83_FR_18173 83 FR 18093 - Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Rule 904, Commentary .07 To Expand Position Limits for Options on Certain Exchange-Traded Funds

83 FR 18093 - Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Rule 904, Commentary .07 To Expand Position Limits for Options on Certain Exchange-Traded Funds

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 80 (April 25, 2018)

Page Range18093-18099
FR Document2018-08615

Federal Register, Volume 83 Issue 80 (Wednesday, April 25, 2018)
[Federal Register Volume 83, Number 80 (Wednesday, April 25, 2018)]
[Notices]
[Pages 18093-18099]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-08615]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83065; File No. SR-NYSEAMER-2018-14]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Rule 904, Commentary .07 To Expand Position Limits for Options on 
Certain Exchange-Traded Funds

April 19, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on April 6, 2018, NYSE American LLC (the ``Exchange'' or 
``NYSE American'') 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to modify Rule 904 (Position Limits), 
Commentary .07 to expand position limits for options on certain 
Exchange-Traded Funds (ETFs). The proposed rule change is available on 
the Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the 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 those 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 parts 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 Rule 904, Commentary .07 to expand 
position limits for options on certain ETFs. Specifically, the Exchange 
proposes to expand the position limits for options on the following 
ETFs: iShares China Large-Cap ETF (``FXI''), iShares MSCI EAFE ETF 
(``EFA''), iShares MSCI Emerging Markets ETF (``EEM''), iShares Russell 
2000 ETF (``IWM''), iShares MSCI Brazil Capped ETF (``EWZ''), iShares 
20+ Year Treasury Bond Fund ETF (``TLT''), PowerShares QQQ Trust 
(``QQQQ''), and iShares MSCI Japan ETF (``EWJ''). This is a competitive 
filing that is based on a proposal recently submitted by the Chicago 
Board Options Exchange Incorporated (``Cboe'') and approved by the 
Securities and Exchange Commission (``Commission'').\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 82770 (February 23, 
2018), 83 FR 8907 (March 1, 2018) (Order Granting Accelerated 
Approval SR-SR-CBOE-2017-057) (the ``Cboe Approval Order'').
---------------------------------------------------------------------------

Position Limit Increase
    Position limits are designed to address potential manipulative 
schemes and adverse market impact surrounding the use of options, such 
as disrupting the market in the security underlying the options. The 
potential manipulative schemes and adverse market impact are balanced 
against the potential of setting the limits so low as to discourage 
participation in the options market. The level of those position limits 
must be balanced between curtailing potential manipulation and the cost 
of preventing potential hedging activity that could be used for 
legitimate economic purposes. Position limits for options on ETFs, such 
as those subject to this proposal, are determined pursuant to Rule 904, 
and vary according to the number of outstanding shares and the trading 
volume of the underlying stocks or ETFs over the past six-months. 
Pursuant to Rule 904, the largest in capitalization and the most 
frequently traded stocks and ETFs have an option position limit of 
250,000 contracts (with adjustments for splits, re-capitalizations, 
etc.) on the same side of the market; and smaller capitalization stocks 
and ETFs have position limits of 200,000, 75,000, 50,000 or 25,000 
contracts (with adjustments for splits, re-capitalizations, etc.) on 
the same side of the market. Options on FXI, EFA, EWZ, TLT, and EWJ are 
currently subject to the standard position limit of 250,000 contracts 
as set forth in Rule 904.\5\ Rule 904, Commentary .07 sets forth 
separate position limits for options on specific ETFs as follows:
---------------------------------------------------------------------------

    \5\ See https://www.theocc.com/webapps/delo-search.
---------------------------------------------------------------------------

     Options on EEM are 500,000 contracts;
     Options on IWM are 500,000 contracts; and
     Options on QQQQ are 900,000 contracts.
    The purpose of this proposal is to amend Rule 904, Commentary .07 
to double the position and exercise limits for FXI, EEM, IWM, EFA, EWZ, 
TLT, QQQQ, and EWJ.\6\ The Exchange notes

[[Page 18094]]

that it also proposes to make non-substantive changes corrections to 
the names of IWM and EEM (replacing ``Index Fund with ETF'') and to 
assign letters (a)--(f) to the paragraphs in current Commentary .07 to 
the Rule to make it easier to follow (and reference).\7\
---------------------------------------------------------------------------

    \6\ By virtue of Rule 905 (Exercise Limits), which is not being 
amended by this filing, the exercise limit for FXI, EEM, IWM, EFA, 
EWZ, TLT, QQQQ, and EWJ options would be similarly increased. The 
Exchange notes that it also proposes to make non-substantive changes 
corrections to the names of IWM and EEM and to assign letters (a)-
(f) to the paragraphs in current Commentary .07 to the Rule to make 
it easier to follow (and reference). See proposed Commentary .07(a)-
(f) to Rule 904. The Exchange does not propose to alter the 
substances of new paragraphs (a)-(e) of the Commentary. Proposed 
changes to paragraph (f) are discussed herein. See proposed 
Commentary .07(f) to Rule 904.
    \7\ See proposed Commentary .07(a)-(f) to Rule 904. The Exchange 
does not propose to alter the substances of new paragraphs (a)-(e) 
of the Commentary. Proposed changes to paragraph (f) are discussed 
herein. See proposed Commentary .07(f) to Rule 904.
---------------------------------------------------------------------------

    As such, options on FXI, EFA, EWZ, TLT, and EWJ would no longer be 
subject to the standard position limits set forth under Rule 904. 
Accordingly, Commentary .07(f) would be amended to set forth that the 
position limits for options on FXI, EFA, EWZ, TLT, and EWJ would be 
500,000 contracts. These position limits equal the current position 
limits for option on IWM and EMM and are similar to the current 
position limit for options on QQQQ set forth in Rule 904, Commentary 
.07. Further, Rule 904 would also be amended to increase the position 
limits for the remaining options subject to this proposal as follows:
     The position limits for options on EEM would be increased 
from 500,000 contracts to 1,000,000 contracts;
     The position limits on options on IWM would be increased 
from 500,000 contracts to 1,000,000 contracts;
     The position limits on options on QQQQ would be increased 
from 900,000 contracts to 1,800,000 contracts.\8\
---------------------------------------------------------------------------

    \8\ See proposed Commentary .07(f) to Rule 904.
---------------------------------------------------------------------------

    In support of this proposal, the Exchange represents that the above 
listed ETFs qualify for either: (i) The initial listing criteria set 
forth in Rule 915, Commentary .06(b) for ETFs holding non-U.S. 
component securities; or (ii) for ETFs listed pursuant to generic 
listing standards for series of portfolio depository receipts and index 
fund shares based on international or global indexes under which a 
comprehensive surveillance agreement (``CSA'') is not required.\9\ FXI 
tracks the performance of the FTSE China 50 Index, which is composed of 
the 50 largest Chinese stocks.\10\ EEM tracks the performance of the 
MSCI Emerging Markets Index, which is composed of approximately 800 
component securities.\11\ ``The MSCI Emerging Markets Index consists of 
the following 21 emerging market country indices: Brazil, Chile, China, 
Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, 
Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South 
Africa, Taiwan, Thailand, and Turkey.'' \12\ IWM tracks the performance 
of the Russell 2000 Index, which is composed of 2,000 small-cap 
domestic stocks.\13\ EFA tracks the performance of MSCI EAFE Index, 
which has over 900 component securities.\14\ ``The MSCI EAFE Index is 
designed to represent the performance of large and mid-cap securities 
across 21 developed markets, including countries in Europe, Australasia 
and the Far East, excluding the U.S. and Canada.'' \15\ EWZ tracks the 
performance of the MSCI Brazil 25/50 Index, which is composed of shares 
of large and mid-size companies in Brazil.\16\ TLT tracks the 
performance of ICE U.S. Treasury 20+ Year Bond Index, which is composed 
of long-term U.S. Treasury bonds.\17\ QQQQ tracks the performance of 
the Nasdaq-100 Index, which is composed of 100 of the largest domestic 
and international nonfinancial companies listed on the Nasdaq Stock 
Market LLC (``Nasdaq'').\18\ EWJ tracks the MSCI Japan Index, which 
tracks the performance of large and mid-sized companies in Japan.\19\
---------------------------------------------------------------------------

    \9\ The Exchange notes that the initial listing criteria for 
options on ETFs that hold non-U.S. component securities are more 
stringent than the maintenance listing criteria for those same ETF 
options. See Rule 915, Commentary .06(b)(ii)(A); Rule 915, 
Commentary .06.
    \10\ See https://www.ishares.com/us/products/239536/ishares-china-largecap-etf.
    \11\ See http://us.ishares.com/productinfo/fund/overview/EEM.htm.
    \12\ See http://www.msci.com/products/indices/tools/index.html#EM.
    \13\ See https://www.ishares.com/us/products/239710/ishares-russell-2000-etf.
    \14\ See https://www.ishares.com/us/products/239623/.
    \15\ See https://www.msci.com/eafe.
    \16\ See https://www.ishares.com/us/products/239612/ishares-msci-brazil-capped-etf.
    \17\ See https://www.ishares.com/us/products/239454.
    \18\ See https://www.invesco.com/portal/site/us/financial-professional/etfs/productdetail?productId=QQQ&ticker=QQQ&title=powershares-qqq.
    \19\ See https://www.ishares.com/us/products/239665/EWJ.
---------------------------------------------------------------------------

    The Exchange represents that more than 50% of the weight of the 
securities held by the options subject to this proposal are also 
subject to a CSA.\20\ Additionally, the component securities of the 
MSCI Emerging Markets Index on which EEM is based for which the primary 
market is in any one country that is not subject to a CSA do not 
represent 20% or more of the weight of the MSCI Emerging Markets 
Index.\21\ Finally, the component securities of the MSCI Emerging 
Markets Index on which EEM is based, for which the primary market is in 
any two countries that are not subject to CSAs do not represent 33% of 
more of the weight of the MSCI Emerging Markets Index.\22\
---------------------------------------------------------------------------

    \20\ See Rule 915, Commentary .06.
    \21\ See Rule 915, Commentary .06(b)(ii)(A).
    \22\ See Rule 915, Commentary .06(b)(ii)(B).
---------------------------------------------------------------------------

    In seeking to expand position limits for the same ETFs at issue in 
this proposal, Cboe represented that market participants have increased 
their demand for options on FXI, EFA, EWZ, TLT, and EWJ for hedging and 
trading purposes and, in support of this claim, presented the trading 
statistics set forth in the table below.\23\
---------------------------------------------------------------------------

    \23\ See Cboe Approval Order, supra note 4.
    \24\ SPDR S&P 500 ETF (``SPY'') is included here for comparison 
purposes.

----------------------------------------------------------------------------------------------------------------
                                                                     2017 ADV         Shares
                       ETF                           2017 ADV         (option       outstanding    Fund  market
                                                   (Mil. shares)    contracts)        (Mil.)       cap  ($Mil.)
----------------------------------------------------------------------------------------------------------------
FXI.............................................           15.08          71,944            78.6        $3,343.6
EEM.............................................           52.12         287,357           797.4        34,926.1
IWM.............................................           27.46         490,070           253.1        35,809.1
EFA.............................................           19.42          98,844          1178.4        78,870.3
EWZ.............................................           17.08          95,152           159.4         6,023.4
TLT.............................................            8.53          80,476            60.0         7,442.4
QQQQ............................................           26.25         579,404           351.6        50,359.7
EWJ.............................................            6.06           4,715           303.6        16,625.1
SPY 24..........................................           64.63       2,575,153          976.23       240,540.0
----------------------------------------------------------------------------------------------------------------


[[Page 18095]]

    The Exchange agrees and believes the current position limits are 
too low and may be a deterrent to successful trading of options on 
these securities. The analysis that follows was likewise conducted by 
Cboe in support of its proposal. The Exchange agrees with Cboe's 
analysis discussed below.
    In support of its proposal to increase the position limits for QQQQ 
to 1,800,000 contracts, Cboe compared the trading characteristics of 
QQQQ to that of SPY, which has no position limits. As shown in Cboe's 
above table, the average daily trading volume through August 14, 2017 
for QQQQ was 26.25 million shares compared to 64.63 million shares for 
SPY. The total shares outstanding for QQQQ are 351.6 million compared 
to 976.23 million for SPY. The fund market cap for QQQQ is $50,359.7 
million compared to $240,540 million for SPY. SPY is one of the most 
actively trading ETFs and is subject to no position limits. QQQQ is 
also very actively traded, and while not to the level of SPY, should be 
subject to the proposed higher position limits based its trading 
characteristics when compared to SPY. The proposed position limit 
coupled with QQQQ's trading behavior would continue to address 
potential manipulative schemes and adverse market impact surrounding 
the use of options and trading in securities underlying the options.
    In support of its proposal to increase the position limits for EEM 
and IWM from 500,000 contracts to 1,000,000 contracts, Cboe also 
compared the trading characteristics of EEM and IWM to that of QQQQ, 
which currently has a position limit of 900,000 contracts. As shown in 
the above table, the average daily trading volume through July 31, 2017 
for EEM was 52.12 million shares and IWM was 27.46 million shares 
compared to 26.25 million shares for QQQQ. The total shares outstanding 
for EEM are 797.4 million and for IWM are 253.1 million compared to 
351.6 million for QQQQ. The fund market cap for EEM is $34,926.1 
million and IWM is $35,809 million compared to $50,359.7 million for 
QQQQ. EEM, IWM and QQQQ have similar trading characteristics and 
subjecting EEM and IWM to the proposed higher position limit would 
continue be designed to address potential manipulative schemes that may 
arise from trading in the options and their underlying securities. 
These above trading characteristics for QQQQ when compared to EEM and 
IWM also justify increasing the position limit for QQQQ. QQQQ has a 
higher options ADV than EEM and IWM, a higher number of shares 
outstanding than IWM and a much higher market cap than EEM and IWM 
which justify doubling the position limit for QQQQ. Based on these 
statistics, and as stated above, the proposed position limit coupled 
with QQQQ's trading behavior would continue to address potential 
manipulative schemes and adverse market impact surrounding the use of 
options and trading in the securities underlying the options.
    In support of its proposal to increase the position limits for FXI, 
EFA, EWZ, TLT, and EWJ from 250,000 contracts to 500,000 contracts, 
Cboe compared the trading characteristics of FXI, EFA, EWZ, TLT and EWJ 
to that of EEM and IWM, both of which currently have a position limit 
of 500,000 contracts. As shown in the above table, the average daily 
trading volume through July 31, 2017 for FXI is 15.08 million shares, 
EFA is 19.42 million shares, EWZ is 17.08 million shares, TLT is 8.53 
million shares, and EWJ is 6.06 million shares compared to 52.12 
million shares for EEM and 27.46 million shares for IWM. The total 
shares outstanding for FXI is 78.6 million, EFA is 1178.4 million, EWZ 
is 159.4 million, TLT is 60 million and EWJ is 303.6 million compared 
to 797.4 million for EEM and 253.1 million for IWM. The fund market cap 
for FXI is $3,343.6 million, EFA is $78,870.3 million, EWZ is $6,023.4 
million, TLT is $7,442.4 million, and EWJ is $16,625.1 million compared 
to $34,926.1 million for EEM and $35,809.1 million for IWM. The above 
trading characteristics of FXI, EFA, EWZ, TLT and EWJ is either similar 
to that of EEM and IWM or sufficiently active enough so that the 
proposed limit would continue to address potential manipulation that 
may arise. EFA has far more shares outstanding and a larger fund market 
cap than EEM, IWM, and QQQQ. EWJ has a more shares outstanding than IWM 
and only slightly less shares outstanding than QQQQ.
    On the other hand, while FXI, EWZ, and TLT do not exceed EEM, IWM 
or QQQQ in any of the specified areas, they are all actively trading so 
that market participant's trading activity has been impacted by them 
being restricted by the current position limits. The Exchange believes 
that the trading activity and these securities being based on a broad 
basket of underlying securities alleviates any potential manipulative 
activity that may arise. In addition, as discussed in more detail 
below, the Exchange's existing surveillance procedures and reporting 
requirements at the Exchange, other options exchanges, and at several 
clearing firms are capable of properly identifying unusual and/or 
illegal trading activity.
    According to Cboe, market participants' trading activity has been 
adversely impacted by the current position limits for FXI, EFA, EWZ, 
TLT, and EWJ and such limits have caused options trading in these 
symbols to move from exchanges to the over-the-counter market.\25\ The 
Exchange understands that certain market participants wishing to make 
trades involving a large number of options contracts in the symbols 
subject to the proposal are opting to execute those trades in the over-
the-counter market. The over-the-counter transactions occur via bi-
lateral agreements, the terms of which are not publicly disclosed to 
other market participants. Therefore, these large trades do not 
contribute to the price discovery process performed on a lit market.
---------------------------------------------------------------------------

    \25\ See SR-CBOE-2017-057, Partial Amendment No. 1 (November 22, 
2017).
---------------------------------------------------------------------------

    The Exchange notes that the ETFs that underlie options subject to 
this proposal are highly liquid, and are based on a broad set of highly 
liquid securities and other reference assets.\26\ The Exchange notes 
that the Commission has generally looked through to the liquidity of 
securities comprising an index in establishing position limits for 
cash-settled index options. The Exchange further notes that options on 
certain broad-based security indexes have no position limits. Likewise, 
the Commission has recognized the liquidity of the securities 
comprising the underlying interest of SPY in permitting no position 
limits on SPY options since 2012,\27\ and expanded position limits for 
options on EEM, IWM, and QQQQ.
---------------------------------------------------------------------------

    \26\ See supra nn. 9-18 (providing trading statistics for each 
ETF at issue in this proposal).
    \27\ See Securities Exchange Act Release No. 67672 (August 15, 
2012), 77 FR 50750 (August 22, 2012).
---------------------------------------------------------------------------

    The proposed position limits set forth in the proposal would 
continue to address potential manipulative activity while allowing for 
potential hedging activity for appropriate economic purposes. The 
creation and redemption process for these ETFs also lessen the 
potential for manipulative activity. When an ETF company wants to 
create more ETF shares, it looks to an Authorized Participant, which is 
a market maker or other large financial institution, to acquire the 
securities the ETF is to hold. For instance, IWM is designed to track 
the performance of the Russell 2000 Index, the Authorized Participant 
will purchase all the Russell 2000 constituent securities in the exact 
same weight as the index, then deliver those shares to the ETF 
provider. In exchange, the ETF provider gives the Authorized 
Participant a block of

[[Page 18096]]

equally valued ETF shares, on a one-for-one fair value basis. The price 
is based on the net asset value, not the market value at which the ETF 
is trading. This process can also work in reverse where the ETF company 
seeks to decrease the number of shares that are available to trade. The 
creation and redemption process, therefore, creates a direct link to 
the underlying components of the ETF, and serves to mitigate potential 
price impact of the ETF shares that might otherwise result from 
increased position limits.
    The ETF creation and redemption seeks to keep ETF share prices 
trading in line with the ETF's underlying net asset value. Because an 
ETF trades like a stock, its price will fluctuate during the trading 
day, due to simple supply and demand. If demand to buy an ETF is high, 
for instance, the ETF's share price might rise above the value of its 
underlying securities. When this happens, the Authorized Participant 
believes the ETF may now be overpriced, and can buy the underlying 
shares that compose the ETF and then sell ETF shares on the open 
market. This should help drive the ETF's share price back toward fair 
value. Likewise, if the ETF starts trading at a discount to the 
securities it holds, the Authorized Participant can buy shares of the 
ETF and redeem them for the underlying securities. Buying undervalued 
ETF shares should drive the price of the ETF back toward fair value. 
This arbitrage process helps to keep an ETF's price in line with the 
value of its underlying portfolio.
    Some of the ETFs underlying options subject to the proposal are 
based on broad-based indices that underlie cash settled options that 
are economically equivalent to the ETF options that are the subject of 
the proposal and have no position limits. Other ETFs are based on 
broad-based indexes that underlie cash-settled options with position 
limits reflecting notional values that are larger than the current 
position limits for ETF analogues (EEM, EFA). Where there was no 
approved index analogue, the Exchange believes, based on the liquidity, 
breadth and depth of the underlying market, that the index referenced 
by the ETF would be considered a broad-based index.\28\ The Exchange 
argues that if certain position limits are appropriate for the options 
overlying the same index or is an analogue to the basket of securities 
that the ETF tracks, then those same economically equivalent position 
limits should be appropriate for the option overlying the ETF. In 
addition, the market capitalization of the underlying index or 
reference asset is large enough to absorb any price movements that may 
be caused by an oversized trade. Also, the Authorized Participant or 
issuer may look to the stocks comprising the analogous underlying index 
or reference asset when seeking to create additional ETF shares are 
part of the creation/redemption process to address supply and demand or 
to mitigate the price movement the price of the ETF.
---------------------------------------------------------------------------

    \28\ See Rule 904C(b) (Position Limits) (describing position 
limits for Broad Stock Index Group).
---------------------------------------------------------------------------

QQQQ
    For example, the PowerShares QQQ Trust or QQQQ is an ETF that 
tracks the Nasdaq 100 Index or NDX, which is an index composed of 100 
of the largest non-financial securities listed on the Nasdaq Stock 
Market LLC (``Nasdaq''). Options on NDX are currently subject to the 
standard position limit of 25,000 contracts for broad-based index 
options but share similar trading characteristics as QQQQ.\29\ Based on 
QQQQ's share price of $154.54 \30\ and NDX's index level of 6,339.14, 
approximately 40 contracts of QQQQ equals one contract of NDX. Based on 
the above comparison of notional values, this would result in a 
position limit equivalent to 1,000,000 contracts for QQQQ as NDX's 
analogue. NDX is subject to the standard position limit of 25,000 
contracts for broad-based index options and has an average daily 
trading volume of 15,300 contracts. QQQQ is currently subject to a 
position limit of 900,000 contracts but has a much higher average daily 
trading volume of 579,404 contracts. Furthermore, NDX currently has a 
market capitalization of $17.2 trillion and QQQQ has a market 
capitalization of $50,359.7 million, and the component securities of 
NDX, in aggregate, have traded an average of 440 million shares per day 
in 2017, both large enough to absorb any price movement caused by a 
large trade in the QQQQ. The Exchange notes that other exchanges allow 
no position limits for NDX,\31\ although it has a much lower average 
daily trading volume than its analogue, the QQQQ. Therefore, the 
Exchange believes it is reasonable to increase the position limit for 
options on the QQQQ from 900,000 to 1,800,000 contracts.
---------------------------------------------------------------------------

    \29\ See id.
    \30\ All share prices used herein are based on the closing price 
of the security on November 16, 2017. Source: Yahoo Finance.
    \31\ See Cboe Rule 24.4 sets forth position limits for broad-
based index options.
---------------------------------------------------------------------------

IWM
    The iShares Russell 2000 ETF or IWM, is an ETF that also tracks the 
Russell 2000 Index or RUT, which is an index that composed of 2,000 
small-cap domestic companies in the Russell 3000 index. Options on RUT 
are currently subject to the standard position limit of 25,000 
contracts for broad-based index options but share similar trading 
characteristics as IWM.\32\ Based on IWM's share price of $144.77 and 
RUT's index level of 1,486.88, approximately 10 contracts of IWM equals 
one contract of RUT. Based on the above comparison of notional values, 
this would result in a position limit equivalent to 250,000 contracts 
for IWM as RUT's analogue. The Exchange notes that at other exchanges 
RUT is not subject to position limits and has an average daily trading 
volume of 66,200 contracts.\33\ IWM is currently subject to a position 
limit of 500,000 contracts but has a much higher average daily trading 
volume of 490,070 contracts. As mentioned above, other exchanges have 
no position limits for RUT,\34\ although it has a much lower average 
daily trading volume than its analogue, the IWM. Furthermore, RUT 
currently has a market capitalization of $2.4 trillion and IWM has a 
market capitalization of $35,809.1 million, and the component 
securities of RUT, in aggregate, have traded an average of 270 million 
shares per day in 2017, both large enough to absorb any price movement 
cause by a large trade in the IWM. Therefore, the Exchange believes it 
is reasonable to increase the position limit for options on the IWM 
from 500,000 to 1,000,000 contracts.
---------------------------------------------------------------------------

    \32\ See Rule 904C(b) (Position Limits) (describing position 
limits for Broad Stock Index Group).
    \33\ See Cboe Rule 24.4.
    \34\ See id.
---------------------------------------------------------------------------

EEM
    EEM tracks the performance of the MSCI Emerging Markets Index or 
MXEF, which is composed of approximately 800 component securities 
following 21 emerging market country indices: Brazil, Chile, China, 
Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, 
Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South 
Africa, Taiwan, Thailand, and Turkey. Below makes the same notional 
value comparison as made above. Based on EEM's share price of $47.06 
and MXEF's index level of 1,136.45, approximately 24 contracts of EEM 
equals one contract of MXEF. MXEF is currently subject to the standard 
position limit of 25,000 contracts for Broad Stock Index Group options 
under Rule 904C(b). Based on the above comparison of notional values, 
this would result in a position limit economically equivalent to 
604,000 contracts for EEM as MXEF's

[[Page 18097]]

analogue. However, MXEF has an average daily trading volume of 180 
contracts. EEM is currently subject to a position limit of 500,000 
contracts but has a much higher average daily trading volume of 287,357 
contracts. Furthermore, MXEF currently has a market capitalization of 
$5.18 trillion and EEM has a market capitalization of $34,926.1 
million, and the component securities of MXEF, in aggregate, have 
traded an average of 33.6 billion shares per day in 2017, both large 
enough to absorb any price movement cause by a large trade in the EEM. 
Therefore, based on the comparison of average daily trading volume, the 
Exchange believes it is reasonable to increase the position limit for 
options on the EEM from 500,000 to 1,000,000 contracts.
EFA
    EFA tracks the performance of MSCI EAFE Index or MXEA, which has 
over 900 component securities designed to represent the performance of 
large and mid-cap securities across 21 developed markets, including 
countries in Europe, Australasia and the Far East, excluding the U.S. 
and Canada. Below makes the same notional value comparison as made 
above. Based on EFA's share price of $69.16 and MXEA's index level of 
1,986.15, approximately 29 contracts of EFA equals one contract of 
MXEA. MXEA is currently subject to the standard position limit of 
25,000 contracts for Broad Stock Index Group options under Rule 
904C(b). Based on the above comparison of notional values, this would 
result in a position limit economically equivalent to 721,000 contracts 
for EFA as MXEA's analogue. Furthermore, MXEA currently has a market 
capitalization of $18.7 trillion and EFA has a market capitalization of 
$78,870.3 million, and the component securities of MXEA, in aggregate, 
have traded an average of 4.6 billion shares per day in 2017, both 
large enough to absorb any price movement cause by a large trade in the 
EEM. However, MXEA has an average daily trading volume of 270 
contracts. EFA is currently subject to a position limit of 250,000 
contracts but has a much higher average daily trading volume of 98,844 
contracts. Based on the above comparisons, the Exchange believes it is 
reasonable to increase the position limit for options on the EFA from 
250,000 to 500,000 contracts.
FXI
    FXI tracks the performance of the FTSE China 50 Index, which is 
composed of the 50 largest Chinese stocks. There is currently no index 
analogue for FXI approved for options trading. However, the FTSE China 
50 Index currently has a market capitalization of $1.7 trillion and FXI 
has a market capitalization of $2,623.18 million, both large enough to 
absorb any price movement cause by a large trade in FXI. The components 
of the FTSE China 50 Index, in aggregate, have an average daily trading 
volume of 2.3 billion shares. FXI is currently subject to a position 
limit of 000 contracts but has a much higher average daily trading 
volume of 15.08 million shares. Based on the above comparisons, the 
Exchange believes it is reasonable to increase the position limit for 
options on the FXI from 250,000 to 500,000 contracts.
EWZ
    EWZ tracks the performance of the MSCI Brazil 25/50 Index, which is 
composed of shares of large and mid-size companies in Brazil. There is 
currently no index analogue for EWZ approved for options trading. 
However, the MSCI Brazil 25/50 Index currently has a market 
capitalization of $700 billion and EWZ has a market capitalization of 
$6,023.4 million, both large enough to absorb any price movement cause 
by a large trade in EWZ. The components of the MSCI Brazil 25/50 Index, 
in aggregate, have an average daily trading volume of 285 million 
shares. EWZ is currently subject to a position limit of 250,000 
contracts but has a much higher average daily trading volume of 17.08 
million shares. Based on the above comparisons, the Exchange believes 
it is reasonable to increase the position limit for options on the EWZ 
from 250,000 to 500,000 contracts.
TLT
    TLT tracks the performance of ICE U.S. Treasury 20+ Year Bond 
Index, which is composed of long-term U.S. Treasury bonds. There is 
currently no index analogue for TLT approved for options trading. 
However, the U.S. Treasury market is one of the largest and most liquid 
markets in the world, with over $14 trillion outstanding and turnover 
of approximately $500 billion per day. TLT currently has a market 
capitalization of $7,442.4 million, both large enough to absorb any 
price movement cause by a large trade in TLT. Therefore, the potential 
for manipulation will not increase solely due the increase in position 
limits as set forth in this proposal. Based on the above comparisons, 
the Exchange believes it is reasonable to increase the position limit 
for options on the TLT from 250,000 to 500,000 contracts.
EWJ
    EWJ tracks the MSCI Japan Index, which tracks the performance of 
large and mid-sized companies in Japan. There is currently no index 
analogue for EWJ approved for options trading. However, the MSCI Japan 
Index has a market capitalization of $3.5 trillion and EWJ has a market 
capitalization of $16,625.1 million, and the component securities of 
the MSCI Japan Index, in aggregate, have traded an average of 1.1 
billion shares per day in 2017, both large enough to absorb any price 
movement caused by a large trade in EWJ. EWJ is currently subject to a 
position limit of 250,000 contracts and has an average daily trading 
volume of 6.6 million shares. Based on the above comparisons, the 
Exchange believes it is reasonable to increase the position limit for 
options on EWJ from 250,000 to 500,000 contracts.
Exchange Analysis and Conclusions
    The Exchange believes that increasing the position limits for the 
options subject to this proposal would lead to a more liquid and 
competitive market environment for these options, which will benefit 
customers interested in this product. Under the proposal, the reporting 
requirement for the above options would be unchanged. Thus, the 
Exchange would still require that each ATP Holder that maintains a 
position in the options on the same side of the market, for its own 
account or for the account of a customer, report certain information to 
the Exchange. This information would include, but would not be limited 
to, the options' position, whether such position is hedged and, if so, 
a description of the hedge, and the collateral used to carry the 
position, if applicable. Exchange Market Makers \35\ would continue to 
be exempt from this reporting requirement, as Market Maker information 
can be accessed through the Exchange's market surveillance systems. In 
addition, the general reporting requirement for customer accounts that 
maintain an aggregate position of 200 or more options contracts would 
remain at

[[Page 18098]]

this level for the options subject to this proposal.\36\
---------------------------------------------------------------------------

    \35\ A Market Maker ``A Market Maker is an ATP Holder that is 
registered with the Exchange for the purpose of making transactions 
as a dealer-specialist on the Floor of the Exchange or for the 
purpose of submitting quotes electronically and making transactions 
as a dealer specialist through the System. A Market Maker submitting 
quotes remotely is not eligible to participate in trades affected in 
open outcry except to the extent that such Market Maker's quotation 
represents the BBO. Market Makers are designated as specialists on 
the Exchange for all purposes under the Securities Exchange Act of 
1934 and the Rules and Regulations thereunder.'' See Rule 920(a).
    \36\ See Rule 906 (Reporting of Options Positions).
---------------------------------------------------------------------------

    The Exchange believes that the existing surveillance procedures and 
reporting requirements at the Exchange, other options exchanges, and at 
the several clearing firms are capable of properly identifying unusual 
and/or illegal trading activity. In addition, routine oversight 
inspections of the Exchange's regulatory programs by the Commission 
have not uncovered any material inconsistencies or shortcomings in the 
manner in which the Exchange's market surveillance is conducted. These 
procedures utilize daily monitoring of market movements via automated 
surveillance techniques to identify unusual activity in both options 
and underlying stocks.\37\
---------------------------------------------------------------------------

    \37\ These procedures have been effective for the surveillance 
of trading the options subject to this proposal and will continue to 
be employed.
---------------------------------------------------------------------------

    Furthermore, large stock holdings must be disclosed to the 
Commission by way of Schedules 13D or 13G.\38\ The positions for 
options subject to this proposal are part of any reportable positions 
and, thus, cannot be legally hidden. Moreover, the Exchange's 
requirement that ATP Holders file reports with the Exchange for any 
customer who held aggregate large long or short positions of any single 
class for the previous day will continue to serve as an important part 
of the Exchange's surveillance efforts.
---------------------------------------------------------------------------

    \38\ 17 CFR 240.13d-1.
---------------------------------------------------------------------------

    The Exchange believes that the current financial requirements 
imposed by the Exchange and by the Commission adequately address 
concerns that an ATP Holder or its customer may try to maintain an 
inordinately large un-hedged position in the options subject to this 
proposal. Current margin and risk-based haircut methodologies serve to 
limit the size of positions maintained by any one account by increasing 
the margin and/or capital that an ATP Holder must maintain for a large 
position held by itself or by its customer.\39\ In addition, Rule 15c3-
1 \40\ imposes a capital charge on ATP Holders to the extent of any 
margin deficiency resulting from the higher margin requirement.
---------------------------------------------------------------------------

    \39\ See Rule 462 (Minimum Margins).
    \40\ 17 CFR 240.15c3-1.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \41\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act,\42\ 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 regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms 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) requirement that the rules of an exchange not be designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.\43\
---------------------------------------------------------------------------

    \41\ 15 U.S.C. 78f(b).
    \42\ 15 U.S.C. 78f(b)(5).
    \43\ Id.
---------------------------------------------------------------------------

    The current position limits for the options subject to this 
proposal have inhibited the ability of Market Makers to make markets on 
the Exchange. Specifically, the proposal is designed to encourage 
Market Makers to shift liquidity from over the counter markets onto the 
Exchange, which will enhance the process of price discovery conducted 
on the Exchange through increased order flow. The proposal will also 
benefit institutional investors as well as retail traders, and public 
customers, by providing them with a more effective trading and hedging 
vehicle. In addition, the Exchange believes that the structure of the 
ETFs subject to this proposal and the considerable liquidity of the 
market for options on those ETFs diminishes the opportunity to 
manipulate this product and disrupt the underlying market that a lower 
position limit may protect against. Increased position limits for 
select actively traded options, such as that proposed herein, is not 
novel and has been previously approved by the Commission. For example, 
the Commission has previously approved, on a pilot basis, eliminating 
position limits for options on SPY.\44\ Additionally, the Commission 
has approved similar proposed rule changes to increase position limits 
for options on highly liquid, actively-traded ETFs,\45\ including a 
proposal to permanently eliminate the position and exercise limits for 
options overlaying the S&P 500 Index, S&P 100 Index, Dow Jones 
Industrial Average, and Nasdaq 100 Index.\46\ In approving the 
permanent elimination of position and exercise limits, the Commission 
relied heavily upon Cboe's surveillance capabilities, the Commission 
expressed trust in the enhanced surveillance and reporting safeguards 
that Cboe took in order to detect and deter possible manipulative 
behavior which might arise from eliminating position and exercise 
limits.\47\ Furthermore, as described more fully above, options on 
other ETFs have the position limits proposed herein, but their trading 
volumes are significantly lower than the ETFs subject to the proposed 
rule change.
---------------------------------------------------------------------------

    \44\ See Securities Exchange Act Release Nos. 67937 (September 
27, 2012), 77 FR 60489 (October 3, 2012) (SR-CBOE-2012-091); 67936 
(September 27, 2012), 77 FR 60491 (October 3, 2012) (SR-BOX-2012-
013); 68001 (October 5, 2012), 77 FR 62303 (October 12, 2012) (SR-
NYSEArca-2012-112); 67672 (August 15, 2012), 77 FR 50750 (August 22, 
2012) (SR-NYSEAmex-2012-29).
    \45\ See Securities Exchange Act Release Nos. 68086 (October 23, 
2012), 77 FR 65600 (October 29, 2012) (SR-CBOE-2012-066); 64928 
(July 20, 2011), 76 FR 44633 (July 26, 2011) (SR-CBOE-2011-065); 
64695 (June 17, 2011), 76 FR 36942 (June 23, 2011) (SR-PHLX-2011-
58); and 55155 (January 23, 2007), 72 FR 4741 (February 1, 2017) 
(SR-CBOE-2007-008).
    \46\ See Securities Exchange Act Release Nos. 44994 (October 26, 
2001), 66 FR 55722 (November 2, 2001) (SR-CBOE-2001-22); 52650 
(October 21, 2005), 70 FR 62147 (October 28, 2005) (SR-CBOE-2005-41) 
(``NDX Approval'').
    \47\ See id., NDX Approval, 70 FR 62147, at 62149.
---------------------------------------------------------------------------

    Lastly, the Commission expressed the belief that removing position 
and exercise limits may bring additional depth and liquidity without 
increasing concerns regarding intermarket manipulation or disruption of 
the options or the underlying securities.\48\ The Exchange's enhanced 
surveillance and reporting safeguards continue to be designed to deter 
and detect possible manipulative behavior which might arise from 
eliminating position and exercise limits.
---------------------------------------------------------------------------

    \48\ Id.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
the proposed rule change will result in additional opportunities to 
achieve the investment and trading objectives of market participants 
seeking efficient trading and hedging vehicles, to the benefit of 
investors, market participants, and the marketplace in general.
    Further, the Exchange notes that the rule change is being proposed 
as a competitive response to a filing submitted by Cboe that was 
recently approved by the Commission.\49\
---------------------------------------------------------------------------

    \49\ See supra note 4.

---------------------------------------------------------------------------

[[Page 18099]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \50\ and Rule 19b-4(f)(6) thereunder.\51\
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78s(b)(3)(A).
    \51\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \52\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \53\ 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 proposed rule change may become operative upon filing. The Exchange 
states that waiver of the operative delay would be consistent with the 
protection of investors and the public interest because it will ensure 
fair competition among the exchanges by allowing the Exchange to 
immediately increase the position limits for the products subject to 
this proposal, which the Exchange believes will provide consistency for 
ATP Holders that are also members at CBOE where these increased 
position limits are currently in place. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest. Therefore, the Commission hereby 
waives the operative delay and designates the proposal as operative 
upon filing.\54\
---------------------------------------------------------------------------

    \52\ 17 CFR 240.19b-4(f)(6).
    \53\ 17 CFR 240.19b-4(f)(6)(iii).
    \54\ 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 Comments

     Use 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-NYSEAMER-2018-14 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-NYSEAMER-2018-14. 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEAMER-2018-14, and should be 
submitted on or before May 16, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\55\
---------------------------------------------------------------------------

    \55\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-08615 Filed 4-24-18; 8:45 am]
 BILLING CODE 8011-01-P



                                                                              Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Notices                                                   18093

                                                  This Notice will be published in the                   with the Securities and Exchange                      Position Limit Increase
                                                Federal Register.                                        Commission (‘‘Commission’’) the                         Position limits are designed to
                                                                                                         proposed rule change as described in                  address potential manipulative schemes
                                                Stacy L. Ruble,
                                                                                                         Items I and II below, which Items have
                                                Secretary.                                                                                                     and adverse market impact surrounding
                                                                                                         been prepared by the self-regulatory
                                                [FR Doc. 2018–08629 Filed 4–24–18; 8:45 am]                                                                    the use of options, such as disrupting
                                                                                                         organization. The Commission is
                                                                                                                                                               the market in the security underlying
                                                BILLING CODE 7710–FW–P                                   publishing this notice to solicit
                                                                                                                                                               the options. The potential manipulative
                                                                                                         comments on the proposed rule change
                                                                                                                                                               schemes and adverse market impact are
                                                                                                         from interested persons.
                                                                                                                                                               balanced against the potential of setting
                                                POSTAL SERVICE
                                                                                                         I. Self-Regulatory Organization’s                     the limits so low as to discourage
                                                Product Change—Priority Mail                             Statement of the Terms of the Substance               participation in the options market. The
                                                Negotiated Service Agreement                             of the Proposed Rule Change                           level of those position limits must be
                                                                                                            The Exchange proposes to modify                    balanced between curtailing potential
                                                AGENCY:   Postal ServiceTM.                              Rule 904 (Position Limits), Commentary                manipulation and the cost of preventing
                                                ACTION:   Notice.                                        .07 to expand position limits for options             potential hedging activity that could be
                                                                                                         on certain Exchange-Traded Funds                      used for legitimate economic purposes.
                                                SUMMARY:    The Postal Service gives                                                                           Position limits for options on ETFs,
                                                                                                         (ETFs). The proposed rule change is
                                                notice of filing a request with the Postal                                                                     such as those subject to this proposal,
                                                                                                         available on the Exchange’s website at
                                                Regulatory Commission to add a                                                                                 are determined pursuant to Rule 904,
                                                                                                         www.nyse.com, at the principal office of
                                                domestic shipping services contract to                                                                         and vary according to the number of
                                                                                                         the Exchange, and at the Commission’s
                                                the list of Negotiated Service                                                                                 outstanding shares and the trading
                                                                                                         Public Reference Room.
                                                Agreements in the Mail Classification                                                                          volume of the underlying stocks or ETFs
                                                Schedule’s Competitive Products List.                    II. Self-Regulatory Organization’s                    over the past six-months. Pursuant to
                                                DATES: Date of required notice: April 25,                Statement of the Purpose of, and                      Rule 904, the largest in capitalization
                                                2018.                                                    Statutory Basis for, the Proposed Rule                and the most frequently traded stocks
                                                                                                         Change                                                and ETFs have an option position limit
                                                FOR FURTHER INFORMATION CONTACT:
                                                Elizabeth Reed, 202–268–3179.                               In its filing with the Commission, the             of 250,000 contracts (with adjustments
                                                SUPPLEMENTARY INFORMATION: The                           self-regulatory organization included                 for splits, re-capitalizations, etc.) on the
                                                United States Postal Service® hereby                     statements concerning the purpose of,                 same side of the market; and smaller
                                                gives notice that, pursuant to 39 U.S.C.                 and basis for, the proposed rule change               capitalization stocks and ETFs have
                                                3642 and 3632(b)(3), on April 19, 2018,                  and discussed any comments it received                position limits of 200,000, 75,000,
                                                it filed with the Postal Regulatory                      on the proposed rule change. The text                 50,000 or 25,000 contracts (with
                                                Commission a USPS Request to Add                         of those statements may be examined at                adjustments for splits, re-capitalizations,
                                                Priority Mail Contract 432 to                            the places specified in Item IV below.                etc.) on the same side of the market.
                                                Competitive Product List. Documents                      The Exchange has prepared summaries,                  Options on FXI, EFA, EWZ, TLT, and
                                                are available at www.prc.gov, Docket                     set forth in sections A, B, and C below,              EWJ are currently subject to the
                                                Nos. MC2018–144, CP2018–207.                             of the most significant parts of such                 standard position limit of 250,000
                                                                                                         statements.                                           contracts as set forth in Rule 904.5 Rule
                                                Elizabeth Reed,                                                                                                904, Commentary .07 sets forth separate
                                                                                                         A. Self-Regulatory Organization’s
                                                Attorney, Corporate and Postal Business Law.                                                                   position limits for options on specific
                                                                                                         Statement of the Purpose of, and
                                                [FR Doc. 2018–08581 Filed 4–24–18; 8:45 am]              Statutory Basis for, the Proposed Rule                ETFs as follows:
                                                BILLING CODE 7710–12–P                                   Change                                                  • Options on EEM are 500,000
                                                                                                                                                               contracts;
                                                                                                         1. Purpose                                              • Options on IWM are 500,000
                                                SECURITIES AND EXCHANGE                                     The Exchange proposes to amend                     contracts; and
                                                COMMISSION                                               Rule 904, Commentary .07 to expand                      • Options on QQQQ are 900,000
                                                                                                         position limits for options on certain                contracts.
                                                [Release No. 34–83065; File No. SR–
                                                                                                         ETFs. Specifically, the Exchange                        The purpose of this proposal is to
                                                NYSEAMER–2018–14]
                                                                                                         proposes to expand the position limits                amend Rule 904, Commentary .07 to
                                                Self-Regulatory Organizations; NYSE                      for options on the following ETFs:                    double the position and exercise limits
                                                American LLC; Notice of Filing and                       iShares China Large-Cap ETF (‘‘FXI’’),                for FXI, EEM, IWM, EFA, EWZ, TLT,
                                                Immediate Effectiveness of Proposed                      iShares MSCI EAFE ETF (‘‘EFA’’),                      QQQQ, and EWJ.6 The Exchange notes
                                                Rule Change To Modify Rule 904,                          iShares MSCI Emerging Markets ETF
                                                Commentary .07 To Expand Position                        (‘‘EEM’’), iShares Russell 2000 ETF                   (Order Granting Accelerated Approval SR–SR–
                                                                                                         (‘‘IWM’’), iShares MSCI Brazil Capped                 CBOE–2017–057) (the ‘‘Cboe Approval Order’’).
                                                Limits for Options on Certain                                                                                     5 See https://www.theocc.com/webapps/delo-
                                                Exchange-Traded Funds                                    ETF (‘‘EWZ’’), iShares 20+ Year                       search.
                                                                                                         Treasury Bond Fund ETF (‘‘TLT’’),                        6 By virtue of Rule 905 (Exercise Limits), which
                                                April 19, 2018.                                          PowerShares QQQ Trust (‘‘QQQQ’’),                     is not being amended by this filing, the exercise
                                                   Pursuant to Section 19(b)(1) 1 of the                 and iShares MSCI Japan ETF (‘‘EWJ’’).                 limit for FXI, EEM, IWM, EFA, EWZ, TLT, QQQQ,
                                                Securities Exchange Act of 1934 (the                     This is a competitive filing that is based            and EWJ options would be similarly increased. The
                                                                                                                                                               Exchange notes that it also proposes to make non-
sradovich on DSK3GMQ082PROD with NOTICES




                                                ‘‘Act’’) 2 and Rule 19b-4 thereunder,3                   on a proposal recently submitted by the               substantive changes corrections to the names of
                                                notice is hereby given that on April 6,                  Chicago Board Options Exchange                        IWM and EEM and to assign letters (a)–(f) to the
                                                2018, NYSE American LLC (the                             Incorporated (‘‘Cboe’’) and approved by               paragraphs in current Commentary .07 to the Rule
                                                ‘‘Exchange’’ or ‘‘NYSE American’’) filed                 the Securities and Exchange                           to make it easier to follow (and reference). See
                                                                                                                                                               proposed Commentary .07(a)–(f) to Rule 904. The
                                                                                                         Commission (‘‘Commission’’).4                         Exchange does not propose to alter the substances
                                                  1 15 U.S.C. 78s(b)(1).                                                                                       of new paragraphs (a)–(e) of the Commentary.
                                                  2 15 U.S.C. 78a.                                         4 See Securities Exchange Act Release No. 82770     Proposed changes to paragraph (f) are discussed
                                                  3 17 CFR 240.19b–4.                                    (February 23, 2018), 83 FR 8907 (March 1, 2018)                                                 Continued




                                           VerDate Sep<11>2014    19:12 Apr 24, 2018   Jkt 244001   PO 00000   Frm 00101   Fmt 4703   Sfmt 4703   E:\FR\FM\25APN1.SGM   25APN1


                                                18094                                   Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Notices

                                                that it also proposes to make non-                                           holding non-U.S. component securities;                         performance of ICE U.S. Treasury 20+
                                                substantive changes corrections to the                                       or (ii) for ETFs listed pursuant to                            Year Bond Index, which is composed of
                                                names of IWM and EEM (replacing                                              generic listing standards for series of                        long-term U.S. Treasury bonds.17 QQQQ
                                                ‘‘Index Fund with ETF’’) and to assign                                       portfolio depository receipts and index                        tracks the performance of the Nasdaq-
                                                letters (a)—(f) to the paragraphs in                                         fund shares based on international or                          100 Index, which is composed of 100 of
                                                current Commentary .07 to the Rule to                                        global indexes under which a                                   the largest domestic and international
                                                make it easier to follow (and reference).7                                   comprehensive surveillance agreement                           nonfinancial companies listed on the
                                                   As such, options on FXI, EFA, EWZ,                                        (‘‘CSA’’) is not required.9 FXI tracks the                     Nasdaq Stock Market LLC (‘‘Nasdaq’’).18
                                                TLT, and EWJ would no longer be                                              performance of the FTSE China 50                               EWJ tracks the MSCI Japan Index, which
                                                subject to the standard position limits                                      Index, which is composed of the 50                             tracks the performance of large and mid-
                                                set forth under Rule 904. Accordingly,                                       largest Chinese stocks.10 EEM tracks the                       sized companies in Japan.19
                                                Commentary .07(f) would be amended                                           performance of the MSCI Emerging                                  The Exchange represents that more
                                                to set forth that the position limits for                                    Markets Index, which is composed of                            than 50% of the weight of the securities
                                                options on FXI, EFA, EWZ, TLT, and                                           approximately 800 component                                    held by the options subject to this
                                                EWJ would be 500,000 contracts. These                                        securities.11 ‘‘The MSCI Emerging                              proposal are also subject to a CSA.20
                                                position limits equal the current                                            Markets Index consists of the following                        Additionally, the component securities
                                                position limits for option on IWM and                                        21 emerging market country indices:                            of the MSCI Emerging Markets Index on
                                                EMM and are similar to the current                                           Brazil, Chile, China, Colombia, Czech                          which EEM is based for which the
                                                position limit for options on QQQQ set                                       Republic, Egypt, Hungary, India,                               primary market is in any one country
                                                forth in Rule 904, Commentary .07.                                           Indonesia, Korea, Malaysia, Mexico,                            that is not subject to a CSA do not
                                                Further, Rule 904 would also be                                              Morocco, Peru, Philippines, Poland,                            represent 20% or more of the weight of
                                                amended to increase the position limits                                      Russia, South Africa, Taiwan, Thailand,                        the MSCI Emerging Markets Index.21
                                                for the remaining options subject to this                                    and Turkey.’’ 12 IWM tracks the                                Finally, the component securities of the
                                                proposal as follows:                                                         performance of the Russell 2000 Index,                         MSCI Emerging Markets Index on which
                                                   • The position limits for options on                                      which is composed of 2,000 small-cap                           EEM is based, for which the primary
                                                EEM would be increased from 500,000                                          domestic stocks.13 EFA tracks the                              market is in any two countries that are
                                                contracts to 1,000,000 contracts;                                            performance of MSCI EAFE Index,                                not subject to CSAs do not represent
                                                   • The position limits on options on                                       which has over 900 component                                   33% of more of the weight of the MSCI
                                                IWM would be increased from 500,000                                          securities.14 ‘‘The MSCI EAFE Index is                         Emerging Markets Index.22
                                                contracts to 1,000,000 contracts;                                            designed to represent the performance                             In seeking to expand position limits
                                                   • The position limits on options on                                       of large and mid-cap securities across 21                      for the same ETFs at issue in this
                                                QQQQ would be increased from 900,000                                         developed markets, including countries                         proposal, Cboe represented that market
                                                contracts to 1,800,000 contracts.8                                           in Europe, Australasia and the Far East,                       participants have increased their
                                                   In support of this proposal, the                                          excluding the U.S. and Canada.’’ 15 EWZ                        demand for options on FXI, EFA, EWZ,
                                                Exchange represents that the above                                           tracks the performance of the MSCI                             TLT, and EWJ for hedging and trading
                                                listed ETFs qualify for either: (i) The                                      Brazil 25/50 Index, which is composed                          purposes and, in support of this claim,
                                                initial listing criteria set forth in Rule                                   of shares of large and mid-size                                presented the trading statistics set forth
                                                915, Commentary .06(b) for ETFs                                              companies in Brazil.16 TLT tracks the                          in the table below.23

                                                                                                                                                                                                                                    Fund
                                                                                                                                                                                            2017 ADV            Shares
                                                                                                                                                                           2017 ADV                                                market
                                                                                                        ETF                                                                                (option con-       outstanding
                                                                                                                                                                          (Mil. shares)                                              cap
                                                                                                                                                                                              tracts)            (Mil.)            ($Mil.)

                                                FXI ...................................................................................................................           15.08           71,944               78.6          $3,343.6
                                                EEM .................................................................................................................             52.12          287,357              797.4          34,926.1
                                                IWM ..................................................................................................................            27.46          490,070              253.1          35,809.1
                                                EFA ..................................................................................................................            19.42           98,844             1178.4          78,870.3
                                                EWZ .................................................................................................................             17.08           95,152              159.4           6,023.4
                                                TLT ...................................................................................................................            8.53           80,476               60.0           7,442.4
                                                QQQQ ..............................................................................................................               26.25          579,404              351.6          50,359.7
                                                EWJ .................................................................................................................              6.06            4,715              303.6          16,625.1
                                                SPY 24 ..............................................................................................................             64.63        2,575,153             976.23         240,540.0




                                                herein. See proposed Commentary .07(f) to Rule                                 10 See https://www.ishares.com/us/products/                     17 See https://www.ishares.com/us/products/

                                                904.                                                                         239536/ishares-china-largecap-etf.                             239454.
                                                  7 See proposed Commentary .07(a)–(f) to Rule                                 11 See http://us.ishares.com/productinfo/fund/                  18 See https://www.invesco.com/portal/site/us/
                                                904. The Exchange does not propose to alter the                              overview/EEM.htm.                                              financial-professional/etfs/product
                                                substances of new paragraphs (a)–(e) of the                                    12 See http://www.msci.com/products/indices/                 detail?productId=QQQ&ticker=QQQ&title=
                                                Commentary. Proposed changes to paragraph (f) are
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                                                                                                            powershares-qqq.
                                                discussed herein. See proposed Commentary .07(f)                             tools/index.html#EM.                                              19 See https://www.ishares.com/us/products/
                                                to Rule 904.                                                                   13 See https://www.ishares.com/us/products/
                                                                                                                                                                                            239665/EWJ.
                                                  8 See proposed Commentary .07(f) to Rule 904.                              239710/ishares-russell-2000-etf.                                  20 See Rule 915, Commentary .06.
                                                  9 The Exchange notes that the initial listing                                14 See https://www.ishares.com/us/products/
                                                                                                                                                                                               21 See Rule 915, Commentary .06(b)(ii)(A).
                                                criteria for options on ETFs that hold non-U.S.                              239623/.                                                          22 See Rule 915, Commentary .06(b)(ii)(B).
                                                component securities are more stringent than the                               15 See https://www.msci.com/eafe.
                                                                                                                                                                                               23 See Cboe Approval Order, supra note 4.
                                                maintenance listing criteria for those same ETF
                                                                                                                               16 See https://www.ishares.com/us/products/                     24 SPDR S&P 500 ETF (‘‘SPY’’) is included here
                                                options. See Rule 915, Commentary .06(b)(ii)(A);
                                                Rule 915, Commentary .06.                                                    239612/ishares-msci-brazil-capped-etf.                         for comparison purposes.



                                           VerDate Sep<11>2014         19:12 Apr 24, 2018          Jkt 244001       PO 00000       Frm 00102        Fmt 4703       Sfmt 4703   E:\FR\FM\25APN1.SGM   25APN1


                                                                             Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Notices                                                    18095

                                                   The Exchange agrees and believes the                 cap than EEM and IWM which justify                       According to Cboe, market
                                                current position limits are too low and                 doubling the position limit for QQQQ.                 participants’ trading activity has been
                                                may be a deterrent to successful trading                Based on these statistics, and as stated              adversely impacted by the current
                                                of options on these securities. The                     above, the proposed position limit                    position limits for FXI, EFA, EWZ, TLT,
                                                analysis that follows was likewise                      coupled with QQQQ’s trading behavior                  and EWJ and such limits have caused
                                                conducted by Cboe in support of its                     would continue to address potential                   options trading in these symbols to
                                                proposal. The Exchange agrees with                      manipulative schemes and adverse                      move from exchanges to the over-the-
                                                Cboe’s analysis discussed below.                        market impact surrounding the use of                  counter market.25 The Exchange
                                                   In support of its proposal to increase               options and trading in the securities                 understands that certain market
                                                the position limits for QQQQ to                         underlying the options.                               participants wishing to make trades
                                                1,800,000 contracts, Cboe compared the                     In support of its proposal to increase             involving a large number of options
                                                trading characteristics of QQQQ to that                 the position limits for FXI, EFA, EWZ,                contracts in the symbols subject to the
                                                of SPY, which has no position limits. As                TLT, and EWJ from 250,000 contracts to                proposal are opting to execute those
                                                shown in Cboe’s above table, the                        500,000 contracts, Cboe compared the                  trades in the over-the-counter market.
                                                average daily trading volume through                    trading characteristics of FXI, EFA,                  The over-the-counter transactions occur
                                                August 14, 2017 for QQQQ was 26.25                      EWZ, TLT and EWJ to that of EEM and                   via bi-lateral agreements, the terms of
                                                million shares compared to 64.63                        IWM, both of which currently have a                   which are not publicly disclosed to
                                                million shares for SPY. The total shares                position limit of 500,000 contracts. As               other market participants. Therefore,
                                                outstanding for QQQQ are 351.6 million                  shown in the above table, the average                 these large trades do not contribute to
                                                compared to 976.23 million for SPY.                     daily trading volume through July 31,                 the price discovery process performed
                                                The fund market cap for QQQQ is                         2017 for FXI is 15.08 million shares,                 on a lit market.
                                                $50,359.7 million compared to $240,540                  EFA is 19.42 million shares, EWZ is                      The Exchange notes that the ETFs that
                                                million for SPY. SPY is one of the most                 17.08 million shares, TLT is 8.53                     underlie options subject to this proposal
                                                actively trading ETFs and is subject to                 million shares, and EWJ is 6.06 million               are highly liquid, and are based on a
                                                no position limits. QQQQ is also very                   shares compared to 52.12 million shares               broad set of highly liquid securities and
                                                actively traded, and while not to the                   for EEM and 27.46 million shares for                  other reference assets.26 The Exchange
                                                level of SPY, should be subject to the                  IWM. The total shares outstanding for                 notes that the Commission has generally
                                                proposed higher position limits based                   FXI is 78.6 million, EFA is 1178.4                    looked through to the liquidity of
                                                its trading characteristics when                        million, EWZ is 159.4 million, TLT is 60              securities comprising an index in
                                                compared to SPY. The proposed                           million and EWJ is 303.6 million                      establishing position limits for cash-
                                                position limit coupled with QQQQ’s                      compared to 797.4 million for EEM and                 settled index options. The Exchange
                                                trading behavior would continue to                      253.1 million for IWM. The fund market                further notes that options on certain
                                                address potential manipulative schemes                  cap for FXI is $3,343.6 million, EFA is               broad-based security indexes have no
                                                and adverse market impact surrounding                   $78,870.3 million, EWZ is $6,023.4                    position limits. Likewise, the
                                                the use of options and trading in                       million, TLT is $7,442.4 million, and                 Commission has recognized the
                                                securities underlying the options.                      EWJ is $16,625.1 million compared to                  liquidity of the securities comprising
                                                   In support of its proposal to increase               $34,926.1 million for EEM and                         the underlying interest of SPY in
                                                the position limits for EEM and IWM                     $35,809.1 million for IWM. The above                  permitting no position limits on SPY
                                                from 500,000 contracts to 1,000,000                     trading characteristics of FXI, EFA,                  options since 2012,27 and expanded
                                                contracts, Cboe also compared the                       EWZ, TLT and EWJ is either similar to                 position limits for options on EEM,
                                                trading characteristics of EEM and IWM                  that of EEM and IWM or sufficiently                   IWM, and QQQQ.
                                                to that of QQQQ, which currently has a                  active enough so that the proposed limit                 The proposed position limits set forth
                                                position limit of 900,000 contracts. As                 would continue to address potential                   in the proposal would continue to
                                                shown in the above table, the average                   manipulation that may arise. EFA has                  address potential manipulative activity
                                                daily trading volume through July 31,                   far more shares outstanding and a larger              while allowing for potential hedging
                                                2017 for EEM was 52.12 million shares                   fund market cap than EEM, IWM, and                    activity for appropriate economic
                                                and IWM was 27.46 million shares                        QQQQ. EWJ has a more shares                           purposes. The creation and redemption
                                                compared to 26.25 million shares for                    outstanding than IWM and only slightly                process for these ETFs also lessen the
                                                QQQQ. The total shares outstanding for                  less shares outstanding than QQQQ.                    potential for manipulative activity.
                                                EEM are 797.4 million and for IWM are                      On the other hand, while FXI, EWZ,                 When an ETF company wants to create
                                                253.1 million compared to 351.6 million                 and TLT do not exceed EEM, IWM or                     more ETF shares, it looks to an
                                                for QQQQ. The fund market cap for                       QQQQ in any of the specified areas,                   Authorized Participant, which is a
                                                EEM is $34,926.1 million and IWM is                     they are all actively trading so that                 market maker or other large financial
                                                $35,809 million compared to $50,359.7                   market participant’s trading activity has             institution, to acquire the securities the
                                                million for QQQQ. EEM, IWM and                          been impacted by them being restricted                ETF is to hold. For instance, IWM is
                                                QQQQ have similar trading                               by the current position limits. The                   designed to track the performance of the
                                                characteristics and subjecting EEM and                  Exchange believes that the trading                    Russell 2000 Index, the Authorized
                                                IWM to the proposed higher position                     activity and these securities being based             Participant will purchase all the Russell
                                                limit would continue be designed to                     on a broad basket of underlying                       2000 constituent securities in the exact
                                                address potential manipulative schemes                  securities alleviates any potential                   same weight as the index, then deliver
                                                that may arise from trading in the                      manipulative activity that may arise. In              those shares to the ETF provider. In
sradovich on DSK3GMQ082PROD with NOTICES




                                                options and their underlying securities.                addition, as discussed in more detail                 exchange, the ETF provider gives the
                                                These above trading characteristics for                 below, the Exchange’s existing                        Authorized Participant a block of
                                                QQQQ when compared to EEM and                           surveillance procedures and reporting
                                                IWM also justify increasing the position                requirements at the Exchange, other                     25 See SR–CBOE–2017–057, Partial Amendment

                                                limit for QQQQ. QQQQ has a higher                       options exchanges, and at several                     No. 1 (November 22, 2017).
                                                                                                                                                                26 See supra nn. 9–18 (providing trading statistics
                                                options ADV than EEM and IWM, a                         clearing firms are capable of properly                for each ETF at issue in this proposal).
                                                higher number of shares outstanding                     identifying unusual and/or illegal                      27 See Securities Exchange Act Release No. 67672

                                                than IWM and a much higher market                       trading activity.                                     (August 15, 2012), 77 FR 50750 (August 22, 2012).



                                           VerDate Sep<11>2014   19:12 Apr 24, 2018   Jkt 244001   PO 00000   Frm 00103   Fmt 4703   Sfmt 4703   E:\FR\FM\25APN1.SGM   25APN1


                                                18096                        Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Notices

                                                equally valued ETF shares, on a one-for-                overlying the ETF. In addition, the                      Russell 2000 Index or RUT, which is an
                                                one fair value basis. The price is based                market capitalization of the underlying                  index that composed of 2,000 small-cap
                                                on the net asset value, not the market                  index or reference asset is large enough                 domestic companies in the Russell 3000
                                                value at which the ETF is trading. This                 to absorb any price movements that may                   index. Options on RUT are currently
                                                process can also work in reverse where                  be caused by an oversized trade. Also,                   subject to the standard position limit of
                                                the ETF company seeks to decrease the                   the Authorized Participant or issuer                     25,000 contracts for broad-based index
                                                number of shares that are available to                  may look to the stocks comprising the                    options but share similar trading
                                                trade. The creation and redemption                      analogous underlying index or reference                  characteristics as IWM.32 Based on
                                                process, therefore, creates a direct link               asset when seeking to create additional                  IWM’s share price of $144.77 and RUT’s
                                                to the underlying components of the                     ETF shares are part of the creation/                     index level of 1,486.88, approximately
                                                ETF, and serves to mitigate potential                   redemption process to address supply                     10 contracts of IWM equals one contract
                                                price impact of the ETF shares that                     and demand or to mitigate the price                      of RUT. Based on the above comparison
                                                might otherwise result from increased                   movement the price of the ETF.                           of notional values, this would result in
                                                position limits.                                                                                                 a position limit equivalent to 250,000
                                                   The ETF creation and redemption                      QQQQ
                                                                                                                                                                 contracts for IWM as RUT’s analogue.
                                                seeks to keep ETF share prices trading                     For example, the PowerShares QQQ                      The Exchange notes that at other
                                                in line with the ETF’s underlying net                   Trust or QQQQ is an ETF that tracks the                  exchanges RUT is not subject to position
                                                asset value. Because an ETF trades like                 Nasdaq 100 Index or NDX, which is an                     limits and has an average daily trading
                                                a stock, its price will fluctuate during                index composed of 100 of the largest                     volume of 66,200 contracts.33 IWM is
                                                the trading day, due to simple supply                   non-financial securities listed on the                   currently subject to a position limit of
                                                and demand. If demand to buy an ETF                     Nasdaq Stock Market LLC (‘‘Nasdaq’’).                    500,000 contracts but has a much higher
                                                is high, for instance, the ETF’s share                  Options on NDX are currently subject to                  average daily trading volume of 490,070
                                                price might rise above the value of its                 the standard position limit of 25,000                    contracts. As mentioned above, other
                                                underlying securities. When this                        contracts for broad-based index options                  exchanges have no position limits for
                                                happens, the Authorized Participant                     but share similar trading characteristics                RUT,34 although it has a much lower
                                                believes the ETF may now be                             as QQQQ.29 Based on QQQQ’s share                         average daily trading volume than its
                                                overpriced, and can buy the underlying                  price of $154.54 30 and NDX’s index                      analogue, the IWM. Furthermore, RUT
                                                shares that compose the ETF and then                    level of 6,339.14, approximately 40                      currently has a market capitalization of
                                                sell ETF shares on the open market.                     contracts of QQQQ equals one contract                    $2.4 trillion and IWM has a market
                                                This should help drive the ETF’s share                  of NDX. Based on the above comparison                    capitalization of $35,809.1 million, and
                                                price back toward fair value. Likewise,                 of notional values, this would result in                 the component securities of RUT, in
                                                if the ETF starts trading at a discount to              a position limit equivalent to 1,000,000                 aggregate, have traded an average of 270
                                                the securities it holds, the Authorized                 contracts for QQQQ as NDX’s analogue.                    million shares per day in 2017, both
                                                Participant can buy shares of the ETF                   NDX is subject to the standard position                  large enough to absorb any price
                                                and redeem them for the underlying                      limit of 25,000 contracts for broad-based                movement cause by a large trade in the
                                                securities. Buying undervalued ETF                      index options and has an average daily                   IWM. Therefore, the Exchange believes
                                                shares should drive the price of the ETF                trading volume of 15,300 contracts.                      it is reasonable to increase the position
                                                back toward fair value. This arbitrage                  QQQQ is currently subject to a position                  limit for options on the IWM from
                                                process helps to keep an ETF’s price in                 limit of 900,000 contracts but has a                     500,000 to 1,000,000 contracts.
                                                line with the value of its underlying                   much higher average daily trading
                                                portfolio.                                              volume of 579,404 contracts.                             EEM
                                                   Some of the ETFs underlying options                  Furthermore, NDX currently has a                           EEM tracks the performance of the
                                                subject to the proposal are based on                    market capitalization of $17.2 trillion                  MSCI Emerging Markets Index or MXEF,
                                                broad-based indices that underlie cash                  and QQQQ has a market capitalization                     which is composed of approximately
                                                settled options that are economically                   of $50,359.7 million, and the                            800 component securities following 21
                                                equivalent to the ETF options that are                  component securities of NDX, in                          emerging market country indices: Brazil,
                                                the subject of the proposal and have no                 aggregate, have traded an average of 440                 Chile, China, Colombia, Czech Republic,
                                                position limits. Other ETFs are based on                million shares per day in 2017, both                     Egypt, Hungary, India, Indonesia, Korea,
                                                broad-based indexes that underlie cash-                 large enough to absorb any price                         Malaysia, Mexico, Morocco, Peru,
                                                settled options with position limits                    movement caused by a large trade in the                  Philippines, Poland, Russia, South
                                                reflecting notional values that are larger              QQQQ. The Exchange notes that other                      Africa, Taiwan, Thailand, and Turkey.
                                                than the current position limits for ETF                exchanges allow no position limits for                   Below makes the same notional value
                                                analogues (EEM, EFA). Where there was                   NDX,31 although it has a much lower                      comparison as made above. Based on
                                                no approved index analogue, the                         average daily trading volume than its                    EEM’s share price of $47.06 and MXEF’s
                                                Exchange believes, based on the                         analogue, the QQQQ. Therefore, the                       index level of 1,136.45, approximately
                                                liquidity, breadth and depth of the                     Exchange believes it is reasonable to                    24 contracts of EEM equals one contract
                                                underlying market, that the index                       increase the position limit for options                  of MXEF. MXEF is currently subject to
                                                referenced by the ETF would be                          on the QQQQ from 900,000 to 1,800,000                    the standard position limit of 25,000
                                                considered a broad-based index.28 The                   contracts.                                               contracts for Broad Stock Index Group
                                                Exchange argues that if certain position                IWM                                                      options under Rule 904C(b). Based on
                                                limits are appropriate for the options                                                                           the above comparison of notional
                                                                                                          The iShares Russell 2000 ETF or
sradovich on DSK3GMQ082PROD with NOTICES




                                                overlying the same index or is an                                                                                values, this would result in a position
                                                analogue to the basket of securities that               IWM, is an ETF that also tracks the
                                                                                                                                                                 limit economically equivalent to
                                                the ETF tracks, then those same                           29 See                                                 604,000 contracts for EEM as MXEF’s
                                                                                                                 id.
                                                economically equivalent position limits                   30 Allshare prices used herein are based on the
                                                should be appropriate for the option                    closing price of the security on November 16, 2017.        32 See Rule 904C(b) (Position Limits) (describing

                                                                                                        Source: Yahoo Finance.                                   position limits for Broad Stock Index Group).
                                                  28 See Rule 904C(b) (Position Limits) (describing       31 See Cboe Rule 24.4 sets forth position limits for     33 See Cboe Rule 24.4.

                                                position limits for Broad Stock Index Group).           broad-based index options.                                 34 See id.




                                           VerDate Sep<11>2014   19:12 Apr 24, 2018   Jkt 244001   PO 00000   Frm 00104   Fmt 4703   Sfmt 4703   E:\FR\FM\25APN1.SGM     25APN1


                                                                             Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Notices                                                   18097

                                                analogue. However, MXEF has an                          trading. However, the FTSE China 50                   EWJ
                                                average daily trading volume of 180                     Index currently has a market
                                                contracts. EEM is currently subject to a                capitalization of $1.7 trillion and FXI                 EWJ tracks the MSCI Japan Index,
                                                position limit of 500,000 contracts but                 has a market capitalization of $2,623.18              which tracks the performance of large
                                                has a much higher average daily trading                 million, both large enough to absorb any              and mid-sized companies in Japan.
                                                volume of 287,357 contracts.                            price movement cause by a large trade                 There is currently no index analogue for
                                                Furthermore, MXEF currently has a                       in FXI. The components of the FTSE                    EWJ approved for options trading.
                                                market capitalization of $5.18 trillion                 China 50 Index, in aggregate, have an                 However, the MSCI Japan Index has a
                                                and EEM has a market capitalization of                  average daily trading volume of 2.3                   market capitalization of $3.5 trillion and
                                                $34,926.1 million, and the component                    billion shares. FXI is currently subject to           EWJ has a market capitalization of
                                                securities of MXEF, in aggregate, have                  a position limit of 000 contracts but has             $16,625.1 million, and the component
                                                traded an average of 33.6 billion shares                a much higher average daily trading                   securities of the MSCI Japan Index, in
                                                per day in 2017, both large enough to                   volume of 15.08 million shares. Based                 aggregate, have traded an average of 1.1
                                                absorb any price movement cause by a                    on the above comparisons, the Exchange                billion shares per day in 2017, both
                                                large trade in the EEM. Therefore, based                believes it is reasonable to increase the             large enough to absorb any price
                                                on the comparison of average daily                      position limit for options on the FXI                 movement caused by a large trade in
                                                trading volume, the Exchange believes it                from 250,000 to 500,000 contracts.                    EWJ. EWJ is currently subject to a
                                                is reasonable to increase the position                                                                        position limit of 250,000 contracts and
                                                limit for options on the EEM from                       EWZ                                                   has an average daily trading volume of
                                                500,000 to 1,000,000 contracts.                                                                               6.6 million shares. Based on the above
                                                                                                           EWZ tracks the performance of the
                                                EFA                                                     MSCI Brazil 25/50 Index, which is                     comparisons, the Exchange believes it is
                                                                                                        composed of shares of large and mid-                  reasonable to increase the position limit
                                                   EFA tracks the performance of MSCI
                                                                                                        size companies in Brazil. There is                    for options on EWJ from 250,000 to
                                                EAFE Index or MXEA, which has over
                                                                                                        currently no index analogue for EWZ                   500,000 contracts.
                                                900 component securities designed to
                                                represent the performance of large and                  approved for options trading. However,                Exchange Analysis and Conclusions
                                                mid-cap securities across 21 developed                  the MSCI Brazil 25/50 Index currently
                                                markets, including countries in Europe,                 has a market capitalization of $700                     The Exchange believes that increasing
                                                Australasia and the Far East, excluding                 billion and EWZ has a market                          the position limits for the options
                                                the U.S. and Canada. Below makes the                    capitalization of $6,023.4 million, both              subject to this proposal would lead to a
                                                same notional value comparison as                       large enough to absorb any price                      more liquid and competitive market
                                                made above. Based on EFA’s share price                  movement cause by a large trade in                    environment for these options, which
                                                of $69.16 and MXEA’s index level of                     EWZ. The components of the MSCI                       will benefit customers interested in this
                                                1,986.15, approximately 29 contracts of                 Brazil 25/50 Index, in aggregate, have an             product. Under the proposal, the
                                                EFA equals one contract of MXEA.                        average daily trading volume of 285                   reporting requirement for the above
                                                MXEA is currently subject to the                        million shares. EWZ is currently subject              options would be unchanged. Thus, the
                                                standard position limit of 25,000                       to a position limit of 250,000 contracts              Exchange would still require that each
                                                contracts for Broad Stock Index Group                   but has a much higher average daily                   ATP Holder that maintains a position in
                                                options under Rule 904C(b). Based on                    trading volume of 17.08 million shares.               the options on the same side of the
                                                the above comparison of notional                        Based on the above comparisons, the                   market, for its own account or for the
                                                values, this would result in a position                 Exchange believes it is reasonable to                 account of a customer, report certain
                                                limit economically equivalent to                        increase the position limit for options               information to the Exchange. This
                                                721,000 contracts for EFA as MXEA’s                     on the EWZ from 250,000 to 500,000                    information would include, but would
                                                analogue. Furthermore, MXEA currently                   contracts.                                            not be limited to, the options’ position,
                                                has a market capitalization of $18.7                                                                          whether such position is hedged and, if
                                                trillion and EFA has a market                           TLT                                                   so, a description of the hedge, and the
                                                capitalization of $78,870.3 million, and                                                                      collateral used to carry the position, if
                                                the component securities of MXEA, in                      TLT tracks the performance of ICE
                                                                                                        U.S. Treasury 20+ Year Bond Index,                    applicable. Exchange Market Makers 35
                                                aggregate, have traded an average of 4.6                                                                      would continue to be exempt from this
                                                billion shares per day in 2017, both                    which is composed of long-term U.S.
                                                                                                        Treasury bonds. There is currently no                 reporting requirement, as Market Maker
                                                large enough to absorb any price                                                                              information can be accessed through the
                                                movement cause by a large trade in the                  index analogue for TLT approved for
                                                                                                        options trading. However, the U.S.                    Exchange’s market surveillance systems.
                                                EEM. However, MXEA has an average                                                                             In addition, the general reporting
                                                daily trading volume of 270 contracts.                  Treasury market is one of the largest and
                                                                                                        most liquid markets in the world, with                requirement for customer accounts that
                                                EFA is currently subject to a position                                                                        maintain an aggregate position of 200 or
                                                limit of 250,000 contracts but has a                    over $14 trillion outstanding and
                                                                                                        turnover of approximately $500 billion                more options contracts would remain at
                                                much higher average daily trading
                                                volume of 98,844 contracts. Based on                    per day. TLT currently has a market
                                                                                                                                                                 35 A Market Maker ‘‘A Market Maker is an ATP
                                                the above comparisons, the Exchange                     capitalization of $7,442.4 million, both
                                                                                                                                                              Holder that is registered with the Exchange for the
                                                believes it is reasonable to increase the               large enough to absorb any price                      purpose of making transactions as a dealer-
                                                position limit for options on the EFA                   movement cause by a large trade in TLT.               specialist on the Floor of the Exchange or for the
                                                                                                        Therefore, the potential for                          purpose of submitting quotes electronically and
sradovich on DSK3GMQ082PROD with NOTICES




                                                from 250,000 to 500,000 contracts.                                                                            making transactions as a dealer specialist through
                                                                                                        manipulation will not increase solely
                                                FXI                                                                                                           the System. A Market Maker submitting quotes
                                                                                                        due the increase in position limits as set            remotely is not eligible to participate in trades
                                                  FXI tracks the performance of the                     forth in this proposal. Based on the                  affected in open outcry except to the extent that
                                                FTSE China 50 Index, which is                           above comparisons, the Exchange                       such Market Maker’s quotation represents the BBO.
                                                                                                                                                              Market Makers are designated as specialists on the
                                                composed of the 50 largest Chinese                      believes it is reasonable to increase the             Exchange for all purposes under the Securities
                                                stocks. There is currently no index                     position limit for options on the TLT                 Exchange Act of 1934 and the Rules and
                                                analogue for FXI approved for options                   from 250,000 to 500,000 contracts.                    Regulations thereunder.’’ See Rule 920(a).



                                           VerDate Sep<11>2014   19:12 Apr 24, 2018   Jkt 244001   PO 00000   Frm 00105   Fmt 4703   Sfmt 4703   E:\FR\FM\25APN1.SGM   25APN1


                                                18098                        Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Notices

                                                this level for the options subject to this              fraudulent and manipulative acts and                  eliminate the position and exercise
                                                proposal.36                                             practices, to promote just and equitable              limits for options overlaying the S&P
                                                   The Exchange believes that the                       principles of trade, to foster cooperation            500 Index, S&P 100 Index, Dow Jones
                                                existing surveillance procedures and                    and coordination with persons engaged                 Industrial Average, and Nasdaq 100
                                                reporting requirements at the Exchange,                 in regulating, clearing, settling,                    Index.46 In approving the permanent
                                                other options exchanges, and at the                     processing information with respect to,               elimination of position and exercise
                                                several clearing firms are capable of                   and facilitating transactions in                      limits, the Commission relied heavily
                                                properly identifying unusual and/or                     securities, to remove impediments to                  upon Cboe’s surveillance capabilities,
                                                illegal trading activity. In addition,                  and perfect the mechanisms of a free                  the Commission expressed trust in the
                                                routine oversight inspections of the                    and open market and a national market
                                                                                                                                                              enhanced surveillance and reporting
                                                Exchange’s regulatory programs by the                   system and, in general, to protect
                                                Commission have not uncovered any                                                                             safeguards that Cboe took in order to
                                                                                                        investors and the public interest.
                                                material inconsistencies or                             Additionally, the Exchange believes the               detect and deter possible manipulative
                                                shortcomings in the manner in which                     proposed rule change is consistent with               behavior which might arise from
                                                the Exchange’s market surveillance is                   the Section 6(b)(5) requirement that the              eliminating position and exercise
                                                conducted. These procedures utilize                     rules of an exchange not be designed to               limits.47 Furthermore, as described
                                                daily monitoring of market movements                    permit unfair discrimination between                  more fully above, options on other ETFs
                                                via automated surveillance techniques                   customers, issuers, brokers, or dealers.43            have the position limits proposed
                                                to identify unusual activity in both                       The current position limits for the                herein, but their trading volumes are
                                                options and underlying stocks.37                        options subject to this proposal have                 significantly lower than the ETFs
                                                   Furthermore, large stock holdings                    inhibited the ability of Market Makers to             subject to the proposed rule change.
                                                must be disclosed to the Commission by                  make markets on the Exchange.                            Lastly, the Commission expressed the
                                                way of Schedules 13D or 13G.38 The                      Specifically, the proposal is designed to             belief that removing position and
                                                positions for options subject to this                   encourage Market Makers to shift
                                                                                                                                                              exercise limits may bring additional
                                                proposal are part of any reportable                     liquidity from over the counter markets
                                                positions and, thus, cannot be legally                                                                        depth and liquidity without increasing
                                                                                                        onto the Exchange, which will enhance
                                                hidden. Moreover, the Exchange’s                        the process of price discovery                        concerns regarding intermarket
                                                requirement that ATP Holders file                       conducted on the Exchange through                     manipulation or disruption of the
                                                reports with the Exchange for any                       increased order flow. The proposal will               options or the underlying securities.48
                                                customer who held aggregate large long                  also benefit institutional investors as               The Exchange’s enhanced surveillance
                                                or short positions of any single class for              well as retail traders, and public                    and reporting safeguards continue to be
                                                the previous day will continue to serve                 customers, by providing them with a                   designed to deter and detect possible
                                                as an important part of the Exchange’s                  more effective trading and hedging                    manipulative behavior which might
                                                surveillance efforts.                                   vehicle. In addition, the Exchange                    arise from eliminating position and
                                                   The Exchange believes that the                       believes that the structure of the ETFs               exercise limits.
                                                current financial requirements imposed                  subject to this proposal and the
                                                by the Exchange and by the Commission                   considerable liquidity of the market for              B. Self-Regulatory Organization’s
                                                adequately address concerns that an                     options on those ETFs diminishes the                  Statement on Burden on Competition
                                                ATP Holder or its customer may try to                   opportunity to manipulate this product                  The Exchange does not believe that
                                                maintain an inordinately large un-                      and disrupt the underlying market that                the proposed rule change would impose
                                                hedged position in the options subject                  a lower position limit may protect
                                                                                                                                                              any burden on competition that is not
                                                to this proposal. Current margin and                    against. Increased position limits for
                                                risk-based haircut methodologies serve                                                                        necessary or appropriate in furtherance
                                                                                                        select actively traded options, such as
                                                to limit the size of positions maintained               that proposed herein, is not novel and                of the purposes of the Act. The
                                                by any one account by increasing the                    has been previously approved by the                   Exchange believes that the proposed
                                                margin and/or capital that an ATP                       Commission. For example, the                          rule change will result in additional
                                                Holder must maintain for a large                        Commission has previously approved,                   opportunities to achieve the investment
                                                position held by itself or by its                       on a pilot basis, eliminating position                and trading objectives of market
                                                customer.39 In addition, Rule 15c3–1 40                 limits for options on SPY.44                          participants seeking efficient trading
                                                imposes a capital charge on ATP                         Additionally, the Commission has                      and hedging vehicles, to the benefit of
                                                Holders to the extent of any margin                     approved similar proposed rule changes                investors, market participants, and the
                                                deficiency resulting from the higher                    to increase position limits for options on            marketplace in general.
                                                margin requirement.                                     highly liquid, actively-traded ETFs,45                  Further, the Exchange notes that the
                                                                                                        including a proposal to permanently                   rule change is being proposed as a
                                                2. Statutory Basis
                                                                                                                                                              competitive response to a filing
                                                   The Exchange believes the proposed                     43 Id.

                                                rule change is consistent with Section                     44 See Securities Exchange Act Release Nos.        submitted by Cboe that was recently
                                                6(b) of the Act 41 in general, and furthers             67937 (September 27, 2012), 77 FR 60489 (October      approved by the Commission.49
                                                                                                        3, 2012) (SR–CBOE–2012–091); 67936 (September
                                                the objectives of Section 6(b)(5) of the                27, 2012), 77 FR 60491 (October 3, 2012) (SR–BOX–
                                                Act,42 in that it is designed to prevent                2012–013); 68001 (October 5, 2012), 77 FR 62303
                                                                                                        (October 12, 2012) (SR–NYSEArca–2012–112);
                                                                                                        67672 (August 15, 2012), 77 FR 50750 (August 22,
sradovich on DSK3GMQ082PROD with NOTICES




                                                  36 See Rule 906 (Reporting of Options Positions).
                                                                                                        2012) (SR–NYSEAmex–2012–29).                             46 See Securities Exchange Act Release Nos.
                                                  37 These procedures have been effective for the
                                                surveillance of trading the options subject to this
                                                                                                           45 See Securities Exchange Act Release Nos.        44994 (October 26, 2001), 66 FR 55722 (November
                                                proposal and will continue to be employed.              68086 (October 23, 2012), 77 FR 65600 (October 29,    2, 2001) (SR–CBOE–2001–22); 52650 (October 21,
                                                  38 17 CFR 240.13d–1.                                  2012) (SR–CBOE–2012–066); 64928 (July 20, 2011),      2005), 70 FR 62147 (October 28, 2005) (SR–CBOE–
                                                  39 See Rule 462 (Minimum Margins).
                                                                                                        76 FR 44633 (July 26, 2011) (SR–CBOE–2011–065);       2005–41) (‘‘NDX Approval’’).
                                                                                                        64695 (June 17, 2011), 76 FR 36942 (June 23, 2011)       47 See id., NDX Approval, 70 FR 62147, at 62149.
                                                  40 17 CFR 240.15c3–1.
                                                                                                        (SR–PHLX–2011–58); and 55155 (January 23, 2007),
                                                  41 15 U.S.C. 78f(b).                                                                                           48 Id.
                                                                                                        72 FR 4741 (February 1, 2017) (SR–CBOE–2007–
                                                  42 15 U.S.C. 78f(b)(5).                               008).                                                    49 See supra note 4.




                                           VerDate Sep<11>2014   19:12 Apr 24, 2018   Jkt 244001   PO 00000   Frm 00106   Fmt 4703   Sfmt 4703   E:\FR\FM\25APN1.SGM   25APN1


                                                                             Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Notices                                                 18099

                                                C. Self-Regulatory Organization’s                          At any time within 60 days of the                  cautioned that we do not redact or edit
                                                Statement on Comments on the                            filing of the proposed rule change, the               personal identifying information from
                                                Proposed Rule Change Received From                      Commission summarily may                              comment submissions. You should
                                                Members, Participants, or Others                        temporarily suspend such rule change if               submit only information that you wish
                                                  No written comments were solicited                    it appears to the Commission that such                to make available publicly. All
                                                or received with respect to the proposed                action is necessary or appropriate in the             submissions should refer to File
                                                rule change.                                            public interest, for the protection of                Number SR–NYSEAMER–2018–14, and
                                                                                                        investors, or otherwise in furtherance of             should be submitted on or before May
                                                III. Date of Effectiveness of the                       the purposes of the Act. If the                       16, 2018.
                                                Proposed Rule Change and Timing for                     Commission takes such action, the
                                                Commission Action                                       Commission shall institute proceedings                  For the Commission, by the Division of
                                                                                                        to determine whether the proposed rule                Trading and Markets, pursuant to delegated
                                                   Because the proposed rule change
                                                                                                        should be approved or disapproved.                    authority.55
                                                does not (i) significantly affect the
                                                protection of investors or the public                                                                         Eduardo A. Aleman,
                                                                                                        IV. Solicitation of Comments
                                                interest; (ii) impose any significant                                                                         Assistant Secretary.
                                                burden on competition; and (iii) become                   Interested persons are invited to                   [FR Doc. 2018–08615 Filed 4–24–18; 8:45 am]
                                                operative for 30 days from the date on                  submit written data, views, and
                                                                                                                                                              BILLING CODE 8011–01–P
                                                which it was filed, or such shorter time                arguments concerning the foregoing,
                                                as the Commission may designate, it has                 including whether the proposed rule
                                                become effective pursuant to Section                    change is consistent with the Act.
                                                                                                                                                              SECURITIES AND EXCHANGE
                                                19(b)(3)(A) of the Act 50 and Rule 19b–                 Comments may be submitted by any of
                                                                                                                                                              COMMISSION
                                                4(f)(6) thereunder.51                                   the following methods:
                                                   A proposed rule change filed                         Electronic Comments                                   [Release No. 34–83066; File No. SR–
                                                pursuant to Rule 19b–4(f)(6) under the
                                                Act 52 normally does not become                            • Use the Commission’s internet                    NYSEArca–2018–23]
                                                operative for 30 days after the date of its             comment form (http://www.sec.gov/
                                                                                                        rules/sro.shtml); or                                  Self-Regulatory Organizations; NYSE
                                                filing. However, Rule 19b–4(f)(6)(iii) 53
                                                                                                           • Send an email to rule-comments@                  Arca, Inc.; Notice of Filing and
                                                permits the Commission to designate a
                                                                                                        sec.gov. Please include File Number SR–               Immediate Effectiveness of Proposed
                                                shorter time if such action is consistent
                                                                                                        NYSEAMER–2018–14 on the subject                       Rule Change To Modify Rule 6.8–O,
                                                with the protection of investors and the                line.                                                 Commentary .06 To Expand Position
                                                public interest. The Exchange has asked
                                                the Commission to waive the 30-day                      Paper Comments                                        Limits for Options on Certain
                                                operative delay so that the proposed                                                                          Exchange-Traded Funds
                                                                                                           • Send paper comments in triplicate
                                                rule change may become operative upon                   to Secretary, Securities and Exchange                 April 19, 2018.
                                                filing. The Exchange states that waiver                 Commission, 100 F Street NE,
                                                of the operative delay would be                                                                                  Pursuant to Section 19(b)(1) 1 of the
                                                                                                        Washington, DC 20549–1090.
                                                consistent with the protection of                                                                             Securities Exchange Act of 1934 (the
                                                                                                        All submissions should refer to File                  ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
                                                investors and the public interest                       Number SR–NYSEAMER–2018–14. This
                                                because it will ensure fair competition                                                                       notice is hereby given that on April 13,
                                                                                                        file number should be included on the
                                                among the exchanges by allowing the                                                                           2018, NYSE Arca, Inc. (the ‘‘Exchange’’
                                                                                                        subject line if email is used. To help the
                                                Exchange to immediately increase the                                                                          or ‘‘NYSE Arca’’) filed with the
                                                                                                        Commission process and review your
                                                position limits for the products subject                                                                      Securities and Exchange Commission
                                                                                                        comments more efficiently, please use
                                                to this proposal, which the Exchange                                                                          (‘‘Commission’’) the proposed rule
                                                                                                        only one method. The Commission will
                                                believes will provide consistency for                   post all comments on the Commission’s                 change as described in Items I and II
                                                ATP Holders that are also members at                    internet website (http://www.sec.gov/                 below, which Items have been prepared
                                                CBOE where these increased position                     rules/sro.shtml). Copies of the                       by the self-regulatory organization. The
                                                limits are currently in place. The                      submission, all subsequent                            Commission is publishing this notice to
                                                Commission believes that waiving the                    amendments, all written statements                    solicit comments on the proposed rule
                                                30-day operative delay is consistent                    with respect to the proposed rule                     change from interested persons.
                                                with the protection of investors and the                change that are filed with the
                                                public interest. Therefore, the                                                                               I. Self-Regulatory Organization’s
                                                                                                        Commission, and all written                           Statement of the Terms of the Substance
                                                Commission hereby waives the                            communications relating to the
                                                operative delay and designates the                                                                            of the Proposed Rule Change
                                                                                                        proposed rule change between the
                                                proposal as operative upon filing.54                    Commission and any person, other than                    The Exchange proposes to modify
                                                  50 15
                                                                                                        those that may be withheld from the                   Rule 6.8–O (Position Limits),
                                                         U.S.C. 78s(b)(3)(A).
                                                  51 17
                                                                                                        public in accordance with the                         Commentary .06 to expand position
                                                         CFR 240.19b–4(f)(6). As required under Rule
                                                19b–4(f)(6)(iii), the Exchange provided the             provisions of 5 U.S.C. 552, will be                   limits for options on certain Exchange-
                                                Commission with written notice of its intent to file    available for website viewing and                     Traded Funds (ETFs). The proposed
                                                the proposed rule change, along with a brief            printing in the Commission’s Public                   rule change is available on the
                                                description and the text of the proposed rule           Reference Room, 100 F Street NE,
                                                change, at least five business days prior to the date
                                                                                                                                                              Exchange’s website at www.nyse.com, at
                                                                                                        Washington, DC 20549 on official
sradovich on DSK3GMQ082PROD with NOTICES




                                                of filing of the proposed rule change, or such                                                                the principal office of the Exchange, and
                                                shorter time as designated by the Commission.           business days between the hours of                    at the Commission’s Public Reference
                                                   52 17 CFR 240.19b–4(f)(6).                           10:00 a.m. and 3:00 p.m. Copies of such               Room.
                                                   53 17 CFR 240.19b–4(f)(6)(iii).
                                                                                                        filing also will be available for
                                                   54 For purposes only of waiving the 30-day
                                                                                                        inspection and copying at the principal                 55 17 CFR 200.30–3(a)(12).
                                                operative delay, the Commission has also
                                                considered the proposed rule’s impact on
                                                                                                        office of the Exchange. All comments                    1 15 U.S.C. 78s(b)(1).
                                                efficiency, competition, and capital formation. See     received will be posted without change.                 2 15 U.S.C. 78a.

                                                15 U.S.C. 78c(f).                                       Persons submitting comments are                         3 17 CFR 240.19b–4.




                                           VerDate Sep<11>2014   19:12 Apr 24, 2018   Jkt 244001   PO 00000   Frm 00107   Fmt 4703   Sfmt 4703   E:\FR\FM\25APN1.SGM    25APN1



Document Created: 2018-11-02 08:17:40
Document Modified: 2018-11-02 08:17:40
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 18093 

2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR