28296 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. 

3The Exchange notes that IM–3140–1 to BOX 

Rule 3140 (Exercise Limits) states that exercise 

limits established under Rule 3140 shall be 

equivalent to the position limits prescribed for such 

options in IM–3120–2. 

4See Securities Exchange Act Release Nos. 67936 

(September 27, 2012), 77 FR 60491 (October 3, 

2012) (SR–BOX–2012–013) (adoption of the SPY 

Pilot Program), 81092 (July 7, 2017), 82 FR 32402 

(July 13, 2017) (SR–BOX–2017–22) (extending the 

SPY Pilot Program to July 12, 2018). 

5 Id. 

6See Securities Exchange Act Release Nos. 67672 

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

(SR–NYSEAmex–2012–29); 67937 (September 27, 

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

2012–091). 

7See Securities Exchange Act Release No. 51041 

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

(SR–CBOE–2005–06). 

8See Securities Exchange Act Release No. 64928 

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

CBOE–2011–065). 

9See supra note 6. 

10See Securities Exchange Act Release No. 83349 

(May 30, 2018), 83 FR 26123 (June 5, 2018) (SR– 

MIAX–2018–11). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83414; File No. SR–BOX– 

2018–22] 

Self-Regulatory Organizations; BOX 

Options Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Amend 

IM–3120–2 of BOX Rule 3120 (Position 

Limits) To Amend the Position and 

Exercise Limits for Options on the 

Standard and Poor’s Depositary 

Receipts Trust (‘‘SPY’’) 

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 6, 

2018, BOX Options Exchange LLC (the 

‘‘Exchange’’) 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 IM– 

3120–2 of BOX Rule 3120 (Position 

Limits) to amend the position and 

exercise limits for options on the 

Standard and Poor’s Depositary Receipts 

Trust (‘‘SPY’’). The text of the proposed 

rule change is available from the 

principal office of the Exchange, at the 

Commission’s Public Reference Room 

and also on the Exchange’s internet 

website at http://boxoptions.com. 

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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization 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 

BOX Rule 3120 (Position Limits) 

establishes position limits for aggregate 

positions in option contracts traded on 

the Exchange. IM–3120–2 to BOX Rule 

3120 lists specific position limits for 

certain select underlying securities.3

SPY is among the certain select 

underlying securities listed in such 

Rule. Currently, this Rule provides 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 IM– 

3120–2 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 

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 its 

proposed rule change, Miami 

International Securities Exchange LLC 

(‘‘MIAX’’) 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.10 The 

Exchange, based on MIAX’s compiled 

trading statistics, represents further that 

there is tremendous liquidity in the 

securities that make up the S&P 500 

Index. 

Accordingly, the Exchange proposes 

to amend IM–3120–2 to Rule 3120 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 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 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 28297 

11See Securities Exchange Act Release No. 82930 

(March 22, 2018), 83 FR 13330 (March 28, 2018) 

(SR–BOX–2018–10); 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 QQQQ was 46.64 million 

shares (calculated using data from Yahoo Finance 

as of May 15, 2018). 

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

14 15 U.S.C. 78f(b)(5). 

15See supra note 8. 

16See supra note 10. 

17 Id. 

18See supra note 11. 

19See supra note 10. 

20See supra note 8. 

21 15 U.S.C. 78f(b)(8). 

22 15 U.S.C. 78s(b)(3)(A). 

23 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. 

same side of the market.11 The Exchange 

also notes that SPY is more liquid than 

QQQQ.12 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 the 

proposal is consistent with the 

requirements of Section 6(b) of the 

Act.13 Specifically, the proposal is 

consistent with Section 6(b)(5) of the 

Act 14 because it is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in facilitating transactions in securities, 

to remove impediments to, and perfect 

the mechanism of, a free and open 

market and a national market system 

and, in general, to protect investors and 

the public interest. The Exchange 

believes that 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),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 FXI, EEM, IWM, EFA, EWZ, TLT, 

QQQQ, and EWJ.16 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.17 The Exchange also notes that 

SPY is more liquid than QQQQ.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 and exercise 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 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 21 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. BOX 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 

The Exchange has 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 22 and Rule 19b– 

4(f)(6) 23 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– 

BOX–2018–22 on the subject line. 


amozie on DSK3GDR082PROD with NOTICES1
28298 Federal Register / Vol. 83, No. 117 / Monday, June 18, 2018 / Notices 

24 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. 

4Rule 1002, entitled ‘‘Exercise Limits’’ notes that 

‘‘except as set forth in subparagraph (c) herein, no 

member or member organization shall exercise, for 

any account in which such member or member 

organization has an interest or for the account of 

any partner, officer, director or employee thereof or 

for the account of any customer, a long position in 

any option contract of a class of options dealt in on 

the Exchange (or, respecting an option not dealt in 

on the Exchange, another exchange if the member 

or member organization is not a member of that 

exchange) if as a result thereof such member or 

member organization, or partner, officer, director or 

employee thereof or customer, acting alone or in 

concert with others, directly or indirectly, has or 

will have exercised within any five (5) consecutive 

business days aggregate long positions in that class 

(put or call) as set forth as the position limit in Rule 

1001, in the case of options on a stock or on an 

Exchange-Traded Fund Share, on a foreign 

currency, or stock index warrants; without regard 

to the exchange on which the options were 

purchased.’’ 

5See Securities Exchange Act Release No. 67999 

(October 5, 2012), 77 FR 62295 (October 12, 2012) 

(SR–Phlx–2012–122); 70879 (November 14, 2013), 

78FR 69731 (November 20, 2013) (SR–PHLX–2013– 

108); 74099 (January 20, 2015), 80 FR 4021 (January 

26, 2015) (SR–Phlx–2015–07); 75414 (July 9, 2015), 

80 FR 41538 (July 15, 2015) (SR–Phlx–2015–60); 

78124 (June 22, 2016), 81 FR 42008 (June 28, 2016) 

(SR–Phlx–2016–68); and 81091 (July 7, 2017), 82 FR 

32404 (July 13, 2017) (SR–Phlx–2017–52). 

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–BOX–2018–22. 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–BOX–2018–22 and should 

be submitted on or before July 9, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12930 Filed 6–15–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83412; File No. SR–Phlx– 

2018–44] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule 1001, 

Entitled ‘‘Position Limits’’ 

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 PHLX LLC (‘‘Phlx’’ 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 1001, entitled ‘‘Position Limits’’, to 

amend position limits for options on the 

SPDR® S&P 500® exchange-traded fund 

(‘‘SPY ETF’’ or ‘‘SPY’’),3 which list and 

trade under the symbol ‘‘SPY.’’ 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaqphlx.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 

Phlx Rule 1001, entitled ‘‘Position 

Limits’’ establishes position for 

aggregate positions in option contracts 

traded on the Exchange. The rule lists 

specific position limits for certain select 

underlying securities.4 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’’).5

The Exchange proposes to amend 

Rule 1001 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 


amozie on DSK3GDR082PROD with NOTICES1