28274 Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; 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: Rule 17g–5, SEC File. No 270– 

581, OMB Control No. 3235–0649 

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’’) is soliciting comments 

on the existing collection of information 

provided for in Rule 17g–5 (17 CFR 

240.17g–5) under the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et 

seq.) (‘‘Exchange Act’’). The 

Commission plans to submit this 

existing collection of information to the 

Office of Management and Budget 

(‘‘OMB’’) for extension and approval. 

Rule 17g–5 requires the disclosure of 

and establishment of procedures to 

manage certain NRSRO conflicts of 

interest, prohibits certain other NRSRO 

conflicts of interest, and contains 

requirements regarding the disclosure of 

information in the case of the conflict of 

interest of an NRSRO issuing or 

maintaining a credit rating on an assetbacked security that was paid for by the 

issuer, sponsor, or underwriter of the 

security. The Commission previously 

estimated that the total annual burden 

for respondents to comply with Rule 

17g–5 is 261,295 hours. 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

estimates of the burden of the proposed 

collection of information; (c) ways to 

enhance the quality, utility, and clarity 

of the information on respondents; and 

(d) ways to minimize the burden of the 

collection of information on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Consideration will be given to 

comments and suggestions submitted in 

writing within 60 days of this 

publication. 

The Commission may not conduct or 

sponsor a collection of information 

unless it displays a currently valid 

control number. No person shall be 

subject to any penalty for failing to 

comply with a collection of information 

subject to the PRA that does not display 

a valid OMB control number. 

Please direct your written comments 

to: Pamela Dyson, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Candace 

Kenner, 100 F St NE, Washington, DC 

20549 or send an email to: PRA_

Mailbox@sec.gov. 

Dated: June 13, 2018. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12981 Filed 6–15–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83415; File No. SR–CBOE– 

2018–042] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the Position 

Limit for SPY Options 

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, Cboe Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘Cboe Options’’) 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 ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 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 4.11 to amend the position limit 

for options on SPDR S&P 500 ETF Trust 

(‘‘SPY’’). 

(additions are italicized; deletions are 

[bracketed]) 

* * * * * 

Cboe Exchange, Inc. 

Rules 

* * * * * 

Rule 4.11. Position Limits 

(No change). 

. . . Interpretations and Policies: 

.01–.06 (No change). 

.07 The position limits under Rule 

4.11 applicable to options on shares or 

other securities that represent interests 

in registered investment companies (or 

series thereof) organized as open-end 

management investment companies, 

unit investment trusts or similar entities 

that satisfy the criteria set forth in 

Interpretation and Policy .06 under Rule 

5.3 shall be the same as the position 

limits applicable to equity options 

under Rule 4.11 and Interpretations and 

Policies thereunder; except that the 

position limits under Rule 4.11 

applicable to option contracts on the 

securities listed in the below chart are 

as follows: 

Security underlying option Position limit 

The DIAMONDS Trust (DIA) .......................................................................................................................................... 300,000 contracts. 

The Standard and Poor’s Depositary Receipts Trust (SPY) .......................................................................................... [None] 1,800,000 contracts. 

The iShares Russell 2000 ETF (IWM) ........................................................................................................................... 1,000,000 contracts. 

The PowerShares QQQ Trust (QQQQ) ......................................................................................................................... 1,800,000 contracts. 

The iShares MSCI Emerging Markets ETF (EEM) ........................................................................................................ 1,000,000 contracts. 

iShares China Large-Cap ETF (‘‘FXI’’) ........................................................................................................................... 500,000 contracts. 

iShares MSCI EAFE ETF (‘‘EFA’’) ................................................................................................................................. 500,000 contracts. 

iShares MSCI Brazil Capped ETF (‘‘EWZ’’) ................................................................................................................... 500,000 contracts. 

iShares 20+ Year Treasury Bond Fund ETF (‘‘TLT’’) .................................................................................................... 500,000 contracts. 

iShares MSCI Japan ETF (‘‘EWJ’’) ................................................................................................................................ 500,000 contracts. 


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5Pursuant to Rule 4.12, Interpretation and Policy 

.02, the exercise limits for options on those 

securities are the same as the position limits set 

forth in Rule 4.11, Interpretation and Policy .07. 

6See Securities Exchange Act Release Nos. 67937 

(September 27, 2012), 77 FR 60489 (October 3, 

2012) (SR–CBOE–2012–091); 70878 (November 14, 

2013), 78 FR 69737 (November 20, 2013) (SR– 

CBOE–2013–106); 74149 (January 27, 2015), 80 FR 

5606 (February 2, 2015) (SR–CBOE–2015–008); 

75381 (July 7, 2015), 80 FR 40111 (July 13, 2015) 

(SR–CBOE–2015–065); 78131 (June 22, 2016), 81 FR 

42011 (June 28, 2016) (SR–CBOE–2016–052); and 

81017 (June 26, 2017), 82 FR 29960 (June 30, 2017) 

(SR–CBOE–2017–050). 

7 Id. 

8See Securities Exchange Act Release Nos. 67672 

(August 15, 2012), 77 FR 50750 (August 22, 2012) 

(SR–NYSEAmex–2012–29); and 67937 (September 

27, 2012), 77 FR 60489 (October 3, 2012) (SR– 

CBOE–2012–091). 

9See Securities Exchange Act Release No. 51041 

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

(SR–CBOE–2005–06). 

10See Securities Exchange Act Release No. 64928 

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

CBOE–2011–065). 

11See supra note 8. 

12Pursuant to Rule 4.12, Interpretation and Policy 

.02, the exercise limit for options on SPY would be 

1,800,000 contracts on the same side of the market. 

13See Securities Exchange Act Release No. 82770 

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

(SR–CBOE–2017–057). 

14From 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). 

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

16 15 U.S.C. 78f(b)(5). 

[Position limits for SPY options are 

subject to a pilot program through July 

12, 2018.] 

.08 No change. 

* * * * * 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/ 

CBOELegalRegulatoryHome.aspx), at 

the Exchange’s Office of the Secretary, 

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 

Rule 4.11 establishes position limits 

for aggregate positions in option 

contracts traded on the Exchange. 

Interpretation and Policy .07 to Rule 

4.11 lists specific position limits for 

certain select underlying securities.5

SPY is among the certain select 

underlying securities listed in that Rule. 

Currently, the Rule provides that there 

is no position limit (or exercise limit) on 

options overlying SPY pursuant to a 

pilot program, which is scheduled to 

expire on July 12, 2018 (‘‘SPY Pilot 

Program’’).6

The Exchange proposes to amend 

Rule 4.11, Interpretation and Policy .07 

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 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,7 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 

the position (and exercise) limit for 

physically-settled SPY options.8 In 

2005, the position (and exercise) limit 

for SPY options was increased from 

75,000 contracts to 300,000 contracts on 

the same side of the market.9 In July 

2011, the position limit (and exercise) 

for these options was again increased 

from 300,000 contracts to 900,000 

contracts on the same side of the 

market.10 Then, in 2012, the position 

(and exercise) limit for SPY options 

were eliminated as part of the SPY Pilot 

Program.11

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 concern 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 4.11, Interpretation and 

Policy .07 to set forth that the position 

limit for options on SPY would be 

1,800,000 contracts on the same side of 

the market.12 This position (and 

exercise) limit equal the current 

position (and exercise) limit 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.13 The 

Exchange notes that SPY is more liquid 

than QQQ.14 The Exchange believes that 

establishing a position (and exercise) 

limit 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 the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.15 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 16 requirements that the rules of 


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17 Id. 

18See supra note 10. 

19See supra note 13. 

20 Id. 

21See supra note 14. 

22See supra note 13. 

23See supra note 10. 

24 15 U.S.C. 78f(b)(8). 

25See SR–MIAX–2018–11 (May 24, 2018). 

26 15 U.S.C. 78s(b)(3)(A). 

27 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. 

an exchange be 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 regulating, clearing, settling, 

processing information with respect to, 

and 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. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 17 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the Exchange believes 

that establishing a permanent position 

(and exercise) limit 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),18 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, 

QQQ, and EWJ.19 Furthermore, as 

previously mentioned, the Commission 

specifically approved a proposal by the 

Exchange to increase the position (and 

exercise) limit 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.20

The Exchange also notes that SPY is 

more liquid than QQQ.21

Lastly, the Commission expressed the 

belief that implementing a higher 

position (and exercise) limit may bring 

additional depth and liquidity without 

increasing concerns regarding 

intermarket manipulation or disruption 

of the options or the underlying 

securities.22 The Exchange’s existing 

surveillance and reporting safeguards 

are designed to deter and detect possible 

manipulative behavior which might 

arise from increasing the position (and 

exercise) limit (increased as compared 

to the 900,000 limit in place prior to the 

SPY Pilot Program).23

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Cboe Options 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 24 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, which 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. Another 

options exchange recently filed a similar 

proposal,25 and 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 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

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 after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 26 and Rule 19b– 

4(f)(6) 27 thereunder. 

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CBOE–2018–042 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–CBOE–2018–042. 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 


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28 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 68001 

(October 5, 2012), 77 FR 62303 (October 12, 2012). 

The SPY Pilot Program was subsequently extended. 

See Securities Exchange Act Release Nos. 70968 

(December 3, 2013), 78 FR 73899 (December 9, 

2013); 74029 (January 9, 2015), 80 FR 2161 (January 

15, 2015); 75415 (July 9, 2015), 80 FR 41541 (July 

15, 2015); 78242 (July 7, 2016), 81 FR 45330 (July 

13, 2016); and 81129 (July 12, 2017), 82 FR 32908 

(July 18, 2017). 

5Pursuant to Rule 6.9–O, the exercise limit for 

options on SPY is equivalent to the position limit 

for SPY options and would also be amended 

pursuant to this proposal. 

6See supra, note 4. 

7See Securities Exchange Act Release Nos. 67672 

(August 15, 2012), 77 FR 50750 (August 22, 2012) 

(SR–NYSEAmex–2012–29); and 67937 (September 

27, 2012), 77 FR 60489 (October 3, 2012) (SR– 

CBOE–2012–091). 

8See Securities Exchange Act Release No. 51041 

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

(SR–CBOE–2005–06). 

9See Securities Exchange Act Release No. 64928 

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

CBOE–2011–065). 

10See supra, note 7. 

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–CBOE–2018–042 and 

should be submitted on or before July 9, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12931 Filed 6–15–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83413; File No. SR– 

NYSEArca–2018–44] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Commentary 

.06 to Rule 6.8–O 

June 12, 2018. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on June 8, 

2018, NYSE Arca, Inc. (the ‘‘Exchange’’ 

or ‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

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 

Commentary .06 to Rule 6.8–O to amend 

the position limits for options on SPDR 

S&P 500 ETF (‘‘SPY’’). The proposed 

rule change is available on the 

Exchange’s website at www.nyse.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 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Rule 6.8–O (Position Limits) 

establishes position limits for aggregate 

positions in option contracts traded on 

the Exchange. Commentary .06 to Rule 

6.8–O lists specific position limits for 

certain select underlying securities. SPY 

is among the certain select underlying 

securities listed in the Rule. Currently, 

Rule 6.8–O provides that there are no 

position 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 6.8–O, Commentary .06, 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, the 

Exchange proposes to allow the SPY 

Pilot Program to terminate and to 

establish position 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.5 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,6 the Exchange believes it 

is appropriate to terminate the SPY Pilot 

Program and establish permanent 

position limits 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.7 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.8 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.9 Then, in 2012, the position 

limits for SPY options were eliminated 

as part of the SPY Pilot Program.10

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 


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