[Federal Register Volume 79, Number 132 (Thursday, July 10, 2014)]
[Notices]
[Pages 39442-39446]
[FR Doc No: 2014-16096]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72537; File No. SR-NYSEArca-2014-25]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Amendment No. 1 and Order Granting Accelerated Approval of Proposed
Rule Change, as Modified by Amendment No. 1, To Make Permanent Its
Pilot Program Regarding Minimum Value Sizes for Opening Transactions in
New Series of Flexible Exchange Options and Establish New Minimum Value
Sizes Applicable to Other FLEX Transactions and FLEX Quotes

July 3, 2014.

I. Introduction

    On March 18, 2014, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to make permanent its pilot program regarding
minimum value sizes for opening transactions in new series of flexible
exchange options (``FLEX Options'' or ``FLEX'') and establish new
minimum value sizes applicable to other FLEX transactions and FLEX
Quotes. The proposed rule change was published for comment in the
Federal Register on April 7, 2014.\3\ The Commission received no
comments on the proposal. The Exchange consented to an extension of the
time period for the Commission to approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether the proposed rule change should be disapproved, to
July 6, 2014. The Exchange filed Amendment No. 1 to the proposed rule
change on May 22, 2014, in order to transmit a revised pilot report
that replaces the original Exhibit 3 to the filing, and to correct an
error in the Notice.\4\ The Commission is publishing this notice to
solicit comments on Amendment No. 1 from interested persons and is
approving the proposed rule change, as modified by Amendment No. 1, on
an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 71839 (April 1,
2014), 79 FR 19154 (``Notice'').
    \4\ The Exchange attached an Exhibit 3 to its proposed rule
change that contained an annual report summarizing pilot data
collected for the year 2013, the most recent complete year of the
pilot program (``Pilot Report''). Specifically, the Pilot Report
summarizes the trading volume and underlying value of opening
transactions in new series of FLEX Options during the year 2013 with
a size below the minimum value thresholds in force before the pilot,
as well as the types of customers initiating such transactions. In
Amendment No. 1, the Exchange submitted a revised Pilot Report as a
new Exhibit 3 that replaces the original Exhibit 3 in its entirety.
The revised Pilot Report corrects an error in the total FLEX Equity
Option contract trading volume under the pilot reported in the
original Pilot Report, and also makes non-substantive changes to
certain descriptive language in the Pilot Report. In Amendment No. 1
the Exchange also corrected the purpose section of the Notice to
state that all FLEX Index Options are subject to the same Underlying
Equivalent Value, and not unique Underlying Equivalent Values
applicable to different types of FLEX Index Options as originally
stated in the Notice.
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II. Description of the Amended Proposal

    FLEX Options, unlike traditional standardized options, allow
investors to customize basic option terms, including size, expiration
date, exercise style, and certain exercise prices.\5\ Pursuant to
Commentary .02 to Rule 5.32, the Exchange currently has in place a
pilot program under which the minimum size requirements set forth in
Rule 5.32(d)(2), which apply to opening transactions in new series of
FLEX Options, are replaced with a one-contract minimum size (``Pilot
Program'').\6\ Prior to the Pilot Program, pursuant to Rule 5.32(d)(2),
the minimum value size for an opening transaction in any FLEX series in
which there was no open interest at the time the request for quotes was
submitted was: (i) For FLEX Equity Options, the lesser of 250 contracts
or the number of contracts overlying $1 million in the underlying
securities; and (ii) for FLEX Index Options, $10 million Underlying
Equivalent Value.\7\ The Exchange's proposal will make the Pilot
Program

permanent by eliminating the minimum value size requirements set forth
in Rule 5.32(d)(2) for opening transactions in new FLEX Option series
and by eliminating the Pilot Program rule text set forth in Commentary
.02 to Rule 5.32. In connection with its proposal to make the Pilot
Program permanent, and as required by its filing establishing the Pilot
Program,\8\ the Exchange submitted to the Commission an annual Pilot
Report summarizing Pilot Program data collected for year 2013, the most
recent complete year of the Pilot Program.\9\
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    \5\ See Notice, 79 FR 19155 n.4; see also NYSE Arca Options Rule
(``Rule'') 5.32. FLEX Options can be FLEX Index Options or FLEX
Equity Options. See Rules 5.30(b)(5) and (b)(6) (defining,
respectively, the terms ``FLEX Equity Option'' and ``FLEX Index
Option'').
    \6\ See Commentary .02 to Rule 5.32; see also Securities
Exchange Act Release Nos. 62054 (May 6, 2010), 75 FR 27381 (May 14,
2010) (SR-NYSEArca-2010-34) (establishing Pilot Program); and 71845
(April 1, 2014) 79 FR 19143 (April 7, 2014) (SR-NYSEArca-2014-31)
(extending Pilot Program until the earlier of July 31, 2014 or
approval of the Pilot Program on a permanent basis).
    \7\ See Rule 5.32(d)(2); see also Rule 5.30(b)(17) (defining the
term ``Underlying Equivalent Value'').
    \8\ See supra note 6.
    \9\ Specifically, the Pilot Report contains data and analysis of
underlying equivalent values, open interest and trading volume, and
analysis of the types of investors that initiated opening FLEX
Equity and Index Options transactions (i.e., institutional, high net
worth, or retail) in new FLEX Option series. See Amendment No. 1,
supra note 4.
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    In its filing, the Exchange also has proposed to make some other
changes to its FLEX Option minimum value size rules, in addition to
requesting that the Pilot Program be made permanent. Rules 5.32(d)(3)-
(4), which are not part of the Pilot Program, set forth minimum value
sizes for other FLEX Option transactions and for FLEX Quotes.
Specifically, pursuant to Rule 5.32(d)(3), for a transaction in any
currently-opened FLEX series, the minimum value size is: (i) For FLEX
Equity Options, the lesser of 100 contracts or the number of contracts
overlying $1 million in the underlying securities in the case of
opening transactions, and 25 contracts in the case of closing
transactions; and (ii) for FLEX Index Options, $1 million Underlying
Equivalent Value in the case of both opening and closing transactions;
or (iii) for either case, the remaining underlying size or Underlying
Equivalent Value on a closing transaction, whichever is less. Pursuant
to Rule 5.32(d)(4), the minimum value size for FLEX Quotes responsive
to a Request for Quotes is 25 contracts in the case of FLEX Equity
Options and $1 million Underlying Equivalent Value in the case of FLEX
Index Options or for either case the remaining underlying size or
Underlying Equivalent Value on a closing transaction, whichever is
less. Even though these minimum value size requirements set forth in
Rules 5.32(d)(3)-(4) are not part of the Pilot Program, the Exchange
has proposed to eliminate them as well, in conjunction with making the
Pilot Program permanent. In its proposal the Exchange noted that
adopting the same minimum value sizes for existing and new series, in
addition to quotes, will allow market participants to tailor their FLEX
Option transactions to meet their investment objectives.
    By proposing to make permanent the Pilot Program one-contract
minimum for opening transactions in new series of FLEX Options and by
also proposing to eliminate the minimum value size requirements for
FLEX Option transactions in currently-opened series and FLEX Quotes
responsive to a Request for Quotes, the Exchange is seeking to
establish a one-contract minimum size for all FLEX Option transactions
and FLEX Quotes. This one-contract minimum size would be codified in
new Rule 5.32(b)(7). The Exchange states that its proposal for a one-
contract minimum value size for all FLEX Option transactions and FLEX
Quotes is based on similar rules governing minimum value size for FLEX
Options approved for the CBOE.\10\
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    \10\ See Notice, 79 FR 19156 and n.13 (citing Securities
Exchange Act Release No. 67624 (August 8, 2012), 77 FR 48580 (August
14, 2012) (order approving CBOE's proposal to make permanent its
pilot program eliminating minimum value sizes for FLEX Options)).
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    In addition, as a technical, non-substantive change, the Exchange
has proposed to relocate from current Rule 5.32(d)(1) to new Rule
5.32(b)(6) rule text stating that the maximum term for both Equity and
Index FLEX Options shall be fifteen years, and make other non-
substantive changes to the rule.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change, as amended, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\11\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\12\
which requires, among other things, that the rules of a national
securities exchange be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, 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; and not be designed to permit unfair discrimination between
customers, issuers, brokers or dealers.
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    \11\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
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    FLEX Options were originally designed for use by institutional and
high net worth customers, rather than retail investors.\13\ In
approving CBOE's pilot eliminating minimum value sizes for FLEX
Options, which was the first such pilot to go into effect, the
Commission noted that it had received several comment letters stating
that the proposal would assist institutional customers, but it also
noted that the elimination of the minimum value size requirements
raised the possibility that retail customers would access the FLEX
Options market.\14\ One of the risks to retail investors outlined in
the ODD \15\ is that, because of the customized nature of FLEX Options
and lack of continuous quotes, trading in FLEX Options is often less
deep and liquid than trading in standardized options on the same
underlying interest.\16\ Additionally, the Commission observed that
reducing the minimum value size for opening FLEX Option transactions
increases the potential for the FLEX Options market to act as a
surrogate for the standardized options market, and expressed concern in
this regard because the standardized market contains certain
protections for investors not present in the FLEX Options market.\17\
The Commission stated that, in the event CBOE proposed making its pilot
program permanent, information regarding the types of

customers initiating opening FLEX Option transactions during the pilot
would enable the Commission to evaluate how market participants have
responded to CBOE's pilot program and what types of customers are using
the FLEX Options market.\18\ For these same reasons, at the
Commission's request, the Exchange included in its Pilot Report
information regarding the types of customers that initiated opening
FLEX Option transactions under its Pilot Program.\19\
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    \13\ See Notice, 79 FR 19156; see also Securities Exchange Act
Release No. 36841 (February 14, 1996), 61 FR 6666 (February 21,
1996) (order approving SR-PSE-95-24). As noted in the Options
Disclosure Document (``ODD''), which explains the characteristics
and risks of exchange-traded options, flexibly structured options
may be useful to sophisticated investors seeking to manage
particular portfolio and trading risks. Rule 9b-1 under the Act
requires that broker-dealers furnish the ODD to a customer before
accepting an order from the customer to purchase or sell an option
contract relating to an options class that is the subject of the
ODD, or approving the customer's account for the trading of such
option. See 17 CFR 240.9b-1(d).
    \14\ See Securities Exchange Act Release No. 61439 (January 28,
2010), 75 FR 5831 (February 4, 2010) (order approving SR-CBOE-2009-
087) (``CBOE Pilot Approval Order'').
    \15\ See supra note 13.
    \16\ In particular, the ODD states that because many of the
terms of FLEX Options are not standardized, it is less likely that
there will be an active secondary market in which holders and
writers of such options will be able to close out their positions by
offsetting sales and purchases. Also, the ODD states that certain
margin requirements for positions in flexibly structured options may
be significantly greater than the margin requirements applicable to
similar positions in other options on the same underlying interest.
    \17\ See CBOE Pilot Approval Order, supra note 14. In
particular, the Commission noted that continuous quotes may not
always be available in the FLEX Options market and that FLEX Options
do not have trading rotations at either the opening or closing of
trading. Id.
    \18\ Id. The Exchange has submitted a Pilot Report to the
Commission as Exhibit 3 to its filing, as well as other,
confidential reports of data collected during the Pilot Program. See
Amendment No. 1, supra note 4.
    \19\ See Amendment No. 1, supra note 4.
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    The Commission believes that these considerations and concerns that
informed its analysis of whether to permanently approve CBOE's pilot
are equally germane to its analysis here. As such, the Commission has
carefully reviewed the Pilot Report that the Exchange provided to the
Commission.\20\ The Pilot Report reflects that, in 2013, 84 opening
transactions in new series of FLEX Equity Options were initiated on the
Exchange with small minimum value sizes made possible by the Pilot
Program, 83 of which were initiated by institutional customers.\21\
Moreover, the Pilot Report indicates that these 84 FLEX Equity Option
transactions covered by the Pilot Program accounted for approximately
1% of the total volume and approximately 3% of the total value of all
opening FLEX Equity Option transactions in new series--i.e., opening
transactions covered by the Pilot Program as well as opening
transactions with value sizes above the pre-pilot minimum--during 2013.
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    \20\ Id.
    \21\ Id. The Pilot Report indicates that there were no opening
transactions in new series of FLEX Index Options during 2013 that
were initiated below the pre-pilot minimum size requirement. The
Pilot Report also indicates that no retail or high net worth
customers initiated opening transactions on the Exchange in new
series of FLEX Options below the pre-pilot minimum value size. The
Exchange believes that the lack of participation in the Pilot
Program by such customers is due to market structure issues,
including but not limited to those surrounding customer priority,
and is aware that retail customers initiate FLEX Option transactions
at other market centers. Id.
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    The Exchange notes that the Pilot Report includes data specific to
opening transactions in new series of FLEX Options pursuant to current
Rule 5.32(d)(2), and does not include data for transactions in
currently-opened FLEX Options series or FLEX Quotes responsive to a
request for quotes pursuant to Rules 5.32(d)(3)-(4), as such
transactions and FLEX Quotes were not part of the Pilot Program.\22\
The Exchange represents, however, that based on its internal review, if
Rules 5.32(d)(3)-(4) had been part of the Pilot Program, transactions
in currently-opened FLEX Options series or FLEX Quotes with small value
sizes made permissible by the Pilot Program would have been de minimis,
and would not have materially altered the data in the Pilot Report.\23\
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    \22\ See Notice, 79 FR 19157.
    \23\ Id.
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    On balance, the Commission believes that it is consistent with the
Act to make the Pilot Program permanent and thus eliminate, on a
permanent basis, the minimum value size requirements set forth in Rule
5.32(d)(2) for opening transactions in new series of FLEX Options. The
protections noted below, including heightened options suitability
requirements, should help to address any concerns about the potential
for retail participation in the Exchange's FLEX Options market in the
future. Moreover, the Commission is not aware of any data or analysis
to date suggesting that the trading of FLEX Options has acted as a
surrogate for the trading of standardized options on the Exchange as a
result of the Pilot Program. Indeed, the Commission understands that
FLEX Option trading accounts for less than 1% of the combined trading
volume of the standardized and FLEX Option markets.\24\ In addition,
the Pilot Report indicates that Pilot Program FLEX Option trades
account for a very small proportion of the total volume and total value
of all FLEX Option trades. Thus, it appears that the Pilot Program has
not caused significant trading interest to migrate from the
standardized options market to the FLEX Options market, nor caused, to
the best of our knowledge, a large number of investors to use FLEX
Options to avoid certain requirements in the standardized market. Based
on the current data and size of the FLEX Options market, and the lack
of any evidence to the contrary, it would appear that investors are
using the FLEX Options market for its intended purpose--to be able to
customize certain terms not available in the standardized options
market.
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    \24\ See email dated June 19, 2014 from Glenn H. Gsell, Managing
Director, Intercontinental Exchange, NYSE Regulation, Inc. to
Michael Bradley and David Michehl, Special Counsels, Division of
Trading and Markets, Commission.
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    The Commission also believes that a logical corollary to making the
Pilot Program permanent is to eliminate the minimum value size
requirements set forth in Rules 5.32(d)(3)-(4) for transactions in
currently-opened FLEX Options series and FLEX Quotes responsive to a
request for quotes. In this regard, the Commission notes that the
Exchange does not believe that the difference between effecting a
transaction in an existing FLEX Option series and effecting a FLEX
transaction in a new series is material to the extent that there should
be different minimum value sizes for the two types of transactions.\25\
In addition, the Exchange believes it would be consistent to apply the
same minimum value size to closing transactions so that investors may
elect to close just a portion of their FLEX position, without being
subject to a minimum value size that may be greater than the equivalent
value size necessary to meet their investment objectives.\26\ Further,
the Exchange believes that it would be consistent to apply the same
minimum value size to FLEX Quotes so that market participants may
respond to a request for quotes with the precise number of contracts or
underlying equivalent value needed to trade with the OTP Holder that
submitted the request. The Commission finds no basis under the Act at
this time for maintaining a minimum value size requirement for
transactions in currently-opened FLEX Option series or FLEX Quotes
responsive to a request for quotes, and believes that these changes
should be approved for reasons similar to those supporting permanent
approval of the Pilot Program. The Commission notes that it is not
aware of any problems resulting from the permanent approval of CBOE's
pilot eliminating FLEX Option minimum value sizes, which included
currently-opened series and FLEX Quotes responsive to a request for
quotes. As a result, the Commission believes that it is appropriate
under the Act, and would promote just and equitable principles of
trade, as well as remove impediments to and perfect the mechanism of a
free and open market and a national market system, to replace the
current minimum value size requirements for all FLEX Option
transactions and FLEX Quotes on the Exchange with a one-contract
minimum size.
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    \25\ See Notice, 79 FR 19157.
    \26\ Id. Currently, the minimum value size for closing
transactions is 25 contracts in the case of FLEX Equity Options and
$1 million Underlying Equivalent Value in the case of FLEX Index
Options, or in either case the remaining underlying size or
Underlying Equivalent Value on a closing transaction, whichever is
less. See Rules 5.32(d)(3)-(4).
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    Existing safeguards--such as position reporting requirements and
margin requirements--will continue to apply to

FLEX Options.\27\ Further, as noted above, under Rule 9b-1 under the
Act,\28\ all customers of a broker-dealer with options accounts
approved to trade FLEX Options must receive the ODD, which contains
specific disclosures about the characteristics and special risks of
trading FLEX Options.\29\ In addition, similar to other options, FLEX
Options are subject to Trading Permit Holder supervision and
suitability requirements, such as in Rules 9.2(b) and 9.18(c),
respectively.\30\ In addition to ensuring that FLEX Options are
suitable for their customers, broker-dealers also must take into
account the characteristics of the FLEX market, as compared to the
standardized market, when satisfying their best execution obligations.
The Commission believes that the safeguards in place are reasonably
designed to help mitigate potential risks for retail investors and
other market participants investing in FLEX Options.
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    \27\ Certain position limit, aggregation and exercise limit
requirements continue to apply to FLEX Options in accordance with
Rule 5.35 (Position Limits) and Rule 5.36 (Exercise Limits). But the
Commission notes that certain FLEX Options do not have position or
exercise limits.
    \28\ 17 CFR 240.9b-1.
    \29\ See supra notes 13 and 16.
    \30\ See Notice, 79 FR 19156.
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    The Exchange believes that permanently removing the minimum value
size requirements for FLEX Options will give investors a more viable,
exchange-traded alternative to customized options in the OTC market,
which are not subject to minimum value size requirements.\31\
Furthermore, the Exchange has represented that broker-dealers have
indicated to the Exchange that the minimum value size requirements have
prevented them from bringing transactions on the Exchange that are
already taking place in the OTC market.\32\ Therefore, it appears
possible that eliminating the minimum value sizes for all FLEX Options
transactions and FLEX Quotes could further incent trading interest in
customized options to move from the OTC market to the Exchange. To the
extent investors choose to trade FLEX Options on the Exchange in lieu
of the OTC market as a result of the permanent removal of the minimum
value size requirements, such action should benefit investors. As the
Commission has previously noted, there are certain benefits to trading
on an exchange, such as enhanced efficiency in initiating and closing
out positions, increased market transparency, and heightened contra-
party creditworthiness due to the role of the Options Clearing
Corporation as issuer and guarantor of FLEX Options.\33\
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    \31\ Id.
    \32\ Id.
    \33\ See Securities Exchange Act Release No. 57429 (March 4,
2008), 73 FR 13058 (March 11, 2008) (order approving SR-CBOE-2006-
36).
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IV. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 1
to 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_ADDRESS>Please include
File Number SR-NYSEArca-2014-25 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2014-25. 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; 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-2014-25 and should
be submitted on or before July 31, 2014.

V. Accelerated Approval of Proposal, as Modified by Amendment No. 1

    In Amendment No. 1, the Exchange submitted a revised Pilot Report
that corrects an error in the total FLEX Equity Option contract trading
volume under the pilot reported in the original Pilot Report, and also
makes non-substantive changes to certain descriptive language in the
Pilot Report. The Commission believes that these corrections to the
Pilot Report do not substantively alter the findings in the Pilot
Report or diminish their support for approval of the pilot on a
permanent basis. Amendment No. 1 also corrected the purpose section of
the Notice to state that all FLEX Index Options are subject to the same
Underlying Equivalent Value, and not unique Underlying Equivalent
Values applicable to different types of FLEX Index Options as
originally stated in the Notice. The Commission believes that this
change in Amendment No. 1 is not substantive to the proposal.
Accordingly, the Commission also finds good cause, pursuant to Section
19(b)(2) of the Act,\34\ for approving the proposed rule change, as
modified by Amendment No. 1, prior to the thirtieth day after the date
of publication of notice in the Federal Register.
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    \34\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    In summary, the Commission believes, for the reasons noted above,
that the proposed rule change to permanently approve the Pilot Program
as well as remove the minimum size requirements for currently-opened
FLEX Option series and FLEX Quotes, thereby permanently removing the
minimum size requirements for all FLEX Options on the Exchange, is
consistent with the Act and Section 6(b)(5) thereunder in particular,
and should be approved, as amended. The Exchange has committed, and the
Commission expects the Exchange, to continue to monitor the usage of
FLEX Options, whether changes need to be made to its rules or the ODD
to address any changes in retail FLEX Option participation, and for any
other issues that may occur as a result of the elimination of the
minimum value sizes on a permanent basis, including whether FLEX Option
trades are being used as a surrogate for trading options in the
standardized market.\35\
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    \35\ See Notice, 79 FR 19157 (Exchange representing that it will
continue to monitor the usage of FLEX Options and whether any
changes to its rules or the ODD are necessary).

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    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\36\ that the proposed rule change (SR-NYSEArca-2014-25) be, and it
hereby is, approved, on an accelerated basis, as amended.
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    \36\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-16096 Filed 7-9-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: July 13, 2010 (Volume 75, Number 133)]
[Notices]
[Page 40005-40007]
[DOCID:fr13jy10-126]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62463; File No. SR-CBOE-2010-043]

 Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Granting Approval of Proposed Rule Change To Enable
the Listing and Trading of Options on the Sprott Physical Gold Trust

July 7, 2010.
    On May 11, 2010, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade options on the
Sprott Physical Gold Trust (``Sprott Options''). The proposed rule
change was published in the Federal Register on June 4, 2010.\3\ The
Commission received no comments on the proposal. This order approves
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 62193 (May 28,
2010), 75 FR 31823.
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I. Description of Proposal

    Recently, the Commission authorized CBOE to list and trade options
on the SPDR Gold Trust,\4\ the iShares COMEX Gold Trust, the iShares
Silver Trust,\5\ the ETFS Silver Trust and the ETFS Gold Trust,\6\ the
ETFS Palladium Trust and the ETFS Platinum Trust.\7\ Now, the

Exchange proposes to list and trade options on the Sprott Physical Gold
Trust.
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    \4\ See Securities Exchange Act Release No. 57897 (May 30,
2008), 73 FR 32061 (June 5, 2008) (order approving SR-CBOE-2005-11).
    \5\ See Securities Exchange Act Release No. 59055 (December 4,
2008), 73 FR 75148 (December 10, 2008) (order approving SR-CBOE-
2008-72).
    \6\ See Securities Exchange Act Release No. 61483 (February 3,
2010), 75 FR 6753 (February 10, 2010) (order approving SR-CBOE-2010-
007).
    \7\ See Securities Exchange Act Release No. 61892 (April 13,
2010), 75 FR 20649 (April 20, 2010) (order approving SR-CBOE-2010-
015).
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    Under current Rule 5.3, only Units (also referred to herein as
exchange traded fund (``ETFs'')) representing (i) interests in
registered investment companies (or series thereof) organized as open-
end management investment companies, unit investment trusts or similar
entities that hold portfolios of securities 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 purchase agreements (the ``Financial
Instruments''), and money market instruments, including, but not
limited to, U.S. government securities and repurchase agreements (the
``Money Market Instruments'') comprising or otherwise based on or
representing investments in indexes or portfolios of securities and/or
Financial Instruments and Money Market Instruments (or that hold
securities in one or more other registered investment companies that
themselves hold such portfolios of securities and/or Financial
Instruments and Money Market Instruments), or (ii) interests in a trust
or similar entity that holds a specified non-U.S. currency 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 and pays the beneficial
owner interest and other distributions on deposited non-U.S. currency,
if any, declared and paid by the trust; or (iii) 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 Units''), or (iv) represent interests in the
streetTRACKS Gold Trust or the iShares COMEX Gold Trust or the iShares
Silver Trust or the ETFS Silver Trust or the ETFS Gold Trust or the
ETFS Palladium Trust or the ETFS Platinum Trust; or (v) represents an
interest in a registered investment company (``Investment Company'')
organized as an open-end management investment company or similar
entity, that invests in a portfolio of securities selected by the
Investment Company's investment adviser consistent with the Investment
Company's investment objectives and policies, which is issued in a
specified aggregate minimum number in return for a deposit of a
specified portfolio of securities and/or a cash amount with a value
equal to the next determined net asset value (``NAV''), and when
aggregated in the same specified minimum number, may be redeemed at a
holder's request, which holder will be paid a specified portfolio of
securities and/or cash with a value equal to the next determined NAV
(``Managed Fund Share'') are eligible as underlying securities for
options traded on the Exchange.\8\ This rule change proposes to expand
the types of ETFs that may be approved for options trading on the
Exchange to include the Sprott Physical Gold Trust.
---------------------------------------------------------------------------

    \8\ See Interpretation and Policy .06 to Rule 5.3.
---------------------------------------------------------------------------

    Apart from allowing the Sprott Physical Gold Trust to be an
underlying for options traded on 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 securities
exchange and must satisfy the other listing standards set forth in
Interpretation and Policy .06 to Rule 5.3.
    Specifically, in addition to satisfying the aforementioned listing
requirements, Units must meet either: (1) The criteria and guidelines
under Rule 5.3 and Interpretation and Policy .01 to Rule 5.3, Criteria
for Underlying Securities; or (2) they must be available for creation
or redemption each business day from or through the issuer in cash or
in kind at a price related to net asset value, and the issuer must be
obligated to issue Units in a specified aggregate number even if some
or all of the investment assets required to be deposited have not been
received by the issuer, subject to the condition that the person
obligated to deposit the investments has undertaken to deliver the
investment assets as soon as possible and such undertaking is secured
by the delivery and maintenance of collateral consisting of cash or
cash equivalents satisfactory to the issuer, as provided in the
respective prospectus.
    The Exchange states that the current continued listing standards
for options on ETFs will apply to options on the Sprott Physical Gold
Trust. Specifically, under Interpretation and Policy .08 to Rule 5.4,
options on Units may be subject to the suspension of opening
transactions as follows: (1) In the case of Units listed pursuant to
Interpretation and Policy .06(v)(E)(y) to Rule 5.3, following the
initial twelve-month period beginning upon the commencement of trading
of the Units, if there are fewer than 50 record and/or beneficial
holders of the Units for 30 or more consecutive trading days; or (2) in
the case of Units listed pursuant to Interpretation and Policy
.06(v)(E)(x) to Rule 5.3, in accordance with the terms of paragraphs
(a)-(d) of Interpretation and Policy .01 to Rule 5.4; or (3) the value
of the index or portfolio of securities, non-U.S. currency, or
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 and Money Market
Instruments on which Units are based is no longer calculated or
available; or (4) such other event occurs or condition exists that in
the opinion of the Exchange makes further dealing on the Exchange
inadvisable.
    Additionally, the Sprott Physical Gold Trust shall not be deemed to
meet the requirements for continued approval, and the Exchange shall
not open for trading any additional series of option contracts of the
class covering the Sprott Physical Gold Trust, if the Sprott Physical
Gold Trust ceases to be an ``NMS stock'' as provided for in paragraph
(f) of Interpretation and Policy .01 of Rule 5.4 or the Sprott Physical
Gold Trust is halted from trading on its primary market.
    The addition of the Sprott Physical Gold Trust to Interpretation
and Policy .06 to Rule 5.3 will not have any effect on the rules
pertaining to position and exercise limits \9\ or margin.\10\
---------------------------------------------------------------------------

    \9\ See CBOE Rules 4.11 and 4.12.
    \10\ See CBOE Rule 12.3.
---------------------------------------------------------------------------

    The Exchange represents that its surveillance procedures applicable
to trading in options on the Sprott Physical Gold Trust will be similar
to those applicable to all other options on other Units currently
traded on the Exchange. The Exchange represents that its surveillance
procedures applicable to trading in options on the Sprott Physical Gold
Trust will be similar to those applicable to all other options on other
ETFs currently traded on the Exchange. Also, the Exchange may obtain
information from the New York Mercantile Exchange, Inc. (``NYMEX'') (a
member of the Intermarket Surveillance Group) related to any financial
instrument that is based, in whole or in part, upon an interest in or
performance of gold.

II. Commission Findings

    After careful consideration, the Commission finds that the proposed
rule change submitted by CBOE is

consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange
\11\ and, in particular, the requirements of Section 6 of the Act.\12\
Specifically, the Commission finds that the proposal is consistent with
Section 6(b)(5) of the Act,\13\ which requires, among other things,
that the rules of a national securities exchange be designed 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. In accordance with the Memorandum of Understanding
entered into between the Commodity Futures Trading Commission
(``CFTC'') and the Commission on March 11, 2008, and in particular the
addendum thereto concerning Principles Governing the Review of Novel
Derivative Products, the Commission believes that novel derivative
products that implicate areas of overlapping regulatory concern should
be permitted to trade in either or both a CFTC- or Commission-regulated
environment, in a manner consistent with laws and regulations
(including the appropriate use of all available exemptive and
interpretive authority).
---------------------------------------------------------------------------

    \11\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As a national securities exchange, the CBOE is required under
Section 6(b)(1) of the Act \14\ to enforce compliance by its members,
and persons associated with its members, with the provisions of the
Act, Commission rules and regulations thereunder, and its own rules. In
addition, brokers that trade Sprott Options will also be subject to
best execution obligations and FINRA rules.\15\ Applicable exchange
rules also require that customers receive appropriate disclosure before
trading Sprott Options.\16\ Further, brokers opening accounts and
recommending options transactions must comply with relevant customer
suitability standards.\17\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b)(1).
    \15\ See NASD Rule 2320.
    \16\ See CBOE Rule 9.15.
    \17\ See FINRA Rule 2360(b) and CBOE Rules 9.7 and 9.9.
---------------------------------------------------------------------------

    Sprott Options will trade as options under the trading rules of the
CBOE. These rules, among other things, are designed to avoid trading
through better displayed prices for Sprott Options available on other
exchanges and, thereby, satisfy CBOE's obligation under the Options
Order Protection and Locked/Crossed Market Plan.\18\ Series of the
Sprott Options will be subject to exchange rules regarding continued
listing requirements, including standards applicable to the underlying
Sprott Physical Gold Trust. Shares of the Sprott Physical Gold Trust
must continue to be traded through a national securities exchange or
through the facilities of a national securities association, and must
be ``NMS stock'' as defined under Rule 600 of Regulation NMS.\19\ In
addition, the underlying shares must continue to comply with the
Exchange's continued listing standards applicable to Units.\20\ If the
Sprott Physical Gold Trust shares fail to meet these requirements, the
exchanges will not open for trading any new series of the respective
Sprott Options.
---------------------------------------------------------------------------

    \18\ See CBOE Rule 6.81. Specifically, CBOE is a participant in
the Options Order Protection and Locked/Crossed Market Plan.
    \19\ 17 CFR 242.600.
    \20\ See Interpretation and Policy .08 to CBOE Rule 5.4.
---------------------------------------------------------------------------

    CBOE has represented that it has surveillance programs in place for
the listing and trading of Sprott Options. For example, CBOE may obtain
trading information via the ISG from the NYMEX related to any financial
instrument traded there that is based, in whole or in part, upon an
interest in, or performance of, gold. Additionally, the listing and
trading of Sprott Options will be subject to the exchange's rules
pertaining to position and exercise limits \21\ and margin.\22\
---------------------------------------------------------------------------

    \21\ See CBOE Rules 4.11 and 4.12.
    \22\ See CBOE Rule 12.3. See also FINRA Rule 2360(b) and
Commentary .01 to FINRA Rule 2360.
---------------------------------------------------------------------------

III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\23\ that the propose rule change (SR-CBOE-2010-043) be, and is
hereby, approved.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-16997 Filed 7-12-10; 8:45 am]
BILLING CODE 8010-01-P


[Federal Register: November 20, 2008 (Volume 73, Number 225)]
[Notices]
[Page 70398-70400]
[DOCID:fr20no08-107]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58943; File No. SR-Phlx-2008-78]

Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating
to Temporarily Increasing the Number of Additional Quarterly Option
Series in Exchange-Traded Fund Options

November 13, 2008.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 12, 2008, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange, pursuant to Section 19(b)(1) of the Act \3\ and Rule
19b-4 thereunder,\4\ proposes to amend Phlx Rule 1012, Series of
Options Open for Trading, to temporarily increase the number of
additional Quarterly Option Series (``QOS'') in exchange-traded fund
(``ETF'') options from sixty (60) to one hundred (100) that may be
added by the Exchange pursuant to Phlx's QOS pilot program (the ``Pilot
Program'') \5\.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(b)(1).
    \4\ 17 CFR 240.19b-4.
    \5\ Phlx's Pilot Program was established in 2007, see Securities
Exchange Act Release No. 55301 (February 15, 2007), 72 FR 8238
(February 23, 2007)(SR-Phlx-2007-08), and extended through July 10,
2009, see Securities Exchange Act Release No. 58039 (June 26, 2008),
73 FR 38284 (July 3, 2008)(SR-Phlx-2008-44). The American Stock
Exchange LLC (``AMEX''), the Boston Stock Exchange, Inc. (``BSE''),
the Chicago Board Options Exchange, Incorporated (``CBOE''), the
International Stock Exchange LLC (``ISE''), the Nasdaq Stock Market
LLC (``NOM''), and NYSEArca, Inc. (``NYSEArca,'' formerly the
Pacific Stock Exchange, Inc. or ``PCX'') have similar pilot programs
(the pilot programs, together with Phlx's Pilot Program, are
together known as the ``QOS Pilot Programs'').
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's
Web site at http://www.phlx.com/regulatory/reg_rulefilings.aspx.

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 and
discussed any comments it received on 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
    This proposed rule change is based on a recent Chicago Board
Options Exchange, Incorporated (``CBOE'') filing.\6\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 58887 (October 30,
2008), 73 FR 66083 (November 6, 2008)(SR-CBOE-2008-111).
---------------------------------------------------------------------------

    The purpose of this proposed rule change is to temporarily increase
the number of additional QOS in ETF options from sixty (60) to one
hundred (100) that may be added by the Exchange. To effect this change,
the Exchange is proposing to add new subparagraph (h) to Commentary .08
of its Rule 1012.
    Because of the current, unprecedented market conditions, the
Exchange has received requests from market participants to add lower
priced strikes for QOS in the Energy Select Sector SPDR (``XLE''), the
DIAMONDS Trust, Series 1 (``DIA'') and the Standard and Poor's
Depositary Receipts/SPDRs (``SPY''). For example, for December 2008
expiration, there is demand for strikes (a) ranging from $20 up through
and including $40 for XLE, (b) ranging from $60 up through and
including $75 for DIA, and (c) ranging from $74 up through and
including $85 for SPY. These strikes are much lower than those
currently listed for which there is open interest.
    However, under current Commentary .08 to Phlx Rule 1012, the
Exchange cannot honor these requests because the maximum number of
additional series, sixty (60), has already been listed. The Exchange is
therefore seeking to temporarily increase to one hundred (100) the
number of additional QOS that may be added. The increase of additional
series would be permitted immediately for expiration months currently
listed and for expiration months added throughout the last quarter of
2008, including the new expiration month added after December 2008
expiration. The Exchange believes that this proposal is reasonable and
will allow for more efficient risk management. The Exchange believes
this proposal will facilitate the functioning of the Exchange's market
and will not harm investors or the public interest.
    The Exchange believes that user demand and the recent downward
price movements in the underlying ETFs warrant a temporary increase in
the number of strikes for all QOS in ETF options. Currently, the
Exchange list QOS in five ETF options: (1) iShares Russell 2000Index
Fund (``IWM''); (2) Nasdaq-100 Index Tracking Stock (``QQQQ''); (3)
SPY; (4) DIA; and (5)
XLE. The chart below provides the historical closing prices of these
ETFs over the past couple of months:

----------------------------------------------------------------------------------------------------------------
                ETF                   10/27/08     10/13/08     10/6/08      9/30/08      8/29/08      7/31/08
----------------------------------------------------------------------------------------------------------------
IWM...............................        44.86        56.98        59.72        68.00        73.87        71.32
QQQQ..............................        28.69        35.13        34.86        38.91        46.12        45.46
SPY...............................        83.95       101.35       104.72       115.99       128.79       126.83
DIA...............................        80.26        95.03        99.90       108.36       115.45       113.70
XLE...............................        40.86        50.55        54.89        63.30        74.65        74.40
----------------------------------------------------------------------------------------------------------------

    The additional series will enable the Exchange to list in-demand,
lower priced strikes.
    It is expected that other options exchanges that have adopted the
QOS Pilot Program will submit similar proposals.\7\
---------------------------------------------------------------------------

    \7\ See e.g., Securities Exchange Act Release No. 58926
(November 10, 2008) (SR-ISE-2008-82).
---------------------------------------------------------------------------

    The Exchange represents that it has the necessary systems capacity
to support the new options series that will result from this proposal.
Further, as proposed, the Exchange notes that these series would
temporarily become part of the pilot program and will be considered by
the Commission when the Exchange seeks to renew or make permanent the
Pilot Program in the future. In addition, the Exchange states that in
the event that current market volatility continues, it may seek to
continue (through a rule filing) the time period during which the
additional series proposed by this filing may be added.
2. Statutory Basis
    Because the rule proposal is responsive to the current,
unprecedented market conditions, is limited in scope as to QOS in ETF
options and as to time, and because the additional new series can be
added without presenting capacity problems, the Exchange believes the
rule proposal is consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange and, in

particular, the requirements of Section 6(b) of the Act.\8\
Specifically, the Exchange believes that the proposed rule change is
consistent with the Section 6(b)(5) of the Act \9\ requirements that
the rules of an exchange be designed to promote just and equitable
principles of trade, to prevent fraudulent and manipulative acts and,
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 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 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 rule does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; or (iii) 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, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6)
thereunder.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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 Commission deems this requirement to be met.
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the operative delay
to permit the proposed rule change to become operative prior to the
30th day after filing. The Commission has determined that waiving the
30-day operative delay of the Exchange's proposal is consistent with
the protection of investors and the public interest because such waiver
will enable the Exchange to better meet customer demand in light of
recent increased volatility in the marketplace.\12\ Therefore, the
Commission designates the proposal operative upon filing.
---------------------------------------------------------------------------

    \12\ 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).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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_ADDRESS>Please include
File No. SR-Phlx-2008-78 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2008-78. 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, 100 F Street, NE.,
Washington, DC 20549, 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 No. SR-Phlx-2008-78 and should be
submitted on or before December 11, 2008.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-27578 Filed 11-19-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 89 (Tuesday, May 8, 2012)]
[Notices]
[Pages 27106-27107]
[FR Doc No: 2012-11001]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66904; File No. SR-NYSEArca-2012-40]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Implementing a Fee
Change for the Floor Broker Electronic Order Capture Device

May 2, 2012.
    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 April 30, 2012, 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, II, and III below, which
Items have been prepared by the self-regulatory organization. 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\ 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 the NYSE Arca Options Fee Schedule
(``Fee Schedule'') to revise the fee for the Floor Broker Electronic
Order Capture Device (``EOC Device''). The text of the proposed rule
change is available at the Exchange, the Commission's Public Reference
Room, and www.nyse.com.

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 proposes to amend the Fee Schedule to revise the fee
for the EOC Device.

    The EOC Device is used by Floor Brokerage operations to comply with
the requirements of NYSE Arca Rule 6.67, Order Format and System Entry
Requirements, namely, the systemization of order details and electronic
tracking of all events in the life of an order, up to and including
cancellation or execution. The Exchange's current Electronic Order
Capture System \3\ platform was implemented in February 2010, and the
$175 monthly fee for the new EOC Devices began being charged on March
1, 2010.
---------------------------------------------------------------------------

    \3\ See NYSE Arca Rule 6.1(b)(39).
---------------------------------------------------------------------------

    Effective May 1, 2012, the Exchange proposes to cap the current
monthly fee of $175 for each EOC Device at $4,200, which represents 24
months of charges. If any OTP Holder has paid more than $4,200 as of
that date, the Exchange will provide a credit so that such OTP Holder
will be charged the same total amount as other OTP Holders.\4\ If an
OTP Holder requests a new EOC Device or the Exchange replaces the
current Electronic Order Capture System platform, the OTP Holder will
be charged $175 per month for each new EOC Device until the $4,200 cap
is reached again.
---------------------------------------------------------------------------

    \4\ For example, if an OTP Holder began using an EOC Device on
March 1, 2010, the OTP Holder will have paid a total of $4,550 by
May 1, 2012. The Exchange will credit such an OTP Holder $350.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \5\ of the Securities Exchange Act
of 1934 (the ``Act''), in general, and Section 6(b)(4) \6\ of the Act,
in particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and other persons using its facilities and is not unfairly
discriminatory. The Exchange believes that it is reasonable to
implement a cap that takes into account (1) the value to the OTP Holder
of the equipment, installation, and maintenance provided by the
Exchange, and (2) the cost to the Exchange of providing such resources
and services. In addition, the Exchange believes that it is reasonable
to resume the monthly fee if an OTP Holder requests a new EOC Device or
the Exchange replaces the current platform because the Exchange will be
incurring new costs to provide a new EOC Device. The Exchange also
believes that the cap is equitably allocated and not unfairly
discriminatory because it will apply to all OTP Holders beginning on
the same date and take into account payments made for EOC Devices
currently used. The Exchange recognizes that certain OTP Holders have
been using an EOC Device since February 2010, when the most recent
Electronic Order Capture System was implemented, and will provide a
credit so that all OTP Holders using the current EOC Device will be
subject to the same total fees. As such, the Exchange believes that the
proposed change is reasonable, equitable, and not unfairly
discriminatory.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \7\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \8\ thereunder, because it establishes a due, fee, or other charge
imposed by the NYSE Arca.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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.

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_ADDRESS>Please include
File Number SR-NYSEArca-2012-40 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-2012-40. 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 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-2012-40 and should
be submitted on or before May 29, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-11001 Filed 5-7-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: December 4, 2006 (Volume 71, Number 232)]
[Notices]
[Page 70374-70375]
[DOCID:fr04de06-47]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RP96-312-160]

Tennessee Gas Pipeline Company; Notice of Negotiated Rate
Amendments

November 24, 2006.
    Take notice that on November 20, 2006, Tennessee Gas Pipeline
Company (Tennessee) tendered for filing certain exhibits to two
amendments to two Gas Transportation Agreements, dated November 1,
2002, between Tennessee and Calpine Energy Services L.P. pursuant to
Tennessee's Rate Schedule FT-A. Tennessee requests the amendments to
the Negotiated Rate Agreements to be effective on December 1, 2006.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as

appropriate. Such notices, motions, or protests must be filed in
accordance with the provisions of Section 154.210 of the Commission's
regulations (18 CFR 154.210). Anyone filing an intervention or protest
must serve a copy of that document on the Applicant. Anyone filing an
intervention or protest on or before the intervention or protest date
need not serve motions to intervene or protests on persons other than
the Applicant.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://www.ferc.gov.
 Persons unable to file electronically should submit an

original and 14 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426.
    This filing is accessible online at http://www.ferc.gov, using the

``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive e-mail
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please e-mail
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For

TTY, call<PHONE_NUMBER>.

Magalie R. Salas,
Secretary.
 [FR Doc. E6-20460 Filed 12-1-06; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 184 (Wednesday, September 23, 2015)]
[Notices]
[Pages 57405-57406]
[FR Doc No: 2015-24217]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meeting

    Notice is hereby given, pursuant to the provisions of the
Government in the Sunshine Act, Public Law 94-409, that the Securities
and Exchange Commission will hold a Closed Meeting on Friday, September
25, 2015 at 11:00 a.m.
    Commissioners, Counsel to the Commissioners, the Secretary to the
Commission, and recording secretaries will attend the Closed Meeting.
Certain staff members who have an interest in the matters also may be
present.
    The General Counsel of the Commission, or her designee, has
certified that, in her opinion, one or more of the exemptions set forth
in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR
200.402(a)(3), (5), (7), 9(ii) and (10), permit consideration of the
scheduled matter at the Closed Meeting.
    Commissioner Piwowar, as duty officer, voted to consider the items
listed for the Closed Meeting in closed session.
    The subject matter of the Closed Meeting will be:
    Institution of injunctive actions;
    Institution and settlement of administrative proceedings; and
    Other matters relating to enforcement proceedings.

    At times, changes in Commission priorities require alterations in
the scheduling of meeting items.
    For further information and to ascertain what, if any, matters have
been added, deleted or postponed, please contact the Office of the
Secretary at<PHONE_NUMBER>.

    Dated: September 18, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015-24217 Filed 9-21-15; 11:15 am]
 BILLING CODE 8011-01-P


Section 4.0 4  1 4  Gene Flow and Weediness 4  Comment Excerpts Commenter Name: Tom Patchett Commenter Organization Name: Tom Patchett Comment Number: 30509 014000 Excerpt Number: 1 Excerpt Text: I am opposed to the use of biotech expansion until some problems are properly addressed. This technology is causing the bulk of the corn to become infected with its properties whether we wish it or not. Look at the Star Link infection in our corn fields.

Please DO NOT APPROVE more use of this technology until it is found how to stop the spread of the pollen. As a member of The National Corn Growers Association and a seed corn grower it is imperative to stop this until more questions are answered.

Commenter Name: Ron Fitchorn Commenter Organization Name: Illinois Corn Growers Association Comment Number: 30509 104000 Excerpt Number: 5 Excerpt Text: Pollen drift has been a key concern. Even with pre commercial approval, pollen drift from test plots and hybrid seed fields could impact neighboring fields. It is very important that adequate safeguards are implemented to limit cross pollination.

Commenter Name: Jim Diamond Commenter Organization Name: The Sierra Club Comment Number: 30509 105000 Excerpt Number: 3 Excerpt Text: For instance, the Starlink episode has shown that genetic material can't be simply recalled but will persist. The fact that many novel genetic " events" may be introduced in the years ahead, and the possible interactions among them, needs to be taken into account  not just the major intended modification in single cases. Systems which are relatively stable with only a few added genes may turn out to be far less stable in a long term context with multiple genetic " events" subject to random reassortment.

EPA Response: The above three commenters are concerned with pollen mediated gene flow from transgenic maize to nontransgenic commercial maize. Under FFDCA and FIFRA, the transfer of a transgene afforded the appropriate food tolerance or exemption from the requirement of a food tolerance and a FIFRA Section 3 registration does not constitute an adverse effect on man or the environment or result in the food made from such crops being considered as adulterated. The movement of pollen to neighboring fields is a natural consequence of crop production and inevitably occurs in reciprocal fashion. Cross pollination of crops by Section 4.0 4  2 pollen from non desired genotypes does not constitute a violation of the laws governing plant incorporated protectants, including MON 863. EPA imposes appropriate confinement conditions on field tests and data gathering under experimental use permits ( EUP) to prohibit pollen flow before an appropriate food tolerance is issued. If the means to prevent pollen mediated gene flow are not practical or biologically possible, the EUP is not approved. There are no sexually compatible relatives of maize in the United States, its possessions or territories. Hence, the establishment of transgenes from transgenic maize in the environment is not biologically plausible within this geographic area.

Commenter Name: Charles Benbrook Commenter Organization Name: Union of Concerned Scientists Comment Number: 30509 115000 Excerpt Number: 37 Excerpt Text: The scientists studied gene flow from transgenic sugar beets to Acinetobacter species ( common soil bacteria) and found, for the first time, " transformation of naturally competent bacteria by transgenic plant DNA, even with plant homogenates...." They have also shown that Acinetobacter bacteria that have taken up an antibiotic resistance gene from a transgenic plant can persist up to two years in soil ( Gebhard and Smalla, 1999).

EPA Response: The study referred to here was actually published in 1998 ( Gebhard and Smalla, Appl. Env. Micro. 64: 1550 1554). While the authors did demonstrate the homologous recombination of an nptII gene from a plant transgene into a naturally competent strain of Acinetobacter ( BD413), the experiments were performed under optimized laboratory conditions and may or may not reflect the potential for horizontal gene flow from transgenic plants to soil bacteria. Furthermore, the detection of this transfer on Mueller Hinton Agar plates was reliant on the presence of homologous sequences being present in the recipient organism. As the authors point out, "... our findings should not affect the evaluation of antibiotic resistance genes such as nptII as markers in transgenic plants. First, promoter sequences, such as NOS or TR1/ TR2 are not active in most bacteria. Thus, transfer of the nptII gene from transgenic plants would not endow the recipient bacteria with a kanamycin resistance phenotype. Secondly, most of the antibiotic resistance genes used as marker genes are widely disseminated in environmental bacteria." It was further concluded that if transformation were to take place in the soil, frequencies would likely be much lower than those observed under these laboratory conditions. While DNA may persist in the soil for up to two years attached to a clay matrix, it is less than clear that this DNA is available to other organisms or completely protected from nucleases which might degrade it. When soil organisms of all kind perish, their DNA is also potentially added to the mix of adsorbed nucleic acid which may or may not be accessible to soil microbes. Additionally, some Acinetobacter spp. or at least some strains of these species appear to be extreme cases in the sense that they are more accepting of foreign DNA and maintain a competency ( i. e., ability to take up DNA) at greater rates than other soil bacteria. Most organisms rely on restriction systems to exclude foreign DNA.

Commenter Name: Douglas Tallamy Commenter Organization Name: University of Delaware  Department of Entomology and Applied Ecology Comment Number: 30509 117000 Section 4.0 4  3 Excerpt Number: 1 Excerpt Text: Risk of Invasiveness One oft cited fear is that genetically enhanced corn will invade our natural ecosystems in much the same way that nonnative plant species have and with many of the same negative effects. Or it if doesn't escape cultivation directly, its genes will through cross pollination with close relatives. Nonsense! Corn is one of the most genetically modified crops in the world; only its modifications were achieved through thousands of years of intentional breeding that altered many thousands of genes rather than a single generation of change from the introduction of a single gene package. It is so different from its closest ancestors that plant taxonomists are still unclear about what these relatives are. Corn is, in effect, a man made species used world wide, yet there are no records of it escaping cultivation and out competing native plants. It is simply too dependent upon man's input to survival. There are also no records of corn genes ever entering the genome of another plant through cross pollination. This could only occur if close relatives grew within a few feet of corn plantings. However, the grasses from which corn was derived are either extinct in the wild or confined to a narrow range in Central America. There is absolutely no threat of BT genes moving from genetically engineered corn to our native flora.

EPA Response: There are no sexually compatible relatives of maize in the United States, its possessions or territories as stated above. Hence, the establishment of transgenes from transgenic maize in the environment is not biologically plausible within this geographic area as the commenter stated. The only evidence of corn crosspollinating another plant outside its genus are directed crosses between certain species of Tripsacum, however, these generally need to be performed under laboratory or controlled greenhouse conditions and with specific varieties of both species in order for any genetic exchange to occur. When maize serves as the female parent the cross is more likely to succeed. Even then, it is common for the maize genome to be lost in subsequent generations due to genetic incongruities between the two plants.


Chemicals of Concern Not In DRAS Database

Chemical Specific Inputs for

2-Hexanone (591-78-6)

Parameter	Reference and Explanation	Value

	Chemical/Physical Properties

	MW (g/mole)	CRC Handbook (2008-2009)	100.158

Tm (K)	CRC Handbook (2008-2009)	217.65

Vp (atm)	Handbook of Physical Properties of Organic Chemicals. 1997. CRC Press	1.53E-04

S (mg/l)	Handbook of Physical Properties of Organic Chemicals. 1997. CRC Press	1.75E+04

H (atm•m3/mol)	Handbook of Physical Properties of Organic Chemicals. 1997. CRC Press	8.74E-07

Da (cm2/s)

8.10E-02

Dw (cm2/s)

1.03E-05

Kow (unitless)	Hansch, C et al. (1995)	1.38E+00

Koc (ml/g)

ND

Kds (cm3/g)

ND

Kdsw (l/kg)

ND

	Dermal Exposure Factors

	Kp (cm/hr)

ND

t

ND

t*

ND

B

ND

	Biotransfer Factors for Animals

	BCFfish

(l/kg FW tissue)

ND

BCFfish (l/kg FW)

ND

Parameter	Reference and Explanation	Value

	Health Benchmarks

	RfD (mg/kg/day)	U.S. EPA. IRIS Toxicological Review of 2-Hexanone (External Review Draft) 2008.	2.00E-01

Oral CSF (mg/kg/day)-1

ND

RfC (mg/m3)	U.S. EPA. IRIS Toxicological Review of 2-Hexanone (External Review Draft) 2008.	2.00E-01

Inhalation CSF

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S for SI	DRAS MEK & MIBK Value	3.18E+00

Note:  NA = Not Applicable

           ND = No Data Available


Comment Info: =================

General Comment:Thank you for your time. We all greatly appreciate it.