[Federal Register Volume 76, Number 159 (Wednesday, August 17, 2011)]
[Notices]
[Pages 51114-51116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20900]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65099; File No. SR-NASDAQ-2011-109]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Options on ETFS Gold Trust

August 11, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on August 2, 2011, the NASDAQ Stock Market LLC (``NASDAQ'' 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 NASDAQ. 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\ 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 NASDAQ Stock Market LLC proposes to list and trade options on 
the ETFS Gold Trust.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaq.cchwallstreet.com, 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 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 IV 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend certain rules 
to enable the listing and trading on the Exchange of options on the 
ETFS Gold Trust (``SGOL'').\3\ Specifically, the Exchange proposes to 
amend Chapter IV, entitled ``Securities Traded on NOM,'' at Sec. 3 
entitled ``Criteria for Underlying Securities'' to add SGOL to the list 
of products deemed appropriate for options trading.
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    \3\ The ETFS is physically-backed by gold bullion which are held 
in Switzerland.
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    Exchange Rules at Chapter IV, Section 3 list the securities deemed 
appropriate for options trading, which shall include shares or other 
securities (``Exchange-Traded Fund Shares'' or ``ETFS''), including but 
not limited to Partnership Units, as defined in Section 3, that are 
principally traded on a national securities exchange and are defined as 
an ``NMS stock'' under Rule 600 of Regulation NMS, and that (i) 
Represent interests in registered investment companies (or series 
thereof) organized as open-end management investment companies, unit 
investment trusts or similar entities, and that hold portfolios of 
securities comprising or otherwise based on or representing investments 
in indexes or portfolios of securities (or that hold securities in one 
or more other registered investment companies that themselves hold such 
portfolios of securities) (``Funds'') and/or financial instruments 
including, but not limited to, stock index futures contracts, options 
on futures, options on securities and indexes, equity caps, collars and 
floors, swap agreements, forward contracts, repurchase agreements and 
reverse repurchase agreements (the ``Financial Instruments''), and 
money market instruments, including, but not limited to, U.S. 
government securities and repurchase agreements (the ``Money Market 
Instruments'') constituting or otherwise based on or representing an 
investment in an index or portfolio of securities and/or Financial 
Instruments and Money Market Instruments, or (ii) represent commodity 
pool interests principally engaged, directly or indirectly, in holding 
and/or managing portfolios or baskets of securities, commodity futures 
contracts, options on commodity futures contracts, swaps, forward 
contracts and/or options on physical commodities and/or non-U.S. 
currency (``Commodity Pool ETFs'') or (iii) represent interests in a 
trust or similar entity that holds a specified non-U.S. currency or 
currencies deposited with the trust or similar entity when aggregated 
in some specified minimum number may be surrendered to the trust by the 
beneficial owner to receive the specified non-U.S. currency or 
currencies and pays the beneficial owner interest and other 
distributions on the deposited non-U.S. currency or currencies, if any, 
declared and paid by the trust (``Currency Trust Shares''), or (iv) 
represent interests in the SPDR Gold Trust or are issued by the iShares 
COMEX Gold Trust or iShares Silver Trust. This rule change proposes to 
expand the types of ETFs that may be approved for options trading to 
include SGOL.
    Apart from allowing SGOL to be an underlying for options traded in 
the Exchange as described above, the listing standards for ETFs will 
remain unchanged from those that apply under current Exchange Rules. 
ETFs on which options may be listed and traded must still be listed and 
traded on a national

[[Page 51115]]

securities exchange and must satisfy other listing standards.\4\
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    \4\ The ETFS must meet the criteria and guidelines for 
underlying securities as set forth in Chapter IV, Section 3(a), (b) 
and (i) of the NASDAQ Options Rules.
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    The Exchange notes that the current continued listing standards for 
options on Exchange-Traded Fund Shares would also apply to options on 
SGOL. Specifically, under Chapter IV, Section 4(h) of the NASDAQ 
Options Rules, Fund Shares approved for options trading pursuant to 
Section 3 of Chapter IV will not be deemed to meet the requirements for 
continued approval, and Nasdaq shall not open for trading any 
additional series of option contracts of the class covering such Fund 
Shares if the security is delisted from trading as provided in 
subparagraph (b)(v) of Section [sic]. In addition, Nasdaq Regulation 
shall consider the suspension of opening transactions in any series of 
options of the class covering Fund Shares in any of the following 
circumstances:
    (i) In the case of options covering Fund Shares approved pursuant 
to Section 3(i)(iv)(1), in accordance with the terms of subparagraphs 
(b)(i), (ii) and (iii) of Section 4;
    (ii) In the case of options covering Fund Shares approved pursuant 
to Section 3(i)(iv)(2) of Chapter IV, following the initial twelve-
month period beginning upon the commencement of trading in the Fund 
Shares on a national securities exchange and are defined as NMS stock 
under Rule 600 of Regulation NMS, there were fewer than 50 record and/
or beneficial holders of such Fund Shares for 30 consecutive days;
    (iii) The value of the index, non-U.S. currency, portfolio of 
commodities including commodity futures contracts, options on commodity 
futures contracts, swaps, forward contracts and/or options on physical 
commodities and/or Financial Instruments or Money Market Instruments, 
or portfolio of securities on which the Fund Shares are based is no 
longer calculated or available; or
    (iv) Such other event occurs or condition exists that in the 
opinion of Nasdaq Regulation makes further dealing in such options on 
NOM inadvisable.\5\
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    \5\ See Chapter IV, Section 4.
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    The addition of SGOL to Exchange Rules at Chapter IV, Section 3 
will not have any effect on the rules pertaining to position and 
exercise limits or margin.\6\ Further, the Exchange represents that its 
surveillance procedures applicable to trading in options on SGOL will 
be similar to those applicable to all other options on other ETFs 
currently traded on the Exchange. The Exchange may obtain trading 
information via the Intermarket Surveillance Group (``ISG'') from other 
exchanges who are members or affiliates of the ISG. The Exchange may 
also obtain trading information from various commodity futures 
exchanges worldwide that have entered into comprehensive surveillance 
sharing agreements with the Exchange. In connection with SGOL, the 
Exchange represents that it may obtain information from the New York 
Mercantile Exchange, Inc. (``NYMEX''), pursuant to a comprehensive 
surveillance sharing agreement, related to any financial instrument 
that is based, in whole or in part, upon an interest in or performance 
of gold. Prior to listing and trading options on SGOL, the Exchange 
represents that it will either have the ability to obtain specific 
trading information via ISG or through a comprehensive surveillance 
sharing agreement with the marketplace or marketplaces with last sale 
reporting that represent(s) the highest volume in derivatives (options 
or futures) on the underlying gold.
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    \6\ See NASDAQ Options Rules, Chapter III, Sections 7 (Position 
Limits), and 9 (Exercise Limits) and Chapter XIII, Section 3 (Margin 
Requirements).
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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 amending its rules to accommodate the listing and trading of options 
on SGOL, which will benefit investors by providing them with valuable 
risk management tools.
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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 either 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 after the 
date of the filing, 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 \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 a self-regulatory organization to provide the Commission 
with 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 fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requests that the Commission waive 
the 30-day operative delay so that the Exchange can list and trade 
options on ETFS Gold Trust immediately. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest.\11\ The Commission notes the 
proposal is substantively identical to proposals previously approved by 
the Commission, and does not raise any new regulatory issues.\12\ For 
these reasons, the Commission designates the proposed rule change as 
operative upon filing.
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    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \12\ See Securities Exchange Act Release Nos. 61483 (February 3, 
2010), 75 FR 6753 (February 10, 2010) (SR-CBOE-2010-007, SR-ISE-
2009-106, SR-NYSEAmex-2009-86, and SR-NYSEArca-2009-110), 62464 
(July 7, 2010), 75 FR 40007 (July 13, 2010) (SR-BX-2010-045) (rule 
filings to enable the listing and trading of options on ETFS Gold 
Trust on CBOE, ISE, NYSE Amex, NYSE Arca and BOX).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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.

[[Page 51116]]

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-NASDAQ-2011-109 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-NASDAQ-2011-109. 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 Web site 
viewing and printing 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.\13\ 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-
NASDAQ-2011-109 and should be submitted on or before September 7, 2011.
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    \13\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20900 Filed 8-16-11; 8:45 am]
BILLING CODE 8011-01-P