
[Federal Register: July 10, 2008 (Volume 73, Number 133)]
[Notices]               
[Page 39741-39743]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jy08-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58083; File No. SR-Amex-2008-57]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Quarterly Options Series Pilot Program

July 2, 2008.
    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 June 27, 2008, the American Stock Exchange LLC (``Exchange'' or 
``Amex'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
The Exchange has designated this proposal as non-controversial under 
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend for one year, through July 10, 
2009, its pilot program allowing the listing and trading of options 
series that expire at the close of business on the last business day of 
a calendar quarter (the ``Pilot Program''). The text of the proposed 
rule change is available on the Exchange's Web site (http://
www.amex.com), at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change 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
    The Exchange is proposing to extend the Pilot Program from July 10, 
2008, through and including July 10, 2009.
    The Pilot Program was originally approved by the Commission in July 
2006,\5\ and subsequently extended in July 2007.\6\ The Pilot Program 
permits the Amex to accommodate the listing and trading of options 
series that expire at the close of business on the last business day of 
a calendar quarter (``Quarterly Options Series''). The Exchange as well 
as the other options exchanges recently amended the Pilot Program to 
permit the listing of additional Quarterly Options Series relating to 
exchange-traded fund (``ETF'') shares.\7\
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    \5\ See Securities Exchange Act Release No. 54137 (July 12, 
2006), 71 FR 41283 (July 20, 2006) (SR-Amex-2006-67).
    \6\ See Securities Exchange Act Release No. 56032 (July 9, 
2007), 72 FR 38634 (July 13, 2007) (SR-Amex-2007-66).
    \7\ See Securities Exchange Act Release No. 57581 (March 31, 
2008), 73 FR 18593 (April 4, 2008) (SR-Amex-2008-31) (``Pilot 
Expansion''). The Pilot Expansion permits the listing of additional 
series and establishes a delisting policy for outlying series with 
no open interest.
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    The Exchange submits that Quarterly Options Series are beneficial 
to the marketplace and provide investors an additional risk management 
tool. Amex Rules 900(b)(45) and 900C(c)(26) define ``Quarterly Options 
Series'' as a series of an options class or an index options class, 
respectively, that is approved for listing and trading on the Exchange 
in which the series is opened for trading on any business day and that 
expires at the close of business on the last business day of a calendar 
quarter. Quarterly Options Series are limited to

[[Page 39742]]

options classes that are either stock index options or options on ETF 
shares and can be opened on a business day (``Quarterly Options Opening 
Date''). Commentary .09 to Amex Rule 903 and Amex Rule 903C(a)(iv) set 
forth the requirements for listing such options on the Exchange. 
Specifically, the Exchange lists series that expire at the end of the 
next four consecutive calendar quarters, as well as the fourth quarter 
of the next calendar year.
    The Exchange has submitted a report (``Report'') providing data 
regarding the Pilot Program as required in the original approval of the 
Pilot Program \8\ as amended by the Pilot Expansion.\9\ Under the terms 
of the Pilot Program, the Exchange selected (5) option classes on which 
Quarterly Options Series may be opened on any Quarterly Options Opening 
Date. Also under the terms of the Pilot Program, the Exchange may list 
those Quarterly Options Series on any option class that is selected by 
another securities exchange with a similar Pilot Program under its 
rules.
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    \8\ The Report submitted to the Commission is required to 
include, at a minimum: (1) Data and written analysis on the open 
interest and trading volume in the classes for which Quarterly 
Options Series were opened; (2) an assessment of the appropriateness 
of the option classes selected for the Pilot Program; (3) an 
assessment of the impact of the Pilot Program on the capacity on the 
Amex, OPRA and on market data vendors (to the extent data from 
market data vendors is available); (4) any capacity problems or 
other problems that arose during the operation of the Pilot Program 
and how the Amex addressed such problems; (5) any complaints that 
the Amex received during the operation of the Pilot Program and how 
the Amex addressed them; and (6) any additional information that 
would assist the Commission in assessing the operation of the Pilot 
Program.
    \9\ In connection with the Pilot Expansion (see supra note 7), 
the Commission required that the Report also include an analysis of 
(1) the impact of the additional series on the Exchange's market and 
quote capacity, and (2) the implementation and effects of the 
delisting policy, including the number of series eligible for 
delisting during the period covered by the report, the number of 
series actually de-listed during that period (pursuant to the 
delisting policy or otherwise), and documentation of any customer 
requests to maintain Quarterly Options Series strikes that were 
otherwise eligible for delisting.
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    As noted in the Report, the Exchange has not selected any 
additional ETF or stock index options for the Pilot at this time. As 
the data in the Report indicate, the Amex volume trends in Quarterly 
Options Series as compared to all options in the Pilot securities show 
higher utilization rates throughout the year. Specifically, an 
examination of monthly volume in Quarterly Options Series as compared 
to all options in the Pilot Program securities shows a monthly average 
of 7.5% or 335,383 contracts per month. Notable are the higher 
utilization rates seen in the calendar quarters of December 2007 and 
May 2008 that were 12.94% and 21.53%, respectively. The Exchange 
believes that the December 2007 figures demonstrate that Quarterly 
Options Series increasingly are used by participants looking to hedge 
exposures through the end of a given calendar quarter. With respect to 
the large increase in utilization of Quarterly Options Series during 
May 2008, the data indicate that the primary reason is due to trading 
in Select Energy SPDR options (XLE). The Exchange submits that based on 
greater volatility and price increases in recent months in the energy 
commodities sectors, XLE has concurrently shown increased interest and 
trading by investors.
    In connection with open interest, the Report reveals that, on 
average, Quarterly Options Series account for 15% of total open 
interest in Pilot Program securities. The open interest in Quarterly 
Options Series has generally trended higher during the time period 
evaluated. The December 2007 and March 2008 open interest in Quarterly 
Options Series were markedly higher, at 18.2% and 18.1% of total 
options open interest, respectively.
    Accordingly, the Exchange believes that an extension of the Pilot 
Program for one year, through July 10, 2009, is warranted in order to 
satisfy the institutional demand for such options and provide 
additional flexibility as well as an additional risk management tool to 
investors.
    The Exchange notes that it possesses the adequate systems capacity 
to support the trading of Quarterly Options Series.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of Act \10\ in general and furthers the objectives of 
Section 6(b)(5) of the Act \11\ in particular in that it is 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 facilitating transactions in 
securities, and 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. The Exchange further 
believes that an extension of the Quarterly Options Series Pilot 
Program will benefit the marketplace and continue to provide investors 
additional risk management tools.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change does not 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 Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \12\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has fulfilled this requirement.
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    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 and will promote 
competition because such waiver will allow the Exchange to continue the 
existing Quarterly Options Series Pilot Program without 
interruption.\14\ Therefore, the Commission designates the proposal 
operative upon filing.
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    \14\ 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

[[Page 39743]]

Commission may summarily abrogate the 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 rule-comments@sec.gov. Please include 
File No. SR-Amex-2008-57 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-Amex-2008-57. 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-Amex-2008-57 and should be 
submitted on or before July 31, 2008.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-15636 Filed 7-9-08; 8:45 am]

BILLING CODE 8010-01-P
