Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices 28481 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(2). 

12 15 U.S.C. 78s(b)(2)(B). 13 17 CFR 200.30–3(a)(12). 

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. 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which fee 

changes in this market may impose any 

burden on competition is extremely 

limited. As a result of all of these 

considerations, the Exchange does not 

believe that the proposed changes will 

impair the ability of member 

organizations or competing order 

execution venues to maintain their 

competitive standing in the financial 

markets. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 10 of the Act and 

subparagraph (f)(2) of Rule 19b–4 11

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 12 of the Act to 

determine whether the proposed rule 

change 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 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSE–2018–27 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–NYSE–2018–27. 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–NYSE–2018–27 and should 

be submitted on or before July 10, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13083 Filed 6–18–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83423; File No. SR–BX– 

2018–022] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Position 

Limits and Exercise Limits for Options 

on the SPDR Exchange-Traded Fund 

June 13, 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 12, 

2018, Nasdaq BX, Inc. (‘‘BX’’ 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 BX 

Rules at Supplementary Material to 

Chapter III, Section 7, entitled ‘‘Position 

Limits,’’ and Section 9, entitled 

‘‘Exercise Limits,’’ to amend position 

limits and exercise 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.’’ 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaqbx.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 


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28482 Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices 

4See Securities Exchange Act Release No. 69179 

(March 19, 2013), 78 FR 17952 (March 25, 2013) 

(SR–BX–2013–024); 72143 (May 9, 2014), 79 FR 

27963 (May 15, 2014) (SR–BX–2014–025); 75412 

(July 9, 2015), 80 FR 41517 (July 15, 2015) (SR–BX– 

2015–039); 78125 (June 22, 2016), 81 FR 42009 

(June 28, 2016) (SR–BX–2016–030); and 81093 (July 

7, 2017), 82 FR 32415 (July 13, 2017) (SR–BX– 

2017–030). 

5 Id. 

6See Securities Exchange Act Release No. 69179 

(March 19, 2013), 78 FR 17952 (March 25, 2013) 

(SR–BX–2013–024). 

7See Securities Exchange Act Release No. 51041 

(January 14, 2005), 70 FR 3408 (January 24, 2005) 

(SR–CBOE–2005–06). At this time BX was not in 

existence. 

8See Securities Exchange Act Release No. 64928 

(July 20, 2011), 76 FR 44633 (July 26, 2011) (SR– 

CBOE–2011–065). At this time BX was not in 

existence. 

9See note 4 above. 

10See Securities Exchange Act Release No. 82770 

(February 23, 2018), 83 FR 8907 (March 1, 2018) 

(SR–CBOE–2017–057). BX’s current rule is based on 

Cboe Exchange, Inc.’s rule. 

11From the beginning of the year, through May 

15, 2018, the ADV for SPY was 108.32 million 

shares while the ADV for QQQ 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. 

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 

BX Rules at Supplementary Material 

to Chapter III, Section 7, entitled 

‘‘Position Limits’’ and Section 9, 

entitled ‘‘Exercise Limits’’ indicate the 

manner in which positions for aggregate 

positions in option contracts are treated 

on the Exchange. 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 

Chapter III, Sections 7 and 9 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 2013 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 

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 Chapter III, Sections 7 and 9 

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 limits equal the current 

position and exercise limits for options 

on QQQ, 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 QQQ.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, 


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Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices 28483 

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. 23 17 CFR 200.30–3(a)(12). 

QQQ, 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 QQQ 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 QQQ.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 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 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

BX–2018–022 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–BX–2018–022. 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–BX–2018–022 and should 

be submitted on or before July 10, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13082 Filed 6–18–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83422; File No. SR–FINRA– 

2018–015] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Designation 

of a Longer Period for Commission 

Action on a Proposed Rule Change To 

Amend FINRA Rule 6433 To Adopt the 

OTC Quotation Tier Size Pilot as 

Permanent 

June 13, 2018. 

On April 20, 2018, Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 


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