Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 28293 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

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. 

4See Securities Exchange Act Release No. 68000 

(October 5, 2012), 77 FR 62300 (October 12, 2012) 

(SR–ISE–2012–81); 70967 (December 3, 2013), 78 

FR 73912 (December 9, 2013) (SR–ISE–2013–62); 

74224 (February 6, 2015), 80 FR 7892 (February 12, 

2015 (SR–ISE–2015–05); 75411 (July 9, 2015), 80 FR 

41543 (July 15, 2015) (SR–ISE–2015–22); 78295 

(July 12, 2016), 81 FR 46728 (July 18, 2016) (SR– 

ISE–2016–16); and 81094 (July 7, 2017), 82 FR 

32392 (July 13, 2017) (SR–ISE–2017–72). 

5 Id. 

6See Securities Exchange Act Release No. 68000 

(October 5, 2012), 77 FR 62300 (October 12, 2012) 

(SR–ISE–2012–81). 

7See Securities Exchange Act Release No. 51042 

(January 14, 2005), 70 FR 3412 (January 24, 2005) 

(SR–ISE–2005–05). 

8See Securities Exchange Act Release No. 64760 

(June 28, 2011), 76 FR 39143 (July 5, 2011) (SR– 

ISE–2011–34). 

9See note 4 above. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83416; File No. SR–ISE– 

2018–53] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Position and 

Exercise Limits for Options on the SPY 

Exchange Traded Fund 

June 12, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on June 4, 

2018, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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 

Rule 412, entitled ‘‘Position Limits’’ at 

Supplementary Material .01 and Rule 

414, entitled ‘‘Exercise Limits’’ at 

Supplementary Material .01, to amend 

position and exercise limits for options 

on the SPDR® S&P 500® exchangetraded fund (‘‘SPY ETF’’ or ‘‘SPY’’),3

which list and trade under the symbol 

‘‘SPY.’’ 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://ise.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 

ISE Rule 412, entitled ‘‘Position 

Limits’’ at Supplementary Material .01 

and Rule 414, entitled ‘‘Exercise Limits’’ 

at Supplementary Material .01 establish 

positions for aggregate positions in 

option contracts traded on the 

Exchange. The rule lists specific 

position and exercise limits for certain 

select underlying securities. SPY is 

among the certain select underlying 

securities listed in each such Rule. 

Currently, these Rules provide that there 

are no position limits and there are no 

exercise limits on options overlying SPY 

pursuant to a pilot program, which is 

scheduled to expire on July 12, 2018 

(‘‘SPY Pilot Program’’).4

The Exchange proposes to amend 

Rule 412 at Supplementary Material .01 

and Rule 414 at Supplementary Material 

.01 to allow the SPY Pilot Program to 

terminate on July 12, 2018, the current 

expiration date of the SPY Pilot 

Program. In lieu of extending the SPY 

Pilot Program for another year, the 

Exchange proposes to allow the SPY 

Pilot Program to terminate and to 

establish position and exercise limits of 

1,800,000 contracts, for options on SPY, 

with such change becoming operative 

on July 12, 2018, so that there is no 

lapse in time between termination of the 

SPY Pilot Program and the 

establishment of the new limits. 

Furthermore, as a result of the 

termination of the SPY Pilot Program, 

the Exchange does not believe it is 

necessary to submit a SPY Pilot Program 

Report at the end of the SPY Pilot 

Program. Based on the prior SPY Pilot 

Program Reports provided to the 

Commission,5 the Exchange believes it 

is appropriate to terminate the SPY Pilot 

Program and that permanent position 

and exercise limits should be 

established for SPY. 

Position limits are designed to 

address potential manipulative schemes 

and adverse market impact surrounding 

the use of options, such as disrupting 

the market in the security underlying 

the options. The potential manipulative 

schemes and adverse market impact are 

balanced against the potential of setting 

the limits so low as to discourage 

participation in the options market. The 

level of those position limits must be 

balanced between curtailing potential 

manipulation and the cost of preventing 

potential hedging activity that could be 

used for legitimate economic purposes. 

The SPY Pilot Program was 

established in 2012 in order to eliminate 

position and exercise limits for 

physically-settled SPY options.6 In 

2005, the position limits for SPY 

options were increased from 75,000 

contracts to 300,000 contracts on the 

same side of the market.7 In July 2011, 

the position limit for these options was 

again increased from 300,000 contracts 

to 900,000 contracts on the same side of 

the market.8 Then, in 2012, the position 

and exercise limits for SPY options were 

eliminated as part of the SPY Pilot 

Program.9

The underlying SPY tracks the 

performance of the S&P 500 Index and 

the Exchange notes that the SPY and 

SPY options have deep, liquid markets 

that reduce concerns regarding 

manipulation and disruption in the 

underlying markets. In support of this 

proposed rule change, the Exchange has 

collected the following trading statistics 

for SPY and SPY Options: (1) The 

average daily volume (‘‘ADV’’) to date 

(as of May 15, 2018) for SPY is 108.32 

million shares; (2) the ADV to date in 

2018 for SPY options is 3.9 million 

contracts per day; (3) the total shares 

outstanding for SPY are 965.43 million; 

and (4) the fund market cap for SPY is 

261.65 billion. The Exchange represents 

further that there is tremendous 

liquidity in the securities that make up 

the S&P 500 Index. 

Accordingly, the Exchange proposes 

to amend Rule 412 at Supplementary 

Material .01 and Rule 414 at 

Supplementary Material .01 to set forth 

that the position and exercise limits for 

options on SPY would be 1,800,000 

contracts on the same side of the 

market. These position and exercise 


amozie on DSK3GDR082PROD with NOTICES1
28294 Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 

10See Securities Exchange Act Release No. 83156 

(May 2, 2018), 83 FR 20875 (May 8, 2018) (SR–ISE– 

2018–39). 

11From the beginning of the year, through May 

15, 2018, the ADV for SPY was 108.32 million 

shares while the ADV for QQQQ was 46.64 million 

shares (calculated using data from Yahoo Finance 

as of May 15, 2018). 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

14See note 8. 

15See note 10 above. 

16 Id. 

17See note 11 above. 

18See note 10 above. 

19See note 8 above 

20 15 U.S.C. 78(f)(b)(8). 

21 15 U.S.C. 78s(b)(3)(A)(iii). 

22 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

limits equal the current position and 

exercise limits for options on QQQQ, 

which the Commission previously 

approved to be increased from 900,000 

contracts on the same side of the 

market, to 1,800,000 contracts on the 

same side of the market.10 The Exchange 

also notes that SPY is more liquid than 

QQQQ.11 The Exchange believes that 

establishing position and exercise limits 

for the SPY options in the amount of 

1,800,000 contracts on the same side of 

the market subject to this proposal 

would allow for the maintenance of the 

liquid and competitive market 

environment for these options, which 

will benefit customers interested in 

these products. Under the proposal, the 

reporting requirement for the options 

would be unchanged. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,12 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,13

in particular, in that it is designed 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 establishing 

permanent position and exercise limits 

for SPY options subject to this proposal 

will encourage Market Makers to 

continue to provide sufficient liquidity 

in SPY options on the Exchange, which 

will enhance the process of price 

discovery conducted on the Exchange. 

The proposal will also benefit 

institutional investors as well as retail 

traders, and public customers, by 

continuing to provide them with an 

effective trading and hedging vehicle. In 

addition, the Exchange believes that the 

structure of the SPY options subject to 

this proposal and the considerable 

liquidity of the market for those options 

diminishes the opportunity to 

manipulate this product and disrupt the 

underlying market that a lower position 

limit may protect against. 

Increased position limits for select 

actively traded options, such as that 

proposed herein (increased as compared 

to the 900,000 limit in place prior to the 

SPY Pilot Program),14 is not novel and 

has been previously approved by the 

Commission. For example, the 

Commission has previously approved a 

rule change permitting the Exchange to 

double the position and exercise limits 

for FXI, EEM, IWM, EFA, EWZ, TLT, 

QQQQ, and EWJ.15 Furthermore, as 

previously mentioned, the Commission 

specifically approved a proposal by the 

Exchange to increase the position and 

exercise limits for options on QQQQ 

from 900,000 contracts on the same side 

of the market to 1,800,000 contracts on 

the same side of the market; similar to 

the current proposal for options on 

SPY.16 The Exchange also notes that 

SPY is more liquid than QQQQ.17

Lastly, the Commission expressed the 

belief that implementing higher position 

and exercise limits may bring additional 

depth and liquidity without increasing 

concerns regarding intermarket 

manipulation or disruption of the 

options or the underlying securities.18

The Exchange’s existing surveillance 

and reporting safeguards are designed to 

deter and detect possible manipulative 

behavior which might arise from 

increasing position and exercise limits 

(increased as compared to the 900,000 

limit in place prior to the SPY Pilot 

Program).19

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. The 

Exchange believes the entire proposal is 

consistent with Section (6)(b)(8) of the 

Act 20 in that it does not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. On the 

contrary, the Exchange believes the 

proposal promotes competition because 

it will enable the option exchanges to 

attract additional order flow from the 

over-the-counter market, who in turn 

compete for those orders. The Exchange 

believes that the proposed rule change 

will result in continued opportunities to 

achieve the investment and trading 

objectives of market participants seeking 

efficient trading and hedging vehicles, 

to the benefit of investors, market 

participants, and the marketplace in 

general. The Exchange believes this 

proposed rule change is necessary to 

permit fair competition among the 

options exchanges and to establish 

uniform position and exercise limits for 

additional multiply listed option 

classes. Furthermore, the Exchange 

believes that the other options 

exchanges will file similar proposals 

with the Commission. 

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)(iii) of the Act 21 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.22

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: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) 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 (http://www.sec.gov/ 

rules/sro.shtml); or 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 28295 

23 17 CFR 200.30–3(a)(12). 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

ISE–2018–53 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–2018–53. 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 website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–ISE–2018–53 and should be 

submitted on or before July 9, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12932 Filed 6–15–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736. 

Extension: 

Exchange Act Rules 13n–1—13n–12; Form 

SDR, SEC File No. 270–629, OMB 

Control No. 3235–0719 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for approval of 

extension of the previously approved 

collection of information provided for in 

Rules 13n–1 through 13n–12 (17 CFR 

240.13n–1 through 240.13n–12) and 

Form SDR (‘‘Rules’’), under the 

Securities Exchange Act of 1934 (15 

U.S.C. 78m(n)(3) et seq.). 

Under the Rules, security-based swap 

data repositories (‘‘SDRs’’) are required 

to register with the Commission by 

filing a completed Form SDR (the filing 

of a completed Form SDR also 

constitutes an application for 

registration as a securities information 

processor (‘‘SIP’’)). SDRs are also 

required to abide by certain minimum 

standards set out in the Rules, including 

a requirement to update Form SDR, 

abide by certain duties and core 

principles, maintain data in accordance 

with the rules, keep systems in 

accordance with the Rules, keep 

records, provide reports to the 

Commission, maintain the privacy of 

security-based swaps (‘‘SBSs’’) data, 

make certain disclosures, and designate 

a Chief Compliance Officer. In addition, 

there are a number of collections of 

information contained in the Rules. The 

information collected pursuant to the 

Rules is necessary to carry out the 

mandates of the Dodd-Frank Act and 

help ensure an orderly and transparent 

market for SBSs. 

The Commission staff estimates that it 

will take an SDR approximately 481 

hours to complete the initial Form SDR 

and any amendments thereto. This 

burden is composed of a one-time 

reporting burden that reflects the 

applicant’s staff time (i.e. internal labor 

costs) to prepare and submit the Form 

to the Commission and includes the 

burden of responding to additional 

provisions incorporated from Form SIP 

and finally includes responding to the 

revised disclosure of business 

affiliations burden. Assuming a 

maximum of ten SDRs, the aggregate 

one-time estimated dollar cost to 

complete Form SDR and any 

amendments thereto will be $793,840 

((Compliance Attorney at $334 per hour 

for 180 hours) + (Compliance Clerk at 

$64 per hour for 301 hours) × (10 

registrants)) and the aggregate ongoing 

cost per year will be $55,440 to comply 

with the rule. 

The Commission staff estimates that 

the average initial paperwork cost of 

filing a Form SDR to withdraw from 

registration will be 12 hours per SDR 

with an estimated dollar cost of $4,008 

to comply with the rule. The 

Commission estimates that an SDR will 

assign these responsibilities to a 

Compliance Attorney, calculated as 

follows: (Compliance Attorney at $334 

per hour for 12 hours) × (1 SDR 

withdrawing) = $4,008. 

In addition, the Commission staff 

estimates that the average initial 

paperwork cost for each non-resident 

SDR to comply with Rule 13n–1(f) will 

be 1 hour and $900 per SDR. Assuming 

a maximum of three non-resident SDRs, 

the aggregate one-time estimated dollar 

cost to comply with the rule will be 

$3,840, calculated as follows: ($900 for 

outside legal services + (Attorney at 

$380 per for 1 hour)) × (3 non-resident 

registrants). Finally, the Commission 

believes that the costs of filing Form 

SDR in a tagged data format beyond the 

costs of collecting the required 

information will be minimal. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA unless it displays a 

currently valid OMB control number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Comments should be 

directed to: (i) Desk Officer for the 

Securities and Exchange Commission, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503, 

or by sending an email to: Shagufta_

Ahmed@omb.eop.gov; and (ii) Pamela 

Dyson, Director/Chief Information 

Officer, Securities and Exchange 

Commission, c/o Candace Kenner, 100 F 

Street NE, Washington, DC 20549, or by 

sending an email to: PRA_Mailbox@

sec.gov. Comments must be submitted to 

OMB within 30 days of this notice. 

Dated: June 13, 2018. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12982 Filed 6–15–18; 8:45 am] 

BILLING CODE 8011–01–P 


amozie on DSK3GDR082PROD with NOTICES1