83 FR 58664 - Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Long-Term Options Contracts

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 224 (November 20, 2018)

Page Range		58664-58665
FR Document		2018-25246
Federal Register, Volume 83 Issue 224 (Tuesday, November 20, 2018)
[Federal Register Volume 83, Number 224 (Tuesday, November 20, 2018)]
[Notices]
[Pages 58664-58665]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-25246]



[[Page 58664]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84590; File No. SR-BX-2018-055]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Regarding Long-Term 
Options Contracts

November 14, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 7, 2018, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II, below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Chapter IV, Securities Traded on BX 
Options, Section 8, Long-Term Options Contracts.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqbx.cchwallstreet.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 Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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 its rules at Chapter IV, Securities 
Traded on BX Options, Section 8, Long-Term Options Contracts, in order 
(i) to clarify the number of long-term option contract (``LEAPS'') 
expiration months that may be listed on the Exchange on underlying 
securities under the current rule, and (ii) to expand the number of 
LEAPS expiration months that may be listed in options on the 
SPDR[supreg] S&P 500[supreg] exchange-traded fund (the ``SPY ETF'') in 
particular.
Clarification of the Number of Permitted Expiration Months
    Pursuant to current Chapter IV, Section 8, the Exchange may list 
LEAPS that expire from twelve (12) to thirty-nine (39) months from the 
time they are listed. The rule provides that there may be up to six (6) 
additional expiration months. Because the rule does not specify which 
expiration months the six months are in addition to, and thus is 
ambiguous, the Exchange proposes to delete the word ``additional.'' As 
amended, the rule would clearly and simply provide that the Exchange 
may list six expiration months having from twelve up to thirty-nine 
months from the time they are listed until expiration. This aspect of 
the proposed rule change is based upon Nasdaq PHLX, LLC (``Phlx'') Rule 
1012, Series of Options Open for Trading, subsection (a)(i)(D).\3\
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    \3\ See Securities Exchange Act Release No. 80769 (May 25, 
2017), 82 FR 25472 (June 1, 2017) (SR-Phlx-2017-41).
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Additional Expiration Months in SPY ETF LEAPS
    The Exchange proposes to further amend Chapter IV, Section 8, to 
permit up to ten LEAPS expiration months for options on the SPY ETF in 
response to customer demand.\4\ The proposal will add liquidity to the 
SPY ETF options market by allowing market participants to hedge risks 
relating to SPY ETF option positions over a longer time period with a 
known and limited cost. This aspect of the proposed rule change is also 
based upon Phlx Rule 1012, Series of Options Open for Trading, 
subsection (a)(i)(D), as recently amended.\5\
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    \4\ Chapter XIV, Index Rules, Section 11, Terms of Index Options 
Contracts, subsection (b)(1)(i) currently permits the Exchange to 
list up to ten (10) expiration months in long term index options.
    \5\ See Securities Exchange Act Release No. 84449 (October 18, 
2018), 83 FR 53699 (October 24, 2018) (SR-Phlx-2018-64).
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    The SPY ETF options market today is characterized by its tremendous 
daily and annual liquidity. As a consequence the Exchange believes that 
the listing of additional SPY ETF LEAPS expiration months would be well 
received by investors. This proposal to expand the number of permitted 
SPY ETF LEAPS expiration months would not apply to LEAPS on any other 
security.\6\
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    \6\ Historically, SPY ETF is the largest and most actively 
traded ETF in the United States as measured by its assets under 
management and the value of shares traded.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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. 
First, as noted above, the proposal protects investors and the public 
interest by clarifying ambiguous rule language associated with 
permitted listings of long term options. Second, the proposal would 
permit the Exchange to offer market participants additional LEAPS on 
SPY ETF options for their investment and risk management purposes. This 
aspect of the proposal is intended simply to provide additional trading 
opportunities which have been requested by customers, thereby 
facilitating transactions in options and contributing to the protection 
of investors and the maintenance of fair and orderly markets. The 
proposed rule change responds to the continuing needs of market 
participants, particularly portfolio managers and other institutional 
customers, by providing protection from long-term market moves and by 
offering an alternative to hedging portfolios with futures positions or 
off-exchange customized derivative instruments. The Exchange believes 
that the addition today of four additional expiration months for SPY 
ETF LEAPS does not represent a proliferation of expiration months, but 
is instead a very modest expansion of LEAPS in response to stated 
customer demand. Significantly, the proposal would feature new LEAPS 
expiration months in only a single class of options that are very 
liquid and heavily traded, as discussed above. Additionally, the 
Exchange notes by way of precedent that ten expiration months are 
already permitted for stock index LEAPS. Further, the Exchange has the 
necessary systems capacity to support the new SPY ETF LEAPS expiration 
months.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).

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[[Page 58665]]

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. On the contrary, the Exchange 
believes that the proposed amendment will benefit investors, market 
participants, and the marketplace in general by eliminating ambiguity 
in the current rules regarding the number of permitted expiration 
months in LEAPS generally. Additionally, the proposal merely provides 
investors additional investment and risk management opportunities by 
providing flexibility to the Exchange to list additional LEAPS 
expiration series, expanding the number of SPY ETF LEAPS offered on the 
Exchange from six expiration months to ten expiration months.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4. In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\12\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative on November 16, 2018, to coincide with the 
effective date of Phlx's proposed rule change on which the proposal is 
partially based.\13\ The Exchange's proposal would clarify ambiguous 
rule text and would conform the Exchange's rules relating to permitted 
number of SPY ETF LEAPS expirations to those of Phlx. Accordingly, the 
Commission believes that the proposal raises no new or novel regulatory 
issues and waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest. The Commission 
therefore waives the 30-day operative delay and designates the proposal 
operative on November 16, 2018.\14\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ See supra note 5.
    \14\ 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).
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    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.

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 [email protected]. Please include 
File Number SR-BX-2018-055 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-BX-2018-055. 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 the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. 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-BX-2018-055 and should be submitted on 
or before December 11, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25246 Filed 11-19-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 224 / Tuesday, November 20, 2018 / Notices 58665

B. Self-Regulatory Organization’s effective date of Phlx’s proposed rule communications relating to the
Statement on Burden on Competition change on which the proposal is proposed rule change between the
The Exchange does not believe that partially based.13 The Exchange’s Commission and any person, other than
the proposed rule change will impose proposal would clarify ambiguous rule those that may be withheld from the
any burden on competition not text and would conform the Exchange’s public in accordance with the
rules relating to permitted number of provisions of 5 U.S.C. 552, will be
necessary or appropriate in furtherance
SPY ETF LEAPS expirations to those of available for website viewing and
of the purposes of the Act. On the
Phlx. Accordingly, the Commission printing in the Commission’s Public
contrary, the Exchange believes that the
believes that the proposal raises no new Reference Room, 100 F Street NE,
proposed amendment will benefit
or novel regulatory issues and waiver of Washington, DC 20549, on official
investors, market participants, and the
the 30-day operative delay is consistent business days between the hours of
marketplace in general by eliminating
with the protection of investors and the 10:00 a.m. and 3:00 p.m. Copies of the
ambiguity in the current rules regarding
public interest. The Commission
the number of permitted expiration filing also will be available for
therefore waives the 30-day operative
months in LEAPS generally. inspection and copying at the principal
delay and designates the proposal
Additionally, the proposal merely office of the Exchange. All comments
operative on November 16, 2018.14
provides investors additional At any time within 60 days of the received will be posted without change.
investment and risk management filing of the proposed rule change, the Persons submitting comments are
opportunities by providing flexibility to Commission summarily may cautioned that we do not redact or edit
the Exchange to list additional LEAPS temporarily suspend such rule change if personal identifying information from
expiration series, expanding the number it appears to the Commission that such comment submissions. You should
of SPY ETF LEAPS offered on the action is necessary or appropriate in the submit only information that you wish
Exchange from six expiration months to public interest, for the protection of to make available publicly. All
ten expiration months. investors, or otherwise in furtherance of submissions should refer to File
C. Self-Regulatory Organization’s the purposes of the Act. Number SR–BX–2018–055 and should
Statement on Comments on the be submitted on or before December 11,
IV. Solicitation of Comments
Proposed Rule Change Received From 2018.
Members, Participants, or Others Interested persons are invited to
submit written data, views, and For the Commission, by the Division of
No written comments were either arguments concerning the foregoing, Trading and Markets, pursuant to delegated
solicited or received. authority.15
including whether the proposed rule
change is consistent with the Act. Eduardo A. Aleman,
III. Date of Effectiveness of the
Proposed Rule Change and Timing for Comments may be submitted by any of Assistant Secretary.
Commission Action the following methods: [FR Doc. 2018–25246 Filed 11–19–18; 8:45 am]

Electronic Comments BILLING CODE 8011–01–P
Because the foregoing proposed rule
change does not: (i) Significantly affect • Use the Commission’s internet
the protection of investors or the public comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE
interest; (ii) impose any significant rules/sro.shtml); or COMMISSION
burden on competition; and (iii) become • Send an email to rule-comments@
operative for 30 days from the date on sec.gov. Please include File Number SR–
which it was filed, or such shorter time BX–2018–055 on the subject line. [Release No. 34–84582; File No. SR–MRX–
as the Commission may designate, it has 2018–34]
Paper Comments
become effective pursuant to Section
19(b)(3)(A) of the Act 9 and Rule 19b– • Send paper comments in triplicate Self-Regulatory Organizations; Nasdaq
4(f)(6) thereunder.10 to Secretary, Securities and Exchange MRX, LLC; Notice of Filing and
A proposed rule change filed under Commission, 100 F Street NE, Immediate Effectiveness of Proposed
Rule 19b–4(f)(6) 11 normally does not Washington, DC 20549–1090. Rule Change Relating to Market Maker
become operative prior to 30 days after All submissions should refer to File Quoting Obligations
the date of the filing. However, pursuant Number SR–BX–2018–055. This file November 14, 2018.
to Rule 19b4(f)(6)(iii),12 the Commission number should be included on the
may designate a shorter time if such subject line if email is used. To help the Pursuant to Section 19(b)(1) of the
action is consistent with the protection Commission process and review your Securities Exchange Act of 1934
of investors and the public interest. The comments more efficiently, please use (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Exchange has asked the Commission to only one method. The Commission will notice is hereby given that on November
waive the 30-day operative delay so that post all comments on the Commission’s 7, 2018, Nasdaq MRX, LLC (‘‘MRX’’ or
the proposal may become operative on internet website (http://www.sec.gov/ ‘‘Exchange’’) filed with the Securities
November 16, 2018, to coincide with the rules/sro.shtml). Copies of the and Exchange Commission
submission, all subsequent (‘‘Commission’’) the proposed rule
9 15 U.S.C. 78s(b)(3)(A). amendments, all written statements change as described in Items I, II, and
10 17 CFR 240.19b–4. In addition, Rule 19b– with respect to the proposed rule III, below, which Items have been
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
change that are filed with the prepared by the Exchange. The
file the proposed rule change, along with a brief Commission, and all written Commission is publishing this notice to
description and text of the proposed rule change, solicit comments on the proposed rule
at least five business days prior to the date of filing 13 See supra note 5. change from interested persons.
of the proposed rule change, or such shorter time 14 For purposes only of waiving the 30-day
as designated by the Commission. The Exchange operative delay, the Commission has also
has satisfied this requirement. considered the proposed rule’s impact on
15 17 CFR 200.30–3(a)(12).
11 17 CFR 240.19b–4(f)(6). 1 15 U.S.C. 78s(b)(1).
efficiency, competition, and capital formation. See
12 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4.

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Document Created: 2018-11-20 07:59:23
Document Modified: 2018-11-20 07:59:23
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		83 FR 58664