Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposes to remove a fee cap on equity options transactions on certain reversals and conversion strategies.
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 remove a fee cap on equity options transactions on certain reversals and conversion strategies. The fee cap was intended to incentivize market participants by capping option transaction fees related to reversal and conversion strategies to encourage trading on the Exchange and the Exchange believes such a fee cap is no longer necessary. 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 are established by combining a long position in the underlying security with a long put and a short call position that shares the same strike and expiration.
The Exchange proposes to eliminate this cap for all market participants relating to option transaction fees in Multiply Listed Options (Section II of the Pricing Schedule) of $500 per day for reversal and conversion strategies executed on the same trading day in the same options class ("Reversal and Conversion Cap"). The Reversal and Conversion Cap applies only to executions occurring on either of the two days preceding the standard options expiration date, which typically was the third Thursday and Friday of every month.
The Exchange believes that its proposal to amend its Pricing Schedule is consistent with Section 6(b) of the Act
The Exchange believes that the proposed elimination of the Reversal and Conversion Cap is reasonable because the Exchange previously capped the option transaction fees in Multiply Listed options for reversals and conversions in an effort to incentivize market participants, but the Exchange believes such an incentive is no longer necessary. The Exchange also believes that this proposal is equitable and not unfairly discriminatory because the Exchange is eliminating the Reversal and Conversion Cap for all members and the Exchange believes that market participants will continue to transact in Multiply Listed options for reversals and conversions.
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.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) 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 email to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.