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, Number 26 (Wednesday, February 7, 2018)]
[Notices]
[Pages 5473-5474]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-02393]


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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.
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    \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'').
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II. Description of the Proposal

    Under the terms of the current Short Term Option Series Program, 
after an option class has been approved for listing and trading on the 
Exchange, the Exchange may open for trading on any Thursday or Friday 
that is a business day series of options on that class that expire on 
each of the next five Fridays, provided that such Friday is not a 
Friday in which monthly options series or Quarterly Options Series 
expire.\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\
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    \4\ See Commentary .11 to Phlx Rule 1012.
    \5\ See id.
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    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\
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    \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.
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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.
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    \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).
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    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\
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    \13\ See Notice, supra note 3, at 61049.
    \14\ Id.
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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.
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    \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