the intervals 
between strike prices for Mini-NDX option series would be determined in 
accordance with proposed new Commentary .02 to Rule 1101A.
    Phlx has analyzed its capacity and represents that it believes the 
Exchange and the Options Price Reporting Authority have the necessary 
systems capacity to handle the additional traffic associated with the 
listing and trading of $1 strikes or greater for Mini-NDX options.

2. Statutory Basis

    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act\8\ 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, 
by allowing the Exchange to list Reduced Value Nasdaq 100 Options at $1 
strike price intervals.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    No written comments were solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) 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, if consistent with the protection of investors and the 
public interest, it has become effective pursuant to Section 
19(b)(3)(A) of the Act\9\ and Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 this requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay and designate the proposed rule change immediately 
operative, so that the Exchange may, for competitive reasons, list 
Reduced Value Nasdaq 100 Options at the same $1 strike price intervals 
currently listed by other option exchanges. The Commission believes 
such waiver is consistent with the protection of investors and the 
public interest.\11\ Accordingly, the Commission designates the 
proposed rule change operative upon filing with the Commission.
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    \11\ For purposes only of waiving the 30-day operative delay of 
this proposal, 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 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,

[[Page 31079]]

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-Phlx-2009-46 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-Phlx-2009-46. 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 on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of such 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-
Phlx-2009-46 and should be submitted on or before July 20, 2009.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-15224 Filed 6-26-09; 8:45 am]
BILLING CODE 8010-01-P