
[Federal Register: October 1, 2008 (Volume 73, Number 191)]
[Notices]               
[Page 57166-57167]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01oc08-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58630; File No. 4-443]

 
Joint Industry Plan; Order Granting Permanent Approval to 
Amendment No. 2 to the Plan for the Purpose of Developing and 
Implementing Procedures Designed To Facilitate the Listing and Trading 
of Standardized Options

September 24, 2008.

I. Introduction

    On August 12, 2008, August 18, 2008, August 15, 2008, August 13, 
2008, August 8, 2008, August 14, 2008, August 14, 2008, and August 18, 
2008, the American Stock Exchange LLC (``Amex''), the Boston Stock 
Exchange, Inc. (``BSE''), Chicago Board Options Exchange, Incorporated 
(``CBOE''), the International Securities Exchange, LLC (``ISE''), The 
NASDAQ Stock Market LLC (``Nasdaq''), NYSE Arca Inc.

[[Page 57167]]

(``NYSE Arca''), the Philadelphia Stock Exchange, Inc. (``Phlx''), and 
the Options Clearing Corporation (``OCC'') respectively, filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
section 11A of the Securities Exchange Act \1\ of 1934 (``Act'') and 
Rule 608 thereunder,\2\ Amendment No. 2 to the Plan for the Purpose of 
Developing and Implementing Procedures Designed to Facilitate the 
Listing and Trading of Standardized Options (``the Options Listing 
Procedures Plan'' or ``OLPP'').\3\ Amendment No. 2 would provide a 
uniform minimum volume threshold per underlying class to qualify for 
the introduction of a new expiration year of Long-term Equity 
AnticiPation securities (``LEAP'' or ``LEAPS'') options.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ On July 6, 2001, the Commission approved the OLPP, which was 
originally proposed by the Amex, CBOE, ISE, OCC, Phlx, and Pacific 
Exchange, Inc. (k/n/a NYSE Arca). See Securities Exchange Act 
Release No. 44521, 66 FR 36809 (July 13, 2001). On February 5, 2004, 
BSE was added as a sponsor to the OLPP. See Securities Exchange Act 
Release No. 49199, 69 FR 7030 (February 12, 2004). On March 21, 
2008, Nasdaq was added as a sponsor to the OLPP. See Securities 
Exchange Act Release No. 57546 (March 21, 2008), 73 FR 16393 (March 
27, 2008).
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    On August 19, 2008, the Commission issued notice of and approved 
Amendment No. 2 on a temporary basis not to exceed 120 days, and 
solicited comment on the proposal.\4\ The Commission received no 
comment letters in response to the Temporary Approval Order. This order 
approves Amendment No. 2 on a permanent basis.
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    \4\ See Securities Exchange Act Release No. 58385 (August 19, 
2008), 73 FR 50375 (August 26, 2008) (``Temporary Approval Order'').
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II. Description of the Proposal

    Currently, Plan Sponsors may list a new LEAP expiration year at the 
appropriate time without any consideration as to the activity level of 
the class of options. Amendment No. 2 proposes to apply a uniform 
minimum volume threshold per underlying class to qualify for the 
introduction of a new expiration year of LEAP options.
    By agreeing to a minimum volume threshold per underlying class to 
qualify for an additional year of LEAP series, the Plan Sponsors intend 
to mitigate the number of option series available for trading. It is 
intended that this will in turn mitigate quote traffic, because 
Participants will not be submitting quotes in the not-listed series. 
The Plan Sponsors have agreed on a minimum volume threshold of 1,000 
contracts national average daily volume in the preceding three calendar 
months (excluding volume in LEAP and FLEX series) to qualify for the 
introduction of a new LEAP expiration year.\5\
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    \5\ The Plan Sponsors represented that, in 2007, if this 
proposal had been in effect, the industry would not have added a new 
expiration year in 550 underlying securities, which would have 
reduced the overall number of listed series (LEAP and non-LEAP 
series) by 8%. These LEAP series generated only .43% of industry 
trading volume in a typical (non-expiration) sample week.
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    The Amendment does not restrict the introduction of a new LEAP 
expiration year in Index options, or in classes that have had options 
products trading at any exchange for less than six months. In addition, 
it also does not restrict, for a particular options class, the 
introduction of new LEAP series with an expiration year that has 
already been introduced by at least one Exchange.

III. Discussion

    After careful review, the Commission finds that Amendment No. 2 is 
consistent with the requirements of the Act and the rules and 
regulations thereunder.\6\ Specifically, the Commission finds that 
Amendment No. 2 to the OLPP is consistent with section 11A of the Act 
\7\ and Rule 608 thereunder \8\ in that it is in the public interest 
and appropriate for the protection of investors and the maintenance of 
fair and orderly markets. Specifically, the Commission believes that by 
adopting a uniform minimum volume threshold per underlying class to 
qualify for the introduction of a new expiration year for LEAP series, 
the options exchanges should reduce the number of option series 
available for trading, and thus may reduce increases in the options 
quote rate because market participants would not be submitting quotes 
in the not-yet-available LEAP series. Accordingly, the Commission 
believes that it is necessary or appropriate in the public interest, 
for the protection of investors and the maintenance of fair and orderly 
markets, to remove impediments to, and perfect mechanisms of, a 
national market system to approve Amendment No. 2 to the OLPP on a 
permanent basis.
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    \6\ In approving this proposed OPRA Plan Amendment, the 
Commission has considered its impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78k-1.
    \8\ 17 CFR 242.608.
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IV. Conclusion

    It is therefore ordered, pursuant to section 11A of the Act,\9\ and 
Rule 608 thereunder,\10\ that proposed Amendment No. 2 to the OLPP be, 
and it hereby is, approved on a permanent basis.
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    \9\ 15 U.S.C. 78k-1.
    \10\ 17 CFR 242.608.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(29).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-22965 Filed 9-30-08; 8:45 am]

BILLING CODE 8010-01-P
