82 FR 39466 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend BOX Rule 5050 (Series of Options Contracts Open for Trading), IM-5050-1, To Include the iShares S&P 500 Index ETF in the List of Exchange-Traded Funds Eligible for $1 Strike Price Intervals
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 159 (August 18, 2017)
Federal Register Volume 82, Issue 159 (August 18, 2017)
| Page Range | 39466-39469 | |
| FR Document | 2017-17436 |
[Federal Register Volume 82, Number 159 (Friday, August 18, 2017)] [Notices] [Pages 39466-39469] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-17436] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81391; File No. SR-BOX-2017-27] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend BOX Rule 5050 (Series of Options Contracts Open for Trading), IM- 5050-1, To Include the iShares S&P 500 Index ETF in the List of Exchange-Traded Funds Eligible for $1 Strike Price Intervals August 14, 2017. 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 August 10, 2017, BOX Options Exchange LLC (``BOX'' or the ``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 self-regulatory organization. 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 proposes to amend BOX Rule 5050 (Series of Options Contracts Open for Trading), IM-5050-1, to include the iShares S&P 500 Index ETF (``IVV'') in the list of Exchange-Traded Funds (``ETFs'') that are eligible for $1 strike price intervals. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at http://boxexchange.com. 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 self-regulatory organization 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 self-regulatory organization 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 Exchange proposes to amend BOX Rule 5050 (Series of Options Contracts Open for Trading), to modify the strike setting regime for IVV options by including IVV in the list of ETFs that are eligible for $1 strike price intervals under IM-5050-1(b). This is a competitive filing that is based on an immediately effective filing recently submitted by the Chicago Board Options Exchange, Incorporated (``CBOE'').\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 80913 (June 13, 2017), 82 FR 27907 (June 19, 2017) (SR-CBOE-2017-048). --------------------------------------------------------------------------- Specifically, the Exchange proposes to modify the interval setting regime for IVV options to allow $1 strike price intervals above $200. The Exchange believes that the proposed rule change would make IVV options easier for investors and traders to use and more tailored to their investment needs. Additionally, the interval setting regime the Exchange proposes to apply to IVV options is currently applied to options on units of the Standard & Poor's Depository Receipts Trust (``SPY''),\4\ which is an ETF that is identical in all material respects to the IVV ETF. --------------------------------------------------------------------------- \4\ See IM-5050-1(b). --------------------------------------------------------------------------- The SPY and IVV ETFs are identical in all material respects. The SPY and IVV ETFs are designed to roughly track the performance of the S&P 500 Index with the price of SPY and IVV designed to roughly approximate 1/10th of the price of the S&P 500 Index. Accordingly, SPY and IVV strike prices having a multiplier of $100 reflect a value roughly equal to 1/10th of the value of the S&P 500 Index. For example, if the S&P 500 Index is at 1972.56, SPY and IVV options might have a value of approximately 197.26 with a notional value of $19,726. In general, SPY and IVV options provide retail investors and traders with the benefit of trading the broad market in a manageably sized contract. As options with an ETF underlying, SPY and IVV options are listed in the same manner as equity options under the Rules. However, under current IM-5050-1(d), the interval between strike prices in series of options on Index-Linked Securities,\5\ as defined in Rule 5020(k), will be $1 or greater where the strike price is $200 or less and $5 or greater where the strike price is greater than [[Page 39467]] $200. In addition, under IM-5050-6(b)(5), --------------------------------------------------------------------------- \5\ The Exchange notes that IVV is treated as an Index-Linked Security under current Exchange rules. The interval between strike prices on Short Term Option Series may be (i) $0.50 or greater where the strike price is less than $100, and $1 or greater where the strike price is between $100 and $150 for all option classes that participate in the Short Term Options Series Program; (ii) $0.50 for option classes that trade in one dollar increments in Related non-short Term Options and are in the Short Term Option Series Program; or (iii) $2.50 or greater where the strike price is above $150. During the month prior to expiration of an option class that is selected for the Short Term Option Series Program pursuant to this rule (Short Term Option), the strike price intervals for the related non- Short Term Option shall --------------------------------------------------------------------------- be the same as the strike price intervals for the Short Term Option. The Exchange's proposal seeks to narrow the strike price intervals to $1 for IVV options above $200, in effect matching the strike setting regime for strike intervals in IVV options below $200 and matching the strike setting regime applied to SPY options. Currently, the S&P 500 Index is above 2000. The S&P 500 Index is widely regarded as the best single gauge of large cap U.S. equities and is widely quoted as an indicator of stock prices and investor confidence in the securities market. As a result, individual investors often use S&P 500 Index-related products to diversify their portfolios and benefit from market trends. Accordingly, the Exchange believes that offering a wider range of S&P 500 Index-based option strikes affords traders and investors important hedging and trading opportunities. The Exchange believes that not having the proposed $1 strike price intervals above $200 in IVV significantly constricts investors' hedging and trading possibilities. The Exchange proposes to amend IM-5050-1(b) to allow IVV options to trade in $1 increments above a strike price of $200. Specifically, the Exchange proposes to amend IM-5050-1(b) to state that, ``[n]otwithstanding any other provision regarding the interval of strike prices of series of options on Exchange-Traded Fund Shares in this rule, the interval of strike prices on SPDR S&P 500 ETF (``SPY''), iShares S&P 500 Index ETF (``IVV''), and the SPDR Dow Jones Industrial Average ETF (``DIA'') options will be $1 or greater.'' The Exchange believes that by having smaller strike intervals in IVV, investors would have more efficient hedging and trading opportunities due to the lower $1 interval ascension. The proposed $1 intervals, particularly above the $200 strike price, will result in having at-the-money series based upon the underlying moving less than 1%. The Exchange believes that the proposed strike setting regime is in line with the slower movements of broad-based indices. Furthermore, the proposed $1 intervals would allow option trading strategies (such as, for example, risk reduction/hedging strategies using IVV weekly options), to remain viable. Considering the fact that $1 intervals already exist below the $200 price point and that IVV is above the $200 level, the Exchange believes that continuing to maintain the artificial $200 level (above which intervals increase 500% to $5), would have a negative effect on investing, trading and hedging opportunities, and volume. The Exchange believes that the investing, trading, and hedging opportunities available with IVV options far outweighs any potential negative impact of allowing IVV options to trade in more finely tailored intervals above the $200 price point. The proposed strike setting regime would permit strikes to be set to more closely reflect values in the underlying S&P 500 Index and allow investors and traders to roll open positions from a lower strike to a higher strike in conjunction with the price movement of the underlying. Under the current rule, where the next higher available series would be $5 away above a $200 strike price, the ability to roll such positions is effectively negated. Accordingly, to move a position from a $200 strike to a $205 strike under the current rule, an investor would need for the underlying product to move 2.5%, and would not be able to execute a roll up until such a large movement occurred. With the proposed rule change, however, the investor would be in a significantly safer position of being able to roll his open options position from a $200 to a $201 strike price, which is only a 0.5% move for the underlying. The proposed rule change will allow the Exchange to better respond to customer demand for IVV strike prices more precisely aligned with current S&P 500 Index values. The Exchange believes that the proposed rule change, like the other strike price programs currently offered by the Exchange, will benefit investors by providing investors the flexibility to more closely tailor their investment and hedging decisions using IVV options. By allowing series of IVV options to be listed in $1 intervals between strike prices over $200, the proposal will moderately augment the potential total number of option series available on the Exchange. However, the Exchange believes it and the Options Price Reporting Authority (``OPRA'') have the necessary systems capacity to handle any potential additional traffic associated with this proposed rule change. The Exchange also believes that Participants will not have a capacity issue due to the proposed rule change. In addition, the Exchange represents that it does not believe that this expansion will cause fragmentation of liquidity. In addition, the interval setting regime the Exchange proposes to apply to IVV options is currently applied to options on SPY \6\ 7 [sic] which is an ETF that is identical in all material respects to the IVV ETF. --------------------------------------------------------------------------- \6\ See IM-5050-1(b). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Securities Exchange Act of 1934 (the ``Act''),\7\ in general, and Section 6(b)(5) of the Act,\8\ 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. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \9\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f(b). \8\ 15 U.S.C. 78f(b)(5). \9\ Id. --------------------------------------------------------------------------- In particular, the proposed rule change will allow investors to more easily use IVV options. Moreover, the proposed rule change would allow investors to better trade and hedge positions in IVV options where the strike price is greater than $200, and ensure that IVV options investors are not at a disadvantage simply because of the strike price. The Exchange also believes the proposed rule change is consistent with Section 6(b)(1) of the Act, which provides that the Exchange be organized and have the capacity to be able to carry out the purposes of the Act and the rules and regulations thereunder, and the rules of the Exchange. The rule change proposal allows the Exchange to respond to customer demand to allow IVV options to trade in $1 intervals above a $200 strike price. The Exchange does not believe that the proposed rule would create additional capacity issues or affect market functionality. [[Page 39468]] As noted above, some ETF options trade in wider $5 intervals above a $200 strike price, whereby options at or below a $200 strike price trade in $1 intervals. This creates a situation where contracts on the same option class effectively may not be able to execute certain strategies such as, for example, rolling to a higher strike price, simply because of the arbitrary $200 strike price above which options intervals increase by 500%. This proposal remedies this situation by establishing an exception to the current interval regime for IVV options to allow such options to trade in $1 or greater intervals at all strike prices. The Exchange believes that the proposed rule change, like other strike price programs currently offered by the Exchange, will benefit investors by giving them increased flexibility to more closely tailor their investment and hedging decisions. Moreover, the proposed rule change is consistent with the rules of other exchanges.\10\ --------------------------------------------------------------------------- \10\ See Nasdaq Phlx Rule 1012.05(a)(iv)(C) and CBOE Rule 5.5.08(b). --------------------------------------------------------------------------- With regard to the impact of this proposal on system capacity, the Exchange believes it and OPRA have the necessary systems capacity to handle any potential additional traffic associated with this proposed rule change. The Exchange believes that its Members will not have a capacity issue as a result of this proposal. In addition, the interval setting regime the Exchange proposes to apply to IVV options is currently applied to options on SPY,\11\ which is an ETF that is identical in all material respects to the IVV ETF. --------------------------------------------------------------------------- \11\ See IM-5050-1(b). --------------------------------------------------------------------------- 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 not necessary or appropriate in furtherance of the purposes of the Act. Rather, the Exchange believes that the proposed rule change will result in additional investment options and opportunities to achieve the investment and trading objectives of market participants seeking efficient trading and hedging vehicles, to the benefit of investors, market participant, and the marketplace in general. Specifically, the Exchange believes that IVV options investors and traders will significantly benefit from the availability of finer strike price intervals above a $200 price point. In addition, the interval setting regime the Exchange proposes to apply to IVV options is currently applied to options on SPY,\12\ which is an ETF that is identical in all material respects to the IVV ETF. Thus, applying the same strike setting regime to SPY and IVV options will help level the playing field for options on similar, competing ETFs. --------------------------------------------------------------------------- \12\ Id. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. 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 intent to file the proposed rule change, along with a brief description and the text of 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 pursuant to Rule 19b-4(f)(6) under the Act \15\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \16\ 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 because this proposal permits listing IVV options in a manner permitted by the Chicago Board Options Exchange, Incorporated,\17\ and will provide investors with an alternative venue for trading IVV options. The Commission also notes that the proposed rule change is consistent with the strike price intervals in IVV options that is permitted on other exchanges and thus raises no new novel or substantive issues.\18\ Accordingly, the Commission hereby waives the operative delay and designates the proposal operative upon filing.\19\ --------------------------------------------------------------------------- \15\ 17 CFR 240.19b-4(f)(6). \16\ 17 CFR 240.19b-4(f)(6)(iii). \17\ See supra note 3. \18\ See supra note 10. See also Miami International Securities Exchange, LLC Rule 404, Interpretations and Policies .10; The Nasdaq Options Market LLC Rules, Chapter IV, Section 6, Supplementary Material .01(c). \19\ 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). --------------------------------------------------------------------------- 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. 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 rule-comments@sec.gov. Please include File Number SR-BOX-2017-27 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-BOX-2017-27. 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 [[Page 39469]] 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-BOX-2017-27 and should be submitted on or before September 8, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-17436 Filed 8-17-17; 8:45 am] BILLING CODE 8011-01-P
![39466 Federal Register / Vol. 82, No. 159 / Friday, August 18, 2017 / Notices
date, and the authority cited by the SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
Postal Service for each request. For each COMMISSION Statement of the Purpose of, and
request, the Commission appoints an Statutory Basis for, the Proposed Rule
[Release No. 34–81391; File No. SR–BOX–
officer of the Commission to represent 2017–27]
Change
the interests of the general public in the
1. Purpose
proceeding, pursuant to 39 U.S.C. 505 Self-Regulatory Organizations; BOX
(Public Representative). Section II also Options Exchange LLC; Notice of The Exchange proposes to amend
establishes comment deadline(s) Filing and Immediate Effectiveness of BOX Rule 5050 (Series of Options
pertaining to each request. a Proposed Rule Change To Amend Contracts Open for Trading), to modify
The public portions of the Postal BOX Rule 5050 (Series of Options the strike setting regime for IVV options
Service’s request(s) can be accessed via Contracts Open for Trading), IM–5050– by including IVV in the list of ETFs that
the Commission’s Web site (http:// 1, To Include the iShares S&P 500 are eligible for $1 strike price intervals
www.prc.gov). Non-public portions of Index ETF in the List of Exchange- under IM–5050–1(b). This is a
the Postal Service’s request(s), if any, Traded Funds Eligible for $1 Strike competitive filing that is based on an
can be accessed through compliance Price Intervals immediately effective filing recently
with the requirements of 39 CFR submitted by the Chicago Board Options
3007.40. August 14, 2017. Exchange, Incorporated (‘‘CBOE’’).3
The Commission invites comments on Pursuant to Section 19(b)(1) of the Specifically, the Exchange proposes to
whether the Postal Service’s request(s) Securities Exchange Act of 1934 modify the interval setting regime for
in the captioned docket(s) are consistent (‘‘Act’’),1 and Rule 19b–4 thereunder,2 IVV options to allow $1 strike price
with the policies of title 39. For notice is hereby given that on August intervals above $200. The Exchange
request(s) that the Postal Service states 10, 2017, BOX Options Exchange LLC believes that the proposed rule change
concern market dominant product(s), (‘‘BOX’’ or the ‘‘Exchange’’) filed with would make IVV options easier for
applicable statutory and regulatory the Securities and Exchange investors and traders to use and more
requirements include 39 U.S.C. 3622, 39 Commission (‘‘Commission’’) the tailored to their investment needs.
U.S.C. 3642, 39 CFR part 3010, and 39 proposed rule change as described in Additionally, the interval setting regime
CFR part 3020, subpart B. For request(s) Items I and II below, which Items have the Exchange proposes to apply to IVV
that the Postal Service states concern been prepared by the self-regulatory options is currently applied to options
competitive product(s), applicable organization. The Commission is on units of the Standard & Poor’s
statutory and regulatory requirements publishing this notice to solicit Depository Receipts Trust (‘‘SPY’’),4
include 39 U.S.C. 3632, 39 U.S.C. 3633, comments on the proposed rule change which is an ETF that is identical in all
39 U.S.C. 3642, 39 CFR part 3015, and from interested persons. material respects to the IVV ETF.
39 CFR part 3020, subpart B. Comment I. Self-Regulatory Organization’s The SPY and IVV ETFs are identical
deadline(s) for each request appear in Statement of the Terms of Substance of in all material respects. The SPY and
section II. the Proposed Rule Change IVV ETFs are designed to roughly track
the performance of the S&P 500 Index
II. Docketed Proceeding(s) The Exchange proposes to amend
with the price of SPY and IVV designed
BOX Rule 5050 (Series of Options
1. Docket No(s).: CP2017–263; Filing to roughly approximate 1/10th of the
Contracts Open for Trading), IM–5050–
Title: Notice of United States Postal price of the S&P 500 Index.
1, to include the iShares S&P 500 Index
Service of Filing a Functionally Accordingly, SPY and IVV strike prices
ETF (‘‘IVV’’) in the list of Exchange-
Equivalent Global Expedited Package having a multiplier of $100 reflect a
Traded Funds (‘‘ETFs’’) that are eligible
Services 7 Negotiated Service value roughly equal to 1/10th of the
for $1 strike price intervals. The text of
Agreement and Application for Non- value of the S&P 500 Index. For
the proposed rule change is available
Public Treatment of Materials Filed example, if the S&P 500 Index is at
from the principal office of the
Under Seal; Filing Acceptance Date: 1972.56, SPY and IVV options might
Exchange, at the Commission’s Public
August 14, 2017; Filing Authority: 39 have a value of approximately 197.26
Reference Room and also on the
CFR 3015.5; Public Representative: with a notional value of $19,726. In
Exchange’s Internet Web site at http://
Kenneth R. Moeller; Comments Due: general, SPY and IVV options provide
boxexchange.com.
August 22, 2017. retail investors and traders with the
2. Docket No(s).: CP2017–264; Filing II. Self-Regulatory Organization’s benefit of trading the broad market in a
Title: Notice of United States Postal Statement of the Purpose of, and manageably sized contract. As options
Service of Filing a Functionally Statutory Basis for, the Proposed Rule with an ETF underlying, SPY and IVV
Equivalent Global Expedited Package Change options are listed in the same manner as
Services 7 Negotiated Service In its filing with the Commission, the equity options under the Rules.
Agreement and Application for Non- self-regulatory organization included However, under current IM–5050–
Public Treatment of Materials Filed statements concerning the purpose of, 1(d), the interval between strike prices
Under Seal; Filing Acceptance Date: and basis for, the proposed rule change in series of options on Index-Linked
August 14, 2017; Filing Authority: 39 and discussed any comments it received Securities,5 as defined in Rule 5020(k),
CFR 3015.5; Public Representative: on the proposed rule change. The text will be $1 or greater where the strike
Kenneth R. Moeller; Comments Due: of these statements may be examined at price is $200 or less and $5 or greater
August 22, 2017. the places specified in Item IV below. where the strike price is greater than
mstockstill on DSK30JT082PROD with NOTICES
This notice will be published in the The self-regulatory organization has
3 See Securities Exchange Act Release No. 80913
Federal Register. prepared summaries, set forth in
(June 13, 2017), 82 FR 27907 (June 19, 2017) (SR–
Sections A, B, and C below, of the most CBOE–2017–048).
Stacy L. Ruble,
significant aspects of such statements. 4 See IM–5050–1(b).
Secretary.
5 The Exchange notes that IVV is treated as an
[FR Doc. 2017–17492 Filed 8–17–17; 8:45 am] 1 15 U.S.C. 78s(b)(1). Index-Linked Security under current Exchange
BILLING CODE 7710–FW–P 2 17 CFR 240.19b–4. rules.
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![Federal Register / Vol. 82, No. 159 / Friday, August 18, 2017 / Notices 39467
$200. In addition, under IM–5050– believes that the proposed strike setting change. The Exchange also believes that
6(b)(5), regime is in line with the slower Participants will not have a capacity
The interval between strike prices on Short movements of broad-based indices. issue due to the proposed rule change.
Term Option Series may be (i) $0.50 or Furthermore, the proposed $1 intervals In addition, the Exchange represents
greater where the strike price is less than would allow option trading strategies that it does not believe that this
$100, and $1 or greater where the strike price (such as, for example, risk reduction/ expansion will cause fragmentation of
is between $100 and $150 for all option hedging strategies using IVV weekly liquidity.
classes that participate in the Short Term options), to remain viable. Considering
Options Series Program; (ii) $0.50 for option
In addition, the interval setting regime
the fact that $1 intervals already exist the Exchange proposes to apply to IVV
classes that trade in one dollar increments in
Related non-short Term Options and are in
below the $200 price point and that IVV options is currently applied to options
the Short Term Option Series Program; or is above the $200 level, the Exchange on SPY 6 7 [sic] which is an ETF that is
(iii) $2.50 or greater where the strike price is believes that continuing to maintain the identical in all material respects to the
above $150. During the month prior to artificial $200 level (above which IVV ETF.
expiration of an option class that is selected intervals increase 500% to $5), would
for the Short Term Option Series Program have a negative effect on investing, 2. Statutory Basis
pursuant to this rule (Short Term Option), trading and hedging opportunities, and
the strike price intervals for the related non- The Exchange believes that the
volume. The Exchange believes that the proposal is consistent with the
Short Term Option shall be the same as the
strike price intervals for the Short Term
investing, trading, and hedging requirements of Section 6(b) of the
Option. opportunities available with IVV Securities Exchange Act of 1934 (the
options far outweighs any potential ‘‘Act’’),7 in general, and Section 6(b)(5)
The Exchange’s proposal seeks to negative impact of allowing IVV options
narrow the strike price intervals to $1 of the Act,8 in particular, in that it is
to trade in more finely tailored intervals designed to prevent fraudulent and
for IVV options above $200, in effect above the $200 price point.
matching the strike setting regime for manipulative acts and practices, to
The proposed strike setting regime
strike intervals in IVV options below promote just and equitable principles of
would permit strikes to be set to more
$200 and matching the strike setting trade, to foster cooperation and
closely reflect values in the underlying
regime applied to SPY options. coordination with persons engaged in
S&P 500 Index and allow investors and
Currently, the S&P 500 Index is above facilitating transactions in securities, to
traders to roll open positions from a
2000. The S&P 500 Index is widely remove impediments to and perfect the
lower strike to a higher strike in
regarded as the best single gauge of large mechanism of a free and open market
conjunction with the price movement of
cap U.S. equities and is widely quoted and a national market system, and, in
the underlying. Under the current rule,
as an indicator of stock prices and general to protect investors and the
where the next higher available series
investor confidence in the securities would be $5 away above a $200 strike public interest. Additionally, the
market. As a result, individual investors price, the ability to roll such positions Exchange believes the proposed rule
often use S&P 500 Index-related is effectively negated. Accordingly, to change is consistent with the Section
products to diversify their portfolios move a position from a $200 strike to a 6(b)(5) 9 requirement that the rules of an
and benefit from market trends. $205 strike under the current rule, an exchange not be designed to permit
Accordingly, the Exchange believes that investor would need for the underlying unfair discrimination between
offering a wider range of S&P 500 Index- product to move 2.5%, and would not customers, issuers, brokers, or dealers.
based option strikes affords traders and be able to execute a roll up until such In particular, the proposed rule
investors important hedging and trading a large movement occurred. With the change will allow investors to more
opportunities. The Exchange believes proposed rule change, however, the easily use IVV options. Moreover, the
that not having the proposed $1 strike investor would be in a significantly proposed rule change would allow
price intervals above $200 in IVV safer position of being able to roll his investors to better trade and hedge
significantly constricts investors’ open options position from a $200 to a positions in IVV options where the
hedging and trading possibilities. $201 strike price, which is only a 0.5% strike price is greater than $200, and
The Exchange proposes to amend IM– move for the underlying. The proposed ensure that IVV options investors are
5050–1(b) to allow IVV options to trade rule change will allow the Exchange to not at a disadvantage simply because of
in $1 increments above a strike price of better respond to customer demand for the strike price.
$200. Specifically, the Exchange IVV strike prices more precisely aligned The Exchange also believes the
proposes to amend IM–5050–1(b) to with current S&P 500 Index values. The proposed rule change is consistent with
state that, ‘‘[n]otwithstanding any other Exchange believes that the proposed Section 6(b)(1) of the Act, which
provision regarding the interval of strike rule change, like the other strike price provides that the Exchange be organized
prices of series of options on Exchange- programs currently offered by the and have the capacity to be able to carry
Traded Fund Shares in this rule, the Exchange, will benefit investors by out the purposes of the Act and the
interval of strike prices on SPDR S&P providing investors the flexibility to rules and regulations thereunder, and
500 ETF (‘‘SPY’’), iShares S&P 500 more closely tailor their investment and the rules of the Exchange. The rule
Index ETF (‘‘IVV’’), and the SPDR Dow hedging decisions using IVV options. change proposal allows the Exchange to
Jones Industrial Average ETF (‘‘DIA’’) By allowing series of IVV options to respond to customer demand to allow
options will be $1 or greater.’’ The be listed in $1 intervals between strike IVV options to trade in $1 intervals
Exchange believes that by having prices over $200, the proposal will above a $200 strike price. The Exchange
smaller strike intervals in IVV, investors moderately augment the potential total does not believe that the proposed rule
mstockstill on DSK30JT082PROD with NOTICES
would have more efficient hedging and number of option series available on the would create additional capacity issues
trading opportunities due to the lower Exchange. However, the Exchange or affect market functionality.
$1 interval ascension. The proposed $1 believes it and the Options Price
intervals, particularly above the $200 Reporting Authority (‘‘OPRA’’) have the 6 See IM–5050–1(b).
strike price, will result in having at-the- necessary systems capacity to handle 7 15 U.S.C. 78f(b).
money series based upon the underlying any potential additional traffic 8 15 U.S.C. 78f(b)(5).
moving less than 1%. The Exchange associated with this proposed rule 9 Id.
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![Federal Register / Vol. 82, No. 159 / Friday, August 18, 2017 / Notices 39469
business days between the hours of American’’).4 The Exchange also closely related to the NYSE American’s
10:00 a.m. and 3:00 p.m. Copies of such proposes to make non-substantive rates, including the rates for providing
filing also will be available for changes to the Fee Schedule in liquidity, and the Exchange is proposing
inspection and copying at the principal connection with the name change of its an adjustment to its rates to remain
office of the Exchange. All comments affiliate NYSE MKT LLC to NYSE competitive with the rates of NYSE
received will be posted without change; American LLC. The Exchange proposes American. Specifically, for Tier 1 and
the Commission does not edit personal to implement the changes effective Tier 2 PO 7 and PO+ 8 Orders, the
identifying information from August 4, 2017.5 The proposed rule Exchange currently provides a credit of
submissions. You should submit only change is available on the Exchange’s $0.0016 per share for orders that are
information that you wish to make Web site at www.nyse.com, at the routed to NYSE American that provide
available publicly. All submissions principal office of the Exchange, and at liquidity to the NYSE American order
should refer to File Number SR–BOX– the Commission’s Public Reference book, which is equal to the NYSE
2017–27 and should be submitted on or Room. American rebate for execution of
before September 8, 2017. customer orders that add liquidity to
II. Self-Regulatory Organization’s
For the Commission, by the Division of NYSE American.
Statement of the Purpose of, and A PO Order is designed to route to the
Trading and Markets, pursuant to delegated Statutory Basis for, the Proposed Rule
authority.20 primary listing market of the security
Change underlying the order (i.e., NYSE,
Eduardo A. Aleman,
Assistant Secretary.
In its filing with the Commission, the NASDAQ, etc.) immediately upon
self-regulatory organization included arrival and the order therefore does not
[FR Doc. 2017–17436 Filed 8–17–17; 8:45 am]
statements concerning the purpose of, rest on the Exchange’s order book.
BILLING CODE 8011–01–P
and basis for, the proposed rule change Because such orders do not rest on the
and discussed any comments it received Exchange’s book, the Exchange charges
on the proposed rule change. The text fees or provides credits for those orders
SECURITIES AND EXCHANGE
of those statements may be examined at based on the fees or credits of the
COMMISSION
the places specified in Item IV below. destination primary listing market,
[Release No. 34–81392; File No. SR– The Exchange has prepared summaries, which are the fees and credits that the
NYSEARCA–2017–89] set forth in sections A, B, and C below, Exchange is charged by the primary
of the most significant parts of such listing market that receives the order. In
Self-Regulatory Organizations; NYSE statements. the NYSE American Fee Filing, NYSE
Arca, Inc.; Notice of Filing and
A. Self-Regulatory Organization’s American proposed to not charge a fee
Immediate Effectiveness of Proposed
Statement of the Purpose of, and the or provide a credit for executions of
Rule Change To Amend the NYSE Arca
Statutory Basis for, the Proposed Rule displayed orders that provide liquidity
Equities Schedule of Fees and
Change on that exchange.9 Accordingly, the
Charges for Exchange Services To
Exchange is proposing to amend the
Modify the Fees and Credits for 1. Purpose rates for routing Tier 1 and Tier 2 PO
Routing Certain Orders to NYSE
The Exchange proposes to amend the Orders to NYSE American to reflect the
American LLC
Fee Schedule to modify the fees and rates proposed by NYSE American. As
August 14, 2017. credits for routing certain orders to the proposed, there will be no credit for
Pursuant to Section 19(b)(1) 1 of the NYSE American. The Exchange also such orders routed to NYSE American
Securities Exchange Act of 1934 (the proposes to make non-substantive that provide liquidity to the NYSE
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 changes to the Fee Schedule in American book.
notice is hereby given that, on August connection with the name change of its The Exchange proposes to make
4, 2017, NYSE Arca, Inc. (the affiliate NYSE MKT LLC to NYSE corresponding changes to the Basic Rate
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with American LLC. pricing section of the Fee Schedule.
the Securities and Exchange In a recent rule filing, NYSE Additionally, in the NYSE American
Commission (the ‘‘Commission’’) the American proposed to modify its fee Fee Filing, NYSE American proposed to
proposed rule change as described in schedule for equities transactions, charge a fee of $0.0005 per share for
Items I, II, and III below, which Items including changes to the rates for executions at the open or close.
have been prepared by the self- providing liquidity and for executions
7 A PO order is a Market or Limit Order that on
regulatory organization. The that occur in the opening and closing
arrival is routed directly to the primary listing
Commission is publishing this notice to auction.6 The Exchange’s current credits market without being assigned a working time or
solicit comments on the proposed rule for routing orders to NYSE American are interacting with interest on the NYSE Arca Book.
change from interested persons. See Rule 7.31(f)(1).
4 On July 24, 2017, the Exchange’s affiliate, NYSE 8 The Exchange transitioned to the Pillar trading
I. Self-Regulatory Organization’s MKT LLC, transitioned to the Pillar trading platform in 2016 and on Pillar, the PO+ modifier
Statement of the Terms of Substance of platform and has been renamed NYSE American in the Exchange’s rules was replaced with the
LLC. See Securities Exchange Act Release Nos. Primary Only Day/IOC Order, which is a Primary
the Proposed Rule Change 79242 (November 4, 2016), 81 FR 79081 (November Only Order designated Day or IOC, as provided in
The Exchange proposes to amend the 10, 2016) (SR–NYSEMKT–2016–97); 79400 current Rule 7.31(f)(1(B). See Securities Exchange
NYSE Arca Equities Schedule of Fees (November 25, 2016), 81 FR 86750 (December 1, Act Release No. 76267 (October 26, 2015), 80 FR
2016) (SR–NYSEMKT–2016–103); 80283 (March 21, 66951 (October 30, 2015) (SR–NYSEArca-2015–56).
and Charges for Exchange Services 2017), 82 FR 15244 (March 27, 2017) (SR– A Primary Only Order designated Day functions
mstockstill on DSK30JT082PROD with NOTICES
(‘‘Fee Schedule’’) to modify the fees and NYSEMKT–2017–14); and 80748 (May 23, 2017), 82 similar to what was a PO+ Order. Therefore, to
credits for routing certain orders to FR 24764 (May 30, 2017) (SR–NYSEMKT–2017–20). promote clarity to the Fee Schedule and avoid any
5 The Exchange originally filed to amend the Fee confusion, the Exchange proposes to remove
NYSE American LLC (‘‘NYSE
Schedule on July 24, 2017 (SR–NYSEArca-2017–81) reference to PO+ Orders from the Fee Schedule.
and withdrew such filing on August 4, 2017. 9 The Exchange notes that orders that are routed
20 17 CFR 200.30–3(a)(12). 6 See Securities Exchange Act Release No. 81228 to NYSE American will be displayed on that
1 15 U.S.C. 78s(b)(1). (July 27, 2017), 82 FR 36012 (August 2, 2017) (SR– exchange. PO Orders do not provide ETP Holders
2 15 U.S.C. 78a.
NYSEMKT–2017–43) (the ‘‘NYSE American Fee the ability to add non-displayed liquidity to away
3 17 CFR 240.19b–4. Filing’’). markets.
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Document Created: 2017-08-18 07:40:41
Document Modified: 2017-08-18 07:40:41
| 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 | 82 FR 39466 |
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