Self-Regulatory Organizations; NASDAQ OMX BX; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Regarding the Short Term Option Series Program, 5604-5606 [2015-01865]
Download as PDF
5604
Federal Register / Vol. 80, No. 21 / Monday, February 2, 2015 / Notices
of the Act 14 and Rule 19b–4(f)(6)
thereunder.15
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange stated that waiver
of this requirement will allow the
Exchange to compete with other
exchanges with similar provisions
without putting the Exchange at a
competitive disadvantage. For this
reason, the Commission believes that
the proposed rule change allowing the
Exchange to open additional series of
individual stock and ETF options in
$.50 strike price intervals up to $100 in
the same manner as other exchanges
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 designates
the proposed rule change to be operative
upon filing.16
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–
CBOE–2015–009 on the subject line.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the 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.
16 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).
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2015–009. 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–CBOE–
2015–009 and should be submitted on
or before February 23, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–01862 Filed 1–30–15; 8:45 am]
BILLING CODE 8011–01–P
14 15
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74147; File No. SR–BX–
2015–006]
Self-Regulatory Organizations;
NASDAQ OMX BX; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Regarding the Short
Term Option Series Program
January 27, 2015.
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
21, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘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 is proposing changes to
amend Chapter IV, Section 6 (Series of
Options Contracts Open for Trading) to
introduce finer $.50 strike price
intervals in non-index Short Term
Options with strike prices less than
$100.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change. The text of
these statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant aspects of such
statements.
1 15
17 17
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CFR 200.30–3(a)(12).
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2 17
E:\FR\FM\02FEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 80, No. 21 / Monday, February 2, 2015 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The purpose of this proposed rule
change is to amend Chapter IV, Section
6 governing the Short Term Option
(‘‘STO’’) 3 Series Program to introduce
finer strike price intervals for certain
STOs. In particular, the Exchange
proposes to amend Chapter IV,
Supplementary Material .07(e) to
Section 6 to extend $0.50 strike price
intervals in non-index options to STOs
with strike prices less than $100 instead
of the current $75. This proposed
change is intended to eliminate gapped
strikes between $75 and $100 that result
from conflicting strike price parameters
under the STO Series Program and the
$2.50 Strike Price Program, as described
in more detail below.
This is a competitive filing that is
based on a recent STO proposal of the
International Securities Exchange, LLC
(‘‘ISE’’).4
Under the Exchange’s rules, the
Exchange may list STOs in up to fifty
option classes in addition to option
classes that are selected by other
securities exchanges that employ a
similar program under their respective
rules.5 On any Thursday or Friday that
is a business day, the Exchange may list
STO series in designated option classes
that expire at the close of business on
each of the next five Fridays that are
business days and are not Fridays in
which monthly or quarterly options
expire.6 These STO series trade in
$0.50, $1, or $2.50 or greater strike price
intervals depending on the strike price
and whether the option trades in dollar
increments in the related monthly
expiration.7 Specifically, STOs in non3 STOs, also known as ‘‘weekly options’’ as well
as ‘‘Short Term Options’’, are series in an options
class that are approved for listing and trading on the
Exchange in which the series are opened for trading
on any Thursday or Friday that is a business day
and that expire on the Friday of the next business
week. If a Thursday or Friday is not a business day,
the series may be opened (or shall expire) on the
first business day immediately prior to that
Thursday or Friday, respectively. STOs are listed
and traded pursuant to the STO Series Program. For
STO Series Program rules regarding non-index
options, see Chapter 1, Section 1(a)(60) and Chapter
IV, Supplementary Material .07 to Section 6. For
STO Series Program rules regarding index options,
see Chapter XIV, Section 2(o) and Chapter XIV,
Section 11(h).
4 See Securities Exchange Act Release No. 73999
(January 6, 2015), 80 FR 1559 (January 12, 2015)
(SR–ISE–2014–52) (order approving).
5 See Chapter IV, Supplementary Material .07(a)
to Section 6.
6 See Chapter IV, Supplementary Material .07 to
Section 6.
7 See Chapter IV, Supplementary Material .07(e)
to Section 6.
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index option classes admitted to the
STO Series Program currently trade in:
(1) $0.50 or greater intervals for strike
prices less than $75, or for option
classes that trade in one dollar
increments in the related monthly
expiration option; (2) $1 or greater
intervals for strike prices that are
between $75 and $150; and (3) $2.50 or
greater intervals for strike prices above
$150.8
The Exchange also operates a $2.50
Strike Price Program that permits the
Exchange to select up to sixty options
classes on individual stocks to trade in
$2.50 strike price intervals, in addition
to option classes selected by other
securities exchanges that employ a
similar program under their respective
rules.9 Monthly expiration options in
classes admitted to the $2.50 Strike
Price Program trade in $2.50 intervals
where the strike price is (1) greater than
$25 but less than $50; or (2) between
$50 and $100 if the strikes are no more
than $10 from the closing price of the
underlying stock in its primary market
on the preceding day.10 These strike
price parameters conflict with strike
prices allowed for STOs as dollar strikes
between $75 and $100 otherwise
allowed under the STO Series Program
may be within $0.50 of strikes listed
pursuant to the $2.50 Strike Price
Program. In order to remedy this
conflict, the Exchange proposes to
extend the $0.50 strike price intervals
currently allowed for STOs with strike
prices less than $75 to STOs with strike
prices less than $100.
With this proposed change, STOs in
non-index option classes will trade in:
(1) $0.50 or greater intervals for strike
prices less than $100, or for option
classes that trade in one dollar
increments in the related monthly
expiration option; (2) $1 or greater
intervals for strike prices that are
between $100 and $150; and (3) $2.50
or greater intervals for strike prices
above $150.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder, including the requirements
of Section 6(b) of the Act.11 In
particular, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 12 requirements that
the rules of an exchange be designed to
8 Id.
9 See Chapter IV, Supplementary Material .03 to
Section 6.
10 Id. For a definition of ‘‘primary market’’, see
Chapter 1, Section 1(a)(48).
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
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5605
promote just and equitable principles of
trade, to prevent fraudulent and
manipulative acts, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
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.
During the month prior to expiration,
the Exchange is permitted to list related
monthly option contracts in the
narrower strike price intervals available
for STO series.13 After transitioning to
short term strike price intervals,
however, monthly options that trade in
$2.50 intervals between $50 and $100
under the $2.50 Strike Price Program,
trade with dollar strikes between $75
and $150. Due to the overlap of $1 and
$2.50 intervals, the Exchange cannot list
certain dollar strikes between $75 and
$100 that conflict with the prior $2.50
strikes. For example, if the Exchange
initially listed monthly options on ABC
with $75, $77.50, and $80 strikes, the
Exchange could list the $76 and $79
strikes when these transition to short
term intervals. The Exchange would not
be permitted to list the $77 and $78
strikes, however, as these are $0.50
away from the $77.50 strike already
listed on the Exchange. This creates
gapped strikes between $75 and $100,
where investors are not able to trade
otherwise allowable dollar strikes on the
Exchange. Similarly, these conflicting
strike price parameters create issues for
investors who want to roll their
positions from monthly to weekly
expirations. In the example above, for
instance, an investor that purchased a
monthly ABC option with a $77.50
strike price would not be able to roll
that position into a later short term
expiration with the same strike price as
that strike is unavailable under current
STO Series Program rules. Permitting
$0.50 intervals for STOs up to $100
would remedy both of these issues as
strikes allowed under the $2.50 Strike
Price Program would not conflict with
the finer $0.50 strike price interval.
The STO Series Program has been
well-received by market participants
and the Exchange believes that
introducing finer strike price intervals
for STOs with strike prices between $75
and $100, and thereby eliminating the
gapped strikes described above, will
benefit these market participants by
giving them more flexibility to closely
tailor their investment and hedging
decisions.
With regard to the impact of this
proposal on system capacity, the
13 See
E:\FR\FM\02FEN1.SGM
Chapter IV, Section 6(d).
02FEN1
5606
Federal Register / Vol. 80, No. 21 / Monday, February 2, 2015 / Notices
Exchange has analyzed its capacity and
represents that it and the Options Price
Reporting Authority (‘‘OPRA’’) have the
necessary systems capacity to handle
any potential additional traffic
associated with this proposed rule
change. The Exchange believes that its
members will not have a capacity issue
as a result of this proposal. The
Exchange also represents that it does not
believe this expansion will cause
fragmentation of liquidity.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, the Exchange believes that the
proposed rule change will result in
additional investment options and
opportunities to achieve the investment
objectives of market participants seeking
efficient trading and hedging vehicles,
to the benefit of investors, market
participants, and the marketplace in
general.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
mstockstill on DSK4VPTVN1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the 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 14 and Rule 19b–4(f)(6)
thereunder.15
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange stated that waiver
of this requirement will ensure fair
competition among exchanges by
allowing the Exchange to open
additional series of individual stocks
14 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the 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.
15 17
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Jkt 235001
and ETF options in $.50 strike price
intervals up to $100 in the same manner
as ISE. For this reason, 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 designates
the proposed rule change to be operative
upon filing.16
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–
BX–2015–006 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2015–006. 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
16 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).
PO 00000
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Sfmt 4703
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–BX–
2015–006 and should be submitted on
or before February 23, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–01865 Filed 1–30–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74149; File No. SR–CBOE–
2015–008]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change to Extend Pilot Program
that Eliminates Position and Exercise
Limits for Physically-Settled SPDR
S&P 500 ETF Trust (‘‘SPY’’) Options
January 27, 2015.
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
21, 2015, Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) 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 Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
1 15
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02FEN1
Agencies
[Federal Register Volume 80, Number 21 (Monday, February 2, 2015)]
[Notices]
[Pages 5604-5606]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01865]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74147; File No. SR-BX-2015-006]
Self-Regulatory Organizations; NASDAQ OMX BX; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change Regarding the
Short Term Option Series Program
January 27, 2015.
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 21, 2015, NASDAQ OMX BX, Inc. (``BX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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.
---------------------------------------------------------------------------
\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 is proposing changes to amend Chapter IV, Section 6
(Series of Options Contracts Open for Trading) to introduce finer $.50
strike price intervals in non-index Short Term Options with strike
prices less than $100.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxbx.cchwallstreet.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 5605]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to amend Chapter IV,
Section 6 governing the Short Term Option (``STO'') \3\ Series Program
to introduce finer strike price intervals for certain STOs. In
particular, the Exchange proposes to amend Chapter IV, Supplementary
Material .07(e) to Section 6 to extend $0.50 strike price intervals in
non-index options to STOs with strike prices less than $100 instead of
the current $75. This proposed change is intended to eliminate gapped
strikes between $75 and $100 that result from conflicting strike price
parameters under the STO Series Program and the $2.50 Strike Price
Program, as described in more detail below.
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\3\ STOs, also known as ``weekly options'' as well as ``Short
Term Options'', are series in an options class that are approved for
listing and trading on the Exchange in which the series are opened
for trading on any Thursday or Friday that is a business day and
that expire on the Friday of the next business week. If a Thursday
or Friday is not a business day, the series may be opened (or shall
expire) on the first business day immediately prior to that Thursday
or Friday, respectively. STOs are listed and traded pursuant to the
STO Series Program. For STO Series Program rules regarding non-index
options, see Chapter 1, Section 1(a)(60) and Chapter IV,
Supplementary Material .07 to Section 6. For STO Series Program
rules regarding index options, see Chapter XIV, Section 2(o) and
Chapter XIV, Section 11(h).
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This is a competitive filing that is based on a recent STO proposal
of the International Securities Exchange, LLC (``ISE'').\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 73999 (January 6,
2015), 80 FR 1559 (January 12, 2015) (SR-ISE-2014-52) (order
approving).
---------------------------------------------------------------------------
Under the Exchange's rules, the Exchange may list STOs in up to
fifty option classes in addition to option classes that are selected by
other securities exchanges that employ a similar program under their
respective rules.\5\ On any Thursday or Friday that is a business day,
the Exchange may list STO series in designated option classes that
expire at the close of business on each of the next five Fridays that
are business days and are not Fridays in which monthly or quarterly
options expire.\6\ These STO series trade in $0.50, $1, or $2.50 or
greater strike price intervals depending on the strike price and
whether the option trades in dollar increments in the related monthly
expiration.\7\ Specifically, STOs in non-index option classes admitted
to the STO Series Program currently trade in: (1) $0.50 or greater
intervals for strike prices less than $75, or for option classes that
trade in one dollar increments in the related monthly expiration
option; (2) $1 or greater intervals for strike prices that are between
$75 and $150; and (3) $2.50 or greater intervals for strike prices
above $150.\8\
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\5\ See Chapter IV, Supplementary Material .07(a) to Section 6.
\6\ See Chapter IV, Supplementary Material .07 to Section 6.
\7\ See Chapter IV, Supplementary Material .07(e) to Section 6.
\8\ Id.
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The Exchange also operates a $2.50 Strike Price Program that
permits the Exchange to select up to sixty options classes on
individual stocks to trade in $2.50 strike price intervals, in addition
to option classes selected by other securities exchanges that employ a
similar program under their respective rules.\9\ Monthly expiration
options in classes admitted to the $2.50 Strike Price Program trade in
$2.50 intervals where the strike price is (1) greater than $25 but less
than $50; or (2) between $50 and $100 if the strikes are no more than
$10 from the closing price of the underlying stock in its primary
market on the preceding day.\10\ These strike price parameters conflict
with strike prices allowed for STOs as dollar strikes between $75 and
$100 otherwise allowed under the STO Series Program may be within $0.50
of strikes listed pursuant to the $2.50 Strike Price Program. In order
to remedy this conflict, the Exchange proposes to extend the $0.50
strike price intervals currently allowed for STOs with strike prices
less than $75 to STOs with strike prices less than $100.
---------------------------------------------------------------------------
\9\ See Chapter IV, Supplementary Material .03 to Section 6.
\10\ Id. For a definition of ``primary market'', see Chapter 1,
Section 1(a)(48).
---------------------------------------------------------------------------
With this proposed change, STOs in non-index option classes will
trade in: (1) $0.50 or greater intervals for strike prices less than
$100, or for option classes that trade in one dollar increments in the
related monthly expiration option; (2) $1 or greater intervals for
strike prices that are between $100 and $150; and (3) $2.50 or greater
intervals for strike prices above $150.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder, including the
requirements of Section 6(b) of the Act.\11\ In particular, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \12\ requirements that the rules of an exchange be
designed to promote just and equitable principles of trade, to prevent
fraudulent and manipulative acts, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, 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.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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During the month prior to expiration, the Exchange is permitted to
list related monthly option contracts in the narrower strike price
intervals available for STO series.\13\ After transitioning to short
term strike price intervals, however, monthly options that trade in
$2.50 intervals between $50 and $100 under the $2.50 Strike Price
Program, trade with dollar strikes between $75 and $150. Due to the
overlap of $1 and $2.50 intervals, the Exchange cannot list certain
dollar strikes between $75 and $100 that conflict with the prior $2.50
strikes. For example, if the Exchange initially listed monthly options
on ABC with $75, $77.50, and $80 strikes, the Exchange could list the
$76 and $79 strikes when these transition to short term intervals. The
Exchange would not be permitted to list the $77 and $78 strikes,
however, as these are $0.50 away from the $77.50 strike already listed
on the Exchange. This creates gapped strikes between $75 and $100,
where investors are not able to trade otherwise allowable dollar
strikes on the Exchange. Similarly, these conflicting strike price
parameters create issues for investors who want to roll their positions
from monthly to weekly expirations. In the example above, for instance,
an investor that purchased a monthly ABC option with a $77.50 strike
price would not be able to roll that position into a later short term
expiration with the same strike price as that strike is unavailable
under current STO Series Program rules. Permitting $0.50 intervals for
STOs up to $100 would remedy both of these issues as strikes allowed
under the $2.50 Strike Price Program would not conflict with the finer
$0.50 strike price interval.
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\13\ See Chapter IV, Section 6(d).
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The STO Series Program has been well-received by market
participants and the Exchange believes that introducing finer strike
price intervals for STOs with strike prices between $75 and $100, and
thereby eliminating the gapped strikes described above, will benefit
these market participants by giving them more flexibility to closely
tailor their investment and hedging decisions.
With regard to the impact of this proposal on system capacity, the
[[Page 5606]]
Exchange has analyzed its capacity and represents that it and the
Options Price Reporting Authority (``OPRA'') have the necessary systems
capacity to handle any potential additional traffic associated with
this proposed rule change. The Exchange believes that its members will
not have a capacity issue as a result of this proposal. The Exchange
also represents that it does not believe this expansion will cause
fragmentation of liquidity.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act. To the contrary, the
Exchange believes that the proposed rule change will result in
additional investment options and opportunities to achieve the
investment objectives of market participants seeking efficient trading
and hedging vehicles, to the benefit of investors, market participants,
and the marketplace in general.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the 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 \14\ and Rule 19b-4(f)(6)
thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Exchange stated that waiver of this requirement will ensure
fair competition among exchanges by allowing the Exchange to open
additional series of individual stocks and ETF options in $.50 strike
price intervals up to $100 in the same manner as ISE. For this reason,
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 designates the proposed rule change to be operative upon
filing.\16\
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\16\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. 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-BX-2015-006 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2015-006. 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-BX-2015-006 and should be
submitted on or before February 23, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-01865 Filed 1-30-15; 8:45 am]
BILLING CODE 8011-01-P