Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the SPY Pilot Program, 32392-32394 [2017-14663]
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32392
Federal Register / Vol. 82, No. 133 / Thursday, July 13, 2017 / Notices
The Commission believes that market
participants (retail and non-retail) are
not likely to be detrimentally affected by
other market participants’ knowledge,
via the ELO identifier, that certain
orders originated from retail investors
and must remain unchanged for at least
one second. In particular, information
leakage would likely not be a concern
for retail interest because retail interest
is most often represented by one order
at a single price.115 Also, the lack of an
ELO attribute on any particular order
would likely not allow market
participants to say with any assurance
that the order is of a particular
participant type.116 Moreover, the
Commission does not believe that
identification of ELO orders would
necessarily result in market participants
choosing to route to ELO orders last and
therefore result in lower fill rates for
these orders.117 In addition, the
Commission notes that the use of the
ELO attribute is voluntary.
Finally, one commenter suggested
that the proposal could create a conflict
with FINRA Rule 5320, commonly
known as the Manning rule.118
According to the commenter, if a brokerdealer has routed a customer ELO order
to Nasdaq but is required to pull that
ELO order within one second and fill it
to comply with its obligations under
FINRA Rule 5320, that broker-dealer
could become out of compliance with
the ELO requirements and, as a result,
its retail customer limit orders could be
´
disadvantaged vis-a-vis other brokerdealers’ retail customer limit orders.119
This commenter also asserted that an
Exchange member may receive a subsecond cancellation request from a
customer, which could cause the
member to fall under the 99% threshold
and become ineligible to submit ELO
orders on behalf of other customers.120
In response, the Exchange stated that
the Manning obligations of a member
using the ELO functionality would be
no different from the obligations on an
OTC market maker that internalizes
orders and relies on the ‘‘no115 See
116 See
supra note 102 and accompanying text.
supra notes 113–114 and accompanying
text.
117 See
supra note 105 and accompanying text.
Citadel Letter I at 2. FINRA Rule 5320(a)
states that ‘‘[e]xcept as provided herein, a member
that accepts and holds an order in an equity
security from its own customer or a customer of
another broker-dealer without immediately
executing the order is prohibited from trading that
security on the same side of the market for its own
account at a price that would satisfy the customer
order, unless it immediately thereafter executes the
customer order up to the size and at the same or
better price at which it traded for its own account.’’
119 See Citadel Letter I at 2.
120 See id. at 5.
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118 See
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knowledge’’ exception to separate its
proprietary trading from its handling of
customer orders.121 The Exchange stated
that this exception should be equally
applicable to a member using the ELO
functionality.122 The Exchange also
noted that it believes that retail investor
limit orders that are posted on the
Exchange will generally not be
cancelled in a short period of time such
as one second, because retail investors
tend to have long-term investment goals
and increasing the chance of receiving
an execution is worth the risk of their
order resting for one second or
longer.123
In response to the Exchange, the
commenter disputed the Exchange’s
assertion that the ‘‘no knowledge’’
exception to the Manning rule should
address its concern, noting that it would
persist where a firm may choose not to
use the ‘‘no-knowledge’’ exception in
order to provide higher fill rates or price
improvement opportunities to its
customers.124 In reply, the Exchange
noted that this scenario posited by the
commenter is representative of a
voluntary strategy used by the brokerdealer, and that the broker-dealer is not
compelled to use ELO.125
The Commission does not believe that
the commenter’s assertion that brokerdealers could be conflicted in their
ability to utilize the ELO functionality
and also comply with their obligations
under FINRA Rule 5320 is a basis for
finding that the Exchange’s proposal is
inconsistent with the Act. As the
Exchange noted, the ‘‘no-knowledge’’
exception to FINRA Rule 5320 could be
applicable to an Exchange member
using the ELO functionality.126 To the
extent firms choose not to rely on the
‘‘no-knowledge’’ exception, any
limitation on such firms’ ability to
utilize the ELO functionality and
resulting effect on their ability to
compete with other broker-dealers that
handle retail order flow would stem
from the firms’ business judgment, not
the eligibility criteria for ELO attribute
usage, which apply uniformly to any
Exchange member seeking to utilize the
ELO functionality.
121 See Nasdaq Response Letter I at 5. See also
Supplementary Material .02 to FINRA Rule 5320.
122 See Nasdaq Response Letter I at 5.
123 See id. at 4. See also FIA PTG Letter I at 3
(stating that most retail participants do not cancel
orders within one second).
124 See Citadel Letter II at 3–4.
125 See Nasdaq Response Letter II at 7.
126 See Nasdaq Response Letter I at 5. See also
Supplementary Material .02 to FINRA Rule 5320.
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IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,127 that the
proposed rule change (SR–NASDAQ–
2016–161), as modified by Amendment
No. 1, be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.128
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–14666 Filed 7–12–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81094; File No. SR–ISE–
2017–72]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the SPY Pilot
Program
July 7, 2017.
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 July 5,
2017, Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘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 the Substance
of the Proposed Rule Change
The Exchange proposes to mend its
rules to extend the pilot program that
eliminated position and exercise limits
for physically-settled options on the
SPDR S&P ETF Trust (‘‘SPY’’) (‘‘SPY
Pilot Program’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at www.ise.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
127 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
128 17
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Federal Register / Vol. 82, No. 133 / Thursday, July 13, 2017 / Notices
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
sradovich on DSK3GMQ082PROD with NOTICES
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
Supplementary Material .01 to ISE Rule
412 and Supplementary Material .01 to
ISE Rule 414 to extend the duration of
the SPY Pilot Program through July 12,
2018. 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 liquidity of the option
and the underlying security, (2) the
market capitalization of the underlying
security and the related index, (3) the
reporting of large positions and
requirements surrounding margin, and
(4) financial requirements imposed by
ISE and the Commission.
With this proposal, the Exchange
submits the SPY report to the
Commission, which report reflects,
during the time period from May 2016
through May 2017, the trading of
standardized SPY options with no
position limits consistent with option
exchange provisions.3 The report was
prepared in the manner specified in the
Exchange’s prior rule filing extending
the SPY Pilot Program.4 The Exchange
notes that it is unaware of any problems
created by the SPY Pilot Program and
does not foresee any as a result of the
proposed extension. The proposed
extension will allow the Exchange and
the Commission to further evaluate the
SPY Pilot Program and the effect it has
on the market.
The Exchange represents that, should
the Exchange propose to extend the
pilot program, adopt on a permanent
basis the pilot program or terminate the
pilot program, it will submit a new pilot
report at least thirty (30) days before the
end of the extended SPY Pilot Program,
which will cover the extended pilot
period. The Pilot Report will detail the
3 The
report is attached as Exhibit 3 [sic].
Securities Exchange Act Release No. 78295
(July 18, 2016), 81 FR 46728 (July 12, 2016) (SR–
ISE–2016–16).
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 SPY Pilot Program.
The Pilot Report will compare the
impact of the SPY 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 will make available to
Commission staff data elements relating
to the effectiveness of the SPY Pilot
Program.
Conditional on the findings in the
SPY Pilot Report, the Exchange will file
with the Commission a proposal to
extend the pilot program, adopt the
pilot program on a permanent basis or
terminate the pilot. If the SPY Pilot
Program is not extended or adopted on
a permanent basis by the expiration of
the Extended Pilot, the position limits
for SPY options would revert to limits
in effect prior to the commencement of
the SPY Pilot Program.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 5 in general, and furthers the
objectives of 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 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.
The Exchange believes that the
proposed rule change would be
beneficial to market participants,
including market makers, institutional
investors and retail investors, by
permitting them to establish greater
positions when pursuing their
investment goals and needs. The
Exchange also believes that
economically equivalent products
should be treated in an equivalent
manner so as to avoid regulatory
arbitrage, especially with respect to
position limits. Treating SPY and SPX
options differently by virtue of imposing
4 See
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PO 00000
5 15
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00078
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32393
different position limits is inconsistent
with the notion of promoting just and
equitable principles of trade and
removing impediments to perfect the
mechanisms of a free and open market.
At the same time, the Exchange believes
that the elimination of position limits
for SPY options would not increase
market volatility or facilitate the ability
to manipulate the market.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
In this regard, the Exchange notes that
the rule change is being proposed as a
competitive response to similar filings
that the Exchange expects to be filed by
other options exchanges. The Exchange
believes this proposed rule change is
necessary to permit fair competition
among the options exchanges and to
establish uniform position limits for a
multiply listed options class.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b–
4(f)(6) thereunder.7
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 8 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 9
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
7 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.
8 17 CFR 240.19b–4(f)(6).
9 17 CFR 240.19b–4(f)(6)(iii).
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32394
Federal Register / Vol. 82, No. 133 / Thursday, July 13, 2017 / Notices
become operative immediately upon
filing. The Exchange believes that
waiver of the operative delay is
consistent with the protection of
investors and the public interest
because it will allow 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 operative delay and
designates the proposed rule change
operative upon filing.10
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–
ISE–2017–72 on the subject line.
sradovich on DSK3GMQ082PROD with NOTICES
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–ISE–2017–72. 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
available publicly. All submissions
should refer to File Number SR–ISE–
2017–72, and should be submitted on or
before August 3, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–14663 Filed 7–12–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81090; File No. SR–
NASDAQ–2017–063]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend the
SPY Pilot Program
July 7, 2017.
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 June 29,
2017, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’ or ‘‘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.
10 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).
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17:41 Jul 12, 2017
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PO 00000
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
Frm 00079
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to extend for
another twelve (12) month time period
the pilot program to eliminate position
limits for options on the SPDR® S&P
500® exchange-traded fund (‘‘SPY ETF’’
or ‘‘SPY’’),3 which list and trade under
the symbol SPY (‘‘SPY Pilot Program’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaq.cchwallstreet.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend the Supplementary
Material at the end of Chapter III,
Section 7 (Position Limits), to extend
the current pilot which expires on July
12, 2017 for an additional twelve (12)
month time period to July 12, 2018
(‘‘Extended Pilot’’). 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
3 ‘‘SPDR®,’’ ‘‘Standard & Poor’s®,’’ ‘‘S&P®,’’ ‘‘S&P
500®,’’ 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.
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]]>Agencies
[Federal Register Volume 82, Number 133 (Thursday, July 13, 2017)]
[Notices]
[Pages 32392-32394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14663]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81094; File No. SR-ISE-2017-72]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend the SPY
Pilot Program
July 7, 2017.
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 July 5, 2017, Nasdaq ISE, LLC (``ISE'' or ``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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to mend its rules to extend the pilot program
that eliminated position and exercise limits for physically-settled
options on the SPDR S&P ETF Trust (``SPY'') (``SPY Pilot Program'').
The text of the proposed rule change is available on the Exchange's
Web site at www.ise.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
[[Page 32393]]
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Supplementary Material .01 to ISE
Rule 412 and Supplementary Material .01 to ISE Rule 414 to extend the
duration of the SPY Pilot Program through July 12, 2018. 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 liquidity of the option and
the underlying security, (2) the market capitalization of the
underlying security and the related index, (3) the reporting of large
positions and requirements surrounding margin, and (4) financial
requirements imposed by ISE and the Commission.
With this proposal, the Exchange submits the SPY report to the
Commission, which report reflects, during the time period from May 2016
through May 2017, the trading of standardized SPY options with no
position limits consistent with option exchange provisions.\3\ The
report was prepared in the manner specified in the Exchange's prior
rule filing extending the SPY Pilot Program.\4\ The Exchange notes that
it is unaware of any problems created by the SPY Pilot Program and does
not foresee any as a result of the proposed extension. The proposed
extension will allow the Exchange and the Commission to further
evaluate the SPY Pilot Program and the effect it has on the market.
---------------------------------------------------------------------------
\3\ The report is attached as Exhibit 3 [sic].
\4\ See Securities Exchange Act Release No. 78295 (July 18,
2016), 81 FR 46728 (July 12, 2016) (SR-ISE-2016-16).
---------------------------------------------------------------------------
The Exchange represents that, should the Exchange propose to extend
the pilot program, adopt on a permanent basis the pilot program or
terminate the pilot program, it will submit a new pilot report at least
thirty (30) days before the end of the extended SPY Pilot Program,
which will cover the extended 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
SPY Pilot Program. The Pilot Report will compare the impact of the SPY
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 will make
available to Commission staff data elements relating to the
effectiveness of the SPY Pilot Program.
Conditional on the findings in the SPY Pilot Report, the Exchange
will file with the Commission a proposal to extend the pilot program,
adopt the pilot program on a permanent basis or terminate the pilot. If
the SPY Pilot Program is not extended or adopted on a permanent basis
by the expiration of the Extended Pilot, the position limits for SPY
options would revert to limits in effect prior to the commencement of
the SPY Pilot Program.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \5\ in general, and furthers the objectives of 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 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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change would be
beneficial to market participants, including market makers,
institutional investors and retail investors, by permitting them to
establish greater positions when pursuing their investment goals and
needs. The Exchange also believes that economically equivalent products
should be treated in an equivalent manner so as to avoid regulatory
arbitrage, especially with respect to position limits. Treating SPY and
SPX options differently by virtue of imposing different position limits
is inconsistent with the notion of promoting just and equitable
principles of trade and removing impediments to perfect the mechanisms
of a free and open market. At the same time, the Exchange believes that
the elimination of position limits for SPY options would not increase
market volatility or facilitate the ability to manipulate the market.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. In this regard, the Exchange notes that the rule change is
being proposed as a competitive response to similar filings that the
Exchange expects to be filed by other options exchanges. The Exchange
believes this proposed rule change is necessary to permit fair
competition among the options exchanges and to establish uniform
position limits for a multiply listed options class.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.\7\
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\7\ 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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \8\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \9\ 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
[[Page 32394]]
become operative immediately upon filing. The Exchange believes that
waiver of the operative delay is consistent with the protection of
investors and the public interest because it will allow 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 operative delay and designates the proposed rule change
operative upon filing.\10\
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\8\ 17 CFR 240.19b-4(f)(6).
\9\ 17 CFR 240.19b-4(f)(6)(iii).
\10\ 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).
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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-ISE-2017-72 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-ISE-2017-72. 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 available publicly. All
submissions should refer to File Number SR-ISE-2017-72, and should be
submitted on or before August 3, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-14663 Filed 7-12-17; 8:45 am]
BILLING CODE 8011-01-P
