Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange, pursuant to Section 19(b)(1) of the Act
The text of the proposed rule change is available on the Exchange's Web site at
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.
The purpose of the proposed rule change is to amend Commentary .01 to Rule 1009 to modify the criteria for listing options on an underlying covered security as defined in Section 18(b)(1)(A) of the Securities Act of 1933 (hereinafter "covered security(ies)"). The Exchange proposes to modify Rule 1009, Commentary .01(4)(i) to permit the listing of an option on an underlying covered security that has a market price of at least $3.00 per share on the business day immediately preceding the date on which the Exchange submits a certificate to the Options Clearing Corporation ("OCC") for listing and trading. The Exchange does not intend to amend any other criteria for listing options on an underlying security in Rule 1009 and accompanying Commentary.
Currently the underlying covered security must have a closing market price of $3.00 per share for five consecutive business days preceding the date on which the Exchange submits a listing certificate to OCC. In the proposed amendment, the market price will still be measured by the closing price reported in the primary market in which the underlying covered security is traded; however, the measurement will be the price on the business day immediately preceding the submission of the listing certificate, instead of the prior five consecutive business days.
The Exchange acknowledges that the Options Listing Procedures Plan
The Exchange's current provision of the "look back" period of five consecutive business days assumed the five-day period was necessary to protect against attempts to manipulate the market.
The proposed change will apply to all covered securities that meet the criteria of Exchange Rule 1009. Pursuant to Exchange Rule 1009, the Exchange Board of Directors (the "Exchange Board") establishes guidelines to be considered by the Exchange in evaluating potential underlying securities for Exchange option transactions.
Just as important, investors have requested that the Exchange offer options on initial public offerings sooner than the six business days time frame in order to provide the opportunity to hedge existing positions post-haste. As such, the Exchange believes the proposed amendment will allow the Exchange to provide investors with the options that are most useful and demanded by them without sacrificing any investor protections.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
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.
No written comments were either solicited or received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
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. The Commission is asking that commenters address the merit of Phlx's statements in support of the proposed rule change, in addition to any other comments they may wish to submit about the proposed rule change. The Commission notes that, prior to 2003, in order to qualify as underlying securities for options traded on national securities exchanges, covered securities were required to have a closing market price of at least $7.50 per share for the majority of business days during the three calendar months preceding the date of selection.
Comments may be submitted by any of the following methods:
* Use the Commission's Internet comment form (
* Send an email to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.