83_FR_7313 83 FR 7279 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Expand the Short Term Option Series Program

83 FR 7279 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Expand the Short Term Option Series Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 34 (February 20, 2018)

Page Range7279-7282
FR Document2018-03306

Federal Register, Volume 83 Issue 34 (Tuesday, February 20, 2018) 
[Federal Register Volume 83, Number 34 (Tuesday, February 20, 2018)]
[Notices]
[Pages 7279-7282]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-03306]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82697; File No. SR-BOX-2018-07]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To Expand 
the Short Term Option Series Program

February 13, 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 February 8, 2018, BOX Options Exchange LLC (``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 BOX Rule 100(a)(65) and IM-5050-6 to 
expand the Short Term Option Series Program (``Program'') to permit the 
listing and trading of options series with Monday expirations that are 
listed pursuant to the Program, including options on the SPDR S&P 500 
ETF Trust (``SPY''). The text of the proposed rule change is available 
from the principal office of the Exchange, at the Commission's Public 
Reference Room and also on the Exchange's internet website at http://boxoptions.com.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to amend Rule 100(a)(65) and IM-5050-6 to 
expand the Short Term Option Series Program (``Program'') to permit the 
listing and trading of options series with Monday expirations that are 
listed pursuant to the Program, including options on the SPDR S&P 500 
ETF Trust (``SPY''). This is a competitive filing that is based on a 
proposal recently submitted by Nasdaq PHLX LLC (``Phlx'') and approved 
by the Commission.\3\
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    \3\ See Securities Exchange Act Release No. 82611 (February 1, 
2018), 83 FR 5473 (February 7, 2018) (Order Approving SR-Phlx-2017-
103).
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    As set forth in Rule 100(a)(65), a Short Term Option Series is a 
series in an option class that is approved for listing and trading on 
the Exchange in which the series is opened for trading on any Tuesday, 
Wednesday, Thursday or Friday that is a business day and that expires 
on the Wednesday or Friday of the next business week. The Exchange is 
now proposing to amend Rule 100(a)(65) to permit the listing of options 
series that expire on Mondays. Specifically, the Exchange is proposing 
that it may open for trading series of options on any Monday that is a 
business day and that expires on the Monday of the next business week. 
The Exchange is also proposing to list Monday expirations series on 
Fridays that precede the expiration Monday by one business week plus 
one business day. Since Rule 100(a)(65) already provides for the 
listing of short term option series on Fridays, the Exchange is not 
modifying this provision to allow for Friday listing of Monday 
expiration series. However, the Exchange is amending Rule 100(a)(65) to 
clarify that, in the case of a series that is listed on a Friday and 
expires on a Monday, that series must be listed one business week and 
one business day prior to that expiration (i.e., two Fridays prior to 
expiration).
    As part of this proposal, the Exchange is also amending Rule 
100(a)(65) to address the expiration of Monday expiration series when 
the Monday is not a business day. In that case, the rule will provide 
that the series shall expire on the first business day immediately 
following that Monday. This procedure differs from the expiration date 
of Wednesday expiration series that are scheduled to expire on a 
holiday. In that case, the Wednesday expiration series shall expire on 
the first business day immediately prior to that Wednesday, e.g., 
Tuesday of that week.\4\ However, the Exchange believes that it is 
preferable to require Monday expiration series in this scenario to 
expire on the Tuesday of that week rather than the previous business 
day, e.g., the previous Friday, since the Tuesday is closer in time to 
the scheduled expiration date of the series than the previous Friday, 
and therefore may be more representative of anticipated market 
conditions. The Exchange also notes that Cboe Exchange, Inc. (``Cboe'') 
uses the same procedure for options on the S&P 500 index (``SPX'') with 
Monday expirations that listed pursuant to its Nonstandard Expirations 
Pilot Program and that are scheduled to expire on a holiday.\5\
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    \4\ See BOX Rule 100(a)(65).
    \5\ See CBOE Rule 24.9(e)(1) (``If the Exchange is not open for 
business on a respective Monday, the normally Monday expiring Weekly 
Expirations will expire on the following business day. If the 
Exchange is not open for business on a respective Wednesday or 
Friday, the normally Wednesday or Friday expiring Weekly Expirations 
will expire on the previous business day.'')
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    The Exchange also proposes to make corresponding changes to IM-
5050-6, which sets forth the requirements for SPY options that are 
listed pursuant to the Short Term Options Series Program, to permit 
Monday SPY expirations (``Monday SPY Expirations''). Accordingly, the 
Exchange proposes to amend IM-5050-6(d) to state that, with respect to 
Monday SPY Expirations, the Exchange may open for trading on any Friday 
or Monday that is a business day series of options on the SPY to expire 
on any Monday of the month that is a business day and is not a Monday 
in which Quarterly Options Series expire, provided that Monday SPY 
Expirations that are listed on a Friday must be listed at least one 
business week and one business day prior to the expiration. BOX may 
list up to five consecutive Monday SPY Expirations at one time; the 
Exchange may have no more than a total of five Monday SPY 
Expirations.\6\ The Exchange will also clarify that, as with Wednesday 
SPY Expirations,

[[Page 7280]]

Monday SPY Expirations will be subject to the provisions of this Rule.
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    \6\ Proposed IM-5050-6(a) states that the Exchange may have no 
more than a total of five Short Term Option Expiration Dates, 
however the Exchange notes that this does not include any Monday or 
Wednesday SPY Expirations as provided in paragraph (c) and proposed 
paragraph (d) of IM-5050-6.
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    The interval between strike prices for the proposed Monday SPY 
Expirations will be the same as those for the current Short Term Option 
Series for Wednesday and Friday SPY Expirations. Specifically, the 
Monday SPY Expirations will have a $0.50 strike interval minimum. As is 
the case with other options series listed pursuant to the Program, the 
Monday SPY Expiration series will be P.M.-settled.
    Currently, for each option class eligible for participation in the 
Program, the Exchange is limited to opening thirty (30) series for each 
expiration date for the specific class. The thirty (30) series 
restriction does not include series that are open by other securities 
exchanges under their respective short term option rules; the Exchange 
may list these additional series that are listed by other exchanges.\7\ 
This thirty (30) series restriction shall apply to Monday SPY 
Expiration series as well. In addition, the Exchange will be able to 
list series that are listed by other exchanges, assuming they file 
similar rules with the Commission to list SPY options expiring on 
Mondays.
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    \7\ See IM-5050-6(b).
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    Finally, the Exchange is amending IM-5050-6(b)(2), which addresses 
the listing of Short Term Options Series that expire in the same week 
as monthly or quarterly options series. Currently, that rule states 
that no Short Term Option Series may expire in the same week in which 
monthly option series on the same class expire (with the exception of 
Wednesday SPY Expirations) or, in the case of Quarterly Options Series, 
on an expiration that coincides with an expiration of Quarterly Option 
Series on the same class. As with Wednesday SPY Expirations, the 
Exchange is proposing to permit Monday SPY Expirations to expire in the 
same week as monthly options series on the same class. The Exchange 
believes that it is reasonable to extend this exemption to Monday SPY 
Expirations because Monday SPY Expirations and standard monthly options 
will not expire on the same trading day, as standard monthly options 
expire on Fridays. Additionally, the Exchange believes that not listing 
Monday SPY Expirations for one week every month because there was a 
monthly SPY expiration on the Friday of that week would create investor 
confusion.
    Relatedly, BOX is also amending IM-5050-6(b)(2) to clarify that 
Monday and Wednesday SPY Expirations may expire in the same week as 
monthly option series in the same class expire, but that no Short Term 
Option Series may expire on the same day as an expiration of Quarterly 
Option Series on the same class. This change will make that provision 
more consistent with the existing language in IM-5050-6 that prohibits 
Wednesday SPY Expirations from expiring on a Wednesday in which 
Quarterly Options Series expire.
    The Exchange does not believe that any market disruptions will be 
encountered with the introduction of P.M.-settled Monday expirations. 
The Exchange has the necessary capacity and surveillance programs in 
place to support and properly monitor trading in the proposed Monday 
expiration series, including Monday SPY Expirations. The Exchange 
currently trades P.M.-settled Short Term Option Series that expire 
almost every Wednesday and Friday, which provide market participants a 
tool to hedge special events and to reduce the premium cost of buying 
protection. The Exchange notes that it has been listing Wednesday 
expirations pursuant to Rule 100(a)(65) and IM-5050-6 since 2016.\8\ 
With the exception of Monday expiration series that are scheduled to 
expire on a holiday, the Exchange does not believe that there are any 
material differences between Monday expirations and Wednesday or Friday 
expirations for Short Term Option Series.
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    \8\ See Securities Exchange Act Release No. 78668 (August 24, 
2016), 81 FR 59696 (August 30, 2016) (SR-BOX-2016-28).
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    The Exchange seeks to introduce Monday expirations to, among other 
things, expand hedging tools available to market participants and to 
continue the reduction of the premium cost of buying protection. The 
Exchange believes that Monday expirations, similar to Wednesday and 
Friday expirations, will allow market participants to purchase an 
option based on their timing as needed and allow them to tailor their 
investment and hedging needs more effectively.
    While other exchanges do not currently list Monday SPY Expirations, 
the Exchange notes that other exchanges currently permit Monday 
expirations for other options. For example, Cboe lists options on the 
SPX with a Monday expiration as part of its Nonstandard Expirations 
Pilot Program.\9\
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    \9\ See CBOE Rule 24.9(e)(1) (``The Exchange may open for 
trading Weekly Expirations on any broad-based index eligible for 
standard options trading to expire on any Monday, Wednesday, or 
Friday (other than the third Friday-of-the month or days that 
coincide with an EOM expiration.'').
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Securities Exchange Act of 1934 
(the ``Act''),\10\ in general, and Section 6(b)(5) of the Act,\11\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general to protect investors and the 
public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes the Short Term Option Series 
Program has been successful to date and that Monday expirations, 
including Monday SPY Expirations, simply expand the ability of 
investors to hedge risk against market movements stemming from economic 
releases or market events that occur throughout the month in the same 
way that the Short Term Option Series Program has expanded the 
landscape of hedging. Similarly, the Exchange believes Monday 
expirations, including Monday SPY Expirations, should create greater 
trading and hedging opportunities and flexibility, and will provide 
customers with the ability to tailor their investment objectives more 
effectively. While other exchanges do not currently list Monday SPY 
Expirations, the Exchange notes that Cboe currently permits Monday 
expirations for other options with a weekly expiration, such as options 
on the SPX.
    With the exception of Monday expiration series that are scheduled 
to expire on a holiday, the Exchange does not believe that there are 
any material differences between Monday expirations, including Monday 
SPY expirations, and Wednesday or Friday expirations, including 
Wednesday and Friday SPY Expirations, for Short Term Option Series. The 
Exchange notes that it has been listing Wednesday expirations pursuant 
to Rule 100(a)(65) and IM-5050-6 since 2016. The Exchange believes that 
it is consistent with the Act to treat Monday expiration series that 
expire on a holiday differently than Wednesday or Friday expiration 
series, since the proposed treatment for Monday expiration series will 
result in an expiration date that is closer in time to the scheduled 
expiration date of the series, and therefore may be more representative 
of anticipated market conditions. The Exchange also notes that Cboe 
uses the same procedure for SPX options with

[[Page 7281]]

Monday expirations that are listed pursuant to its Nonstandard 
Expiration Pilot Program and that are scheduled to expire on a holiday.
    Given the similarities between Monday SPY Expiration series and 
Wednesday and Friday SPY Expiration series, the Exchange believes that 
applying the provisions in IM-5050-6 that currently apply to Wednesday 
SPY Expirations to Monday SPY Expirations is justified. For example, 
the Exchange believes that allowing Monday SPY Expirations and monthly 
SPY expirations in the same week will benefit investors and minimize 
investor confusion by providing Monday SPY Expirations in a continuous 
and uniform manner. The Exchange also believes that is appropriate to 
amend IM-5050-6(b)(2) to clarify that no Short Term Option Series may 
expire on the same day as an expiration of Quarterly Option Series on 
the same class. This change will make that provision more consistent 
with the existing language in IM-5050-6 that prohibits Wednesday SPY 
Expirations from expiring on a Wednesday in which Quarterly Options 
Series expire.
    Finally, the Exchange represents that it has an adequate 
surveillance program in place to detect manipulative trading in Monday 
expirations, including Monday SPY Expirations, in the same way that it 
monitors trading in the current Short Term Option Series. The Exchange 
also represents that it has the necessary systems capacity to support 
the new options series.

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. In this regard and as indicated 
above, the Exchange notes that the rule change is being proposed as a 
competitive response to a filing submitted by Phlx that was recently 
approved by the Commission.\12\ The Exchange notes that having Monday 
expirations is not a novel proposal, as Cboe currently lists and trades 
short-term SPX options with a Monday expiration. The Exchange does not 
believe the proposal will impose any burden on intra-market 
competition, as all market participants will be treated in the same 
manner under this proposal. Additionally, the Exchange does not believe 
the proposal will impose any burden on inter-market competition, as 
nothing prevents the other options exchanges from proposing similar 
rules to list and trade short-term options series with Monday 
expirations.
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    \12\ See supra note 3.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\13\ and Rule 19b-4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intention to file 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) normally does 
not become operative for 30 days from the date of filing. However, Rule 
19b-4(f)(6)(iii)\15\ 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 proposal may become operative 
immediately upon filing. The Commission notes that it recently approved 
Phlx's substantially similar proposal to list and trade Monday SPY 
Expirations.\16\ The Exchange has stated that waiver of the operative 
delay will allow the Exchange to list and trade Monday SPY Expirations 
as soon as possible, and therefore, promote competition among the 
option exchanges. For these reasons, the Commission believes that the 
proposed rule change presents no novel issues and that waiver of the 
30-day operative delay is consistent with the protection of investors 
and the public interest, and will allow the Exchange to remain 
competitive with other exchanges. Therefore, the Commission hereby 
waives the 30-day operative delay and designates the proposal effective 
upon filing.\17\ 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.
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    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra note 3.
    \17\ 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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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-BOX-2018-07 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2018-07. 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

[[Page 7282]]

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-BOX-2018-07 and should be 
submitted on or before March 9, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-03306 Filed 2-16-18; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 83, No. 34 / Tuesday, February 20, 2018 / Notices 7279 CONTACT PERSON FOR MORE INFORMATION: and discussed any comments it received not a business day. In that case, the rule For further information and to ascertain on the proposed rule change. The text will provide that the series shall expire what, if any, matters have been added, of these statements may be examined at on the first business day immediately deleted or postponed; please contact the places specified in Item IV below. following that Monday. This procedure Brent J. Fields from the Office of the The self-regulatory organization has differs from the expiration date of Secretary at (202) 551–5400. prepared summaries, set forth in Wednesday expiration series that are Dated: February 14, 2018. Sections A, B, and C below, of the most scheduled to expire on a holiday. In that Brent J. Fields, significant aspects of such statements. case, the Wednesday expiration series Secretary. A. Self-Regulatory Organization’s shall expire on the first business day Statement of the Purpose of, and immediately prior to that Wednesday, [FR Doc. 2018–03467 Filed 2–15–18; 11:15 am] Statutory Basis for, the Proposed Rule e.g., Tuesday of that week.4 However, BILLING CODE 8011–01–P Change the Exchange believes that it is preferable to require Monday expiration 1. Purpose series in this scenario to expire on the SECURITIES AND EXCHANGE COMMISSION The Exchange proposes to amend Tuesday of that week rather than the Rule 100(a)(65) and IM–5050–6 to previous business day, e.g., the previous [Release No. 34–82697; File No. SR–BOX– expand the Short Term Option Series Friday, since the Tuesday is closer in 2018–07] time to the scheduled expiration date of Program (‘‘Program’’) to permit the listing and trading of options series with the series than the previous Friday, and Self-Regulatory Organizations; BOX Monday expirations that are listed therefore may be more representative of Options Exchange LLC; Notice of pursuant to the Program, including anticipated market conditions. The Filing and Immediate Effectiveness of Proposed Rule Change To Expand the options on the SPDR S&P 500 ETF Trust Exchange also notes that Cboe Short Term Option Series Program (‘‘SPY’’). This is a competitive filing that Exchange, Inc. (‘‘Cboe’’) uses the same is based on a proposal recently procedure for options on the S&P 500 February 13, 2018. submitted by Nasdaq PHLX LLC index (‘‘SPX’’) with Monday expirations Pursuant to Section 19(b)(1) of the (‘‘Phlx’’) and approved by the that listed pursuant to its Nonstandard Securities Exchange Act of 1934 Commission.3 Expirations Pilot Program and that are (‘‘Act’’),1 and Rule 19b–4 thereunder,2 As set forth in Rule 100(a)(65), a Short scheduled to expire on a holiday.5 notice is hereby given that, on February Term Option Series is a series in an The Exchange also proposes to make 8, 2018, BOX Options Exchange LLC option class that is approved for listing corresponding changes to IM–5050–6, (‘‘Exchange’’) filed with the Securities and trading on the Exchange in which which sets forth the requirements for and Exchange Commission the series is opened for trading on any SPY options that are listed pursuant to (‘‘Commission’’) the proposed rule Tuesday, Wednesday, Thursday or the Short Term Options Series Program, change as described in Items I and II Friday that is a business day and that to permit Monday SPY expirations below, which Items have been prepared expires on the Wednesday or Friday of (‘‘Monday SPY Expirations’’). by the Exchange. The Commission is the next business week. The Exchange Accordingly, the Exchange proposes to publishing this notice to solicit is now proposing to amend Rule amend IM–5050–6(d) to state that, with comments on the proposed rule change 100(a)(65) to permit the listing of respect to Monday SPY Expirations, the from interested persons. options series that expire on Mondays. Exchange may open for trading on any Specifically, the Exchange is proposing Friday or Monday that is a business day I. Self-Regulatory Organization’s that it may open for trading series of series of options on the SPY to expire Statement of the Terms of Substance of options on any Monday that is a on any Monday of the month that is a the Proposed Rule Change business day and that expires on the business day and is not a Monday in The Exchange proposes to amend Monday of the next business week. The which Quarterly Options Series expire, BOX Rule 100(a)(65) and IM–5050–6 to Exchange is also proposing to list provided that Monday SPY Expirations expand the Short Term Option Series Monday expirations series on Fridays that are listed on a Friday must be listed Program (‘‘Program’’) to permit the that precede the expiration Monday by at least one business week and one listing and trading of options series with one business week plus one business business day prior to the expiration. Monday expirations that are listed day. Since Rule 100(a)(65) already BOX may list up to five consecutive pursuant to the Program, including provides for the listing of short term Monday SPY Expirations at one time; options on the SPDR S&P 500 ETF Trust option series on Fridays, the Exchange the Exchange may have no more than a (‘‘SPY’’). The text of the proposed rule is not modifying this provision to allow total of five Monday SPY Expirations.6 change is available from the principal for Friday listing of Monday expiration The Exchange will also clarify that, as office of the Exchange, at the series. However, the Exchange is with Wednesday SPY Expirations, Commission’s Public Reference Room amending Rule 100(a)(65) to clarify that, and also on the Exchange’s internet in the case of a series that is listed on 4 See BOX Rule 100(a)(65). website at http://boxoptions.com. a Friday and expires on a Monday, that 5 See CBOE Rule 24.9(e)(1) (‘‘If the Exchange is II. Self-Regulatory Organization’s series must be listed one business week not open for business on a respective Monday, the and one business day prior to that normally Monday expiring Weekly Expirations will Statement of the Purpose of, and expire on the following business day. If the Statutory Basis for, the Proposed Rule expiration (i.e., two Fridays prior to Exchange is not open for business on a respective Change expiration). Wednesday or Friday, the normally Wednesday or sradovich on DSK3GMQ082PROD with NOTICES As part of this proposal, the Exchange Friday expiring Weekly Expirations will expire on In its filing with the Commission, the is also amending Rule 100(a)(65) to the previous business day.’’) self-regulatory organization included address the expiration of Monday 6 Proposed IM–5050–6(a) states that the Exchange statements concerning the purpose of, may have no more than a total of five Short Term expiration series when the Monday is Option Expiration Dates, however the Exchange and basis for, the proposed rule change notes that this does not include any Monday or 3 See Securities Exchange Act Release No. 82611 Wednesday SPY Expirations as provided in 1 15 U.S.C. 78s(b)(1). (February 1, 2018), 83 FR 5473 (February 7, 2018) paragraph (c) and proposed paragraph (d) of IM– 2 17 CFR 240.19b–4. (Order Approving SR–Phlx–2017–103). 5050–6. VerDate Sep<11>2014 17:55 Feb 16, 2018 Jkt 244001 PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1

7280 Federal Register / Vol. 83, No. 34 / Tuesday, February 20, 2018 / Notices Monday SPY Expirations will be subject no Short Term Option Series may expire requirements of Section 6(b) of the to the provisions of this Rule. on the same day as an expiration of Securities Exchange Act of 1934 (the The interval between strike prices for Quarterly Option Series on the same ‘‘Act’’),10 in general, and Section 6(b)(5) the proposed Monday SPY Expirations class. This change will make that of the Act,11 in particular, in that it is will be the same as those for the current provision more consistent with the designed to prevent fraudulent and Short Term Option Series for existing language in IM–5050–6 that manipulative acts and practices, to Wednesday and Friday SPY Expirations. prohibits Wednesday SPY Expirations promote just and equitable principles of Specifically, the Monday SPY from expiring on a Wednesday in which trade, to foster cooperation and Expirations will have a $0.50 strike Quarterly Options Series expire. coordination with persons engaged in interval minimum. As is the case with The Exchange does not believe that facilitating transactions in securities, to other options series listed pursuant to any market disruptions will be remove impediments to and perfect the the Program, the Monday SPY encountered with the introduction of mechanism of a free and open market Expiration series will be P.M.-settled. P.M.-settled Monday expirations. The and a national market system, and, in Currently, for each option class Exchange has the necessary capacity general to protect investors and the eligible for participation in the Program, and surveillance programs in place to public interest. the Exchange is limited to opening support and properly monitor trading in In particular, the Exchange believes thirty (30) series for each expiration date the proposed Monday expiration series, the Short Term Option Series Program for the specific class. The thirty (30) including Monday SPY Expirations. The has been successful to date and that series restriction does not include series Exchange currently trades P.M.-settled Monday expirations, including Monday that are open by other securities Short Term Option Series that expire SPY Expirations, simply expand the exchanges under their respective short almost every Wednesday and Friday, ability of investors to hedge risk against term option rules; the Exchange may list which provide market participants a market movements stemming from these additional series that are listed by tool to hedge special events and to economic releases or market events that other exchanges.7 This thirty (30) series reduce the premium cost of buying occur throughout the month in the same restriction shall apply to Monday SPY protection. The Exchange notes that it way that the Short Term Option Series Expiration series as well. In addition, has been listing Wednesday expirations Program has expanded the landscape of the Exchange will be able to list series pursuant to Rule 100(a)(65) and IM– hedging. Similarly, the Exchange that are listed by other exchanges, 5050–6 since 2016.8 With the exception believes Monday expirations, including assuming they file similar rules with the of Monday expiration series that are Monday SPY Expirations, should create Commission to list SPY options expiring scheduled to expire on a holiday, the greater trading and hedging on Mondays. Exchange does not believe that there are opportunities and flexibility, and will Finally, the Exchange is amending provide customers with the ability to any material differences between IM–5050–6(b)(2), which addresses the tailor their investment objectives more Monday expirations and Wednesday or listing of Short Term Options Series that effectively. While other exchanges do Friday expirations for Short Term expire in the same week as monthly or not currently list Monday SPY Option Series. quarterly options series. Currently, that Expirations, the Exchange notes that The Exchange seeks to introduce rule states that no Short Term Option Cboe currently permits Monday Monday expirations to, among other Series may expire in the same week in expirations for other options with a things, expand hedging tools available which monthly option series on the weekly expiration, such as options on to market participants and to continue same class expire (with the exception of the SPX. the reduction of the premium cost of Wednesday SPY Expirations) or, in the With the exception of Monday buying protection. The Exchange case of Quarterly Options Series, on an expiration series that are scheduled to believes that Monday expirations, expiration that coincides with an expire on a holiday, the Exchange does expiration of Quarterly Option Series on similar to Wednesday and Friday not believe that there are any material the same class. As with Wednesday SPY expirations, will allow market differences between Monday Expirations, the Exchange is proposing participants to purchase an option based expirations, including Monday SPY to permit Monday SPY Expirations to on their timing as needed and allow expirations, and Wednesday or Friday expire in the same week as monthly them to tailor their investment and expirations, including Wednesday and options series on the same class. The hedging needs more effectively. Friday SPY Expirations, for Short Term While other exchanges do not Exchange believes that it is reasonable Option Series. The Exchange notes that currently list Monday SPY Expirations, to extend this exemption to Monday it has been listing Wednesday the Exchange notes that other exchanges SPY Expirations because Monday SPY expirations pursuant to Rule 100(a)(65) currently permit Monday expirations for Expirations and standard monthly and IM–5050–6 since 2016. The other options. For example, Cboe lists options will not expire on the same Exchange believes that it is consistent options on the SPX with a Monday trading day, as standard monthly with the Act to treat Monday expiration expiration as part of its Nonstandard options expire on Fridays. Additionally, series that expire on a holiday Expirations Pilot Program.9 the Exchange believes that not listing differently than Wednesday or Friday Monday SPY Expirations for one week 2. Statutory Basis expiration series, since the proposed every month because there was a The Exchange believes that the treatment for Monday expiration series monthly SPY expiration on the Friday proposal is consistent with the will result in an expiration date that is of that week would create investor closer in time to the scheduled sradovich on DSK3GMQ082PROD with NOTICES confusion. 8 See Securities Exchange Act Release No. 78668 expiration date of the series, and Relatedly, BOX is also amending IM– (August 24, 2016), 81 FR 59696 (August 30, 2016) therefore may be more representative of 5050–6(b)(2) to clarify that Monday and (SR–BOX–2016–28). anticipated market conditions. The Wednesday SPY Expirations may expire 9 See CBOE Rule 24.9(e)(1) (‘‘The Exchange may Exchange also notes that Cboe uses the in the same week as monthly option open for trading Weekly Expirations on any broad- based index eligible for standard options trading to same procedure for SPX options with series in the same class expire, but that expire on any Monday, Wednesday, or Friday (other 10 15 U.S.C. 78f(b). than the third Friday-of-the month or days that 7 See IM–5050–6(b). coincide with an EOM expiration.’’). 11 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:55 Feb 16, 2018 Jkt 244001 PO 00000 Frm 00145 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1

Federal Register / Vol. 83, No. 34 / Tuesday, February 20, 2018 / Notices 7281 Monday expirations that are listed to list and trade short-term options filing.17 At any time within 60 days of pursuant to its Nonstandard Expiration series with Monday expirations. the filing of the proposed rule change, Pilot Program and that are scheduled to the Commission summarily may C. Self-Regulatory Organization’s expire on a holiday. temporarily suspend such rule change if Given the similarities between Statement on Comments on the it appears to the Commission that such Monday SPY Expiration series and Proposed Rule Change Received From action is necessary or appropriate in the Wednesday and Friday SPY Expiration Members, Participants, or Others public interest, for the protection of series, the Exchange believes that The Exchange has neither solicited investors, or otherwise in furtherance of applying the provisions in IM–5050–6 nor received comments on the proposed the purposes of the Act. If the that currently apply to Wednesday SPY rule change. Commission takes such action, the Expirations to Monday SPY Expirations Commission shall institute proceedings is justified. For example, the Exchange III. Date of Effectiveness of the to determine whether the proposed rule believes that allowing Monday SPY Proposed Rule Change and Timing for should be approved or disapproved. Expirations and monthly SPY Commission Action expirations in the same week will Because the foregoing proposed rule IV. Solicitation of Comments benefit investors and minimize investor change does not: (i) Significantly affect Interested persons are invited to confusion by providing Monday SPY the protection of investors or the public submit written data, views, and Expirations in a continuous and interest; (ii) impose any significant arguments concerning the foregoing, uniform manner. The Exchange also burden on competition; and (iii) become including whether the proposed rule believes that is appropriate to amend operative for 30 days from the date on change is consistent with the Act. IM–5050–6(b)(2) to clarify that no Short which it was filed, or such shorter time Comments may be submitted by any of Term Option Series may expire on the as the Commission may designate, the the following methods: same day as an expiration of Quarterly proposed rule change has become Electronic Comments Option Series on the same class. This effective pursuant to Section 19(b)(3)(A) change will make that provision more of the Act 13 and Rule 19b–4(f)(6) • Use the Commission’s internet consistent with the existing language in thereunder.14 comment form (http://www.sec.gov/ IM–5050–6 that prohibits Wednesday A proposed rule change filed under rules/sro.shtml); or SPY Expirations from expiring on a • Send an email to rule-comments@ Rule 19b-4(f)(6) normally does not Wednesday in which Quarterly Options sec.gov. Please include File Number SR– become operative for 30 days from the Series expire. BOX–2018–07 on the subject line. date of filing. However, Rule 19b– Finally, the Exchange represents that 4(f)(6)(iii)15 permits the Commission to Paper Comments it has an adequate surveillance program designate a shorter time if such action in place to detect manipulative trading • Send paper comments in triplicate is consistent with the protection of to Brent J. Fields, Secretary, Securities in Monday expirations, including investors and the public interest. The Monday SPY Expirations, in the same and Exchange Commission, 100 F Street Exchange has asked the Commission to NE, Washington, DC 20549–1090. way that it monitors trading in the waive the 30-day operative delay so that current Short Term Option Series. The All submissions should refer to File the proposal may become operative Number SR–BOX–2018–07. This file Exchange also represents that it has the immediately upon filing. The necessary systems capacity to support number should be included on the Commission notes that it recently subject line if email is used. To help the the new options series. approved Phlx’s substantially similar Commission process and review your B. Self-Regulatory Organization’s proposal to list and trade Monday SPY comments more efficiently, please use Statement on Burden on Competition Expirations.16 The Exchange has stated only one method. The Commission will that waiver of the operative delay will post all comments on the Commission’s The Exchange does not believe that the proposed rule change will impose allow the Exchange to list and trade internet website (http://www.sec.gov/ any burden on competition not Monday SPY Expirations as soon as rules/sro.shtml). Copies of the necessary or appropriate in furtherance possible, and therefore, promote submission, all subsequent of the purposes of the Act. In this regard competition among the option amendments, all written statements and as indicated above, the Exchange exchanges. For these reasons, the with respect to the proposed rule notes that the rule change is being Commission believes that the proposed change that are filed with the proposed as a competitive response to a rule change presents no novel issues Commission, and all written filing submitted by Phlx that was and that waiver of the 30-day operative communications relating to the recently approved by the Commission.12 delay is consistent with the protection proposed rule change between the of investors and the public interest, and Commission and any person, other than The Exchange notes that having Monday will allow the Exchange to remain those that may be withheld from the expirations is not a novel proposal, as competitive with other exchanges. public in accordance with the Cboe currently lists and trades short- Therefore, the Commission hereby provisions of 5 U.S.C. 552, will be term SPX options with a Monday waives the 30-day operative delay and available for website viewing and expiration. The Exchange does not designates the proposal effective upon printing in the Commission’s Public believe the proposal will impose any burden on intra-market competition, as Reference Room, 100 F Street NE, 13 15 U.S.C. 78s(b)(3)(A). all market participants will be treated in Washington, DC 20549, on official 14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– business days between the hours of sradovich on DSK3GMQ082PROD with NOTICES the same manner under this proposal. 4(f)(6) requires a self-regulatory organization to give Additionally, the Exchange does not the Commission written notice of its intention to 10:00 a.m. and 3:00 p.m. Copies of the believe the proposal will impose any file the proposed rule change at least five business filing also will be available for burden on inter-market competition, as days prior to the date of filing of the proposed rule change, or such shorter time as designated by the 17 For purposes only of waiving the 30-day nothing prevents the other options Commission. The Exchange has satisfied this operative delay, the Commission has also exchanges from proposing similar rules requirement. considered the proposed rule’s impact on 15 17 CFR 240.19b–4(f)(6)(iii). efficiency, competition, and capital formation. See 12 See supra note 3. 16 See supra note 3. 15 U.S.C. 78c(f). 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7282 Federal Register / Vol. 83, No. 34 / Tuesday, February 20, 2018 / Notices inspection and copying at the principal website at www.nyse.com, at the $0.0009 per share for LOC orders from office of the Exchange. All comments principal office of the Exchange, and at any member organization executing in received will be posted without change. the Commission’s Public Reference the current billing month (1) an ADV of Persons submitting comments are Room. MOC activity on the NYSE of at least cautioned that we do not redact or edit 0.25% of NYSE (Tape A) CADV, (2) an II. Self-Regulatory Organization’s personal identifying information from ADV of the member organization’s total comment submissions. You should Statement of the Purpose of, and close activity (MOC/LOC and other submit only information that you wish Statutory Basis for, the Proposed Rule executions at the close) on the NYSE of to make available publicly. All Change at least 0.35% of NYSE (Tape A) CADV, submissions should refer to File In its filing with the Commission, the and (3) whose MOC activity comprised Number SR–BOX–2018–07 and should self-regulatory organization included at least 35% of the member be submitted on or before March 9, statements concerning the purpose of, organization’s total close activity (MOC/ 2018. and basis for, the proposed rule change LOC and other executions at the close). For the Commission, by the Division of and discussed any comments it received The rates and requirements for MOC/ Trading and Markets, pursuant to delegated on the proposed rule change. The text LOC Tiers 1 and 2 would remain the authority.18 of those statements may be examined at same. Eduardo A. Aleman, the places specified in Item IV below. * * * * * Assistant Secretary. The Exchange has prepared summaries, The proposed change is not otherwise [FR Doc. 2018–03306 Filed 2–16–18; 8:45 am] set forth in sections A, B, and C below, intended to address any other issues, BILLING CODE 8011–01–P of the most significant parts of such and the Exchange is not aware of any statements. problems that member organizations A. Self-Regulatory Organization’s would have in complying with the SECURITIES AND EXCHANGE Statement of the Purpose of, and the proposed change. COMMISSION Statutory Basis for, the Proposed Rule 2. Statutory Basis [Release No. 34–82706; File No. SR–NYSE– Change 2018–08] The Exchange believes that the 1. Purpose proposed rule change is consistent with Self-Regulatory Organizations; New The Exchange proposes to amend its Section 6(b) of the Act,4 in general, and York Stock Exchange LLC; Notice of Price List to introduce a new MOC/LOC furthers the objectives of Sections Filing and Immediate Effectiveness of Tier 3. 6(b)(4) and 6(b)(5) of the Act,5 in Proposed Rule Change To Amend Its The proposed change would only particular, because it provides for the Price List for Equity Transactions in apply to fees and credits in transactions equitable allocation of reasonable dues, Stocks With a Per Share Stock Price of in securities priced $1.00 or more. fees, and other charges among its $1.00 or More To Introduce a New The Exchange proposes to implement members, issuers and other persons Market at-the-Close and Limit at-the- this change to its Price List effective using its facilities and does not unfairly Close Tier 3 February 1, 2018. discriminate between customers, Currently, for MOC/LOC Tier 1, the issuers, brokers or dealers. February 13, 2018. The Exchange believes that the Exchange currently charges $0.0004 per Pursuant to Section 19(b)(1) 1 of the proposed fee change for certain share for MOC orders and $0.0007 per Securities Exchange Act of 1934 (the executions at the close are reasonable. share for LOC orders from any member ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 The Exchange’s closing auction is a organization in the prior three billing notice is hereby given that, on February recognized industry benchmark,6 and months executing (1) an ADV of MOC 1, 2018, New York Stock Exchange LLC member organizations receive a activity on the NYSE of at least 0.45% (‘‘NYSE’’ or the ‘‘Exchange’’) filed with substantial benefit from the Exchange in of NYSE CADV, (2) an ADV of total the Securities and Exchange obtaining high levels of executions at close activity (MOC/LOC and Commission (the ‘‘Commission’’) the the Exchange’s closing price on a daily executions at the close) on the NYSE of proposed rule change as described in basis. at least 0.7% of NYSE CADV, and (3) Items I, II, and III below, which Items The Exchange believes that offering a whose MOC activity comprised at least have been prepared by the self- new fee tier for member organizations 35% of the member organization’s total regulatory organization. The that execute in a current month an ADV close activity (MOC/LOC and other Commission is publishing this notice to of MOC activity on the NYSE of at least executions at the close). For MOC/LOC solicit comments on the proposed rule 0.25% of NYSE (Tape A) CADV, an Tier 2, the Exchange currently charges change from interested persons. ADV of the member organization’s total $0.0005 per share for MOC orders and I. Self-Regulatory Organization’s $0.0008 per share for LOC orders from close activity (MOC/LOC and other Statement of the Terms of Substance of any member organization in the prior executions at the close) on the NYSE of the Proposed Rule Change three billing months executing (1) an at least 0.35% of NYSE (Tape A) CADV, ADV of MOC activity on the NYSE of at and whose MOC activity comprised at The Exchange proposes to amend its least 35% of the member organization’s Price List for equity transactions in least 0.35% of NYSE CADV, (2) an ADV of total close activity (MOC/LOC and total close activity (MOC/LOC and other stocks with a per share stock price of executions at the close) is reasonable $1.00 or more to introduce a new market other executions at the close) on the NYSE of at least 0.525% of NYSE and not unfairly discriminatory because sradovich on DSK3GMQ082PROD with NOTICES at-the-close (‘‘MOC’’) and limit at-the- the proposed change would encourage close (‘‘LOC’’) Tier 3. The proposed rule CADV, and (3) whose MOC activity comprised at least 35% of the member greater marketable and other liquidity at change is available on the Exchange’s organization’s total close activity (MOC/ 4 15 U.S.C. 78f(b). 18 17 CFR 200.30–3(a)(12). LOC and other executions at the close). 5 15 U.S.C. 78f(b)(4) & (5). 1 15 U.S.C. 78s(b)(1). The Exchange proposes a third tier for 6 For example, the pricing and valuation of 2 15 U.S.C. 78a. MOC and LOC orders that would charge certain indices, funds, and derivative products 3 17 CFR 240.19b–4. $0.0008 per share for MOC orders and require primary market prints. VerDate Sep<11>2014 17:55 Feb 16, 2018 Jkt 244001 PO 00000 Frm 00147 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1


Document Created: 2018-02-17 02:29:22
Document Modified: 2018-02-17 02:29:22
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 7279 
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