81 FR 42008 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to SPY Position Limits

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 124 (June 28, 2016)

Page Range		42008-42009
FR Document		2016-15174
Federal Register, Volume 81 Issue 124 (Tuesday, June 28, 2016)
[Federal Register Volume 81, Number 124 (Tuesday, June 28, 2016)]
[Notices]
[Pages 42008-42009]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-15174]



[[Page 42008]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78124; File No. SR-Phlx-2016-68]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to SPY 
Position Limits

June 22, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 10, 2016, NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to extend for another twelve (12) month time 
period the pilot program to eliminate position limits for options on 
the SPDR[supreg] S&P 500[supreg] exchange-traded fund (``SPY ETF'' or 
``SPY''),\3\ which list and trade under the symbol SPY (``SPY Pilot 
Program'').
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    \3\ ``SPDR[supreg],'' ``Standard & Poor's[supreg],'' 
``S&P[supreg],'' ``S&P 500[supreg],'' and ``Standard & Poor's 500'' 
are registered trademarks of Standard & Poor's Financial Services 
LLC. The SPY ETF represents ownership in the SPDR S&P 500 Trust, a 
unit investment trust that generally corresponds to the price and 
yield performance of the SPDR S&P 500 Index.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.cchwallstreet.com/, at the principal 
office of the Exchange, 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 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Rule 1001 
(Position Limits) to extend the current pilot which expires on July 12, 
2016 for an additional twelve (12) month time period to July 12, 2017 
(``Extended Pilot''). This filing does not propose any substantive 
changes to the SPY Pilot Program. In proposing to extend the SPY Pilot 
Program, the Exchange reaffirms its consideration of several factors 
that supported the original proposal of the SPY Pilot Program, 
including (1) the availability of economically equivalent products and 
their respective position limits; (2) the liquidity of the option and 
the underlying security; (3) the market capitalization of the 
underlying security and the related index; (4) the reporting of large 
positions and requirements surrounding margin; and (5) the potential 
for market on close volatility.
    With this proposal, the Exchange submits the SPY report to the 
Commission, which report reflects, during the time period from May 2015 
through May 2016, the trading of standardized SPY options with no 
position limits consistent with option exchange provisions.\4\ The 
report was prepared in the manner specified in the Exchange's prior 
rule filing extending the SPY Pilot Program.\5\ The Exchange notes that 
it is unaware of any problems created by the SPY Pilot Program and does 
not foresee any as a result of the proposed extension. The proposed 
extension will allow the Exchange and the Commission additional time to 
further evaluate the pilot program and its effect on the market.
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    \4\ The report is attached as Exhibit 3.
    \5\ See Securities Exchange Act Release No. 75414 (July 9, 
2015), 80 FR 41538 (July 15, 2015) (SR-PHLX-2015-60).
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    As with the original proposal to establish the SPY Pilot Program, 
the Exchange represents that a SPY Pilot Report will be submitted at 
least thirty (30) days before the end of the Extended Pilot and would 
analyze that period. The Pilot Report will detail the size and 
different types of strategies employed with respect to positions 
established as a result of the elimination of position limits in SPY. 
In addition, the report will note whether any problems resulted due to 
the no limit approach and any other information that may be useful in 
evaluating the effectiveness of the Extended Pilot. The Pilot Report 
will compare the impact of the SPY Pilot Program, if any, on the 
volumes of SPY options and the volatility in the price of the 
underlying SPY shares, particularly at expiration during the Extended 
Pilot. In preparing the report the Exchange will utilize various data 
elements such as volume and open interest. In addition the Exchange 
will make available to Commission staff data elements relating to the 
effectiveness of the SPY Pilot Program. Conditional on the findings in 
the SPY Pilot Report, the Exchange will file with the Commission a 
proposal to extend the pilot program, adopt the pilot program on a 
permanent basis or terminate the pilot. If the SPY Pilot Program is not 
extended or adopted on a permanent basis by the expiration of the 
Extended Pilot, the position limits for SPY options would revert to 
limits in effect prior to the commencement of the SPY Pilot Program.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \7\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change would be 
beneficial to market participants, including market makers, 
institutional investors and retail investors, by permitting them to 
establish greater positions when pursuing their investment goals and 
needs. The Exchange also believes that economically equivalent products 
should be treated in an equivalent manner so as to avoid regulatory 
arbitrage, especially with respect to position limits. Treating SPY and 
SPX options differently by virtue of imposing different position limits 
is inconsistent with the notion of promoting just and equitable 
principles of trade and removing impediments to perfect the mechanisms 
of a free and open market. At the same time, the Exchange believes that 
the elimination of position limits for SPY options would not increase 
market volatility or facilitate the ability to manipulate the market.

[[Page 42009]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. In this regard, the Exchange notes that the rule change is 
being proposed as a competitive response to similar filings that the 
Exchange expects to be filed by other options exchanges. The Exchange 
believes this proposed rule change is necessary to permit fair 
competition among the options exchanges and to establish uniform 
position limits for a multiply listed options class.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \8\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

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 email to [email protected]. Please include 
File Number SR-Phlx-2016-68 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2016-68. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. 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-Phlx-2016-68, and should be 
submitted on or before July 19, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-15174 Filed 6-27-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 124 / Tuesday, June 28, 2016 / Notices 42009

B. Self-Regulatory Organization’s Comments may be submitted by any of SECURITIES AND EXCHANGE
Statement on Burden on Competition the following methods: COMMISSION
The proposed rule change does not Electronic Comments [Release No. 34–78125; File No. SR–BX–
impose any burden on competition that 2016–030]
is not necessary or appropriate in • Use the Commission’s Internet
furtherance of the purposes of the Act. comment form (http://www.sec.gov/ Self-Regulatory Organizations;
In this regard, the Exchange notes that rules/sro.shtml); or NASDAQ BX, Inc.; Notice of Filing and
the rule change is being proposed as a Immediate Effectiveness of Proposed
• Send an email to rule-comments@ Rule Change to Elimination of SPY
competitive response to similar filings sec.gov. Please include File Number SR–
that the Exchange expects to be filed by Position Limits
Phlx–2016–68 on the subject line.
other options exchanges. The Exchange June 22, 2016.
believes this proposed rule change is Paper Comments Pursuant to Section 19(b)(1) of the
necessary to permit fair competition Securities Exchange Act of 1934 (the
among the options exchanges and to • Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities ‘‘Act’’),1 and Rule 19b–4 thereunder,2
establish uniform position limits for a notice is hereby given that on June 10,
multiply listed options class. and Exchange Commission, 100 F Street
2016, NASDAQ BX, Inc. (‘‘Exchange’’)
NE., Washington, DC 20549–1090.
C. Self-Regulatory Organization’s filed with the Securities and Exchange
Statement on Comments on the All submissions should refer to File Commission (‘‘SEC’’ or ‘‘Commission’’)
Proposed Rule Change Received From Number SR–Phlx–2016–68. This file the proposed rule change as described
Members, Participants, or Others number should be included on the in Items I, II, and III below, which Items
subject line if email is used. To help the have been prepared by the Exchange.
No written comments were either Commission process and review your The Commission is publishing this
solicited or received. notice to solicit comments on the
comments more efficiently, please use
III. Date of Effectiveness of the only one method. The Commission will proposed rule change from interested
Proposed Rule Change and Timing for post all comments on the Commission’s persons.
Commission Action Internet Web site (http://www.sec.gov/ I. Self-Regulatory Organization’s
Because the foregoing proposed rule rules/sro.shtml). Copies of the Statement of the Terms of the Substance
change does not: (i) Significantly affect submission, all subsequent of the Proposed Rule Change
the protection of investors or the public amendments, all written statements The Exchange proposes to extend for
interest; (ii) impose any significant with respect to the proposed rule another twelve (12) month time period
burden on competition; and (iii) become change that are filed with the the pilot program to eliminate position
operative for 30 days from the date on Commission, and all written limits for options on the SPDR® S&P
which it was filed, or such shorter time communications relating to the 500® exchange-traded fund (‘‘SPY ETF’’
as the Commission may designate, it has proposed rule change between the or ‘‘SPY’’),3 which list and trade under
become effective pursuant to Section Commission and any person, other than the symbol SPY (‘‘SPY Pilot Program’’).
19(b)(3)(A)(iii) of the Act 8 and those that may be withheld from the The text of the proposed rule change
subparagraph (f)(6) of Rule 19b–4 public in accordance with the is available on the Exchange’s Web site
thereunder.9 provisions of 5 U.S.C. 552, will be at http://
At any time within 60 days of the available for Web site viewing and nasdaqomxbx.cchwallstreet.com/, at the
filing of the proposed rule change, the printing in the Commission’s Public principal office of the Exchange, and at
Commission summarily may the Commission’s Public Reference
Reference Room, 100 F Street NE.,
temporarily suspend such rule change if Room.
Washington, DC 20549 on official
it appears to the Commission that such business days between the hours of II. Self-Regulatory Organization’s
action is: (i) Necessary or appropriate in 10:00 a.m. and 3:00 p.m. Copies of such Statement of the Purpose of, and
the public interest; (ii) for the protection filing also will be available for Statutory Basis for, the Proposed Rule
of investors; or (iii) otherwise in inspection and copying at the principal Change
furtherance of the purposes of the Act. office of the Exchange. All comments In its filing with the Commission, the
If the Commission takes such action, the received will be posted without change; Exchange included statements
Commission shall institute proceedings the Commission does not edit personal concerning the purpose of and basis for
to determine whether the proposed rule identifying information from the proposed rule change and discussed
should be approved or disapproved. submissions. You should submit only any comments it received on the
IV. Solicitation of Comments information that you wish to make proposed rule change. The text of these
available publicly. All submissions statements may be examined at the
Interested persons are invited to places specified in Item IV below. The
should refer to File Number SR–Phlx–
submit written data, views, and Exchange has prepared summaries, set
2016–68, and should be submitted on or
arguments concerning the foregoing, forth in sections A, B, and C below, of
before July 19, 2016.
including whether the proposed rule the most significant aspects of such
change is consistent with the Act. For the Commission, by the Division of statements.
asabaliauskas on DSK3SPTVN1PROD with NOTICES

Trading and Markets, pursuant to delegated
8 15 U.S.C. 78s(b)(3)(a)(iii). authority.10 1 15 U.S.C. 78s(b)(1).
9 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– Brent J. Fields, 2 17 CFR 240.19b–4.
4(f)(6) requires a self-regulatory organization to give 3 ‘‘SPDR®,’’ ‘‘Standard & Poor’s®,’’ ‘‘S&P®,’’ ‘‘S&P
Secretary.
the Commission written notice of its intent to file 500®,’’ and ‘‘Standard & Poor’s 500’’ are registered
the proposed rule change at least five business days [FR Doc. 2016–15174 Filed 6–27–16; 8:45 am] trademarks of Standard & Poor’s Financial Services
prior to the date of filing of the proposed rule BILLING CODE 8011–01–P LLC. The SPY ETF represents ownership in the
change, or such shorter time as designated by the SPDR S&P 500 Trust, a unit investment trust that
Commission. The Exchange has satisfied this generally corresponds to the price and yield
requirement. 10 17 CFR 200.30–3(a)(12). performance of the SPDR S&P 500 Index.

VerDate Sep<11>2014 17:49 Jun 27, 2016 Jkt 238001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\28JNN1.SGM 28JNN1
Document Created: 2016-06-28 00:53:46
Document Modified: 2016-06-28 00:53:46
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		81 FR 42008