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Notice
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Exchange Fees and Charges
A Notice by the Securities and Exchange Commission on
Document Details
Information about this document as published in the Federal Register.
- Printed version:
- Publication Date:
- 09/15/2006
- Agency:
- Securities and Exchange Commission
- Document Type:
- Notice
- Document Citation:
- 71 FR 54547
- Page:
- 54547-54548 (2 pages)
- Agency/Docket Numbers:
- Release No. 34-54417
- File No. SR-NYSEArca-2006-52
- Document Number:
- E6-15299
Document Details
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- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
- II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
- A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
- 1. Purpose
- 2. Statutory Basis
- B. Self-Regulatory Organization's Statement on Burden on Competition
- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
- III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
- IV. Solicitation of Comments
- Electronic Comments
- Paper Comments
- Footnotes
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Published Document
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Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] and Rule 19b-4 thereunder,[2] notice is hereby given that on August 31, 2006, the NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) 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 Exchange. The Exchange has designated the proposed rule change as one establishing or changing a due, fee, or other charge, pursuant to Section 19(b)(3)(A)(ii) of the Act [3] and Rule 19b-4(f)(2) thereunder,[4] which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend its Schedule of Fees and Charges in order to extend the pilot program (“Pilot Program”) that applies to Option Strategy Executions until March 1, 2007. The Exchange also proposes at this time to correct a minor typographical error on the schedule. The text of the proposed rule change is available on NYSE Arca's Web site at (http://www.nysearca.com), at the Office of the Secretary at NYSE Arca, 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 proposal. 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 represents that the purpose of this proposed rule change is to extend the Pilot Program that applies to Option Strategy Executions until March 1, 2007. The transactions included as part of the Pilot Program include reversals and conversions,[5] dividend spreads,[6] box spreads,[7] short stock interest spreads,[8] and merger spreads.[9] Because the referenced Options Strategy Transactions are generally executed by professionals whose profit margins are generally narrow, the Pilot Program caps the transaction fees associated with such executions at $1,000 per strategy execution that are executed on the same trading day in the same option class. In addition, there is also a monthly cap of $50,000 per initiating firm for all strategy executions. The Exchange believes that by keeping fees low, the Start Printed Page 54548Exchange will be able to attract liquidity by accommodating these transactions. Extending the Pilot Program until March 1, 2007 will allow the Exchange to keep these fees low and thus continue to attract liquidity.
OTP Holders and OTP Firms who wish to benefit from the fee cap will be required to submit to the Exchange forms with supporting documentation (e.g., clearing firm transaction data) to qualify for the cap.
2. Statutory Basis
The Exchange believes that the proposal is consistent with Section 6(b) of the Act,[10] in general, and Section 6(b)(4),[11] in particular, in that it provides for the equitable allocation of dues, fees, and other charges among its members.
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
Written comments on the proposed rule change were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act [12] and subparagraph (f)(2) of Rule 19b-4 thereunder [13] because it establishes or changes a due, fee, or other charge. At any time within 60 days of the filing of the 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 rule-comments@sec.gov. Please include File Number SR-NYSEArca-2006-52 on the subject line.
Paper Comments
- Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2006-52. 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. Copies of such filing also will be available for inspection and copying at the principal office of NYSE Arca. 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-2006-52 and should be submitted on or before October 6, 2006.
Start SignatureFor the Commission, by the Division of Market Regulation, pursuant to delegated authority.[14]
Nancy M. Morris,
Secretary.
Footnotes
1. 15 U.S.C. 78s(b)(1).
Back to Citation2. 17 CFR 240.19b-4.
Back to Citation3. 15 U.S.C. 78s(b)(3)(A)(ii).
Back to Citation4. 17 CFR 240.19b-4(f)(2).
Back to Citation5. Reversals and conversions are transactions that employ calls, puts and the underlying stock to lock in a nearly risk free profit. Reversals are established by combining a short stock position with a short put and a long call position that shares the same strike and expiration. Conversions employ long positions in the underlying stock that accompany long puts and short calls sharing the same strike and expiration.
Back to Citation6. Dividend spreads are trades involving deep in the money options that exploit pricing differences arising around the time a stock goes ex-dividend.
Back to Citation7. Box spreads is a strategy that synthesizes long and short stock positions to create a profit. Specifically, a long call and short put at one strike is combined with a short call and long put at a different strike to create synthetic long and synthetic short stock positions, respectively.
Back to Citation8. A short stock interest spread is a spread that uses two deep in the money put options of the same class followed by the exercise of the resulting long position in order to establish a short stock interest arbitrage position.
Back to Citation9. A merger spread is a transaction executed pursuant to a strategy involving the simultaneous purchase and sale of options of the same class and expiration date, but with different strike prices followed by the exercise of the resulting long option position.
Back to Citation10. 15 U.S.C. 78f(b).
Back to Citation11. 15 U.S.C. 78f(b)(4).
Back to Citation12. 15 U.S.C. 78s(b)(3)(A)(ii).
Back to Citation13. 17 CFR 240.19b-4(f)(2).
Back to Citation14. 17 CFR 200.30-3(a)(12).
Back to Citation[FR Doc. E6-15299 Filed 9-14-06; 8:45 am]
BILLING CODE 8010-01-P