[Federal Register Volume 74, Number 211 (Tuesday, November 3, 2009)]
[Notices]
[Pages 56906-56907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26403]



[[Page 56906]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60896; File No. SR-NYSEArca-2009-98]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Relating to $1 
Strikes for KBW Bank Index Options (BKX)

October 28, 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 October 27, 2009, NYSE Arca, Inc. (``NYSE Arca'' 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 Rule 5.14 Terms of Index Option 
Contracts in order to establish strike price intervals of $1.00 in the 
KBW Bank Index (``BKX''). 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed rule change is based on a filing submitted by NASDAQ 
OMX PHLX Inc. (``PHLX'') that was recently approved by the 
Commission.\4\
---------------------------------------------------------------------------

    \4\ See Exchange Act Release No. 60840 (October 20, 2009) (order 
approving SR-PHLX-2009-77).
---------------------------------------------------------------------------

    The purpose of the proposed rule change is designed to provide 
investors with greater flexibility by allowing them to establish 
positions that are better tailored to meet their investment objectives.
    The Exchange proposes to list series at $1.00 or greater strike 
price intervals for BKX, if the strike price is less than $200, and 
will list at least two strike prices above and two strike prices below 
the current value of the index at about the time a series is opened for 
trading on the Exchange. At the time of initial listing, the Exchange 
shall list strike prices for the index that are within 5 points from 
the closing value of the index on the preceding day.
    Additional series of BKX may be opened for trading on the Exchange 
when the Exchange deems it necessary to maintain an orderly market, to 
meet customer demand, or when the underlying Index moves substantially 
from the initial exercise prices 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 Index. The Exchange may also open additional 
strike prices that are more than 30% above or below the current Index 
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 
shall not be considered when determining customer interest under this 
provision. In addition to the initial listed series, the Exchange may 
list up to sixty (60) additional series per expiration month for each 
series on BKX. In all cases, however, $1.00 strike price intervals may 
be listed on BKX only where the strike price is less than $200.
    The Exchange shall not list LEAPS on BKX at intervals less than 
$2.50.
    The Exchange also proposes an additional Delisting Policy for BKX. 
With respect to BKX, the Exchange will regularly review series that are 
outside a range of five (5) strikes above and five (5) strikes below 
the current value of BKX, and may delist series with no open interest 
in both the put and the call series having a: (a) Strike higher than 
the highest strike price with open interest in the put and/or call 
series for a given expiration month, and (b) strike lower than the 
lowest strike price with open interest in the put and/or call series 
for a given expiration month.
    Notwithstanding the above delisting policy, customer requests to 
add strikes and/or maintain strikes in BKX eligible for delisting may 
be granted.
    With regard to the impact on system capacity, NYSE Arca has 
analyzed its capacity and represents that it and the Options Price 
Reporting Authority have the necessary systems capacity to handle the 
additional traffic associated with the listing and trading of an 
expanded number of series as proposed by this filing.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) \5\ of the Securities Exchange Act of 1934 (the ``Act''), 
in general, and furthers the objectives of Section 6(b)(5) \6\ in 
particular in that it is designed to promote just and equitable 
principles if trade, to prevent fraudulent and manipulative acts, to 
remove impediments to and to perfect the mechanism for a free and open 
market and a national market system and, in general, to protect 
investors and the public interest, by providing investors greater 
flexibility to establish positions that are better tailored to meet 
their investment objectives.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 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. 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

[[Page 56907]]

(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 \7\ and Rule 19b-4(f)(6) thereunder.\8\
---------------------------------------------------------------------------

    \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 this requirement.
---------------------------------------------------------------------------

    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 
options on the KBW Bank Index at the same $1 strike price intervals 
currently listed by PHLX. The Commission believes such waiver is 
consistent with the protection of investors and the public interest.\9\ 
Accordingly, the Commission designates the proposed rule change 
operative upon filing with the Commission.
---------------------------------------------------------------------------

    \9\ 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).
---------------------------------------------------------------------------

    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 [email protected]. Please include 
File Number SR-NYSEArca-2009-98 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-2009-98. 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-NYSEArca-2009-98 and should be submitted on or before 
November 24, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. E9-26403 Filed 11-2-09; 8:45 am]
BILLING CODE 8011-01-P