83 FR 5473 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Order Approving a Proposed Rule Change To Expand the Short Term Option Series Program To Allow Monday Expirations for SPY Options
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 26 (February 7, 2018)
Federal Register Volume 83, Issue 26 (February 7, 2018)
| Page Range | 5473-5474 | |
| FR Document | 2018-02393 |
[Federal Register Volume 83, Number 26 (Wednesday, February 7, 2018)] [Notices] [Pages 5473-5474] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-02393] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82611; File No. SR-Phlx-2017-103] Self-Regulatory Organizations; Nasdaq PHLX LLC; Order Approving a Proposed Rule Change To Expand the Short Term Option Series Program To Allow Monday Expirations for SPY Options February 1, 2018. I. Introduction On December 6, 2017, the Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to amend Rule 1000 and Commentary .11 to Rule 1012 to expand the Short Term Option Series Program to permit listing and trading of options on the SPDR S&P 500 ETF Trust (``SPY'') with Monday expirations. The proposed rule change was published for comment in the Federal Register on December 26, 2017.\3\ The Commission received no comments on the proposal. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 82363 (December 19, 2017), 82 FR 61047 (December 26, 2017) (``Notice''). --------------------------------------------------------------------------- II. Description of the Proposal Under the terms of the current Short Term Option Series Program, after an option class has been approved for listing and trading on the Exchange, the Exchange may open for trading on any Thursday or Friday that is a business day series of options on that class that expire on each of the next five Fridays, provided that such Friday is not a Friday in which monthly options series or Quarterly Options Series expire.\4\ In addition, the Exchange may open for trading on any Tuesday or Wednesday that is a business day series of options on SPY to expire on up to five consecutive Wednesdays, provided that each such Wednesday is a business day and is not a Wednesday in which Quarterly Options Series expire.\5\ --------------------------------------------------------------------------- \4\ See Commentary .11 to Phlx Rule 1012. \5\ See id. --------------------------------------------------------------------------- The Exchange proposes to expand the Short Term Option Series to permit Phlx to open for trading, on any Monday or Friday that is a business day, series of options on SPY that expire on any Monday of the month that is a business day and is not a Monday in which Quarterly Options Series expires (``Monday SPY Expirations'').\6\ In the case of a series that is listed on a Friday and expires on a Monday, it must be listed one business week and one business day prior to that Monday expiration.\7\ If the Monday SPY Expirations falls on a Monday that is not a business day, the series shall expire on the first business day immediately following that Monday.\8\ The Exchange also proposes to amend Commentary .11 to Phlx Rule 1012 state that it may list up to five consecutive Monday SPY Expirations at one time, and may have no more than a total of five Monday SPY Expirations (in addition to a maximum of five Short Term Option Series for SPY expiring on Friday and five Wednesday SPY Expirations). In addition, like Wednesday SPY Expirations and unlike other option series in the Short Term Option Series program, Monday SPY Expirations could expire in the same week in which monthly option series in the same class expire.\9\ Otherwise, Monday SPY Expirations are subject to the same rules as standard Short Term Option Series.\10\ --------------------------------------------------------------------------- \6\ Under the proposal, the Exchange would expand the definition of ``Short Term Option Series'' in Phlx Rule 1044(b)(44) and add a description of Monday SPY Expirations to Commentary .11 to Phlx Rule 1012. See Notice, supra note 3, at 61048. \7\ See proposed Commentary .11 to Phlx Rule 1012. \8\ See proposed Phlx Rule 1000(b)(44). \9\ See proposed Commentary .11 to Phlx Rule 1012. \10\ For example, Monday SPY Expirations would be subject to the same series limitations and strike interval rules as standard Short Term Option Series. See Notice, supra note 3, at 61048. --------------------------------------------------------------------------- III. Discussion and Commission's Findings The Commission has carefully reviewed the proposed rule change and finds that it is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act.\11\ Specifically, the Commission finds that the proposal is consistent with the requirements of Sections 6(b)(5) of the Act,\12\ which requires, among other things, that a national securities exchange have rules designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in [[Page 5474]] regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and in general, to protect investors and the public interest. The Commission believes that the proposed rule change may provide the investing public and other market participants more flexibility to closely tailor their investment and hedging decisions in SPY options, thus allowing them to better manage their risk exposure. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f. In approving this proposed rule change, the Commission has considered the proposed rule change's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \12\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- In approving the proposal, the Commission notes that the Exchange has represented that it has an adequate surveillance program in place to detect manipulative trading in Monday SPY Expirations.\13\ The Exchange further states that it has the necessary systems capacity to support the new options series.\14\ --------------------------------------------------------------------------- \13\ See Notice, supra note 3, at 61049. \14\ Id. --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered that pursuant to Section 19(b)(2) of the Act \15\ that the proposed rule change (SR-Phlx-2017-103) be, and hereby is, approved. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(2). \16\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-02393 Filed 2-6-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 26 / Wednesday, February 7, 2018 / Notices 5473
quotation and transaction infrastructure. SECURITIES AND EXCHANGE Quarterly Options Series expires
The Exchange’s proposed twelve-month COMMISSION (‘‘Monday SPY Expirations’’).6 In the
Pilot Program will allow for both the case of a series that is listed on a Friday
[Release No. 34–82611; File No. SR–Phlx–
Exchange and the Commission to 2017–103]
and expires on a Monday, it must be
continue monitoring the potential for listed one business week and one
adverse market effects of p.m.- Self-Regulatory Organizations; Nasdaq business day prior to that Monday
settlement on the market, including the PHLX LLC; Order Approving a expiration.7 If the Monday SPY
underlying cash equities markets, at the Proposed Rule Change To Expand the Expirations falls on a Monday that is not
expiration of these options. Short Term Option Series Program To a business day, the series shall expire on
Allow Monday Expirations for SPY the first business day immediately
The Commission notes that the following that Monday.8 The Exchange
Options
Exchange will provide the Commission also proposes to amend Commentary .11
with the annual report analyzing February 1, 2018. to Phlx Rule 1012 state that it may list
volume and open interest of EOMs and I. Introduction up to five consecutive Monday SPY
Weekly Expirations that will also Expirations at one time, and may have
contain information and analysis of On December 6, 2017, the Nasdaq no more than a total of five Monday SPY
EOMs and Weekly Expirations trading PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed Expirations (in addition to a maximum
patterns and index price volatility and with the Securities and Exchange of five Short Term Option Series for
Commission (‘‘Commission’’), pursuant SPY expiring on Friday and five
share trading activity for series that
to Section 19(b)(1) of the Securities Wednesday SPY Expirations). In
exceed minimum parameters. This
Exchange Act of 1934 (‘‘Act’’) 1 and Rule addition, like Wednesday SPY
information should be useful to the 19b–4 thereunder,2 a proposed rule
Commission as it evaluates whether Expirations and unlike other option
change to amend Rule 1000 and series in the Short Term Option Series
allowing p.m.-settlement for EOMs and Commentary .11 to Rule 1012 to expand
Weekly Expirations has resulted in program, Monday SPY Expirations
the Short Term Option Series Program could expire in the same week in which
increased market and price volatility in to permit listing and trading of options
the underlying component stocks, monthly option series in the same class
on the SPDR S&P 500 ETF Trust expire.9 Otherwise, Monday SPY
particularly at expiration. The Pilot (‘‘SPY’’) with Monday expirations. The Expirations are subject to the same rules
Program information should help the proposed rule change was published for
as standard Short Term Option Series.10
Commission and the Exchange assess comment in the Federal Register on
the impact on the markets and December 26, 2017.3 The Commission III. Discussion and Commission’s
determine whether changes to these received no comments on the proposal. Findings
programs are necessary or appropriate. This order approves the proposed rule The Commission has carefully
Furthermore, the Exchange’s ongoing change. reviewed the proposed rule change and
analysis of the Pilot Program should II. Description of the Proposal finds that it is consistent with the
help it monitor any potential risks from requirements of the Act and the rules
Under the terms of the current Short
large p.m.-settled positions and take and regulations thereunder applicable to
Term Option Series Program, after an
appropriate action, if warranted. a national securities exchange and, in
option class has been approved for
particular, the requirements of Section
IV. Conclusion listing and trading on the Exchange, the
6(b) of the Act.11 Specifically, the
Exchange may open for trading on any
It is therefore ordered, pursuant to Commission finds that the proposal is
Thursday or Friday that is a business
Section 19(b)(2) of the Act,11 that the consistent with the requirements of
day series of options on that class that
proposed rule change (SR–ISE–2017– Sections 6(b)(5) of the Act,12 which
expire on each of the next five Fridays,
requires, among other things, that a
111) be approved for a pilot period of provided that such Friday is not a
national securities exchange have rules
twelve months. Friday in which monthly options series
designed to prevent fraudulent and
For the Commission, by the Division of or Quarterly Options Series expire.4 In
manipulative acts and practices, to
Trading and Markets, pursuant to delegated addition, the Exchange may open for
promote just and equitable principles of
authority.12 trading on any Tuesday or Wednesday
trade, to foster cooperation and
that is a business day series of options
Eduardo A. Aleman, coordination with persons engaged in
on SPY to expire on up to five
Assistant Secretary. consecutive Wednesdays, provided that 6 Under the proposal, the Exchange would
[FR Doc. 2018–02394 Filed 2–6–18; 8:45 am] each such Wednesday is a business day expand the definition of ‘‘Short Term Option
BILLING CODE 8011–01–P and is not a Wednesday in which Series’’ in Phlx Rule 1044(b)(44) and add a
Quarterly Options Series expire.5 description of Monday SPY Expirations to
The Exchange proposes to expand the Commentary .11 to Phlx Rule 1012. See Notice,
supra note 3, at 61048.
Short Term Option Series to permit Phlx 7 See proposed Commentary .11 to Phlx Rule
to open for trading, on any Monday or 1012.
Friday that is a business day, series of 8 See proposed Phlx Rule 1000(b)(44).
options on SPY that expire on any 9 See proposed Commentary .11 to Phlx Rule
Monday of the month that is a business 1012.
10 For example, Monday SPY Expirations would
day and is not a Monday in which
sradovich on DSK3GMQ082PROD with NOTICES
be subject to the same series limitations and strike
interval rules as standard Short Term Option Series.
1 15 U.S.C. 78s(b)(1). See Notice, supra note 3, at 61048.
2 17 CFR 240.19b–4. 11 15 U.S.C. 78f. In approving this proposed rule
3 See Securities Exchange Act Release No. 82363
change, the Commission has considered the
(December 19, 2017), 82 FR 61047 (December 26, proposed rule change’s impact on efficiency,
2017) (‘‘Notice’’). competition, and capital formation. See 15 U.S.C.
11 15 U.S.C. 78s(b)(2). 4 See Commentary .11 to Phlx Rule 1012. 78c(f).
12 17 CFR 200.30–3(a)(12). 5 See id. 12 15 U.S.C. 78f(b)(5).
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![5474 Federal Register / Vol. 83, No. 26 / Wednesday, February 7, 2018 / Notices
regulating, clearing, settling, processing (the ‘‘MSRB’’ or ‘‘Board’’) filed with the effective in 1978, and has been amended
information with respect to, and Securities and Exchange Commission several times since then as the MSRB
facilitating transactions in securities, to (the ‘‘SEC’’ or ‘‘Commission’’) the has enhanced its rule book. More
remove impediments to and perfect the proposed rule change as described in recently, in 2012, the MSRB issued a
mechanism of a free and open market Items I, II, and III below, which Items request for comment on its entire rule
and a national market system, and in have been prepared by the MSRB. The book.4 In response, two market
general, to protect investors and the Commission is publishing this notice to participants requested that the MSRB
public interest. The Commission solicit comments on the proposed rule harmonize its advertising rules with
believes that the proposed rule change change from interested persons. FINRA Rule 2210, on communications
may provide the investing public and with the public.5 Market participants
I. Self-Regulatory Organization’s echoed those requests more generally in
other market participants more
Statement of the Terms of Substance of their latest responses to a 2016 request
flexibility to closely tailor their
the Proposed Rule Change for comment on the MSRB’s strategic
investment and hedging decisions in
SPY options, thus allowing them to The MSRB filed with the Commission priorities.6 Further, and apart from the
better manage their risk exposure. a proposed rule consisting of MSRB’s requests for comment, the
In approving the proposal, the amendments to MSRB Rule G–21, on MSRB solicited input about possible
Commission notes that the Exchange advertising (‘‘proposed amended Rule amendments to Rule G–21 from market
has represented that it has an adequate G–21’’), proposed new MSRB Rule G– participants, including industry groups
surveillance program in place to detect 40, on advertising by municipal that represent dealers.7
manipulative trading in Monday SPY advisors (‘‘proposed Rule G–40’’), and a After considering the important
Expirations.13 The Exchange further technical amendment to MSRB Rule G– suggestions made by market
states that it has the necessary systems 42, on duties of non-solicitor municipal participants, the MSRB prepared
capacity to support the new options advisors (‘‘proposed amended Rule G– proposed amended Rule G–21 to, among
series.14 42,’’ together with proposed amended other things:
Rule G–21 and proposed Rule G–40, the • Enhance the MSRB’s fair-dealing
IV. Conclusion ‘‘proposed rule change’’). The MSRB provisions by promoting regulatory
It is therefore ordered that pursuant to requests that the proposed rule change consistency among Rule G–21 and the
Section 19(b)(2) of the Act 15 that the become effective nine months from the advertising rules of other financial
proposed rule change (SR–Phlx–2017– date of SEC approval. regulators; and
103) be, and hereby is, approved. The text of the proposed rule change • promote regulatory consistency
is available on the MSRB’s website at between Rule G–21(a)(ii), the definition
For the Commission, by the Division of
Trading and Markets, pursuant to delegated www.msrb.org/Rules-and- of ‘‘form letter,’’ and FINRA Rule 2210’s
authority.16 Interpretations/SEC-Filings/2018- definition of ‘‘correspondence.’’
Filings.aspx, at the MSRB’s principal Proposed amended Rule G–21 also
Eduardo A. Aleman,
office, and at the Commission’s Public makes a technical amendment in
Assistant Secretary. paragraph (e) to streamline the rule.
[FR Doc. 2018–02393 Filed 2–6–18; 8:45 am]
Reference Room.
BILLING CODE 8011–01–P II. Self-Regulatory Organization’s other public media, or any written or electronic
Statement of the Purpose of, and promotional literature distributed or made generally
Statutory Basis for, the Proposed Rule available to customers or the public, including any
SECURITIES AND EXCHANGE notice, circular, report, market letter, form letter,
Change telemarketing script, seminar text, press release
COMMISSION concerning the products or services of the broker,
In its filing with the Commission, the
dealer or municipal securities dealer, or reprint, or
[Release No. 34–82616; File No. SR–MSRB– MSRB included statements concerning any excerpt of the foregoing or of a published
2018–01] the purpose of and basis for the article.
proposed rule change and discussed any As such, Rule G–21 not only applies to print
Self-Regulatory Organizations; comments it received on the proposed advertisements, but also applies to an
Municipal Securities Rulemaking rule change. The text of these statements advertisement ‘‘published or used in any electronic
Board; Notice of Filing of a Proposed or other public media,’’ such as a social media post.
may be examined at the places specified 4 MSRB Notice 2012–63, Request for Comment on
Rule Change Consisting of in Item IV below. The MSRB has MSRB Rules and Interpretive Guidance (Dec. 18,
Amendments to Rule G–21, on prepared summaries, set forth in 2012).
Advertising, Proposed New Rule G–40, Sections A, B, and C below, of the most 5 See Letter from David L. Cohen, Managing
on Advertising by Municipal Advisors, significant aspects of such statements. Director, Associate General Counsel, Securities
and a Technical Amendment to Rule Industry and Financial Markets Association, dated
G–42, on Duties of Non-Solicitor A. Self-Regulatory Organization’s February 19, 2013, to Ronald W. Smith, Corporate
Secretary, Municipal Securities Rulemaking Board;
Municipal Advisors Statement of the Purpose of, and Letter from Gerald K. Mayfield, Senior Counsel,
Statutory Basis for, the Proposed Rule Wells Fargo & Company Law Department, dated
February 1, 2018. Change February 19, 2013, to Ronald W. Smith, Corporate
Pursuant to Section 19(b)(1) of the Secretary, Municipal Securities Rulemaking Board.
Securities Exchange Act of 1934 (the 1. Purpose 6 MSRB Notice 2016–25, MSRB Seeks Input on
‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule Strategic Priorities (Oct. 12, 2016); see Letter from
Background Michael Decker, Managing Director, Securities
19b–4 thereunder,2 notice is hereby Industry and Financial Markets Association, dated
A. Proposed Amended Rule G–21
given that on January 24, 2018 the November 11, 2016, to Ronald W. Smith, Secretary,
sradovich on DSK3GMQ082PROD with NOTICES
Municipal Securities Rulemaking Board Rule G–21 is a core fair practice rule Municipal Securities Rulemaking Board; Letter
of the MSRB. Rule G–21 applies to all from Robert J. McCarthy, Director of Regulatory
13 See advertisements by dealers, as defined by Policy, Wells Fargo Advisors, LLC, dated November
Notice, supra note 3, at 61049.
11, 2016, to Ronald W. Smith, Corporate Secretary,
14 Id. Rule G–21(a)(i).3 Rule G–21 became Municipal Securities Rulemaking Board.
15 15 U.S.C. 78s(b)(2). 7 See MSRB Notice 2017–04, Request for
16 17 CFR 200.30–3(a)(12). 3 An advertisement, as defined by Rule G–21(a)(i): Comment on Draft Amendments to MSRB Rule G–
1 15 U.S.C. 78s(b)(1).
Means any material (other than listings of 21, on Advertising, and on Draft Rule G–40, on
2 17 CFR 240.19b–4. offerings) published or used in any electronic or Advertising by Municipal Advisors (Feb. 16, 2017).
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Document Created: 2018-10-26 13:56:17
Document Modified: 2018-10-26 13:56:17
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 83 FR 5473 |
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