81 FR 59696 - Self-Regulatory Organizations; BOX Options Exchange LLC; Order Approving a Proposed Rule Change To Expand the Short Term Option Series Program To Allow Wednesday Expirations for SPY Options

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 168 (August 30, 2016)

[Federal Register Volume 81, Number 168 (Tuesday, August 30, 2016)]
[Notices]
[Page 59696]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-20737]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78668; File No. SR-BOX-2016-28]


Self-Regulatory Organizations; BOX Options Exchange LLC; Order 
Approving a Proposed Rule Change To Expand the Short Term Option Series 
Program To Allow Wednesday Expirations for SPY Options

August 24, 2016.

I. Introduction

    On June 30, 2016, BOX Options Exchange LLC (``BOX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend its rules governing the Short Term Option 
Series Program \3\ to allow the listing and trading of options on the 
SPDR S&P 500 ETF Trust (``SPY'') with Wednesday expirations. The 
proposed rule change was published for comment in the Federal Register 
on July 13, 2016.\4\ The Commission received no comments on the 
proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See IM-5050-6 to BOX Rule 5050.
    \4\ See Securities Exchange Act Release No. 78243 (July 7, 
2016), 81 FR 45346 (July 13, 2016) (``Notice'').
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II. Description of the Proposal

    Under the terms of the current Short Term Option Series Program, 
after an option class has been approved for listing and trading on the 
Exchange, the Exchange may open for trading on any Thursday or Friday 
that is a business day series of options on that class that expire on 
each of the next five Fridays, provided that such Friday is not a 
Friday in which monthly options series or Quarterly Options Series 
expire.\5\
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    \5\ See Securities Exchange Act Release No. 62505 (July 15, 
2010), 75 FR 42792 (July 22, 2010).
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    The Exchange's proposed rule change would expand the Short Term 
Option Series Program to permit BOX to open for trading, on any Tuesday 
or Wednesday that is a business day, series of options on SPY that 
expire on any Wednesday of the month that is a business day and is not 
a Wednesday in which Quarterly Options Series expire (``Wednesday SPY 
Expirations'').\6\ Wednesday SPY Expirations would be subject to the 
same rules as the standard Short Term Option Series program,\7\ with 
two exceptions. The Exchange proposes that the current limitation of no 
more than five Short Term Option Series expiration dates in a class \8\ 
would not include any Wednesday SPY Expiration. Instead, the Exchange 
proposes a separate limit of five consecutive Wednesday SPY expiration 
dates \9\ so that the Exchange could list five Short Term Option Series 
expiration dates for SPY expiring on Friday as well as five Wednesday 
SPY Expiration dates.\10\ In addition, unlike other option series in 
the Short Term Option Series program, Wednesday SPY Expirations could 
expire in the same week in which monthly option series in the same 
class expire.\11\
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    \6\ Under the proposal, the Exchange would expand the definition 
of ``Short Term Option Series'' in BOX Rule 100(a)(64) and add a 
description of Wednesday SPY Expirations in proposed IM-5050-6(c) to 
BOX Rule 5050. For further details, see Notice, supra note 4, at 
45346.
    \7\ For example, Wednesday SPY Expirations would be subject to 
the same series limitations and strike interval rules as standard 
Short Term Option Series and would be P.M.-settled. See IM-5050-6(b) 
to BOX Rule 5050. See also Notice, supra note 4, at 45346-47.
    \8\ See IM-5050-6(a) to BOX Rule 5050.
    \9\ See proposed IM-5050-6(c) to BOX Rule 5050.
    \10\ See Notice, supra note 4, at 45346.
    \11\ See id.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange 
and, in particular, with section 6(b) of the Act.\12\ In particular, 
the Commission finds that the proposed rule change is consistent with 
section 6(b)(5) of the Act,\13\ which requires, among other things, 
that a national securities exchange have rules 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 regulating, clearing, settling, processing 
information with respect to, and 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. The Commission believes that 
the proposed rule change may provide the investing public and other 
market participants more flexibility to closely tailor their investment 
and hedging decisions in SPY options, thus allowing them to better 
manage their risk exposure.
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    \12\ 15 U.S.C. 78f(b). In approving this proposed rule change, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \13\ 15 U.S.C. 78f(b)(5).
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    In approving this proposal, the Commission notes that the Exchange 
has represented that it has an adequate surveillance program in place 
to detect manipulative trading in Wednesday SPY Expirations.\14\ The 
Exchange further states that it has the necessary systems capacity to 
support the new options series.\15\
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    \14\ See Notice, supra note 4, at 45347.
    \15\ See id.
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-BOX-2016-28) be, and hereby 
is, approved.
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    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-20737 Filed 8-29-16; 8:45 am]
BILLING CODE 8011-01-P