81 FR 62784 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Expand the Short Term Option Series Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 176 (September 12, 2016)
Federal Register Volume 81, Issue 176 (September 12, 2016)
| Page Range | 62784-62787 | |
| FR Document | 2016-21801 |
[Federal Register Volume 81, Number 176 (Monday, September 12, 2016)] [Notices] [Pages 62784-62787] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-21801] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78772; File No. SR-MIAX-2016-31] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Expand the Short Term Option Series Program September 6, 2016. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that, on September 2, 2016, Miami International Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II 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 Substance of the Proposed Rule Change The Exchange is filing a proposal to amend Rule 404, Series of Option Contracts Open for Trading, Interpretations and Policies .02, to expand the Short Term Option Series Program to allow Wednesday expirations for SPDR S&P 500 ETF Trust (``SPY'') options. Additionally, the Exchange proposes to amend the definition of Short Term Option Series in Rule 100. The text of the proposed rule change is available on the Exchange's Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at MIAX's principal office, 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 62785]] A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to expand the Short Term Option Series Program outlined in Rule 404, Interpretations and Policies .02, to allow the listing and trading of SPY options with Wednesday expirations. This is a competitive filing based on a filing submitted by the BOX Options Exchange, LLC (``BOX''), which the Commission recently approved.\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 78668 (August 24, 2016), 81 FR 59696 (August 30, 2016) (order approving SR-BOX-2016- 28). --------------------------------------------------------------------------- Currently, under the Short Term Option Series Program the Exchange may open for trading on any Thursday or Friday that is a business day (``Short Term Option Opening Date'') series of options on that class that expire at the close of business on each of the next five Fridays that are business days, and are not Fridays in which monthly option series or Quarterly Options Series expire (``Short Term Option Expiration Dates''). The Exchange is now proposing to amend Rule 404, Interpretations and Policies .02, to permit the listing of SPY options expiring on Wednesdays. Specifically, the Exchange is proposing that it may open for trading on any Tuesday or Wednesday that is a business day, series of SPY options that expire on any Wednesday of the month that is a business day, and is not a Wednesday on which Quarterly Options Series expire (``Wednesday SPY Expirations''). The proposed Wednesday SPY Expiration series would be similar to the current Short Term Option Series, with certain exceptions, as explained in greater detail below. The Exchange notes that Wednesday expirations are not a novel proposal. Specifically, the U.S. Securities and Exchange Commission (``Commission'') approved a CBOE proposal to list Wednesday expirations for broad-based indexes.\4\ Additionally, BOX recently received approval to list Wednesday SPY Expirations.\5\ --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 76909 (January 14, 2016), 81 FR 3512 (January 21, 2016) (Order approving SR-CBOE-2015- 106). \5\ See supra note 3. --------------------------------------------------------------------------- In regards to Wednesday SPY Expirations, the Exchange is proposing to remove the current restriction preventing MIAX from listing Short Term Option Series that expire in the same week in which monthly option series in the same class expire. Specifically, the Exchange would be allowed to list Wednesday SPY Expirations in the same week in which monthly option series in SPY expire. The current restriction to prohibit the expiration of monthly and Short Term Option Series from expiring on the same trading day is reasonable to avoid investor confusion. This confusion would not apply with Wednesday SPY Expirations and standard monthly options because they would not expire on the same trading day, as standard monthly options do not expire on Wednesdays. Additionally, it would lead to investor confusion if Wednesday SPY Expirations were not listed for one week every month because there was a monthly SPY expiration on the Friday of that week. The existing restriction that a Short Term Option Series may not expire on the same day that a Quarterly Option Series expires would apply to Wednesday SPY Expirations. Under the proposal, the Exchange may open for trading on any Tuesday or Wednesday that is a business day, series of SPY options that expire at the close of business on each of the next five Wednesdays that are business days and are not Wednesdays on which Quarterly Options Series expire. The Exchange may have no more than a total of five Wednesday SPY Expirations listed. This is similar to the listing procedures for Short Term Option Series that expire on Fridays. If the Exchange is not open for business on the respective Tuesday or Wednesday, the Wednesday SPY Expiration Opening Date will be the first business day immediately prior to that respective Tuesday or Wednesday. Similarly, if the Exchange is not open for business on a Wednesday, the expiration date for a Wednesday SPY Expiration will be the first business day immediately prior to that Wednesday. This is also similar to the procedures for Short Term Option Series that expire on Fridays. The Exchange is also proposing to clarify that the five expirations limit in the current Short Term Option Series Program Rule would not include any Wednesday SPY Expirations and vice versa.\6\ This means, under the proposal, the Exchange would be allowed to list five Short Term Option Series expirations for SPY expiring on Friday under the current rule and five Wednesday SPY Expirations. The interval between strike prices for the proposed Wednesday SPY Expirations would be the same as those for the current Short Term Option Series. Specifically, the Wednesday SPY Expirations would have $0.50 strike intervals.\7\ --------------------------------------------------------------------------- \6\ Specifically, the Exchange proposes to add the following text to Rule 404, Interpretations and Policies .02, in the appropriate paragraph, ``Wednesday SPY expirations (described in the paragraph below) are not included as part of this count [ ]'' and ``Non-Wednesday SPY Expirations (described in the paragraph above) are not included as part of this count.'' \7\ This is because SPY options have $1 strike price intervals for non-Short Term Option series. See Exchange Rule 404, Interpretations and Policies .10. Pursuant to Rule 404, Interpretations and Policies .02(e), the strike price interval for Short Term Option Series may be $0.50 or greater for option classes that trade in $1 strike price intervals and are in the Short Term Option Series Program. --------------------------------------------------------------------------- Currently, for each Short Term Option Expiration Date, the Exchange is limited to opening thirty (30) series for each expiration date for the specific class.\8\ The thirty (30) series restriction does not include series that are opened by other securities exchanges under their respective short term option rules; MIAX may list these additional series that are listed by other exchanges.\9\ The thirty (30) series restriction would apply to Wednesday SPY Expiration series as well. In addition, the Exchange would be able to list series that are listed by other exchanges, assuming they file similar rules with the Commission to list SPY options expiring on Wednesdays. --------------------------------------------------------------------------- \8\ See Exchange Rule 404, Interpretations and Policies .02(a). \9\ See Exchange Rule 404, Interpretations and Policies .02(a). --------------------------------------------------------------------------- As is the case with current Short Term Option Series, the Wednesday SPY Expiration series would be P.M.-settled. The Exchange does not believe that any market disruptions would be encountered with the introduction of P.M.-settled Wednesday SPY Expirations. The Exchange currently trades P.M.-settled Short Term Option Series that expire almost every Friday, which provide market participants a tool to hedge special events and to reduce the premium cost of buying protection. The Exchange seeks to introduce Wednesday SPY Expirations to, among other things, expand hedging tools available to market participants and to continue the reduction of the premium cost of buying protection. The Exchange believes that Wednesday expirations, similar to Friday expirations, would allow market participants to purchase an option based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. The Exchange is also proposing to amend Rule 100, which sets forth the definition of Short Term Option Series. The definition set forth in Rule 100 is redundant to the terms for Short Term Option Series set forth in Rule 404, Interpretations and Policies .02. As a result, the Exchange believes that amending Rule 100 by including an [[Page 62786]] internal cross reference to Rule 404, Interpretations and Policies .02 and by deleting redundant language would result in a clearer definition and would make the Rulebook more precise and user friendly. The Exchange is taking this opportunity to amend Rule 404, Interpretations and Policies .02 with respect to Exchange closures on Fridays that would otherwise be eligible as Short Term Option Expiration Dates. Specifically, the Exchange is cleaning up outdated language that previously tied listings to Fridays in the following business week, i.e., ``if the Exchange is not open for business on the Friday of the following business week. . . .'' Since Short Term Option Series may be listed out over five consecutive Fridays, the existing language is unnecessarily restrictive. Also, this proposed change harmonizes the Exchange's rule text with existing BOX rule text, i.e., ``if the [Exchange] is not open for business on a Friday . . .'' The Exchange proposes to add the new rule text language regarding Wednesday SPY Expirations at the beginning of Rule 404, Interpretations and Policies .02, before the provisions governing classes, expiration, initial series, additional series, and strike interval. The Exchange believes that placement of Wednesday SPY Expirations at the start of Rule 404, Interpretations and Policies .02, would make it apparent that the rest of Rule 404, Interpretations and Policies .02 applies to Wednesday SPY Expirations. To make this point clear, the Exchange proposes to add the sentence, ``References to `Short Term Option Series' below shall be read to include `Wednesday SPY Expirations,' except where indicated otherwise[ ]'' before the alphabetically listed paragraphs set forth in Rule 404, Interpretations and Policies .02. The Exchange believes that the introduction of Wednesday SPY Expirations would provide investors with a flexible and valuable tool to manage risk exposure, minimize capital outlays, and be more responsive to the timing of events affecting the industry. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ``Act'') and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of section 6(b) of the Act.\10\ Specifically, the Exchange believes the proposed rule change is consistent with the section 6(b)(5) \11\ requirements that the rules of an exchange be 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. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 16 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- In particular, the Exchange believes the Short Term Option Series Program has been successful to date and that Wednesday SPY Expirations simply expand the ability of investors to hedge risk against market movements stemming from economic releases or market events that occur throughout the month in the same way that the Short Term Option Series Program has expanded the landscape of hedging. Similarly, the Exchange believes Wednesday SPY Expirations should create greater trading and hedging opportunities and flexibility, and provide customers with the ability to more closely tailor their investment objectives. The Exchange believes that allowing Wednesday SPY Expirations and monthly SPY expirations in the same week would benefit investors and minimize investor confusion by providing Wednesday SPY Expirations in a continuous and uniform manner. In addition to the substantive proposal to permit Wednesday SPY Expirations, the Exchange is proposing to make a minor change to the text of Rule 404, Interpretations and Policies .02, that would benefit investors and the public by providing clarity and accuracy in the Exchange's Rules. It is in the public interest for rules to be accurate and concise so as to eliminate the potential for confusion. The Exchange represents that it has an adequate surveillance program in place to detect manipulative trading in Wednesday SPY Expirations in the same way it monitors trading in the current Short Term Option Series. Finally, the Exchange also represents that it has the necessary systems capacity to support the new options series. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that having Wednesday expirations is not a novel proposal.\12\ The Exchange does not believe the proposal will impose any burden on intramarket competition, as all market participants will be treated in the same manner as they are with respect to existing Short Term Option Series. Additionally, the Exchange does not believe the proposal will impose any burden on intermarket competition, as nothing prevents the other options exchanges from proposing similar rules to those that the Exchange is currently proposing. --------------------------------------------------------------------------- \12\ See supra note 4. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor 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, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\ --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A). \14\ 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 intention 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. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days from the date of filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission notes that it recently approved BOX's substantially similar proposal to list and trade Wednesday SPY Expirations.\16\ The Exchange has stated that waiver of the operative delay will allow the Exchange to list and trade Wednesday SPY Expirations as soon as possible, and therefore, promote competition among the option [[Page 62787]] exchanges. For these reasons, the Commission believes that the proposed rule change presents no novel issues and that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest, and will allow the Exchange to remain competitive with other exchanges. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal effective upon filing.\17\ 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 necessary or appropriate in the public interest, for the protection of investors, or 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. --------------------------------------------------------------------------- \15\ 17 CFR 240.19b-4(f)(6)(iii). \16\ See supra note 3. \17\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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-MIAX-2016-31 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-MIAX-2016-31. 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 the 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-MIAX-2016-31 and should be submitted on or before October 3, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\18\ --------------------------------------------------------------------------- \18\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-21801 Filed 9-9-16; 8:45 am] BILLING CODE 8011-01-P
![62784 Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices
from a comprehensive or even a the United States) registered or applying SECURITIES AND EXCHANGE
representative survey or study of the for registration pursuant to Section 15 of COMMISSION
costs of Commission rules. the Exchange Act to maintain—in the
[Release No. 34–78772; File No. SR–MIAX–
Compliance with the collection of United States—complete and current 2016–31]
information requirements of the rule is copies of books and records required to
mandatory and is necessary to comply be maintained under any rule adopted Self-Regulatory Organizations; Miami
with the requirements of the rule in under the Exchange Act and furnish to International Securities Exchange LLC;
general. An agency may not conduct or the Commission a written notice Notice of Filing and Immediate
sponsor, and a person is not required to specifying the address where the copies Effectiveness of Proposed Rule
respond to, a collection of information are located. Alternatively, Rule 17a–7 Change To Expand the Short Term
unless it displays a currently valid provides that non-resident broker- Option Series Program
control number. dealers may file with the Commission a
The public may view the background September 6, 2016.
written undertaking to furnish the
documentation for this information Pursuant to section 19(b)(1) of the
requisite books and records to the Securities Exchange Act of 1934
collection at the following Web site,
Commission upon demand within 14 (‘‘Act’’),1 and Rule 19b–4 thereunder,2
www.reginfo.gov. Comments should be
days of the demand. notice is hereby given that, on
directed to: (i) Desk Officer for the
Securities and Exchange Commission, There are approximately 45 non- September 2, 2016, Miami International
Office of Information and Regulatory resident brokers and dealers. Based on Securities Exchange LLC (‘‘MIAX’’ or
Affairs, Office of Management and the Commission’s experience, the ‘‘Exchange’’) filed with the Securities
Budget, Room 10102, New Executive Commission estimates that the average and Exchange Commission
Office Building, Washington, DC 20503, amount of time necessary to comply (‘‘Commission’’) the proposed rule
or by sending an email to: Shagufta_ with Rule 17a–7 is one hour per year. change as described in Items I and II
Ahmed@omb.eop.gov; and (ii) Pamela Accordingly, the total industry-wide below, which Items have been prepared
Dyson, Director/Chief Information reporting burden is approximately 45 by the Exchange. The Commission is
Officer, Securities and Exchange hours per year. Assuming an average publishing this notice to solicit
Commission, c/o Remi Pavlik-Simon, cost per hour of approximately $291 for comments on the proposed rule change
100 F Street NE., Washington, DC 20549 a compliance manager, the total internal from interested persons.
or send an email to: PRA_Mailbox@ cost of compliance for the respondents I. Self-Regulatory Organization’s
sec.gov. Comments must be submitted to is approximately $13,095 per year.1 Statement of the Terms of Substance of
OMB within 30 days of this notice. the Proposed Rule Change
An agency may not conduct or
Dated: September 6, 2016. sponsor, and a person is not required to The Exchange is filing a proposal to
Robert W. Errett, respond to, a collection of information amend Rule 404, Series of Option
Deputy Secretary. under the PRA unless it displays a Contracts Open for Trading,
[FR Doc. 2016–21795 Filed 9–9–16; 8:45 am] currently valid OMB control number. Interpretations and Policies .02, to
BILLING CODE 8011–01–P The public may view background expand the Short Term Option Series
documentation for this information Program to allow Wednesday
collection at the following Web site: expirations for SPDR S&P 500 ETF Trust
SECURITIES AND EXCHANGE (‘‘SPY’’) options. Additionally, the
www.reginfo.gov. Comments should be
COMMISSION Exchange proposes to amend the
directed to (i) Desk Officer for the
Securities and Exchange Commission, definition of Short Term Option Series
Submission for OMB Review; in Rule 100.
Comment Request Office of Information and Regulatory
The text of the proposed rule change
Affairs, Office of Management and
Upon Written Request, Copies Available is available on the Exchange’s Web site
Budget, Room 10102, New Executive
From: Securities and Exchange at http://www.miaxoptions.com/filter/
Office Building, Washington, DC 20503 wotitle/rule_filing, at MIAX’s principal
Commission, Office of FOIA Services, or by sending an email to: Shagufta_
100 F Street NE., Washington, DC office, and at the Commission’s Public
Ahmed@omb.eop.gov; and (ii) Pamela Reference Room.
20549–2736. Dyson, Director/Chief Information
Extension: Officer, Securities and Exchange II. Self-Regulatory Organization’s
Rule 17a–7, SEC File No. 270–147, OMB Commission, c/o Remi Pavlik-Simon, Statement of the Purpose of, and
Control No. 3235–0131 100 F Street NE., Washington, DC 20549 Statutory Basis for, the Proposed Rule
Notice is hereby given that pursuant or by sending an email to: PRA_ Change
to the Paperwork Reduction Act of 1995 Mailbox@sec.gov. Comments must be In its filing with the Commission, the
(44 U.S.C. 3501 et seq.) (‘‘PRA’’), the submitted within 30 days of this notice. Exchange included statements
Securities and Exchange Commission Dated: September 6, 2016. concerning the purpose of and basis for
(‘‘Commission’’) has submitted to the the proposed rule change and discussed
Office of Management and Budget Robert W. Errett,
any comments it received on the
(‘‘OMB’’) a request for approval of Deputy Secretary. proposed rule change. The text of these
extension of the previously approved [FR Doc. 2016–21798 Filed 9–9–16; 8:45 am] statements may be examined at the
sradovich on DSK3GMQ082PROD with NOTICES
collection of information provided for in BILLING CODE P places specified in Item IV below. The
Rule 17a–7 (17 CFR 240.17a–7) under Exchange has prepared summaries, set
the Securities Exchange Act of 1934 (15 1 $291 per hour for a compliance manager is from forth in sections A, B, and C below, of
U.S.C. 78a et seq.). SIFMA’s Management & Professional Earnings in the most significant aspects of such
Rule 17a–7 requires a non-resident the Securities Industry 2013, modified by
Commission staff for an 1800-hour work-year,
statements.
broker-dealer (generally, a broker-dealer multiplied by 5.35 to account for bonuses, firm size,
with its principal place of business in a employee benefits, and overhead, and adjusted for 1 15 U.S.C. 78s(b)(1).
place not subject to the jurisdiction of inflation. 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 E:\FR\FM\12SEN1.SGM 12SEN1](https://thefederalregister.org/doc/81_FR_62960/page/1.svg)
![Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices 62785
A. Self-Regulatory Organization’s Expirations in the same week in which would be the same as those for the
Statement of the Purpose of, and monthly option series in SPY expire. current Short Term Option Series.
Statutory Basis for, the Proposed Rule The current restriction to prohibit the Specifically, the Wednesday SPY
Change expiration of monthly and Short Term Expirations would have $0.50 strike
Option Series from expiring on the same intervals.7
1. Purpose Currently, for each Short Term Option
trading day is reasonable to avoid
The Exchange proposes to expand the investor confusion. This confusion Expiration Date, the Exchange is limited
Short Term Option Series Program would not apply with Wednesday SPY to opening thirty (30) series for each
outlined in Rule 404, Interpretations Expirations and standard monthly expiration date for the specific class.8
and Policies .02, to allow the listing and options because they would not expire The thirty (30) series restriction does
trading of SPY options with Wednesday on the same trading day, as standard not include series that are opened by
expirations. This is a competitive filing monthly options do not expire on other securities exchanges under their
based on a filing submitted by the BOX Wednesdays. Additionally, it would respective short term option rules;
Options Exchange, LLC (‘‘BOX’’), which lead to investor confusion if Wednesday MIAX may list these additional series
the Commission recently approved.3 SPY Expirations were not listed for one that are listed by other exchanges.9 The
Currently, under the Short Term week every month because there was a thirty (30) series restriction would apply
Option Series Program the Exchange monthly SPY expiration on the Friday to Wednesday SPY Expiration series as
may open for trading on any Thursday of that week. The existing restriction well. In addition, the Exchange would
or Friday that is a business day (‘‘Short that a Short Term Option Series may not be able to list series that are listed by
Term Option Opening Date’’) series of expire on the same day that a Quarterly other exchanges, assuming they file
options on that class that expire at the Option Series expires would apply to similar rules with the Commission to
close of business on each of the next Wednesday SPY Expirations. list SPY options expiring on
five Fridays that are business days, and Under the proposal, the Exchange Wednesdays.
are not Fridays in which monthly may open for trading on any Tuesday or As is the case with current Short
option series or Quarterly Options Wednesday that is a business day, series Term Option Series, the Wednesday
Series expire (‘‘Short Term Option of SPY options that expire at the close SPY Expiration series would be P.M.-
Expiration Dates’’). The Exchange is of business on each of the next five settled. The Exchange does not believe
now proposing to amend Rule 404, Wednesdays that are business days and that any market disruptions would be
Interpretations and Policies .02, to are not Wednesdays on which Quarterly encountered with the introduction of
permit the listing of SPY options Options Series expire. The Exchange P.M.-settled Wednesday SPY
expiring on Wednesdays. Specifically, may have no more than a total of five Expirations. The Exchange currently
the Exchange is proposing that it may Wednesday SPY Expirations listed. This trades P.M.-settled Short Term Option
open for trading on any Tuesday or is similar to the listing procedures for Series that expire almost every Friday,
Wednesday that is a business day, series Short Term Option Series that expire on which provide market participants a
of SPY options that expire on any Fridays. If the Exchange is not open for tool to hedge special events and to
Wednesday of the month that is a business on the respective Tuesday or reduce the premium cost of buying
business day, and is not a Wednesday Wednesday, the Wednesday SPY protection. The Exchange seeks to
on which Quarterly Options Series Expiration Opening Date will be the first introduce Wednesday SPY Expirations
expire (‘‘Wednesday SPY Expirations’’). business day immediately prior to that to, among other things, expand hedging
The proposed Wednesday SPY respective Tuesday or Wednesday. tools available to market participants
Expiration series would be similar to the Similarly, if the Exchange is not open and to continue the reduction of the
current Short Term Option Series, with for business on a Wednesday, the premium cost of buying protection. The
certain exceptions, as explained in expiration date for a Wednesday SPY Exchange believes that Wednesday
greater detail below. The Exchange Expiration will be the first business day expirations, similar to Friday
notes that Wednesday expirations are immediately prior to that Wednesday. expirations, would allow market
not a novel proposal. Specifically, the This is also similar to the procedures for participants to purchase an option based
U.S. Securities and Exchange Short Term Option Series that expire on on their timing as needed and allow
Commission (‘‘Commission’’) approved Fridays. them to tailor their investment and
a CBOE proposal to list Wednesday The Exchange is also proposing to hedging needs more effectively.
expirations for broad-based indexes.4 clarify that the five expirations limit in The Exchange is also proposing to
Additionally, BOX recently received the current Short Term Option Series amend Rule 100, which sets forth the
approval to list Wednesday SPY Program Rule would not include any definition of Short Term Option Series.
Expirations.5 Wednesday SPY Expirations and vice The definition set forth in Rule 100 is
In regards to Wednesday SPY versa.6 This means, under the proposal, redundant to the terms for Short Term
Expirations, the Exchange is proposing the Exchange would be allowed to list Option Series set forth in Rule 404,
to remove the current restriction five Short Term Option Series Interpretations and Policies .02. As a
preventing MIAX from listing Short expirations for SPY expiring on Friday result, the Exchange believes that
Term Option Series that expire in the under the current rule and five amending Rule 100 by including an
same week in which monthly option Wednesday SPY Expirations. The
series in the same class expire. interval between strike prices for the
7 This is because SPY options have $1 strike price
Specifically, the Exchange would be intervals for non-Short Term Option series. See
proposed Wednesday SPY Expirations Exchange Rule 404, Interpretations and Policies .10.
sradovich on DSK3GMQ082PROD with NOTICES
allowed to list Wednesday SPY Pursuant to Rule 404, Interpretations and Policies
6 Specifically, the Exchange proposes to add the .02(e), the strike price interval for Short Term
3 See Securities Exchange Act Release No. 78668 Option Series may be $0.50 or greater for option
following text to Rule 404, Interpretations and
(August 24, 2016), 81 FR 59696 (August 30, 2016) Policies .02, in the appropriate paragraph, classes that trade in $1 strike price intervals and are
(order approving SR–BOX–2016–28). ‘‘Wednesday SPY expirations (described in the in the Short Term Option Series Program.
4 See Securities Exchange Act Release No. 76909 8 See Exchange Rule 404, Interpretations and
paragraph below) are not included as part of this
(January 14, 2016), 81 FR 3512 (January 21, 2016) count [ ]’’ and ‘‘Non-Wednesday SPY Expirations Policies .02(a).
(Order approving SR–CBOE–2015–106). (described in the paragraph above) are not included 9 See Exchange Rule 404, Interpretations and
5 See supra note 3. as part of this count.’’ Policies .02(a).
VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\12SEN1.SGM 12SEN1](https://thefederalregister.org/doc/81_FR_62960/page/2.svg)
![62786 Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices
internal cross reference to Rule 404, 6(b)(5) 11 requirements that the rules of expirations is not a novel proposal.12
Interpretations and Policies .02 and by an exchange be designed to prevent The Exchange does not believe the
deleting redundant language would fraudulent and manipulative acts and proposal will impose any burden on
result in a clearer definition and would practices, to promote just and equitable intramarket competition, as all market
make the Rulebook more precise and principles of trade, to foster cooperation participants will be treated in the same
user friendly. and coordination with persons engaged manner as they are with respect to
The Exchange is taking this in regulating, clearing, settling, existing Short Term Option Series.
opportunity to amend Rule 404, processing information with respect to, Additionally, the Exchange does not
Interpretations and Policies .02 with and facilitating transactions in believe the proposal will impose any
respect to Exchange closures on Fridays securities, to remove impediments to burden on intermarket competition, as
that would otherwise be eligible as and perfect the mechanism of a free and nothing prevents the other options
Short Term Option Expiration Dates. open market and a national market exchanges from proposing similar rules
Specifically, the Exchange is cleaning system, and, in general, to protect to those that the Exchange is currently
up outdated language that previously investors and the public interest. proposing.
tied listings to Fridays in the following In particular, the Exchange believes
business week, i.e., ‘‘if the Exchange is the Short Term Option Series Program C. Self-Regulatory Organization’s
not open for business on the Friday of has been successful to date and that Statement on Comments on the
the following business week. . . .’’ Wednesday SPY Expirations simply Proposed Rule Change Received From
Since Short Term Option Series may be expand the ability of investors to hedge Members, Participants, or Others
listed out over five consecutive Fridays, risk against market movements Written comments were neither
the existing language is unnecessarily stemming from economic releases or solicited nor received.
restrictive. Also, this proposed change market events that occur throughout the III. Date of Effectiveness of the
harmonizes the Exchange’s rule text month in the same way that the Short Proposed Rule Change and Timing for
with existing BOX rule text, i.e., ‘‘if the Term Option Series Program has Commission Action
[Exchange] is not open for business on expanded the landscape of hedging.
a Friday . . .’’ Similarly, the Exchange believes Because the foregoing proposed rule
The Exchange proposes to add the Wednesday SPY Expirations should change does not: (i) Significantly affect
new rule text language regarding create greater trading and hedging the protection of investors or the public
Wednesday SPY Expirations at the opportunities and flexibility, and interest; (ii) impose any significant
beginning of Rule 404, Interpretations provide customers with the ability to burden on competition; and (iii) become
and Policies .02, before the provisions more closely tailor their investment operative for 30 days from the date on
governing classes, expiration, initial objectives. The Exchange believes that which it was filed, or such shorter time
series, additional series, and strike allowing Wednesday SPY Expirations as the Commission may designate, the
interval. The Exchange believes that and monthly SPY expirations in the proposed rule change has become
placement of Wednesday SPY same week would benefit investors and effective pursuant to section 19(b)(3)(A)
Expirations at the start of Rule 404, minimize investor confusion by of the Act 13 and Rule 19b–4(f)(6)
Interpretations and Policies .02, would providing Wednesday SPY Expirations thereunder.14
make it apparent that the rest of Rule in a continuous and uniform manner. A proposed rule change filed under
404, Interpretations and Policies .02 In addition to the substantive Rule 19b–4(f)(6) normally does not
applies to Wednesday SPY Expirations. proposal to permit Wednesday SPY become operative for 30 days from the
To make this point clear, the Exchange Expirations, the Exchange is proposing date of filing. However, Rule 19b–
proposes to add the sentence, to make a minor change to the text of 4(f)(6)(iii) 15 permits the Commission to
‘‘References to ‘Short Term Option Rule 404, Interpretations and Policies designate a shorter time if such action
Series’ below shall be read to include .02, that would benefit investors and the is consistent with the protection of
‘Wednesday SPY Expirations,’ except public by providing clarity and accuracy investors and the public interest. The
where indicated otherwise[ ]’’ before the in the Exchange’s Rules. It is in the Exchange has asked the Commission to
alphabetically listed paragraphs set public interest for rules to be accurate waive the 30-day operative delay so that
forth in Rule 404, Interpretations and and concise so as to eliminate the the proposal may become operative
Policies .02. potential for confusion. immediately upon filing. The
The Exchange believes that the The Exchange represents that it has an Commission notes that it recently
introduction of Wednesday SPY adequate surveillance program in place approved BOX’s substantially similar
Expirations would provide investors to detect manipulative trading in proposal to list and trade Wednesday
with a flexible and valuable tool to Wednesday SPY Expirations in the same SPY Expirations.16 The Exchange has
manage risk exposure, minimize capital way it monitors trading in the current stated that waiver of the operative delay
outlays, and be more responsive to the Short Term Option Series. Finally, the will allow the Exchange to list and trade
timing of events affecting the industry. Exchange also represents that it has the Wednesday SPY Expirations as soon as
necessary systems capacity to support possible, and therefore, promote
2. Statutory Basis competition among the option
the new options series.
The Exchange believes the proposed
rule change is consistent with the B. Self-Regulatory Organization’s 12 See supra note 4.
Securities Exchange Act of 1934 (the Statement on Burden on Competition 13 15 U.S.C. 78s(b)(3)(A).
14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
sradovich on DSK3GMQ082PROD with NOTICES
‘‘Act’’) and the rules and regulations The Exchange does not believe that 4(f)(6) requires a self-regulatory organization to give
thereunder applicable to the Exchange the proposed rule change will impose the Commission written notice of its intention to
and, in particular, the requirements of any burden on competition that is not file the proposed rule change at least five business
section 6(b) of the Act.10 Specifically, necessary or appropriate in furtherance days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
the Exchange believes the proposed rule of the purposes of the Act. The Commission. The Exchange has satisfied this
change is consistent with the section Exchange notes that having Wednesday requirement.
15 17 CFR 240.19b–4(f)(6)(iii).
10 15 U.S.C. 78f(b). 11 16 U.S.C. 78f(b)(5). 16 See supra note 3.
VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 E:\FR\FM\12SEN1.SGM 12SEN1](https://thefederalregister.org/doc/81_FR_62960/page/3.svg)
![Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices 62787
exchanges. For these reasons, the proposed rule change between the documents, including all
Commission believes that the proposed Commission and any person, other than correspondence, memoranda, papers,
rule change presents no novel issues those that may be withheld from the books, notices, accounts, and other such
and that waiver of the 30-day operative public in accordance with the records made or received by it in the
delay is consistent with the protection provisions of 5 U.S.C. 552, will be course of its business as such and in the
of investors and the public interest, and available for Web site viewing and conduct of its self-regulatory activity,
will allow the Exchange to remain printing in the Commission’s Public and that such documents be available
competitive with other exchanges. Reference Room, 100 F Street NE., for examination by the Commission.
Therefore, the Commission hereby Washington, DC 20549, on official There are 29 entities required to
waives the 30-day operative delay and business days between the hours of comply with the rule: 19 national
designates the proposal effective upon 10:00 a.m. and 3:00 p.m. Copies of the securities exchanges, 1 national
filing.17 At any time within 60 days of filing also will be available for securities association, 8 registered
the filing of the proposed rule change, inspection and copying at the principal clearing agencies, and the Municipal
the Commission summarily may office of the Exchange. All comments Securities Rulemaking Board. The
temporarily suspend such rule change if received will be posted without change; Commission staff estimates that the
it appears to the Commission that such the Commission does not edit personal average number of hours necessary for
action is necessary or appropriate in the identifying information from compliance with the requirements of
public interest, for the protection of submissions. You should submit only Rule 17a–1 is 52 hours per year. In
investors, or otherwise in furtherance of information that you wish to make addition, 4 national securities
the purposes of the Act. If the available publicly. All submissions exchanges notice-registered pursuant to
Commission takes such action, the should refer to File Number SR–MIAX– Section 6(g) of the Act (15 U.S.C. 78f(g))
Commission shall institute proceedings 2016–31 and should be submitted on or are required to preserve records of
to determine whether the proposed rule before October 3, 2016. determinations made under Rule 3a55–
should be approved or disapproved. For the Commission, by the Division of 1 under the Act (17 CFR 240.3a55–1),
Trading and Markets, pursuant to delegated which the Commission staff estimates
IV. Solicitation of Comments authority.18 will take 1 hour per exchange, for a total
Interested persons are invited to Robert W. Errett, of 4 hours. Accordingly, the
submit written data, views and Deputy Secretary. Commission staff estimates that the total
arguments concerning the foregoing, [FR Doc. 2016–21801 Filed 9–9–16; 8:45 am]
number of hours necessary to comply
including whether the proposed rule with the requirements of Rule 17a–1 is
BILLING CODE 8011–01–P
change is consistent with the Act. 1,512 hours. The total internal cost of
Comments may be submitted by any of compliance for all respondents is
the following methods: SECURITIES AND EXCHANGE $98,280, based on an average cost per
COMMISSION hour of $65.
Electronic Comments Compliance with Rule 17a–1 is
• Use the Commission’s Internet Submission for OMB Review; mandatory. Rule 17a–1 does not assure
comment form (http://www.sec.gov/ Comment Request confidentiality for the records
rules/sro.shtml); or maintained pursuant to the rule. The
Upon Written Request, Copies Available records required by Rule 17a–1 are
• Send an email to rule-comments@ From: Securities and Exchange
sec.gov. Please include File Number SR– available only for examination by the
Commission, Office of FOIA Services, Commission staff, state securities
MIAX–2016–31 on the subject line. 100 F Street NE., Washington, DC authorities, and the self-regulatory
Paper Comments 20549–2736 organizations. Subject to the provisions
• Send paper comments in triplicate Extension: of the Freedom of Information Act, 5
to Secretary, Securities and Exchange Rule 17a–1, SEC File No. 270–244, OMB U.S.C. 522, and the Commission’s rules
Control No. 3235–0208 thereunder (17 CFR 200.80(b)(4)(iii)),
Commission, 100 F Street NE.,
Washington, DC 20549–1090. Notice is hereby given that, pursuant the Commission does not generally
to the Paperwork Reduction Act of 1995 publish or make available information
All submissions should refer to File contained in any reports, summaries,
(44 U.S.C. 3501 et seq.), the Securities
Number SR–MIAX–2016–31. This file and Exchange Commission analyses, letters, or memoranda arising
number should be included on the (‘‘Commission’’) has submitted to the out of, in anticipation of, or in
subject line if email is used. To help the Office of Management and Budget connection with an examination or
Commission process and review your (‘‘OMB’’) a request for approval of inspection of the books and records of
comments more efficiently, please use extension of the previously approved any person or any other investigation.
only one method. The Commission will collection of information provided for in An agency may not conduct or
post all comments on the Commission’s Rule 17a–1 (17 CFR 240.17a–1) under sponsor, and a person is not required to
Internet Web site (http://www.sec.gov/ the Securities Exchange Act of 1934, as respond to, a collection of information
rules/sro.shtml). Copies of the amended (the ‘‘Act’’) (15 U.S.C. 78a et under the PRA unless it displays a
submission, all subsequent seq.). currently valid OMB control number.
amendments, all written statements Rule 17a–1 requires that every The public may view background
with respect to the proposed rule national securities exchange, national documentation for this information
change that are filed with the collection at the following Web site:
sradovich on DSK3GMQ082PROD with NOTICES
securities association, registered
Commission, and all written clearing agency, and the Municipal www.reginfo.gov. Comments should be
communications relating to the Securities Rulemaking Board keep on directed to: (i) Desk Officer for the
file for a period of not less than five Securities and Exchange Commission,
17 For purposes only of waiving the 30-day
years, the first two years in an easily Office of Information and Regulatory
operative delay, the Commission has also
considered the proposed rule’s impact on accessible place, at least one copy of all Affairs, Office of Management and
efficiency, competition, and capital formation. See Budget, Room 10102, New Executive
15 U.S.C. 78c(f). 18 17 CFR 200.30–3(a)(12). Office Building, Washington, DC 20503,
VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 E:\FR\FM\12SEN1.SGM 12SEN1](https://thefederalregister.org/doc/81_FR_62960/page/4.svg)
Document Created: 2016-09-10 00:56:40
Document Modified: 2016-09-10 00:56:40
| 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 62784 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR