[Federal Register Volume 78, Number 160 (Monday, August 19, 2013)]
[Notices]
[Pages 50469-50471]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20066]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70168; File No. SR-NYSEArca-2013-79]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Commentary 
.07 to Rule 6.4 To Modify the Short-Term Option Series Program To 
Increase the Number of Classes That Are Eligible To Participate in the 
Program From Five to 30

August 13, 2013.
    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 August 7, 2013, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``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\ 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 Commentary .07 to Rule 6.4 to modify 
the short-term option series (``Short-Term Option Series'' or ``STOS'') 
Program to increase the number of classes that are eligible to 
participate in the Program from five to 30. The text of the proposed 
rule change is available on the Exchange's Web site at www.nyse.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 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 Exchange first proposes to amend Commentary .07(b) to Rule 6.4 
related to the STOS Program to increase the number of classes that are 
eligible to participate in the STOS Program from five to 30.\3\ 
Currently, for each option class that has been approved for listing and 
trading on the Exchange, the Exchange may select up to five listed 
options classes for the STOS Program. The Exchange may also include in 
the STOS Program any option classes that are selected by other 
exchanges that employ a similar program under their respective rules.
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    \3\ A Short-Term Option Series is a series of an option class 
that is approved for listing and trading on the Exchange in which 
the series is opened for trading on any Thursday or Friday that is a 
business day and that expires at the close of business on the next 
Friday that is a business day. If a Thursday or Friday is not a 
business day, the series may be opened on the first business day 
immediately prior to that Thursday or Friday. If a Friday is not a 
business day, the series shall expire on the first business day 
immediately prior to that Friday. See NYSE Arca Rule 5.10(b)(24); 
Commentary .07(a) to NYSE Arca Rule 6.4.
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    The Exchange is proposing to amend Commentary .07(b) to compete 
equally and fairly with other options exchanges in satisfying high 
market demand for weekly options. The Exchange believes that limiting 
the number of options classes eligible to participate in its STOS 
Program to five places the Exchange at a competitive disadvantage 
relative to substantially similar STOS Programs offered by other 
exchanges. Options exchanges operated by BATS Exchange, Inc. 
(``BATS''), Chicago Board Options Exchange (``CBOE''), NASDAQ Stock 
Market LLC (``NOM''), International Securities Exchange (``ISE''), and 
NASDAQ OMX PHLX LLC (``PHLX'') now have rules that allow up to 30 
classes to participate in their respective STOS Programs.\4\ The 
Exchange's proposed increase in the number of classes eligible to 
participate in the STOS Program would not only improve its competitive 
position relative to other exchanges, but would also promote 
consistency and uniformity among the competing options exchanges that 
have adopted similar STOS Programs.
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    \4\ See BATS Rule 19.6, Interpretations and Policies .05(a); 
BATS Rule 29.11(h); CBOE Rules 5.5 and 24.9; NOM Rules Chapter IV, 
Section 6; Chapter XIV, Section 11; ISE Rules 504 and 2009; and PHLX 
Rules 1012 and 1101A. NOM and BATS, like NYSE Arca, each began its 
STOS Program in 2010, with 5-class limits similar to that provided 
for in Commentary .07 to NYSE Arca Rule 6.4. See Securities Exchange 
Act Release Nos. 62297 (June 15, 2010), 75 FR 35111 (June 21, 2010) 
(SR-NASDAQ-2010-073); 62597 (July 29, 2010), 75 FR 47335 (August 5, 
2010) (SR-BATS-2010-020).
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    The Exchange notes that its STOS Program has been well-received by 
market participants, particularly retail investors. The Exchange 
believes that the current proposed revision to the STOS Program will 
permit the Exchange to meet increased customer demand and provide 
market participants with the ability to hedge securities positions with 
a greater number of option classes and series.
    With regard to the impact of this proposal on system capacity, the 
Exchange has analyzed its capacity and represents that it and the 
Options Price Reporting Authority have the necessary systems capacity 
to handle the potential additional traffic associated with the proposed 
expansion of the STOS Program. While the expansion of the STOS Program 
is expected to generate additional quote traffic, the Exchange believes 
that this increased traffic will be manageable. The Exchange also notes 
that any series added under this expansion would be subject to quote

[[Page 50470]]

mitigation.\5\ Although the number of classes participating in the 
Program would increase, that increase would be limited, as described 
above, and consistent with existing, similar programs on other 
exchanges. Further, the Exchange does not believe that the proposal 
will result in a material proliferation of additional series because it 
is limited to a fixed number of classes.
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    \5\ See Commentary .03 to NYSE Arca Rule 6.86.
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    The Exchange also notes its proposed typographical corrections to 
Commentary .07(b) to Rule 6.4.
    The Exchange next proposes to make a non-substantive, technical 
amendment to Commentary .07(d) to Rule 6.4, to correct two references 
to the word ``month.'' The Exchange proposes to correct each of the two 
references to read ``series'' instead of ``month.''
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5),\7\ 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, in general, to protect 
investors and the public interest. The Exchange believes that 
increasing the number of options classes that are eligible to 
participate in the STOS Program will result in a continuing benefit to 
investors by giving them more flexibility to closely tailor their 
investment and hedging decisions to their needs. Further, the Exchange 
does not believe that the proposal will cause market fragmentation or 
result in decreased liquidity.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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. To the contrary, the Exchange 
believes that the proposal will allow the Exchange to compete more 
effectively with other options exchanges that have already adopted 
changes to their STOS Programs that are materially identical to the 
changes proposed by this filing.

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 does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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. The Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest in that it will allow NYSE Arca to select option 
classes that are eligible to participate in the STOS Program in a 
manner substantially similar to the corresponding rules of other 
exchanges.\10\ In sum, the proposed rule change presents no novel 
issues, and waiver will allow the Exchange to remain competitive with 
other exchanges. Therefore, the Commission designates the proposal 
operative upon filing.\11\
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    \10\ See BATS Rule 19.6, Interpretations and Policies .05(a); 
BATS Rule 29.11(h); CBOE Rules 5.5 and 24.9; NOM Rules Chapter IV, 
Section 6, Supplementary Material .07; Chapter XIV, Section 
11(h)(1)(i); ISE Rules 504, Supplementary Material .02(a) and 2009, 
Supplementary Material .01(a); and PHLX Rules 1012, Commentary 
.11(a) and 1101A(b)(vi)(A). NOM and BATS, like NYSE Arca, each began 
its STOS Program in 2010, with five-class limits similar to that 
provided for in Commentary .07 to NYSE Arca Rule 6.4. See Securities 
Exchange Act Release Nos. 62297 (June 15, 2010), 75 FR 35111 (June 
21, 2010) (SR-NASDAQ-2010-073); 62597 (July 29, 2010), 75 FR 47335 
(August 5, 2010) (SR-BATS-2010-020).
    \11\ For purposes only of waiving the 30-day operative delay, 
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 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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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 email to [email protected]. Please include 
File Number SR-NYSEArca-2013-79 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-2013-79. This 
file number should be included on the subject line if email 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 
10:00 a.m. and 3:00 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;

[[Page 50471]]

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-2013-79 and should be submitted on or before September 9, 
2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20066 Filed 8-16-13; 8:45 am]
BILLING CODE 8011-01-P