Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Rule Change To Amend IM-3120-2 to Rule 3120 To Extend the Pilot Program That Eliminated the Position Limits for Options on SPDR S&P 500 ETF, 73911-73912 [2013-29261]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 78, Number 236 (Monday, December 9, 2013)]
[Notices]
[Pages 73911-73912]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29261]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70970; File No. SR-BOX-2013-53]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing of Proposed Rule Change To Amend IM-3120-2 to Rule 3120 To 
Extend the Pilot Program That Eliminated the Position Limits for 
Options on SPDR S&P 500 ETF

December 3, 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 November 21, 2013, BOX Options Exchange LLC (the ``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 self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 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 IM-3120-2 to Rule 3120 to extend the 
pilot program that eliminated the position limits for options on SPDR 
S&P 500 ETF (``SPY'') (``SPY Pilot Program''). 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 IM-3120-2 to Rule 3120 to extend the 
time period of the SPY Pilot Program,\3\ which is currently scheduled 
to expire on November 27, 2013, through January 27, 2015.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 67936 (September 27, 
2012), 77 FR 60491 (October 3, 2012) (Notice of Filing and Immediate 
Effectiveness of SR-BOX-2012-013).
---------------------------------------------------------------------------

    This filing does not propose any substantive changes to the SPY 
Pilot Program. In proposing to extend the SPY Pilot Program, the 
Exchange reaffirms its consideration of several factors that supported 
the original proposal of the SPY Pilot Program, including (1) the 
availability of economically equivalent products and their respective 
position limits, (2) the liquidity of the option and the underlying 
security, (3) the market capitalization of the underlying security and 
the related index, (4) the reporting of large positions and 
requirements surrounding margin, and (5) the potential for market on 
close volatility.
    In the original proposal to establish the SPY Pilot Program, the 
Exchange stated that if it were to propose an extension, permanent 
approval or termination of the program, the Exchange would submit, 
along with any filing proposing such amendments to the program, a 
report providing an analysis of the SPY Pilot Program covering the 
first twelve (12) months during which the SPY Pilot Program was in 
effect (the ``Pilot Report'').\4\ However, because not all self-
regulatory organizations (``SROs'') have adopted similar rules 
eliminating position limits on SPY and market participants that are 
members of such SROs are required to comply with the more restrictive 
SPY position limits, no market participants have availed themselves of 
the SPY Pilot Program. As a result, there is no meaningful data 
available to compile the Pilot Report at this time and therefore the 
Exchange is not filing a Pilot Report with this extension request. The 
Exchange believes it is appropriate to extend the SPY Pilot Program to 
provide time for other SROs to adopt similar rules eliminating position 
limits on SPY so that the Exchange can prepare a meaningful Pilot 
Report if it were to propose any further extension, permanent approval 
or termination of the program.
---------------------------------------------------------------------------

    \4\ See supra note 3.
---------------------------------------------------------------------------

    As with the original proposal to establish the SPY Pilot Program, 
the Exchange represents that the Pilot Report will be submitted within 
thirty (30) days of the end of the first twelve (12) months of the 
extend pilot period. The Pilot Report will detail the size and 
different types of strategies employed with respect to positions 
established as a result of the elimination of position limits in SPY. 
In addition, the Pilot Report will note whether any problems resulted 
due to the no limit approach and any other information that may be 
useful in evaluating the effectiveness of the pilot program. The Pilot 
Report will compare the impact of the pilot program, if any, on the 
volumes of SPY options and the volatility in the price of the 
underlying SPY shares, particularly at expiration. In preparing the 
report the Exchange will utilize various data elements such as volume 
and open interest. In addition, the Exchange has represented that it 
will make available to Commission staff data elements relating to the 
effectiveness of the pilot.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\5\ in general, and Section 
6(b)(5) of the Act,\6\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, 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. The Exchange 
believes that extending the SPY Pilot Program promotes just and 
equitable principles of trade by permitting market participants, 
including market makers, institutional investors and retail investors, 
to establish greater positions when pursuing their investment goals and 
needs.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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. The proposed rule change is not 
designed to address any aspect of competition, whether between the 
Exchange and its competitors, or among market

[[Page 73912]]

participants. Instead, the proposed rule change is designed to allow 
the SPY Pilot Program to continue while other SROs adopt similar 
provisions and meaningful data can be compiled into a Pilot Report.

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

    Pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) 
\8\ thereunder, the Exchange has designated this proposal as one that 
effects a change that: (i) Does not significantly affect the protection 
of investors or the public interest; (ii) does not impose any 
significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest.\9\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6). 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.
---------------------------------------------------------------------------

    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 upon filing. The Exchange believes that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because it will permit the SPY Pilot 
Program to continue without interruption. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest. Therefore, the Commission hereby 
waives the 30-day operative delay and designates the proposal operative 
upon filing.\12\
---------------------------------------------------------------------------

    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 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).
---------------------------------------------------------------------------

    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.

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-2013-53 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-2013-53. 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-2013-53 and should be 
submitted on or before December 30, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29261 Filed 12-6-13; 8:45 am]
BILLING CODE 8011-01-P