81 FR 42030 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 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 | 42030-42032 | |
| FR Document | 2016-15173 |
[Federal Register Volume 81, Number 124 (Tuesday, June 28, 2016)] [Notices] [Pages 42030-42032] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-15173] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78123; File No. SR-NASDAQ-2016-084] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 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, The NASDAQ Stock Market LLC (``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://nasdaq.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 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 [[Page 42031]] 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. 75413 (July 9, 2015), 80 FR 41519 (July 15, 2015) (SR-NASDAQ-2015-072). --------------------------------------------------------------------------- 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 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-NASDAQ-2016-084 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-NASDAQ-2016-084. 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 [[Page 42032]] 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-NASDAQ-2016-084, 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. 2016-15173 Filed 6-27-16; 8:45 am] BILLING CODE 8011-01-P
![42030 Federal Register / Vol. 81, No. 124 / Tuesday, June 28, 2016 / Notices
C. Self-Regulatory Organization’s Commission and any person, other than 500® exchange-traded fund (‘‘SPY ETF’’
Statement on Comments on the those that may be withheld from the or ‘‘SPY’’),3 which list and trade under
Proposed Rule Change Received From public in accordance with the the symbol SPY (‘‘SPY Pilot Program’’).
Members, Participants, or Others provisions of 5 U.S.C. 552, will be The text of the proposed rule change
The Exchange has not solicited, and available for Web site viewing and is available on the Exchange’s Web site
does not intend to solicit, comments on printing in the Commission’s Public at http://nasdaq.cchwallstreet.com, at
this proposed rule change. The Reference Room, 100 F Street NE., the principal office of the Exchange, and
Exchange has not received any Washington, DC 20549, on official at the Commission’s Public Reference
unsolicited written comments from business days between the hours of Room.
Members or other interested parties. 10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s
filing also will be available for Statement of the Purpose of, and
III. Date of Effectiveness of the inspection and copying at the principal
Proposed Rule Change and Timing for Statutory Basis for, the Proposed Rule
office of the Exchange. All comments Change
Commission Action received will be posted without change;
The foregoing rule change has become the Commission does not edit personal In its filing with the Commission, the
effective pursuant to Section 19(b)(3)(A) identifying information from Exchange included statements
of the Act 21 and paragraph (f) of Rule submissions. You should submit only concerning the purpose of and basis for
19b–4 thereunder.22 At any time within information that you wish to make the proposed rule change and discussed
60 days of the filing of the proposed rule available publicly. All submissions any comments it received on the
change, the Commission summarily may should refer to File Number SR– proposed rule change. The text of these
temporarily suspend such rule change if BatsEDGA–2016–12, and should be statements may be examined at the
it appears to the Commission that such submitted on or before July 19, 2016. places specified in Item IV below. The
action is necessary or appropriate in the Exchange has prepared summaries, set
For the Commission, by the Division of
public interest, for the protection of Trading and Markets, pursuant to delegated
forth in sections A, B, and C below, of
investors, or otherwise in furtherance of authority.23 the most significant aspects of such
the purposes of the Act. Brent J. Fields,
statements.
IV. Solicitation of Comments Secretary. A. Self-Regulatory Organization’s
[FR Doc. 2016–15171 Filed 6–27–16; 8:45 am] Statement of the Purpose of, and
Interested persons are invited to Statutory Basis for, the Proposed Rule
BILLING CODE 8011–01–P
submit written data, views, and Change
arguments concerning the foregoing,
including whether the proposed rule 1. Purpose
SECURITIES AND EXCHANGE
change is consistent with the Act. COMMISSION The purpose of the proposed rule
Comments may be submitted by any of change is to amend the Supplementary
the following methods: [Release No. 34–78123; File No. SR– Material at the end of Chapter III,
NASDAQ–2016–084]
Section 7 (Position Limits) to extend the
Electronic Comments
Self-Regulatory Organizations; The current pilot which expires on July 12,
• Use the Commission’s Internet 2016 for an additional twelve (12)
comment form (http://www.sec.gov/ NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of month time period to July 12, 2017
rules/sro.shtml); or (‘‘Extended Pilot’’). This filing does not
• Send an email to rule-comments@ Proposed Rule Change to Elimination
of SPY Position Limits propose any substantive changes to the
sec.gov. Please include File Number SR– SPY Pilot Program. In proposing to
BatsEDGA–2016–12 on the subject line. June 22, 2016. extend the SPY Pilot Program, the
Paper Comments Pursuant to Section 19(b)(1) of the Exchange reaffirms its consideration of
Securities Exchange Act of 1934 (the several factors that supported the
• Send paper comments in triplicate ‘‘Act’’),1 and Rule 19b–4 thereunder,2 original proposal of the SPY Pilot
to Secretary, Securities and Exchange notice is hereby given that on June 10, Program, including (1) the availability of
Commission, 100 F Street NE., 2016, The NASDAQ Stock Market LLC economically equivalent products and
Washington, DC 20549–1090. (‘‘Exchange’’) filed with the Securities their respective position limits; (2) the
All submissions should refer to File and Exchange Commission (‘‘SEC’’ or liquidity of the option and the
Number SR–BatsEDGA–2016–12. This ‘‘Commission’’) the proposed rule underlying security; (3) the market
file number should be included on the change as described in Items I, II, and capitalization of the underlying security
subject line if email is used. To help the III below, which Items have been and the related index; (4) the reporting
Commission process and review your prepared by the Exchange. The of large positions and requirements
comments more efficiently, please use Commission is publishing this notice to surrounding margin; and (5) the
only one method. The Commission will solicit comments on the proposed rule potential for market on close volatility.
post all comments on the Commission’s change from interested persons. With this proposal, the Exchange
Internet Web site (http://www.sec.gov/ submits the SPY report to the
rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s Commission, which report reflects,
submission, all subsequent Statement of the Terms of the Substance during the time period from May 2015
of the Proposed Rule Change
asabaliauskas on DSK3SPTVN1PROD with NOTICES
amendments, all written statements through May 2016, the trading of
with respect to the proposed rule The Exchange proposes to extend for standardized SPY options with no
change that are filed with the another twelve (12) month time period
Commission, and all written the pilot program to eliminate position 3 ‘‘SPDR®,’’ ‘‘Standard & Poor’s®,’’ ‘‘S&P®,’’ ‘‘S&P
communications relating to the limits for options on the SPDR® S&P 500®,’’ and ‘‘Standard & Poor’s 500’’ are registered
trademarks of Standard & Poor’s Financial Services
proposed rule change between the LLC. The SPY ETF represents ownership in the
23 17 CFR 200.30–3(a)(12). SPDR S&P 500 Trust, a unit investment trust that
21 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). generally corresponds to the price and yield
22 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4. performance of the SPDR S&P 500 Index.
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![42032 Federal Register / Vol. 81, No. 124 / Tuesday, June 28, 2016 / Notices
available for Web site viewing and S&P 500® ETF Trust (‘‘SPY Pilot to establish and extend the SPY Pilot
printing in the Commission’s Public Program’’) and to make non-substantive Program, which include: (1) The
Reference Room, 100 F Street NE., technical corrections to Interpretations liquidity of the option and the
Washington, DC 20549 on official and Policies .01. underlying security; (2) the market
business days between the hours of The text of the proposed rule change capitalization of the underlying security
10:00 a.m. and 3:00 p.m. Copies of such is available on the Exchange’s Web site and the securities that make up the S&P
filing also will be available for at http://www.miaxoptions.com/filter/ 500 Index; (3) options reporting
inspection and copying at the principal wotitle/rule_filing, at MIAX’s principal requirements; and (4) financial
office of the Exchange. All comments office, and at the Commission’s Public requirements imposed by MIAX and the
received will be posted without change; Reference Room. Commission.
the Commission does not edit personal II. Self-Regulatory Organization’s The Exchange notes that it is not
identifying information from Statement of the Purpose of, and aware of any problems created by the
submissions. You should submit only Statutory Basis for, the Proposed Rule current SPY Pilot Program and does not
information that you wish to make foresee any problems with the proposed
Change
available publicly. All submissions extension. The Exchange has formally
should refer to File Number SR– In its filing with the Commission, the submitted a Report for the SPY Pilot
NASDAQ–2016–084, and should be Exchange included statements Program as part of this filing.4 In
submitted on or before July 19, 2016. concerning the purpose of and basis for addition, the Exchange represents that if
the proposed rule change and discussed it chooses to extend or seek permanent
For the Commission, by the Division of
Trading and Markets, pursuant to delegated any comments it received on the approval of the SPY Pilot Program, the
authority.10 proposed rule change. The text of these Exchange will submit another SPY Pilot
Brent J. Fields, statements may be examined at the Program Report at least thirty (30) days
Secretary. places specified in Item IV below. The prior to the expiration of the extended
Exchange has prepared summaries, set SPY Pilot Program time period which
[FR Doc. 2016–15173 Filed 6–27–16; 8:45 am]
forth in sections A, B, and C below, of would cover the period between reports.
BILLING CODE 8011–01–P
the most significant aspects of such The SPY Pilot Program Report will
statements. compare the impact of the pilot
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s program, if any, on the volumes of SPY
COMMISSION Statement of the Purpose of, and options and the volatility in the price of
[Release No. 34–78120; File No. SR–MIAX– Statutory Basis for, the Proposed Rule the underlying SPY contract,
2016–17] Change particularly at expiration. The SPY Pilot
Program Report will also detail the size
1. Purpose and different types of strategies
Self-Regulatory Organizations; Miami
International Securities Exchange LLC; Exchange Rules 307, Position Limits, employed with respect to positions
Notice of Filing and Immediate and 309, Exercise Limits, establish established in SPY options; note
Effectiveness of a Proposed Rule position and exercise limits for whether any problems, in the
Change To Amend Exchange Rules aggregate positions in option contracts underlying SPY ETF or otherwise, arose
307 and 309 To Extend the SPY Pilot traded on the Exchange. Interpretations as a result of the no-limit approach; and
Program and Policies .01 to Rule 307 lists include any other information that may
specific position limits for options on be useful in evaluating the effectiveness
June 22, 2016. specific underlying securities, and of the SPY Pilot Program. In preparing
Pursuant to Section 19(b)(1) of the Interpretations and Policies .01 to Rule the Pilot Report, the Exchange will
Securities Exchange Act of 1934 (the 309 lists specific exercise limits for utilize various data elements such as
‘‘Act’’),1 and Rule 19b–4 thereunder,2 options on specific underlying volume and open interest. In addition
notice is hereby given that on June 10, securities. Among the listed specific the Exchange would make available to
2016, Miami International Securities underlying securities is the SPDR® S&P Commission staff data elements relating
Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) 500® ETF Trust (‘‘SPY’’). Currently, to the effectiveness of the SPY Pilot
filed with the Securities and Exchange each of these Rules provides that there Program.
Commission (‘‘Commission’’) the is no position limit and no exercise The Exchange proposes to extend the
proposed rule change as described in limit on options overlying SPY. The SPY Pilot Program in order for the
Items I, II, and III below, which Items position and exercise limits for options Exchange and the Commission to have
have been prepared by the Exchange. overlying SPY in each of these Rules are additional time to evaluate the Pilot and
The Commission is publishing this the subject of a pilot program, which is its effect on the market and to determine
notice to solicit comments on the scheduled to expire on July 12, 2016.3 whether to seek permanent approval.
proposed rule change from interested The Exchange proposes to amend Prior to the expiration of the SPY Pilot
persons. Exchange Rule 307, Interpretations and Program and based upon the findings of
I. Self-Regulatory Organization’s Policies .01, and Exchange Rule 309, the SPY Pilot Program Report, the
Statement of the Terms of the Substance Interpretations and Policies .01, to Exchange will be able to either extend
of the Proposed Rule Change extend the duration of the SPY Pilot the SPY Pilot Program, adopt the SPY
Program through July 12, 2017. There Pilot Program on a permanent basis, or
asabaliauskas on DSK3SPTVN1PROD with NOTICES
The Exchange is filing a proposal to are no substantive changes being
amend Exchange Rules 307 and 309 to terminate the SPY Pilot Program. If the
proposed to the SPY Pilot Program. The SPY Pilot Program is not extended or
extend the pilot program that eliminates Exchange affirms its consideration of
the position and exercise limits for adopted on a permanent basis by the
several factors that support the proposal expiration of the extended SPY Pilot
physically-settled options on the SPDR®
Program, the position limits for options
3 See Securities Exchange Act Release No. 75448
10 17 CFR 200.30–3(a)(12). overlying SPY would revert to limits in
(July 14, 2015), 80 FR 42856 (July 20, 2015) (SR–
1 15 U.S.C. 78s(b)(1).
MIAX–2015–46) (extending the SPY Pilot Program
2 17 CFR 240.19b–4. to July 12, 2016). 4 See Exhibit 3 attached hereto.
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Document Created: 2016-06-28 00:53:43
Document Modified: 2016-06-28 00:53:43
| 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 42030 |
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