Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 28277 

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 


amozie on DSK3GDR082PROD with NOTICES1
28278 Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 

11See Securities Exchange Act Release No. 83066 

(April 19, 2018), 83 FR 18099 (April 25, 2018) (SR– 

NYSEArca–2018–23); See also Securities Exchange 

Act Release No. 82770 (February 23, 2018), 83 FR 

8907 (March 1, 2018) (SR–CBOE–2017–057). 12From 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). 13 15 U.S.C. 78f(b). 14 15 U.S.C. 78f(b)(5). 

15See supra, note 9. 

16See supra, note 11. 

17 Id. 

18See supra, note 12. 

19See supra, note 11. 

20See supra, note 9. 

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

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. 

proposed rule change, the Exchange has 

collected the following trading statistics 

for SPY and SPY Options: (1) The 

average daily volume (‘‘ADV’’) (as of 

May 15, 2018) for SPY is 108.32 million 

shares; (2) the ADV 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 Commentary .06 to Rule 

6.8–O to set forth that the position limit 

for options on SPY would be 1,800,000 

contracts on the same side of the 

market. This position limit equals the 

current position limit for options on the 

PowerShares QQQ Trust (‘‘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.11 The Exchange 

also notes that SPY is more liquid than 

QQQ.12 The Exchange believes that 

establishing position limits for SPY 

options in the amount of 1,800,000 

contracts on the same side of the market 

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 SPY options 

would be unchanged. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 13 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 14

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, 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 

limits for SPY options 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 SPY options 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),15 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 iShares China Large-Cap ETF 

(‘‘FXI’’), iShares MSCI EAFE ETF 

(‘‘EFA’’), iShares MSCI Emerging 

Markets ETF (‘‘EEM’’), iShares Russell 

2000 ETF (‘‘IWM’’), iShares MSCI Brazil 

Capped ETF (‘‘EWZ’’), iShares 20+ Year 

Treasury Bond Fund ETF (‘‘TLT’’), 

iShares MSCI Japan ETF (‘‘EWJ’’) and 

QQQ.16 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.17 The 

Exchange also notes that SPY is more 

liquid than QQQ.18

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.19

The Exchange’s existing surveillance 

and reporting safeguards are designed to 

deter and detect possible manipulative 

behavior which might arise from 

increasing position limits (increased as 

compared to the 900,000 limit in place 

prior to the SPY Pilot Program).20

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 not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is not designed to 

address any aspect of competition, 

whether between the Exchange and its 

competitors, or among market 

participants. Instead, the proposed rule 

change promotes competition because it 

will enable the options 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. 

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 

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 21 and Rule 19b– 

4(f)(6) 22 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 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 28279 

23 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. 67672 

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

The SPY Pilot Program was subsequently extended. 

See Securities Exchange Release Nos. 70734 

(October 22, 2013), 78 FR 64255 (October 28, 2013); 

73847 (December 16, 2014), 79 FR 76426 (December 

22, 2014); 75416 (July 9, 2015), 80 FR 41521 (July 

15, 2015); 78241 (July 7, 2016), 81 FR 45325 (July 

13, 2016); and 81130 (July 12, 2017), 82 FR 32906 

(July 18, 2017). 

5Pursuant to Rule 905, 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. 

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– 

NYSEArca–2018–44 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–NYSEArca–2018–44. 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–NYSEArca–2018–44 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. 2018–12929 Filed 6–15–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83417; File No. SR– 

NYSEAMER–2018–26] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Commentary 

.07 to Rule 904 

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 American LLC (the 

‘‘Exchange’’ or ‘‘NYSE American’’) 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 .07 to Rule 904 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 904 (Position Limits) establishes 

position limits for aggregate positions in 

option contracts traded on the 

Exchange. Commentary .07 to Rule 904 

lists specific position limits for certain 

select underlying securities. SPY is 

among the certain select underlying 

securities listed in the Rule. Currently, 

Rule 904 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 904, Commentary .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, 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 


amozie on DSK3GDR082PROD with NOTICES1