Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange is proposing Amendment No. 1 to SR–NYSEAmex-2010–40 in order to revise the Statutory Basis section and to adopt rules extending the maximum term of FLEX Index and FLEX Equity Options, and to establish a new Pilot Program to permit FLEX Options to trade with no minimum size requirement, and also to correct a reference within the rule text. A copy of this filing is available on the Exchange's Web site at
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.
NYSE Amex is filing this Amendment No. 1 in order to revise the Statutory Basis section of the 19b–4 with corresponding changes to the Exhibit 1. The Exchange is not proposing any revisions to the Exhibit 5. This amendment replaces the original filing in its entirety.
The purpose of the filing is to modify Rule 903G to extend the maximum term of FLEX Index and FLEX Equity options to the same term permissible on NYSE Arca Inc. (“Arca”); and replace the minimum value size Pilot Program for FLEX Equity options with a new Pilot Program to eliminate minimum value sizes for both FLEX Equity options and FLEX Index options by adopting rule provisions similar to those in use by the Chicago Board Options Exchange (“CBOE”). The Exchange also proposes to correct a rule reference.
The Exchange is proposing to adopt a provision to allow a maximum term of fifteen years for both FLEX Equity and FLEX Index options, based on a provision in NYSE Arca Rule 5.32(d)(1).
Presently, under an existing Pilot Program, the Exchange has reduced the minimum value size requirements for an opening FLEX Equity transaction to the lesser of 150 contracts or the number of contracts overlying $1 million in underlying securities. An opening FLEX Index transaction requires a minimum size of $10 million Underlying Equivalent Value in the case of Broad Stock Index Group FLEX Index Options and $5 million Underlying Equivalent Value in the case of Stock Index Industry Group FLEX Index Options. The Exchange proposes to replace the existing minimum size Pilot Program with a new pilot program that eliminates the minimum value size requirements for both FLEX Equity and FLEX Index options. If, in the future, the Exchange proposes an extension of the new minimum value size Pilot Program, or should the Exchange propose to make the new Program permanent, the Exchange will submit, along with any filing proposing such amendments to the Program, a Pilot Program report that would provide an analysis of the Pilot covering the period during which the Program was in effect. This minimum value size report would include: (i) data and analysis on the open interest and trading volume in (a) FLEX Equity Options with opening transaction with a minimum size of 0 to 249 contracts and less than $1 million in underlying value; (b) FLEX Index Options with opening transaction with a minimum opening size of less than $10 million in underlying equivalent value; and (ii) analysis on the types of investors that initiated opening FLEX Equity and Index Options transactions (
The Exchange notes that any positions established under this Pilot would not be impacted by the expiration of the Pilot. For example, a 10-contract FLEX Equity Option opening position that overlies less than $1 million in the underlying security and expires in January 2015 could be established during the Pilot. If the Pilot Program were not extended, the position would continue to exist and any further trading in the series would be subject to the minimum value size requirements for continued trading in that series. The proposed minimum opening transaction size elimination is based on a similar pilot approved for use on CBOE.
In preparing this filing the Exchange discovered an incorrect rule reference in Rule 903G(c)(2). The reference is to Rule 952 that has been eliminated and replaced with Rule 960NY; as such we are amending our rules to make this correction.
The Exchange believes the proposed rule change is consistent with Section 6(b)
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.
No written comments were solicited or received with respect to the proposed rule change.
Because the foregoing proposed rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) 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, it has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b–4(f)(6) normally may not become operative prior to 30 days after the date of filing.
The Commission believes that waiving the 30-day operative delay with respect to the proposed rule change to the maximum term of FLEX options is consistent with the protection of investors and the public interest. The Commission notes that this proposed rule change will make the Amex rule substantially similar to the corresponding provisions of the Arca and CBOE rules, and may provide investors with greater flexibility when conducting transactions in FLEX options.
The Commission has also considered NYSE Amex's request to waive the 30-day operative delay with respect to the minimum size pilot. Because, however, the Commission does not believe, practically speaking, that a pilot should retroactively commence, the Commission is only waiving the operative delay as of the date of this notice for the reasons discussed below.
The Commission believes that shortening the 30-day operative delay to allow the commencement of the pilot as of the date of this notice is consistent with the protection of investors and the public interest. The Commission notes that the proposed rule change is substantially similar to a pilot that was previously approved by the Commission and is currently in existence for CBOE.
At any time within 60 days of the filing of Amendment No. 1, 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 the furtherance of the purposes of the Act.
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:
• Use the Commission's Internet comment form (
• Send an e-mail to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.