Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Rule Change to List and Trade Option Contracts Overlying 1,000 Shares of the SPDR S&P 500 Exchange-Traded Fund, 7835-7837 [2013-02301]
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Federal Register / Vol. 78, No. 23 / Monday, February 4, 2013 / Notices
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 10 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),11 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 immediately upon
filing. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because such waiver would allow the
pilot program to continue
uninterrupted. Accordingly, the
Commission hereby grants the
Exchange’s request and designates the
proposal operative upon filing.12
At any time within 60 days of the
filing of such 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
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–02287 Filed 2–1–13; 8:45 am]
BILLING CODE 8011–01–P
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEMKT–2013–04 on the
subject line.
Paper Comments
mstockstill on DSK4VPTVN1PROD with NOTICES
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEMKT–2013–04. 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 Web site (https://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 Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
publicly available. All submissions
should refer to File Number SR–
NYSEMKT–2013–04 and should be
submitted on or before February 25,
2013.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
12 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68759; File No. SR–BOX–
2013–06]
Self-Regulatory Organizations; BOX
Options Exchange LLC; Notice of
Filing of Proposed Rule Change to List
and Trade Option Contracts Overlying
1,000 Shares of the SPDR S&P 500
Exchange-Traded Fund
10 17
11 17
January 29, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
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19:26 Feb 01, 2013
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13 17
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(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
18, 2013, BOX Options Exchange LLC
(‘‘Exchange’’ or ‘‘BOX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules to define certain contract terms for
trading option contracts overlying 1,000
SPDR® S&P 500® exchange-traded fund
(‘‘SPY ETF’’),3 (‘‘SPY’’) Shares. 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 Web site at https://
boxexchange.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 5050 (Series of Contracts Open for
Trading) to define certain contract terms
for trading option contracts overlying
1,000 SPDR® S&P 500® exchange-traded
fund (‘‘SPY ETF’’),4 (‘‘SPY’’) Shares. In
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 ‘‘SPDR®,’’ ‘‘Standard & Poor’s®,’’ ‘‘S&P®,’’ ‘‘S&P
500®,’’a and ‘‘Standard & Poor’s 500’’ are registered
trademarks of Standard & Poor’s Financial Services
LLC. The SPY ETF represents ownership in the
SPDR S&P 500 Trust, a unit investment trust that
generally corresponds to the price and yield
performance of the SPDR S&P 500 Index.
4 ‘‘SPDR®,’’ ‘‘Standard & Poor’s®,’’ ‘‘S&P®,’’ ‘‘S&P
500®,’’ and ‘‘Standard& Poor’s 500’’a are registered
trademarks of Standard & Poor’s Financial Services
LLC. The SPY ETF represents ownership in the
2 17
CFR 200.30–3(a)(12).
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Continued
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Federal Register / Vol. 78, No. 23 / Monday, February 4, 2013 / Notices
order to list these option contracts
overlying 1,000 SPY Shares (‘‘Jumbo
options’’) the Exchange is initially
proposing to restrict the listing of Jumbo
options to the SPY ETF, and also
proposing to define how strike prices
and bids and offers will be expressed for
Jumbo option contracts by further
amending Rule 5050.
First, the Exchange proposes to add to
Rule 5050(e) a provision to permit BOX
to list Jumbo contracts on SPY for all
expirations applicable to options
overlying 100 shares of SPY. Note that
SPY options are currently the most
actively traded option class in terms of
average daily volume (‘‘ADV’’).5 The
Exchange proposes to designate this
most active ETF as eligible for 1,000
share contracts, and restrict Jumbo
contracts to SPY, for which the
Securities and Exchange Commission
(the ‘‘Commission’’) has approved the
elimination of any Position Limit.
Contract Terms
To avoid investor confusion with SPY
options that overly [sic]100 shares, the
Exchange further proposes to amend
Rule 5050 to define how strike prices
will be set and how bids and offers will
be defined for Jumbo options. The
Exchange proposes that bids and offers
shall be expressed in terms of dollars
per 1/1000th part of the total value of
the contract.
Rule 5050(e)(2) proposes that strike
prices be set at the same level as for
regular options. Thus, a Jumbo option
contract to deliver an ETF at $145 per
share would carry a total deliverable
value of $145,000, and the strike price
would be set at $145. Proposed Rule
5050(e)(3) provides that bids and offers
in Jumbo option contracts shall be
expressed in terms of dollars per 1/
1000th part of the total value of the
contract. Thus, if an ETF with a Jumbo
option strike price of $145 was trading
at $146 per share, the intrinsic $1 per
share value would denote a total
contract value of $1,000, and be
expressed as a bid or offer quote around
such intrinsic value.
The table below demonstrates the
difference between a Jumbo option
contract and a standard option contract
to call or put shares at $45 per share,
with a bid or offer of $3.20 per share:
Standard
Jumbo
100 shares ...................................................
45 .................................................................
3.20 ..............................................................
$100 .............................................................
1,000 shares
45
3.20
$1,000
Total Value of Deliverable ...................................
$4,500 ..........................................................
$45,000
Total Value of Contract .......................................
mstockstill on DSK4VPTVN1PROD with NOTICES
Shares Deliverable Upon Exercise ............................
Strike Price if underlying is $45 per share .................
Bid or Offer .................................................................
Premium Multiplier ......................................................
$320 .............................................................
$3,200
SPY options contracts is likely to result
in more efficient pricing through
arbitrage with standard contracts.
Additionally, the Exchange will
designate Jumbo SPY options contracts
with a different trading symbol (SPYJ)
than the related standard contract.
Moreover, the Exchange believes the
terms of Jumbo SPY options contracts
are consistent with the terms of the
Options Disclosure Document.
With regard to the impact of this
proposal on system capacity, BOX has
analyzed its capacity and represents that
it and the Options Price Reporting
Authority have the necessary systems
capacity to handle the potential
additional traffic associated with the
listing and trading of Jumbo SPY
options contracts. The Exchange has
further discussed the proposed listing
and trading of Jumbo SPY options
contracts with the OCC, which has
represented that it is able to
accommodate the proposal.
Additionally, the Exchange believes
that price protection would not apply
across standard and Jumbo SPY options
on an intramarket basis, as these are
separate products. While the Exchange
recognizes that trading different options
products that overlie the same security
or index could disperse trading interest
across the products to some extent, with
highly-liquid options on the liquid SPY,
there generally exists a critical mass of
willing buyers and sellers for both the
options and the underlying securities to
mitigate the price protection concerns.
Further, the Exchange believes that
because of the liquidity in SPY and
options on SPY, existing market forces
should keep the prices between
standard contracts and Jumbo SPY
options contracts consistent. With
respect to the related arbitrage, the
Exchange understands that the OCC’s
portfolio margining process will be set
to have positions in a standard contract
and a Jumbo options contract set against
each other, and that consistent cross
margining will be available between
standard contracts and Jumbo options
contracts. Accordingly, the Exchange
believes that the availability of Jumbo
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the Act,6
in general, and Section 6(b)(5) of the
Act,7 in particular, that the rules of an
exchange be designed to promote just
and equitable principles of trade, to
prevent fraudulent and manipulative
acts, to remove impediments to and to
perfect the mechanism for a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. The
Exchange believes that the proposed
rule change is also consistent with
Section 6(b)(8) of the Act in that it does
not impose any burden on competition
not necessary or appropriate in
furtherance of the purposes of the Act.
In particular, the Exchange believes
this proposed rule change will benefit
investors by providing additional
methods to trade highly liquid options
on SPY, and providing greater ability to
mitigate risk in managing large
portfolios. Specifically, the Exchange
believes that investors would benefit
from the introduction and availability of
Jumbo SPY options by making options
on large blocks of the SPY ETF more
available as an investing tool,
particularly for institutional investors.
As noted above, the proposed rule
change intends to adopt a different
SPDR S&P 500 Trust, a unit investment trust that
generally corresponds to the price and yield
performance of the SPDR S&P 500 Index.
5 SPY ADV was 2,156,482 contracts in April 2012.
ADV for the same period for the next four most
actively traded options was: Apple Inc. (option
symbol AAPL)—1,074,351; S&P 500 Index (option
symbol SPX)—656,250; PowerShares QQQ TrustSM,
Series 1 (option symbol QQQ)—573,790; and
iShares® Russell 2000® Index Fund (option symbol
IWM)—550,316. The Exchange notes that any
expansion of the program would require that a
subsequent proposed rule change be submitted to
the Commission.
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 78, No. 23 / Monday, February 4, 2013 / Notices
trading symbol to distinguish Jumbo
SPY options from the related regular
option contracts and therefore, ease any
investor confusion as to the product
they are trading.
The Exchange also believes Jumbo
SPY options will provide investors with
an additional tool for hedging risk in the
highly liquid ETF. Further, the
proposed rule change is limited to just
the SPY ETF, a single, high-priced,
highly liquid security.
Finally, the Exchange notes that the
Commission previously approved
option contracts on ETFs that overly
[sic] 1,000 shares for NYSE Amex.8
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes this proposed
rule change will benefit investors by
providing additional methods to trade
options on the liquid SPY, and
providing greater ability to mitigate risk
in managing large portfolios.
Specifically, the Exchange believes that
investors would benefit from the
introduction and availability of Jumbo
SPY options by making options on large
blocks of the SPY ETF more available as
an investing tool, particularly for
institutional investors. The Exchange
also believes Jumbo SPY options will
provide investors with an additional
tool for hedging risk in the highly liquid
ETF. Further, the proposed rule change
is limited to just the SPY ETF, a single,
high-priced, highly liquid security.
Finally, the Exchange is not proposing
any limitations regarding market
participants that will be able to trade
Jumbo SPY options if they choose.
For all the reasons stated, 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, and believes the
proposed change will enhance
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
mstockstill on DSK4VPTVN1PROD with NOTICES
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
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
8 See Exchange Act Release No. 40157 (July 1,
1998), 63 FR 37426 (July 10, 1998) (Order
Approving SR-Amex-96–44).
VerDate Mar<15>2010
19:26 Feb 01, 2013
Jkt 229001
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve or disapprove
such proposed rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–BOX–2013–06 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–BOX–2013–06. 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 Web site (https://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 Web site 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;
the Commission does not edit personal
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BOX–
2013–06 and should be submitted on or
before February 25, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–02301 Filed 2–1–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68751; File No. SR–C2–
2013–005]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Relating to Amending the Fees
Schedule
January 29, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
18, 2013, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
filed with the Securities and Exchange
Commission (the ‘‘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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fees Schedule. The text of the proposed
rule change is provided below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
C2 OPTIONS EXCHANGE,
INCORPORATED
FEES SCHEDULE
JANUARY 18[1], 2013
*
*
*
9 17
*
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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*
]]>Agencies
[Federal Register Volume 78, Number 23 (Monday, February 4, 2013)]
[Notices]
[Pages 7835-7837]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02301]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68759; File No. SR-BOX-2013-06]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing of Proposed Rule Change to List and Trade Option Contracts
Overlying 1,000 Shares of the SPDR S&P 500 Exchange-Traded Fund
January 29, 2013.
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 January 18, 2013, BOX Options Exchange LLC (``Exchange'' or ``BOX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to define certain contract
terms for trading option contracts overlying 1,000 SPDR[supreg] S&P
500[supreg] exchange-traded fund (``SPY ETF''),\3\ (``SPY'') Shares.
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 Web site at https://boxexchange.com.
---------------------------------------------------------------------------
\3\ ``SPDR[supreg],'' ``Standard & Poor's[supreg],''
``S&P[supreg],'' ``S&P 500[supreg],'' and ``Standard & Poor's 500''
are registered trademarks of Standard & Poor's Financial Services
LLC. The SPY ETF represents ownership in the SPDR S&P 500 Trust, a
unit investment trust that generally corresponds to the price and
yield performance of the SPDR S&P 500 Index.
---------------------------------------------------------------------------
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 5050 (Series of Contracts Open
for Trading) to define certain contract terms for trading option
contracts overlying 1,000 SPDR[supreg] S&P 500[supreg] exchange-traded
fund (``SPY ETF''),\4\ (``SPY'') Shares. In
[[Page 7836]]
order to list these option contracts overlying 1,000 SPY Shares
(``Jumbo options'') the Exchange is initially proposing to restrict the
listing of Jumbo options to the SPY ETF, and also proposing to define
how strike prices and bids and offers will be expressed for Jumbo
option contracts by further amending Rule 5050.
---------------------------------------------------------------------------
\4\ ``SPDR[supreg],'' ``Standard & Poor's[supreg],''
``S&P[supreg],'' ``S&P 500[supreg],'' and ``Standard & Poor's 500''
are registered trademarks of Standard & Poor's Financial Services
LLC. The SPY ETF represents ownership in the SPDR S&P 500 Trust, a
unit investment trust that generally corresponds to the price and
yield performance of the SPDR S&P 500 Index.
---------------------------------------------------------------------------
First, the Exchange proposes to add to Rule 5050(e) a provision to
permit BOX to list Jumbo contracts on SPY for all expirations
applicable to options overlying 100 shares of SPY. Note that SPY
options are currently the most actively traded option class in terms of
average daily volume (``ADV'').\5\ The Exchange proposes to designate
this most active ETF as eligible for 1,000 share contracts, and
restrict Jumbo contracts to SPY, for which the Securities and Exchange
Commission (the ``Commission'') has approved the elimination of any
Position Limit.
---------------------------------------------------------------------------
\5\ SPY ADV was 2,156,482 contracts in April 2012. ADV for the
same period for the next four most actively traded options was:
Apple Inc. (option symbol AAPL)--1,074,351; S&P 500 Index (option
symbol SPX)--656,250; PowerShares QQQ Trust\SM\, Series 1 (option
symbol QQQ)--573,790; and iShares[supreg] Russell 2000[supreg] Index
Fund (option symbol IWM)--550,316. The Exchange notes that any
expansion of the program would require that a subsequent proposed
rule change be submitted to the Commission.
---------------------------------------------------------------------------
Contract Terms
To avoid investor confusion with SPY options that overly [sic]100
shares, the Exchange further proposes to amend Rule 5050 to define how
strike prices will be set and how bids and offers will be defined for
Jumbo options. The Exchange proposes that bids and offers shall be
expressed in terms of dollars per 1/1000th part of the total value of
the contract.
Rule 5050(e)(2) proposes that strike prices be set at the same
level as for regular options. Thus, a Jumbo option contract to deliver
an ETF at $145 per share would carry a total deliverable value of
$145,000, and the strike price would be set at $145. Proposed Rule
5050(e)(3) provides that bids and offers in Jumbo option contracts
shall be expressed in terms of dollars per 1/1000th part of the total
value of the contract. Thus, if an ETF with a Jumbo option strike price
of $145 was trading at $146 per share, the intrinsic $1 per share value
would denote a total contract value of $1,000, and be expressed as a
bid or offer quote around such intrinsic value.
The table below demonstrates the difference between a Jumbo option
contract and a standard option contract to call or put shares at $45
per share, with a bid or offer of $3.20 per share:
------------------------------------------------------------------------
Standard Jumbo
------------------------------------------------------------------------
Shares Deliverable Upon Exercise 100 shares........ 1,000 shares
Strike Price if underlying is 45................ 45
$45 per share.
Bid or Offer.................... 3.20.............. 3.20
Premium Multiplier.............. $100.............. $1,000
---------------------------------------
Total Value of Deliverable.. $4,500............ $45,000
---------------------------------------
Total Value of Contract..... $320.............. $3,200
------------------------------------------------------------------------
Additionally, the Exchange believes that price protection would not
apply across standard and Jumbo SPY options on an intramarket basis, as
these are separate products. While the Exchange recognizes that trading
different options products that overlie the same security or index
could disperse trading interest across the products to some extent,
with highly-liquid options on the liquid SPY, there generally exists a
critical mass of willing buyers and sellers for both the options and
the underlying securities to mitigate the price protection concerns.
Further, the Exchange believes that because of the liquidity in SPY and
options on SPY, existing market forces should keep the prices between
standard contracts and Jumbo SPY options contracts consistent. With
respect to the related arbitrage, the Exchange understands that the
OCC's portfolio margining process will be set to have positions in a
standard contract and a Jumbo options contract set against each other,
and that consistent cross margining will be available between standard
contracts and Jumbo options contracts. Accordingly, the Exchange
believes that the availability of Jumbo SPY options contracts is likely
to result in more efficient pricing through arbitrage with standard
contracts.
Additionally, the Exchange will designate Jumbo SPY options
contracts with a different trading symbol (SPYJ) than the related
standard contract. Moreover, the Exchange believes the terms of Jumbo
SPY options contracts are consistent with the terms of the Options
Disclosure Document.
With regard to the impact of this proposal on system capacity, BOX
has analyzed its capacity and represents that it and the Options Price
Reporting Authority have the necessary systems capacity to handle the
potential additional traffic associated with the listing and trading of
Jumbo SPY options contracts. The Exchange has further discussed the
proposed listing and trading of Jumbo SPY options contracts with the
OCC, which has represented that it is able to accommodate the proposal.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\6\ in general, and Section
6(b)(5) of the Act,\7\ in particular, that the rules of an exchange be
designed to promote just and equitable principles of trade, to prevent
fraudulent and manipulative acts, to remove impediments to and to
perfect the mechanism for a free and open market and a national market
system, and, in general, to protect investors and the public interest.
The Exchange believes that the proposed rule change is also consistent
with Section 6(b)(8) of the Act in that it does not impose any burden
on competition not necessary or appropriate in furtherance of the
purposes of the Act.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes this proposed rule change will
benefit investors by providing additional methods to trade highly
liquid options on SPY, and providing greater ability to mitigate risk
in managing large portfolios. Specifically, the Exchange believes that
investors would benefit from the introduction and availability of Jumbo
SPY options by making options on large blocks of the SPY ETF more
available as an investing tool, particularly for institutional
investors. As noted above, the proposed rule change intends to adopt a
different
[[Page 7837]]
trading symbol to distinguish Jumbo SPY options from the related
regular option contracts and therefore, ease any investor confusion as
to the product they are trading.
The Exchange also believes Jumbo SPY options will provide investors
with an additional tool for hedging risk in the highly liquid ETF.
Further, the proposed rule change is limited to just the SPY ETF, a
single, high-priced, highly liquid security.
Finally, the Exchange notes that the Commission previously approved
option contracts on ETFs that overly [sic] 1,000 shares for NYSE
Amex.\8\
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\8\ See Exchange Act Release No. 40157 (July 1, 1998), 63 FR
37426 (July 10, 1998) (Order Approving SR-Amex-96-44).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes this proposed rule change will benefit
investors by providing additional methods to trade options on the
liquid SPY, and providing greater ability to mitigate risk in managing
large portfolios. Specifically, the Exchange believes that investors
would benefit from the introduction and availability of Jumbo SPY
options by making options on large blocks of the SPY ETF more available
as an investing tool, particularly for institutional investors. The
Exchange also believes Jumbo SPY options will provide investors with an
additional tool for hedging risk in the highly liquid ETF. Further, the
proposed rule change is limited to just the SPY ETF, a single, high-
priced, highly liquid security. Finally, the Exchange is not proposing
any limitations regarding market participants that will be able to
trade Jumbo SPY options if they choose.
For all the reasons stated, 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, and
believes the proposed change will enhance competition.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BOX-2013-06 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BOX-2013-06. 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 Web site (https://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 Web site 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; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BOX-2013-06 and should be
submitted on or before February 25, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02301 Filed 2-1-13; 8:45 am]
BILLING CODE 8011-01-P
