81 FR 42009 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Elimination of SPY Position Limits
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 124 (June 28, 2016)
Federal Register Volume 81, Issue 124 (June 28, 2016)
| Page Range | 42009-42011 | |
| FR Document | 2016-15175 |
[Federal Register Volume 81, Number 124 (Tuesday, June 28, 2016)] [Notices] [Pages 42009-42011] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-15175] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78125; File No. SR-BX-2016-030] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Elimination of 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 BX, Inc. (``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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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''). --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxbx.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. [[Page 42010]] 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 Supplementary Material at the end of Chapter III, Section 7 (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. --------------------------------------------------------------------------- \4\ The report is attached as Exhibit 3. \5\ See Securities Exchange Act Release No. 75412 (July 9, 2015), 80 FR 41517 (July 15, 2015) (SR-BX-2015-039). --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78f(b). \7\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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. 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 [[Page 42011]] change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse 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-BX-2016-030 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-BX-2016-030. 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-BX-2016-030, 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\ --------------------------------------------------------------------------- \10\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-15175 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.
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![Federal Register / Vol. 81, No. 124 / Tuesday, June 28, 2016 / Notices 42011
change is consistent with the Act. received will be posted without change; change pursuant to Section
Comments may be submitted by any of the Commission does not edit personal 19(b)(3)(A)(iii) of the Act 3 and Rule
the following methods: identifying information from 19b–4(f)(6) thereunder.4 The
submissions. You should submit only Commission is publishing this notice to
Electronic Comments
information that you wish to make solicit comments on the proposed rule
• Use the Commission’s Internet available publicly. All submissions change from interested persons.
comment form (http://www.sec.gov/ should refer to File Number SR–BX–
rules/sro.shtml); or 2016–030, and should be submitted on I. Self-Regulatory Organization’s
• Send an email to rule-comments@ or before July 19, 2016. Statement of the Terms of the Substance
sec.gov. Please include File Number SR– of the Proposed Rule Change
For the Commission, by the Division of
BX–2016–030 on the subject line. Trading and Markets, pursuant to delegated The Exchange proposes to extend the
Paper Comments authority.10 operation of a pilot program that
Brent J. Fields, eliminates position and exercise limits
• Send paper comments in triplicate
Secretary. for physically-settled SPY options
to Brent J. Fields, Secretary, Securities
[FR Doc. 2016–15175 Filed 6–27–16; 8:45 am] (‘‘SPY Pilot Program’’). The text of the
and Exchange Commission, 100 F Street
proposed rule change is provided
NE., Washington, DC 20549–1090. BILLING CODE 8011–01–P
below.
All submissions should refer to File
Number SR–BX–2016–030. This file (additions are italicized; deletions are
SECURITIES AND EXCHANGE [bracketed])
number should be included on the
COMMISSION * * * * *
subject line if email is used. To help the
Commission process and review your [Release No. 34–78131; File No. SR–CBOE–
Chicago Board Options Exchange,
comments more efficiently, please use 2016–052]
Incorporated Rules
only one method. The Commission will
post all comments on the Commission’s Self-Regulatory Organizations; * * * * *
Internet Web site (http://www.sec.gov/ Chicago Board Options Exchange,
Incorporated; Notice of Filing and Rule 4.11. Position Limits
rules/sro.shtml). Copies of the
Immediate Effectiveness of a Proposed No changes.
submission, all subsequent
Rule Change To Extend a Pilot . . . Interpretations and Policies:
amendments, all written statements
Program that Eliminates Position and .01–.06 No change.
with respect to the proposed rule
Exercise Limits for Physically-Settled
change that are filed with the .07 The position limits under Rule
SPDR S&P 500 ETF Trust (‘‘SPY’’)
Commission, and all written 4.11 applicable to options on shares or
Options
communications relating to the other securities that represent interests
proposed rule change between the June 22, 2016. in registered investment companies (or
Commission and any person, other than Pursuant to Section 19(b)(1) of the series thereof) organized as open-end
those that may be withheld from the Securities Exchange Act of 1934 (the management investment companies,
public in accordance with the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 unit investment trusts or similar entities
provisions of 5 U.S.C. 552, will be notice is hereby given that on June 20, that satisfy the criteria set forth in
available for Web site viewing and 2016, Chicago Board Options Exchange, Interpretation and Policy .06 under Rule
printing in the Commission’s Public Incorporated (the ‘‘Exchange’’ or 5.3 shall be the same as the position
Reference Room, 100 F Street NE., ‘‘CBOE’’) filed with the Securities and limits applicable to equity options
Washington, DC 20549 on official Exchange Commission (‘‘Commission’’) under Rule 4.11 and Interpretations and
business days between the hours of the proposed rule change as described Policies thereunder; except that the
10:00 a.m. and 3:00 p.m. Copies of such in Items I and II below, which Items position limits under Rule 4.11
filing also will be available for have been prepared by the Exchange. applicable to option contracts on the
inspection and copying at the principal The Exchange filed the proposal as a securities listed in the below chart are
office of the Exchange. All comments ‘‘non-controversial’’ proposed rule as follows:
Security underlying option Position limit
The DIAMONDS Trust (DIA) ......................................................................................................................................... 300,000 contracts.
The Standard and Poor’s Depositary Receipt Trust (SPY) ........................................................................................... None.
The iShares Russell 2000 Index Fund (IWM) ............................................................................................................... 500,000 contracts.
The PowerShares QQQ Trust (QQQ) ........................................................................................................................... 900,000 contracts.
The iShares MSCI Emerging Markets Index Fund (EEM) ............................................................................................ 500,000 contracts.
Position limits for SPY options are the Exchange’s Office of the Secretary, II. Self-Regulatory Organization’s
subject to a pilot program through [July and at the Commission’s Public Statement of the Purpose of, and
12, 2016] July 12, 2017. Reference Room. Statutory Basis for, the Proposed Rule
.08 No change. Change
asabaliauskas on DSK3SPTVN1PROD with NOTICES
* * * * * In its filing with the Commission, the
The text of the proposed rule change Exchange included statements
is also available on the Exchange’s Web concerning the purpose of and basis for
site (http://www.cboe.com/AboutCBOE/ the proposed rule change and discussed
CBOELegalRegulatoryHome.aspx), at any comments it received on the
10 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. 4 17 CFR 240.19b–4(f)(6).
1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78s(b)(3)(A)(iii).
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Document Created: 2016-06-28 00:53:42
Document Modified: 2016-06-28 00:53:42
| 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 42009 |
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